SF 4983

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/09/2024 09:49am

A bill for an act
relating to taxation; sales and use; modifying the exemption for data centers;
amending Minnesota Statutes 2022, sections 297A.68, subdivision 42; 297A.75,
subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 297A.68, subdivision 42, is amended to read:

Subd. 42.

deleted text begin Qualified deleted text end Data centers.

(a) Purchases of enterprise information technology
equipment and computer software for use in a qualified data center, deleted text begin or deleted text end a qualified refurbished
data center, new text begin or a qualified large-scale data center new text end are exempt, except that computer software
maintenance agreements are exempt for purchases made after June 30, 2013. deleted text begin The tax on
purchases exempt under this paragraph must be imposed and collected as if the rate under
section 297A.62, subdivision 1, applied, and then refunded after June 30, 2013, in the manner
provided in section 297A.75. deleted text end This exemption includes enterprise information technology
equipment and computer software purchased to replace or upgrade enterprise information
technology equipment and computer software in a qualified data center, deleted text begin or deleted text end a qualified
refurbished data center new text begin , or a qualified large-scale data center new text end .

new text begin (b) For a qualified data center or qualified refurbished data center, the tax on purchases
exempt under paragraph (a) must be imposed and collected as if the rate under section
297A.62, subdivision 1, applied, and then refunded after June 30, 2013, in the manner
provided in section 297A.75.
new text end

new text begin (c) For a qualified large-scale data center, the exemption under paragraph (a) applies at
the time of purchase.
new text end

deleted text begin (b) deleted text end new text begin (d) new text end Electricity used or consumed in the operation of a qualified data center deleted text begin or deleted text end new text begin , new text end qualified
refurbished data center new text begin , or qualified large-scale data center new text end is exempt.

deleted text begin (c) deleted text end new text begin (e) new text end For purposes of this subdivision, "qualified data center" means a facility in
Minnesota:

(1) that is comprised of one or more buildings that consist in the aggregate of at least
25,000 square feet, and that are located on a single parcel or on contiguous parcels, where
the total cost of construction or refurbishment, investment in enterprise information
technology equipment, and computer software is at least $30,000,000 within a 48-month
period. The 48-month period begins no sooner than July 1, 2012, except that costs for
computer software maintenance agreements purchased before July 1, 2013, are not included
in determining if the $30,000,000 threshold has been met;

(2) that is constructed or substantially refurbished after June 30, 2012, where
"substantially refurbished" means that at least 25,000 square feet have been rebuilt or
modified, including:

(i) installation of enterprise information technology equipment; environmental control,
computer software, and energy efficiency improvements; and

(ii) building improvements; and

(3) that is used to house enterprise information technology equipment, 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 square footage
of the following spaces shall be included if the spaces support the operation of enterprise
information technology equipment: office space, meeting space, and mechanical and other
support facilities. For purposes of this subdivision, "computer software" includes, but is not
limited to, software utilized or loaded at a qualified data center deleted text begin or deleted text end new text begin , new text end qualified refurbished
data center, new text begin or qualified large-scale data center, new text end including maintenance, licensing, and
software customization.

deleted text begin (d) deleted text end new text begin (f) new text end For purposes of this subdivision, a "qualified refurbished data center" means an
existing facility that qualifies as a data center under paragraph (c), clauses (2) and (3), but
that is comprised of one or more buildings that consist in the aggregate of at least 25,000
square feet, and that are located on a single parcel or contiguous parcels, where the total
cost of construction or refurbishment, investment in enterprise information technology
equipment, and computer software is at least $50,000,000 within a 24-month period.

deleted text begin (e) deleted text end new text begin (g) new text end For purposes of this subdivision, "enterprise information technology equipment"
means computers and equipment supporting computing, networking, or data storage,
including servers and routers. It includes, but is not limited to: cooling systems, cooling
towers, and other temperature control infrastructure; power infrastructure for transformation,
distribution, or management of electricity used for the maintenance and operation of a
qualified data center or qualified refurbished data center, including but not limited to exterior
dedicated business-owned substations, backup power generation systems, battery systems,
and related infrastructure; and racking systems, cabling, and trays, which are necessary for
the maintenance and operation of the qualified data center deleted text begin or deleted text end new text begin , new text end qualified refurbished data
center new text begin , or qualified large-scale data center new text end .

new text begin (h) For purposes of this subdivision, a "qualified large-scale data center" means a facility
in Minnesota:
new text end

new text begin (1) that is comprised of one or more buildings connected to each other by fiber and
associated equipment required for operating a fiber transmission network between data
center buildings and Internet points for the purpose of providing redundancy and resiliency
for the data center services provided in each building that consist in the aggregate of at least
25,000 square feet, and that are located in one physical location or multiple locations; and
new text end

new text begin (2) for which the total cost of construction or refurbishment, investment in enterprise
information technology equipment, and computer software is at least $250,000,000
collectively by the facility and its tenants within a 60-month period beginning after June
30, 2024.
new text end

deleted text begin (f) deleted text end new text begin (i) new text end A qualified data center or qualified refurbished data center may claim the
exemptions in this subdivision for purchases made either within 20 years of the date of its
first purchase qualifying for the exemption under paragraph (a), or by June 30, 2042,
whichever is earlier.

new text begin (j) A qualified large-scale data center may claim the exemption in this subdivision for
sales purchases qualifying for the exemption under paragraph (a) until July 1, 2059.
new text end

deleted text begin (g) deleted text end new text begin (k) new text end The purpose of this exemption is to create jobs in the construction and data center
industries.

deleted text begin (h) This subdivision deleted text end new text begin (l) The exemption under this subdivision for qualified data centers
and qualified refurbished data centers new text end is effective for sales and purchases made before July
1, 2042.

deleted text begin (i) deleted text end new text begin (m) new text end The commissioner of employment and economic development must certify to
the commissioner of revenue, in a format approved by the commissioner of revenue, when
a qualified data center has met the requirements under paragraph deleted text begin (c) or deleted text end new text begin (e), new text end a qualified
refurbished data center has met the requirements under paragraph deleted text begin (d) deleted text end new text begin (f) new text end new text begin , or a qualified
large-scale data center has met the requirements under paragraph (h) new text end . The certification must
provide the following information regarding each qualified data center deleted text begin or deleted text end new text begin , new text end qualified
refurbished data center new text begin , or qualified large-scale data center new text end :

(1) the total square footage amount;

(2) the total amount of construction or refurbishment costs and the total amount of
qualifying investments in enterprise information technology equipment and computer
software;

(3) new text begin for a qualified data center or qualified refurbished data center, new text end the beginning and
ending of the applicable period under either paragraph deleted text begin (c) deleted text end new text begin (e) new text end or deleted text begin (d) deleted text end new text begin (f) new text end in which the qualifying
expenditures and purchases under clause (2) were made, but in no case shall the period
begin before July 1, 2012; deleted text begin and
deleted text end

new text begin (4) for a qualified large-scale data center, the beginning and end of the applicable period
under paragraph (h) in which the qualifying expenditures and purchases were made, but in
no case shall the period begin before July 1, 2024; and
new text end

deleted text begin (4) deleted text end new text begin (5) new text end the date upon which the qualified data center first met the requirements under
paragraph deleted text begin (c) deleted text end new text begin (e), new text end or a qualified refurbished data center first met the requirements under
paragraph deleted text begin (d) deleted text end new text begin (f), or a qualified large-scale data center met the requirements under paragraph
(h) new text end .

deleted text begin (j) deleted text end new text begin (n) new text end Any refund for sales tax paid on qualifying purchases under new text begin paragraph (b) new text end deleted text begin this
subdivision deleted text end must not be issued unless the commissioner of revenue has received the
certification required under paragraph deleted text begin (i) deleted text end new text begin (m) new text end issued by the commissioner of employment
and economic development.

deleted text begin (k) deleted text end new text begin (o) new text end The commissioner of employment and economic development must annually
notify the commissioner of revenue of the qualified new text begin large-scale new text end data centers that are projected
to meet the requirements under paragraph deleted text begin (c) and the qualified refurbished data centers that
are projected to meet the requirements under paragraph (d) deleted text end new text begin (h) new text end in each of the next four years.
The notification must provide the information required under paragraph deleted text begin (i) deleted text end new text begin (m) new text end , clauses (1)
deleted text begin to deleted text end new text begin , (2), new text end (4) new text begin , and (5) new text end , for each qualified new text begin large-scale new text end data center deleted text begin or qualified refurbished data
center deleted text end .

new text begin (p) Within three years after being placed in service, a qualified large-scale data center
must certify to the commissioner of employment and economic development that the facility
has attained certification under one or more of the following sustainable design or green
building standards:
new text end

new text begin (1) BREEAM for new construction or BREEAM in-use;
new text end

new text begin (2) Energy Star;
new text end

new text begin (3) Envision;
new text end

new text begin (4) ISO 50001-energy management;
new text end

new text begin (5) LEED for building design and construction or LEED for operations and maintenance;
new text end

new text begin (6) green globes for new construction or green globes for existing buildings;
new text end

new text begin (7) UL 3223; or
new text end

new text begin (8) other reasonable standards approved by the commissioner of employment and
economic development.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024.
new text end

Sec. 2.

Minnesota Statutes 2022, section 297A.75, subdivision 1, is amended to read:

Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the following
exempt items must be imposed and collected as if the sale were taxable and the rate under
section 297A.62, subdivision 1, applied. The exempt items include:

(1) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(2) building materials for mineral production facilities exempt under section 297A.71,
subdivision 14;

(3) building materials for correctional facilities under section 297A.71, subdivision 3;

(4) building materials used in a residence for veterans with a disability exempt under
section 297A.71, subdivision 11;

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

(6) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23;

(7) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(8) equipment and materials used for the generation, transmission, and distribution of
electrical energy and an aerial camera package exempt under section 297A.68, subdivision
37;

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3, paragraph
(a), clause (10);

(10) materials, supplies, and equipment for construction or improvement of projects and
facilities under section 297A.71, subdivision 40;

(11) materials, supplies, and equipment for construction, improvement, or expansion of
a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision 45;

(12) enterprise information technology equipment and computer software for use in a
qualified data center new text begin or qualified refurbished data center new text end exempt under section 297A.68,
subdivision 42 new text begin , paragraph (b) new text end ;

(13) materials, supplies, and equipment for qualifying capital projects under section
297A.71, subdivision 44, paragraph (a), clause (1), and paragraph (b);

(14) items purchased for use in providing critical access dental services exempt under
section 297A.70, subdivision 7, paragraph (c);

(15) items and services purchased under a business subsidy agreement for use or
consumption primarily in greater Minnesota exempt under section 297A.68, subdivision
44;

(16) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivisions 49; 50, paragraph (b); and 51;

(17) building materials, equipment, and supplies for qualifying capital projects under
section 297A.71, subdivision 52; and

(18) building materials, equipment, and supplies for constructing, remodeling, expanding,
or improving a fire station, police station, or related facilities exempt under section 297A.71,
subdivision 53.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2024.
new text end