How the University of Michigan shapes Ann Arbor — including your tax bill

You can’t really understand Ann Arbor — including its property taxes — without the University of Michigan. U-M was founded in 1817 (first in Detroit, then moved here in 1837), and it’s the oldest and largest university in the state, with more than 53,000 students. It’s also one of Michigan’s biggest employers and the engine of the local economy. For a homeowner, here’s the catch: the university owns roughly 9 percent of all the land inside the city, and as a public university it pays no property tax on it. That’s a big share of Ann Arbor’s land generating no property tax — a long-running sore point, since it leaves more of the cost of city services resting on everyone else’s homes and businesses. It’s one reason the idea of a city income tax keeps coming up here (more on that in our income-tax note). The university’s size also keeps housing in high demand: tens of thousands of students need places to live, which pushes up rents and home prices, especially near campus. On the bright side, all those students and staff are why Ann Arbor feels far bigger than its size, with the restaurants, culture, and football Saturdays to match — Michigan Stadium, “the Big House,” is the largest stadium in the entire country, seating over 107,000. The short version for a buyer: the university is why Ann Arbor is what it is, for better and for a slightly heavier tax load.