By: Button, Bonnen of Brazoria, Gonzales,	H.B. No. 2096
	Martinez Fischer, Parker, et al.

	A BILL TO BE ENTITLED
	AN ACT
	relating to the temporary exemption of certain tangible personal
	property related to certain multi-user data centers 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 151.3591 to read as follows:
	Sec. 151.3591.  PROPERTY USED IN CERTAIN MULTI-USER DATA
	CENTERS; 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 multi-user data center
	creates a job used to qualify under this section.
	(2)  "Multi-user data center" means all or part of a new
	or redeveloped facility that:
	(A)  is located in this state;
	(B)  is composed of a building or a series of
	buildings and related improvements located on a parcel of land or on
	parcels of land that are in close proximity to each other;
	(C)  is specifically constructed or refurbished,
	repaired, restored, remodeled, or otherwise modified and actually
	used primarily to house servers and related equipment and support
	staff for the processing, storage, and distribution of data;
	(D)  is designed for use by one or more qualifying
	occupants for the processing, storage, and distribution of data;
	(E)  is not used primarily by a telecommunications
	provider to place tangible personal property that is used to
	deliver telecommunications services; and
	(F)  has an uninterruptible power source,
	generator backup power, a sophisticated fire suppression and
	prevention system, and enhanced physical security that includes
	restricted access, video surveillance, and electronic systems.
	(3)  "Permanent job" means an employment position that
	will exist for at least three years after the date the job is
	created.
	(4)  "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.
	(5)  "Qualifying multi-user data center" means a
	multi-user data center that meets the qualifications prescribed by
	Subsection (d).
	(6)  "Qualifying occupant" means a person who:
	(A)  contracts with a qualifying owner or
	qualifying operator:
	(i)  for at least 1,000 kilowatts of
	critical IT load capacity per month for a period of at least two
	years; and
	(ii)  to place, or cause to be placed, and to
	use tangible personal property at the qualifying multi-user data
	center; 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 multi-user data center.
	(7)  "Qualifying operator" means a person who controls
	access to a qualifying multi-user data center, regardless of
	whether that person owns each item of tangible personal property
	located at the qualifying multi-user data center. A qualifying
	operator may also be the qualifying owner.
	(8)  "Qualifying owner" means a person who owns the
	building or buildings in which a qualifying multi-user data center
	is located. A qualifying owner may also be the qualifying operator.
	(b)  Except as otherwise provided by this section, tangible
	personal property that is necessary and essential to the operation
	of a qualifying multi-user data center 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 electricity, use in a qualifying multi-user data center 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)  Subject to Subsection (l), a multi-user data center may
	be certified by the comptroller as a qualifying multi-user data
	center for purposes of this section if, on or after September 1,
	2015, the qualifying owner, qualifying operator, or qualifying
	occupants of the multi-user data center, independently or jointly:
	(1)  create at least five qualifying jobs in the county
	in which the multi-user data center is located, not including jobs
	moved from one county in this state to another county in this state;
	and
	(2)  make or agree to make, on or after September 1,
	2015, a capital investment if:
	(A)  the capital investment is at least $100
	million over a 10-year period beginning on the date the multi-user
	data center is certified by the comptroller as a qualifying
	multi-user data center;
	(B)  the capital investment is in a particular
	multi-user data center; and
	(C)  the amount of the capital investment will
	exclusively serve qualifying occupants that execute contracts on or
	after September 1, 2015, and who were not under contract with the
	qualified owner or qualified operator before September 1, 2015.
	(e)  A multi-user data center that is eligible under
	Subsection (d) to be certified by the comptroller as a qualifying
	multi-user data center shall apply to the comptroller for
	certification and for the issuance of a registration number or
	numbers by the comptroller. The application must be made on a form
	prescribed by the comptroller and must include the information
	required by the comptroller. The application must include the name
	and contact information for each qualifying occupant, if any, as of
	the date on which the application is filed with the comptroller, and
	the name and contact information for the qualifying owner and, if
	applicable, 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) will be met independently or jointly
	by the qualifying owner, qualifying operator, or qualifying
	occupants within the time period prescribed by that subsection.
	(f)  A person who is not listed as a qualifying occupant on an
	application filed under Subsection (e) may submit an application to
	the comptroller for a registration number in relation to a
	certified qualifying multi-user data center on a form prescribed by
	the comptroller. The comptroller shall issue the registration
	number to the applicant on receipt of information sufficient for
	the comptroller to determine that the applicant is a qualifying
	occupant of the certified qualifying multi-user data center.
	(g)  The exemption provided by this section begins on the
	date the multi-user data center is certified by the comptroller as a
	qualifying multi-user data center and expires:
	(1)  on the 10th anniversary of that date, if the
	qualifying owner, qualifying operator, or qualifying occupants,
	independently or jointly, make a capital investment of at least
	$100 million but less than $150 million as provided by Subsection
	(d)(2); or
	(2)  on the 15th anniversary of that date, if the
	qualifying owner, qualifying operator, or qualifying occupants,
	independently or jointly, make a capital investment of $150 million
	or more as provided by Subsection (d)(2).
	(h)  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.
	(i)  The comptroller shall revoke all registration numbers
	issued in connection with a qualifying multi-user data center 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.
	(j)  The comptroller shall adopt rules consistent with and
	necessary to implement this section, including rules relating to:
	(1)  a qualifying multi-user data center, 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 multi-user data center, qualifying owner,
	qualifying operator, and qualifying occupant comply with this
	section and remain entitled to the exemption authorized by this
	section.
	(k)  Except as provided by Section 321.211, the exemption
	provided under this section does not apply to the taxes imposed
	under Chapter 321, 322, or 323.
	(l)  A multi-user data center is not eligible to receive an
	exemption under this section if the data center is subject to an
	agreement limiting the appraised value of the data center's
	property under Subchapter B or C, Chapter 313.
	(m)  A qualifying owner, qualifying operator, or qualifying
	occupant of a qualifying multi-user data center may apply to the
	comptroller for a refund of the taxes imposed by this chapter paid
	on the purchase of an item of tangible personal property described
	by Subsection (b) that occurred before the date the qualifying
	multi-user data center is certified by the comptroller if the item
	was purchased after the earlier of:
	(1)  the date the multi-user data center submits the
	application described by Subsection (e); or
	(2)  the 180th day before the date the multi-user data
	center is certified by the comptroller.
	(n)  Notwithstanding any other law, a data center that was
	certified as a qualifying data center under Section 151.359 between
	January 1, 2014, and December 31, 2014, and that otherwise meets the
	qualifications for certification as a qualifying multi-user data
	center prescribed by Subsection (d), may elect, on written notice
	to the comptroller, to become a certified qualifying multi-user
	data center subject to this section. Any capital investment made,
	and any qualifying jobs created, by the certified qualifying data
	center before the date the data center provides written notice to
	the comptroller under this section shall be considered in
	determining whether the data center meets the qualifications
	prescribed by Subsection (d), regardless of whether the investment
	was made, or the jobs created, before September 1, 2015. For
	purposes of Subsections (g) and (m), the date on which a qualifying
	data center was certified as a qualifying data center by the
	comptroller under Section 151.359 is considered to be the date on
	which the qualifying multi-user data center is certified as a
	certified qualifying multi-user data center for purposes of this
	section.
	SECTION 2.  Sections 151.317(a) and (b), Tax Code, are
	amended to read as follows:
	(a)  Subject to Sections 151.1551, 151.359, and 151.3591
	[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 or multi-user data
	center that is certified by the comptroller as a qualifying data
	center under Section 151.359 or a qualifying multi-user data center
	under Section 151.3591 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.
	(b)  The sale, production, distribution, lease, or rental
	of, and the use, storage, or other consumption in this state of, gas
	and electricity sold for the uses listed in Subsection (a), are
	exempted from the taxes imposed by a municipality under Chapter 321
	except as provided by Sections 151.359(j), 151.3591(k), and
	321.105.
	SECTION 3.  Section 313.010, Tax Code, as added by Chapter
	1274 (H.B. 1223), Acts of the 83rd Legislature, Regular Session,
	2013, is amended to read as follows:
	Sec. 313.010.  CERTAIN ENTITIES INELIGIBLE. An entity that
	has been issued a registration number under Section 151.359 or
	151.3591 is not eligible to receive a limitation on appraised value
	under this chapter.
	SECTION 4.  Section 321.208, Tax Code, is amended to read as
	follows:
	Sec. 321.208.  STATE EXEMPTIONS APPLICABLE.  The exemptions
	provided by Subchapter H, Chapter 151, apply to the taxes
	authorized by this chapter, except as provided by Sections
	[151.359(j) and] 151.317(b), 151.359(j), and 151.3591(k), and
	subject to Section 321.211.
	SECTION 5.  Subchapter C, Chapter 321, Tax Code, is amended
	by adding Section 321.211 to read as follows:
	Sec. 321.211.  MULTI-USER DATA CENTER EXCEPTION. The
	governing body of a municipality with a population of 35,000 or less
	may by ordinance provide that the exemption provided by Section
	151.3591 applies to the taxes imposed by the municipality under
	this chapter.
	SECTION 6.  Section 323.207, Tax Code, is amended to read as
	follows:
	Sec. 323.207.  STATE EXEMPTIONS APPLICABLE.  The exemptions
	provided by Subchapter H, Chapter 151, apply to the taxes
	authorized by this chapter, except as provided by Sections
	[151.359(j) and] 151.317(b), 151.359(j), and 151.3591(k).
	SECTION 7.  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 8.  Section 151.3591, Tax Code, as added by this Act,
	applies only to:
	(1)  a multi-user data center that becomes a qualifying
	multi-user data center on or after the effective date of this Act;
	(2)  an occupant of a multi-user data center that
	becomes a qualifying occupant on or after the effective date of this
	Act; or
	(3)  a certified qualifying data center under Section
	151.359 that elects to become a certified qualifying multi-user
	data center under Section 151.3591(n), Tax Code, as added by this
	Act.
	SECTION 9.  This Act takes effect September 1, 2015.