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Follow The Money

Institute report uncovers Michigan’s sprawl subsidies

January 25, 2005 | By Keith Schneider
Great Lakes Bulletin News Service

MLUI/Gary Howe

Northern Michigan’s Garfield Township used state subsidies to finance sprawling development and now faces severe traffic congestion problems

BEULAHNew research by the Michigan Land Use Institute documents for the first time a pervasive pattern of public investment that is encouraging runaway sprawl in Michigan. The research, contained in a report being released today, recounts an extensive history of spending on roads, jobs, government offices, and business development that is contributing to urban decay, environmental degradation, poor public transportation services, and increased hardships for people in general and for those with disabilities in particular.

The study, Follow The Money: Uncovering and Reforming Michigan’s Sprawl Subsidies, is the culmination of a year of research by the Institute in partnership with United Cerebral Palsy of Michigan. The complete report is available without charge at www.mlui.org in text-only, PDF format, and a purchaseable printed copy here.

Follow The Money comes as Governor Jennifer M. Granholm and the Republican-led state Legislature face a third straight year of political wrangling to close a stubborn budget deficit. The report describes how certain public investments accelerate sprawl; it also provides state lawmakers with a new way to evaluate how the state makes its economic development and investment decisions, and whether that money can be invested in new and more economically useful ways.

Follow The Money provides compelling evidence that existing economic development policy exacerbates state and local budget deficits, harms Michigan’s overall economic competitiveness, and makes communities less, not more, supportive of people in general and people with disabilities in particular.

The principal finding of the report is that Michigan, like other states, spends plenty on sprawl in the form of a network of taxpayer-supported grants, subsidies, tax abatements and incentives, loans, bonds, and direct outlays. In 2001, the latest year for complete figures, state and local governments invested $10.1 billion for roads, buildings, schools, water, sewer, public transit, public safety, and other infrastructure and services, without which sprawling development cannot proceed. In addition, that same year the state spent $507 million for economic development and awarded over $1 billion in tax credits for redeveloping old and contaminated industrial sites. While the report identifies significant public spending in central cities, it also shows that a growing percentage of the state's investment in 2001 went to luring jobs, homes, and businesses to the countryside.

“Sprawl cannot exist without massive public spending for roads, water, sewers, public buildings, and business development,” according to the report. “These intense, taxpayer-financed intrusions into the market have distorted the landscape, ruined central cities, harmed the environment, and reduced the quality of life.”

Greenfields Win, Cities Lose
In almost every category of economic development investment, the study says, the majority of state spending is directed to the fastest growing suburbs, while cities and older suburbs lose. And while it is the residents of older cities and suburbs who must dig deep into their own pockets to keep their communities afloat as needed state money flows elsewhere, every Michigan citizen ultimately pays.

For example, according to the report, the Legislature established the Transportation Economic Development Fund in 1987 so that the state could invest in highways, roads, streets, and other infrastructure that support new jobs. Of the $382 million spent from the fund since 1988, 78 percent, or $297 million, went to new suburbs and rural areas, while just 22 percent, or $85 million, went to core communities.

The big winner in this transportation fund was Auburn Hills, an upscale suburban Oakland County community of 20,000 people that didn’t even exist until 1983. Auburn Hills received more than $25 million, or $1,250 per resident, for streetscape improvements, new roads, a bicycle path, and other amenities. That was $5 million more than the much larger city of Pontiac, which received just $303 for each of its 66,000 residents, and $2 million more than Detroit, which received a miserly $25 for each of its 920,000 residents.

Other examples contained in Follow The Money include:

  • Once-rural Garfield Township, in northern Michigan’s Grand Traverse County, received more than $20 million in state and federal support to execute a business development strategy that encouraged sprawl and triggered an expensive traffic congestion problem. Residents of Grand Rapids, in contrast, used only modest amounts of state support for its $2 billion downtown redevelopment program, which has revived business, housing, jobs, the arts, and civic spirit in Michigan’s second largest city.
  • Daimler Chrysler and two Japanese partners are building two new engine plants, worth $700 million and employing 600 people, in a 245-acre field in rural Monroe County. Michigan kicked in $53.65 million in business tax credits and property tax abatements, plus job training, community development, and road construction grants. Governor Granholm heralded the plants as “great news” at a time of severe manufacturing sector job losses. Michigan did try to promote some urban sites, but the companies were not interested. At $90,000 per job, the report concludes that state spending is better directed to small businesses and suppliers ready to locate in cities.
  • The Southeast Michigan Council of Governments directs more than $600 million annually to the Detroit region for transportation, most of it to modernize and maintain roads in the outer suburbs, where half of the seven-county region’s residents live. Meanwhile, the 2.4 million people in Detroit and its inner suburbs cope with substandard streets and public transportation that limit their mobility and job prospects. Richard Bernstein, a Wayne State University trustee who has been blind from birth, says: “If you can’t drive, and you can’t afford someone to drive for you, you don’t have a life here.”

A Statewide Problem
The problem the report documents is a statewide one. Myron Orfield, a researcher and former Minnesota state senator, concluded in a 2003 report for the Mott Foundation that nearly two-thirds of southeast Michigan residents live in communities that are sliding toward a future of limited economic opportunity. That future eerily resembles what Detroit and its older suburbs already endure: Growing poverty in public schools, weak or declining tax bases, inadequate roads and sewers, and stagnant household incomes. The same patterns, said Mr. Orfield, are also occurring around Grand Rapids, Lansing, Flint, Kalamazoo, Saginaw, and Traverse City.

The report finds that the state’s failure to use public dollars to encourage smarter economic development hurts every Michigan resident:

  • Traffic congestion is increasing, even though Michigan is among the nation’s slowest-growing states.
  • Water pollution from sewage treatment plants overwhelmed by sprawl’s heavy stormwater runoff threatens public health in dozens of cities.
  • Michigan residents spend 200 percent more for school construction than they did 10 years ago, even though the student population increased by less than 4%.
  • State and local budget deficits continue to grow, in part because of the exploding cost of building and maintaining public infrastructure and services across a spread-out domain.

Follow The Money includes recommendations for modernizing state economic development strategy. The report concludes that only when that strategy improves will Michigan be able to conserve its natural resources, produce more job opportunities, enjoy great cities, and restore our rapidly diminishing sense of community — bedrock necessities for competing successfully in the 21st century.

Keith Schneider is an award-winning journalist and a founder of the Michigan Land Use Institute. Reach him at keith@mlui.org. Follow The Money is available online in a text-only version, or as a PDF format, as well as a purchaseable printed copy here


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