Bill Summary – FastDemocracy

General Assembly                      Raised Bill No. 6468
      January Session, 2021                 LCO No. 3635
     Referred to Committee on          FINANCE, REVENUE AND
     BONDING
     Introduced by:
       (FIN)
 AN ACT CONCERNING INCENTIVES FOR QUALIFIED DATA
 CENTERS TO LOCATE IN THE STATE.
 Be it enacted by the Senate and House of Representatives in General
 Assembly convened:
      Section 1. (NEW) (Effective July 1, 2021) (a) As used in this section:
       (1) "Colocation tenant" means a person that contracts with the owner
    or operator of a qualified data center to use or occupy all or part of a
    qualified data center for a period of at least two years;
      (2) "Eligible qualified data center costs" means expenditures made on
   or after July 1, 2021, for the development, acquisition, construction,
   rehabilitation, renovation, repair or operation of a facility to be used as
   a qualified data center, including the cost of land, buildings, site
   improvements, modular data centers, lease payments, site
   characterization and assessment, engineering services, design services
   and data center equipment acquisition and permitting related to such
   data center equipment acquisitions. "Eligible qualified data center costs"
   does not include expenditures made in connection with real or personal
   property that is located outside the boundaries of the facility to be used
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 as a qualified data center;
   (3) "Enterprise information technology equipment" means:
   (A) Hardware that support computing, networking or data storage
 functions, including servers and routers;
   (B) Networking systems equipment that support computing,
 networking or data storage functions and have an industry designation
 as equipment within the enterprise class or data center class of
 networking systems; and
   (C) Generators and other equipment used to ensure an uninterrupted
 power supply for the hardware and networking systems equipment
 under subparagraph (A) or (B) of this subdivision;
   (4) "Facility" means one or more contiguous tracts of land in the state
 and any structure and personal property contained on such land;
   (5) "Operator" means a person that contracts with the owner of a
 qualified data center to operate such qualified data center;
     (6) "Owner" means a person that holds a leasehold estate in excess of
 fifty years or a fee title to a facility;
    (7) "Person" means an individual, an estate, a trust, a receiver, a
 cooperative association, a corporation, a company, a firm, a partnership,
 a limited partnership, a limited liability company, a limited liability
 partnership or a joint venture;
    (8) "Qualified data center" means a facility that is developed,
 acquired, constructed, rehabilitated, renovated, repaired or operated, to
 house a group of networked computer servers in one physical location
 or multiple contiguous locations to centralize the storage, management
 and dissemination of data and information pertaining to a particular
 business or classification or body of knowledge;
   (9) "Qualified data center equipment" means computer equipment,
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 software and hardware purchased or leased for the processing, storage,
 retrieval or communication of data, including:
    (A) Computer servers, routers, connections, chassis, networking
 equipment, switches, racks, fiber optic and copper cables, trays,
 conduits and other enabling machinery, equipment and hardware,
 regardless of whether such personal property is affixed to or
 incorporated into real property;
    (B) Equipment used in the operation of computer equipment or
 software for the benefit of a qualified data center, including component
 parts, replacement parts and upgrades, regardless of whether the
 personal property is affixed to or incorporated into real property;
    (C) Equipment necessary for the transformation, generation,
 distribution or management of electricity that is required to operate
 computer servers and related equipment, including substations,
 generators, uninterruptible energy equipment, supplies, conduits, fuel
 piping and storage, cabling, duct banks, switches, switchboards,
 batteries and testing equipment;
    (D) Equipment necessary to cool and maintain a controlled
 environment for the operation of computer servers and other equipment
 of a qualified data center, including chillers, mechanical equipment,
 refrigerant piping, fuel piping and storage, adiabatic and free cooling
 systems, cooling towers, water softeners, air handling units, indoor
 direct exchange units, fans, ducting and filters;
    (E) Water conservation systems, including equipment designed to
 collect, conserve and reuse water;
   (F) Conduit, ducting and fiber optic and copper cables located
 outside the qualified data center, that are directly related to connecting
 one or more qualified data center locations;
   (G) Monitoring equipment and security systems;
   (H) Modular data centers and preassembled components of any item
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 described in this subsection, including components used in the
 manufacturing of modular data centers; and
    (I) Any other personal property that is essential to the operations of a
 qualified data center or that is acquired for incorporation into or used
 or consumed in the operation of the qualified data center; and
    (10) "Qualified investment" means the aggregate, nonduplicative
 eligible qualified data center costs expended by an owner, operator and
 colocation tenant of a qualified data center.
    (b) Any person that anticipates it will own, operate or be a colocation
 tenant in a qualified data center in this state may apply to the
 Commissioner of Economic and Community Development to enter into
 an agreement in accordance with the provisions of subsection (c) of this
 section, for exemption from the taxes imposed under chapters 219 and
 203 of the general statutes as set forth in subsections (d) and (e) of this
 section.
    (c) (1) Any person described in subsection (b) of this section that seeks
 an exemption under subsection (b) of this section shall submit an
 application to the Commissioner of Economic and Community
 Development, in a manner and form prescribed by the commissioner. If
 the commissioner approves such application, the commissioner shall
 enter into an agreement with such person, provided such person
 demonstrates to the satisfaction of the commissioner that:
    (A) The facility to be developed, acquired, constructed, rehabilitated,
 renovated, repaired or operated will be used as a qualified data center;
 and
    (B) The qualified data center will make, on or before the fifth
 anniversary of the date an agreement entered into pursuant to this
 section becomes effective, a qualified investment of at least (i) fifty
 million dollars if such qualified data center is located in an enterprise
 zone designated pursuant to section 32-70 of the general statutes or a
 federal qualified opportunity zone designated pursuant to the Tax Cuts
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 and Jobs Act of 2017, P.L. 115-97, as amended from time to time, or (ii)
 two hundred million dollars if such qualified data center is not located
 in an enterprise zone or a federal qualified opportunity zone.
   (2) Any agreement entered into pursuant to this section shall:
    (A) Be for a period of twenty years, unless extended under the
 provisions of subdivision (3) of this subsection, from the date an
 agreement entered into pursuant to this section becomes effective,
 which may be in the year in which the construction, rehabilitation,
 renovation or repair of a qualified data center commences;
   (B) Include a five-year qualifying period, from the date an agreement
 entered into pursuant to this section becomes effective, for the
 applicable qualified investment amount set forth in subparagraph (B) of
 subdivision (1) of this subsection to be reached;
    (C) Include the payment of an annual fee by the qualified data center,
 to be determined annually by the commissioner and not to exceed fifty
 thousand dollars, for the administrative and operational costs of the
 Office of Data Infrastructure Administration and Security established
 under subsection (f) of this section. Such fee shall be paid by the
 qualified data center to the commissioner during each year of such
 qualifying period or until the applicable qualified investment amount
 set forth in subparagraph (B) of subdivision (1) of this subsection is
 reached, whichever is sooner;
   (D) Include a detailed description of the capital project that is the
 subject of the agreement;
   (E) Provide that the provisions of the agreement may be transferred,
 within the time period such agreement is effective and for the remaining
 duration of such time period, to any (i) subsequent owner of the
 qualified data center, (ii) operator or affiliate of the operator of the
 qualified data center, or (iii) colocation tenant, provided the facility
 continues to be used as a qualified data center; and
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   (F) Include provisions for the assessment and payment of the taxes
 exempted pursuant to such agreement and the rates or amounts of
 penalties and interest to be imposed thereon, if the commissioner
 determines that the requirements of the agreement or of a qualified data
 center are not being met or have not been met.
    (3) If a qualified data center makes a qualified investment of at least
 (A) two hundred million dollars if such qualified data center is located
 in an enterprise zone designated pursuant to section 32-70 of the general
 statutes or a federal qualified opportunity zone designated pursuant to
 the Tax Cuts and Jobs Act of 2017, P.L. 115-97, as amended from time to
 time, or (B) four hundred million dollars if such qualified data center is
 not located in an enterprise zone or a federal qualified opportunity zone,
 the commissioner shall extend to thirty years the period for which an
 agreement entered into pursuant to this section is effective.
    (4) Any qualified data center that enters into an agreement pursuant
 to this section and makes the applicable qualified investment amount
 set forth in subdivision (3) of this subsection shall be exempt from any
 financial transactions tax or fee that may be imposed by the state on
 trades of stocks, bonds, derivatives and other financial products. The
 exemption under this subdivision shall be effective for a period of thirty
 years from the date the construction, rehabilitation, renovation or repair
 of a facility is completed, as determined by the commissioner. The
 commissioner may incorporate the provisions of this subdivision into
 the agreement entered into pursuant to this section or amend an existing
 agreement with a qualified data center to incorporate the provisions of
 this subdivision.
    (d) (1) With respect to the exemption from the taxes imposed under
 chapter 219 of the general statutes, the Commissioner of Economic and
 Community Development shall notify the Commissioner of Revenue
 Services of any person that has entered into an agreement pursuant to
 this section. The Commissioner of Revenue Services shall provide to
 such person a certificate that exempts such person, and any contractor
 or subcontractor of such person, from such taxes for (A) the sale of and
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 the storage, use or other consumption in this state of qualified data
 center equipment acquired for incorporation into or used and consumed
 in the development, acquisition, construction, rehabilitation,
 renovation, repair or operation of a facility that is used or to be used as
 a qualified data center, (B) the sale of and the acceptance, use or other
 consumption in this state of any service described under subdivision
 (37) of subsection (a) of section 12-407 of the general statutes, that is used
 and consumed in the development, acquisition, construction,
 rehabilitation, renovation, repair or operation of a facility that is used or
 to be used as a qualified data center, and (C) all electricity used by a
 qualified data center. Such person, and any contractor or subcontractor
 of such person, may use such certificate for the purchase, storage, use or
 other consumption in this state of qualified data center equipment,
 services and electricity as set forth in this subsection and each seller of
 such equipment, services or electricity may rely on such certificate.
    (2) The certificate provided pursuant to subdivision (1) of this
 subsection shall, during the time period the agreement is effective,
 apply to any additional building at a qualified data center to be
 developed, acquired, constructed, rehabilitated, renovated, repaired or
 operated, to house a group of networked computer servers, regardless
 of whether such development, acquisition, construction, rehabilitation,
 renovation, repair or operation was contemplated at the time of entering
 into the agreement.
    (e) (1) With respect to the exemption from the tax imposed under
 chapter 203 of the general statutes, such exemption shall apply to (A)
 real property, buildings or structures, located within or at a qualified
 data center, and (B) enterprise information technology equipment used
 by a qualified data center.
    (2) The exemption under this subsection shall, during the time period
 the agreement is effective with respect to the exemption from the tax
 imposed under chapter 203 of the general statutes, apply to any
 additional building at a qualified data center that is developed,
 acquired, constructed, rehabilitated, renovated, repaired or operated, to
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 house a group of networked computer servers, and any additional
 facility acquired for the development, construction, rehabilitation,
 renovation, repair or operation of a qualified data center, after the date
 the agreement was entered into, regardless of whether any such
 development, acquisition, construction, rehabilitation, renovation,
 repair or operation was contemplated at the time of entering into the
 agreement.
    (3) The Commissioner of Economic and Community Development
 shall notify each municipality in which such facility is located of any
 agreement entered into pursuant to this section and shall provide the
 identity of the person with which the commissioner has entered into
 such agreement, the date such agreement is effective and the terms of
 the agreement with respect to the exemption from the tax imposed
 under chapter 203 of the general statutes.
    (4) No developer or owner shall commence construction,
 rehabilitation, renovation or repair of a facility that will be a qualified
 data center unless such owner has entered into a negotiated host
 municipality fee agreement with the municipality in which such facility
 is located. If a facility is located in contiguous municipalities, such
 owner shall enter into a negotiated host municipality fee agreement
 with each such municipality.
    (f) There is established an Office of Data Infrastructure
 Administration and Security within the Department of Economic and
 Community Development. The office shall (1) serve as the liaison
 between applicants and qualified data centers and other state agencies,
 (2) provide assistance to applicants and qualified data centers from the
 preapplication phase to the post-operational stage, and (3) seek to
 ensure coordinated, efficient and timely responses to applicants and
 qualified data centers.
   (g) The Commissioner of Economic and Community Development
 shall notify the Commissioner of Revenue Services of any taxes imposed
 under chapter 219 of the general statutes that become due and owing
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 due to the requirements of an agreement entered into pursuant to this
 section or of a qualified data center not being met. The amount of any
 such tax, penalty or interest due and unpaid may be collected under the
 provisions of section 12-35 of the general statutes. The warrant provided
 under section 12-35 of the general statutes shall be signed by the
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