Michigan cities lose millions to pollution tax breaks with no oversight, little say

Michigan companies receive hundreds of millions of dollars in tax breaks each year meant to incentivize pollution control. 

But the cities footing the bill often don’t know how much money they’re losing to these equipment tax breaks, they aren’t required to report it to taxpayers and they have little say in whether the exemptions are granted. They also don’t know how much pollution is being controlled. 

Sterling Heights ranks sixth among Michigan municipalities for property taxes lost to the  Air Pollution Control Exemption law in the last decade, according to a BridgeDetroit review of records. All of the exemptions went to automaker Stellantis to control its pollution at the Sterling Heights Assembly Plant.

Sterling Heights representatives said they didn’t know how much the exemption was costing the city in lost taxes, but that it was probably less than half a percent of the city’s overall operating budget, explaining it would take a while to calculate the cost of the exemptions, something they had never done before. City officials also didn’t know how much pollution was being controlled as a result of the law. 

A BridgeDetroit review of the state’s online records found that Sterling Heights has lost an estimated $23 million in property taxes in the last decade from the exemptions. A family of four in Sterling Heights would pay an additional estimated $7,000 in taxes over 10 years to make up for the cost of the exemptions. 

The plant generates a lot of economic activity for the city between the jobs created and the remaining taxes that Stellantis pays, officials said. 

“The economic impact that the plant brings to Sterling Heights is significant, to say the least,” said Melanie D. Davis, community relations director for the city. 

In 2023, the city passed a resolution celebrating the 40-year anniversary of the company’s presence in Sterling Heights, where City Manager Mark Vanderpool highlighted a $235 million investment at the plant as a sign of Stellantis’ “commitment to the Sterling Heights community.” The investment was made to support the development of electric vehicles, including the Ram 1500 pickup. In September Stellanis axed the pickup citing slow demand. Stellantis representatives declined to share the number of jobs SHAP provides. In 2023, during the United Auto Workers strike, 6,800 members walked off the job at the plant, demanding higher wages. 

The Air Pollution Control Exemption Act allows the State Tax Commission to provide incentives for companies that add pollution control equipment to their operations. These property and sales tax exemptions last indefinitely and cost local governments an estimated $200 million annually statewide. Small municipalities with the lowest budgets are impacted the most. In some cases, the value of the tax incentives is more than double the annual tax revenue for the entire municipality. Two-thirds of the municipalities that issued exemptions in the last decade had a population of less than 20,000 people. Despite the impact of the exemptions, there’s no legal requirement for municipalities to track or publicly report these losses, unlike other tax abatements that are typically disclosed in annual financial statements. 

“There is no statutory authorization for such reporting,” said Ron Leix, spokesperson for the Michigan Department of Treasury. 

BridgeDetroit reviewed Michigan Department of Treasury online records, Tax Expenditure reports, and Air Quality Division inspection reports from the last decade. The analysis revealed that the state has granted 333 pollution exemptions, which cost local governments around $1.2 billion in lost property taxes. The five municipalities that exempted the most in the last decade per resident were: River Rouge ($1,542.79), Hampton ($4,753.21), Frenchtown ($5,001.53), Monroe ($17,082.63), and Port Sheldon ($22,935.62).  

BridgeDetroit reached out to all five municipalities. 

Hampton Township declined to comment. Port Sheldon said it is not involved in the approval process and did not respond to additional requests for comment. In Monroe, some city officials say they’d welcome more data and involvement in the process but trust state officials with oversight. Frenchtown and River Rouge did not respond to a request for comment.

Detroit officials similarly seemed unconcerned, calling the exemption a “trivial” amount. Still, the number Detroit has exempted in the last decade is more than a new $45 million, 150-unit affordable housing development between E. Jefferson and the Detroit River. 

Jacob Whiton, a former researcher with Good Jobs First, evaluated that nearly all local governments across Michigan do not report the value of the Air Pollution Control Exemption in their financial statements. 

“The exemption is quite unique in this regard: Despite the fact that it comes at the expense of revenue for cities and school districts and counties, companies never have to actually go before the elected officials of these local governments to get approval for the exemption,” said Whiton. “It’s important to change that so that people can really weigh those monetary costs in terms of the impact on public services against what they potentially stand to benefit from new investment in these industries.” 

Jody Egen, director of communications for Monroe, said the city would welcome being included. 

“As with any matter involving impact on the local community, the City of Monroe would prefer that matters with local fiscal impact include an element of local review and input; however, the state Legislature structured this exemption without such provisions,” Egen wrote by email. She noted that air quality violations are handled by the state, and not the city. 

Two companies have claimed exemptions in Monroe in the last decade: DTE and Gerdau Special Steel. 

“Without further information, it is our understanding that state or federal agencies are the appropriate authorities to address and enforce any such matters,” Egen added. “DTE and Gerdau have been, and remain, valued community partners, major employers and significant contributors to Monroe’s economy. We trust that both companies continue to operate in full compliance with all applicable laws and regulations and will take any steps necessary to maintain that compliance in the future.” 

DTE Energy and Gerdau Special Steel have violated air quality laws more than 20 times in the last decade, according to EGLE’s online records. But in the history of the law, an exemption has never been revoked due to noncompliance, state officials say. 

Neither Monroe nor Sterling Heights has independently evaluated whether the exemption has led to any measurable pollution reduction, nor has the state.

Regardless, Alexis Richards, Sterling Heights planner, said there’s a public health cost of more pollution. 

“So even while we may be losing out on taxable dollars, there’s definitely a benefit to reducing pollution,” said Richards, commending businesses for investing in cleaner technologies. 

A representative from the Michigan Department of Environment, Great Lakes, and Energy (EGLE) confirmed that in many cases, companies are getting exemptions for pollution controls they are already legally required to install.

“The likelihood of a facility installing air pollution control equipment that’s not required by permit or regulation is much less than it would have been when this program was enacted [in 1965],” said Chris Ethridge, assistant director at EGLE’s Air Quality Division. “It’s a very old program.”

Stellantis, while operating as Fiat Chrysler Automobiles, had at least one violation in Sterling Heights in the last decade. In 2021, the plant was cited for emitting more pollution per hour more than permitted. But the track record for exempted Stellantis facilities elsewhere in Michigan isn’t as great – Stellantis has received approximately 47 certificates for its facilities across the state in the last decade, and they have received 19 violations from EGLE.

Across the state, exempted facilities violated air quality laws dozens of times in the last decade. 

Jenn Fiedler of the Michigan Townships Association, a not-for-profit corporation advocating with Michigan’s township governments, said she hasn’t received inquiries from local townships about its impact. 

The question of whether the exemption is driving investment — or subsidizing business as usual — remains largely unanswered.

“The idea that this is necessary, and we’d be sort of endangering the region’s ability to compete effectively for investment without it …,” said Whiton. “It’s both such a small amount of money that it doesn’t matter, but if it’s such a small amount of money, are we really meant to believe that Stellantis or FCA — which has been operating in Southeast Michigan for decades — was not going to invest … if the exemption didn’t exist?”

Jodi Tinson, spokesperson for Stellantis, did not respond to a request for comment on the exemption’s influence on the facility’s location. Stellantis reported nearly $6 billion in profits in 2024. 

The earliest exemption still in effect in the last decade for Stellantis was granted in 1982.

Mike Johnston, executive vice president of government affairs and workforce development for the Michigan Manufacturers Association, said he would guess that most EGLE permit holders utilize the exemption. He is a strong advocate for keeping the exemption for economic development. 

“It would be adding costs on Michigan products that are not added on in cost in our competitor states, making us by definition uncompetitive,” said Johnston, of the organization that represents 1,800 manufacturers across the state. “And doing it in an irrational way, penalizing Michigan companies for installing pollution control equipment, sometimes voluntarily and sometimes by state and federal mandate.”

In October Stellantis announced a $13 billion investment over the next four years to grow business in the United States, with $230 million of that spending forecast to be in Michigan. 

“If it’s an economic development motivation … then we should have a real conversation about whether that’s something we want to be subsidizing,” said Whiton.

---

This project was an initiative of the Kozik Environmental Justice Reporting Grants funded by the National Press Foundation and the National Press Club Journalism Institute. 

Methodology: To determine the amount of lost property taxes exemption certificates from the Michigan Department of Treasury online reportswere used. Each certificate lists the cost of the equipment exempted. Using the initial assessed value of the equipment and the depreciated value over time according to the state’s Machines and Equipment schedule a local millage rates for where each facility is located was applied to the equipment values. Violations were calculated by using Shelby Jouppi’s dataset that organizes data published online by the Michigan Department of Environment, Great Lakes, and Energy. The addresses listed for exempted facilities were matched to the addresses where air quality violations occurred. Isabella McLaury, and Ted Tansley and Alex Hill of DETROITography.com contributed to this report. Content was fact-checked by Jeremy Verdusco. Graphics were provided by Matt Daniels.