Headline: Small town monthly tabloid newspaper supported by advertising gets circulated free of charge to most homes in the city. Lots of human interest pieces, history, restaurant reviews, and peeks into the nooks and crannies of the town.

It was a recipe for success cooked up by the Hunts (Don and Mary) when they launched the Ann Arbor Observer in 1976. For years, the Hunts published The Observer and the tabloid newspaper served up helpings of writing on local topics of interest. When they retired, The Observer was sold to long-time editor John Hilton and Patricia Garcia. Garcia is the partner of local real estate developer Dennis Dahlmann. It has been a bumpier road for Hilton and Garcia than it was for the Hunts due, in part, to changes in the publishing industry and, of course, the economic downtown.

Unlike AnnArbor.com, which neglected to report on its own recent downsizing, The Observer posted a short note about its own downsizing in February of 2009 to the tabloid’s web site. The Observer lost five workers, froze pay and cut the page count of its monthly publication sharply. The Observer is produced by a small staff and contributors, many of whose bylines appear monthly. James Leonard is one of those contributors. In the latest issue of The Observer, he has a piece titled “A Taxing Question: a few brave souls renew the call for a city income tax.”

“A Taxing Question” starts out with a glaring error. Leonard writes that Second Ward Council member Tony Derezinski is the only Council member to have “outright endorsed” the idea of a city income tax. In 2009, Stephen Rapundalo (the other Second Ward City Council member), Former Third Council member Leigh Greden and City Administrator Roger Fraser made a video for AnnArbor.com in which the three pitched the idea of a city income tax. Click here to watch the video.

In the second paragraph, Leonard quotes Third Ward Council member Christopher Taylor’s false assertion that, “our property tax revenues keep falling.” Well, no. In fact, according to data from the city’s financial web site, property tax revenues have increased yearly from $55 million to $81 million between 2001 and 2010. This was the subject of A2Politico’s first ever Whopper of the Year Award, given to City Administrator Roger Fraser, for his similar assertions.

Then, Leonard quotes Tony Derezinski as claiming that Ann Arbor needs a city income tax because, “40 percent of the property in town is tax exempt because the University owns the property. What sense does that make?”

What sense, indeed.

Derezinski’s claim is a whopper. It’s huckster propaganda employed in an attempt to convince people that the reason Ann Arbor needs an income tax is because 40 percent of the land is off the tax rolls, land owned by U of M, an entity which could make a voluntary payment in lieu of property taxes, like many universities do across the United States, but does not.

The Truth?

According to state records, the U owns 3,176 acres of land. The city of Ann Arbor is 27.7 square miles, or 17,728 acres.

The Math:

The University of Michigan owns 17.5 percent of the land, not 40 percent of the land. Excluding land owned by the public (which has never and would never be included in the tax rolls), in Ann Arbor, 72.5 percent of the land is subject to property tax. This is about the same amount of land subject to property tax in Dearborn, Michigan, where U of M also has a campus, and property taxes for homeowners are, on average, half of what they are in Ann Arbor.

The A2Politico Weekly Whopper goes to Second Ward Council member Tony Derezinski, The Ann Arbor Observer, and its writer, James Leonard.