Pyramid deal depends on tax breaks by end of year

The old Steelcase pyramid in Gaines Township. (Nov. 16, 2015.)


LANSING, Mich. (WOOD) — A make-or-break deadline is looming to approve tax exemptions that would cement a Nevada-based technology company’s plans to move into the former Steelcase pyramid in Kent County.

The $5 billion project could create about 1,000 new jobs, about half generated by Switch and its regional SUPERNAP data center and the other half by the cloud storage company’s customers, which include Google, Amazon, eBay and more.

The move hinges on the state legislature passing tax exemptions, and it doesn’t seem like a rubber stamp is hovering anywhere near the bills in question.

The legislature is set to go home in mid-December. Switch says it wants the bills passed before that happens.

“They want to get done, but they need to make a decision and they need to make it fast,” Switch’s Lansing-based spokesman Roger Martin said Tuesday.

A more likely scenario would have lawmakers picking up the debate over the exemptions when they come back after the New Year. That’s not good enough, Switch says.

So would Switch really walk away if the bills aren’t OK’d before the end of the year?

“That is the position. Yes,” Martin said.

An executive with Switch on Tuesday told the House Committee on Tax Policy that Michigan wasn’t even on the list of choices when the company first began looking for a location for its East Coast hub. At least two other states were being considered.

But then Switch heard about the vacant pyramid, located off East Paris Avenue and 60th Street in Gaines Township, and paid a visit to check it out.

“When we went there, we fell in love with Grand Rapids and we fell in love with Michigan,” Switch Executive Vice President Jason Mendenhall said.

But it appears that love is only as strong as the tax breaks.

“The price is to forgo sales, use and personal property tax revenue that we are currently not collecting and will never collect if the company chooses to go to another state,” state Rep. Rob VerHeulen, R-Walker, explained.

He is co-sponsoring the legislation required for the tax breaks.

But fellow committee members had a number of questions. Some echoed concerns over the appearance of offering so-called corporate welfare. Others are concerned about picking winners and losers by way of tax policy, something one member said the state has been trying to move away from.

“We’re starting again down a path of targeting industries, targeting companies rather than just trying to make our state as attractive as possible,” Rep. Jim Townsend, D-Royal Oak, said.

“The benefit here in my mind greatly outweighed some of the concerns I had in those areas,” said Rep. Andy Schor, D-Lansing, another sponsor of the legislation.

But what about that deadline?

The legislature could stay in session longer than its scheduled recess in mid-December if progress is being made, but that seems unlikely. And at that point, one member said, the deal with Switch would be just as unlikely.

“If we don’t have it done by then, I would have no reason to believe that they won’t walk away,” Rep. Ken Yonker, R-Caledonia, said.

 

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