SB 684 — Certified pollution control equipment; certification by subdivisions.

SESSION ENROLLED VIRGINIA ACTS OF ASSEMBLY ––-- 2022 SESSION CHAPTER E501 An Act to amend and reenact §§ 58.1-609.3 and 58.1-3660 of the Code of Virginia, relating to certified pollution control equipment;

R O [S 684] Approved LApril L11, 2022 Be it enacted by the General Assembly of Virginia:

That §§ 58.1-609.3 and 58.1-3660 of the Code of Virginia are amended and reenacted as followE:follows:

DThe shalltax notimposed applyby tothis thechapter following:r or pursuant to the authority granted in §§ 58.1-605 and 58.1-606 1.shall not apply to the following:

Personal1. property purchased by a contractor which is used solely in another state or in a foreign country, which could be purchased by such contractor for such use free from sales tax in such other state or foreign country, and which is stored temporarily in Virginia pending shipment to such state or country.

2.Personal property purchased by a contractor which is used solely in another state or in a foreign country, which could be purchased by such contractor for such use free from sales tax in such other country.

(i)foreign Industrialcountry, materialsand forwhich futureis processing,stored manufacturing,temporarily refining,in orVirginia conversionpending intoshipment articlesto of tangible personal property for resale where such industrialstate materials either enter into the proBuction of or become2. a component part of the finished product;

(ii)(i) Industrial materials for future processing, manufacturing, refining, or conversion into articles of tangible personal property for resale where such industrial materials thateither areenter coatedinto upon8orthe resale;production of or become a component part of the finished product;

(iii)(ii) machineryindustrial ormaterials toolsthat orare repaircoated partsupon therefor or replacementsimpregnated thereof,into fuel,the power,Eenergy,product orat supplies,any usedstage directlyof inits processing,being manufacturing,processed, refining,manufactured, miningrefined, or convertingconverted products for sale or resale;

(iii) machinery or tools or repair parts therefor or replacements thereof, fuel, power, energy, or supplies, used directly in processing, manufacturing, refining, mining or converting products for sale or resale;

The provisions of this addition,subsection thedo exemption provided herein shall not beapply applicable to anythe machinery,drilling tools, and equipment, In or anyextraction other tangible personal property used by a public service corporation in the generation of electricoil, power,gas, exceptnatural forgas raw materials that are inputs to production of electricity, including fuel, or for machinery, tools, and equipmentcoalbed usedmethane togas. generate energy derived from sunlight or wind.

In addition, the exemption provided herein shall not be applicable to any machinery, tools, and equipment, or any other tangible personal property used by a public service corporation in the generation of electric power, except for raw materials that are inputs to production of electricity, including fuel, or for machinery, tools, and equipment used to generate energy derived from sunlight or wind.

Tangible personal property sold or leased to a public service corporation engaged in business as a common carrier of property or passengers by railway, for use or consumption by such common carrier dir4.directly in the rendition of its public service.

4.

This exemption shall include dredges, their supporting equipment, attendant vessels, and fuel and supplies for use or consumption aboard such vessels, provided the dredges are used exc5.exclusively or principally in interstate or foreign commerce.

5.

Tangible personal property including machinery and tools, repair parts or replacements thereof, and supplies and materials used directly in maintaining and preparing textile products for rental or leasing by an industrial processor engaged in the commercial leasing or renting of laundered textile products.

of 6 9.

Certified pollution control equipment and facilities as defined in § 58.1-3660, except for any equipment that has not been certified to the Department of Taxation by a state certifying authority or of 5 subdivision certifying authority pursuant to such section.

Computer equipment purchased or leased on or before June 30, 2011, used in data centers located in a Virginia locality having an unemployment rate above 4.9 percent for the calendar quarter ending November 2007, for the processing, storage, retrieval, or communication of data, including but not limited to servers, routers, connections, and other enabling hardware when part of a new investment of at least $75 million in such exempt property, when such investment results in the creation of at least 100 new jobs paying at least twice the prevailing average wage in that locality, so long as such investment was made in accordance with a memorandum of understanding with the Virginia Economic Development Partnership Authority entered into or amended between January 1, 2008, and December 31, 2008.

Beginning July 1, 2010, and ending June 30, 2035, computer equipment or enabling software of 6 purchased or leased for the processing, storage, retrieval, or communication of data, including but not limited to servers, routers, connections, and other enabling hardware, including chillers and bEckupbackup generators used or to be used in the operation of the equipment exempted in this paragraph, provided that such computer equipment or enabling software is purchased or leased for use in a data center, which includes any data center facilities located in the same locality as the data center that Rreare under of 5 common ownership or affiliation of the data center operator, that (i) is located in a Virginia locality;

(ii) results in thea creationnew capital investment on or after JulyJanuary 1, 2009, of at least 50$150 newmillion; jobs by the data center operator and theresults tenants of the data center, collectively, associated with the operation or maintenance of the data center provided that such jobs pay at least one and one-half times the prevailing average wage in that locality.

Theand requirement(iii) results in the creation on or after July 1, 2009, of at least 50 new jobs isby reducedthe todata 10center newoperator jobsand ifthe tenants of the data centercenter, iscollectively, locatedassociated inwith athe distressedoperation localityor atmaintenance of the timedata ofcenter theprovided executionthat ofsuch ajobs memorandumpay ofat understandingleast withone and one-half times the VirgEniaprevailing Economicaverage Developmentwage Partnershipin Authority.that locality.

The requirement of at least 50 new jobs is reduced to 10 new jobs if the data center is located in a distressed locality at the time of the execution of a memorandum of understanding with the Virginia Economic Development Partnership Authority.

Prior to claiming such exemption, any qualifying person claiming the exemption, including a data center operator on behalf of itself and its tenants, must enter into a memorandum of understanding with the Virginia Economic DevelopmentfDevelopment and its Partnership Authority that at a minimum provides the details for determining the amount of capital investment made and the number of new jobs created, the timeline for achieving the capital investment and new job goals, the repayment obligations should those goals not be achieved, and any conditSonsconditions under which repayment by the qualifying data center or data center tenant claiming the exemptio6exemption may be required.

In addition, the exemption shall apply to any such computer equipment or enabling 4oftwaresoftware purchased or leased to upgrade, supplement, or replace computer equipment or enabling software R purchased or leased in the initial investment.

b.

For purposes of this subdivision 18, "distressed locality" means:

For so long as a data center operator is claiming an exemption pursuant to this subdivision 18, such operator shall be required to submit an annual report to the Virginia Economic Development Partnership Authority on behalf of itself and, if applicable, its participating tenants that includes their employment levels, capital investments, average annual wages, qualifying expenses, and tax benefit, and such other information as the Virginia Economic Development Partnership Authority determines is relevant, pursuant to procedures developed by the Virginia Economic Development Partnership Authority.

The Department, in collaboration with the Virginia Economic Development Partnership Authority, shall publish a biennial report on the exemption that shall include aggregate information on qualifying expenses claimed under this exemption, the total value of the tax benefit, a return on investment analysis that includes direct and indirect jobs created by data center investment, state and local tax revenuesysisrevenues generated, and any other information the Department and the Virginia Economic Development Partnership Authority deem appropriate to demonstrate the costs and benefits of the exemption.

The Virginia Economic Development Partnership Authority may publish on its website and distribute annual information indicating the job creation and ranges of capital investments made by a data center operator and, if applicable, its participating tenants, in a format to be dev19.developed in consultation with data center operators.

(Effective19. until January 1, 2022) If the preponderance of their use is in the manufacture of beer by a brewer licensed pursuant to subdivision 1 or 2 of § 4.1-208, (i) machinery, tools, and equipment, or of 6 repair parts therefor or replacements thereof, fuel, power, energy, or supplies;

(Effective until January 1, 2022) If the preponderance of their use is in the manufacture of beer by a brewer licensed pursuant to subdivision 1 or 2 of § 4.1-208, (i) machinery, tools, and equipment, or repair parts therefor or replacements thereof, fuel, power, energy, or supplies;

(ii) materials for future processing, manufacturing, or conversion into beer where such materials either enter into the production of 5 of or become a component part of the beer;

A subdivision certifying authority may only certify property pursuant to this section if the property being certified is equipment, facilities, devices, or other property intended for use by the political subdivision in conjunction with the operation of its water, wastewater, stormwater, or solid of 6 waste management facilities or systems.

E C.

For solar photovoltaic (electric energy) systems, this exemption applies only to (i) projects equaling 20 megawatts or less, as measured in alternating current (AC) generation capacity, for which an initial interconnection request form has been filed with an electric utility or a regional tranRmissiontransmission organization on or before December 31, 2018;

(ii) projects equaling 20 megawatts or less, as measured in alternating current (AC) generation capacity, that serve any of the public institutions of higher education listed in § 23.1-100 or any private college as defined in § 23.1-105;

(iii) 80 percent of the assessed value of projects for which an initial interconnection request form has been filed with an electric utility or a regional transmission organization (a) between January 1, 2015, and June 30, 2018, for projects greater than 20 megawatts or (b) on or after July 1, 2018, for projects greater than 20 of 5 megawatts and less than 150 megawatts, as measured in alternating current (AC) generation capacEty,capacity, and that are first in service on or after January 1, 2017;

and (v) 80 percent of the assessed value of all other projects equaling more than five megawatts and less than 150 megawatts, as measured in alternating current (AC) generation capacity for which an initial interconnection request form has been filed with an electric utility or a regional transmission organization on or after January 1, 2019.