2015-2016 Regular Session SB 798 PN 0863 Bill Text (HTM)

PRINTER'S NO. 863

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

798

Session of

2015

INTRODUCED BY HUTCHINSON, AUMENT, BARTOLOTTA, GORDNER, RAFFERTY,

SMITH, TEPLITZ, VOGEL, VULAKOVICH AND WHITE, MAY 6, 2015

REFERRED TO FINANCE, MAY 6, 2015

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," providing for a computer data center equipment

incentive program.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Article XXIX-D heading of the act of March 4,

1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, added

October 9, 2009 (P.L.451, No.48) is amended to read:

ARTICLE XXIX-D

[(RESERVED)]

COMPUTER DATA CENTER EQUIPMENT

INCENTIVE PROGRAM

Section 2. The act is amended by adding sections to read:

Section 2901-D. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Computer data center." All or part of a facility that may

be composed of one or more businesses, owners or tenants, that

is or will be predominantly used to house working servers or

similar data storage systems and that may have uninterruptible

energy supply or generator backup power, or both, cooling

systems, towers and other temperature control infrastructure.

"Computer data center equipment." Equipment that is used to

outfit, operate or benefit a computer data center and component

parts, installations, refreshments, replacements and upgrades to

the equipment, whether any of the equipment is affixed to or

incorporated into real property, including:

(1) All equipment necessary for the transformation,

generation, distribution or management of electricity that is

required to operate computer server or similar data storage

equipment, including generators, uninterruptible energy

supplies, conduit, gaseous fuel piping, cabling, duct banks,

switches, switchboards, batteries and testing equipment.

(2) All equipment necessary to cool and maintain a

controlled environment for the operation of the computer

servers or data storage systems and other components of the

computer data center, including mechanical equipment,

refrigerant piping, gaseous fuel piping, adiabatic and free

cooling systems, cooling towers, water softeners, air

handling units, indoor direct exchange units, fans, ducting

and filters.

(3) All water conservation systems, including facilities

or mechanisms that are designed to collect, conserve and

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reuse water.

(4) All software, including, but not limited to,

enabling software and licensing agreements, computer server

or similar data storage equipment, chassis, networking

equipment, switches, racks, cabling, trays and conduit.

(5) All monitoring equipment and security systems.

(6) Modular data centers and preassembled components of

any item described in this definition, including components

used in the manufacturing of modular data centers.

(7) Other tangible personal property that is essential

to the operations of a computer data center.

"Department." The Department of Revenue of the Commonwealth.

"Existing computer data center." A computer data center in

operation prior to January 1, 2014.

"Facility." One or more parcels of land in this Commonwealth

and any structures and personal property contained on the land.

"New computer data center." A computer data center that

first commences operation on or after January 1, 2014.

"New investment." Construction, expansion or build out of

data center space at either a new computer data center or an

existing computer data center on or after January 1, 2014, and

the purchase and installation of computer data center equipment,

except for items described under paragraph (4) of the definition

of "computer data center equipment."

"Owner or operator." Includes a single entity, multiple

entities or affiliated entities.

"Qualification period." As follows:

(1) With respect to the owner or operator of a computer

data center certified under this article, a period of time

beginning on the date of certification of the computer data

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center and expiring at the end of the fifteenth full calendar

year following the calendar year in which the owner or

operator filed the form for certification.

(2) With respect to a qualified tenant of the owner or

operator of a computer data center certified under this

article, a period of time beginning on the date that the

qualified tenant enters into an agreement concerning the use

or occupancy of the computer data center and expiring at the

earlier of the expiration of the term of the agreement or the

end of the 10th full calendar year following the calendar

year in which the qualified tenant enters into the agreement.

"Qualified tenant." An entity that contracts with the owner

or operator of a computer data center that is certified pursuant

to this article to use or occupy part of the computer data

center for at least 100 kilowatts per month for two or more

years.

"Tax exemption." The tax exemption provided for under this

article.

"Telecommunications provider." A provider of

telecommunications services, as defined in 61 Pa. Code § 60.20

(relating to telecommunications service).

"Tenant." An entity that contracts with the owner or

operator of a computer data center to use or occupy part of the

computer data center.

Section 2902-D. Sales and use tax exemption.

(a) State sales and use tax.--The tax imposed by section 202

shall not be imposed upon the sale at retail or use of computer

data center equipment for installation in a computer data

center, purchased by:

(1) An owner or operator of a computer data center

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certified under this article.

(2) A qualified tenant of a new computer data center

certified under this article.

(b) Local sales and use tax.--The sale at retail or use of

computer data center equipment for installation in a computer

data center shall be exempt from a city or county tax on

purchase price authorized under Article XXXI-B of the act of

July 28, 1953 (P.L.723, No.230), known as the Second Class

County Code, and the act of June 5, 1991 (P.L.9, No.6), known as

the Pennsylvania Intergovernmental Cooperation Authority Act for

Cities of the First Class, if purchased by:

(1) An owner or operator of a computer data center

certified under this article.

(2) A qualified tenant of a new computer data center

certified under this article.

qualification period.

(d) Exclusions.--The following do not qualify for a tax

exemption:

(1) Telecommunications providers' computer data centers

that do not have retail or wholesale customers being billed

or paying for services, and whose majority of services are

for internal services to itself or its subsidiaries.

(2) Computer data center equipment used by the computer

data center to:

(i) generate electricity for resale purposes to a

power utility; or

(ii) generate, provide or sell more than 5% of its

electricity outside of the computer data center.

Section 2903-D. Application.

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To be considered for a tax exemption, an owner or operator of

a computer data center shall submit to the department an

application on a form prescribed by the department that includes

the following:

(1) The owner's or operator's name, address and

telephone number.

(2) The address of the site where the facility is or

will be located, including, if applicable, information

sufficient to identify the specific portion or portions of

the facility comprising the computer data center.

(3) If the computer data center is to qualify under

section 2906-D(1), the following:

(i) The anticipated investment associated with the

computer data center for which the tax exemption is being

sought.

(ii) An affirmation, signed by an authorized

executive representing the owner or operator, that the

computer data center is expected to satisfy the

certification requirements prescribed in section 2906-

D(1).

(4) If the computer data center is to qualify under

section 2906-D(2), an affirmation, signed by an authorized

executive representing the owner or operator, that the

computer data center has satisfied, or will satisfy, the

certification requirements prescribed in section 2906-D(2).

Section 2904-D. Review of application.

(a) General rule.--Within 60 days after receiving a complete

and correct application, the department shall review the

application and either issue a written certification that the

computer data center qualifies for the tax exemption or provide

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written reasons for its denial.

(b) Deemed approval.--Failure of the department to approve

or deny an application within 60 days after the date the owner

or operator of a computer data center submits the application to

the department constitutes certification of the computer data

center, and the department shall issue written certification to

the owner or operator within 14 days. The department may not

certify any new computer data center after December 31, 2029.

Section 2905-D. Separation of facilities.

(a) Separate certification.--An owner or operator of a

computer data center may separate a facility into one or more

computer data centers, which may each receive a separate

certification, if each computer data center individually meets

the requirements prescribed in section 2906-D.

(b) Limitation.--A portion of a facility or an article of

computer data equipment shall not be deemed to be a part of more

than one computer data center.

more parcels, buildings or condominiums in a facility into a

single computer data center if, in the aggregate, the parcels,

buildings and condominiums meet the requirements of this

article.

Section 2906-D. Eligibility requirements.

A computer data center must meet one of the following

requirements, after taking into account the combined investments

made and annual compensation paid by the owner or operator of a

computer data center or a qualified tenant:

(1) On or before the fourth anniversary of

certification, the computer data center creates a minimum

investment of:

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(i) At least $25,000,000 of new investment if the

computer data center is located in a county with a

population of 250,000 or fewer individuals; or

(ii) At least $50,000,000 of new investment if the

computer data center is located in a county with a

population of more than 250,000 individuals.

(2) On or before the fourth anniversary of

certification, one or more taxpayers operating or occupying a

computer data center, in the aggregate, pay annual

compensation of at least $1,000,000 to employees at the

certified computer data center site for each year of the

certification.

Section 2907-D. Notification.

(a) Requirements satisfied.--On or before the fourth

anniversary of the certification of a computer data center, the

owner or operator of a computer data center shall notify the

department in writing whether the computer data center for which

the certification is requested has satisfied the requirements

prescribed in section 2906-D.

(b) Records.--Until a computer data center satisfies the

requirements prescribed in section 2906-D, the owner, operator

and qualified tenants shall maintain detailed records of all

investment created by the computer data center, including costs

of buildings and computer data center equipment, and all tax

exemption directly received by the owner, operator or qualified

tenant.

Section 2908-D. Revocation of certification.

(a) Revocation.--If the department determines that the

requirements of section 2906-D have not been satisfied, the

department may revoke the certification of a computer data

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center.

(b) Appeal.--The owner or operator of the computer data

center may appeal the revocation. Appeals filed under this

section shall be governed by Article II.

section, the qualification period of any owner, operator or

qualified tenant of the computer data center expires, and the

department may recapture from the owner, operator or qualified

tenant all or part of the tax exemption provided directly to the

owner or operator. The department may give special consideration

or allow a temporary exemption from recapture of the tax

exemption if there is extraordinary hardship due to factors

beyond the control of the owner or operator or qualified tenant.

The department may require the owner or operator or qualified

tenant to file appropriate amended tax returns to reflect any

recapture of the tax exemption.

Section 2909-D. Regulations.

The department shall promulgate regulations and prescribe

forms and procedures as necessary for the purposes of this

article.

Section 2910-D. Confidential information.

Proprietary business information contained in the application

form described in section 2903-D and the written notice

described in section 2907-D, as well as information concerning

the identity of a qualified tenant, are confidential and may not

be disclosed to the public. The department may disclose the name

of a computer data center that has been certified under this

article.

Section 2911-D. List of tenants.

An owner or operator of a computer data center shall provide,

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to the extent permissible under Federal law, the department with

a list of qualified tenants, including the commencement and

expiration dates of each qualified tenant's agreement to use or

occupy part of the computer data center. The list shall be

provided to the department annually, upon request by the

department.

Section 2912-D. Sale or transfer.

Except as provided in section 2908-D, a computer data center

retains its certification regardless of a transfer, sale or

other disposition, directly or indirectly, of the computer data

center.

Section 2913-D. Exemption certificate.

An owner, operator or tenant must prepare and deliver a

properly executed exemption certificate to a vendor from which

the owner, operator or tenant purchases exempt property.

Section 3. This act shall take effect immediately.

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