LANSING, Mich. — The Michigan Economic Development Corporation, the quasi-public agency tasked with creating jobs and promoting business across the state, has become a flashpoint in the governor's race, with both major-party candidates, the state attorney general, and a bloc of Senate Republicans all calling for major reform.
The MEDC, established in 1999, provides hundreds of millions of dollars in grants and tax incentives each year. Those funds have typically gone toward projects such as parks and small business renovations. But a series of high-profile setbacks and fraud allegations have drawn fresh scrutiny from across the political spectrum as the November election approaches.
The most recent controversy involves Bilal Hammoud, the former executive director of The American Arab Chamber, who was reportedly fired after more than $1 million of a $3.4 million grant administered by the MEDC was said to have gone missing. Hammoud is a known ally of Gov. Gretchen Whitmer, who appointed him to the state's Workforce Development Board two years ago. The Michigan Attorney General's Office is coordinating with the FBI on the matter, and the chamber has launched its own independent investigation.
The case has a familiar ring for many observers. Former MEDC board member Fay Beydoun, a Whitmer ally and donor, faces 16 felony charges tied to the alleged misuse of a $20 million state grant awarded to her nonprofit, Global Link International.
Michigan Senate Republicans pointed to the pattern in a social media post, noting that Hammoud had replaced Beydoun and that Whitmer had taken Hammoud on an official trip to the UAE and Bahrain last year.
Michigan Attorney General Dana Nessel, a Democrat, notably joined the long-standing Republican call for abolition after the Hammoud story broke. "Abolish the MEDC," Nessel posted on social media.
Gabe Butzke, a spokesperson for the Michigan Forward Network, echoed the sentiment. "This story of fraud at the MEDC is sounding eerily familiar, and it's clear that the group is a horrible steward of Michiganders' tax dollars. For once, we are in agreement with Attorney General Nessel: it is time to abolish the MEDC."
The pressure is not limited to the executive and legislative branches. Both gubernatorial candidates have outlined plans for the agency.
Democratic nominee Jocelyn Benson, the Secretary of State, said the MEDC might need to be broken up and that a separate entity should be created to focus specifically on growing small and micro businesses. "I will not give the MEDC another cent until substantial guardrails are put into place to ensure this type of corruption never happens again," Benson said in a statement. She described reform as a moral responsibility and outlined a people-driven economic development vision at the Michigan Democratic Party's nominating convention.
Republican nominee John James said the MEDC needs a complete overhaul. "As Governor, I'll demand measurable return on investment, transparency, and accountability for taxpayer dollars, while focusing economic development on first retaining the jobs Michigan already has, then reclaiming the jobs we've lost to other states, and then recruiting new investment," James said in a statement. He also pledged to reduce the tax and regulatory burden while lowering the cost of energy and insurance.
James's lieutenant gubernatorial running mate, State Rep. Jay DeBoyer, R-Clay, championed legislation to reform the agency. "I think that the MEDC needs to be looked at hard, it needs to be cleaned up, and it needs to be reined in, because it seems like there hasn't been any guardrails in place with taxpayer dollars," DeBoyer said at the Michigan Republican Party's nominating convention.
Legislative action is already underway. Senate Republicans introduced a package of more than 50 bills that would abolish the MEDC and several programs under its jurisdiction and establish a replacement state economic development regime.
The agency's track record has drawn questions for years. A 2020 study by the Mackinac Center for Public Policy found that the state's incentive funds lifted employment and sales at funded firms, but that the average cost per job created was $593,913 per year.
High-profile failures have also weighed on the agency's reputation. In Genesee County, the 1,300-acre Mundy Township advanced manufacturing site remains vacant even after $250 million in state funding was given to SanDisk to clear land, after the company backed out of a deal that had promised thousands of jobs. In Mecosta County, Gotion's planned battery component plant never materialized following a change in local government, and the state is seeking to recoup $23.7 million already paid to Gotion.
Because the MEDC falls under the purview of the governor, the winner in November will hold significant power over the agency's future, though its funding is controlled by the legislature and some of it is already locked in.