Bipartisan vibes as Michigan lawmakers seek to reform SOAR incentive fund
- Efforts to reform the state’s large-scale business incentive program known as SOAR appear to have broad support
- A Senate committee heard testimony Thursday from backers who say the fund needs greater transparency and local input
LANSING—A first round of testimony on proposed reforms to Michigan’s large-scale business incentives program showed potential for bipartisan support Thursday in Lansing.
Supporters of the legislation hailed how it would redistribute the $500 million per year that will fund the Strategic Outreach and Attraction Reserve (SOAR) through 2025.
The bills are intended to bring more transparency and community focused investment to the program, while also focusing on bringing higher-paying jobs to Michigan. A lack of corporate accountability was highlighted in a recent Bridge Michigan report on the auto industry’s legacy of abandoning contaminated factory sites to build new electric vehicle battery plants aided by taxpayer subsidies.
“If we are spending taxpayer dollars, we must ensure that this is moving the state and all of our residents forward towards higher median incomes, better health outcomes, and better prosperity all around in national rankings,” said Sen. Mallory McMorrow, D-Royal Oak, a co-sponsor with Sen. Mary Cavanagh, D-Redford Township.
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The lawmakers sit on the Senate Economic and Community Development Committee, where testimony was heard Thursday, though no vote was taken.
If passed, the program would be renamed the Make It In Michigan Fund, retaining SOAR’s focus on critical industry attraction and site preparation. It also would add a third funding element: directing 20 percent of subsidy awards toward a new community revitalization portion of the incentive plan called the Michigan 360 Fund.
“We wanted to ensure that all of our economic development tools align around prosperity for residents,” McMorrow said.
Thursday’s testimony follows growing and bipartisan concerns over how SOAR money has been awarded. The fund was created in late 2021 after Michigan lost out on $11.4 billion of investment from Ford Motor Co., which instead chose Tennessee and Kentucky for large-scale electric vehicle battery campuses. Michigan political and business officials said at the time that the state lost out because Michigan did not have large enough incentive funding to compete nationally for the biggest projects in the U.S.
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But questions soon emerged over whether SOAR — which totaled $2 billion in funding over its first two years — was attracting the types of jobs that warranted that level of taxpayer investment. Most deals focused on EV battery factories employing mostly production workers.
Legislators on both sides of the aisle more recently started to question whether SOAR offered the transparency it had first promised after some SOAR-funded projects were announced before the Legislature was even given the opportunity to approve funding.
Lawmakers also recognized tension some communities felt when they learned — often near the end of an award process — that they were identified for a major development, yet “may not feel like they are a full partner in the process,” McMorrow said.
Backers say the new legislation will improve accountability for companies that receive large-scale incentives, allow more legislative and community input as plans take shape, and potentially direct more projects toward areas that most need new investments, including brownfields and areas with higher unemployment rates.
The proposed Michigan 360 Fund would be used to address direct community-based issues like housing, downtown vitality and small business growth alongside corporate development. Funding could also go toward child care, transportation and community colleges.
After McMorrow outlined the new incentive proposal, support came from the Michigan League for Public Policy, the Michigan Municipal League and Jared Fleisher, vice president for government affairs for The Rocket Companies in Detroit.
Fleisher, who was among the consultants that helped in the formation of SOAR, said that program always was intended as a stopgap.
Moving beyond SOAR to the proposed legislation will bolster Michigan as “the kind of place where people want to come and locate a business” while also retaining some incentives, he said.
State Sen. John Lindsey, R-Allen, raised questions during testimony about transparency, including how communities can be more involved earlier in the incentive process. While support for companies is critical on a local level — including for tax abatements — many of the deals also involved non-disclosure agreements for local officials, ensuring silence through much of the process of choosing a site.
Fleisher acknowledged the difficulty of involving too many people in the early negotiations part of a deal and of finalizing a proposal that leaves the Legislature little room to raise questions or concerns.
“We're proposing … some level of involvement and visibility that does not slow down the process,” McMorrow said.
“We’re open to feedback and we'd love to find something that strikes that right balance,” she added.
Lindsey told Bridge after the hearing that the opening for Republicans to provide feedback on the proposals leave him “optimistic that … (McMorrow) wants to work on this.”
He also supports a bill proposed by state Sen. Thomas Albert to eliminate SOAR, but said if large-scale incentives remain in Michigan, the identified problems need to be addressed.
“I’ll certainly be engaged in putting forward some ideas,” he said.
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