Could data centers help fight Lansing’s housing crisis?

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LANSING, Mich. (WLNS) — Lansing City Council will wade into the controversial waters of data centers beginning Monday night, and with that debate, a proposal to benefit housing issues in the city.

Peter Spadafore, councilman from the 4th Ward and recently elected president, tells 6 News the body will establish a schedule Monday night to consider a proposal by a British company, Deep Green, to build a data center in downtown Lansing. But the council will also begin to review a draft ordinance from Spadafore that could see a financial boon in addressing Lansing’s ongoing housing crisis.

“The ordinance creates a housing support fund, and that fund is going to be filled by using a portion of the revenue that’s generated from the electricity usage of any data center that’s constructed in the city of Lansing and the water, water and light service territory,” Spadafore said.

Spadafore’s plan captures a percentage of the increased revenues the Lansing Board of Water and Light (BWL) may experience with the location of data centers in the service area. Currently, BWL pays the city of Lansing a return on equity payment as a form of taxes.

Housing Support Services EDP Ordinance – Draft 5 Download

For 2025, that payment is $27.5 million. The money goes directly into the city’s general fund and is distributed to various budget priorities. Any data center will increase the total income of the BWL, and the return on equity payment.

Under Spadafore’s plan, any increase in funds paid by the BWL to the city that can be attributed to data center utility usage would see 10% captured and placed in the proposed housing support fund.

Spadafore estimates, conservatively, the BWL payment to the city could increase by $1 million if a data center comes online. He expects that would mean $100,000 specifically earmarked to address housing issues.

“I say housing support that might be assisting folks from losing their home, that might be paying for hotels at night when someone is experiencing homelessness or their home gets red tagged,” Spadafore said. “I’ve had a grand plan at one point of creating a fund that would fund repairs of homes to make them safer to live in while we work to recuperate the costs from a landlord, much like we would if we do, we clear the trash or we mow the lawns. We bill back the landlord. But repairs to properties are a lot more expensive than mowing lawns. So, we needed a fund to help do that. So, this is sort of what I hope to be the beginning of a longer conversation about how we can help support housing security in the city.”

He notes that the city has heard many comments and concerns about the housing crisis in the city, and a need for the city to step up.

“We’ve heard a lot about how we should be investing more city funds in housing support,” Spadafore said.

But Spadafore recognizes this proposal is not the entire solution to Lansing’s housing crisis, it is a piece of a larger solution. He said on top of facing an aging housing stock, the city and the region is experiencing a serious lack of safe, affordable housing in the first place.

“There are multiple, multiple angles to the housing,” he said. “And we’re trying to find different answers for different parts. Is this another piece? It’s one piece of a very, very large solution. I, I don’t have a like a singular focus this year, but if I can do one thing this year, it would be to fast-track more investment in housing, because we — even if we can help folks who are experiencing homelessness, find housing and give them the resources — we have a shortage of housing.”

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