Taxpayers Shouldn’t Subsidize High Income Housing

Millions going to build luxury developments

Aerial shot of Detroit, via Robert Thompson at Wikicommons.

Michigan has a number of programs that try to make housing affordable to people that don’t have a lot of income. But stranger, Michigan has a program that subsidizes high-income housing, as well.

The state transfers money from taxpayers to selected developers to build or renovate buildings in the state’s Community Revitalization Program. This program to deliver taxpayer money to projects that include high-dollar housing is in addition to a new subsidy program for developers enacted by state policymakers earlier this year.

The state gave developers of apartments in Detroit that rent between $19,500 and $75,600 per year $3.5 million in taxpayer assistance. The state money includes some direct investment, so maybe there will be a return for taxpayers. Whether it does or does not, however, seems irrelevant to the state administrators when lawmakers pump over $100 million into the program a year.

The state gave $636,680 of taxpayer dollars to developers for luxury waterfront condominiums in Manistee. (Here’s a 2,070-foot three-bedroom unit with a $399,000 asking price.) That would be enough to buy two units for taxpayers, but the money given to the developer was not designed to give taxpayers something in return.

Developers of Grand Rapids lofts that charge up to $23,400 per year in rent got a $3 million loan from taxpayers. That’s in addition to another $2.8 million from city and state property taxpayers in a different program to fix and update this building. The state doesn’t report back on whether companies that get money in this program repay their loans.

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Ostensibly, state assistance is for economic development purposes. That is, state administrators may think these projects would not get off the ground without taxpayer dollars. Yet buildings that get built to serve the wealthy are likely to be built, regardless. Perhaps they won’t be as nice. Or they may get built in different places. The possibility of tapping into high rents makes a lot of investment possible. But it’s also possible that the public financing only bumps up the price of land, too, making the assistance simply a transfer from taxpayers to landowners.

Developers can’t be blamed for taking advantage of programs that our policymakers offer them. But our elected officials should stop this program and stop spending taxpayer money on people that can take care of themselves.


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The Mackinac Center for Public Policy is a free market, non-partisan educational institute workings towards a freer and fairer government. Our main focuses are in the following policy areas: Fiscal, Education, Energy and Environment, Labor, and Criminal Justice. Learn more at www.mackinac.org/issues

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