State SealARIZONA HOUSE OF REPRESENTATIVES

 

SB 1366: commerce authority; data centers

PRIME SPONSOR: Senator Mesnard, LD 17

BILL STATUS: Caucus & COW

                                Ways & Means: DP 6-3-0-1

 

Overview

Includes leased or rented computer data center (CDC) equipment certified by the Arizona Commerce Authority (ACA) as a deduction from the personal property rental classification tax base.☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☒ Fiscal Note

History

The Arizona Legislature in 2013 established the CDC Program (Program). The objective of the Program is to encourage CDC operation and expansion in Arizona. The Program seeks to accomplish this objective by providing transaction privilege tax (TPT) and use tax exemptions at the local, county and state levels, on qualifying purchases of CDC equipment. The Program is administered by the ACA in conjunction with the Department of Revenue (CDC Program).

The TPT and use tax exemptions provided by the Program are available if all of the following are satisfied:

1.       An applicant submits an application for CDC certification and receives a letter of certification from the ACA;

2.       The CDC owner, operator or qualified colocation tenant collectively satisfy the applicable capital investment threshold in a timely manner:

a.       If the CDC facility is located in either Maricopa County or Pima County, a capital investment of at least $50 million must be made within five years of the date of the CDC's certification;

b.       If the CDC facility is located in a county other than Maricopa County or Pima County, a capital investment of at least $25 million must be made within five years of the date of the CDC's certification; or

c.        In the case of a pre-2013 CDC, regardless of location, a capital investment of at least $250 million must have been made during the period between September 1, 2007, and August 31, 2013;

3.       The applicant remits the requisite processing fee; and

4.       All relevant parties furnish evidence of registration under the federal E-Verify Program (ACA Program).

The JLBC Staff estimates that the revenue reductions as a result of the bill would be as follows. These estimates are speculative due to data constraints.

1.       A one-time General Fund revenue reduction of at least four million in FY 2020.

2.       An estimated ongoing reduction of General Fund collections of 8.5 million annually, beginning in FY 2020 (JLBC fiscal note).

Provisions

1.       Includes, as a deduction from the personal property rental classification tax base, CDC equipment leased or rented to the owner, operator or qualified colocation tenant of a CDC that is certified by the ACA. (Sec. 2)

2.       Expands the definition of CDC equipment to include property regardless of whether owned, leased, licensed or used by the owner or operator pursuant to a contract, used to outfit, operate or benefit a CDC. (Sec. 1)

3.       Redefines CDC equipment as all software, rather than enabling software. (Sec. 1)

4.       Defines software as any software that is purchased, leased or licensed to support, maintain or use in any aspect of a CDC or its CDC equipment. (Sec. 1)

5.       Applies retroactively from and after September 12, 2013. (Sec. 3)

6.       Makes technical and conforming changes.

 

 

 

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Fifty-fourth Legislature                               SB 1366

First Regular Session                    Version 2: Caucus & COW

 

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