A real estate development company tied to the business empire of billionaire megadonor Stephen Ross is partnering with technology company Oracle and ChatGPT maker OpenAI to build a massive data center outside Ann Arbor.
The plan, announced Thursday, to build a 250-acre campus in Saline Township starting in 2026 is pending approval from the Michigan Public Service Commission.
Related Digital previously sued Saline Township over officials' initial decision to oppose the rezoning, but the town council ultimately allowed the project to move forward rather than go through court proceedings. Related Digital declined to disclose the total cost of the project.
“We are proud to develop this critical project exclusively for Oracle and contribute to keeping our country competitive in the global race for artificial intelligence,” Jeff T. Blau, CEO of Related Companies and chairman of Related Digital, said in a statement. “This historic multi-billion dollar investment will ensure that Michigan plays a leading role in developing the digital infrastructure America’s companies need.”
The “hyperscale” data center is expected to be massive and require 25% more energy than DTE Energy Co. currently provides to its customers. DTE spokesperson Jill Wilmot said the utility currently has excess capacity and will be able to provide the 1.4 gigawatts of load it needs as demand increases over the next two to three years.
Related Digital was founded by Ross's Related Companies, a New York City real estate development company. Ross, 85, owner of the Miami Dolphins and a huge donor to the University of Michigan, remains non-executive chairman of Related but has “no formal role in the operations of Related Numbers,” said Natalie Ravitz, a Related spokesperson.
Related declined to disclose what stake, if any, Ross owns in Related Digital.
Governor Gretchen Whitmer called the data center “the largest economic project in Michigan's history” in a statement.
“This transformative new Stargate OpenAI facility, built by Oracle and related digital companies, will create 2,500 high-paying union construction jobs, more than 450 permanent high-skilled, high-paying on-site jobs, and 1,500 community jobs, 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 to build on our work to compete and win large projects in next-generation industries from automotive and clean energy to semiconductors and batteries.”
Data centers house the computers and other technology needed to power artificial intelligence and other advanced software programs. They are huge consumers of energy and water, often used to cool their operations.
Resistance to data centers includes concerns about increased household utility bills, increased water usage and increased traffic.
“DTE's announcement today that it will power a massive 1.4-gigawatt data center in Michigan is further proof of what we've been saying since last year,” Michigan Sierra Club lobbyist Tim Minotas said in a statement. “Data centers are coming to Michigan and, without the proper guardrails, could pose a threat to our communities, economy, energy bills, water and climate.”
The data center will use a so-called closed-loop cooling system that, according to the developers, “limits daily water usage to levels comparable to office buildings.”
Democratic Rep. Morgan Forman of Pittsfield Township, who represents the district where the project is located, said she initially had reservations about the project's water use, but she believed precautions would be taken to limit water use.
She said the project appears to be a win in terms of jobs and expected tax revenue: “My hope is that it might become the standard for other data centers looking to locate in Michigan.”
As part of the agreement, Wilmot said the data center will pay for the new DTE energy storage system. This means DTE can store excess energy for use during peak hours or when the grid is stressed.
“The bottom line is that developing data centers in DTE's electric service areas will not increase customer rates,” DTE Energy CEO Joi Harris said in a statement. “Recent legislation passed by the Michigan Legislature ensures that our customers do not subsidize the cost of data centers.”
A controversial new Michigan law passed late last year exempts data centers from sales and use taxes and prohibits data centers from providing electric service at rates that “cause residential customers to subsidize the costs of providing electric service to the facility.” The tax holiday lasts until 2028.
“Additionally, DTE is ensuring that data centers can absorb all new costs required to service them – in this case, battery storage,” Harris said. “Our customers will not pay. By building this new battery storage, DTE is investing in its systems to protect and facilitate continued reliable service to all customers.”
More details about 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 spokesman for the commission declined to comment on Thursday, citing an expected filing on Friday.
As data centers are added, the utility's fixed costs will be spread among more payers, and households will benefit from privately paid energy storage systems, DTE said.
“New power demand will be supported by existing capacity and new energy storage investments that will be paid for by the data centers,” a DTE press release said. “The data center growth will provide significant affordability benefits to existing customers as DTE sells excess generation, and contract terms will also ensure that the data centers absorb all new costs required to serve them.”
Ronald Kohler, a member of the town's planning commission, reluctantly supported the project after the town was threatened with a lawsuit. The 68-year-old farmer said the project's industrial zoning is a big change for the farming community of fewer than 3,000 residents.
The developers are calling the project “The Barn,” a reference to the historic red barn that will be preserved at the site's entrance.
Dozens of citizens attended both meetings, with representatives from Related Digital and DTE answering their questions and addressing concerns, according to minutes from special township meetings held on Sept. 24 and Oct. 1, which focused on the data center proposal.
Digital representatives told residents that the construction project would not involve any temporary housing and that noise would be limited to less than 65 decibels. According to the Hearing Health Foundation, sounds of 70 decibels or less pose no risk to human hearing.
When asked why the developer chose this particular location, representatives said the property is flat and has easy access to U.S. 12, according to town meeting minutes.
“It's a beautiful property,” said Kohler, who knows the family who is selling the property for development. “That's a big stink. But it is what it is. We'll deal with it. I think it's good for the community.”
Fire departments will receive support, township schools will receive more funding and cemeteries will benefit, he said, adding it won't add much traffic to US-12.
Staff writer Max Reinhart contributed.