column: Having the University of Michigan call Ann Arbor 'home' comes with pros and cons

While it is difficult to gather all of the pros and cons of being the hometown to the U-M, I would like to make note of a few points.

Ann Arbor property values are strong: A comparison using figures from the state Department of Treasury, shows the taxable value of property in the City of Ann Arbor grew more and declined less when compared to eight other Michigan cities of comparable size in tax base and population.

The comparison shows that during the last decade’s growth period (2001-2008), Ann Arbor's tax base grew 42.9 percent while the average growth of the eight other communities was 24.6 percent. During the recent recessionary period (2008 - 2012), Ann Arbor's property values declined 4.4 percent compared to the 23 percent average decline in the eight other Michigan cities.

Had Ann Arbor experienced these average rates of growth and decline, the city would have $23 million less in tax revenue than it received this year.

Universities are good for the local tax base: If you were to look at the taxable value of property during that same time period in other Michigan cities that host state universities (East Lansing, Kalamazoo, Mount Pleasant, Marquette), you similarly would see there is both greater growth in property values and greater insulation from decline.

Universities pay taxes on leased space: The university leases more than 1 million square feet of privately owned office space in the Ann Arbor area. Through those leases U-M pays an estimated $4.5 million of property taxes every year to local authorities.

Universities pay for services: U-M pays the City of Ann Arbor directly for water and sewer services resulting in payments in excess of $9.6 million a year. When you add in the other services the university pays for - from police services on football Saturdays to parking lot leases - total payments to the city and Ann Arbor Public Schools in 2012, totaled $11.3 million.

State support for fire protection: The city also receives about $1.2 million annually from the state to partially compensate for providing fire protection to the U-M campus. The university also built and maintains, at no cost to the city, Fire Station No. 5 on the north side of town, which has an estimated value of $250,000 a year.

A plausible contribution to the economic prosperity of the Ann Arbor tax base and insulation from decline is the employment growth at the university during this past decade of more than 9,200 new jobs, a doubling of research spending from $656 million to $1.3 billion, and the creation of 83 new start-up companies since 2001 - now at a pace of one every four to five weeks.

And, though the story accurately reported that U-M has purchased 29 parcels of land in the city during the past 13 years, I would add that the university also sold 12 parcels during that time, which were returned to the city’s tax rolls or deeded to the city itself.

While the information presented here may not completely answer the oft-asked question of what Ann Arbor’s tax base would be like without the presence of the University of Michigan, it is intended to provide additional information on the university’s financial support both directly and indirectly to the city’s financial bottom line.

Jim Kosteva is the director of community relations at the University of Michigan.

U-M Tax Comparison.pdf