LANSING – Governor Rick Snyder last week signed a pair of bills providing sales and use tax exemptions for certain data centers saying they “modernize the structure of Michigan’s tax code” by give data centers similar treatment as manufacturing facilities, which better aligns the state with tax laws elsewhere.
“Michigan has a long tradition of innovation and talent, and is quickly becoming known as an ideal place for high tech jobs and growth of the emerging technology industry,” Snyder said in a statement. “It’s imperative that our tax policies continually develop and evolve to meet the needs of the jobs of tomorrow. The world constantly changes in how we make things, and we need to adapt and ensure we remain a state that continually draws on innovative commerce and new opportunities for Michiganders.”
The bills, SB 616 (PA 251) and SB 617 (PA 252), will take effect immediately, and were crafted to draw the attention of multi-billion-dollar company Switch – which houses data for such companies as Shutterfly, Dreamworks, HP, JP Morgan Chase and more – who originally requested the legislation as part of a deal to continue looking at expanding in Michigan.
Legislation had also been drafted to exempt the company from certain personal property taxes but didn’t make the final cut out of the Legislature last week.
The bills Snyder signed into law on Wednesday were revised in the Legislature to include some job creation requirements despite that Switch said that was one of the reasons some other agreements fell by the wayside in other states. Even so, the company already said it expected to create more than 1,000 jobs at its new facility, a building previously owned by Steelcase, known as the “pyramid.”
The deal seemed pretty set and ready from the get-go, as Switch provided layouts of its eastern campus with a statement in mid-November, when it publicly confirmed its interest in Michigan, about why it was drawn to Michigan (See Gongwer Michigan Report, November 16, 2015).
Even so, leading business organizations, including the Michigan Chamber of Commerce, attacked the effort to provide tax breaks to the company.
One day after the legislation passed, Switch formally announced it would begin construction on renovating and updating the facility, anticipated to be about a $5 billion investment.
There are approximately 40 data centers now in Michigan that would become eligible for the exemptions in the bills, the governor’s office noted, and at least 16 other states provide some degree of tax exemptions on data center equipment.
Aligning Michigan’s tax policies with those of other states puts Michigan in the best position to attract more and better jobs, as well as additional investment, the governor’s statement indicated.
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