Chapter 122:28-1 | Computer Data Centers

Rule 122:28-1-01 | Definitions.

• Effective: February 8, 2021
• Promulgated Under: 119.03

As used in rules 122:28-1-02 to 122:28-1-05 of the Administrative Code:

(A) "Authority" means the tax credit authority.

(B) "Capital lease" and "operating lease" are to be construed in accordance with generally accepted accounting principles, and a capital lease is included in the capital investment project as defined in section 122.175 of the Revised Code.

(C) "Director" means the director of the Ohio development services agency.

(D) "Exempt property" means tangible personal property used to construct and finally incorporated in the computer data center or to conduct the computer data center business and placed or installed at the computer data center.

(E) "Grantees" means, collectively, the original grantee and/or the supplemental grantee.

(F) "Original grantee" means the computer data center business or businesses leading the capital investment project.

(G) "Statutory minimums" means the statutory minimum of one million five hundred thousand dollars of annual payroll in accordance with division (A)(5))(b) of section 122.175 of the Revised Code and one hundred million dollars of capital investment in the project as set forth in division (A)(5)(a) of section 122.175 of the Revised Code.

(H) "Supplemental grantee" means a tenant or other co-location participant in the original grantee's computer data center business that elects to become a party to the tax exemption agreement under division (M) of section 122.175 of the Revised Code and is approved by the authority. Supplemental grantees may provide computer data center business services to themselves or to third parties.

(I) "Tax Commissioner" means the tax commissioner of the Ohio department of taxation.

Supplemental Information

Authorized By: 122.175(K)
Amplifies: 122.175
Five Year Review Date: 2/8/2026

Rule 122:28-1-02 | Computer Data Center Equipment.

• Effective: February 8, 2021
• Promulgated Under: 119.03

Exempt equipment includes all tangible personal property incorporated into the computer data center or used primarily to conduct computer data center business for the original grantee or the supplemental grantee, including, but not limited to:

(A) Any building or construction materials incorporated into the computer data center, or building and construction materials sold to construction contractors for incorporation into a computer data center, including building materials, infrastructure, machinery, wiring, cabling and equipment that otherwise may be considered business fixtures, but does not include tools and equipment that is considered to be consumed by the contractor. Examples of tools and equipment used by contractors that are not incorporated into the computer data center, include, but are not limited to, hammers, nail guns, bulldozers and cranes (without operators supplied), job trailers, portable toilets, air compressors, generators, scaffolding and vehicles;

(B) Any tangible personal property generating, transforming, transmitting, distributing, or managing electricity to operate the computer data center business.

(C) Any computers, servers, routers, switches, peripheral computer devices, racks, shelving, cabling, wiring, storage batteries, back-up generators, uninterrupted power supply units, environmental control equipment, other redundant power supply equipment, and prewritten computer software used in operating, managing, or maintaining the computer data center business of the original grantee or the supplemental grantee; and

(D) Any other tangible personal property used to conduct the computer data center business, such as video monitors and security systems used to directly monitor the computer data center or computer data center equipment, tools consumed by the original or supplemental grantee for installation or repair of computer data center equipment, and similar tangible personal property used for the operation of a computer data center business, but does not include tangible personal property not part of the computer data center business even if located at the computer data center, including, but not limited to, exercise equipment, prewritten computer software used for purposes other than to conduct a computer data center business such as accounting, payroll or human resources, general office supplies, office furniture, janitorial supplies or equipment for business operations other than the computer data center business.

Supplemental Information

Authorized By: 122.175(K)
Amplifies: 122.175
Five Year Review Date: 2/8/2026

Rule 122:28-1-03 | Reporting.

• Effective: February 8, 2021
• Promulgated Under: 119.03

In the matter of divisions (E)(5) and (I) of section 122.175 of the Revised Code:

(A) Annual reporting to the director

(1) Original grantee will submit to the director an annual report indicating: (a) the total new payroll of grantees at the project site for the preceding calendar year; (b) the number of new full-time equivalent employees at the project site; (c) whether the total payments for a capital investment project made by grantees at the project site meets or exceeds the statutory minimums or such higher amount agreed to by the director and original grantee; and (d) any other information the director reasonably requests in writing at least sixty days before the due date for such annual report, which the director reasonably deems necessary.

(2) To the extent the original grantee is relying on supplemental grantees to meet the statutory minimums, the original grantee will provide grantor, upon request and to grantor's satisfaction, a compliance supplement confirming the process by which the original grantee obtains its information from supplemental grantees and confirms the information's accuracy.

(3) The annual report is due by March first of each year and is to be certified by an officer or other authorized representative of the original grantee.

(B) Reporting to the tax commissioner.

(1) Following each calendar year, original grantees and supplemental grantees, if applicable, will submit, in a form acceptable to the tax commissioner, a report summarizing the amount of exempt purchases made during the year along with an estimate of the sales and use taxes which would have been due in the absence of the data center tax exemption agreement. The sales tax exemption report is due no later than March first of each year and is to be certified by an officer of the grantee or supplemental grantee, respectively.

(2) In order to process and provide the original grantee or supplemental grantee with a direct payment permit, original grantees and supplemental grantees will provide information requested by the tax commissioner on the application for such direct payment permit.

(3) Original grantees and supplemental grantees will timely file the use tax returns in accordance with section 5739.031 of the Revised Code and pay the use tax due on any purchases not subject to the data center tax exemption on which sales tax was not paid to vendor. Grantees are to file returns even if grantees have no tax liability for the reporting period.

(4) Failure to provide the tax commissioner any of the information described in paragraph (B) of this rule will be considered a failure to meet or comply with a requirement set forth in the agreement.

(C) Original grantees are to give the director written notice of the suspension of operations prior to suspension, if possible, and within five business days following suspension if notice prior to suspension is not possible. Grantee is to notify the director and the tax commissioner within five business days of the re-establishment of its operations at the project.

Supplemental Information

Authorized By: 122.175(K)
Amplifies: 122.175
Five Year Review Date: 2/8/2026

Rule 122:28-1-04 | Remedies.

• Effective: February 8, 2021
• Promulgated Under: 119.03

In the matter of divisions (G) and (J) of section 122.175 of the Revised Code:

(A) Grantees are to satisfy the statutory minimums. If grantees fail to timely meet the statutory minimums, the authority may terminate the data center tax exemption agreement and grantor will not issue tax exemption certificates to the original grantee or any supplemental grantee. The authority may also have the grantees refund the state an amount equal to all or a portion of the exemption claimed.

(B) The grantees are noncompliant with the data center tax exemption if grantees have timely met the statutory minimums but subsequently during the term of the tax exemption agreement failed to meet the agreement metrics, including: (1) maintaining operations as an eligible computer data center; (2) meeting the identified investment target; or (3) meeting employment and payroll obligations (e.g., create and retain full-time equivalent employees and new payroll targets). In the event of such noncompliance, the director will notify the grantees and the tax credit authority. The grantees will have the opportunity to explain the noncompliance, and the authority may reduce the rate or term of the data center tax exemption for the current year and future years or terminate the exemption. The authority may consider the effect of market conditions on the eligible computer data center, whether the grantee continues to maintain other operations in this state, and, with respect to agreements involving multiple grantees, the specific grantee's level of responsibility for the noncompliance.

(C) If an original grantee or a supplemental grantee subject to an exemption agreement fails to meet or comply with any condition or requirement set forth in the exemption agreement, the director may amend the exemption agreement to reduce the percentage of the exemption or term during which the exemption applies to the computer data center equipment used or to be used by the noncompliant taxpayer at an eligible computer data center. The reduction of the percentage or term may take effect in the current calendar year.

Supplemental Information

Authorized By: 122.175(K)
Amplifies: 122.175
Five Year Review Date: 2/8/2026

Rule 122:28-1-05 | Fees.

• Effective: February 8, 2021
• Promulgated Under: 119.03

In the matter of division (K) of section 122.175 of the Revised Code:

(A) At the time each original grantee enters into the data center tax exemption agreement, the original grantee will pay to the development services agency a servicing fee, in an amount equal to four hundred dollars per year of the data center tax exemption agreement. A separate servicing fee, each calculated as described in the preceding sentence, will be assessed for each original grantee that is party to a data center tax exemption agreement. An amendment that requests the addition of affiliated taxpayer(s) following the initial approval of the data center tax exemption agreement is subject to the same servicing fee for each added party related to the original grantee. Such an amendment is not subject to the amendment fee, as described in paragraph (B) of this rule, unless the amendment requests changes to other terms of the data center tax exemption agreement.

(B) An original grantee or a supplemental grantee for a project that has already received approval from the authority for a data center tax exemption is to pay a three hundred dollar fee to the development services agency in connection with the grantee's request to amend a previously approved tax exemption project, including to add a supplemental grantee, provided that the amendment fee will not be assessed for ministerial amendments. The determination of the executive director of the authority on the nature of an amendment as ministerial or substantive is final.

(C) An original grantee that does not submit to the director a complete annual report or annual certification postmarked by or received prior to March first of the year the report or certification is due will be assessed a late fee of five hundred dollars for each month the report or certification is not received on the first day of each ensuing calendar month until the taxpayer submits the complete annual report or annual certification under paragraphs (A) and (C) of rule 122:28-1-03 of the Administrative Code. If an annual report or annual certification submitted to the director is not complete, the director, or his or her designee will notify the original grantee of the deficiencies in the submission, and the original grantee will have thirty days from the date of the notice to provide supplemental information to the director that completes the annual report or annual certification. During the pendency of the thirty-day time period to supplement annual report or annual certification information, the original grantee is still subject to the monthly late fee. Failure by an original grantee to comply with reporting requirements is a breach of the the data center tax exemption agreement. After the expiration of any applicable cure period under the data center tax exemption agreement, the authority may exercise its remedies including, without limitation, reduction of the term or percentage of the tax exemption or both, or termination of the tax exemption. Any supplemental grantees will be copied on any notices of default sent to the original grantee.

(D) A tax exemption certificate will not be issued to any original grantee or supplemental grantee with unpaid fees under this rule.

Supplemental Information

Authorized By: 122.175(K)
Amplifies: 122.175
Five Year Review Date: 2/8/2026