Whitmer Calls For Michigan Housing Reform To Cut Red Tape

Gov. Gretchen Whitmer is using her final year in office to champion a sweeping housing package centered on a new affordable-housing tax credit.

The proposal aims to boost construction for working- and middle-class Michiganders who are increasingly priced out of many communities. To do so, she wants to remove regulatory barriers and is piggybacking on bipartisan housing reform legislation dubbed “Housing Readiness,” introduced earlier this week.

“There’s still a lot of red tape that gets in the way of shovels hitting dirt,” Whitmer said in her State of the State address. “Let’s make it easier to build in-law suites and multifamily homes.”

With her initiative and the proposed legislation, Michigan joins the national shift toward state-led reforms to address housing affordability. Lawmakers in California, Oregon, Montana, Arizona, Texas, Florida, and Colorado have taken similar steps.

They have moved to legalize “missing middle” housing types in more neighborhoods. They are also relaxing rules on smaller lots, accessory dwelling units and parking minimums. Those changes aim to lower development costs and open more sites.

The Michigan Democrat also joins presidential contenders Illinois Gov. J.B. Pritzker and Pennsylvania Gov. Josh Shapiro, who this year launched efforts to advance housing reform in their states. Whitmer is considered a top contender, but she has been ambiguous about her intentions.

Adding a LIHTC program

Whitmer urged lawmakers to create a Michigan affordable housing tax credit that layers on top of the federal Low-Income Housing Tax Credit.

Many states, including Michigan’s neighbors, already supplement federal subsidies with state programs. Affordable housing groups have proposed a roughly $42 million credit to match federal credits.

The credit, however, comes at the cost of lowering future state revenue.

Kansas enacted a law last year that cut the state’s available credits by more than 50% through 2028, when the program is set to expire. The incentive, created in 2022 to spur construction of 3,800 to 5,000 new homes per year, came under fire after projections showed it could cost the state nearly $1 billion in future tax revenue.

Georgia, which has matched federal credits dollar-for-dollar since 2001, may lose the tax credit. Lawmakers there are considering eliminating the program in 2031 as part of a proposal to lower state personal and corporate income tax rates.

Bipartisan support for housing reform

Under Whitmer, the state launched in 2022 with a housing plan and a goal of 75,000 new and rehabilitated housing units by the end of fiscal 2026. The state used first-time homebuyer payment assistance and investment from the Michigan State Housing Development Authority to boost housing.

After reaching the goal early, Whitmer increased the target to 115,000 last year. The number is now nearly 87,000, according to the state.

Still, lawmakers believe more must be done to ease housing affordability concerns. Whitmer tied her proposal to a bipartisan House package that would relax minimum dwelling-size requirements and allow multiunit buildings in more locations.

Republican state Rep. Joe Aragona, one of the legislative sponsors, said in last week’s announcement that housing construction costs continue to rise.

“They’re becoming incredibly unattainable, and that’s why you have this bipartisan, bicameral group together to try and solve this issue, or at least solve part of this issue.”

The bills aim to reduce parking requirements and other local standards that limit new housing or drive up prices. Business groups and builders say these needed changes address high material costs and sluggish permitting, which stall projects.

Facing the same opposition while building a legacy

Similar to zoning, taxation and building code legislative reforms other states have undertaken, the legislation would supersede local government authority, which has drawn the ire of local governments.

In Michigan, local control advocates warn that state mandates could override community preferences and strain infrastructure or services in fast-growing areas.

Whitmer counters that the status quo leaves too many families without safe, affordable homes and threatens Michigan’s long-term competitiveness. She argues that young workers and families will leave if they cannot find housing near job centers, schools and amenities.

As she nears the end of her tenure, Whitmer views the housing agenda as both a policy and a political legacy statement.

By pairing a state tax credit with zoning and permitting reforms, she is borrowing strategies from other capitals. She is betting that treating housing as critical infrastructure will resonate with Michigan residents, who are anxious about costs and opportunities.