A lose-lose legal battle? Michigan township defends decision to settle on OpenAI data center
SALINE TWP., MI — Amid angry, screaming neighbors, national publicity and personal attacks, elected officials in a rural farming community south of Ann Arbor continue to face pushback against a difficult decision they had to make.
The blowback is due to the Saline Township Board of Trustee’s decision to settle a lawsuit, which paved the way for a massive 2.2-million-square-foot hyperscale data center for Chat GPT-creator OpenAI and multinational technology firm Oracle to move forward.
Related: Michigan’s largest AI data center can move ahead after DTE wins key approval
But was it a lose-lose situation for township officials?
On one hand, some residents who oppose the data center are blasting the board for not fighting a suit brought by data center developer Related Digital and a set of property owners.
The suit came two days after the township board voted 4-1 to deny rezoning about 575 acres of farmland, calling it “inconsistent with the master plan.” Township officials have consistently tried to relay to the public that they also didn’t want the data center.
At the same time, officials have said it was a court battle that would have had massive financial repercussions for the small township south of Ann Arbor.
“Of course, the monetary issues were important. It could have resulted in millions in damages,” Saline Township attorney Fred Lucas said.
“But beyond that, one of the other concerns was that even if we’d won the lawsuit, there was a possibility a data center could have been there anyways,” Lucas said.
While an exact figure of how much money the property owners on the suit could hypothetically have been awarded by a judge is not available, the township and its attorneys evaluated possible outcomes.
“In terms of the damages, I don’t know how much they are selling the property for. We’re not privy to that,” Lucas said.
However, Lucas and township officials who spoke with MLive all mentioned hearing it could be in the $50,000 to $60,000 per acre range.
“As farmland, it’s probably only valued at $10,000″ per acre, Lucas said. “So, what’s the net loss there for 575 acres?”
Assuming those estimates are in the ballpark, $55,000 per acre would amount to more than $25 million in potential damages to property owners. That is a lot of money for a small rural township with about 2,500 residents.
The township’s insurance coverage for legal fees is $500,000, Clerk Kelly Marion confirmed.
The township is also in the red, with a projected budget deficit. Projected revenue is around $747,000, with expenses exceeding that at more than $1 million, according to proposed budget numbers for 2025-2026.
Fiery public comments from angry residents, including some who live close to the data center site, are now a regular part of township board meetings.
“You should have spent every last dime of this money that you had in this township until there wasn’t a penny left of the money that we all give,” Matthew McDonald, who lives near the data center site yelled at the township board and Lucas at a Wednesday, Dec. 10 board meeting.
McDonald compared the data center project to “the Red Coats,” referencing British soldiers confiscating firearms from colonists during the American Revolutionary War.
“You gave into the Red Coats, you bunch of Benedict Arnolds,” he said during his public comment, also directing his criticisms toward Lucas as the township’s attorney.
After the suit was filed, the township had actually brought a different attorney for the case. David Landry, a defense attorney for the township’s insurance company, has never responded to multiple requests for comment from MLive.
Landry had laid out the possible outcomes of the suit.
Even if the developer, Related Digital, had “gone away” by dropping out of the suit, Lucas previously said, “the real question would have been the property owners.”
“They could make an argument for loss of income from the sale of their properties to Related Digital,” he said.
Another neighboring resident, Kathryn Haushalter, who lives on Willow Road, recently filed a motion in Washtenaw County Circuit Court to intervene in the lawsuit. Haushalter is seeking to defend the township board’s initial decision to deny conditionally rezoning the land.
Days before filing the legal complaint, she told township officials at the Dec. 10 meeting that she would be at every meeting until the issue is settled.
“You were rushed to do it. You were bullied. And, yes, you were weak,” she said during a fiery public comment.
“I have nothing against you personally, but you need to resign. We are not done fighting,” she said.
The legal argument
RD Michigan (Related Digital), and property owners Feldkamp Siblings LLC, Dennis and Lynn Finkbeiner, Wilkin Farm Properties LLC, and Dennis and Alice Wilkin filed the original Sept. 12 suit in Washtenaw County Circuit Court.
In the Sept. 12 suit, Related Digital and the property owners alleged, in part, the denial of the rezoning constitutes “an unreasonable exercise of the Township’s police power,” it states.
The township’s local zoning ordinance excludes places where a data center could be allowed, which would be a violation of state law — known as “exclusionary zoning.”
No land in the township is zoned for industrial and research purposes, and no land is envisioned for industrial uses on the township’s future land use map.
The suit also claimed the township’s denial was in violation of Michigan’s Zoning Enabling Act and due process of law. It further contends the data center proposal was “appropriate, necessary and reasonable.”
“We could not prove we weren’t being exclusionary,” Clerk Kelly Marion said. “If you lose on one count, you lose on all of them.”
Not only was there monetary risk, but property owners could have found a different data center partner even if the township won the case, Marion said.
“They said they could find a company that would lease it to a government or a school,” she said, referring to a public university that is exempt under the law from following local building and zoning codes and would not generate tax revenue.
“The scariest would have been a data center without any local control,” she said, adding property owners have also mentioned solar and housing as possible uses for the land.
Related Digital has argued that the firm and property owners had a solid case against the township.
“The sellers would have had a clear claim against the Township regarding their rights as a property owner to develop their property for a permissible land use,” Related Digital spokesperson Natalie Ravitz said in a statement to MLive.
Ravitz said the assumption the land could still be developed for a data center or other non-agricultural uses are “correct.” Related Digital could also have partnered with a university or non-profit on a data center, “which then would have meant zero control/tax revenue for the community,” she said.
“Fortunately, we were able to reach a settlement with the Township to allow this project to move forward while codifying restrictions on the development related to water usage, setbacks, site plans and decommissioning.”
As part of the settlement, Related Digital also agreed to contribute $14 million to the township and three local fire departments, according to the consent judgment.
Township trustee and zoning administrator Tom Hammond was worried about blowback that would have come had the township fought the suit and lost.
Hammond pointed to a case in Grand Traverse County, where Wineries of Old Mission Peninsula won a federal lawsuit against Peninsula Township over zoning regulations deemed too restrictive. That township was hit with about $50 million in damages, as legal disputes continue.
“Now they want the board to resign (in Peninsula Township),” he said. “The residents are saying, why did we lose all this money?”
“I’m a taxpayer just like everyone else, and I wouldn’t want to pay for that lawsuit, and every (property tax paying) resident in the township would have been responsible for that,” he added.
Saline Township officials’ decision to settle the lawsuit brought some benefits to the township, Hammond said.
“A conservation easement, money for farmland preservation. These are things that are totally new to us,” he said.
“If the option would have been … to keep it farmland, I think everyone on the board would have gone for that. But there is a financial gain for the landowners,” he said.
He was also worried about losing local control if a government entity or university got involved in developing the land.
Township Supervisor Jim Marion was the only board member to vote against pursuing a lawsuit settlement.
“I was trying to stick up for the township residents,” Jim Marion said.
“If we would have put it on the ballot,” he said, “it would have been overwhelmingly against it.”
But does he think the township had a chance of winning in court? No.
“Not according to our attorneys. Both of them said we were going to lose,” Jim Marion said.
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