| AI Summary |
This bill establishes a statewide incentive framework to promote the development of certified data centers in Colorado by providing tax benefits, encouraging grid infrastructure investment, and ensuring community benefits.
Key Components
1. Eligibility for Benefit Extension
Certified data centers may extend their 20-year benefit period by 10 additional years if they:
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Invest at least $5 million in new electric grid enhancements
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Create 10 new qualifying jobs beyond prior job commitments
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Remain in compliance with environmental standards
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Fulfill community benefit obligations
2. Tax Incentives Provided
a. Grid Enhancement Investment Income Tax Credit (Sec. 39-22-571):
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Available for certified data center projects with enhancement certification
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Amount determined by a tax credit certificate from the Office of Economic Development
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Credit is nonrefundable but carryforward is allowed for 5 years
b. Sales and Use Tax Exemption (Sec. 39-26-735):
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Applies to purchases of IT infrastructure, mechanical systems, and other qualified data center equipment
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Available to certified data centers with a valid exemption certificate
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Begins January 1, 2026
3. Workforce & Community Benefit Requirements
Certified projects must:
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Participate in at least one state workforce development program, such as:
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Apprenticeships
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STEM education
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Career pathways
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Engage in economic development integration, including:
4. Local Government Coordination (Sec. 24-48.5-814)
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The program respects local authority over property taxes, land use, permitting, and local incentives
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State office may establish procedures to coordinate with local governments
5. Cost Recovery & Fee Structure (Sec. 24-48.5-817)
Office of Economic Development may:
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Charge up to $10,000 application fee
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Charge up to $20,000 certification fee
Public Utilities Commission may:
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Charge up to $25,000 review fee for utility-related applications
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Additional fees allowed for certain grid upgrade reviews
Fee sunset: No fees may be charged after December 31, 2027
6. Implementation Within Existing Resources (Sec. 24-48.5-818)
7. Reporting and Accountability
Certified data centers must:
8. Legislative Intent and Evaluation Metrics
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Emphasis on economic development, grid modernization, and competitiveness
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State Auditor must evaluate:
Effective Date & Applicability
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Applies to projects where construction begins on or after the act’s effective date
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Tax benefits and requirements begin January 1, 2026
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Program continues indefinitely
Impact
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Promotes large-scale, sustainable data center development in Colorado
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Supports energy infrastructure and job creation
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Balances state support with local autonomy and fiscal oversight
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| Summary |
The bill creates the data center development and grid
modernization program (program) in the Colorado office of economic
development (office). To facilitate efficient data center development and
grid modernization, the program allows tax and utility benefits to a data
center operator that applies to the office to have a data center project
certified at one of 2 levels and that satisfies certain eligibility criteria for
certification.
The first level of data center project certification created in the bill
is base certification. In connection with base certification, the bill
specifies that:
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To obtain base certification, a data center operator must
commit, through the application process with the office, to
making a $250 million minimum capital investment in data
center facility construction and equipment within 5 years,
creating 25 full-time jobs that satisfy specified criteria, and
breaking ground on the data center project within 5 years
of obtaining base certification;
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In addition to the investment and job creation requirements,
to obtain base certification a data center operator must also
commit to implementing basic grid support capabilities,
obtaining certification under one of several energy
efficiency standards, implementing water stewardship
strategies that optimize operational water management,
sourcing at least 50% of the data center project's energy
consumption from renewable and clean sources, supporting
clean integration by implementing energy storage solutions
that align with the data center project's needs and
operations, agreeing to certain post-certification
requirements, and agreeing to submit annual compliance
reports to the office;
•
A data center operator must apply to the office, in a form
and manner to be determined by the office, for base
certification before taking action to satisfy any of the
eligibility criteria;
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The office is required to review a data center operator's
application for base certification and award base
certification to data center operators that have
demonstrated that they will satisfy the base certification
criteria;
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A data center operator that obtains base certification for a
data center project is eligible for a 100% sales and use tax
exemption on the purchase, use, and storage of information
technology infrastructure, data center infrastructure, and
electrical grid enhancement equipment (qualified
purchases) for 20 years from the date that the data center
project was certified, so long as the data center project
satisfies ongoing compliance requirements; and
•
In addition to the sales and use tax credit, a data center
operator that obtains base certification for a data center
project is eligible for standard utility rate incentives as
negotiated between the data center operator and the utility.
The second level of data center certification created in the bill is
enhancement certification. A data center operator that has obtained base
certification for a data center project may apply for enhancement
certification for the same data center. In connection with enhancement
certification, the bill specifies that:
•
To obtain enhancement certification, a data center operator
must invest a minimum of $10 million in grid enhancement
and modernization, invest in workforce development or
other community benefit programs, agree to certain
post-certification requirements, and agree to submit annual
compliance reports to the office;
•
A data center operator must apply to the office, in a form
and manner to be determined by the office, for
enhancement certification either before or after making the
required minimum grid enhancement and modernization
investment;
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The office is required to review a data center operator's
application for enhancement certification and award
enhancement certification to data center operators that have
demonstrated that they will satisfy the enhancement
certification criteria;
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For income tax years commencing on or after 2026, a data
center operator that obtains enhancement certification for
a data center project is eligible for an income tax credit in
an amount equal to 10% of the amount of any grid
enhancement and modernization investment made by the
data center operator and an additional amount equal to 5%
of the amount of such investment if the investment is made
in a rural area (grid enhancement credit);
•
A data center operator is not eligible to claim the grid
enhancement credit until the data center operator has made
the required minimum grid enhancement and
modernization investment; and
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In addition to the grid enhancement credit, a data center
operator that obtains enhancement certification for a data
center project is eligible for enhanced utility benefits as
negotiated between the data center operator and the utility.
Before submitting an application for certification for a data center
project, a data center operator is required to conduct and document a
preliminary consultation with the utility that will provide electricity for
the data center project regarding interconnection feasibility, capacity, and
infrastructure requirements and obtain a written feasibility assessment
from the utility. A data center operator is required to include the
documentation of the consultation and the written feasibility assessment
with an application to the office for certification of the data center
project, and, if the data center project includes projects requiring review
by the public utilities commission (commission), the commission is
required to review specified aspects of the application.
A certified data center project that necessitates a new customer
load or co-located customer load that satisfies certain criteria (emerging
new load) is eligible for targeted resource acquisition if the data center
operator satisfies specified requirements. The bill specifies a process by
which a utility regulated by the commission may submit a resource
acquisition application to the commission to meet emerging new load
needs. The bill also specifies how a utility may finance resources and
infrastructure needs in connection with emerging new loads.
After achieving base certification and enhancement certification,
a data center operator may apply to the office for certain benefit
extensions for the sales and use tax exemption allowed to data center
operators that have obtained base certification, for the grid enhancement
credit allowed to data center operators that have obtained enhancement
certification, and for the utility benefits negotiated between the data
center operator and the utility.
If the office determines that a data center operator is not fulfilling
its obligations and commitments to retain base certification or
enhancement certification, the office is required to revoke the
certification and the data center operator is required to repay the state for
the tax benefits that it received.
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