Overview
- Washtenaw County is at the center of Michigan’s data center surge, driven in large part by a state incentive that removes Michigan’s 6% sales and use tax on qualifying data center construction and equipment once a project is certified under the Enterprise Data Center program. The exemption was enacted through Public Act 181 of 2024 and Public Act 207 of 2024, and it has helped make large-scale projects financially attractive enough that multiple proposals are now landing in the county.
- WEMU has reported that at least four data centers are proposed or in development in Washtenaw County, and that county leaders have been pushing for stronger disclosure requirements so local boards have clear information about expected electric load, water use, and community impacts before approvals move forward.
- The fiscal impact has become one of the main drivers of backlash. Bridge Michigan reported that the Senate Fiscal Agency estimated the incentives could reduce state and local revenue by more than $90 million through 2065, with qualification thresholds including at least $250 million in investment and 30 jobs paying 150% of the local median wage. CBS Detroit has reported that $13 million in tax breaks had already been claimed, citing House fiscal analysts.
- Commissioner Yousef Rabhi is a key local voice because he opposed these exemptions before returning to county office. When he served in the Michigan House, Data Center Dynamics reported that Rabhi introduced bills to eliminate the sales and use tax exemptions for data centers, but the effort failed. After that, Michigan expanded incentives instead: Bridge Michigan reported the Legislature approved the major 2024 package projected at more than $90 million in foregone revenue, and Planet Detroit reported the laws extended exemptions through at least 2050 (and in some cases 2065) and broadened the “enterprise” framework.
- The local flashpoint is the scale of the projects now being discussed. The proposed Saline-area “Stargate” development has been described as hyperscale, and Bridge Michigan has emphasized that state utility regulators are now facing a high-stakes decision about whether to approve key power-related contracts tied to that project—highlighting how quickly local land-use debates in Washtenaw can become entangled with statewide energy planning.
- Washtenaw County’s adopted resolution also lays out the impacts local officials want reviewed before approvals. It cites backup generator noise in the 85–100 dBA range, describes how that noise can travel, and urges careful review of energy demand, water use, emissions exposure, and public health considerations, including the reality that large data centers can require enormous volumes of cooling water. The resolution references a case in Newton County, Georgia reporting 9 million gallons per day as an illustration of scale.
- The result is a growing political fight over whether Michigan is subsidizing facilities that can strain local resources. Bridge Michigan and Inside Climate News have reported a bipartisan repeal push introduced in December 2025 to unwind the incentive laws passed in late 2024, while utilities and supporters argue repeal could leave Michigan less competitive for investment, including Consumers Energy warning that it could put the state behind others in attracting projects.
Transcription
David Fair: This is 89.1 WEMU, and once again, we're going to discuss matters around the topic of data centers. I'm David Fair, and welcome to another edition of Issues of the Environment. Tax incentives have made Michigan a hotspot for large-scale data center projects. There are four proposed or in development in Washtenaw County alone. Supporters contend it's going to create jobs and increase the tax base for the communities where these centers are located. But the state has cut some of those taxes that would have been collected for construction and equipment, and we cannot yet put a tally on the cost of environmental impact. Our guest this morning opposed these state tax incentives while serving as state representative and now works these issues as the eighth district representative on the Washtenaw County Board of Commissioners. Yousef Rabhi, welcome back to WEMU!
Yousef Rabhi: Thank you so much for having me! Glad to be here!
David Fair: Well, the matter of tax incentives is an under-discussed part of this data center conversation, I think, and it may potentially have some huge implications. When you were in the State House, you introduced those bills to eliminate the sales tax and use tax exemptions. What were your concerns then?
Yousef Rabhi: So, there's several types of tax incentives, unfortunately, that data centers have been granted over the years. And when I was in the Legislature, there was a lot of focus on the property tax component for enterprise data centers. And actually, there was the bill, that we almost killed, that granted expanded property tax exemptions. And so, one of the bills I introduced was to eliminate those property tax exceptions that were given out to those certain data centers. After I left the Legislature, there was a package of bills that was proposed and passed to, in addition to that, grant data centers eemptions on sales and use taxes for the equipment that they purchased. Just as a reminder, constitutionally, that money goes to our schools. Over 70% of that money go to our school per the State Constitution. And so, by exempting all that high-cost equipment from failed and used tech, you are causing a reduction in revenue for our schools across the state. Some of the money also goes to our local communities, as well our cities and townships. These are services, like road maintenance and road plowing, that are going to be impacted by these sales tax and use tax reductions.
David Fair: Well, the argument is that job growth and tax revenue outside of the exemptions will more than offset the state's investment through these incentive programs. Do you see it that way?
Yousef Rabhi: Well, that's typically the argument. But unfortunately, these data centers really don't create that many jobs in the long term. And so, that argument really falls short on these types of projects. The other thing, I would say too, is that format of economic development of giving the tax incentives out to attract businesses to Michigan is really proven itself to not work, especially what it means that were underinvesting in our infrastructure and our roads and our parks and our schools and our universities. Because, really, what we want to create in our state as an environment where the talent want to live here and businesses will follow the talent. But what we're doing, unfortunately, is we're just giving these handouts to these corporations to make money to pad their pockets. And ultimately, the revenue is being locked from those services that will attract out to our state. And the trade-off is we are not even getting that many jobs out of it.
David Fair: And this is something that was put forth and, to this day, is fully supported by Governor Gretchen Whitmer. Are you somewhat surprised she's such a champion of these data center development incentives?
Yousef Rabhi: I think that, in general, but what I've observed in the political spaces that I've been in in Lansing and even locally, politicians are enamored with the idea of economic development. They want to be able to do the big press conference and the big ribbon cuttings to say, "We're going to create X-number of jobs. It's going to be great!" But the reality often after the press conference and after the pretty ribbons are thrown in the trash that there's an environmental impact. The jobs that were touted are not actually going to materialize. The investment that was touted isn't actually going to materialize. And oftentimes, these companies still get to walk away with some of those tax incentives. And so, the people that live at the end of the day are the people of Michigan. And so, I have seen a lot of political leaders sort of get sucked into that mindset of all economic development is good economic development. But the reality is much more nuanced than that, and we have to be more discerning of the state.
David Fair: Issues of the Environment and our conversation with Washtenaw County Commissioner Yousef Rabhi continues on 89.1 WEMU to dive into some of the nuance. A number of the projects around the state and in Washtenaw County are considered hyperscale developments. These are massive facilities with a variety of impacts, including the potential of putting a damaging environmental footprint into the communities where they reside. The Board of Commissioners passed a resolution, so communities in Washtenaw County might have a blueprint model to use in considering potential data center projects. Have community leaders been reaching out, approaching you and your colleagues on the board with data center questions?
Yousef Rabhi: Definitely to a degree and especially folks in out in the community. Residents of Washtenaw County have been coming forward and thanking the board for passing that resolution. What's really inspiring about all of this activism that's happening around pushing back on data centers is it is bringing people from across the political spectrum together to fight a common cause. And I think there's a common recognition emerging to among people that really these data centers, in particular, are a prime example of the sort of billionaire class--the wealthy, mega-rich Silicon Valley folks--are gaining more and more wealth and power. And the rest of America is suffering. We're struggling to make ends meet. Average, everyday Michiganders are struggling to make ends meet, while these folks are making hundreds of millions of dollars off of our communities and off of our environment. And this is a prime example of that. I mean, they're going to come into our community, they are going to demolish and destroy our environment, and they're going to extract profits that really are going to be in the community. They're going to go to their headquarters. They're going to go into the pockets for their already very wealthy CEO's and their shareholders. And it's going to leave our communities, at the end of the day, devastated with these environmental impacts. I mean, some of the things that they're doing. I mean ,they've applied for permits through EGLE to literally destroy wetlands. I believe there's several that have been approved to completely waste. That's unacceptable.
David Fair: And among the other concerns beyond wetland destruction, water and energy--two of the biggest environmental concerns. Some data center facilities use a tremendous amount of water as a cooling mechanism. How might a community prevent a center from digging deep into the aquifers or taking too much water from the area's natural resources?
Yousef Rabhi: Well, that's a great point. And there are so many concerns with these data centers, and even the one that's proposed in Saline and some of the others, they say they're closed loop, which is supposed to imply to people that, "Oh, they're not going to draw as much water," and so on. But the reality is, at some point, these closed loop systems do have to purge and replenish. And when those systems purge and replenish, they are purging contaminated water potentially into our water systems. And they do require some significant water withdrawal, despite the fact that they're "closed loop." And so, those aquifers, especially in the Saline area, are already taxed pretty heavily. And so, adding this on this scale to that area is going to have a major and significant impact on the aquifers. Not to mention, there's obviously the aquifers that are used for municipal use, but there's also aquifers used for agricultural use. And so, one of the other factors here is these data centers are definitely, in a very real way, threatening the agricultural economy that we have in our community because that economy depends on the environment. It depends on water, and a lot of our farmers understand that and are very good stewards of our environment.
David Fair: You know, the amount of electricity needed to run a hyperscale data center will exponentially add to what we need to generate in the state to accommodate it. We know we don't have the grid capacity now. The public has received assurances from the major utilities, like DTE, that residential consumers will not see rates go up, regardless of how much needs to be invested to meet the data center needs. Are you buying that?
Yousef Rabhi: I am most definitely not! I think that it is just one big lie, to be honest. And because the reality is, just like we see every single year, DTE and Consumers are going to come back to the Michigan Public Service Commission, and they're going to ask for some ridiculous rate increase. I mean, they've asked for double-digit rate increases in years past. And typically, they're not granted those double-digit rate increases, but they're always granted a significant rate increase. And a lot of times these rate increases include a ton of different reasons for the rate increase. Building grid capacity and building all this infrastructure is going to be included in those rate increase requests. I guarantee it! And it may not be direct. They will find a legal way of getting around, making it directly connected to the data center, but they're going to find a way to increase costs, just like they do every single year on all the rate payers in their areas. So, it is going to happen. And also to think about the environmental impact at a time when we're trying to reduce our reliance on fossil fuels, these data centers are going to require an increase in fossil fuel usage to come online as quickly as they're proposing to come online. And it is going to be a dramatic increase because these data centers are also using more power than thousands of homes combined. It is adding massive need to the grid and massive consumption of fossil fuels. I think the backdrop of this that I think is important for everybody is the why, too. Why are we doing this to ourselves? Why are we doing this for our wetlands? Why we are doing this to our environment, our climate, our air, our trees and ecosystems that are being torn down to be replaced by data centers? The why is important. And the reality is we don't need AI to survive as humans. We've survived for thousands of years without it, and we don't need it. All these mega-billionaires are trying to do with this is replace workers. One of the main functions of AI is to replace humans, in terms of in the workforce. And we've seen thousands of layoffs, even in the last year, in a lot of different sectors, but especially in the tech sector, of staff that have become obsolete because of AI. It's not helping. In large part, it's not helping to save lives. AI is, in general, in my opinion, a way for the wealthy to accumulate more wealth and to not have to pay as many people to do it
David Fair: Once again, you're listening to Issues of the Environment on WEMU. We're talking with Washtenaw County Commissioner Yousef Rabhi. It would appear, by everything we can see and everything we're experiencing, that artificial intelligence and these data centers are here to stay, and that the industry will only grow if we're going to have to find our way through to responsible stewardship. How do we go about creating policy, both at a federal, state and local level, that supports the industry and protects the environment and the people of the communities where they're located?
Yousef Rabhi: Well, I mean, personally, I have no interest in passing any type of legislation that supports the industry. I don't see it as the positive for our state. I don't see it as a positive for our society.
David Fair: But do you realistically think we can turn it back?
Yousef Rabhi: I think that there's a lot of people right now that are waking up to the fact that humanity as a whole doesn't need AI to survive. And I think there is a movement growing right now, that I've really seen, of people turning towards the idea that human hands can craft these amazing things, whether it's artwork, whether it's carpentry, or whether it's music, right? And to say, like, let's double down on human-created music. Let's double down on human created artwork and human-created graphic design because that is real to us. We connect with it as humans on a different level. And I think that there is a movement towards rejection of the idea that we just have to accept AI as a reality. At the very least, in terms of regulation, what I would like to see is just like there was a push for regulation around labeling genetically-modified food, I think there should be a push for labeling artificial intelligence-created content. I mean, I was on Spotify the other day, and a song came on, and I was like, "It sounded really interesting to me." And so, I looked up the artist, and it turned out it's AI-generated on Spotify. And I had no idea. There was no way to tell.
David Fair: But you enjoyed it.
Yousef Rabhi: It was interesting music. But, like, at the same time, to me, part of the importance of music is that you're not just connecting with the sounds that are coming out of the speaker. You're connecting with an artist that is creating it. And to know that on the other end of those sound waves was a robot, really, I think, hollowed out the meaning of the music itself as a human. And so, I do think it's important for people to know and understand when they're consuming content that is not real.
David Fair: What, if any, next steps will you take as a member of the Washtenaw County Board of Commissioners in advocating for your particular perspective?
Yousef Rabhi: Well, unfortunately, at the county level, there's not a whole lot that can be done to directly influence and block these data centers from happening because a lot of it is managed in terms of in the zoning and planning process at the local level. And so, there's not a whole not that the county can do, but what I intend to do as a public official is continue to show up to these data center protests to continue to encourage and activate and organize with the community to push back and to help give strength to the local elected officials that can make a difference and an impact and can pass resolutions banning or barring or limiting these data centers. And I intend to do that. I intend to use every power and platform that I have to support the people that are organizing. Again, it's been really cool to see from all different walks of life and from all different political parties and political ideologies organizing the people against the profit machine that are these data centers.
David Fair: Well, thank you so much for taking the time and having the conversation with me today, Yousef! ! appreciate it!
Yousef Rabhi: You got it! Thank you, David!
David Fair: That is 8th District Washtenaw County Commissioner Yousef Rabhi, our guest on Issues of the Environment. For more information, stop by our website at WEMU.org. Issues of the Environment--it's produced in partnership with the Office of the Washtenaw County Water Resources Commissioner, and you hear it every Wednesday. I'm David Fair, and this is your community NPR station, 89.1 WEMU-FM, Ypsilanti,
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