Switch deal for ‘pyramid’ not done yet

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

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.

Switch's plans for the pyramid.

Switch's plans for the pyramid.

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.

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

2 comments

  • Matthew, Business Analyst

    Switch will only offer about 400 high-tech jobs at the data center, mostly entry level positions, while others working there would be employed by companies that use the center. Most of those are expected to be relocating here from other locations according to Birgit Klohs, but she was very quick to add that when they do hire locally it will likely be comparable to Medical Mile, where out of towners come in and fill the jobs rather than actually hiring the people who live here. As for Switch, when they do hire people they tend to focus very strongly on hiring military veterans, which is pretty cool.

    So apart from the veterans who are looking for entry level tech jobs (customer service, data entry, tech support, etc.), our local workforce will not gain from this deal one single bit. And since the state is considering millions of dollars in tax breaks, I don’t see how this area, or the state, benefits financially from this deal. All it does is get rid of a local architectural white elephant, give the guv another meaningless stat to pad his resume with, and keep the GR in the national business news for another month or so, until these idiot marketers can come up with the next ArtPrize gimmick.

    • Susan Vanderwahl

      If that is the case, then I don’t think the state should even consider the tax breaks. If we are giving up millions of dollars in steady annual tax revenue, it should be for more than just a couple hundred entry level jobs. Some vague hope that it will draw more business in the future is not good enough. That is the promise that we were sold here in GR with the Silver Line, and it simply isn’t panning out that way. That is the promise that we were also given with the Medical Mile, and it isn’t panning out that way downtown either. All we are getting there is local businessmen opening bars and breweries and a crapload of residential developments that nobody can afford to live in.

      If Switch can agree to hire 1000 Michigan residents in permanent full time positions at $15 per hour or better, then fine. Otherwise it is going to end up not being worth the money we lose by giving the tax breaks. Hopefully our state legislators won’t fall for this “I’ll gladly pay you Tuesday for a hamburger today” nonsense.

Notice: you are using an outdated browser. Microsoft does not recommend using IE as your default browser. Some features on this website, like video and images, might not work properly. For the best experience, please upgrade your browser.