HOUSE DOCKET, NO. 4889        FILED ON: 3/1/2022

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 4634

The Commonwealth of Massachusetts

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PRESENTED BY:

Michael J. Finn

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act relative to qualified data centers in the Commonwealth.

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PETITION OF:

HOUSE DOCKET, NO. 4889        FILED ON: 3/1/2022

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 4634

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Second General Court
(2021-2022)

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An Act relative to qualified data centers in the Commonwealth.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Section 6 of chapter 64H, as so appearing in the 2020 Official Edition, is hereby amended by inserting after subsection (xx) the following new subsection:

(yy)(1) The gross receipts from the purchase, sale, lease, construction, installation, assembly, storage, distribution, use, consumption, operations, repair or maintenance of the items contained in this section by an owner, operator, colocation tenant, contractor and subcontractor of a qualified data center in the commonwealth are specifically exempted during the qualification period from the sales and use taxes imposed by this chapter.

(A) Purchases or leases of eligible data center equipment for use in a qualified data center is exempt.

(B) Purchases or leases of computer software for use in a qualified data center is exempt.

(C) Electricity purchased for use or consumption in the operation of a qualified data center is exempt.

(D) Construction costs incurred for the construction, renovation or refurbishment of a qualified data center is exempt.

(2) As used in this section, the following words shall, unless the context otherwise requires, have the following meanings: -

"Qualified data center" means a facility in the Commonwealth:

(A) that is owned or leased by: (i) the operator of the data center facility; or (ii) a person, partnership, company, corporation or other entity under common ownership of the operator of the data center facility;

(B) that is comprised of one or more data center buildings that consist in the aggregate of at least 50,000 square feet, and that are located on a single parcel or on contiguous parcels, where the total eligible qualified data center costs of the data center facility are at least $25,000,000 within a ten-year period from the effective date of the certification by the secretary of economic development as a qualified data center facility;

(C) that is constructed or substantially refurbished after the effective date of this section; and

(D) that is used to house computer information technology equipment, networking, data processing or data storage, including servers and routers for the storage, management, and dissemination of data and information where the facility has the following characteristics:

(i) uninterruptible power supplies, generator backup power, or both;

(ii) sophisticated fire suppression and prevention systems; and

(iii) enhanced security. A facility will be considered to have enhanced security if it has restricted access to the facility to selected personnel; permanent security guards; video camera surveillance; an electronic system requiring pass codes, keycards, or biometric scans, such as hand scans and retinal or fingerprint recognition; or similar security features.

In determining whether the facility has the required square footage, the total square footage of the data center facility shall include the space that houses the computer information technology equipment, networking, data processing or data storage, including servers and routers, and the following spaces that support the operation of enterprise information technology equipment including, but not limited to, office space, meeting space, loading dock space, and mechanical and other support facilities.

"Colocation tenant" means a person, partnership, company, corporation or other entity that contracts with or leases from the owner or operator of a qualified data center to use or occupy all or part of a qualified data center.

“Computer software” includes, but is not limited to, software purchased, leased, utilized or loaded at a qualified data center including, but not limited to, maintenance, licensing, and software customization.

"Construction costs" means materials, labor, services and equipment purchased or leased to construct the data center facility including, but not limited to, data center building costs, accessory building costs and building improvement costs, land development and site improvement costs, site utility infrastructure costs, building materials, steel, concrete, gravel, engineering services, heavy equipment, cranes, transportation equipment, excavation costs, storm water system and management costs, access roads, bridges, fencing, lighting, landscaping, and other costs to construct the facility.

“Eligible data center equipment” means computers and equipment supporting computing, networking, data processing or data storage, including servers and routers purchased or leased at a qualified data center. It includes, but is not limited to, computer servers, routers, connections, chassis, networking equipment, switches, racks, fiber optic and copper cables, trays, conduits and other enabling machinery, equipment and hardware; component parts, replacement parts and upgrades; cooling systems, cooling towers, chillers, mechanical equipment, HVAC equipment, refrigerant piping, fuel piping and storage, adiabatic and free cooling systems, water softeners, air handling units, indoor direct exchange units, fans, ducting, filters and other temperature control infrastructure; power infrastructure for transformation, generation, distribution, or management of electricity used for the operations and maintenance of a qualified data center, including but not limited to, substations, switchyards, transformers, generators, uninterruptible power supplies, backup power generation systems, battery systems, energy efficiency measures, supplies, fuel piping and storage, duct banks, switches, switchboards, testing equipment and related utility infrastructure; monitoring and security equipment; water conservation systems, including equipment designed to collect, conserve and reuse water; modular data center equipment and preassembled components of any item described in this paragraph, including components used in the manufacturing of modular data centers; and any other personal property

or equipment that is used or consumed in the operation and maintenance of the qualified data center.

"Eligible qualified data center costs" means expenditures made after the effective date of this section for the construction, refurbishment, renovation or improvement of a facility to be used as a qualified data center, including, but not limited to, the cost of land, land development and site improvement costs, site utility infrastructure costs, construction costs, data center building costs, accessory building costs and building improvement costs, and eligible data center equipment.

"Qualification period" means with respect to the owner, operator, colocation tenant, contractor or subcontractor of a qualified data center, a period of time beginning on the effective date of the certification of the qualified data center for the first data center building, and shall continue for a period of thirty full calendar years following such certification, expiring at the end of the thirtieth full calendar year following the calendar year containing the effective date. If the qualified data center is comprised of more than one data center building, then the qualification period for each subsequent data center building that is constructed at the qualified data center facility shall become effective when each data center building begins commercial operations, as evidenced by receipt of a certificate of occupancy, and shall continue for a period of thirty full calendar years, expiring at the end of the thirtieth full calendar year following the calendar year each respective data center building began commercial operations.

"Substantially refurbished" means that at least 50,000 square feet of an existing facility that qualifies as a data center have been rebuilt, modified or constructed where the total eligible qualified data center costs are at least $25,000,000 within a ten-year period from the effective date of the certification by the secretary of economic development as a qualified data center facility, including, but not limited to:

(A) installation of computer information technology equipment, networking, data processing or data storage, including servers and route; environmental control, computer software, and energy efficiency improvements; and

(B) building improvements.

(3) The purpose of this exemption is to encourage economic development in the construction and operations of the data center industry and the growth of the digital economy in the Commonwealth.

(4) Only sales, purchases and leases made after the effective date of this section shall be eligible for this exemption.

(5) To qualify for the sales and use tax relief, the owner or operator shall submit to the secretary of housing and economic development an application on a form prescribed by the commissioner that includes all of 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 information sufficient to identify the facility composing the eligible qualified data center, and the expected

commercial operations date of each data center building that will be located at the eligible qualified data center facility;

3. The anticipated aggregate square feet of the eligible qualified data center for which the sales and use tax exemption is being sought;

4. The anticipated investment associated with the eligible qualified data center for which the sales and use tax exemption is being sought; and

5. An affirmation, signed by an authorized executive representing the owner or operator, that the eligible qualified data center is expected to satisfy the certification requirements prescribed in subsection (2) as a qualified data center.

(6) The secretary of housing and economic development must certify when a qualified data center has met the requirements under subsection (2). Within sixty days after receiving a complete and correct application, the secretary shall review the application and either issue a written certification that the computer data center qualifies for the sales and use tax exemption or provide written reasons for its denial and an opportunity for the applicant to cure any deficiencies. Failure to approve or deny the application within sixty days after the date the owner or operator submits the application to the secretary constitutes approval of the qualified data center, and the secretary shall issue written certification to the owner or operator within fourteen days. The effective date of the certification is either the date on which the application was submitted to the secretary, or a prospective date stated in the application that does not exceed five years after the date on which the application was submitted. The secretary shall send a copy of the certification, including its effective date, to the commissioner. The certification must provide the following information regarding each qualified data center:

(A) the effective date of the certification;

(B) the total square footage amount;

(C) the total amount of land costs, construction costs, refurbishment costs and eligible data center equipment; and

(D) the beginning and ending date of the sales and use tax exemption for the first data center building, which shall begin on the effective date of the certification and expire at the end of the thirtieth full calendar year following the calendar year containing the effective date, and for a qualified data center that is comprised of more than one data center building, the expected commercial operations dates and expected qualification periods for subsequent data center buildings expected to be located at the qualified data center facility.

The secretary shall promulgate any rules or regulations and shall issue instructions or forms necessary for the implementation of this subsection.

(7) The sales and use tax exemption for a qualified data center shall apply to purchases, sales and leases for the construction, installation, assembly, storage, distribution, use, consumption, operations, repair or maintenance of one or more data center buildings that are located on a single parcel or on contiguous parcels within the qualified data center facility for

land development and site improvement costs, site utility infrastructure costs, construction costs, data center building costs, accessory building costs and building improvement costs, computer software costs, electricity costs and eligible data center equipment. The sales and use tax exemption for the first data center building, shall become effective upon certification by the secretary of economic development, and shall continue for a period of thirty full calendar years following such certification, expiring at the end of the thirtieth full calendar year following the calendar year containing the effective date. If the qualified data center is comprised of more than one data center building, then the qualification period for each subsequent data center building that is constructed at the qualified data center facility shall become effective when each data center building begins commercial operations, as evidenced by receipt of a certificate of occupancy, and shall continue for a period of thirty full calendar years, expiring at the end of the thirtieth full calendar year following the calendar year each respective data center building began commercial operations. The sales and use tax exemption certification shall apply to an owner, operator, colocation tenant, contractor and subcontractor of a qualified data center for such thirty-year qualification period. If the qualified data center is sold to a new owner prior to the expiration of the exemption, then the sales and use tax exemption shall remain in effect and apply to a subsequent owner for the remaining duration of the thirty-year qualification period.