Senate negotiators agree in principle to cap, sunset housing tax credits and add data‑center conditions

Senate committee members reviewed and signaled agreement in principle to a balloon amendment that would end the state—s 4% housing tax credit allocations, retain the 9% credit under a new cap structure, and attach new conditions to a proposed sales‑tax exemption for data‑center equipment.

The substitute offer presented would limit the current plan year issuance to $25,000,000 in state tax credits, cap future plan‑year allocations of the 9% credit at $8,800,000 per plan year (applied over standard 10‑year credit terms), require a sunset of the program at the end of 2028, and fold the contents of House Bill 2096 into the package while deferring full consideration of SB 51 for later action.

Nick Myers, Revisor, Office of Revisor of Statutes, walked senators through the proposed balloon amendment and its 10 amendments, saying the package deleted authorizations for modular data centers and preassembled components, excluded telecommunications and video/wireless providers from the definition of a qualified firm, and added multiple compliance commitments required of qualifying firms. "These covered nations as defined in this, federal law are Iran, North Korea, China, and Russia, just for your information," Myers said while describing a proposed prohibition on equipment manufactured or produced in those countries.

The amendment would add a prohibition on utilities offering economic development discounted electric rates to any facility defined as a data center, by bringing in an existing chapter 66 statute governing economic development electric rates. It would also require a qualified firm to commit to purchase electricity from the retail public utility serving the territory for 10 years to preserve the state's sales‑tax base on electricity generation tied to the exemption. The balloon would limit the length of the sales‑tax exemption to 20 years after commencement of operations and set a minimum data‑center investment threshold at $250,000,000.

Committee members asked implementation questions about compliance verification, the burden on state agencies, and how the certification requirements would be enforced. Representative Clayton asked, "So is there anything in the balloon that says who does that certification? Who does the work? Who looks at it? Who's responsible?" Myers replied that the qualified firm would certify compliance and that "the Department of Commerce would be the entity that would be reviewing, and ensuring compliance." Senators pressed whether additional agency staff (FTEs) or more resources would be required; Myers said that would be for the Department of Commerce to determine and report back if it needed more staff.

The balloon also lists multiple data‑security and auditing standards a qualified firm would need to certify compliance with, including SOC reports, ISO/IEC 27001 (2022), PCI DSS, NIST Special Publication 800‑53 and references to federal information security requirements. Myers told the committee these are recognized information‑security and attestation standards but that compliance among potential developers may vary.

Senators and sponsors discussed timing and the definition of plan years under the KHRC Qualified Allocation Plan process. The sponsors said the 4% credit would not receive additional awards after the 2025 Qualified Allocation Plan year and that the 9% credit cap and sunset would be tied to Qualified Allocation Plan years, with the package language to be clarified by revisers to align a calendar cutoff of December 31, 2028, with the 2028 Qualified Allocation Plan year as the last year awards would be made.

Members also discussed single‑subject constraints; revisers advised that some of the changes (for example, pulling in a chapter 66 statute that affects utility rate discounts) broaden the bill's subject matter and would require assignment to a new Senate bill so the amendments could be inserted without violating single‑subject rules. The committee agreed to accept the offer as drafted in principle, allow revisers latitude to perfect statutory language, and return to address SB 51 and related amendments at a later convening.

The discussion closed with senators indicating they would reconvene in first recess to finalize insertion language and conferee assignments; no formal recorded roll‑call vote on the final balloon amendment was recorded in the transcript.

Less central details: the balloon would remove authorization for modular data centers and preassembled components from the exemption language; it would prohibit a qualified firm from receiving discounted economic development electric rates; require water‑conservation commitments; and require assurances that exempted equipment is not sourced from certain foreign nations according to the cited federal provision in the draft. The transcript did not include final statutory text or an enacted vote; senators asked revisers and the Department of Commerce to return with clarified language and implementation details before final action.