Colorado data center tax incentive bill postponed indefinitely

DENVER — A Colorado bill that would have created tax incentives for data center development was postponed Thursday indefinitely after failing in the House Energy and Environment Committee on an 11-2 vote.

House Bill 26-1030, titled Data Center & Utility Modernization, proposed a state sales and use tax exemption for qualifying data centers and would have created the Colorado Data Center Development Authority within the Colorado Office of Economic Development and International Trade to oversee the program.

Under the proposal, certified data center projects could have received a 100% state sales and use tax exemption on qualified infrastructure, mechanical systems and technology purchases for 20 years beginning in tax year 2027. The exemption could have been extended for another 10 years if operators met ongoing requirements.

To qualify, developers would have needed to invest at least $250 million in data center infrastructure within five years, create jobs paying at least 110% of the county average wage and meet environmental and labor standards.

The bill also required applicants to consult with utilities on electricity infrastructure and water management plans before receiving certification. Utilities would have been required to determine whether projects would create unreasonable cost impacts for other ratepayers.

The authority would have been allowed to charge application fees of up to $30,000 and certification fees of up to $20,000 to cover administrative costs.

The legislation also included provisions allowing utilities regulated by the Colorado Public Utilities Commission to submit targeted resource-acquisition applications for large-load customers, such as data centers. Applications submitted before Dec. 31, 2029, would have been required to target a 3-to-1 ratio of non-carbon-emitting power sources to carbon-emitting sources. Beginning in 2040, all proposed energy resources would have needed to come from renewable sources.