Whitmer approves tax break to increase supply of affordable housing

Gov. Gretchen Whitmer signed a series of bills Wednesday that lawmakers hope will increase the supply of affordable housing in Michigan.

The bills modify the state's brownfield development fund, expanding it to support housing developments. The brownfield program in Michigan provides reimbursements for costs associated with redeveloping contaminated, blighted or historic properties through tax increment financing (TIF) which works by capturing an increase in taxes stemming from the redevelopment. In other words, a development that generates new tax revenue due to an increase in the property tax value sees those dollars returned to the developer.

Proponents of the brownfield fund expansion herald it as a way to tackle one of Michigan's most pressing housing challenges.

"Affordable housing is a national crisis and Michigan is no exception," state Sen. Sam Singh, one of the bill sponsors, said in a statement. "These bills will give our local communities more tools, and incentive, to invest in affordable housing projects, signaling the commitment to addressing this crisis head-on."

Michigan State Housing Development Authority Executive Director Amy Hovey called the new TIF tool "a game-changer" in a statement.

Michigan's housing affordability challenges are particularly acute for renters in the state, with a much larger share of renters cost burdened compared with homeowners in the state, an analysis from the Citizens Research Council of Michigan finds.

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Just over half of renters in Michigan spent more than 30% of their household income to cover housing costs in 2021 and almost a quarter paid more than 50% of their household income for housing, according to the research organization that focuses on public affairs in the state. The federal government considers housing affordable for those spending less than 30% of their monthly household income on housing expenses.

The bills in the package signed by Whitmer — Senate Bills 129, 130, 131 and 132 — received bipartisan support. But three Democratic lawmakers in the state House voted against the bills: state Reps. Abraham Aiyash, of Hamtramck; Donavan McKinney, of Detroit, and Dylan Wegela, of Garden City.

Wegela was the lone Democratic vote against Senate Bill 289 which expands the tax capture revenues local brownfield redevelopment authorities can capture to include sales and use taxes. Whitmer also signed that bill Wednesday. The legislation lifts the current $800 million limit on the total amount of capture income and withholding tax revenues to $1.6 billion. And it doubles the allowable annual tax capture from $40 million to $80 million. Proponents say the aim of the legislation is to boost community revitalization across the state.

"There is no other program designed for, or capable of, supporting brownfield redevelopments of this scale and impact, putting obsolete vacant land back to proper use," bill sponsor state Sen. Jeremy Moss, D-Southfield, said.

Whitmer touted the bills she signed as a way to finance affordable housing, redevelop vacant land and retool abandon properties.

"Whether it's renovating the old bank or theater on main street, or building affordable housing on abandoned land, Michigan communities are on the move, open for business and showing the world how much we have to offer," she said in a statement.

Contact Clara Hendrickson: chendrickson@freepress.com or 313-296-5743. Follow her on Twitter @clarajanehen.