Whitmer changes course, blocks $10M grant that helps former GOP chair

Developers Schostak Brothers & Co. are hoping to build a mixture of residential and commercial buildings on over 560 acres in Salem Township, off the Gotfredson Road exit of M-14 in eastern Washtenaw County. Legislators recently gave the township $10 million to help install water and sewer lines.

Gov. Gretchen Whitmer’s administration is blocking the payout of a $10 million grant that would aid the development of vacant land tied to a well-connected Michigan Republican.

Kurt Weiss, a spokesman for the Department of Technology, Management and Budget, told Bridge Magazine on Tuesday that the payment is being withheld following multiple articles in Bridge that showed the grant –   approved on the last day of lame duck with no debate among legislators –  would help spur commercial and residential development on land owned by a company headed by Bobby Schostak, the former chairman of the Michigan Republican Party.

The decision comes just over a week after Whitmer herself had railed against the pork in the spending plan but said she couldn’t stop the grants because they passed a legal review.

Related: Whitmer rips Michigan Republican pork deals; says she can't block them
Related:  Analysis: Eight ways Gretchen Whitmer vows to improve Michigan

Weiss said the state initiated a review after Whitmer’s executive team raised questions about the grants and whether the money, totalling $113 million, was “the wisest use of taxpayers dollars.”

“That project probably rose to the top of that list” of questionable grants, Weiss said.

It’s unclear how long the review will take, Weiss said.

The Schostak company wants to develop 800 homes as well as commercial development on the more than 560 acres it has acquired at a cost of more than $28 million.

Without the utility lines, the land cannot support those plans.

The total cost of bringing water and sewer to the area is at least $30 million; the Legislature awarded another $10 million grant in 2017, also as a last minute add to a huge spending bill.

The state Attorney General’s office has told DTMB that the grants, approved as part of a $1.3 billion spending bill, are legal and should be funded, Weiss said, unless there are problems.

That prompted members of Whitmer’s executive staff to call for an additional review and led to the delay on the Salem Township grant, the largest of all grants, and two others, Weiss said.

The grant is intended to go to Salem Township to bring the utility lines to property near the intersection of M-14 and Gotfredson Road in eastern Washtenaw Township.

But the actual wording of the grant in the law, Weiss said, is open to a broad interpretation. It calls for spending the money “to encourage economic development and future growth” in a small portion of the township.

There is no mention of water and sewer lines, with the language vague enough to suggest the township could spend the money on other things, Weiss said. He said the department is intending to reach out to the township to let it know “that they have options.”

Gary Whittaker, the township supervisor, has told Bridge that the township has not sought the grants and that it has long anticipated that developers would bear the cost of installing utility lines.

In 2009, the Schostak company asked the township to ask the federal government to fund the project; the township declined.

That decision added to the contentious relationship between the township and Schostak Brothers & Co., Inc., with the Schostak company taking legal action against the township. Whittaker has said the township would probably use the money for the utilities out of fear of being embroiled in more legal action.

Whittaker said Tuesday he has not talked with the state about the grant and is unsure what else the township could spend the money upon. Schostak did not responed to a request for comment but he has defended the project and the use of tax dollars. He said the state’s money will lead to an economic boon in the region.

Michigan lawmakers complete “special grant proposal” forms after they approve grants explaining who sponsored the measure and why the funding is necessary. A form allocating $10 million for water and sewer lines in Salem Township, however, listed no sponsor. The lines will bring utilities to land owned by Schostak Brothers & Co., whose CEO, Bobby Schostak, is the former chairman of the Michigan Republican Party.

The grant was one of the few approved that didn’t have a sponsor, Bridge reported. Most of the grants were championed by local legislators but the Salem Township one had no advocate.

It was a relative orphan until Arlan Meekhof, the former senate majority leader, told the media he had pushed for the grant.

He said the money would spur economic development –  even though the project is over 150 miles away from his own district.

The vast majority of the grants approved in lame duck funded community projects such as fixes to an armory in Owosso, bridge repairs in Alpena, money for school safety in Van Buren County and parks in Inkster and Rochester Hills.

The money for Salem Township differed in that it would directly benefit a private developer – and because local elected officials didn’t request the money.

State Rep. Donna Lasinski, D-Scio Township, represents Salem Township and she did not know about the grant request. She said she’s upset her peers approved it, saying it has the state subsidizing “a for-profit developer and prefers them over other developers.”

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Tue, 02/12/2019 - 6:03pm

Outstanding news. I'll be interested to see what happens next. It's good to see Arlen Meekhof identified as a devious and incompetent lackey is Schostak. It would seem probable that Meekhof was also integral to Schostak winning a $10M grant for this unwanted development in 2017. Impossible to believe folks at MEDC and Snyder camp weren't involved.

Wed, 02/13/2019 - 5:47am

As a conservative, I applaud Whitmer for doing this. No government money should ever be used in support of a private venture. Any private venture should pay 100% of all that is needed to support the venture. Even Dan Gilbert should be paying to replace all the sewers and water lines in downtown Detroit for all his structures that are bringing in money for his private coffers. Now if she would do away with the Economic Development giveaways, that would really be something.

Dave Andrews
Wed, 02/13/2019 - 7:34am

Dear Gretchen;
Remember that feeling you got right after you signed the order to not spend $10 M? It can be the again and again if you will just do the same thing over and over. Cut that pork! Get that feeling.

We, the citizens of michigan get that same feeling when you make those cuts.

john chastain
Wed, 02/13/2019 - 8:46am

This too is a consequence of term limits. Once an idea to create change and bring fresh ideas into government it has morphed into ignorance and corruption. Here you have people in office to arrange favors for patrons and push agendas that long term politicians wouldn’t touch. Not knowing or caring about functioning government they have their work done for them by consultants of dubious value and leave office with pork and future intact. Even the best of intentions can have unintended results. There is nothing worse than the amateur doing the job of a professional, would you have one for a surgeon?

David Andrews
Wed, 02/13/2019 - 9:04pm

Michigan has had term limits since her first Constitution was approved!
What Michigan has not had, and continues not to have is people interested enough in their own future to study and learn about what their government is doing and to vote in accordance with their studies. Term limits as we now have them were pushed through because people wanted a mechanism other than the will of the people to throw out lawmakers - indeed getting rid of some that should have never served in Lansing, but also sending home some of the most talented public servants we have ever seen.

Wed, 02/13/2019 - 10:15am

That money should go to schools, not a private company ! Michigan’s schools are an embarrassment!

Karen Dunnam
Wed, 02/13/2019 - 11:17am

There is one school in the township, an elementary. Presumably its drinking fountains are useable.
If the Twp officials decline to apply for or accept the revenue, it won't magically transfer to the municipal coffers.

John Wierenga
Wed, 02/13/2019 - 11:31am

Three cheers for our new Governor. This project was not pork. This was graft at the top of the Republican Party in Michigan. If this can be stopped it is a great win for the people and democracy. When is my one time party going to start serving this State and Nation again. This is a win for conservatives and everyone else.

Fri, 02/15/2019 - 12:54pm

Excellent. Screw all republicans, they are all corrupt.

Jennifer Carter
Sun, 02/17/2019 - 2:07am

About time. Keep up the good work. The good ole boys club isn't working anymore for MI. The worker bees in this state are happy the new gov smart enough to see through the b.s.