Legislation to attract large-scale data centers will allow Michigan to cultivate the economy of the future, resulting in a positive impact on jobs, local businesses, education, and more 

LANSING, Mich. (May 9, 2024) — Today, the Michigan Senate acted in a bipartisan fashion to pass Sen. Kevin Hertel’s (D-St. Clair Shores) Senate Bill 237, which would incentivize tech companies to locate in Michigan — helping create good-paying jobs and boost revenue streams in communities across the state.

“Data centers power everything from email and social media to search engines and online banking, and with increased investments in artificial intelligence, there is a growing demand for more data generation, processing, and storage,” said Sen. Hertel. “Not only do data centers serve as the backbone of our increasingly digital world, but they are economic engines that help fuel long-term community growth. These multi-billion dollar investments translate into greater state and local tax revenue that goes to funding our schools and our roads.”

Currently, more than 30 states offer tax incentives specifically targeted at attracting data centers. Without such provisions, Michigan will continue to lose these investments to states such as Ohio, Wisconsin, and Indiana. Most recently, Fort Wayne, IN — a city just an hour south of the Michigan border — secured a $2 billion Google data center that is projected to create up to 200 new, competitive jobs.

To help Michigan better attract these economic opportunities, SB 237 provides use and sales tax exemptions for equipment and machinery located inside enterprise data centers through 2050 — or 2065 if the data center is located on a brownfield site or a location that was used primarily as a power plant for electricity. To qualify for the exemption, the data center would have to make at least $250 million in capital investments, as well as create and maintain a minimum of 30 in-state jobs paying at least 150% of the prosperity region’s median wage.

“With this legislation, we’re opening Michigan’s doors to the knowledge-based economy,” Sen. Hertel said. “Fitting this final piece of the puzzle into place expands on our state’s many lucrative qualities — access to infrastructure, renewable energy, a skilled workforce — and unlocks our ability to secure investments that will have a positive impact on communities from Metro Detroit and Kalamazoo to Grandville and Midland.”

Studies from other states have shown the average data center typically leads to approximately $200 million annually in local economic activity once operations begin, supporting jobs such as data technicians, utility tradespersons, equipment repair, building maintenance, and security. This increase in local revenue can be a game-changer for communities. For example, Benton Harbor — a place where a tech company is interested in constructing a data center — could see their school district’s budget double if they successfully secure the investment.

Building on the monumental Clean Energy Future package the State Legislature championed last fall, this bill also includes a number of clean energy provisions that would hold Michigan-based data centers to some of the highest environmental standards in the nation, allowing us to grow the economy in a responsible and sustainable manner.

“Here in Michigan, we are cultivating the economy of the future — an economy where business and environmental interests are not diametrically opposed but work together to create communities with access to fresh air, clean water and good-paying jobs,” said Sen. Hertel. “Coupled with our Clean Energy Future package, this legislation sets Michigan apart as a national leader, proving that we can achieve ambitious clean energy goals while also building a robust economy.”

During the committee process, this legislation garnered support from a broad coalition of organizations — from business leaders to labor unions — including the Detroit Regional Chamber of Commerce, Grands Rapids Chamber of Commerce, General Motors, Consumers Energy, DTE Energy, Michigan Regional Council of Carpenters and Millwrights, Michigan Laborers District Council, Construction Association of Michigan, Economic Development Leaders for Michigan, Net Choice and more.

Senate Bill 237 now heads to the Michigan House for their consideration.