Economic Development, Government, and Technology

Legislature approves tax breaks for data center campus

December 16, 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

Both the Michigan House and Senate had a late Tuesday night as they approved tax-exemption bills that were deemed necessary to bring a major data center campus to the Grand Rapids area.

The two bills, exempting data centers from use and sales tax, are on their way to Gov. Rick Snyder to be signed. The House approved the amended bills, 61-45, and then the Senate approved those versions, 26-12, after initially passing them last week.

Snyder is expected to sign the bills today.

“For years, our state has been working hard to attract high-tech innovators and skilled workers to Michigan,” Rep. Winnie Brinks, D-Grand Rapids, said. “With the passage of this package of bills, Michigan is taking a leap forward into a future where Michigan is known as a technology leader. I look forward to Switch becoming a part of West Michigan’s business landscape and to the jobs and opportunities they will provide.”

The exemptions make it all the more likely the Nevada-based Switch will locate in the former Steelcase Pyramid in Caledonia, at 6100 E. Paris Ave. SE, where it has said it will invest more than $5 billion and create 1,000 jobs during the next 10 years.

The move was requested because Switch liked Michigan, but wanted the state on a level playing field with more than 20 other states that already had tax exemptions in place.

Prior to the Senate approving the House’s modifications, Switch sent out a statement indicating they will begin construction soon, thanking the state and saying the first clients will be operational by 2016.

“We are grateful to Republican and Democratic leadership in the Michigan Legislature, Gov. Rick Snyder and Lt. Gov. Brian Calley, Birgit Klohs and The Right Place in Grand Rapids, the Grand Rapids Area Chamber, the Detroit Regional Chamber and others who worked together to make Michigan’s tax policies competitive and attractive to data centers and our clients around the nation and world,” Switch VP of Strategy Adam Kramer said.

“We look forward to working in partnership with Michigan to attract the largest companies in the world to the Switch ecosystem here in the Great Lakes State.”

Switch indicated a project team will be on the ground immediately, with a site plan finalized and contractors selected for the 2-million-square-foot data center campus. The initial construction budget will be $400 million, growing to approximately $2 billion. The $5-billion total investment includes data center infrastructure.

The House put job requirements in the bills, which will end the exemptions should Switch not create 400 jobs by 2022 and 1,000 jobs by 2026.

According to Switch, the jobs that will be created at the SuperNAP will start at $15 an hour plus benefits, with most jobs paying between $60,000 and $200,000.

The bills also included modifications ensuring the School Aid Fund isn’t affected and K-12 schools won’t lose funding, because of lost tax revenue from data centers.

“These bills strike a careful balance, opening the door to economic growth in West Michigan, while ensuring that our kids and their schools won’t pay the price,” Rep. Brinks said. “These bills will bring opportunities for our kids to work in a rapidly growing, high-tech industry right here in West Michigan.”

Switch’s more than 1,000 clients, such as eBay, Dreamworks, HP, Intuit, Sony, Amazon and Google, will also begin to look at West Michigan as a place to house operations, as they begin to host data equipment in the SuperNAP campus.

“Today, Michigan not only welcomes Switch, it welcomes an entire industry to the state,” The Right Place President and CEO Birgit Klohs said. “I often remind our partners in the region that economic development is a team sport. This project epitomizes this. Without the assistance and support of countless elected officials, business and community leaders, Switch would not be coming to West Michigan.” 

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