Financially Distressed Cities, Villages, and Townships (FDCVT) Grant Program

The Financially Distressed Cities, Villages, and Townships (FDCVT) Grant Program, administered by the Michigan Department of Treasury, is designed to provide targeted financial assistance to Michigan municipalities that are facing acute fiscal challenges. The primary objective of this program is to support local governments that meet one or more conditions of probable financial distress and to help them stabilize their financial health. The program is funded through state sales tax revenues and represents a strategic effort by the State of Michigan to address local fiscal emergencies and promote sustainable governance practices in vulnerable municipalities. This competitive grant offers up to $2 million per local unit, with a total of $2.5 million allocated for Fiscal Year 2026. Funding is intended for specific, outcome-oriented projects or services that directly contribute to improving a city, village, or township’s financial trajectory. Eligible expenditures include reducing debt obligations, mitigating unfunded accrued liabilities, repairing or replacing critical infrastructure and equipment, transitioning to shared services with other jurisdictions, and administering initiatives aimed at achieving financial sustainability. All expenditures must be permissible under state and federal law and align with the approved scope outlined in the grant agreement. Eligibility is restricted to cities, villages, or townships located in Michigan that exhibit at least one qualifying condition of probable financial distress, as determined by the Michigan Department of Treasury. These conditions may include recent financial emergencies, failure to deposit pension contributions, default on bond payments, declining general fund balances, or other significant indicators of fiscal instability. Applicants must submit a fully completed application (Form 5193) and demonstrate how their proposed project will lead toward financial recovery. Priority is given to applicants that meet multiple criteria of distress, have declared financial emergencies in the past decade, or have approved deficit elimination plans. The application window for FY 2026 opened on December 2, 2025, and will close on January 30, 2026. Applications must be received by 11:59 p.m. on the due date via email, fax, or mail. Late or incomplete applications will not be considered. Submissions should include supporting documentation such as financial statements, letters of support (for shared services), detailed budgets, cost savings projections, and timelines. If multiple projects are proposed, each must be submitted as a separate application and prioritized accordingly. The application process emphasizes clarity, sustainability, and alignment with the program’s core goal of promoting financial stability. The evaluation of applications is conducted by a review panel using a structured scoring framework. Projects are assessed based on the extent of financial distress, clarity and feasibility of the proposal, alignment with program objectives, anticipated cost savings, and sustainability. Successful applicants will receive a Notification of Intent to Award by April 30, 2026. To receive funds, grantees must submit a signed Grant Agreement and Board Resolution within 60 days. The grant period extends through September 30, 2030, allowing for comprehensive project implementation and performance tracking. Grantees are required to submit semiannual narrative and financial reports detailing progress and expenditures. A final report is due within 30 days of project completion, and a follow-up report is required one year after final closeout. Reimbursements are issued on a monthly basis upon submission of valid documentation. The Michigan Department of Treasury reserves the right to adjust award amounts or request clarifications during the review process. Funds may be reclaimed if the grantee fails to comply with grant conditions or reporting requirements. This structured, accountability-driven program provides critical resources to municipalities working to overcome long-term financial obstacles and build a sustainable fiscal future.

Prioritize clarity and connection between the project, budget, and financial stability outcomes. Detailed timelines and deliverables help ensure funding.