Eligibility
- The data center may be an enterprise or a colocation data center.
- Prior to using the DCRSUT Exemption, a data center must enter into a Memorandum of Understanding (MOU) with the Virginia Economic Development Partnership (VEDP) setting forth the terms and conditions of use. The MOU will set forth the data center facilities in the specific Virginia locality for which the data center will purchase or lease qualifying computer equipment or enabling software and will be using the DCRSUT Exemption.
- A colocation data center will enter into an MOU permitting both the data center and its tenants, together, to qualify for and use the DCRSUT Exemption.
Statutory Minimum General Eligibility Thresholds:
- $150 million new capital investment.
- 50 new jobs located at the data center in the applicable locality and associated with the operation or maintenance of the data center.
- Each new job must be paid at least 150% of the prevailing annual average wage in the locality where the data center is located, excluding fringe benefits.
Statutory Minimum Unemployment Distressed/Enterprise Zone Eligibility Thresholds:
- For a data center located in an Enterprise Zone or in a locality with an unemployment rate for the preceding calendar year of at least 150% of the average statewide unemployment rate for that calendar year.
- $150 million capital investment.
- 25 new jobs associated with the operation or maintenance of the data center in the locality.
- Each new job must be paid at least 150% of the prevailing annual average wage in the locality where the data center is located, excluding fringe benefits.
The data center and its tenants, as may be applicable, may use the DCRSUT Exemption prior to meeting the statutory minimum capital investment, new job, and wage thresholds subject to the requirement that if such thresholds are not met by a certain performance date, the value of the DCRSUT Exemption received will be repaid to the Commonwealth.
The data center and its tenants, as may be applicable, generally must meet the statutory minimum capital investment, new job, and wage thresholds within three years after the data center and VEDP have entered into the MOU.
A data center and its tenants may use the DCRSUT Exemption for qualifying computer equipment or enabling software used for the processing, storage, retrieval, or communication of data, including but not limited to servers, routers, connections, and other enabling hardware, including chillers and backup generators used or to be used in the operation of the equipment.
The following property qualifies for the DCRSUT Exemption:
- Servers, mainframes, network infrastructure, data storage hardware, and other computer equipment to the extent used for the processing, storage, retrieval, or communication of data.
- Cabling, switches, directors, wiring, and similar items to the extent used in the operation of exempt equipment, but not general building improvements or other fixtures.
- Generators, radiators, exhaust fans, fuel storage tanks, and similar items to the extent used to provide electricity, but not fuel otherwise subject to retail sales and use tax.
- Electrical substations, power distribution equipment, cogeneration equipment, batteries, and other electrical equipment to the extent used to provide electricity.
- Chillers, computer room air conditioners (CRACs), heating, ventilating, and air conditioning (HVAC) systems, cool towers, and similar items to the extent used to provide the proper environment in the data center, e.g., temperature and humidity.
- Water storage tanks, water pumps, piping, and similar items to the extent used to operate chillers and other cooling systems to provide the proper environment in the data center, e.g., temperature and humidity.
- Monitoring systems used to monitor the data center’s power generation, transmission, and distribution equipment, to the extent such systems are used to exercise remote control over exempt equipment and to identify specific repair and maintenance needs of exempt equipment, but not equipment used for external surveillance and security and tangible personal property, such as fire and burglar alarm systems, which would be considered general building improvements.
- Cabinets, battery racks, and cable trays specifically designed to ensure that the servers and other exempt equipment function properly.
- Software used for the processing, storage, retrieval, or communication of data when it is sold or leased with the exempt equipment, but not when it is sold or leased separately.
- Custom software which is not prewritten and is specifically designed and developed for only one customer.
General upgrades to the data center facility such as repairing or replacing roofs, lighting, fencing, and other general building improvements or fixtures are not qualifying computer equipment.