SB 394 Creates state and local sales and use tax exemptions for data storage centers and allows municipalities to enter into loan agreements, or sell, lease, or mortgage municipal property for a technology business facility project
Sponsor: Silvey
LR Number: 1862S.01I Fiscal Note not available
Committee: Jobs, Economic Development and Local Government
Last Action: 3/13/2013 - Second Read and Referred S Jobs, Economic Development and Local Government Committee Journal Page: S520
Title: Calendar Position:
Effective Date: August 28, 2013

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Current Bill Summary


SB 394 - This act allows the governing body of any municipality to enter into loan agreements, or sell, lease, or mortgage municipal property to private entities for the development of a technology business facility project. Municipalities include utility boards of counties, cities, towns or villages. Transactions involving the lease or rental of such properties will be exempt from state and local sales taxes and any leasehold interests on such properties will not be subject to property taxes. The act allows municipalities to sell or otherwise dispose of municipal property to private entities for technology business facility projects provided that the terms and methods utilized reasonably protect the economic well being of the municipality. Any private entity which transfers property to the municipality for purposes of a technology business facility project will reserve the right to request that the municipality transfer such property back to the entity at no cost.

This act provides state and local sales and use tax exemptions for all machinery, equipment, computers, electrical energy, gas, water and other utilities, including telecommunication and internet services, used in new data storage center facilities. The act also provides a state and local sales and use tax exemption for purchases of tangible personal property for the construction of a new data storage center facility. In order to receive the sales tax exemption provided for new data storage center facilities, an application must be made to the Department of Economic Development for certification. Such application must show that the project will result in at least thirty-seven million dollars of new facility investment and create at least thirty new jobs with wages of at least 150 percent of the county average wage over a three year period. A project may be approved, at the Department of Economic Development's discretion, even though the investment and job creation requirements are not met if exemptions do not exceed the project fiscal benefit to the state over ten years. Projects must meet the job creation and investment amounts projected in their notice of intent to receive exemptions under the act.

The act also creates a state and local sales and use tax exemption for existing data storage center facilities for all machinery, equipment, computers, electrical energy, gas, water and other utilities, including telecommunication and internet services. The exemption will only apply to the increase in expenditures for utilities over the previous year's expenditures. The exemptions for tangible property will be available only on the increase in expenditures over the average of the previous three years expenditures. In order to receive the sales tax exemption provided for existing data storage center facilities, an application must be made to the Department of Economic Development for certification. Such application must show that the project will result in at least five million dollars of new facility investment over a one year period and create at least five new jobs with wages of at least 150 percent of the county average wage over a two year period. A project may be approved even though the investment and job creation requirements are not met if exemptions do not exceed the project fiscal benefit to the state over ten years. Projects must meet the job creation and investment amounts projected in their notice of intent to receive exemptions under the act.

The Department of Economic Development and the Department of Revenue are authorized to conduct random audits to ensure compliance with the requirements for state and local sales and use tax exemptions authorized under the act.

The data storage centers tax incentive will expire on September 1, 2019. The expiration will not impair any agreements or exemptions granted before the expiration.

These provisions are similar to a provision of SB 46 (2013), HB 222 (2013), HCS/HB 698 (2013), HCS HB 23(2013), HCS/SS/SCS/SB 83 (2013), HCS/SB 112(2013), SCS/SB 120 (2013), SCS/SB 584 (2012), SB 8 (1st Ex. Session 2011), SB 217 (2011), and SB 868 (2010).

MIKE HAMMANN