(The Center Square) – Gov. Gretchen Whitmer announced the Michigan Strategic Fund has approved investment for a housing development project in Traverse City, which is expected to generate a total capital investment of $25.3 million and create 24 full-time equivalent jobs.
“As we put Michigan back to work, I’m excited about this new housing investment which will make a huge difference in the lives of Traverse City residents and help small businesses grow,” Whitmer said in a statement. "Investments in housing infrastructure are crucial as we build our economy back better from the pandemic. I welcome any funds that will make a difference in the lives of Michiganders.”
GLC Northern Michigan Pine, LLC plans to construct a four-story, mixed-use development in Traverse City, providing up to 91 units of residential rental housing and underground parking, with first-floor commercial space. Located at 309 W. Front St. downtown, the project will also include more than 3,000 feet of new public boardwalk along the Boardman River.
“The Traverse City Commission has been working hard to promote redevelopment of key areas in our downtown that will provide a mix of housing opportunities for our citizens, not just short term vacation rentals,” Traverse City Mayor Jim Caruthers said in a statement. “With our 'hot' investment market and the high cost of construction UpNorth, this has proven challenging for building mixed use housing for our downtown workforce. With the assistance from the MEDC, this will help Traverse City to provide the year-round housing units this community desperately needs.”
However, promises like these often fall short, John Mozena, president of the Center for Economic Accountability, a nonprofit organization for transparent economic development policy, told The Center Square in a phone interview.
For example, companies build things because there’s a market for it. Real estate developers want “free” money to boost profit margins, Mozena said.
An Upjohn Institute study found that three-fourths of all subsidized investments would have happened without the subsidy.
“In terms of of all the economic development subsidies in the country the evidence is that at least three-quarters of all of the projects would’ve happened without the subsidies — potentially as much as 98%," Mozena said, citing the study.
“If there’s a market, you don’t need subsidies,” Mozena said. “Because there’s that demand created by the market, it’s not the subsidies that are making this happen, it’s just the demand from the marketplace”
Mozena said politicians use taxpayer funding more as a political tool than an economic one. Strong demand exists to invest in moneymaking real estate.
The Michigan Economic Development Corporation and the Michigan Strategic Fund, which dole out taxpayer money to private companies, won’t say what percentage of deals pitched to them they fund. Mozena said the Texas Enterprise Fund funded 95% of the deals presented.
Meanwhile in the private market where venture capitalists have skin in the game, Mozena said they generally fund less than 5% of deals presented.
Local politicians welcomed the announcement.
“I really appreciate the support for the city of Traverse City, recognizing that downtown projects are good for all Michiganders,” Sen. Wayne Schmidt, R-Traverse City, said in a statement.
Traverse City is supporting the project with an existing brownfield work plan valued at $243,700 and a Downtown Development Authority contribution of $3.5 million to create sidewalk systems, bridge repair, buried power lines, and a new public parking deck. The project is funded by a $2.9 million Michigan Community Revitalization Program loan.