Alabama Administrative Code › Title 810 - ALABAMA DEPARTMENT OF REVENUE › Chapter 810-4-3 - REQUIREMENTS FOR ASSESSING AND GRANTING OF ABATEMENT OF NONEDUCATIONAL AD VALOREM TAXES ON CERTAIN INDUSTRIAL PROPERTY › Section 810-4-3-.03 - Property Qualifying For Abatement - Chapter 9B

Current through Register Vol. 42, No. 9, June 28, 2024
(1) Property qualifying for tax abatements
			 under Title 40, Chapter 9B,
Code of Ala. 1975
, must be
			 classified as industrial development property. For purposes of this rule,
			 industrial development property is defined as real and/or personal property
			 acquired in connection with establishing or expanding an industrial or research
			 enterprise in Alabama.
(2) If the
			 trade or business to be conducted by a private user at a given site is
			 predominantly (i.e. more than 50% of the project investment) in the nature of
			 an industrial or research enterprise, then all of the property to be acquired
			 or constructed at said site will constitute industrial development property
			 eligible for abatements under Chapter 9B. If the predominant activity is not in
			 the nature of an industrial or research enterprise, then only the portion, of
			 the personal property used for industrial research or enterprise will
			 constitute industrial development property eligible for abatement under Chapter
			 9B.
(3) All real and personal
			 property, the cost of which may be added to the capital account, comprising a
			 data processing center acquired at any time during the applicable maximum
			 exemption period qualifies for abatement. Property includes but is not limited
			 to, computers, software licensed for use, equipment supporting computing,
			 networking or data storage; cooling systems, cooling towers, and other
			 temperature infrastructures, power infrastructure for transformation,
			 distribution, or management of electricity used for the maintenance and
			 operation of a data processing center, including, but not limited to, exterior
			 dedicated business-owned substations, backup power generation systems, battery
			 systems, and related infrastructure; and any other equipment necessary for the
			 maintenance and operation of a data processing center.
(4) Co-location lessees of data processing
			 centers must receive the same incentives as the lessor based on the data
			 center's qualifying activities, provided the tenants are included in the
			 initial abatement agreement or later added to the original abatement agreement
			 through addenda. Once the exemption period begins, the addition of a lessee
			 does not extend the maximum exemption period. However, a tenant's investment
			 can be applied to the calculation of aggregate capital investment necessary to
			 extend the maximum exemption period as provided in §
								40-9B-3.
			 In no event will the tax abatements granted to a data processing center extend
			 beyond the end of the applicable maximum exemption period.
(5) A major addition for a data processing
			 center project must not include capitalized repairs, rebuilds, maintenance, or
			 replacement equipment on real and/or personal property placed in service before
			 the date the abatement is granted. Capitalized repairs, rebuilds, maintenance,
			 refresh equipment, and replacement equipment acquired by a data processing
			 center project during the maximum exemption period as defined by §
								40-9B-3 will qualify for an abatement. Once the maximum exemption period as defined by
			 §
								40-9B-3 expires, all real and personal property will become fully taxable.
(6) With the exception of a data processing
			 center project, no further abatement with respect to the same private use
			 industrial property may be granted unless there is a major addition as defined
			 by §
								40-9B-3,
Code of Ala, 1975
.
(a) To constitute a major addition within the
			 meaning of Title 40, Chapter 9B,
Code of Ala. 1975
,
			 the lesser of an investment of 30 percent of the original cost of currently
			 existing industrial property, the sum total of original facilities and
			 equipment, and any expansion or additions to date before the abatement request,
			 or $2,000,000 must be made.
(b)
			 With the exception of a data processing center, a major addition does not
			 include capitalized repairs, rebuilds, maintenance, or replacement
			 equipment.
(c) Costs associated
			 with renovating or remodeling existing facilities of an operating industrial or
			 research enterprise do not qualify for an abatement under Chapter 9B.
(d) Equipment that performs the same function
			 as the equipment that it replaces, even though the new equipment performs the
			 function better or faster, is defined as replacement equipment. Equipment that
			 replaces existing equipment that performs not only the same function, but also
			 an additional function, qualifies as a capital investment in meeting the thirty
			 percent (30%) or $2,000,000 threshold of a major addition.
(e) Replacement property qualifies for the
			 remainder of an abatement previously granted on the equipment being
			 replaced.
(f) Replacement equipment
			 acquired subject to a lease in effect before May 21, 1992 is taxable only
			 according to the lease.