GAINES TOWNSHIP, Mich. — It's a project with the potential to have one of the largest economic impacts ever in our state's history, but it's not a done deal yet.
On Monday, Nevada-based cloud storage company Switch confirmed it has plans to purchase the former Steelcase Pyramid office building to be used for a 2 million square foot, $5 billion SUPERNAP data center.
The deal, that has the potential to bring 1,000 new jobs and billions of dollars in long-term investment to the state, is contingent on the passage of state legislation.
"Until this legislation is passed there is no deal," Birgit Klohs, president and CEO of Right Place Michigan told FOX 17 on Monday.
"Nothing has been signed, no building has been sold, no one has been hired."
Klohs cautioned that expectations need to managed until state lawmakers make a decision.
Before the end of the year, the state legislature will need to approve three bills that would create new tax exemptions for any data storage center doing figure business in Michigan. Only then will Switch's strong interest in the Gaines Township site become official.
It's not immediately clear yet how much money the company could save through such tax relief.
Three lawmakers in each chamber have proposed bills making amendments to the state's sales and use tax policy, including Rep. Ken Yonker, R-Caledonia, whose district would house the future Switch site.
“We’ve wanted to bring Michigan into a new era of economic development," Yonker said. "Manufacturing has always been our base, but the future is in information."
In wake of criticisms lobbed at lawmakers supporting the large corporate tax credits, Yonker argues the state has no other choice if it wants to cement itself as a formidable player in the information industry.
“It’s been a common practice with large manufacturing: GM, Ford and Chrysler," he said. "It’s not always popular with people but there’s a national rule that’s played out among the states and it’s competition.”
Yonker said Michigan does have the option to choose not to play a part, but the consequences would outweigh that decision. The other state in the running to land Switch, New York, already has the need tax breaks in place.
Similar tax breaks were offered to Switch in Nevada where the company is based.
Switch official said the $5 billion investment, which would be phased in over the period of a decade, would include the costs for both the data centers and the computer servers that will be placed inside the buildings.
Company officials and lawmakers attest the ripple effect would be tremendous. SUPERNAP Michigan would be the largest data center campus in the eastern U.S. serving Switch’s current and new clients.
Switch says they have 1,000 clients, including eBay, Intel, Shutterfly, Amazon, HP, JP Morgan Chase, Google, Amazon, and Fox Broadcasting.
“If we have a large company that brings in a lot of other industries, you can look at, well we’re giving them this break but at the end result how much more revenue are they going to create for Michigan," Yonker said.
Any specific financial impacts of the proposed tax breaks won't be known until both the House and Senate Fiscal Agencies can analyze the respective bills. That can happen when the bills are introduced in committee, which is expected to happen as soon as lawmakers return from Thanksgiving break in December, Yonker said.
The seven-story pyramid, which is located near 60th Street and East Paris Avenue in Gaines Township opened as the Steelcase Research and Development facility in 1989. The company moved out three years ago amid downsizing.
“We are excited to be working with Governor Snyder, the Michigan Legislature, the Michigan Economic Development Corporation and The Right Place, Inc. to bring Switch and its 1,000+ clients that make up the largest data center ecosystem in the world to Michigan,” said Executive Vice President of Strategy for Switch, Adam Kramer in a press release.