Data center tax break bill dead — for this year

Switch data center | Nick Manes

Legislation to expand tax breaks for the Switch data center in Kent County passed out of the state House on Wednesday on a razor-thin margin, but is now dead at least for this year.  

Senate Bill 455 took more than 30 minutes to get the needed votes before ultimately passing the lower chamber on a 55-53 vote that united a number of conservative Republicans and progressive Democrats against it, arguing that further tax breaks for a large company like Switch is bad public policy. 

“When progressives and conservatives come together on an issue, you know we’re on the right side of the issue,” said state Rep. Darrin Camilleri (D-Brownstown Twp.). 

Shortly after being passed in the House, the Senate adjourned for the year without taking up the legislation. The House also adjourned for the remainder of the year on Wednesday. 

One data center tax break bill clears committee, others stall

The bill passed the Senate 27-11 back in September. Senate Republicans spokeswoman Amber McCann said the Switch legislation could come up in the body in the new year. 

The legislation, sponsored by state Sen. Jim Stamas (R-Midland), would exempt Switch and its clients from property taxes at the site, home to a pyramid-shaped building originally built by office furniture company Steelcase. Switch went on to buy the Pyramid once the company made the building its eastern U.S. base of operations. 

A November report from the nonpartisan House Fiscal Agency notes that the tax break, if granted, would reduce school debt and millages for local school districts by about $242,000 in the first year.

Switch, a Nevada-based data center company, set up shop in Gaines Township in southern Kent County in late 2015, shortly after then-Gov. Rick Snyder signed legislation exempting the equipment in the facility from a variety of taxes.  

A late 2018 legislative report from the Michigan Economic Development Corp. (MEDC) shows the company had 58 jobs at the data center, considerably fewer than the company had said it would be creating. 

 

Lawmakers push tax breaks for data centers, critics worry about school funds

While initially opposed to the legislation, the Caledonia Community Schools eventually took a neutral position on the bill after some changes were made. 

Supporters of the legislation argue the added property tax breaks are needed as a way to codify the original deal Switch made with the state and are just keeping a promise the state made to the company.

State Rep. Steve Marino (R-Harrison Twp.) spoke in support of the bill, noting it would “alleviate uncertainty” on the part of the company, which had invested more than $122 million into the facility as of last year, according to the MEDC report.

Thomas Albert

But the legislation lacked the backing of two local conservative lawmakers.

“This bill would in fact harm my local school district,” said state Rep. Thomas Albert (R-Belding), who noted that the Caledonia Community Schools is within his district.

Similarly, Rep. Steve Johnson (R-Wayland), who represents Gaines Township where the data center is located, slammed the bill. 

“[The bill] is specific to one company in my district. I’m glad we have companies in my district,” Johnson said, noting that he has other data centers located within his state House district that would not be receiving the same tax break. 

That, he said in a floor speech, led to his “no” vote and he urged others to do the same. 

“So I implore you today … to stand up for a free market where everyone plays on an equal field,” Johnson said.