Saline Township — OpenAI CEO Sam Altman and executives from Oracle and Related Digital visited the site of a hyperscale data center they are building in Saline Township on Monday as part of an effort to tout the cloud computing campus sprouting from former farmland they are calling “The Saline Barn.”
Joined by Gov. Gretchen Whitmer, labor leaders and officials from construction firm Walbridge and Blackstone Real Estate, they celebrated the impact the huge facility could have on burgeoning artificial intelligence platforms and announced new local investments such as a $10 million donation to the Saline Recreation Center to expand its aquatic center and more.
Altman called the $16 billion data center campus under construction on the outskirts of Ann Arbor a “huge bet” on the future of AI and said it could provide the computing power to enable breakthroughs in medicine.
“This could very well turn into the site where cancer gets cured,” Altman said. “This could turn into the site where hundreds of millions of students around the world learn and get private tutoring. This could turn into the site where millions of small businesses can run their business with AI in the cloud. A gigawatt of AI can do all those things.”
The executives were on a mission to build goodwill in the community where the development has spurred lawsuits, thousands of critical public comments,and the resignation of a township treasurer who said she and her colleagues have been subjected to death threats from people outraged about the data center.
“I can’t take it anymore,” former Saline Township treasurer Jennifer Zink said through tears at the end of a May 15 meeting. “The threats, that ‘I’m going to tar and feather you.’ … It’s so disgusting.”
Altman acknowledged the division tech companies such as OpenAI have faced as they ramp up AI programs and data center development across the world.
“We know how complex of a project this is,” Altman said Monday. “We know what the current attitude towards data centers in the world is… I think we can make this a great example for the future.
“This is a huge bet,” the tech billionaire added.
The companies are working to restore the facility’s image. They lined the construction site with signs about jobs, water conservation and energy payments and purchased social media advertisements promoting the facility’s impact on the local economy.
They hosted the Monday press conference in a tent at the data center construction site. Barn-shaped soap dispensers in the restrooms nodded to Saline Township’s rural character.
“It’s not the typical barn you see in this area,” Whitmer said Monday of the data center project. “This one will hold servers, not farm animals.”
Companies behind Saline Township data center donate $10M toward rec center
The companies invited some Saline Township residents to attend, including Ed and Marian Groom, 77 and 78, respectively, who said they received non-transferrable invitations via email.
Ed Groom, who attended the Monday event, said he believes residents’ concerns about the data center have been addressed, such as water and energy use and worries about increased traffic. He doesn’t believe there have been any noise or traffic disruptions so far.
“Even though they try to explain everything at the meetings, people just don’t listen,” Ed Groom said.
Executives on Monday touted the millions of dollars they will put into local initiatives such as farmland preservation, community development and fire department budgets, as well as the jobs created by the facility’s construction.
Some of those investments were included in a settlement agreement between Related Digital and Saline Township in September, when the tech giant agreed to drop its lawsuit against the township. In exchange for rezoning the property for the data center, Related agreed to put $12 million into local initiatives and preserve 200 acres of farmland at the site, among other measures.
Sunshine Lambert, the parks and recreation director for Saline, said the $10 million donation promised for the recreation center will be “transformational.” The executives involved with the data center project toured some of the community’s facilities last winter and saw for themselves the need for investment in the rec center, she said, and added the donation will help Saline expand programs such as its swim lessons and childcare.”This is an opportunity that, honestly, I would have never imagined,” Lambert said. “I’m speechless.”
Data center job promises often overpromised: expert
The hyperscale data center is under construction on former farmland along Saline Township’s Michigan Avenue. The data center will be built on approximately 250 acres of the 575-acre parcel.
The tech companies expect to generate more than 2,500 union construction jobs by building the data center, then expect to need more than 450 people to run the facility when it’s operating.
Data center developers usually promise more jobs than actually materialize at the facilities, said Jean Hardy, a Michigan State University professor of Media and Information who studies emerging technology and rural development.
The biggest impact data centers have on the workforce is on short-term construction jobs, Hardy said. But because Michigan lacks the skilled labor force needed for large development projects, Hardy said some of those jobs go to people who live outside the state.
Hardy said it’s unlikely there are 2,500 out-of-work union laborers in Michigan to pick up the data center jobs.
“The reality is that Michigan does not have the trades pipeline to actually fulfill a lot of the large-scale construction it does any year, let alone on data centers,” he said. “It’s very common for construction crews to come outside the area.”
Sean McGarvey, president of North America’s Building Trades Union, said Monday that the U.S. has the skilled labor force to build data centers.
The tech executives and Whitmer have praised the Saline Township data center as the largest investment in Michigan’s history. The Detroit Regional Chamber has encouraged Michiganians to embrace data centers and likened them to the auto industry.
“What is about to happen on this site will change our state forever,” said John Rakolta Jr., chairman of Walbridge, the Detroit-based construction giant that has shifted from constructing auto plants to data centers.
“Ninety years ago, Michigan built the arsenal of democracy because the world needed it built at scale,” Rakolta said Monday. “Today, the world needs something different; it needs the digital infrastructure that will power the next century of human progress. Once again, Michigan is answering the call, and I call it ‘welcome to the arsenal of intelligence.'”
The multi-billion-dollar Saline Township data center may be Michigan’s largest economic development project in terms of the amount of money it will cost to build, Hardy said, but not by other metrics such as jobs or economic impact.
He said it’s not appropriate to compare the economic impact of the data center industry to that of the auto industry, where a new auto plant can directly employ several thousand workers and provide hundreds of additional jobs in the supply chain.
“There is literally no world in which the data center industry will employ that number of people,” he said. “The way data centers operate, they are literally designed to need minimal human intervention.”
Saline Township, schools to get millions in new tax revenue
The largest economic impact data centers have comes from paying property taxes to municipalities and counties, which could put that money into staffing, parks or other programs.
The development will pay the township roughly $1.6 million per year through 2039, plus at least $8 million to Saline Area Schools and $2.2 million to the Washtenaw County Intermediate School District, the township has said in informational documents about the development.
Oracle CEO Clay Magouyrk said the facility will generate 2,000 times the tax revenue as a data center than it did as farmland.
“Look, I like farmland,” Magouyrk said. “I’ll be honest with you, I think if I had to choose just on pure aesthetics, a nice set of green stuff is gonna look way cooler than all of this gravel.”
In settling the lawsuit that Related Digital filed against it, Saline Township agreed to grant the data center an industrial property tax abatement that will result in a roughly 50% reduction in real and personal property taxes for 12 years. The $1.6 million annual tax payment to the township is what the facility would pay, even with the industrial tax abatement. Google also received a 12-year, 50% reduction in property taxes for the data center it plans to build in Van Buren Township in western Wayne County.
“Property tax revenue of a hyperscale data center could kind of revolutionize the actual local tax base of a rural township,” Hardy said. “It could turn that township around from scraping by to actually being able to provide better goods and services to its community.”
Saline data center sparked statewide outcry
The Saline Township data center project was controversial from the start. Township officials didn’t want it and denied a conditional rezoning request in September. Related Digital sued two days later, arguing the township used exclusionary zoning to prevent the sprawling tech development.
The township stopped fighting. Losing would have been too expensive to justify and “a hindrance on each resident here in this township,” township clerk Kelly Marion said in May.
Instead, the township settled. It agreed to rezone the property, while Related Digital promised to put $2 million into a farmland preservation trust, $2 million into a community investment fund, $8 million into local fire department budgets, preserve 200 acres of farmland, not to expand the data center, not to build solar arrays, to use water-efficient cooling methods and more.
The tech companies announced additional community investments Monday, including $10 million for the Saline Recreation Center.
Oracle and OpenAI were revealed as the project partners in October.
That’s when dissent spread through the state.
DTE Energy Co. sought fast-paced approval from state energy regulators for a contract to serve the data center. The Michigan Public Service Commission approved, which barred outside groups, including the Michigan Attorney General’s Office, from scrutinizing DTE’s claims that the deal will benefit ratepayers, not lead to increased costs or other problems.
Fellow Democrats slam Whitmer for standing alongside AI tech executives
The modern, sprawling hyperscale data centers under development in Saline Township and across Michigan are used to train artificial intelligence tools. Previous versions of data centers were smaller and used locally to serve companies that needed server and web space.
Data centers are essential digital infrastructure, Hardy said, and used by anyone who sends emails, texts pictures or streams movies. Unlike other technology infrastructure, like broadband internet, the presence of a data center doesn’t benefit neighbors.
Some Michigan K-12 schools and universities are using artificial intelligence in the classroom, although teachers and administrators struggle with setting boundaries for student and staff use of the technology. Hospitals and even General Motors have started using artificial intelligence in their operations.
Florida’s Attorney General sued OpenAI on Monday, alleging the company’s chatbots are unsafe because they were allegedly used by a gunman who plotted a mass attack at Florida State University and killed two on campus last year, the Wall Street Journal reported Monday. OpenAI officials have denied responsibility for the crime.
“The unfortunate thing is that with data centers, the impacts are highly concentrated in one specific geographic location, but the benefits diffuse to everyone who uses the internet,” said Hardy, the MSU professor. “A data center moves to town, that doesn’t mean you benefit as an individual, as a consumer, whatsoever.”
In addition to concerns about data centers’ impacts on local landscapes, energy grids and water availability, critics of hyperscale data centers in Michigan question whether and how the state should embrace artificial intelligence.
Whitmer addressed some of those concerns Monday.
“AI must always be a tool to bolster human intelligence, not the other way around,” she said. “Michiganders must build the center, operate the technology and reap the benefits.”
Whitmer, a Democrat, did not take questions Monday from reporters at the event.
Later, U.S. Rep. Rashida Tlaib, D-Detroit, slammed the governor after a photo was published on X showing Whitmer standing alongside the tech titans at the groundbreaking event.
“Disgusting,” Tlaib wrote on X. “So disappointed in Governor Whitmer’s support of data center expansions in our state especially when so many Michiganders are opposed.”
State Rep. Dylan Wegela, D-Garden City, called the governor’s participation in the event a “complete betrayal of the working class.”
“@gretchenwhitmer is selling out Michigan to big tech billionaires,” Wegela wrote on X. “AI is trying to replace the working class, and destroying the planet while doing so.”
ckthompson@detroitnews.com
This article originally appeared on The Detroit News: OpenAI’s Sam Altman says Michigan data center a ‘huge bet’ on AI
Reporting by Carol Thompson, Candice Williams and Julia Cardi, The Detroit News / The Detroit News
USA TODAY Network via Reuters Connect
