RAPID RESPONSE HOUSING FUND: UPDATE
The Michigan Legislature narrowly avoided a government shutdown, finalizing the FY 2026 state budget after the October 1 fiscal year deadline. Governor Whitmer signed the $81 billion spending plan last week. This budget will be remembered for major cuts to housing and economic development programs, as lawmakers redirected roughly $1.8 billion annually toward Michigan’s roads. The Legislature also reduced enhancement grant funding dramatically from prior years, approving only $28 million in total legislative-directed spending. Most of these projects focus on local infrastructure and equipment, not housing. Housing North’s $10 million enhancement grant request for the Rapid Response Housing Fund (RRHF) was not included in the final budget.
Key Housing-Related Appropriations in the FY 2025-26 Budget:
Community Development Block Grant (CDBG): $47 million
Michigan Housing and Community Development Fund (MHCDF): $50 million
Community Development Financial Institutions (CDFI) Fund: $5 million
Zoning Reform Grants: $3 million
Office of Rural Prosperity: $1 million
MSHDA Home Repair Program: $1.2 million
Limited Grants to Statewide or Regional Housing Organizations
Habitat for Humanity of Michigan: $500,000
Common Ground: $175,000
What This Means for Northwest Michigan
The new state budget underscores the growing need for regional and local housing solutions. With fewer state-level grants available, Northwest Michigan communities will need to rely more heavily on local partnerships and flexible funding tools such as Payment in Lieu of Taxes (PILOT) ordinances, housing TIF districts, and revolving loan programs like Housing North’s Rapid Response Housing Fund. The cuts also mean less capacity for small communities to plan, zone, and finance new housing. Without robust state support for technical assistance or housing readiness grants, local governments will face more pressure to fund their own planning and infrastructure work to enable development.
Still, there are bright spots. Continued funding for the Michigan Housing and Community Development Fund and zoning reform grants provides some opportunities for Northwest Michigan municipalities to compete for state dollars. By working together at the county and regional levels, local governments, employers, and nonprofits can continue advancing practical, homegrown housing solutions despite a tighter state budget.
