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Switch data center hearings begin in Lansing

Posted at 4:31 PM, Dec 01, 2015
and last updated 2015-12-01 16:31:22-05

LANSING, Mich. — Proposed tax breaks aimed at luring a multi-billion dollar data center into the now vacant former Steelcase pyramid received its first hearing in a committee in Lansing on Tuesday.

At stake, officials with Switch have said the company will only move forward if it gets tax breaks and incentives approved by lawmakers.

The Switch development promises new jobs, but many state leaders aren't yet sold on the project, saying it would hurt our tax base and even the school aid fund.

Lawmakers who sponsored the exemption bills testified first, arguing other states have exemptions on sales, use, and personal property tax for data centers already in place.

"Michigan must compete with other states," Rep. Rob VerHuelen, R-Walker said during the hearing. "We can not compete if our tax structure is not equally attractive."

However, some have raised concerns about the potential loss of revenue for the state by providing the tax breaks.

A Senate fiscal analysis of the bills conducted by the state's non-partisan fiscal agency concluded the bills "would reduce General Fund and School Aid Fund revenue as well as local unit revenue by an unknown, although potentially significant, amount."

The analysis said the amount would depend on the number of affected taxpayers and their specific characteristics, but likely would total at least $11.4 million per year, according to the Senate fiscal analysis.

Analysis from the House Fiscal Agency has estimates even larger losses citing an "immediate revenue reduction is estimated to fall between $20 million to $30 million on an annual basis."

There are currently about 40 data centers operating in Michigan that would become eligible for the exemptions.

Switch Executive Vice President Jason Mendenhall then testified that Switch will create 1,000 new jobs for West Michigan, mostly in high-tech fields.  He said the lowest paid employee would make no less than $15 an hour.

Mendenhall said the company "fell in love" with the area.

"After a visit to Grand Rapids, it became clear that it would be very interesting for me to relocate my family to Grand Rapids," he testified. "Now if any of you have ideas on how to sell a 10th grade teenage girl on that Grand Rapids is a big win for her, I take those ideas hands down."

The hearing will continue Wednesday. A second hearing in the State Senate begins Wednesday too.