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