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LANSING, Mich. (AP) — A tech company's expansion into western Michigan will be ensured through tax breaks that Gov. Rick Snyder signed into law on Wednesday, exempting it and in-state data centers from sales and use taxes for 20 years as long as the industry adds 1,000 jobs.
"It's imperative that our tax policies continually develop and evolve to meet the needs of the jobs of tomorrow," the Republican said in a written statement.
Lawmakers rushed to pass the legislation this month after learning Nevada-based Switch wanted to locate its first eastern U.S. facility near Grand Rapids, contingent on the approval of tax exemptions.
Data centers and clients that rent their services will be exempt from paying the 6 percent sales and use taxes on computers, servers, routers, wiring and other items. Switch has mega-data centers in Las Vegas and Reno; its 1,000 clients include eBay and Amazon.
At least 24 states now have specially tailored incentives for data centers. Snyder said at least 16 of those provide some degree of tax exemptions on data center equipment.
Switch says construction planning and work will begin soon in Gaines Township. The $5 billion data center will be operational by the end of 2016 and be based in a pyramid-shaped building that once housed office furniture maker Steelcase's research facility.
Switch estimates the campus will employ at least 1,000 workers and spend $5 billion over 10 years.
The nonpartisan House Fiscal Agency projects a $13 million annual loss in revenue from 40 data centers currently operating in Michigan, not including any co-located businesses that also will qualify for the preferential tax treatment. For each $1 billion spent on tangible personal property at the Switch facility, the state will forego $45 million in taxes.
Also Wednesday, Snyder signed bills that let the state collect child support, restitution for crime victims and tax levies before paying a legal judgment or claim; bring Michigan in line with federal standards for the use of aviation fuel taxes; keep intact restrictions on baiting deer and elk; and clarify the relationship between employees of a franchisee and a franchisor.
The last piece was GOP-backed legislation enacted in response to an August ruling by the National Labor Relations Board that could make it easier for unions to bargain for better pay and working conditions on behalf of workers at McDonald's, Burger King and other fast-food chains.
Public Acts 251-52: http://1.usa.gov/1ZpSkov
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