Senate Bill 6642 - State of Washington, 2020 Regular Session

Summary

Senate Bill 6642 of the State of Washington, 66th Legislature, 2020 Regular Session, by Senators Zeiger, O'Ban, Becker, and Darneille, read first time January 29, 2020 and referred to the Committee on Financial Institutions, Economic Development & Trade. The title states that the bill relates to providing a tax preference for rural and nonrural data centers and amends RCW 82.08.986. Its first section sets out legislative findings, including that the legislature authorizes sales tax abatement for tenants in as many as eight data centers in Washington's urban counties. A later section is a tax preference performance statement.

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Full text

     S-5072.2

                               SENATE BILL 6642


     State of Washington       66th Legislature         2020 Regular Session

     By Senators Zeiger, O'Ban, Becker, and Darneille

     Read first time 01/29/20.       Referred to   Committee   on   Financial
     Institutions, Economic Development & Trade.




1        AN ACT Relating to providing a tax preference for rural and
2    nonrural data centers; amending RCW 82.08.986; adding a new section
3    to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW;
4    creating new sections; and providing expiration dates.


 5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:


 6        NEW SECTION.  Sec. 1.   The legislature finds that data centers
 7   are a cornerstone for strong internet infrastructure that is critical
 8   to the continuing prosperity of Washington's vibrant digital economy.
 9   Under current law, data center incentives are restricted to rural
10   counties and have improved the economies of rural counties. The
11   legislature recognizes that rural county data center investments are
12   necessary but insufficient for the state's total economy and
13   competitiveness. Washington is the only state that restricts
14   incentives geographically. As a result, data centers serving urban
15   counties requiring higher performance and that offer colocation
16   services for multiple tenants that foster technology ecosystems are
17   lost    to  other  states,  particularly   neighboring  Oregon.   The
18   legislature further finds that despite the need, the lack of data
19   center usage growth in Washington urban counties is primarily due to
20   the sales tax, which can add as much as ten percent to the total cost
21   of ownership and often runs into the millions of dollars for even
                                     p. 1                             SB 6642
 1   mid-level users. Therefore, the legislature authorizes sales tax
 2   abatement for tenants in as many as eight data centers in
 3   Washington's urban counties.


 4       NEW SECTION.   Sec. 2.   (1) This section is the tax preference
 5   performance statement for the tax preferences in sections 3, 4, and
 6   5, chapter . . ., Laws of 2020 (sections 3, 4, and 5 of this act).
 7   This performance statement is only intended to be used for subsequent
 8   evaluation of the tax preferences. It is not intended to create a
 9   private right of action by any party or be used to determine
10   eligibility for preferential tax treatment.
11       (2) The legislature categorizes these tax preferences as ones
12   intended to improve industry competitiveness, as indicated in RCW
13   82.32.808(2)(b) and as one intended to create or retain jobs as
14   indicated in RCW 82.32.808(2)(c).
15       (3) It is the legislature's specific public policy objective to
16   improve industry competitiveness and to increase, create, or retain
17   jobs in computer data centers in Washington state, thereby increasing
18   family wage jobs. It is the legislature's intent to provide a sales
19   and use tax exemption on eligible server equipment and power
20   infrastructure installed in eligible computer data centers, charges
21   made for labor and services rendered in respect to installing
22   eligible server equipment, and for construction, installation,
23   repair, alteration, or improvement of eligible power infrastructures
24   in order to increase investment in data center construction, leasing,
25   and other investment throughout the state of Washington, thereby
26   growing employment in the technology industry in the state while
27   adding real and personal property to state and local property tax
28   rolls, thereby increasing the county tax base.
29       (4) The legislature intends to extend the expiration date of the
30   tax preferences in this act and expand the applicability of the tax
31   preferences to the entire state of Washington if a review finds that:
32       (a) As a proxy for overall technology industry growth, the amount
33   of electrical capacity deployed attributable to these projects
34   increased by at least ten percent over the capacity deployed in the
35   nonrural data centers in the state since 2016; or
36       (b) The county tax base increased as a result of the
37   construction, leasing, and other investment of computer data centers
38   eligible for the tax preferences.


                                     p. 2                          SB 6642
1        (5) In order to obtain the data necessary to perform the review
2    in subsection (4) of this section, the joint legislative audit and
3    review committee may refer to data available from the department of
4    revenue regarding county property tax assessments and data provided
5    to the department of revenue pursuant to the annual tax performance
6    report required under RCW 82.32.534.

 7       NEW SECTION.   Sec. 3.   A new section is added to chapter 82.08
 8   RCW to read as follows:
 9       (1) An exemption from the tax imposed by RCW 82.08.020 is
10   provided for sales to qualifying businesses and to qualifying tenants
11   of eligible server equipment to be installed, without intervening
12   use, in an eligible computer data center, and to charges made for
13   labor and services rendered in respect to installing eligible server
14   equipment. The exemption also applies to sales to qualifying
15   businesses   and    to   qualifying   tenants   of   eligible   power
16   infrastructure, including labor and services rendered in respect to
17   constructing, installing, repairing, altering, or improving eligible
18   power infrastructure.
19       (2)(a)(i) In order to qualify for the exemption, a qualifying
20   business must be located in a nonrural county, demonstrate that it
21   possesses sufficient capacity to meet the minimum tenant take down
22   requirement no less than ten times and in the twelve months prior to
23   applying, and must be in the business of servicing this scale and
24   type of data center tenant.
25       (ii) For the purposes of demonstrating that the requirements of
26   this subsection (2)(a) are met, a qualifying business must submit
27   records of available power for customers at the time of the
28   application for the exemption under this section. The qualifying
29   business must demonstrate that it has 1.5 megawatt of available power
30   and that in the prior twelve months such qualifying business was in
31   the business of contracts utilizing capacity of at least one hundred
32   fifty kilowatts each. The qualifying business must provide requests
33   for proposals, pricing offered, and marketing materials associated
34   with the requirements of this subsection, as required by the
35   department, as supporting documentation that the requirements of this
36   subsection (2)(a) have been met.
37       (b) In order to qualify for the exemption, a qualifying tenant
38   must contract for a minimum electrical capacity of one hundred fifty
39   kilowatts for server and computer equipment in a qualifying business.
                                     p. 3                          SB 6642
 1   Tenants that previously qualified under RCW 82.08.986 or 82.12.986
 2   must reapply if they intend to expand into a qualifying business.
 3       (c)(i) The exemptions provided in this section are limited to
 4   qualifying businesses or tenants in no more than eight computer data
 5   centers. Each computer data center must be predefined at the time of
 6   application. Expansions beyond the initial perimeter and new computer
 7   data centers within the state must apply separately.
 8       (ii) For the purposes of this subsection (2)(c):
 9       (A) "Predefined" means that at the time of application, the
10   qualifying business must indicate the data center's location and the
11   boundaries where the incentives will apply, which may include new
12   buildings for expansion in a campus. The exemption application of the
13   qualifying business cannot be used in another location, as that
14   location must apply separately; and
15       (B) "Expansions beyond the initial perimeter" means if a
16   qualifying business purchases, after their initial application for an
17   exemption under this section, a lot adjacent to the initial perimeter
18   or a lot in a different location from the data center in their
19   initial application, the qualifying business must amend their initial
20   application for an exemption under this section or submit a new
21   application, as required by the department, to include the expansion
22   beyond the initial perimeter in order to notify the department of
23   additional capacity that may qualify for an exemption under this
24   section.
25       (3) Qualification for this section may be found in statements
26   related to the amount of power contracted for at the site and what is
27   available to sell, as well as the capacity of the backup power
28   infrastructure.
29       (4) The pro rata portion of previously exempted sales and use
30   taxes are immediately due and payable for a qualifying business or
31   qualifying tenant that does not meet the minimum electrical capacity
32   requirements in subsection (2)(b) of this section for a period of at
33   least three years from the date of installation of the server
34   equipment.
35       (5) Qualifying businesses and tenants must claim an exemption
36   under this section in the current tax year when the taxes would have
37   been due unless an extension is filed with the department.
38       (6)(a) A qualifying business or a qualifying tenant claiming an
39   exemption under this section must complete an annual tax performance
40   report as required in RCW 82.32.534. The tax performance report of a
                                     p. 4                          SB 6642
 1   qualifying business or a qualifying tenant must include the amount of
 2   electrical capacity, measured by kilowatts deployed within their
 3   nonrural data center.
 4       (b) For the purposes of this subsection, kilowatts are measured
 5   by the amount of power for which the qualifying business or
 6   qualifying tenant contracted during the applicable tax year for which
 7   an exemption is claimed under this section. A qualifying business or
 8   qualifying tenant must maintain a contracted minimum of one hundred
 9   fifty kilowatts during the tax year for which the qualifying business
10   or qualifying tenant is claiming an exemption under this section. The
11   information required under this subsection must be reported to the
12   department within thirty days after the last day of the exemption
13   applicant's tax year.
14       (c) Information submitted on the tax performance report is not
15   subject to the confidentiality provisions of RCW 82.32.330 and may be
16   disclosed to the public upon request, except as provided otherwise in
17   RCW 82.32.330.
18       (7)(a) The exemption provided in this section does not apply to:
19       (i) Any person who has received the benefit of the deferral
20   program under chapter 82.60 RCW on the construction, renovation, or
21   expansion of a structure or structures used as a computer data
22   center; and
23       (ii) Any person affiliated with a person within the scope of
24   (a)(i) of this subsection (7).
25       (b) If a person claims an exemption under this section and
26   subsequently receives the benefit of the deferral program under
27   chapter 82.60 RCW on either the construction, renovation, or
28   expansion of a structure or structures used as a computer data center
29   or machinery or equipment used in a computer data center, the person
30   must repay the amount of taxes exempted under this section. Interest
31   as provided in chapter 82.32 RCW applies to amounts due under this
32   section until paid in full.
33       (8) The definitions in this subsection apply throughout this
34   section unless the context clearly requires otherwise.
35       (a) "Affiliated" means that one person has a direct or indirect
36   ownership interest of at least twenty percent in another person.
37       (b) "Building" means a fully enclosed structure with a weather
38   resistant exterior wall envelope or concrete or masonry walls
39   designed in accordance with the requirements for structures under
40   chapter 19.27 RCW.
                                     p. 5                          SB 6642
 1       (c)(i) "Computer data center" means a facility comprised of one
 2   or more buildings, which may be comprised of multiple businesses,
 3   constructed or refurbished specifically, and used primarily, to house
 4   working   servers,    where   the    facility   has   the    following
 5   characteristics: (A) Uninterruptible power supplies, generator backup
 6   power, or both; (B) sophisticated fire suppression and prevention
 7   systems; and (C) enhanced physical security, such as: Restricted
 8   access to the facility to selected personnel; permanent security
 9   guards; video camera surveillance; an electronic system requiring
10   passcodes, keycards, or biometric scans, such as hand scans and
11   retinal or fingerprint recognition; or similar security features.
12       (ii) For a computer data center comprised of multiple buildings,
13   each separate building constructed or refurbished specifically, and
14   used primarily, to house working servers is considered a computer
15   data center if it has all of the characteristics listed in (c)(i)(A)
16   through (C) of this subsection (8).
17       (iii) A facility comprised of one building or more than one
18   building must have a combined square footage of at least one hundred
19   thousand square feet.
20       (d) "Eligible computer data center" means a computer data center
21   having at least twenty thousand square feet dedicated to housing
22   working servers.
23       (e) "Eligible power infrastructure" means all fixtures and
24   equipment owned by a qualifying business or qualifying tenant and
25   necessary for the transformation, distribution, or management of
26   electricity that is required to operate eligible server equipment
27   within an eligible computer data center. The term includes
28   generators; wiring; cogeneration equipment; and associated fixtures
29   and   equipment,  such   as   electrical  switches,  batteries,   and
30   distribution, testing, and monitoring equipment. The term does not
31   include substations.
32       (f)(i) "Eligible server equipment" means for a qualifying
33   business whose computer data center qualifies as an eligible computer
34   data center, the original server equipment installed in an eligible
35   computer data center on or after the effective date of this section,
36   and replacement server equipment.
37       (ii) For purposes of this subsection (8)(f), "replacement server
38   equipment" means server equipment that:



                                     p. 6                          SB 6642
 1       (A) Replaces existing server equipment, if the sale or use of the
 2   server equipment to be replaced qualified for an exemption under this
 3   section or RCW 82.12.986; and
 4       (B) Is installed and put into regular use ten years after the
 5   effective date of this section.
 6       (iii) For a qualifying tenant who leases space within an eligible
 7   computer data center, "eligible server equipment" means the original
 8   server equipment installed within the space it leases from an
 9   eligible computer data center on or after ten years after the
10   effective date of this section, and replacement server equipment. For
11   purposes   of  this   subsection   (8)(f)(iii),  "replacement  server
12   equipment" means server equipment that:
13       (A) Replaces existing server equipment, if the sale or use of the
14   server equipment to be replaced qualified for an exemption under this
15   section or RCW 82.12.986; and
16       (B) Is installed and put into regular use ten years after the
17   effective date of this section.
18       (g) "Nonrural county" means a county that does not meet the
19   definition of "rural county" under RCW 82.14.370.
20       (h) "Qualifying business" means a business entity that exists for
21   the primary purpose of engaging in commercial activity for profit and
22   that is the owner of an eligible computer data center. The term does
23   not include the state or federal government or any of their
24   departments,   agencies,   and   institutions;   tribal  governments;
25   political subdivisions of this state; or any municipal, quasi-
26   municipal, public, or other corporation created by the state or
27   federal government, tribal government, municipality, or political
28   subdivision of the state.
29       (i) "Qualifying tenant" means a business entity that exists for
30   the primary purpose of engaging in commercial activity for profit and
31   that leases space from a qualifying business within an eligible
32   computer data center. The term does not include the state or federal
33   government or any of their departments, agencies, and institutions;
34   tribal governments; political subdivisions of this state; or any
35   municipal, quasi-municipal, public, or other corporation created by
36   the state or federal government, tribal government, municipality, or
37   political subdivision of the state.
38       (j) "Server equipment" means the computer hardware located in an
39   eligible computer data center and used exclusively to provide
40   electronic data storage and data management services for internal use
                                     p. 7                          SB 6642
 1   by the owner or lessee of the computer data center, for clients of
 2   the owner. For the purposes of this subsection, "electronic data
 3   storage and data management services" include, but are not limited
 4   to: Providing data storage and backup services, providing computer
 5   processing power, hosting enterprise software applications, and
 6   hosting web sites. The term also includes providing services such as
 7   email, web browsing and searching, media applications, and other
 8   online services, regardless of whether a charge is made for such
 9   services.   "Server  equipment"   also   includes computer  software
10   necessary to operate the computer hardware. "Server equipment" does
11   not include personal computers, the racks upon which the server
12   equipment is installed, and computer peripherals such as keyboards,
13   monitors, printers, and mice.
14       (9) This section expires January 1, 2030.


15       NEW SECTION.   Sec. 4.   A new section is added to chapter 82.12
16   RCW to read as follows:
17       (1) An exemption from the tax imposed by RCW 82.12.020 is
18   provided for the use by qualifying businesses or qualifying tenants
19   of eligible server equipment to be installed, without intervening
20   use, in an eligible computer data center, and to the use of labor and
21   services rendered in respect to installing such server equipment. The
22   exemption also applies to the use by a qualifying business or
23   qualifying tenant of eligible power infrastructure, including labor
24   and services rendered in respect to installing, repairing, altering,
25   or improving such infrastructure.
26       (2) The exemption provided in this section does not apply to any
27   person for whom the exemption under section 3 of this act does not
28   apply.
29       (3) The definitions and requirements in section 3 of this act
30   apply to this section.
31       (4) This section expires January 1, 2030.


32       Sec. 5.   RCW 82.08.986 and 2017 c 135 s 26 are each amended to
33   read as follows:
34       (1) An exemption from the tax imposed by RCW 82.08.020 is
35   provided for sales to qualifying businesses and to qualifying tenants
36   of eligible server equipment to be installed, without intervening
37   use, in an eligible computer data center, and to charges made for
38   labor and services rendered in respect to installing eligible server
                                     p. 8                          SB 6642
 1   equipment. Until January 1, 2026, the exemption also applies to sales
 2   to qualifying businesses and to qualifying tenants of eligible power
 3   infrastructure, including labor and services rendered in respect to
 4   constructing, installing, repairing, altering, or improving eligible
 5   power infrastructure.
 6       (2)(a) In order to claim the exemption under this section, a
 7   qualifying business or a qualifying tenant must submit an application
 8   to the department for an exemption certificate. The application must
 9   include the information necessary, as required by the department, to
10   determine that a business or tenant qualifies for the exemption under
11   this section. The department must issue exemption certificates to
12   qualifying businesses and qualifying tenants. The department may
13   assign a unique identification number to each exemption certificate
14   issued under this section.
15       (b) A qualifying business or a qualifying tenant claiming the
16   exemption under this section must present the seller with an
17   exemption certificate in a form and manner prescribed by the
18   department. The seller must retain a copy of the certificate for the
19   seller's files.
20       (c) With respect to computer data centers for which the
21   commencement of construction occurs after July 1, 2015, but before
22   July 1, 2019, the exemption provided in this section is limited to no
23   more than eight computer data centers, with total eligible data
24   centers provided under this section limited to twelve from July 1,
25   2015, through July 1, 2025. Tenants of qualified data centers do not
26   constitute additional data centers under the limit. The exemption is
27   available on a first-in-time basis based on the date the application
28   required under this section is received by the department. Exemption
29   certificates expire two years after the date of issuance, unless
30   construction has been commenced.
31       (3)(a) Within six years of the date that the department issued an
32   exemption certificate under this section to a qualifying business or
33   a qualifying tenant with respect to an eligible computer data center,
34   the qualifying business or qualifying tenant must establish that net
35   employment at the eligible computer data center has increased by a
36   minimum of:
37       (i) Thirty-five family wage employment positions; or
38       (ii) Three family wage employment positions for each twenty
39   thousand square feet of space or less that is newly dedicated to
40   housing working servers at the eligible computer data center. For
                                     p. 9                          SB 6642
 1   qualifying tenants, the number of family wage employment positions
 2   that must be increased under this subsection (3)(a)(ii) is based only
 3   on the space occupied by the qualifying tenant in the eligible
 4   computer data center.
 5       (b) In calculating the net increase in family wage employment
 6   positions:
 7       (i) The owner of an eligible computer data center, in addition to
 8   its own net increase in family wage employment positions, may
 9   include:
10       (A) The net increase in family wage employment positions employed
11   by qualifying tenants; and
12       (B) The net increase in family wage employment positions
13   described in (c)(ii)(B) of this subsection (3).
14       (ii)(A) Qualifying tenants, in addition to their own net increase
15   in family wage employment positions, may include:
16       (I) A portion of the net increase in family wage employment
17   positions employed by the owner; and
18       (II) A portion of the net increase in family wage employment
19   positions described in (c)(ii)(B) of this subsection (3).
20       (B) The portion of the net increase in family wage employment
21   positions to be counted under this subsection (3)(b)(ii) by each
22   qualifying tenant must be in proportion to the amount of space in the
23   eligible computer data center occupied by the qualifying tenant
24   compared to the total amount of space in the eligible computer data
25   center occupied by all qualifying tenants.
26       (c)(i) For purposes of this subsection, family wage employment
27   positions are new permanent employment positions requiring forty
28   hours of weekly work, or their equivalent, on a full-time basis at
29   the eligible computer data center and receiving a wage equivalent to
30   or greater than one hundred fifty percent of the per capita personal
31   income of the county in which the qualified project is located. An
32   employment position may not be counted as a family wage employment
33   position unless the employment position is entitled to health
34   insurance coverage provided by the employer of the employment
35   position. For purposes of this subsection (3)(c), "new permanent
36   employment position" means an employment position that did not exist
37   or that had not previously been filled as of the date that the
38   department issued an exemption certificate to the owner or qualifying
39   tenant of an eligible computer data center, as the case may be.


                                     p. 10                         SB 6642
 1       (ii)(A) Family wage employment positions include positions filled
 2   by employees of the owner of the eligible computer data center and by
 3   employees of qualifying tenants.
 4       (B) Family wage employment positions also include individuals
 5   performing work at an eligible computer data center as an independent
 6   contractor hired by the owner of the eligible computer data center or
 7   as an employee of an independent contractor hired by the owner of the
 8   eligible computer data center, if the work is necessary for the
 9   operation of the computer data center, such as security and building
10   maintenance, and provided that all of the requirements in (c)(i) of
11   this subsection (3) are met.
12       (d) All previously exempted sales and use taxes are immediately
13   due and payable for a qualifying business or qualifying tenant that
14   does not meet the requirements of this subsection.
15       (4) A qualifying business or a qualifying tenant claiming an
16   exemption under this section or RCW 82.12.986 must complete an annual
17   tax performance report with the department as required under RCW
18   82.32.534.
19       (5)(((a) The exemption provided in this section does not apply
20   to:
21       (i) Any person who has received the benefit of the deferral
22   program under chapter 82.60 RCW on: (A) The construction, renovation,
23   or expansion of a structure or structures used as a computer data
24   center; or (B) machinery or equipment used in a computer data center;
25   and
26       (ii) Any person affiliated with a person within the scope of
27   (a)(i) of this subsection (5).
28       (b) If a person claims an exemption under this section and
29   subsequently receives the benefit of the deferral program under
30   chapter 82.60 RCW on either the construction, renovation, or
31   expansion of a structure or structures used as a computer data center
32   or machinery or equipment used in a computer data center, the person
33   must repay the amount of taxes exempted under this section. Interest
34   as provided in chapter 82.32 RCW applies to amounts due under this
35   section until paid in full.
36       (6))) The definitions in this subsection apply throughout this
37   section unless the context clearly requires otherwise.
38       (a) "Affiliated" means that one person has a direct or indirect
39   ownership interest of at least twenty percent in another person.


                                     p. 11                         SB 6642
 1       (b) "Building" means a fully enclosed structure with a weather
 2   resistant exterior wall envelope or concrete or masonry walls
 3   designed in accordance with the requirements for structures under
 4   chapter 19.27 RCW. This definition of "building" only applies to
 5   computer data centers for which commencement of construction occurs
 6   on or after July 1, 2015.
 7       (c)(i) "Computer data center" means a facility comprised of one
 8   or more buildings, which may be comprised of multiple businesses,
 9   constructed or refurbished specifically, and used primarily, to house
10   working   servers,    where   the    facility   has   the    following
11   characteristics: (A) Uninterruptible power supplies, generator backup
12   power, or both; (B) sophisticated fire suppression and prevention
13   systems; and (C) enhanced physical security, such as: Restricted
14   access to the facility to selected personnel; permanent security
15   guards; video camera surveillance; an electronic system requiring
16   passcodes, keycards, or biometric scans, such as hand scans and
17   retinal or fingerprint recognition; or similar security features.
18       (ii) For a computer data center comprised of multiple buildings,
19   each separate building constructed or refurbished specifically, and
20   used primarily, to house working servers is considered a computer
21   data center if it has all of the characteristics listed in (c)(i)(A)
22   through (C) of this subsection (((6))) (5).
23       (iii) A facility comprised of one building or more than one
24   building must have a combined square footage of at least one hundred
25   thousand square feet.
26       (d) "Electronic data storage and data management services"
27   include, but are not limited to: Providing data storage and backup
28   services, providing computer processing power, hosting enterprise
29   software applications, and hosting web sites. The term also includes
30   providing services such as email, web browsing and searching, media
31   applications, and other online services, regardless of whether a
32   charge is made for such services.
33       (e)(i) "Eligible computer data center" means a computer data
34   center:
35       (A) Located in a rural county as defined in RCW 82.14.370; and
36       (B) Having at least twenty thousand square feet dedicated to
37   housing working servers((, where the server space has not previously
38   been dedicated to housing working servers; and
39       (C) For which the commencement of construction occurs:
40       (I) After March 31, 2010, and before July 1, 2011;
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 1       (II) After March 31, 2012, and before July 1, 2015; or
 2       (III) After June 30, 2015, and before July 1, 2025)).
 3       (ii)   ((For   purposes   of  this   section,   "commencement  of
 4   construction" means the date that a building permit is issued under
 5   the building code adopted under RCW 19.27.031 for construction of the
 6   computer data center. The construction of a computer data center
 7   includes the expansion, renovation, or other improvements made to
 8   existing facilities, including leased or rented space. "Commencement
 9   of construction" does not include soil testing, site clearing and
10   grading, site preparation, or any other related activities that are
11   initiated before the issuance of a building permit for the
12   construction of the foundation of a computer data center.
13       (iii) With respect to facilities in existence on April 1, 2010,
14   that are expanded, renovated, or otherwise improved after March 31,
15   2010, or facilities in existence on April 1, 2012, that are expanded,
16   renovated, or otherwise improved after March 31, 2012, or facilities
17   in existence on July 1, 2015, that are expanded, renovated, or
18   otherwise improved after June 30, 2015, an eligible computer data
19   center includes only the portion of the computer data center meeting
20   the requirements in (e)(i)(B) of this subsection (6))) Facilities in
21   existence before January 1, 2019, that meet the requirements of
22   (c)(i), (ii), and (iii) of this subsection and have at least twenty
23   thousand square feet dedicated to housing working servers, qualify as
24   an eligible computer data center for charges made for labor,
25   services, and material related to installations after December 31,
26   2019,   for  eligible   power  infrastructure   and  eligible   server
27   equipment.
28       (iii) Movable or fixed stand-alone, prefabricated, or modular
29   units, including intermodal shipping containers do not qualify as
30   "eligible computer data centers".
31       (f) "Eligible power infrastructure" means all fixtures and
32   equipment owned by a qualifying business or qualifying tenant and
33   necessary for the transformation, distribution, or management of
34   electricity that is required to operate eligible server equipment
35   within an eligible computer data center. The term includes
36   generators; wiring; cogeneration equipment; and associated fixtures
37   and   equipment,  such   as   electrical   switches,  batteries,   and
38   distribution, testing, and monitoring equipment. The term does not
39   include substations.
40       (g) "Eligible server equipment" means:
                                     p. 13                         SB 6642
 1       (i) For a qualifying business whose computer data center
 2   qualifies as an eligible computer data center under (e)(i)(((C)(I)))
 3   (B) of this subsection (((6))) (5), the ((original)) server equipment
 4   installed and put into regular use in an eligible computer data
 5   center on or after April 1, 2010, and before January 1, ((2026, and
 6   replacement server equipment. For purposes of this subsection
 7   (6)(g)(i), "replacement server equipment" means server equipment
 8   that:
 9       (A) Replaces existing server equipment, if the sale or use of the
10   server equipment to be replaced qualified for an exemption under this
11   section or RCW 82.12.986; and
12       (B) Is installed and put into regular use before April 1, 2018.
13       (ii) For a qualifying business whose computer data center
14   qualifies as an eligible computer data center under (e)(i)(C)(II) of
15   this subsection (6), "eligible server equipment" means the original
16   server equipment installed in an eligible computer data center on or
17   after April 1, 2012, and before January 1, 2026, and replacement
18   server equipment. For purposes of this subsection (6)(g)(ii),
19   "replacement server equipment" means server equipment that:
20       (A) Replaces existing server equipment, if the sale or use of the
21   server equipment to be replaced qualified for an exemption under this
22   section or RCW 82.12.986; and
23       (B) Is installed and put into regular use before April 1, 2024.
24       (iii)(A) For a qualifying business whose computer data center
25   qualifies as an eligible computer data center under (e)(i)(C)(III) of
26   this subsection (6), "eligible server equipment" means the original
27   server equipment installed in a building within an eligible computer
28   data center on or after July 1, 2015, and replacement server
29   equipment. Server equipment installed in movable or fixed stand-
30   alone, prefabricated, or modular units, including intermodal shipping
31   containers, is not "directly installed in a building." For purposes
32   of this subsection (6)(g)(iii)(A), "replacement server equipment"
33   means server equipment that replaces existing server equipment, if
34   the sale or use of the server equipment to be replaced qualified for
35   an exemption under this section or RCW 82.12.986; and
36       (B) Is installed and put into regular use no later than twelve
37   years after the date of the certificate of occupancy.
38       (iv))) 2030.
39       (ii) For a qualifying tenant who leases space within an eligible
40   computer   data  center,   "eligible  server   equipment"   means  the
                                     p. 14                         SB 6642
 1   ((original)) server equipment installed within the space it leases
 2   from an eligible computer data center on or after April 1, 2010, and
 3   before January 1, ((2026, and replacement server equipment)) 2030.
 4   ((For purposes of this subsection (6)(g)(iv), "replacement server
 5   equipment" means server equipment that:
 6       (A) Replaces existing server equipment, if the sale or use of the
 7   server equipment to be replaced qualified for an exemption under this
 8   section or RCW 82.12.986;
 9       (B) Is installed and put into regular use before April 1, 2024;
10   and
11       (C) For tenants leasing space in an eligible computer data center
12   built after July 1, 2015, is installed and put into regular use no
13   later than twelve years after the date of the certificate of
14   occupancy.))
15       (h) "Qualifying business" means a business entity that exists for
16   the primary purpose of engaging in commercial activity for profit and
17   that is the owner of an eligible computer data center. The term does
18   not include the state or federal government or any of their
19   departments,   agencies,   and   institutions;  tribal   governments;
20   political subdivisions of this state; or any municipal, quasi-
21   municipal, public, or other corporation created by the state or
22   federal government, tribal government, municipality, or political
23   subdivision of the state.
24       (i) "Qualifying tenant" means a business entity that exists for
25   the primary purpose of engaging in commercial activity for profit and
26   that leases space from a qualifying business within an eligible
27   computer data center. The term does not include the state or federal
28   government or any of their departments, agencies, and institutions;
29   tribal governments; political subdivisions of this state; or any
30   municipal, quasi-municipal, public, or other corporation created by
31   the state or federal government, tribal government, municipality, or
32   political subdivision of the state. The term also does not include a
33   lessee of space in an eligible computer data center under (e)(i)
34   (((C)(I))) (B) of this subsection (((6))) (5), if the lessee and
35   lessor are affiliated and:
36       (i) That space will be used by the lessee to house server
37   equipment that replaces server equipment previously installed and
38   operated in that eligible computer data center by the lessor or
39   another person affiliated with the lessee; or


                                     p. 15                         SB 6642
 1       (ii) Prior to May 2, 2012, the primary use of the server
 2   equipment installed in that eligible computer data center was to
 3   provide electronic data storage and data management services for the
 4   business purposes of either the lessor, persons affiliated with the
 5   lessor, or both.
 6       (j) "Server equipment" means the computer hardware located in an
 7   eligible computer data center and used exclusively to provide
 8   electronic data storage and data management services for internal use
 9   by the owner or lessee of the computer data center, for clients of
10   the owner or lessee of the computer data center, or both. "Server
11   equipment" also includes computer software necessary to operate the
12   computer hardware. "Server equipment" does not include personal
13   computers, the racks upon which the server equipment is installed,
14   and computer peripherals such as keyboards, monitors, printers, and
15   mice.


16       NEW SECTION.   Sec. 6.   Section 5 of this act expires January 1,
17   2030.

                                   --- END ---




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