Michigan’s expansion of Brownfield Tax Increment Financing (TIF) to include housing, along with new payment-in-lieu-of-taxes (PILOT) options for “missing middle” developments, marks a move toward a simpler, more accessible incentive structure. Marilyn Chrumka, Vice President of Development at Michigan Community Capital, says the previous process was highly complex and discouraged many developers.
Streamlining Michigan’s Housing Incentives
Previously, developers needed to layer multiple incentives — such as commercial rehab abatements, neighborhood enterprise zones, and brownfield plans — to make projects financially feasible. Each program had its own application, eligibility rules, and oversight. This created a significant administrative burden. Chrumka notes that most developers lacked the expertise or resources to combine three separate tax incentives, leaving many projects untapped.
The new Brownfield housing rules consolidate these incentives into a single pathway. Developers can now access tax increment financing for up to 30 years without stacking programs. This streamlining reduces transaction costs and makes it easier for experienced and less specialized developers alike to model the financial impact of incentives early in a project. “This simplifies it and allows you to focus on… the tax incentive you need to reach, however long you need,” Chrumka says.
For developers, the result is a more predictable, less burdensome process that lowers barriers to entry and can broaden participation in affordable housing projects across the state.
Incentives Fall Short on Financing
The expanded Brownfield and PILOT options reduce a project’s tax burden and increase its debt capacity. However, they do not provide enough support to make most affordable housing projects viable in Michigan’s secondary markets. Lower operating expenses improve a project’s debt coverage ratio, but the gap between construction costs and affordable rents remains wide.
Chrumka says the reforms are “pointed in the right direction,” but fall short of solving the underlying financial challenge. The scale of the problem is significant. TIF captures the increase in property tax revenue generated by new development. In markets with lower property values and tax rates, however, that additional revenue is modest. A 30-year TIF might save a project several hundred thousand dollars, but rising construction costs have created funding gaps reaching into the millions.
On typical Michigan Community Capital projects, Chrumka says, $8–15 million in non-repayable subsidy is required for financial viability. Tax incentives can reduce this need modestly, but cannot eliminate it. Since 2018, construction costs have risen roughly 50%, while available subsidies have not kept pace. Tax incentive reform alone cannot resolve this fundamental mismatch.
Subsidies Still Outpace Tax Relief
The Brownfield housing expansion removes administrative obstacles and broadens eligibility. Still, it does not address the core structural issue: the growing gap between development costs and what low- and moderate-income households can afford in rent.
Chrumka explains that Michigan Community Capital’s projects target households earning 60–120% of the area median income. These are families who earn too much for Low-Income Housing Tax Credit or Section 8 programs, but not enough to afford market-rate housing. The rents these households can pay are tied to largely flat incomes, while construction costs have surged.
Tax incentives can lower operating costs, but they cannot change the underlying economics. Materials, labor, and building code requirements have all become more expensive. “It’s just simply more expensive to build the same thing than it was 10 years ago,” Chrumka says.
In this environment, tax incentives are useful for improving feasibility at the margins, but they do not close the large financing gaps that many projects face. Projects that are $5–10 million short of viability require grants, low-interest loans, or other forms of direct subsidy. Incremental reductions in property tax liability are not sufficient.
Reforms Alone Cannot Restart Development
Policymakers and the public may mistake the Brownfield housing expansion for a solution to Michigan’s affordable housing crisis. It is only a partial step. Chrumka cautions that while the reforms make it easier to structure deals and marginally improve project economics, they have not restarted the stalled development pipeline.
Michigan Community Capital currently has no multifamily groundbreakings planned for 2026. Projects in its pipeline remain on hold because the subsidy gap cannot be closed with existing tools, including the expanded Brownfield program. “All of the multifamily projects in our pipeline are on ice right now. We don’t plan on having any groundbreaking this year, because there simply is not enough subsidy to cover the current gap,” Chrumka says.
The underlying issue is straightforward: state and federal subsidy programs have not kept up with construction cost inflation. Without a significant increase in direct subsidies, through new state appropriations, expanded federal programs, or other financing mechanisms, the workforce housing pipeline will remain frozen. This is true regardless of how streamlined the tax-incentive process becomes.
Direct Funding Remains the Solution
The recent Brownfield reforms represent meaningful progress in making Michigan’s incentive landscape more accessible and efficient. However, the main obstacle to affordable housing development is not administrative complexity but a persistent shortage of direct capital subsidy. As construction costs continue to rise and incomes remain stagnant, the need for deeper, more flexible funding sources is only growing.
For Michigan’s policymakers and housing advocates, the lesson is clear: simplifying incentives is valuable, but it is not enough to address the state’s affordable housing shortfall. Without a substantial expansion of direct funding, most new workforce housing projects will remain out of reach, no matter how much the incentive process is improved.
