Gov. Gretchen Whitmer is using her last year in office to champion a sweeping housing package that focuses on a new affordable housing tax credit.
This proposal aims to increase the construction of working-class and middle-class Michiganders with increasing prices in many communities. To do so, he wants to remove regulatory barriers and supports bipartisan housing reform legislation called “Housing Readiness,” which was introduced earlier this week.
“There is still a lot of red tape that gets in the way of shovels hitting the dirt,” Whitmer said in his State of the State address. “Let’s make it easier to build single-family homes and multi-family homes.”
With his plan and proposed legislation, Michigan is joining a national revolution of state-led reforms to address housing affordability. Lawmakers in California, Oregon, Montana, Arizona, Texas, Florida and Colorado have taken similar measures.
They have moved to approve “non-central” housing types in many areas. They are also relaxing rules for small lots, used residences and small amounts of parking. Those changes aim to reduce the cost of development and launch more sites.
The Michigan Democrat is also joining the presidential race of Illinois Gov. JB Pritzker and Pennsylvania Governor Josh Shapiro, who this year launched efforts to improve housing reform in their states. Whitmer is considered a leading contender, but has been vague about his intentions.
Adds LIHTC program
Whitmer urged lawmakers to create an affordable Michigan housing tax credit that is more than the Low Income Housing Tax Credit.
Many states, including Michigan’s neighbors, are already supplementing federal funding through federal programs. Affordable housing groups have raised about $42 million in debt to match federal debt.
The debt, however, comes at the cost of reducing future national income.
Kansas enacted legislation last year that cuts the state’s available credits by more than 50% by 2028, when the program is set to expire. The incentive, set for 2022 to encourage the construction of 3,800 to 5,000 new homes a year, came under fire after estimates showed it could cost the state nearly $1 billion in future tax revenue.
Georgia, which has matched the federal dollar-for-dollar credit since 2001, could lose the tax credit. Lawmakers there are considering ending the program in 2031 as part of a proposal to lower personal and corporate income tax rates.
Bipartisan support for housing reform
Under Whitmer, the state launched a 2022 housing plan and a goal of 75,000 new and renovated homes by the end of fiscal 2026. The state used homebuyer down payment assistance and investment from the Michigan State Housing Development Authority to improve housing.
After reaching the goal early, Whitmer increased the goal to 115,000 last year. The number is now nearly 87,000, according to the government.
Still, lawmakers believe more needs to be done to alleviate housing affordability problems. Whitmer tied his proposal to a Bipartisan House package that would relax lot size requirements and allow multi-unit buildings in more areas.
Republican state Rep. Joe Aragona, one of the sponsors of the legislation, said in an announcement last week that housing costs continue to rise.
“They are incredibly unreachable, which is why you put this bicameral group together to try to solve this issue, or at least solve part of this issue.”
The bills aim to ease parking requirements and other zoning standards that limit new housing or increase prices. Business groups and builders say the necessary changes address high property costs and slow permitting, stalling projects.
Facing the same opposition while building a legacy
Similar to zoning, tax and building code changes other states have made, the law would replace local government authorities, which have drawn the ire of local governments.
In Michigan, local control advocates warn that the state’s mandate could override public preferences and pressure infrastructure or services in fast-growing areas.
Whitmer argues that the current situation leaves too many families without safe, affordable homes and threatens Michigan’s long-term competitiveness. He argues that young workers and families will leave if they can’t find housing near job centers, schools and amenities.
As he nears the end of his term in office, Whitmer views the housing agenda as a policy and political legacy statement.
By pairing federal tax credits with zoning and permitting changes, he borrows techniques from other capitals. He’s betting that treating housing as critical infrastructure will affect Michigan residents, who are concerned about costs and opportunities.
