By: Hancock	S.B. No. 1104

	A BILL TO BE ENTITLED
	AN ACT
	relating to the temporary exemption of certain tangible personal
	property related to large data center projects from the sales and
	use tax.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subchapter H, Chapter 151, Tax Code, is amended
	by adding Section 151.3595 to read as follows:
	Sec. 151.3595.  PROPERTY USED IN CERTAIN LARGE DATA CENTER
	PROJECTS; TEMPORARY EXEMPTION. (a) In this section:
	(1)  "County average weekly wage" means the average
	weekly wage in a county for all jobs during the most recent four
	quarterly periods for which data is available, as computed by the
	Texas Workforce Commission, at the time a data center creates a job
	used to qualify under this section.
	(2)  "Large data center project" means a project
	comprised of a building or series of buildings located or to be
	located on a single parcel of land or on contiguous parcels of land
	that are commonly owned or owned by affiliation with the operator of
	the with at least 250,000 square feet of space, which space:
	(A)  is located in this state;
	(B)  is specifically constructed or refurbished
	and actually used primarily to house servers and related equipment
	and support staff for the processing, storage, and distribution of
	data;
	(C)  is used by a single qualifying occupant for
	the processing, storage, and distribution of data;
	(D)  is not used primarily by a telecommunications
	provider to place tangible personal property that is used to
	deliver telecommunications services; and
	(E)  has an uninterruptible power source,
	generator backup power, a fire suppression and prevention system,
	and physical security that includes restricted access, video
	surveillance, and electronic systems.
	(3)  "Permanent job" means an employment position that
	will exist for at least five years after the date the job is
	created.
	(4)  "Qualifying large data center project" means a
	data center that meets the qualifications prescribed by Subsection
	(d).
	(5)  "Qualifying job" means a full-time, permanent job
	that pays at least 120 percent of the county average weekly wage in
	the county in which the job is based. A qualifying job includes a
	new employment position staffed by a third-party employer if there
	is a written contract between the third-party employer and a
	qualifying owner, qualifying operator, or qualifying occupant that
	provides the third-party employment position is permanently
	assigned to the associated qualifying large data center project.
	(6)  "Qualifying operator" means a person who controls
	access to a qualifying large data center project, regardless of
	whether that person owns each item of tangible personal property
	located at the qualifying large data center project. A qualifying
	operator may also be the qualifying owner.
	(7)  "Qualifying owner" means a person who owns the
	building or buildings in which a qualifying large data center
	project is located. A qualifying owner may also be the qualifying
	operator.
	(8)  "Qualifying occupant" means a person who:
	(A)  contracts with a qualifying owner or
	qualifying operator to place, or cause to be placed, and to use
	tangible personal property at the qualifying large data center
	project; or
	(B)  in the case of a qualifying occupant who is
	also the qualifying owner and the qualifying operator, places or
	causes to be placed, and uses tangible personal property at the
	qualifying large data center project.
	(b)  Except as otherwise provided by this section, tangible
	personal property that is necessary and essential to the operation
	of a qualified large data center project is exempted from the taxes
	imposed by this chapter if the tangible personal property is
	purchased for installation at, incorporation into, or in the case
	of Subdivision (1), use in a qualifying large data center project by
	a qualifying owner, qualifying operator, or qualifying occupant,
	and the tangible personal property is:
	(1)  electricity;
	(2)  an electrical system;
	(3)  a cooling system;
	(4)  an emergency generator;
	(5)  hardware or a distributed mainframe computer or
	server;
	(6)  a data storage device;
	(7)  network connectivity equipment;
	(8)  a rack, cabinet, and raised floor system;
	(9)  a peripheral component or system;
	(10)  software;
	(11)  a mechanical, electrical, or plumbing system that
	is necessary to operate any tangible personal property described by
	Subdivisions (2)-(10);
	(12)  any other item of equipment or system necessary
	to operate any tangible personal property described by Subdivisions
	(2)-(11), including a fixture; and
	(13)  a component part of any tangible personal
	property described by Subdivisions (2)-(10).
	(c)  The exemption provided by this section does not apply
	to:
	(1)  office equipment or supplies;
	(2)  maintenance or janitorial supplies or equipment;
	(3)  equipment or supplies used primarily in sales
	activities or transportation activities;
	(4)  tangible personal property on which the purchaser
	has received or has a pending application for a refund under Section
	151.429;
	(5)  tangible personal property not otherwise exempted
	under Subsection (b) that is incorporated into real estate or into
	an improvement of real estate;
	(6)  tangible personal property that is rented or
	leased for a term of one year or less; or
	(7)  notwithstanding Section 151.3111, a taxable
	service that is performed on tangible personal property exempted
	under this section.
	(d)  A large data center project may be certified by the
	comptroller as a qualifying large data center project for purposes
	of this section if, on or after June 1, 2015:
	(1)  a single qualifying occupant:
	(A)  contracts with a qualifying owner or
	qualifying operator to lease space in which the qualifying occupant
	will locate a large data center project; or
	(B)  occupies a space that was not previously used
	as a data center in which the qualifying occupant will locate a
	large data center project, in the case of a qualifying occupant who
	is also the qualifying operator and the qualifying owner; and
	(2)  the qualifying owner, qualifying operator, or
	qualifying occupant, jointly or independently:
	(A)  creates 40 qualifying jobs in the county in
	which the data center is located, not including jobs moved from one
	county in this state to another county in this state;
	(B)  makes or agrees to make a capital investment,
	on or after May 1, 2015, of at least $500 million in that particular
	large data center project over a five-year period beginning on the
	application submission date for certification by the comptroller as
	a qualifying large data center project or beginning on the date the
	data center is certified by the comptroller as a qualifying large
	data center project; and
	(C)  will contract for at least 20 megawatts of
	transmission capacity for operations of the large data center
	project.
	(e)  A large data center project that is eligible under
	Subsection (d) to be certified by the comptroller as a qualified
	large data center project shall apply to the comptroller for
	certification as a qualifying large data center project and for
	issuance of a registration number or numbers by the comptroller.
	The application must be made on a form prescribed by the comptroller
	and include the information required by the comptroller. The
	application must include the name and contact information for the
	qualifying occupant and, if applicable, the name and contact
	information for the qualifying owner and the qualifying operator
	who will claim the exemption authorized under this section. The
	application form must include a section for the applicant to
	certify that the capital investment required by Subsection
	(d)(2)(B) will be met independently or jointly by the qualifying
	occupant, qualifying owner, or qualifying operator within the time
	period prescribed by Subsection (d)(2)(B).
	(f)  The exemption provided by this section begins on the
	date the large data center project is certified by the comptroller
	as a qualifying data center and expires on the 20th anniversary of
	that date, if the qualifying occupant, qualifying owner, or
	qualifying operator independently or jointly makes a capital
	investment of at least $500 million or more as provided by
	Subsection (d)(2)(B).
	(g)  Each person who is eligible to claim an exemption
	authorized by this section must hold a registration number issued
	by the comptroller. The registration number must be stated on the
	exemption certificate provided by the purchaser to the seller of
	tangible personal property eligible for the exemption.
	(h)  The comptroller shall revoke all registration numbers
	issued in connection with a qualifying large data center project
	that the comptroller determines does not meet the requirements
	prescribed by Subsection (d). Each person who has the person's
	registration number revoked by the comptroller is liable for taxes,
	including penalty and interest from the date of purchase, imposed
	under this chapter on purchases for which the person claimed an
	exemption under this section, regardless of whether the purchase
	occurred before the date the registration number was revoked.
	(i)  The comptroller shall adopt rules consistent with and
	necessary to implement this section, including rules relating to:
	(1)  a qualifying large data center project, qualifying
	owner, qualifying operator, and qualifying occupant;
	(2)  issuance and revocation of a registration number
	required under this section; and
	(3)  reporting and other procedures necessary to ensure
	that a qualifying large data center project, qualifying owner,
	qualifying operator, and qualifying occupant comply with this
	section and remain entitled to the exemption authorized by this
	section.
	SECTION 2.  Sections 151.317(a), Tax Code, are amended to
	read as follows:
	(a)  Subject to Sections 151.359 and 151.1551 and Subsection
	(d) of this section, gas and electricity are exempted from the taxes
	imposed by this chapter when sold for:
	(1)  residential use;
	(2)  use in powering equipment exempt under Section
	151.318 or 151.3185 by a person processing tangible personal
	property for sale as tangible personal property, other than
	preparation or storage of prepared food described by Section
	151.314(c-2);
	(3)  use in lighting, cooling, and heating in the
	manufacturing area during the actual manufacturing or processing of
	tangible personal property for sale as tangible personal property,
	other than preparation or storage of prepared food described by
	Section 151.314(c-2);
	(4)  use directly in exploring for, producing, or
	transporting, a material extracted from the earth;
	(5)  use in agriculture, including dairy or poultry
	operations and pumping for farm or ranch irrigation;
	(6)  use directly in electrical processes, such as
	electroplating, electrolysis, and cathodic protection;
	(7)  use directly in the off-wing processing, overhaul,
	or repair of a jet turbine engine or its parts for a certificated or
	licensed carrier of persons or property;
	(8)  use directly in providing, under contracts with or
	on behalf of the United States government or foreign governments,
	defense or national security-related electronics, classified
	intelligence data processing and handling systems, or
	defense-related platform modifications or upgrades;
	(9)  use directly by a data center that is certified by
	the comptroller as a qualifying data center under Section 151.359
	or a qualifying large data center project under Section 151.3595 in
	the processing, storage, and distribution of data;
	(10)  a direct or indirect use, consumption, or loss of
	electricity by an electric utility engaged in the purchase of
	electricity for resale; or
	(11)  use in timber operations, including pumping for
	irrigation of timberland.
	SECTION 3.  The change in law made by this Act does not
	affect tax liability accruing before the effective date of this
	Act. That liability continues in effect as if this Act had not been
	enacted, and the former law is continued in effect for the
	collection of taxes due and for civil and criminal enforcement of
	the liability for those taxes.
	SECTION 4.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2015.