Economic development: other; use tax act; amend to reflect elimination of the Michigan strategic fund. Amends sec. 4cc of 1937 PA 94 (MCL 205.94cc). TIE BAR WITH: SB 0631'25
SB 645 amends Michigan’s Use Tax Act to expand and restructure the state’s sales and use tax exemption for data center equipment. The bill preserves the existing exemption for qualified data centers and colocated businesses, but adds a new category for “enterprise data centers” that can receive the exemption if they obtain a certificate and meet detailed eligibility standards. Those standards include a minimum $250 million capital investment, at least 30 qualified new jobs paying at least 150% of the regional median wage, limits on other property tax incentives, and compliance with environmental and energy-related requirements.
The bill also creates a certification and oversight process administered by the Michigan strategic fund bureau, which is the successor entity referenced in the bill’s definitions and procedures. Applicants must apply for a certificate, report annual information on purchases and employment, and maintain compliance with green building, municipal water, and clean energy requirements. The exemption can be revoked if a facility no longer qualifies, and the bill includes clawback provisions requiring repayment of exempted taxes, with interest, if revocation occurs. New certificates would stop being issued after December 31, 2029, though existing certificates would remain valid.
The bill would amend MCL 205.94cc to extend and modify Michigan’s use tax exemption for data center equipment, including equipment used in construction and buildout of qualifying facilities. It would add a new enterprise data center exemption running through 2050, or through 2065 for certain brownfield or former power plant sites, and would impose detailed eligibility, reporting, certification, and revocation rules. The bill also updates statutory references from the Michigan strategic fund to the bureau of fair competition and free enterprise, reflecting the broader reorganization referenced in the bill caption. Its practical effect would be to provide a targeted tax incentive for large-scale data center development while conditioning the benefit on investment, job creation, energy sourcing, water use, and environmental performance.
The bill text and available context suggest a generally pro-development, incentive-oriented approach, with the legislature using tax policy to attract and retain large data center investments in Michigan. The absence of recorded committee transcripts or votes limits direct evidence of debate, but the structure of the bill indicates support for economic development and infrastructure investment, especially in high-capital projects. At the same time, the bill’s detailed conditions and sunset on new certificates suggest an effort to balance business incentives with public accountability and policy safeguards.
The main points of contention likely involve the size and duration of the tax exemption, the environmental and utility impacts of large data centers, and whether the public benefits justify the foregone tax revenue. The bill’s requirements on clean energy procurement, municipal water sourcing, and restrictions on electric rates indicate concern about shifting costs to other utility customers or increasing environmental burdens. Another likely issue is the administrative complexity of certification, annual reporting, and clawback enforcement, as well as the bill’s tie-bar to SB 631 and its dependence on the reorganization of the Michigan strategic fund.