Switch, school districts clash over tax breaks

Kent County

GAINES TOWNSHIP, Mich. (WOOD) — When a big, high-tech business was eyeing Kent County for a new location, tax breaks offered by local and state government helped seal the deal. Now the nature of one part of that deal is raising questions.

Michigan’s Economic Development Corporation made a deal with Switch, a Nevada-based data center operator, to move into the old Steelcase pyramid near the intersection of 60th Street and East Paris Avenue SE in Gaines Township. The deal included greatly reducing the company’s tax burden, which took an act of the state Legislature in 2015.

But now there is some confusion about what that really means.

“It’s our position and understanding that there was to be full abatement of the taxes and special assessments,” said Natalie Stewart, the vice president of government and public affairs for Switch.

She said for two and a half years, that was exactly what happened.

Then, late last year, a bill arrived for taxes from which the company believes it is exempt.

Due to a quirk of wording in the tax rules, Caledonia Community Schools and the Kent Intermediate School District said Switch owed them. Switch did pay the bill, but it also took action to appeal.

The state Legislature is now moving on a new bill that would clarify Switch’s place in terms of being free from special assessments and millages to cover school debt. For this year, those taxes work out to about $375,000 for Caledonia Community Schools.

Superintendent Dr. Dedrick Martin said he talked to the company about payment in lieu of taxes and suggested a $1.3 million, eight-year plan. He wanted a deal before the Legislature took action. Without that, he said in a letter that the school would work “to influence the legislation and mitigate the impact on Kent ISD and Caledonia Community Schools.”

Switch replied that if the relationship between the company and school district is for “Switch to make large financial payments to purchase support for legislative initiatives such as (Senate Bill) 455, we must respectfully decline.”

“We certainly hoped we could come to some type of an agreement because our school system does not want to stand in the way of economic development and growth but at the same time we all bear some responsibility for education the students in our community as well as the entire state,” Martin told News 8.

Some type of an agreement might still be possible.

“We look forward to continuing our conversations with the education community and really creating a win-win scenario not only for Switch and the education community but for Michigan and West Michigan. I look forward to those continued conversations,” Stewart said.

The legislation to codify Switch’s position on exemptions has moved through the Senate and is now awaiting action in the state House.

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