MichMash: Can a proposed tax subsidy fix the affordable housing crisis in Michigan?

With the housing crisis looming across Michigan, state officials are leaning on a proposed redevelopment subsidy program to make housing more affordable. Lauren Gibbons from Bridge Michigan describes the architecture of the program with MichMash host Cheyna Roth. 

In this episode:

• Local governments may soon be able to offer tax subsidies to affordable housing developments
• While a plus for affordable housing, the legislation may lead to less funding for schools 
• Democrats are quickly moving through their priority list and introducing new proposals 

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Affordable housing shortages are impacting all parts of Michigan, Gibbons says. This primarily comes down to high demand and low supply of housing options. As costs increase, tourism communities like Traverse City are seeing dwindling options for workers to live. In Ann Arbor, people are living outside the city and commuting in due to the high cost of living. 

Tax increment financing is currently only used for commercial developments, but proposed legislation would allow local governments to offer some subsidies to development projects serving people whose income is 120% or less than the area median income. There’s no cap on this type of funding and the bill allows local governments to decide the amount. 

Michigan State Housing Development Authority Executive Director Amy Hovey told Gibbons that these subsidies could have a large impact on community housing needs. 

“She [Hovey] told me that…it’s a crisis that is quickly becoming an emergency and hopes that more non-traditional partners in this, not just housing officials or local governments, more people start becoming aware of affordable housing needs and start coming up with creative solutions,” says Gibbons. 

The program would focus on subsidies going to redevelop Brownfield sites, or previously developed land that is now blighted or contaminated. 

Supporters of the bill see it making Michigan a leader in addressing affordable housing needs. Maine is the only other state using tax increment financing for affordable housing. 

However, opponents of the bill see areas where the program could be abused.

Sen. Lana Theis (R-Brighton) fears landlords and developers using taxpayer dollars to improve their property while also increasing rents for tenants. The proposal would also decrease school funding, with more state and local tax revenue going to eligible projects. 

The proposed legislation passed in the Michigan Senate and is now before the state House. It’s likely the legislation could see a fast path to Gov. Gretchen Whitmer’s desk, much like others supported by Democrats during this legislative session. 

Democrats repealed the “right to work” law in March and Michigan’s 1931 abortion ban in April. Lawmakers also passed new gun safe storage and background check bills this month.  

“There’s still a few odds and ends on the table, but the initial priority list was very quickly gotten through,” says Gibbons. “Now with looking forward to the future, Michigan Democrats this week have been putting forward a few new proposals.”

The new proposals include driver’s licenses to undocumented immigrants who can prove residency and an energy package recently introduced in the Senate. Legislators are also starting the state budget process and reviewing Whitmer’s proposed plan.

More from MichMash: 

• MichMash County Close-up: Oakland
• MichMash: Bucket list bills and pent-up policy make their way through Lansing
• MichMash: The road ahead with incoming Senate Majority Leader Winnie Brinks