When Michigan approved subsidies for a data center in Grand Rapids in 2015, the data storage company Switch promised it would create 1,000 jobs.

A 2022 state report said Switch had created 26 jobs or 2.6% of its promised goal.

Despite that broken promise, last week, the Legislature approved House Bill 4906 to extend to exempt large data centers from sales and use taxes until 2050. Some exemptions will last until 2066.

The bill would reduce state and local revenue between $52.5 million through fiscal year 2065-66, according to the Senate Fiscal Agency. The loss to the general fund could exceed $90 million.

In 2015, the Detroit Free Press quoted Birgit Klohs, the then-president and CEO of The Right Place, Inc., a group that advocates for subsidies, saying: “I cannot overstate the impact Switch will have on both the greater Grand Rapids area as well as the entire state of Michigan.”

Switch did not respond to a request for comment.

John Mozena, president of the Center for Economic Accountability, said that data centers are some of the “dumbest things a state can subsidize.”

Data centers require great amounts of water and electricity but provide few jobs, Mozena told Michigan Capitol Confidential. They also are unlikely to lead to new jobs in their vicinity because modern cloud computing makes the actual location of a server far less important.

“That’s why the promises of follow-on high-tech development around data centers almost never deliver,” Mozena said. “Developers say that companies will come to town to be near the data center, but only a tiny fraction of very specific industries, such as high-speed Wall Street trading firms, need to be physically close to the data centers they’re using. Otherwise, data centers and IT companies are often looking for very different things in the site selection process. Data centers care about cheap land, power and water, in places with a low risk of natural disasters. IT firms, however, are almost entirely focused on the availability of a skilled local IT workforce.”

State Rep. Joey Andrews, D-St. Joseph, welcomed the bill’s passage.

“The passage of this bill will help bolster economic growth and development here in Michigan,” the bill sponsor said in a news release. “As technology continues to advance, it is imperative that legislation allows the state to remain competitive economically. Southwest Michigan’s abundant fresh water resources and reliable nuclear energy infrastructure make it an ideal destination for data centers, particularly with the growing demand for such facilities. This positions our region as increasingly attractive for investment, fostering economic growth and job creation.”

The Senate Fiscal Agency said large data centers can consume anywhere from 1 million to 5 million gallons of water per day.

East Lansing residents won’t face the possibility of $500-per-day fines for having long-term guests in their homes after voters approved a ballot measure this month.

Proposal 1, approved Nov. 5, will prohibit the city from “interfer[ing] with rights of owners to live with persons of their choice, so long as they are not rent-paying tenants.” It will change a situation under which residents who allowed nonpaying guests in their homes for more than 30 days, were, with some exceptions, required to seek a city permit or risk being fined.

Voters supported the proposal by a vote of 7,972 in favor to 6,666 opposed.

“This vote and campaign showed that East Lansing residents want to have guests live in their home without potentially facing large fines,” the East Lansing Charter Committee, which pushed for the change, said on its website.

“Those for and against Proposal 1 agreed on the key points – they want to have live-in child care, to age in place without fines, to have loved ones live so they can be cared for,” the committee continued. “City council and officials were moving in that direction. YOU just made it official.“

The committee included on its website testimony from a retired Ingham County circuit court judge who described a case brought to him that involved thousands of dollars in fines. Outrageous fines were not unusual, wrote retired judge James R. Giddings. A retired prosecutor wrote that one factor in her decision to leave East Lansing was the possibility of being fined by the city if she ever needed in-home caregivers.

Michigan Capitol Confidential submitted a Freedom of Information Act request to the city, asking for records of all permits issued to residents under now-repealed requirements. It also sought information about any citations and fines issued to violators. City officials responded that they do not have such records.

“The reason that this request was denied is as follows,” wrote Carrie Sampson, the city’s communications director. “The City is not in possession of documents that respond to this (FOIA) request. Homeowners can have guests and the City does not issue permits for guests. We do not issue citations to homeowners for having guests, and no permits would have been issued, since such a thing does not exist,” she told CapCon in an email.

But Mark Grebnar, a longtime East Lansing resident, said a colleague faced fines from the city. In the last 10 years, he has represented about 30 clients who had problems because of the unusual regulations on residential guests, Grebnar told a public forum.

Members of the charter committee asked the city to change its code, Grebnar said, but council members replied that there was not a problem.

The charter committee gathered enough signatures to add the proposal to the ballot, at which point, Grebnar said, officials decided to begin reforming the rule.

Various press accounts, as well as the charter amendment committee, said that some property owners have been fined thousands of dollars.

CapCon has asked the city the amount of revenue it has collected through these fines since 2020. It is awaiting a response.