Senate Bill Report SB 5414

Summary

A Washington State Senate Bill Report on SB 5414, as of February 8, 2021, prepared for the Senate Committee on Business, Financial Services & Trade, which considered the bill on 2/09/21. The bill, sponsored by Senators Gildon, Conway, Fortunato and Wilson, C., provides a sales and use tax preference for data centers in counties with a certain population. The report describes current law and then summarizes a proposed substitute limiting the exemption to a county with a population between 900,000 and 1 million, which Pierce County meets. Under the substitute, qualifying businesses need 1.5 megawatts of available power, no new certificates issue on or after July 1, 2027, the exemptions expire July 1, 2037, and holders must create at least three jobs per 20,000 square feet. It also sets out a tax preference performance statement for review by JLARC.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

                            SENATE BILL REPORT
                                  SB 5414

                                      As of February 8, 2021

Title: An act relating to providing a tax preference for data centers in counties with a certain
     population.

Brief Description: Providing a tax preference for data centers in counties with a certain
     population.

Sponsors: Senators Gildon, Conway, Fortunato and Wilson, C..

Brief History:
     Committee Activity: Business, Financial Services & Trade: 2/09/21.


                                     Brief Summary of Bill
           • Establishes a sales and use tax exemption for data centers in counties
             with a certain population.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: Kellee Gunn (786-7429)

     Background: Current law provides a retail sale and use tax exemption for qualifying
     businesses operating data centers and qualifying tenants of those data centers. The
     exemption includes purchases of eligible server equipment and power infrastructure, labor,
     and services for installing eligible server equipment, and for constructing, installing,
     repairing, altering, or improving eligible power infrastructure.

     To qualify and maintain an exemption, a facility must meet certain criteria regarding
     employment and facility size, be in a rural county, and commence construction during a
     certain period. Limits under current law on the number of data centers receiving an
     incentive have been met.




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                             SB 5414
     Within six years of being issued an exemption certificate, an eligible data center must show
     it has established or increased family wage employment positions by an amount dependent
     on the size of the data center. Family wage employment positions are defined as new
     permanent full-time jobs with employer-provided health care, requiring 40 hours of work
     and with a wage that is 150 percent of the per capita personal income of the county where
     the center is located. If the number of family wage jobs has not increased or been met
     within those six years, all previously exempted sales and use taxes are immediately due and
     payable.

     Summary of Bill: The bill as referred to committee not considered.

     Summary of Bill (Proposed Substitute): An exemption to the sales and use tax is
     established for qualifying businesses and tenants of eligible data centers. To qualify, a
     business must be in a county with a population between 900,000 and 1 million people as
     determined in the April 1, 2020, population estimate provided by the Office of Financial
     Management. Pierce County meets that population criteria.

     An application must be made to the Department of Revenue (DOR) for the exemption
     certificate. A qualifying business must submit records of available power for customers at
     the time of application, which demonstrates it has a minimum of 1.5 megawatts of available
     power. A tenant must contract for a minimum electrical capacity of 150 kilowatts for server
     and computer equipment in a qualifying business.

     The exemption certificate is effective on the date the application is received by DOR, which
     is deemed its date of issuance. No new exemption certificates may be issued by DOR on or
     after July 1, 2027, and the exemptions fully expire July 1, 2037. The exemption certificate
     may be used to build, repair, or refurbish a data center. The number of exemption
     certificates is limited to two the first year, and one per year for years three through six. The
     certificate is available on a first-in-time basis.

     Construction must commence within two years of certificate issuance. Within six years, the
     qualifying business or tenant must show it has increased or established at least three jobs
     per 20,000 square feet of space. The amount of family wage jobs the qualifying tenant must
     have created may be based on the proportion of the space they occupy in the data center.

     Family wage jobs are defined similarly to the current law program except the wage must be
     at least 125 percent of the per capita personal income of the county where the project is
     located.

     Certificate holders may transfer their certificate with consent of DOR if certain
     requirements are met.

     Tax Performance Statement and Review. A tax preference performance statement is
     established. The specific public policy objective of this tax preference is to:


Senate Bill Report                              -2-                                          SB 5414
         • improve industry competitiveness;
         • increase, create, or retain jobs in the county that meets the population criteria, thereby
           increasing family wage jobs; and
         • increase the county tax base because of the construction, leasing, and other
           investment of eligible computer data centers.

     The Joint Legislative Audit and Review Committee (JLARC) will perform the tax
     preference review. If JLARC finds the tax preference increases the tax base of the county
     because of the construction, leasing, and other investment of eligible computer data centers,
     the Legislature intends to extend the expiration date and expand the preference to the entire
     state of Washington.

     Appropriation: None.

     Fiscal Note: Requested on February 3, 2021.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: Ninety days after adjournment of session in which bill is passed.




Senate Bill Report                              -3-                                          SB 5414


File and source

File

2021-02-09_a28531_d227753_bill-report-5414-sba-bfst-21.pdf

Size

8,986 bytes

SHA-256

59a16aaff7760e35364d02fc16a29d6425e0d3874e95b5052f8c36013db49b5f

Our copy

2021-02-09_a28531_d227753_bill-report-5414-sba-bfst-21.pdf

Original

app.leg.wa.gov