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Tuesday, 26 July 2016 12:21

With Renaissance Zone status, Switch data center to save $1.1 million in property taxes

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Switch Ltd.’s site in southern Kent County has been designated a Renaissance Zone after receiving approval today from directors of the Michigan Strategic Fund.

According to documents with the Michigan Economic Development Corp., the Las Vegas-based firm’s proposed cloud-based data center at the former Steelcase Inc. Pyramid facility in Gaines Charter Township will be designated a Renaissance Zone for 15 years, making the company exempt from paying most state and local taxes, including real and personal property taxes. The state will reimburse school districts to make up for the lost revenue.

The designation is expected to save Switch $1.1 million annually on its taxes.

Additionally, Switch will enter into a payment in lieu of taxes (PILOT) agreement wherein it will reimburse both Gaines Charter Township and the county to make up for the loss of real property taxes.

Since announcing the plans to locate at the Gaines Township site last fall, Switch executives have promised to bring 1,000 jobs and $5 billion in new investment, largely in the form of servers and other equipment, which will mostly be exempt from any property taxes.

Based on figures included in its Renaissance Zone application, the company will achieve those job creation and investment targets in subsequent development phases.

According to the document, Switch estimates about $151 million in total investment and the creation of 103 jobs in the five-year first phase of the development.

The company anticipates its clients who locate servers at the facility will create 100 jobs and make a “significant” investment in equipment, but those figures were not included in the application because they were not attributable to Switch.

The company maintains that “initial benchmarks remain unchanged and they will be achieved in subsequent phases of the development,” according to Switch spokesperson Roger Martin, who spoke with MiBiz for a previous report.

Representatives for Switch declined to give any comment for this report.

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