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MichiganVotes: Senate Bill Would Increase Government Housing Subsidies

A bill that would expand subsidies for Michigan's government-backed housing authority passed almost unanimously in the State Senate.

The Michigan State Housing Development Authority would be bolstered by Senate Bill 347, which, according to, would, "empower the MSHDA to use money in reserve funds to 'invest' (buy ownership interest) in companies or nonprofits whose 'primary purpose is to acquire ownership interests in multifamily housing projects' (and not necessarily build new ones)."

The bill is sponsored by Sen. Mark Jansen, R-Gaines Township, and passed the Senate 36-2.

The authority, known by some as "Michigan’s Fannie May," gives government the power to indirectly subsidize housing and development projects. After the national housing collapse a few years ago, financial reports put the entity's finances on shaky grounds. 

But politicians are pushing ahead anyway.

In sum, MSHDA borrows funds at low government interest rates and then lends the money for a profit. These funds go toward private developers who construct residencies that ultimately will be subsidized for those earning lower incomes. 

Having generated revenue, MSHDA deposits the sums in “reserve or sinking funds” whereby access is granted by the state. 

But Senate Bill 347 changes this. 

The new legislation grants MSHDA the authority to “invest money held in reserve or sinking funds, or money not required for immediate use or disbursement, in entities.” The bill specifies “entities” as “limited partnerships and limited liability corporations, whose primary purpose is, directly or indirectly to acquire ownership interests in multifamily housing projects.” 

James Hohman, a fiscal policy analyst for the Mackinac Center for Public Policy, argues that the possible negative effects of such actions are largely “theoretical and dispersed.” 

Hohman said that economic problems such as the "crowding out" of private lenders and loss of efficiency from redistribution are difficult to validate. But the extension of such subsidies to individuals encourages behavior aimed at “gaming the system.” 

The bill sits in the the House. Sen. Jansen did not respond to a request for comment.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.