Economic Development, Government, and Nonprofits

Grand Rapids chamber supports tax breaks for data center campus

December 8, 2015
| By Pat Evans |
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Switch Steelcase Pyramid data center campus rendering
A partial rendering of the $5 billion, 2-million-square-foot data center campus planned by Switch for the former Steelcase Pyramid property. Courtesy Switch

The Grand Rapids Area Chamber of Commerce is urging the state Legislature to further move the region and state “into the digital era” by advancing a trio of tax-break bills.

“On the map”

The Grand Rapids chamber said last week that it supports the data center tax-exemption bills that have passed through the Michigan Senate and are awaiting action by the House.

The bills, which offer sales, use and personal property tax exemptions for data centers, “support our state’s growing high-tech industry and kick-start construction on the largest data center campus in the eastern United States,” the chamber said of the SuperNAP data center campus in Caledonia planned by Nevada-based Switch, should the bills pass.

The bills are also meant to put Michigan on a level playing field with more than 18 states that offer the exemptions.

“When an opportunity of this magnitude comes along, we must seriously consider it,” said Rick Baker, the chamber's president and CEO. “Other states have already taken the initiative in hopes of attracting this growing industry and companies like Switch. The Grand Rapids chamber encourages the Legislature to cultivate a tax climate that supports the industries of the future.”

The support of the legislation goes along with the results of the chamber’s annual survey, which found that attracting and retaining talent is a top issue, as members have found it difficult to fill IT and high-tech positions.

"The choice before policymakers is whether or not we want to create a competitive tax structure to support a growing industry,” said Allie Bush, the chamber's director of government affairs. “Supporting existing companies and adding Switch to our portfolio will be a game changer and enhance our high-tech talent pipeline.”

Bush also said the chamber has spoken to members from a variety of industries who are excited about the prospect of putting Michigan “on the map in the tech world.”

Opposition

Not everyone in Michigan is excited about the prospect of the data center tax breaks.

Justin Amash, R-Mich., a West Michigan representative in the U.S. House of Representatives, who has no vote in the matter, took to Twitter last month in opposition of the bills, calling them “corporate welfare.”

“Corporate welfare — whether special tax breaks or subsidies — inherently harms the economy & destroys jobs in MI,” Amash says in a series of tweets. “Corporate welfare simply shifts resources from more efficient uses to less efficient uses. And, in any case, it’s immoral.”

The tweets were preceded by another tweet by Amash with a link to a “Key Vote Alert” post on the Americans for Prosperity website, urging constituents to tell state legislators to “vote NO on cronyism and corporate welfare.”

“In conclusion, I urge you to oppose these bills and instead choose to embrace free-market principles as the best mechanism for growing our economy stronger,” says Pete Lund, Michigan director, Americans for Prosperity, in the post.

The Michigan Chamber of Commerce and many Democrats oppose the bills, largely because of the risk that the company’s promises don’t come through and the lost tax revenue from data centers already operating in the state.

Support

Still, many in the state are in favor of the project, which could attract locations of Switch’s more than 1,000 clients, such as Amazon, Google and eBay.

Switch would also pay property, income and payroll taxes.

Last week, the state Senate approved the bills 21-15, and the bills have passed through a House committee.

“I cannot overstate the impact Switch will have on both the greater Grand Rapids area, as well as the entire state of Michigan,” said Birgit Klohs, CEO, The Right Place, a regional economic development nonprofit in Grand Rapids, last month.

“The unparalleled technology and data infrastructure investments planned by Switch will unleash countless new possibilities for growth in our state. The future of business will be driven by data, and Michigan will be well positioned as a hub of data innovation.”

$5B campus

The Switch SuperNAP data center campus would be based at the former Steelcase Pyramid building in Caledonia, at 6100 E. Paris Ave. SE.

Switch said it would invest $5 billion in the site during the next 10 years, including 2 million square feet of data center construction and “transformational infrastructure.”

Switch projects it and its clients would employ at least 1,000 people at the campus.

The campus would provide a 2-millisecond connection to Chicago and 14-millisecond connection to New York.

Switch has its main SuperNAP center in Las Vegas and another near Reno, Nev. 

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