Michigan Taxpayers Footing $57 Million in Private Business Subsidies

by Scott McClallen


Taxpayers will spend at least $57 million to retain or create jobs via Michigan Economic Development Corp. subsidies and local grants that they say will create or retain 1,846 jobs.

The subsidies include $29.4 million for a paper mill expansion, $13.2 million for a Monroe brownfield site redevelopment, $6.9 million for an electric vehicle supplier, $1.5 million for an Underwriter’s Laboratory, $3 million for Hoponassu OZ LLC, and $1.5 million to redevelop a property in Detroit.

“Today’s approvals will help us continue to grow our economy and compete for every good-paying job,” Gov. Gretchen Whitmer said in a statement. “From Marquette to Monroe, we will expand leadership in future mobility, elevate our growing outdoor recreation industry, create good-paying jobs for Michiganders, and invest in our communities.”

John Mozena, president of the Center for Economic Accountability, a nonprofit organization for transparent economic development policy, questioned if state employees and politicians would spend their own money to fund these projects.

“Nobody is as easy of spending money as when they’re spending someone else’s money on themselves,” Mozena said in a phone interview.

“The idea of investments is to identify opportunities that no one else does and make a profit. In Michigan, they aren’t investing like venture capitalists or hedge fund managers. Rather, they’re investing like a gambler going to a roulette wheel and putting chips down on every single number, and then celebrating when the ball lands on one of them.”

The Michigan Strategic Fund approved a 15-year Forest Products Processing Renaissance Zone worth $29.4 million to upgrade the Escanaba Mill to retain 1,240 jobs in the Upper Peninsula. Delta County, Escanaba Township, and Wells Township anticipate authorizing a 15-year Renaissance Zone, and the townships expect to approve a 50% property tax abatement.

Billerud plans to upgrade its Escanaba operations to produce paperboard or carton board.

Lear, an auto company, plans to manufacture electric vehicle sub-systems at its Independence Township plant, expand its Traverse City plant to manufacture EV battery packs, and upgrade its Sterling Heights facility.

The project is expected to create up to 500 jobs, funded by a $4.5 million Michigan Business Development Program performance-based grant. The strategic fund also approved a 15-year, 100% State Essential Services Assessment exemption valued at $1.9 million.

“The plant is slated to start production in early 2024 and will provide battery disconnect units and other vehicle electrification technologies,” Lear President and CEO Ray Scott said in a statement.

The city of Monroe will redevelop a 17-acre brownfield site at the former home of the La-Z-Boy headquarters. In 2019, Monroe began assembling this property for a mixed-use redevelopment and established a Telegraph Road Corridor Improvement Authority TIF district. Monroe is working with two developers, including a national grocer for the commercial space, expected to create 45 full-time equivalent jobs.

The City of Monroe Brownfield Redevelopment Authority received strategic fund approval of $2.7 million in state tax capture to reimburse brownfield activities. Monroe has already completed eligible activities totaling $1.3 million and has committed to meeting future costs totaling $5.4 million.

Monroe also supports the project with local tax capture valued at $3.8 million.

Taxpayers will pay $1.497 million via a Michigan Community Revitalization Program performance-based grant to redevelop a property into a three-story building in the North End neighborhood in Detroit. Fifteen rental units will be restricted to rents between 50% and 80% of the area median income.

The city of Detroit has approved a 15-year Neighborhood Enterprise Zone tax abatement valued at $743,956.

The strategic fund also approved $1.5 million to fund mobility 4.0, which is described as the Fourth industrial revolution.

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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “Gardeners” by Greta Hoffman.




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