88R13363 CJD-F

By: Shine H.B. No. 4371

A BILL TO BE ENTITLED

AN ACT

relating to an exemption from sales and use taxes for certain items used by or for certain life sciences campuses.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended by adding Section 151.360 to read as follows:

Sec. 151.360. ITEMS USED FOR CERTAIN LIFE SCIENCES CAMPUSES. (a) In this section:

(1) "Affiliated group" has the meaning assigned by Section 171.0001.

(2) "Life sciences activity" includes, when conducted with respect to an existing or potential life sciences product or service:

(A) discovery;

(B) research, including pre-clinical and clinical;

(C) development;

(D) testing;

(E) clinical trials;

(F) regulatory application and review;

(G) dispensation;

(H) administration;

(I) prescription;

(J) manufacture; and

(K) production.

(3) "Life sciences campus" means a building that has at least 1,500,000 square feet of space and any other buildings and improvements to real property:

(A) that are owned by a single owner or by multiple owners that are members of the same affiliated group;

(B) that are located or to be located on a single parcel of land, or on multiple parcels of land, if each parcel of land is:

(i) located entirely within a county:

(a) with a population of one million or more;

(b) in which all or part of a municipality with a population of one million or more is located; and

(c) that is located adjacent to a county with a population of 2.5 million or more; and

(ii) owned by a single owner or by multiple owners that are members of the same affiliated group;

(C) the owner or owners of which, on or before January 1, 2030, make a capital investment of at least $1 billion to construct, refurbish, repair, restore, remodel, or modify for use primarily to conduct life sciences activities and other activities necessary and essential to life sciences activities; and

(D) that, on completion of the construction, refurbishment, repair, restoration, remodeling, or modification, are used by an owner or tenant primarily to conduct life sciences activities and other activities necessary and essential to life sciences activities.

(4) "Life sciences product or service" includes a drug, medicine, therapeutic appliance, device, or supply, another similar or related item, or an item intended for use with or as a component of an item listed in this subdivision if the item is intended to:

(A) be dispensed, administered, or prescribed for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans or other animals; or

(B) affect the structure or function of the body of humans or other animals.

(5) "Tenant" means a person who rents space in a life sciences campus and whose activities at the campus are primarily life sciences activities.

(b) The following are exempted from the taxes imposed by this chapter:

(1) tangible personal property that is used to construct, refurbish, repair, restore, remodel, or modify an improvement to real property that is:

(A) part of a life sciences campus; or

(B) installed at or incorporated into an improvement to real property that is part of a life sciences campus;

(2) labor to construct, refurbish, repair, restore, remodel, or modify an improvement to real property that is part of a life sciences campus;

(3) tangible personal property that is purchased, leased, or rented by a tenant or an owner of a life sciences campus for use primarily in the conduct of life sciences activities at the life sciences campus; and

(4) gas and electricity that is purchased by a tenant or an owner of a life sciences campus for use at the life sciences campus.

(c) The exemption provided by this section does not apply to the taxes imposed under Chapter 321, 322, or 323.

SECTION 2. Sections 151.317(a) and (b), Tax Code, are amended to read as follows:

(a) Subject to Sections 151.1551, 151.359, [and] 151.3595, and 151.360 and Subsection (d) of this section, gas and electricity are exempted from the taxes imposed by this chapter when sold for:

(1) residential use;

(2) use in powering equipment exempt under Section 151.318 or 151.3185 by a person processing tangible personal property for sale as tangible personal property, other than preparation or storage of prepared food described by Section 151.314(c-2);

(3) use in lighting, cooling, and heating in the manufacturing area during the actual manufacturing or processing of tangible personal property for sale as tangible personal property, other than preparation or storage of prepared food described by Section 151.314(c-2);

(4) use directly in exploring for, producing, or transporting, a material extracted from the earth;

(5) use in agriculture, including dairy or poultry operations and pumping for farm or ranch irrigation;

(6) use directly in electrical processes, such as electroplating, electrolysis, and cathodic protection;

(7) use directly in the off-wing processing, overhaul, or repair of a jet turbine engine or its parts for a certificated or licensed carrier of persons or property;

(8) use directly in providing, under contracts with or on behalf of the United States government or foreign governments, defense or national security-related electronics, classified intelligence data processing and handling systems, or defense-related platform modifications or upgrades;

(9) use directly by a data center or large data center project that is certified by the comptroller as a qualifying data center under Section 151.359 or a qualifying large data center project under Section 151.3595 in the processing, storage, and distribution of data;

(10) a direct or indirect use, consumption, or loss of electricity by an electric utility engaged in the purchase of electricity for resale; [or]

(11) use in timber operations, including pumping for irrigation of timberland; or

(12) use at a life sciences campus that qualifies for the exemption provided by Section 151.360.

(b) The sale, production, distribution, lease, or rental of, and the use, storage, or other consumption in this state of, gas and electricity sold for the uses listed in Subsection (a), are exempted from the taxes imposed by a municipality under Chapter 321 except as provided by Sections 151.359(j), 151.360(c), and 321.105.

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.