Local in Ann Arbor

Twin Challenges

As it has arrived in the 21st Century, the City of Ann Arbor has experienced two challenges that combine to constrict its choices. They are the growth of the University of Michigan and the restriction of annexation for City expansion.

The University of Michigan

The University of Michigan (Ann Arbor campus) is both the City’s treasure and its biggest problem.

Employee zip codes for UM (click to view)

It provides employment to the area (though according to MLive, “Of UM’s 51,000-plus total Ann Arbor employees, fewer than 19,000, or 36%, live in ZIP codes that touch the city”. Presumably that is 48103, 48104, 48105, and 48108. It must surely bring business to a whole variety of vendors. And of course there is UM football, which provides a bonanza to the hospitality industry every fall.

Certainly UM brings status to Ann Arbor. It is a globally recognized university. And UM research has supported numerous business startups. This is well supported on campus.

Some of us might see the contribution to Ann Arbor culture as its greatest boon. It houses and produces a great many theater and musical events, a real embellishment to living in this City.

But these benefits do not directly contribute to City government. While UM pays utility fees and cooperates with transit and fire protection, it pays no property taxes, not even the PILOT (payment in lieu of taxes) that some large universities give to their host cities.

Land, the Limited Resource

Because UM continues to grow, and because so many of its activities are within the City boundaries, it is an active competitor for scarce land parcels, often outbidding for-profit (and taxable) entities. Ann Arbor City Administration (as reported by MLive) has begun to speak about this openly.

By the city’s count, the city is now losing $2.4 million annually in tax revenue due to university land acquisitions since 2000 and cumulatively UM’s growing footprint has cost the city more than $25 million in that timeframe.

Meanwhile, UM continues to plan for expansion and growth. There is now the beginning of a Campus Plan 2050. At present, the landscapes are tentative and several versions are being considered.

This is especially a problem for the City of Ann Arbor because its boundaries are more or less fixed. Note that the boundary almost exactly matches the freeway ring. (Click on figure for better magnification.) The few white spaces are township islands. None of the rest of this area is available for annexation.

If this were a city in a different state, the population pressures and demand for land area would result in annexation of the more rural edges of the city. In fact, this is how Ann Arbor City became as large as it is, incorporating portions of Ann Arbor Township, Pittsfield Township, and Scio Township. But in 1968 there was a revolt of township governments, who were seeing their tax base disappear. A law was passed that requires all annexations to go before the Boundary Commission. If a township objects to an annexation, it usually does not succeed.

The Student Housing Problem

So here is the problem. Just as UM has occupied more and more of the land area of the City of Ann Arbor, so also it has increased enrollment steadily. Since the land supply within the City is inelastic because of the limits on annexation, this has created a very hot market both for buildable land and for student housing. So as Ann Arbor neighborhoods became more and more alarmed at the construction of dedicated (proprietary) student housing, the demand became greater. But the UM has not increased their on-campus supply of housing for many years, until just recently they began to take notice of this need. (The 2050 campus plan makes this an explicit goal.)

As this article in MLive makes clear, the weight of this student enrollment pressure is threatening the very culture of Ann Arbor, as neighborhoods are encroached upon and families are priced out because of the cost of land.

Proposed 17-story development on 711 Church Street

The consequence has been a discouragingly common approval of over-sized developments in spite of vehement objections by nearby residents. The approval (May 6, 2024) of a new tower on 711 Church Street is not really a surprise. Is this inevitable? Does this represent good practice from a city planning viewpoint? That is one question before all parties interested in the future of the City.

This entry was posted on May 7, 2024 at 5:57 pm and is filed under Basis, civic finance, Sustainability. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site.