OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
EMERGENCY CERTIFICATION
HB-6514
AN ACT CONCERNING INCENTIVES FOR QUALIFIED DATA
CENTERS TO LOCATE IN THE STATE.
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect
Department of Economic & Community Development GF - See Below
Note: GF=General Fund
Municipal Impact:
Municipalities Effect
Various Municipalities See Below
Explanation
The bill authorizes the commissioner of the Department of
Economic and Community Development (DECD) to enter into tax
incentive agreements (including sales tax and property tax
exemptions) with qualified data centers.
State Impact
Current law allows Connecticut Innovations (CI) to enter into
agreements to provide sales and use tax relief.1 The bill extends this
1 CI is granted broad authority to exempt sales and use tax for any
project that has been approved by the Board of Directors (subject to the
operating policies and procedures of the Board) under CGS Sec. 32-
46(b). For example, in 2019 CI provided an estimated $55.2 million
exemption from state sales and use tax over 10 years for a relatively
large development (465,000 sq. ft.) in New Britain.
Primary Analyst: MM 2/24/21
Contributing Analyst(s): AN, CW
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authority to the DECD with respect to qualified data centers
only. Consequently, there is no state revenue impact from this
provision.
Additionally, the bill allows the DECD commissioner to enter into a
contractual arrangement to exempt any qualified data center developer
from a future state financial transaction tax if one were to be
enacted. The fiscal impact of this provision is dependent upon
whether: 1) the state would enact any such tax in the future, and 2) the
DECD commissioner subsequently invokes this authority.
The bill also establishes an Office of Data Infrastructure
Administration and Security within the DECD, and specifies that
associated administrative and operational costs be funded by annual
payments (not to exceed $50,000 each) made by qualified data
centers. It is anticipated such payments would cover additional
administrative costs to the agency.
Municipal Impact
The bill provides a property tax exemption to qualified data centers
for meeting certain investment thresholds for up to a thirty-year
period. Any foregone revenue to a municipality as a result of the bill
would depend on the amount of qualifying real and personal property
exempt from taxation, the municipalitys mill rate, and the offsetting
revenue a municipality would receive from entering into a host
agreement with the data center, as required by the bill.
For illustrative purposes, property tax exemptions for $200 million
in qualifying property would lead to foregone revenue of at least $6.27
million annually, assuming the FY 21 average statewide mill rate of
31.36.
The bill also enables municipalities to place liens on associated
property in the event of non-payment under a host agreement.
This analysis does not attempt to address any potential change in
value over the time due to depreciation or cost of land.
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The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to inflation, except for the annual
payments to DECD which would remain subject to a $50,000 cap.
The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly,
solely for the purposes of information, summarization and explanation and does not represent the intent of the
General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety
of informational sources, including the analysts professional knowledge. Whenever applicable, agency data is
consulted as part of the analysis, however final products do not necessarily reflect an assessment from any
specific department.