House File 146 - Introduced HOUSE FILE BY RANTS Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act providing sales, use, and property tax exemptions for 2 certain data centers. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1290YH 83 5 tw/mg:sc/5 PAG LIN 1 1 Section 1. Section 423.3, subsection 93, Code 2009, is 1 2 amended to read as follows: 1 3 93. a. (1) The sales price from the sale or rental of 1 4 computers and equipment that are necessary for the maintenance 1 5 and operation of a web search portal business or data center 1 6 and property whether directly or indirectly connected to the 1 7 computers, including but not limited to cooling systems, 1 8 cooling towers, and other temperature control infrastructure; 1 9 power infrastructure for transformation, distribution, or 1 10 management of electricity used for the maintenance and 1 11 operation of the web search portal business or data center, 1 12 including but not limited to exterior dedicated business=owned 1 13 substations, back=up power generation systems, battery 1 14 systems, and related infrastructure; and racking systems, 1 15 cabling, and trays, which are necessary for the maintenance 1 16 and operation of the web search portal business or data 1 17 center. 1 18 (2) The sales price of back=up power generation fuel, that 1 19 is purchased by a web search portal business or data center 1 20 for use in the items listed in subparagraph (1). 1 21 (3) The sales price of electricity purchased for use by a 1 22 web search portal business or data center. 1 23 b. For the purpose of claiming this exemption, all of the 1 24 following requirements shall be met: 1 25 (1) The purchaser or renter shall be a web search portal 1 26 business or data center. 1 27 (2) The web search portal business or data center shall 1 28 have a physical location in the state that is used for the 1 29 operations and maintenance of the web search portal business 1 30 or data center. 1 31 (3) (a) The web search portal business shall make a 1 32 minimum investment in an Iowa physical location of two hundred 1 33 million dollars within the first six years of operation in 1 34 Iowa beginning with the date the web search portal business 1 35 initiates site preparation activities. The minimum investment 2 1 includes the initial investment, including land and subsequent 2 2 acquisition of additional adjacent land and subsequent 2 3 investment at the Iowa location. 2 4 (b) The data center shall make a minimum investment in an 2 5 Iowa physical location of one million dollars within the first 2 6 six years of operation in Iowa beginning with the date the 2 7 data center initiates site preparation activities. The 2 8 minimum investment includes the initial investment, including 2 9 land and subsequent acquisition of additional adjacent land 2 10 and subsequent investment at the Iowa location. 2 11 (4) (a) The web search portal business shall purchase, 2 12 option, or lease Iowa land not later than December 31, 2008, 2 13 for any initial investment. However, the December 31, 2008, 2 14 date shall not affect the future purchases of adjacent land 2 15 and additional investment in the initial or adjacent land to 2 16 qualify as part of the minimum investment for purposes of this 2 17 exemption. 2 18 (b) The data center shall purchase, option, or lease Iowa 2 19 land not later than December 31, 2009, for any initial 2 20 investment. However, the December 31, 2009, date shall not 2 21 affect the future purchases of adjacent land and additional 2 22 investment in the initial or adjacent land to qualify as part 2 23 of the minimum investment for purposes of this exemption. 2 24 c. This exemption applies from the date of the initial 2 25 investment in or the initiation of site preparation activities 2 26 for the web search portal facility or data center as described 2 27 in paragraph "b". For purposes of claiming this exemption, 2 28 the requirements may be met by aggregating the various Iowa 2 29 investments and other requirements of the web search portal 2 30 business's affiliates or data center's affiliates. This 2 31 exemption applies to affiliates of the web search portal 2 32 business or data center. 2 33 d. Failure to meet eighty percent of the minimum 2 34 investment amount requirement specified in paragraph "b" 2 35 within the first six years of operation from the date the web 3 1 search portal business or data center initiates site 3 2 preparation activities will result in the web search portal 3 3 business or data center losing the right to claim thisweb 3 4 search portal businessexemption and the web search portal 3 5 business or data center shall pay all sales or use tax that 3 6 would have been due on the purchase or rental or use of the 3 7 items listed in this exemption, plus any applicable penalty 3 8 and interest imposed by statute. 3 9 e. For purposes of this subsection: 3 10 (1) "Affiliate" means an entity that directly or 3 11 indirectly controls, is controlled with or by, or is under 3 12 common control with another entity. 3 13 (2) "Control" means any of the following: 3 14 (a) In the case of a United States corporation, the 3 15 ownership, directly or indirectly, of fifty percent or more of 3 16 the voting power to elect directors. 3 17 (b) In the case of a foreign corporation, if the voting 3 18 power to elect the directors is less than fifty percent, the 3 19 maximum amount allowed by applicable law. 3 20 (c) In the case of an entity other than a corporation, 3 21 fifty percent or more ownership interest in the entity, or the 3 22 power to direct the management of the entity. 3 23 (3) "Data center" means a facility, or portion of a 3 24 facility, that is predominately used for the housing and 3 25 operation of computer data processing hardware and associated 3 26 equipment directly in support thereof. 3 27(3)(4) "Web search portal business" means an entity 3 28 whose business among other businesses is to provide a search 3 29 portal to organize information; to access, search, and 3 30 navigate the internet, including research and development to 3 31 support capabilities to organize information; or to provide 3 32 internet access, navigation, or search functionalities. 3 33 Sec. 2. Section 427.1, subsection 36, Code 2009, is 3 34 amended to read as follows: 3 35 36. WEB SEARCH AND DATA CENTER PROPERTY. 4 1 a. Property, other than land and buildings and other 4 2 improvements, that is utilized by a web search portal business 4 3 or data center as defined in and meeting the requirements of 4 4 section 423.3, subsection 93, including computers and 4 5 equipment that are necessary for the maintenance and operation 4 6 of a web search portal business or data center and other 4 7 property whether directly or indirectly connected to the 4 8 computers, including but not limited to cooling systems, 4 9 cooling towers, and other temperature control infrastructure; 4 10 power infrastructure for transformation, distribution, or 4 11 management of electricity, including but not limited to 4 12 exterior dedicated business=owned substations, and power 4 13 distribution systems which are not subject to assessment under 4 14 chapter 437A; racking systems, cabling, and trays; and back=up 4 15 power generation systems, battery systems, and related 4 16 infrastructure all of which are necessary for the maintenance 4 17 and operation of the web search portal business or data 4 18 center. 4 19 b. Thisweb search portal businessexemption applies 4 20 beginning with the assessment year the investment in or 4 21 construction of the facility utilizing the materials, 4 22 equipment, and systems set forth in paragraph "a" are first 4 23 assessed. For purposes of claiming thisweb search portal 4 24 businessexemption, the requirements may be met by aggregating 4 25 the various Iowa investments and other requirements of the web 4 26 search portal business's affiliates or data center's 4 27 affiliates as allowed under section 423.3, subsection 93. 4 28 This exemption applies to affiliates of the web search portal 4 29 business or data center. 4 30 Sec. 3. IMPLEMENTATION. Section 25B.7 does not apply to 4 31 the property tax exemption enacted in this Act. 4 32 EXPLANATION 4 33 This bill provides a sales and use tax exemption for the 4 34 sale or rental of computers and equipment that are necessary 4 35 for the maintenance and operation of a data center and 5 1 property that is directly or indirectly connected to the 5 2 computers; the sale of back=up power generation fuel; and 5 3 electricity used in the operation and maintenance of the data 5 4 center. 5 5 To qualify for the sales and use tax exemption, the 5 6 purchaser or renter must be a data center. A data center 5 7 means a facility, or portion of a facility, that is 5 8 predominately used for housing and operation of computer data 5 9 processing hardware and associated equipment directly in 5 10 support thereof; the data center must have a physical location 5 11 in the state that is used for the operations and maintenance 5 12 of the data center; the data center must have a minimum 5 13 investment within the first six years of operation in Iowa of 5 14 $1 million; and the data center must purchase, option, or 5 15 lease land in the state not later than December 31, 2009. 5 16 The bill also provides a property tax exemption for 5 17 property utilized by a data center as defined in and meeting 5 18 the qualifications of the provisions for the sales and use tax 5 19 exemption. The bill makes inapplicable the provision of the 5 20 Code that requires the state to fund a property tax exemption 5 21 in order for it to be implemented. 5 22 LSB 1290YH 83 5 23 tw/mg:sc/5