Talking Michigan Transportation

Meet MDOT’s director of economic development

• Season 7 • Episode 206

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On this week’s edition of the Talking Michigan Transportation podcast, a conversation with Mike Kapp, who directs the Michigan Department of Transportation’s Office of Economic Development (OED). 

Kapp explains the origins of the office and how its various programs provide benefits to communities across the state. He also breaks down the six categories that make up the program. 

Later, Kapp talks about the office’s 2024 accomplishments, including distributing $23.1 million in Category A grant funds, which: 

  • Generated $4.5 billion in private investment,
  • Supported 4,414 jobs, and
  • Resulted in $262 in private investment for every public dollar. 

See all of the OED’s accomplishments online.

Jeff Cranson:

Hello, welcome to the Talking Michigan Transportation Podcast. I'm Jeff Cranson. This is the first episode of 2025. I hope everybody is settling in to a new year and all that goes with it.

Jeff Cranson:

It's pretty cold in Michigan right now so it's hard to think about major construction projects and roads and bridges, but we know that people are hard at work planning those, and part of that planning also includes MDOT's Office of Economic Development, which plays an important role, sometimes fairly quiet behind the scenes, in helping communities that need road improvements, very specific to certain businesses and job creation. So I spoke with Mike Kapp, who's the director of that office, and he's been in that role for some time, so he has a pretty good handle on all that they do. I hope you enjoy the conversation as he explains the various categories of grants and the kinds of help that the Office of Economic Development provides across the state. So, once again, Mike Kapp, who is the director of MDOT's Office of Economic Development. Mike, thanks for being here First time guest on the podcast, but I always follow what your office does with great interest, for obvious reasons. Could you first talk a little bit about yourself and your background and how you came to this position?

Mike Kapp:

Sure, my education is in political science and economics and I started with the department a little over 35 years ago working in planning, doing revenue forecasting, and eventually got to doing the allocation of federal aid to the department and local agencies. And did that for a long time. But an opportunity opened up in this office and I found the work very interesting and kind of related to my economic background. So I jumped at the opportunity and have been here since around 2002.

Jeff Cranson:

Obviously, this still stokes your passions. I know from working with you and your staff how excited you get about being able to help communities and businesses and all that you do. When you say 35 years with the department, remind me of the history of the office and when it was established.

Mike Kapp:

Oh sure, around 1987 was when the statute that created the office was passed, and it was a recognition that we needed to infuse money into particular areas of road development and respond to particular needs. And so the legislature set aside some money off the top of the Michigan Transportation Fund, which is where our gas taxes and registration fees go, and they set some money aside off the top to provide funding for these particular uses. And that was when the office was created.

Jeff Cranson:

I recall when I started with the department thinking you know, all transportation improvement is about economic development. So it took me a while and with your help I came to understand the unique role that the Office of Economic Development plays in helping businesses and communities, really great and small, across the state. Talk about, I guess, the mission and you know what you and I have talked about before, about the kind of the gaps that it fills in in helping communities.

Mike Kapp:

Sure.

Mike Kapp:

So the funding that gets distributed by formula, you know, goes to the various road agencies and they're looking at their individual systems and what's best for that over the long run.

Mike Kapp:

And all of that has a huge impact on the economy and as well as people's mobility. But in addition to that there's always situations where you know a company that really could locate anywhere in the United States or maybe even in the world might be looking for a location and need some road improvements and they, you know they go to the road agency and say this is really the right place for us to put this investment and create these jobs and keep them here in Michigan. But we need some road improvements. And you know the agency may look at their list of priorities and how they've committed their funds out for three to five years and say, oh, we can fit that in and you know if they have the money into the future. And by then you know, the company may have taken those jobs and investment and gone somewhere else. So the EDF Category A program creates the opportunity for the road agencies to come to us and let us fill that need more quickly and keep those jobs and resources here in the state.

Jeff Cranson:

Yeah, I think that's well put that. The goal, just like that at MEDC and the various regional economic development agencies, is to, first and foremost, retain what you have right.

Mike Kapp:

Absolutely. But these companies are always looking for what's the best opportunity and especially when there are big changes in investments, they really can make those anywhere and the states are in a position where they have to compete for those funds. So whichever gives them the best opportunity is where they're going to go, and you know MEDC provides funding for a lot of that. You know, to help make lower their costs or do some environmental cleanup or something in a location. But we're here to be specifically to address, you know, any deficiencies in the road around those areas.

Jeff Cranson:

So this gets into a bit of economic political theory, but since that's you know what you studied, you probably have some thoughts on it. You'll hear various people over the years. Administrations come and go and lawmakers come and go, and some deride any incentives and say you know, we shouldn't do that. And the counter argument to that is that we can't unilaterally disarm when all the states around us are offering incentives. How do you talk about that when you hear people having that debate?

Mike Kapp:

Well, there are two parts of that. One is just the overall environment. The only way we can put states in the position where they don't have to compete for these very specific investments would be if somehow it was prohibited at a federal level. It's not prohibited, then you know, ohio is going to come in and try to get those jobs and investments to come there. And as long as they're going to do that, if we didn't do that for a long enough period of time, eventually it would erode our manufacturing base and our sources of employment, and most of those are the kinds of businesses that have a lot of spinoff activity. They create, you know, not only jobs, but jobs for people servicing the people who work in those jobs, and so they are really important to the economy.

Mike Kapp:

And there doesn't seem to be a we don't really have a good solution as to how do we get out of that, out of that competition. It's what we're faced with and you know, I remember Governor Engler back originally had that same philosophy and he realized that that was really just the state of the world and responded by creating the Michigan Economic Development Corporation so that Michigan could compete. The other thing I would say is that we never provide specifically for the TDF category program at MDOT. We never provide direct subsidies to any companies. The money always goes to a public road agency for public roads and we also look when're looking at the evaluating applications, make sure that there is some benefit to the public and that it's lasting and create some other economic opportunity.

Jeff Cranson:

Yeah, that's a really good point and that's a great, great anecdote too about Governor Engler's metamorphosis. I'm guessing that he came to understand that even better when he went on to head up the National Association of Manufacturers. That's really interesting. Stay with us, we'll have more on the other side of this important message.

MDOT Announcement:

Michigan law requires drivers to maintain at least 200 feet behind a snowplow when crews are plowing or treating roads and have their lights on. This does not apply when passing the snowplow. In addition, stay at least 20 feet away when the plow is stopped or at an intersection. Failure to do so can result in a fine of $100. The law is meant to ensure snowplow operators have the proper space and time to clear the roads. This makes Michigan's roads and neighborhoods safer to drive on and walk around throughout the winter. Always remember snowplows need room to groom.

Jeff Cranson:

So let's talk about because this is hard to keep track of and it's taken me a while to sort it out in my mind. Let's go through the six I guess it's six categories of TEDF grant programs. Is that right?

Mike Kapp:

Yeah, actually there are six categories. So the money was set aside and at the time, you know, the main focus was Category A or the Target Industry Program, which is what I've been describing. But there were also some other needs thought of at the time and so they created some other needs thought of at the time and so they created some other categories and they each have their names. But we usually go by the. You know it's the section of law that they were based under. So they have. The categories are A through E.

Mike Kapp:

But category B was some funding set aside to just kind of create some transfers of road jurisdictions back and forth between particular locations at the time that needed between the state and some local jurisdictions, and once those were accomplished the category went away. Those were accomplished, the category went away. But then later on the legislature created a new Category B which provided some funding for small cities and villages that were 10,000 population or below. And that was really just because it's been so long since we've dealt with road funding and all of the agencies don't have enough to maintain the system that we have. It was really hurting a lot of those small agencies and so they kind of created a grant program to help shore that up for a few years. But that program also has expired and we have one more year of it under some additional funding that the legislature provided us. So I'm not sure where that will go after this year. But that's Category B.

Mike Kapp:

And then Category C was created for the large five urban counties within the state. Five urban counties within the state Wayne, oakland, macomb and Kent and I think I got them all.

Jeff Cranson:

Well, I think you Genesee, yeah, yeah, I was going to say you got the big three, and then Genesee and Kent, right?

Mike Kapp:

Yes, and their funding is for reducing congestion, so they're in places where congestion is becoming an impediment to economic development.

Mike Kapp:

So they have some funding that is set aside on a formula basis for them and it actually has been a recent topic for the legislature because of the formula.

Mike Kapp:

Category D is for the other 78 counties in the state and it allows them to help create an all-season system, so a network of roads that are important for commercial businesses between and through the communities throughout the Upper Peninsula and Northern Lower Peninsula, upper Peninsula and Northern Lower Peninsula. And we also have Category F which, if I can jump ahead to that category, because it creates the connection inside cities in those rural counties for those routes and it is for all season projects. That program was not set up as a formula program because it's only $2.5 million and there are a little over 100 eligible agencies, so we have to do that on a grants basis because if we divided the $2.5 million up you couldn't do a project anywhere in a year. So that's Category F. And then Category E was some additional funding for the Upper Peninsula counties and the very most northern Lower Peninsula counties, with an understanding that the forest roads in those counties are important and it gave them a little additional funding by formula to shore up those roads for the forestry industry.

Jeff Cranson:

So those are the various categories.

Mike Kapp:

Sure Is that, because of the challenges unique to those kinds of roads, yeah, exactly, I mean, some of them are, you know, basically two tracks through a, you know, through a forest, and so they can help improve those roads and make sure that we can, you know, continue the viability of the forest industry in the state, which is an important industry.

Jeff Cranson:

Yeah, absolutely so. Talk a little bit about how your office and programs that specifically can help with non-motorized uses.

Mike Kapp:

Sure. So we have the Federal Transportation Alternatives Program and that provides funding through a grant process for bicycle and pedestrian facilities and historic transportation preservation, as well as they fund our Safe Routes to School program, and those are really for any eligible road agency, so MDOT can apply for those as well as local agencies. And it's, you know, really a recognition that our transportation system is about mobility, not just about moving cars but moving people and giving them access and connections to various transportation.

Jeff Cranson:

Yeah, and I think that often confuses people because people think that that's anything related to trails obviously is a DNR thing. Can you talk a little bit about that relationship and how your office and others at MDOT work with the DNR in partnership on those things?

Mike Kapp:

Yeah, so we provide trail that is primarily for transportation, so it's getting people from one place to the other, and the DNR you know is focused more on recreation and really you can use the same trail for both things. The more trails that are available that connect places and get people from place to place are also available for them to bicycle and walk and get exercise, which is really important as well to people's health. Michigan Department of Natural Resources with their funding, and agencies can apply for both fundings and we kind of work with them, our staff works with their staff, to help agencies sort of figure out how to coordinate both the timing and all the various eligibility and requirements that come along with each program.

Jeff Cranson:

It wasn't long ago that it seemed that we had to explain the economic benefit of cycling. For instance, there was a time when we would hear from skeptics that that's just a waste of money. And when you talk about the DNR's focus being recreation and what MDOT can do for these things being economic development, I know that the latest estimates are that cycling in Michigan is like a $668 million economic benefit. So I've noticed just in the last few years that's turned around and you don't hear from those skeptics anymore like you used to, especially in northern counties where they've come to realize that their businesses and others really want support for cycling and for hiking and other things. So you must feel good about that.

Mike Kapp:

Yeah, that's you know. That's absolutely right. I think a lot of the reason, you know, people didn't cycle and walk in the past was because we really didn't have the facilities for it. And you know, it can be a fright that you know the roads are actually available to everyone. They're supposed to be there for all users. But I think, you know, it's kind of a scary thing walking down a busy road or even biking down a busy road. So now that we're providing those facilities, people are taking that opportunity and they're seeing the benefits and also seeing the boost in the economy and in tourism kind of brought up by the pandemic. Was that it, you know, really created an opportunity for people to get places? So there was, you know, sort of an emergency. You know access that people could get because they could use the trails, and more people started doing it during the pandemic when they were trapped at home.

Jeff Cranson:

Yeah, that's a really good point. There was a real connection there between what you just talked about about needing to accommodate all users which is why we have a complete streets policy in Michigan and Amy Mattisoff, who worked in your area and headed that up and really, I think, took it to new heights with her passion for it, and now she's part of a different structure, an umbrella called Public Affairs, where she's a Deputy Director of Public Affairs overseeing government relations and policy. So I think that her background, with the things you're talking about, are going to be even more helpful. So, lastly, I just I wanted to talk to you about the 2024 accomplishments. Your staff put together a really nice list and our graphics folks created a very easy to read infographic that wraps it all up. So could you talk a little bit about some of those accomplishments?

Mike Kapp:

Yeah, absolutely.

Mike Kapp:

We are required to put together a annual report, which we do which goes much more in depth than all of the stuff that we do for the Transportation Economic Development Fund.

Mike Kapp:

But not everybody wants to leave Thursday that long document, and so we've put together this one page accomplishments that primarily shows each of the categories and the amount of money that has gone into and the number of projects that they each have supported. And it's significant because there are matching funds and so it's a pretty significant amount of money that goes toward these road projects and the Category A projects are. I think one of the things I like that this document shows is that, along with these specific projects that we funded in 2024, there was $4.5 billion of private investment that went along with that, that was supported by those projects and there were 4,414 jobs. So, again, these are projects that go towards just making the road system better, that are, I'm sure, needed anyways, but because we were able to provide them at the right time and in the right place, we were able to add this additional investment, and we always compute the private to public ratio, and there was $262 of private funds for every dollar of public funds that we put into those projects.

Jeff Cranson:

Yeah, I love that calculation, that's really good. Pardon me, I said I love that calculation, that's really good. Wow, thank you. Yeah, and I think you know it hits on all of our biggest sectors, right Agriculture, high tech, research, manufacturing, mining, medical research, tourism, forestry. Those are all what Michigan's economy is all about now.

Mike Kapp:

They're very much the foundation of the economy and the ones that have a lot of spinoff jobs in terms of restaurants and, you know, shopping malls and you know all those other sort of commercial things that people who work in those places work for, and they also tend to bring others of those industries here. When we have the best people and the best companies in the state, then it attracts additional companies of like, so it really can have a long-term add-on benefit.

Jeff Cranson:

Yeah, absolutely no, I think. Like I said, I think it's a really easy to read infographic. I'm going to link to it in the show notes and hopefully it really explains. I think the best thing, because you come up with that public-private investment calculation. It shows that this really is truly supports, kind of a P3 model for how to do business, and that's great. So anything else you want to say about your office and your team's work before we close?

Mike Kapp:

Well, I'll just say you know, the success we have is mainly based on the people that we have in the office. They are all very dedicated and really focusing on putting these public dollars to their highest and best use, and they do that by working closely with the communities and with the companies and trying to make sure that we have the best applications, and a competitive process isn't fair if it's not, if everybody doesn't have an opportunity to participate in it. So they work with communities and maybe not great at writing grants, but they help them get the information that they need into the application so that they can have a fair shot at it, and that's really important to both the success and the benefits of the program.

Jeff Cranson:

Yeah, and I think you know the outcomes hold their own rewards when you see something come to fruition and see those jobs created. But nobody knows what goes on along the way. There's a lot of difficult conversations and any degree of government oversight can often be tense and it's hard work but I hope it's rewarding work.

Mike Kapp:

Yeah, I think it is, and they're a great group to work with yeah, absolutely Well.

Jeff Cranson:

Thanks, Mike. I appreciate you taking time to do this and thank you for you and your staff doing what you do Anytime. Jeff, thank you. I'd like to thank you once more for tuning in to Talking Michigan Transportation. You can find show notes and more on Apple Podcasts or Buzzsprout. I also want to acknowledge the talented people who help make this a reality each week, starting with Randy Debler, who skillfully edits the audio, Jesse Ball, who proofs the content, Courtney Bates, who posts the podcast to various platforms, and Jacke Salinas, who transcribes the audio to make it accessible to all.