Data center development proposals should be evaluated on a case-by-case basis. While large ‘hyperscale’ facilities should be carefully scrutinized to mitigate potential negative impacts (power demand, water use, noise), many smaller more typical data centers are nearly indistinguishable from office buildings and provide valuable services to local businesses and other users of digital cloud services.
The economic benefits of data center investments are modest. The primary economic activity created by data centers is during the construction phase. Attracting data centers is not an effective approach to long-term economic development. However, local host communities may substantially benefit from property tax revenue and/or community benefit agreements.
The negative impacts of data centers are often overstated. While there is risk of unsustainable development, Michigan’s water resources and power grid appear capable of accommodating substantial data center development under current policies. The most concerning negative impact of data centers is noise pollution. Protecting nearby residents from harmful impacts of data center noise is feasible but requires particular attention from local permitting agencies.
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We have always made all of our publications, whether in paper or electronic format, available to all without charge. We will continue to provide unrestricted access to every publication in our library.To ensure continued free access, we are asking YOU to help with a $110 charitable donation (or what you can afford) to the Citizens Research Council of Michigan TODAY to ensure timely and comprehensive analysis of the issues driving state spending. Donations of any amount are appreciated. Please consider making your donation recurring.
June 16, 2026
Report 426 | Memorandum 1184
Data Centers in Michigan: Evaluation of Policy Controversies Regarding Hyperscale Data Center Development
Data center development proposals should be evaluated on a case-by-case basis. While large ‘hyperscale’ facilities should be carefully scrutinized to mitigate potential negative impacts (power demand, water use, noise), many smaller more typical data centers are nearly indistinguishable from office buildings and provide valuable services to local businesses and other users of digital cloud services.
The economic benefits of data center investments are modest. The primary economic activity created by data centers is during the construction phase. Attracting data centers is not an effective approach to long-term economic development. However, local host communities may substantially benefit from property tax revenue and/or community benefit agreements.
The negative impacts of data centers are often overstated. While there is risk of unsustainable development, Michigan’s water resources and power grid appear capable of accommodating substantial data center development under current policies. The most concerning negative impact of data centers is noise pollution. Protecting nearby residents from harmful impacts of data center noise is feasible but requires particular attention from local permitting agencies.
Kindly consider a $110 donation for unlimited access to this important report.
We have always made all of our publications, whether in paper or electronic format, available to all without charge. We will continue to provide unrestricted access to every publication in our library.To ensure continued free access, we are asking YOU to help with a $110 charitable donation (or what you can afford) to the Citizens Research Council of Michigan TODAY to ensure timely and comprehensive analysis of the issues driving state spending. Donations of any amount are appreciated. Please consider making your donation recurring.
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