Biz leaders push data centers, warning Michigan may miss ‘golden ticket’

As business leaders pushed for data centers on Mackinac Island, many policymakers are looking to pump the breaks
In policy conference panels, industry officials expressed anxiety that Michigan could fall behind in attracting the massive facilities
Polling shows the public is largely uncomfortable with the facility and wants more regulation

MACKINAC ISLAND — Amid growing protests over data centers, business leaders who gathered here this week for the Mackinac Policy Conference argued Michigan must quickly embrace the massive projects or risk losing out on a wave of investment.

Hyperscale data centers are “producing thousands of construction jobs, hundreds of millions of dollars worth of taxes, and we’ve got 30 to 40 people in each township that decided that they don’t want them there, and they’re carrying the day,” said John Rakolta, chairman and CEO of Walbridge construction company.

Rakolta, whose firm is building a $7 billion data center in Saline Township, argued Michigan should be more like Ohio, where the government boasts it is already home to more than 200 data centers.

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The Detroit Regional Chamber, which organized the annual Mackinac Island conference, has pushed hard to promote data center server farms amid an explosion in investment in critical AI infrastructure.

The potential to miss out on a deluge of investment has been a persistent source of anxiety among business leaders, who warn the state is moving too slowly to capitalize on a boom that will likely slow down.

“We’ve got 12 to 18 months” to make Michigan maximally appealing to data center developers, said Garrick Rochow, the president and CEO of Consumers Energy, Michigan’s largest energy utility.

“We’re working with two large hyperscalers right now. They’re going through the zoning process. They’re not going to stay here forever,” Rochow added, arguing taxes generated by data centers would benefit the state and local communities.

“We talk about the roads, how we’re going to pay for it, and yet we’re saying, ‘Not in my backyard, Don’t come here.’ It is absolutely ridiculous.”

Political pushback

Gov. Gretchen Whitmer and Michigan lawmakers in late 2024 created new tax incentives to lure data centers whose operators invest at least $250 million and create 30 jobs paying 150% of the local median wage.

While business leaders urge more action, the data center push has become a political liability for officials and candidates trying to appeal to voters who oppose potential projects in their communities.

Hyperscale data centers have so far been proposed in 11 Michigan counties, but bipartisan backlash has emerged amid concerns about the facilities’ hefty land, water and energy demand and the idea of giving tax breaks to some of the world’s richest companies.

Some Michigan communities have adopted data center moratoriums.

State Sen. Mallory McMorrow, who has taken flack for voting for the data incentives as she runs for US Senate, told Bridge she wants Michigan to “go further” and implement more guardrails for the projects.

“Michigan should reject any data center that harms our air and water, that doesn’t use full transparency,” she said.

mackinac debate — Data centers were a hot topic in a Democratic US Senate debate at the Mackinac Policy Conference. (Simon Schuster/Bridge Michigan)

Republican gubernatorial candidate Perry Johnson, who did not respond to earlier Bridge questions about data centers and the environment, said Thursday that “the problem is the subsidies.”

In a Google-sponsored session at the Mackinac conference, backers pitched data centers as “community assets,” touting potential new jobs and property tax revenues as clear benefits. Liz Schwab, the head of data center market development and policy at Google, said the facilities are “a fairly unobtrusive, light industrial neighbor.”

Abdul El-Sayed, who is running against McMorrow in the Democratic US Senate primary, said the only part of the Google session he agreed with “was the ‘ass’ part.”

Polling indicates Michiganders share El-Sayed’s skepticism. A poll conducted this month and sponsored by the Detroit Regional Chamber found just a third of Michiganders would support a data center within 25 miles of their home.

About three-quarters of the 600 likely voters surveyed supported regulations on data centers, including requiring the facilities to pay for all electrical infrastructure upgrades, banning non-disclosure agreements with local officials, minimizing water use and using at least some renewable energy.

Even with all those guarantees in place, less than half of respondents said they’d be open to a data center opening near them.

A ‘golden ticket’

Michigan businesses that stand to benefit from more data centers would like to see the state open up further.

JR Rakolta, the president of Walbridge and John Rakolta’s son, said he would consider “more extreme” measures to accommodate data centers if he was leading the state, including opening up the Great Lakes as a water source to cool the heat-generating facilities.

“We’ve gotta be open to getting things done by any means necessary,” JR Rakolta added.

In Saline Township, where Walbridge is building a data center for a partnership between OpenAI and Oracle, local government officials moved to block the project but were sued by developers and settled out of court amid a budget shortfall in the 2,500-resident rural community.

Separately, Google is establishing a 282-acre data center in Wayne County’s Van Buren Township. Nicknamed Project Cannoli, the data center is projected to use about 1 gigawatt of electricity. It was approved by township officials who also provided property tax breaks amid some opposition from residents.

Data centers could be a “golden ticket” for those communities, but candidates have offered “very little support,” Rakolta lamented.

US Rep. John James, a GOP candidate for governor, took issue with Rakolta’s framing.

“Anybody thinking that anything other than the 10 million people in the state of Michigan is ‘the golden ticket’ has it all wrong,” James told reporters Wednesday on the porch of the Grand Hotel.

“We have to diversify our economy, but it cannot be at the expense of those 10 million people. Michigan is open for business, but we are not for sale.”

‘Overwhelming people’

Despite a frosty relationship, Michigan’s legislative leaders are aligned in their misgivings about the way data centers have entered the state.

House Speaker Matt Hall, a Republican, supports data centers, but told Bridge “they’re certainly not coming into these communities in a very collaborative way.” He argued against the tax breaks, saying the incentives are “overwhelming people.”

Winnie Brinks, Matt Hall — Though they voted differently on data center tax breaks, Senate Majority Leader Winnie Brinks and House Speaker Mat Hall both have criticisms for how data centers have come into the state. (Simon Schuster/Bridge Michigan)

Senate Majority Leader Winnie Brinks, who voted for the tax breaks in 2024, sees it as a failure of communication.

“The folks building data centers and even the energy companies haven’t really made the case about what are the positive benefits that this brings to a community,” Brinks said.

Developers behind planned data centers should not be a “mystery” when they approach communities, Michigan Gov. Jennifer Granholm said on the Google-sponsored panel, arguing companies should pitch themselves as partners willing to negotiate community benefit agreements.

“Data centers can be a huge grid asset if it’s done well,” said Granholm, who was secretary of energy under President Joe Biden and now consults for firms in the industry. She noted some facilities have purchased battery storage on-site so they reduce strain on infrastructure when the demand is high.

Schwab, the Google official, said she was open to community benefits agreements provided they were “attainable” and said she was “excited about that as a structure and would be open to working on it with a future governor.”

Panelists praised Whitmer for supporting data center development. She has championed the data center in Saline Township, touting it as the largest single economic development project in the state’s history.

But Glenn Stevens, the panel’s moderator, noted Whitmer is term-limited and leaving office at the end of the year, creating some uncertainty for what the next governor will bring.

“There’s some gubernatorial candidates … they’re not coming out and supporting it,” Rakolta said. “We need our leaders to lead.”