LANSING – As the Michigan House may take up sales, use and personal property tax exemptions for data centers – inspired by Switch, a Nevada-based data center looking to move to the state if the tax changes are made – existing data centers in the state are advocating for changes that would “level the playing field.”
The Michigan Data Center Alliance, made up of nine data centers in the state, held a conference call Monday calling for the “Michigan fairness amendment,” which would continue the current property tax structure for existing data centers and preserve that tax revenue for schools, police, fire and other community services.
The amendment would also “level the playing field” for new data centers by exempting them from sales, use and personal property taxes.
Currently, House and Senate bills providing exemptions for data centers from sales, use and property taxes (SB 616, SB 617, SB 618, HB 5074, HB 5075 and HB 5076) sit in the House. The Senate passed its bills last week.
The property tax exemptions, however, are subject to a 10-year sunset (under the Senate versions) and a 20-year sunset (under the House versions) and approval from local communities where the data centers would be located.
“Giving a tax break to any one company could disadvantage other businesses already in the state,” said Yan Ness, the CEO of Online Tech, a data center in Ann Arbor.
The Senate version of the bills includes a 15-year sunset on the sales and use tax exemptions. The House sunset is 20 years.
Currently it is unclear when or if the House will act on the bills. House Speaker Kevin Cotter (R-Mount Pleasant) said Friday he cannot guarantee the chamber will vote.
Monday, Gideon D’Assandro, spokesperson for Cotter, said there is no firm plan on when or if a vote would take place this week. He said the House Republicans will caucus on Tuesday and go from there.
The bills have seen a flurry of criticism and opposition from conservative powerhouses in the state, including the Michigan Chamber of Commerce, the National Federation of Independent Business-Michigan ad U.S. Rep. Justin Amash (R-Cascade Township). Support has come from the Grand Rapids and Detroit Regional chambers of commerce as well as the Right Place, a Grand Rapids economic development agency.
But Ness said if the tax code changes are going to be made, they should create “winners and winners” not “winners and losers.”
On whether to not the state should take up these tax changes, Ness said that “is beyond my pay grade” but if the exemptions are going to be passed, they should apply to the entire industry, not just one company.
Carrie Wheeler, chief operating officer of Liquid Web, a Lansing-based data center, said the industry continues to grow in the state and currently data centers employ 1,000 people.
“But make no mistake, we are ready to compete,” Wheeler said. “Because competition means more jobs.”
Larry Andrus, the CEO of Trivalent, a data center in the Grand Rapids area, said without the fairness amendment, certain data centers will be operating a disadvantage, which will hurt growth and the industry.
Ness said existing data centers understand communities don’t want to lose revenue, so the centers are willing to pay what they currently do in property taxes, but going forward want a level playing field.
He also said the reception to the amendment has been positive.
This story was published by Gongwer News Service. To subscribe, click on www.gongwer.com
