By: Capriglione H.B. No. 2482
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the temporary exemption of certain tangible personal
  property related to data centers from the sales and use tax.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle H, Chapter 151.359 Subsections (a) (b)
  (d) (e) and (f), Tax Code are amended to read as follows:
         Sec. 151.359.  PROPERTY USED IN CERTAIN DATA CENTERS;
  TEMPORARY EXEMPTION. (a) In this section:
               (1)  "County average weekly wage" means the average
  weekly wage in a county for all jobs during the most recent four
  quarterly periods for which data is available, as computed by the
  Texas Workforce Commission, at the time a data center creates a job
  used to qualify under this section.
               (2)  "Data center" means at least 100,000 square feet
  of space in one or more buildings [a single building] located or to
  be located on a single parcel of land or on contiguous or
  noncontiguous parcels of land [or portion of a single building,
  which space]:
                     (A)  [is] located in this state;
                     (B)  [is] specifically constructed or refurbished
  and actually used primarily to house servers and related equipment
  and support staff for the processing, storage, and distribution of
  data;
                     (C)  [is] used by one or more [a single]
  qualifying occupants [occupant] for the processing, storage, and
  distribution of data;
                     (D)  [is] not used primarily by a
  telecommunications provider to place tangible personal property
  that is used to deliver telecommunications services; [and]
                     (E)  has an uninterruptible power source,
  [generator] backup electricity generation system [power], [a]
  sophisticated fire suppression and prevention system, and enhanced
  physical security that includes restricted access, video
  surveillance, and electronic systems; and
                     (F)  noncontiguous parcels must be located in the
  same county or an adjacent county and connected by fiber and
  associated equipment required for operating a fiber transmission
  network between data center buildings or parcels and for the sole
  use of the qualifying occupants or their agent(s).
               (3)  "Permanent job" means an employment position that
  will exist for at least five years after the date the job is
  created.
               (4)  "Qualifying data center" means a data center that
  meets the qualifications prescribed by Subsection (d).
               (5)  "Qualifying job" means a full-time, permanent job
  that pays at least 120 percent of the county average weekly wage in
  the county in which the data center position [job] is located
  [based]. The term includes a new employment position staffed by a
  third-party employer if a written contract exists between the
  third-party employer and a qualifying owner, qualifying operator,
  or qualifying occupant that provides that the employment position
  is [permanently] assigned to an associated qualifying data center.
               (6)  "Qualifying operator" means a person who controls
  access to a qualifying data center, regardless of whether that
  person owns each item of tangible personal property located at the
  qualifying data center. A qualifying operator may also be the
  qualifying owner.
               (7)  "Qualifying owner" means a person who owns the
  building or buildings in which a qualifying data center is located.
  A qualifying owner may also be the qualifying operator.
               (8)  "Qualifying occupant" means a person who:
                     (A)  contracts with a qualifying owner or
  qualifying operator to place, or cause to be placed, and to use
  tangible personal property at the qualifying data center; or
                     (B)  in the case of a qualifying occupant who is
  also the qualifying owner and the qualifying operator, places or
  causes to be placed, and uses tangible personal property at the
  qualifying data center.
         (b)  Except as otherwise provided by this section, tangible
  personal property that is necessary and essential to the operation
  of a qualified data center is exempted from the taxes imposed by
  this chapter if the tangible personal property is purchased for
  installation at, incorporation into, or in the case of Subdivision
  (1), use in a qualifying data center by a qualifying owner,
  qualifying operator, or qualifying occupant, and the tangible
  personal property is:
               (1)  electricity;
               (2)  an electrical system;
               (3)  a cooling system;
               (4)  a backup electricity generation system [an
  emergency generator];
               (5)  hardware or a distributed mainframe computer or
  server;
               (6)  a data storage device;
               (7)  network connectivity equipment;
               (8)  a rack, cabinet, and raised floor system;
               (9)  a peripheral component or system;
               (10)  software;
               (11)  a mechanical, electrical, or plumbing system that
  is necessary to operate any tangible personal property described by
  Subdivisions (2)-(10);
               (12)  any other item of equipment or system necessary
  to operate any tangible personal property described by Subdivisions
  (2)-(11), including a fixture; and
               (13)  a component part of any tangible personal
  property described by Subdivisions (2)-(10).
         (d)  Subject to Subsection (k), a data center may be
  certified by the comptroller as a qualifying data center for
  purposes of this section if, on or after September 1, 2013:
               (1)  one or more [a single] qualifying occupants
  [occupant]:
                     (A)  contract [contracts] with a qualifying owner
  or qualifying operator to lease or license via service agreement
  space in which at least one [the] qualifying occupant will locate a
  data center; [or]
                     (B)  occupy [occupies] a space that was not
  previously used as a data center in which at least one [the]
  qualifying occupant will locate a data center[, in the case of a
  qualifying occupant who is also the qualifying operator and the
  qualifying owner]; or
                     (C)  refurbish a space in which at least one
  qualifying occupant will locate a data center; and
               (2)  the qualifying owner, qualifying operator, or
  qualifying occupant or occupants, jointly or independently:
                     (A)  create [creates] at least 20 qualifying jobs.
  All qualifying jobs must be located in the county or counties in
  which the data center is located.[, not including jobs] Jobs moved
  from one county in this state to another county in this state may
  not be included; and
                     (B)  make [makes] or agree [agrees] to make a
  capital investment, on or after September 1, 2013, of at least $200
  million in that particular data center over a five-year period
  beginning on the date the data center is certified by the
  comptroller as a qualifying data center.
         (e)  A data center that is eligible under Subsection (d) to
  be certified by the comptroller as a qualified data center shall
  apply to the comptroller for certification as a qualifying data
  center and for issuance of a registration number or numbers by the
  comptroller. The application must be made on a form prescribed by
  the comptroller and include the information required by the
  comptroller. The application must include the name and contact
  information for the qualifying occupant and, if applicable, the
  name and contact information for the qualifying owner and the
  qualifying operator who will claim the exemption authorized under
  this section. The application form must include a section for the
  applicant to certify that the capital investment required by
  Subsection (d)(2)(B) will be met independently or jointly by the
  qualifying occupant or occupants, qualifying owner, or qualifying
  operator within the time period prescribed by that subsection
  [Subsection (d)(2)(B)].
         (f)  The exemption provided by this section begins on the
  date the data center is certified by the comptroller as a qualifying
  data center and expires:
               (1)  on the 10th anniversary of that date, if the
  qualifying occupant or occupants, qualifying owner, or qualifying
  operator independently or jointly makes a capital investment of at
  least $200 million but less than $250 million as provided by
  Subsection (d)(2)(B); or
               (2)  on the 15th anniversary of that date, if the
  qualifying occupant or occupants, qualifying owner, or qualifying
  operator independently or jointly makes a capital investment of
  $250 million or more as provided by Subsection (d)(2)(B).
         SECTION 2.  Subtitle H, Chapter 151.3595 Subsections (a) (b)
  (d) (e) and (f), Tax Code are amended to read as follows:
         Sec. 151.3595.  PROPERTY USED IN CERTAIN LARGE DATA CENTER
  PROJECTS; TEMPORARY EXEMPTION. (a) In this section:
               (1)  "County average weekly wage" means the average
  weekly wage in a county for all jobs during the most recent four
  quarterly periods for which data is available, as computed by the
  Texas Workforce Commission, at the time a large data center project
  creates a job used to qualify under this section.
               (2)  "Large data center project" means a project that:
                     (A)  is located in this state;
                     (B)  is composed of one or more buildings
  comprising at least 250,000 square feet of space located or to be
  located on one or more [a single parcel of land or on] contiguous or
  noncontiguous parcels of land that are commonly owned or owned by
  affiliation with the qualifying operator;
                     (C)  is specifically constructed or refurbished
  and actually used primarily to house servers and related equipment
  and support staff for the processing, storage, and distribution of
  data;
                     (D)  is used by one or more [a single] qualifying
  occupants or operators [occupant] for the processing, storage, and
  distribution of data;
                     (E)  is not used primarily by a telecommunications
  provider to place tangible personal property used to deliver
  telecommunications services; and
                     (F)  has an uninterruptible power source, [a]
  backup electricity generation system [generator], [a] fire
  suppression and prevention system, and physical security that
  includes restricted access, video surveillance, and electronic
  systems; and
                     (G)  may include noncontiguous parcels only if the
  noncontiguous parcels are located in the same or adjacent county
  and connected by fiber and associated equipment required for
  operating a fiber transmission network between data center
  buildings or parcels and for the sole use of the qualifying
  occupants or their agent(s).
               (3)  "Permanent job" means an employment position that
  will exist for at least five years after the date the job is
  created.
               (4)  "Qualifying job" means a full-time, permanent job
  that pays at least 120 percent of the county average weekly wage in
  the county in which the large data center project position [job] is
  located [based]. The term includes a new employment position
  staffed by a third-party employer if a written contract exists
  between the third-party employer and a qualifying owner, qualifying
  operator, or qualifying occupant that provides that the employment
  position is [permanently] assigned to an associated qualifying
  large data center project.
               (5)  "Qualifying large data center project" means a
  large data center project that meets the qualifications prescribed
  by Subsection (d).
               (6)  "Qualifying operator" means a person who controls
  access to a qualifying large data center project, regardless of
  whether that person owns each item of tangible personal property
  located at the qualifying large data center project. A qualifying
  operator may also be the qualifying owner.
               (7)  "Qualifying owner" means a person who owns a
  building in which a qualifying large data center project is
  located. A qualifying owner may also be the qualifying operator.
               (8)  "Qualifying occupant" means a person who:
                     (A)  contracts with a qualifying owner or
  qualifying operator to place, or cause to be placed, and to use
  tangible personal property at the qualifying large data center
  project; or
                     (B)  in the case of a qualifying occupant who is
  also the qualifying owner and the qualifying operator, places or
  causes to be placed and uses tangible personal property at the
  qualifying large data center project.
         (b)  Except as otherwise provided by this section, tangible
  personal property that is necessary and essential to the operation
  of a qualifying large data center project is exempted from the taxes
  imposed by this chapter if the tangible personal property is
  purchased for installation at, incorporation into, or in the case
  of electricity, use in a qualifying large data center project by a
  qualifying owner, qualifying operator, or qualifying occupant, and
  the tangible personal property is:
               (1)  electricity;
               (2)  an electrical system;
               (3)  a cooling system;
               (4)  a backup electricity generation system [an
  emergency generator];
               (5)  hardware or a distributed mainframe computer or
  server;
               (6)  a data storage device;
               (7)  network connectivity equipment;
               (8)  a rack, cabinet, and raised floor system;
               (9)  a peripheral component or system;
               (10)  software;
               (11)  a mechanical, electrical, or plumbing system that
  is necessary to operate any tangible personal property described by
  Subdivisions (2)-(10);
               (12)  any other item of equipment or system necessary
  to operate any tangible personal property described by Subdivisions
  (2)-(11), including a fixture; and
               (13)  a component part of any tangible personal
  property described by Subdivisions (2)-(10).
         (d)  Subject to Subsection (j), a large data center project
  may be certified by the comptroller as a qualifying large data
  center project for purposes of this section if, on or after June 1,
  2015:
               (1)  one or more [a single] qualifying occupants
  [occupant]:
                     (A)  contract [contracts] with a qualifying owner
  or qualifying operator to lease, license, or enter into a service
  agreement for space in which at least one [the] qualifying occupant
  will locate a large data center project; [or]
                     (B)  occupy [occupies] a space that was not
  previously used as a data center in which at least one [the]
  qualifying occupant will locate a large data center project, if at
  least one [in the case] of the [a] qualifying occupants [occupant
  who] is also the qualifying operator and the qualifying owner; or
                     (c)  refurbishes a space in which at least one
  qualifying occupant will locate a large data center project, if at
  least one of the qualifying occupants is also the qualifying
  operator and the qualifying owner; and
               (2)  the qualifying owner, qualifying operator, or
  qualifying occupant or occupants, independently or jointly:
                     (A)  create [creates] at least 40 qualifying jobs.
  All jobs must be in the county or counties in which the large data
  center project is located.[, not including jobs] Jobs moved from
  one county in this state to another county in this state may not be
  included;
                     (B)  on or after May 1, 2015, make [makes] or agree
  [agrees] to make a capital investment of at least $500 million in
  that particular large data center project, the amount of which may
  not include a capital investment to replace personal property
  previously placed in service in that large data center project,
  over a five-year period beginning on the earlier of:
                           (i)  the date the large data center project
  submits the application described by Subsection (e); or
                           (ii)  the date the large data center project
  is certified by the comptroller as a qualifying large data center
  project; and
                     (C)  agrees to contract for at least 20 megawatts
  of transmission capacity for operation of the large data center
  project.
         (e)  A large data center project that is eligible under
  Subsection (d) to be certified by the comptroller as a qualifying
  large data center project shall apply to the comptroller for
  certification and for the issuance of a registration number or
  numbers by the comptroller. The application must be made on a form
  prescribed by the comptroller and must include the information
  required by the comptroller. The application must include the name
  and contact information for each [the] qualifying occupant, and, if
  applicable, the name and contact information for the qualifying
  owner and the qualifying operator who will claim the exemption
  authorized under this section. The application form must include a
  section for the applicant to certify that the capital investment
  required by Subsection (d)(2)(B) will be met independently or
  jointly by the qualifying occupant or occupants, qualifying owner,
  or qualifying operator within the time period prescribed by that
  subsection [Subsection (d)(2)(B)].
         (f)  The exemption provided by this section begins on the
  date the large data center project is certified by the comptroller
  as a qualifying large data center project and expires on the 20th
  anniversary of that date, if the qualifying occupant or occupants,
  qualifying owner, or qualifying operator, independently or jointly
  makes the capital investment of at least $500 million as provided by
  Subsection (d)(2)(B).
         SECTION 3.  The change in law made by this Act does not
  affect tax liability accruing before the effective date of this
  Act. That liability continues in effect as if this Act had not been
  enacted, and the former law is continued in effect for the
  collection of taxes due and for civil and criminal enforcement of
  the liability for those taxes.
         SECTION 4.  This Act takes effect September 1, 2023.