- A legislative committee peeled back details of the failed bid to land a massive Sandisk chip complex in Michigan
- The state offered about $20 billion in subsidies, including cash, new tax captures and a 50-year property tax break
- The state cited ‘staggering’ job growth as a benefit, but skeptics questioned why Michigan would offer $20B
LANSING — Michigan’s top economic developers insisted Wednesday that spending $20 billion in taxpayer funds toward a $63 billion semiconductor complex near Flint would have resulted in “staggering” job growth and spending across the state.
“The significance of this opportunity cannot be overstated,” Christen Armstrong, chief operating and performance officer with the Michigan Economic Development Corporation, said of the state’s failed bid to land chip-maker Sandisk.
However, in a hearing before the House Subcommittee on Corporate Subsidies and State Investments, skeptical legislators questioned whether the payoff would have been worth $20 billion in taxpayer cash, business tax credits and property tax breaks for up to 50 years.
The hearing offered an insider’s account of the “historic” economic development deal backed by Gov. Gretchen Whitmer — and legislators who are leading voices in the escalating scrutiny of public subsidies.
Had Sandisk not walked away from Michigan in July, the company also would have received $16 billion in federal funding on top of the public funding offered by Michigan, according to the MEDC, along with a local tax break for the project in Genesee County’s Mundy Township.
Related:
- Residents call Michigan’s $261M Flint-area megasite development ‘traumatic’
- Records: Michigan offered more than $6B in failed bid to land chip factories
- Lawmakers: Spending $660K per job for Sandisk would have been tough sell
All told, incentives from the state, federal and local governments approached $40 billion, according to estimates from the MEDC and legislators on Wednesday.
“How is this the right investment to make for the state and for the people of Michigan?” asked Rep. Dylan Wegela, a Garden City Democrat and vice chair of the House subcommittee, after Armstrong and MEDC CEO Quentin Messer Jr. outlined the value of the state’s incentive offer.
Previously quantified as at least $6.2 billion, the $20 billion state incentive offer detailed for the first time on Wednesday included an additional $13.7 billion in state-level property and business tax breaks, according to MEDC documents obtained by Bridge.
“I just cannot look at this in any kind of sensible and logical way and understand why we are going out there and doing all of this work to give Michigan’s hard-earned taxpayer dollars to a private business and essentially making the investment for them,” Wegela said.
The hearing came a week after the subcommittee’s first hearing on the Flint-area deal and six weeks after Michigan officials announced that Sandisk was walking away from plans to build in the state. The semiconductor company blamed “national economic turmoil,” Whitmer announced at the time.
The first hearing on Aug. 20 focused on the experience in Mundy Township, south of Flint’s Bishop Airport, where an arm of the Flint and Genesee Group Foundation is using $261 million in state funding to assemble about 1,300 acres as a megasite.
The land acquisition started as a regional and state initiative in 2021, but it was not publicized locally until later, when the Flint & Genesee Economic Alliance accelerated its offers to buy homes, farmland, a church and, most recently, an elementary school.
“Perfectly good homes and businesses have been torn down, and active communities of residents watched the destruction from their porches,” Mundy Township Supervisor Jennifer Stainton, elected in fall 2024 on an anti-megasite platform, testified last week.
A chance at ‘history’
Sandisk first expressed interest in Michigan in 2022 when the company was still a part of Western Digital and interested in building four semiconductor fabrication sites at the megasite.
“This project easily would have been the largest investment opportunity in Michigan’s history … and would have taken 20 years in order to complete,” Messer said.
The project aligned with federal industrial policy, he added, giving the state an extra boost of incentive funding.
Michigan began preparing the megasite after it found itself “behind” many states, Canada and Mexico in large-scale development land, Messer said, “because we had not invested in site development.”
The semiconductor production complex would have created 7,400 jobs over two decades, plus 2,000 full-time contractors, according to estimates.
Sandisk, after counting on nearly $40 billion in public funding, was offering to pay Mundy Township $10 million a year instead of paying local taxes. That prompted committee Chair Steve Carra, R-Three Rivers, to ask if that was a bribe, “since you’re using taxpayer resources to give it back to some taxpayers.”
Armstrong, with the MEDC, disagreed with the characterization: “I would call that trying to be a good corporate citizen.”
Michigan has so far spent about $200 million from its Strategic Outreach and Attraction Reserve (SOAR) fund on the megasite, which is about 1,300 acres. Property purchases have been for above market value, Tyler Rossmaessler, executive director of the Flint & Genesee Economic Alliance, told the subcommittee.
The property is the “best site in America,” Rossmaessler told the subcommittee several times on Wednesday, noting that property acquisition and demolition continues — as does interest in the property.
Messer, the MEDC CEO, maintained that the Sandisk development would have been a “generational semiconductor fab investment” but told lawmakers that “economic factors outside of the state’s control ultimately proved insurmountable.”
Incentive scrutiny
Testimony on Wednesday centered on the Flint-area megasite, but it came as legislators appear poised for heightened debate on economic development strategy in the state.
Whitmer has repeatedly called on lawmakers to continue to fund high-dollar subsidies through the SOAR fund, saying the incentives are necessary for Michigan to compete for projects that would bring new jobs to the state.
In the Sandisk deal, about $2 billion would have been funneled through the SOAR program, with other funding coming from tax breaks that would have required legislative approval.
“Michigan’s economy is on the line,” she warned in January.
However, SOAR funding — once a bipartisan, $1 billion win for Whitmer — no longer maintains its hopeful luster. A Bridge investigation this year showed few hiring results for the billions spent, spurring legislators in both parties to urge scrutiny and reform.
Budget plans from Whitmer and the Democratic-led Senate propose cuts to some MEDC programs and only include placeholders for potential SOAR funding, rather than specific recommendations.
A competing budget approved Tuesday in the Republican-led House would end SOAR funding and cut business development programs operated through the MEDC, among other reductions that would affect the agency and likely its staffing.
While the committee’s questions targeted the dollar value of the Sandisk offer from the MEDC, Messer and Armstrong pointed to steps along the way to approval that would have involved public votes.
“The buck stops in the Legislature,” agreed Carra, the committee chair. He noted lawmakers had authorized the incentive spending and other Sandisk subsidy components would have required full House votes, like a $3.3 billion subsidy for a to-be-created “fab hub program.”
But then Carra pressed Messer: “Should we have created (the MEDC)?”
“I strongly believe that it is in the best interest of Michiganders to have a state economic development organization that has and executes a state economic development strategy,” Messer replied.
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