Billionaire megadonor Stephen Ross' Related Digital is partnering with tech companies Oracle and ChatGPT maker OpenAI to build a massive data center outside of Ann Arbor.

The plan, announced Thursday, envisions building a 250-acre campus in Saline Township beginning in 2026, pending approval from the Michigan Public Service Commission.

Related Digital previously sued Saline Township over officials' initial decision to oppose its rezoning, but the town board eventually allowed the project to move forward in lieu of a court battle. Related declined to provide the total cost of the project.

"We are proud to be developing this critical project exclusively for Oracle and contributing to keeping our nation competitive in the global AI race,” said Jeff T. Blau, CEO of Related Companies and Chairman of Related Digital, in a statement. “This historic, multi-billion-dollar investment will ensure that Michigan plays a leading role in developing the digital infrastructure American companies need.”

The "hyperscale" data center is expected to be huge, requiring 25% more energy than DTE Energy Co. currently provides to its customers. DTE spokesperson Jill Wilmot said the utility currently has excess capacity and, as demand ramps up over the next two to three years, will be able to provide 1.4 gigawatts of load the company requires.

In a statement, Gov. Gretchen Whitmer called the data center the "largest economic project in Michigan history."

“This transformational new Stargate OpenAI facility, built by Oracle and Related Digital, will create 2,500 good-paying union construction jobs, more than 450 permanent high-skill, high-paying jobs on site, and 1,500 more in the community while helping us lead the future of advanced manufacturing and technology," she said.

“I’m grateful to these cutting-edge companies for betting on Michigan, building on our work to compete for and win big projects in next-generation industries from cars and clean energy to semiconductors and batteries."

Data centers house computers and other tech needed to power Artificial Intelligence and other advanced software programs. They are prodigious consumers of energy and water, often used to cool their operations.

Pushback against data centers ranges from concerns over higher utility bills for households to increased water use and additional traffic.

"DTE’s announcement today that it will power a massive 1.4-gigawatt data center in Michigan is further proof of what we have been saying since last year," Sierra Club Michigan lobbyist Tim Minotas said in a statement. "Data centers are coming to Michigan and can pose a threat to our neighborhoods, our economy, energy bills, water, and climate without proper guardrails in place."

The developers said the data center will use what's called a closed-loop cooling system, which, according to the developers, "limits daily water use to levels comparable to an office building."

State Rep. Morgan Foreman, a Pittsfield Township Democrat who represents the district where the project will be located, said she had initial reservations about the project’s water use, but she believes precautions will be taken to limit use.

She said the project appears to be a win in terms of jobs and expected tax revenue: “I’m hoping that it can maybe be a standard for other data centers looking to come to Michigan.”

As part of the agreement, Wilmot said the data center will pay for new DTE energy storage systems. That means DTE can store excess energy to be used during peak hours or when the grid is otherwise strained.

"Most importantly, data center development in DTE’s electric service territory will not increase customer rates," DTE Energy CEO Joi Harris said in a statement. "Recent legislation passed by the Michigan legislature ensures our customers will not subsidize data center rates."

A controversial new Michigan law passed late last year exempts data centers from sales and use taxes, as well as a ban on data centers taking electric service under a rate “that causes residential customers to subsidize the costs incurred to provide electric services to the facility.” The tax exemption lasts through 2028.

"Furthermore, DTE is ensuring the data center will absorb all new costs required to serve them — in this case, battery storage," Harris said. "Our customers will not pay. By building this new battery storage, DTE is investing in its system in a way that protects and promotes continued reliable service for all customers."

More details on the agreement are expected Friday, when DTE plans to formally request permission from the Michigan Public Service Commission to provide energy to the company and build an energy storage system.

A spokesperson for the commission declined to comment Thursday, citing the anticipated Friday filing.

DTE said with the addition of the data center, the utility's fixed costs will be spread out over more payers and households will benefit from an energy storage system paid for privately.

"The new electricity demand will be supported with existing capacity and new energy storage investments, which will be paid for by the data center," according to a DTE press release. "This data center growth will create substantial affordability benefits for existing customers as DTE sells excess generation, and contract terms will also ensure that the data center absorbs all new costs required to serve them."

Ronald Kohler, a member of the township’s planning commission, reluctantly supported the project after the township was threatened with the lawsuit. The 68-year-old farmer said the industrial zoning for the project represents a big change for the agricultural community with fewer than 3,000 residents.

Developers call the project "The Barn" in reference to a historic red barn by the site entrance that will be preserved.

“It’s a beautiful property,” said Kohler, who knows the family that sold the property for the development. “That was the big stink. But it is what it is. We’ll deal with it. I think it will be good for the community.”

The fire department will get support, there’ll be more funding for township schools, and the cemetery also will benefit, he said, adding that it shouldn’t add too much traffic to U.S.-12.

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