Michigan Advance op-ed: The BX data center push

Should Michigan be handing its resources to Blackstone?

Before dedicating land, water, electricity, and public support to the massive Saline data center, state leaders should take a closer look at the private equity giant financing it.

The following op-ed by PESP  Senior Communications Coordinator Sam Garin published in June in the Michigan Advance:

Earlier this month, executives from OpenAI, Oracle, and private equity giant Blackstone gathered for a celebratory photo op with Governor Gretchen Whitmer at the site of the controversial Stargate data center in Saline. While much attention has focused on OpenAI and Oracle’s involvement in the project, less attention has been paid to Blackstone, which is financing roughly 90% of the project.

For months, the proposed data center has drawn sharp criticism from local residents over the destruction of farmland, environmental impacts, and enormous water and electricity demands. Upon completion, the 1,000 acre data center in Saline would become the largest user of electricity in Michigan. If Michigan is to dedicate significant land, water, electricity, and tax breaks to this project, we should be examining what we know about the private equity giant that is helping fund it.

As a Michigander who works to uncover the impacts of private equity on our state and beyond, I believe Blackstone’s profits-first, people-last record should give us pause.

Blackstone is the world’s largest alternative asset manager, managing over $1.3 trillion in assets across a wide range of industries. Blackstone’s current and past investments include Vanguard Health Systems, former owner of Detroit Medical Center; fast-food chain Jersey Mike’s; and student housing in Ann Arbor. Blackstone has drawn criticism for its aggressive rent hikes as a landlord, mistreatment of workers by companies it owns, and for fraud settlements related to surprise medical billing and aggressively pursuing debts from low-income patients by a medical staffing company it owned.

Blackstone’s negative impacts can be found right here in Michigan, too. In 2023, Blackstone-owned medical staffing firm Team Health Holdings, Inc. settled a case with the State of Michigan for alleged medical billing fraud. Meanwhile, pollution from Blackstone-backed fossil fuel assets is associated with an estimated $10 million to $11 million in annual health-related costs in Michigan, including approximately 580 asthma incidents, emergency room visits, missed work days, and missed school days each year.

It’s no surprise to find Blackstone at the scene of this controversial development. Private equity firms are the largest owners of data centers other than Big Tech companies and nearly half of the top 25 data center owners in the U.S. are linked to private equity. Blackstone has been a major player pushing forward the data center buildout across the country, from funding and constructing data centers to acquiring the utilities that would power them. In New Mexico, Blackstone is currently attempting to purchase electric utility TXNM Energy, raising concerns about how the private equity playbook could inflate electricity prices as ratepayers struggle with the national affordability crisis.

Blackstone has been entrusted by Michigan’s leaders with this massive project that has very tangible upfront costs for Saline residents and the rest of the state. Blackstone’s track record in the data center buildout deserves real scrutiny for that reason, and it doesn’t always hold up. The private equity firm’s huge investment in data centers has led to serious local impacts for the communities housing them.

When Fayette County, Georgia, residents noticed their water pressure was unusually low last year, officials discovered that a data center owned by Blackstone’s QTS had drained nearly 30 million gallons of water from the county water system before paying for it, an amount of water far beyond the data center’s agreed-upon peak limit. With supporters of data centers in Michigan suggesting that we should allow them access to the precious water of our Great Lakes, will Michigan’s abundant freshwater be dedicated to corporations instead of Michiganders?

While promoters of the Stargate project have touted its use of union labor, Blackstone’s broader labor record isn’t so sterling. The Private Equity Labor Scorecard failed Blackstone for wage-and-hour violations, safety issues, and other labor concerns at portfolio companies.

At Blackstone-owned Great Wolf Lodge locations, Great Wolf hired union busters as workers attempted to organize in 2024. One of the firm’s most disturbing examples of its labor record involved Blackstone-owned Packers Sanitation, where more than 100 child workers illegally worked overnight shifts cleaning industrial meat-processing equipment.

Residents of Saline have spent months raising concerns about Stargate’s water use, electricity demand, and environmental impacts. Statewide, Michiganders are deeply concerned about data centers in their communities and at least 51 Michigan cities and towns have issued moratoriums on data center development.

Yet Lansing appears far more interested in accommodating Blackstone than addressing those concerns. Before Michigan dedicates significant public resources to a project financed largely by a trillion-dollar private equity firm, policymakers should explain why they believe Blackstone’s interests are aligned with those of Michigan communities.

Lansing is supporting an investment craze whose returns for Michigan taxpayers might never materialize. What’s right for Blackstone is not necessarily right for the Great Lakes State. Our lawmakers should be supporting the interests of the Michiganders they represent, not out-of-state private equity firms and their profits.