Funding Questions Surround Hangar42 Studios Deal, According to Center Analyst

State officials mum on details surrounding possible $45 million project touted by Gov. Granholm in State of the State address

For Immediate Release
Thursday, May 20, 2010

Contact: Michael D. LaFaive
Director of Fiscal Policy
Michael D. Jahr
Senior Director of Communications 

MIDLAND — Hangar42, a film studio  touted by Gov. Jennifer Granholm in her State of the State address, has raised some troubling questions that state officials appear unwilling or unable to answer, according to Michael D. LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy.

"This project should be called 'Area42' after America's famous and highly secretive military complex known as Area 51 in southern Nevada," said LaFaive of the Grand Rapids site. "During our three-month investigation, we've sought answers regarding the cost of the property, the status of the deal, the owners of the studio, payment of contractors, financing and more, but no answers have been forthcoming."

Multiple phone calls, e-mails and even a Freedom of Information Act request have gone unanswered, ignored or been rejected by officials at the Michigan Film Office and the Michigan Economic Development Corp., said LaFaive, who worked with Mackinac Center Communications Specialist Kathy Hoekstra on the investigation.

Several published reports indicate that the total "investment" in the new studio was $45 million. But Mackinac Center research shows that the building converted for use as a studio was listed for sale for as little $9.8 million just days before the governor's State of the State speech. Public documents indicate that there are six liens against the current owner of the building, apparently filed by unpaid contractors hired to improve the site. The largest lien is for nearly $230,000.

"These numbers raise a lot of questions," said Hoekstra, who today posted an online video of the investigation. "Was the buyer prepared to pay more than four times the previous asking price for the property? Was the building purchased only after $30 million to $35 million in upgrades? Taxpayers are entitled to know how their money is being spent."

 The new studio apparently qualifies for a refundable infrastructure tax credit, which would represent 25 percent of the infrastructure investment in the project.

"This is just the latest chapter in the MEDC's effort to remain as closed to public scrutiny as possible," said LaFaive, author of the Center's Policy Brief titled "MEGA, the MEDC and the Loss of Sunshine." "If the governor is willing to laud the project to a statewide audience, then her administration should be willing to share the details with taxpayers who are bearing much of the cost."