Definition of “Qualified Data Center” (New Section 1(g)):
“Qualified data center” means one or more buildings that are constructed, reconstructed, enlarged, remodeled or leased to house a group of networked computer servers in this state to centralize the storage, management and dissemination of data and information pertaining to a particular business, taxonomy or body of knowledge and such buildings are connected to each other by fiber and associated equipment required for operating a fiber transmission network between data center buildings and internet points for the purpose of providing redundancy and resiliency for the data center services provided in each building.
Core Qualification (New Section 2(a)):
A qualified firm that makes an investment in eligible data center costs in a qualified data center of at least $250,000,000 in the aggregate by the fifth year of operations and creates and maintains at least 20 new jobs at the qualified data center within two calendar years after the commencement of operations shall receive a sales tax exemption...
Electricity Rate Prohibition (amended K.S.A. 66-101j):
A customer shall not be eligible for the discount authorized by this section for any new or expanded facility that is a qualified data center as defined in section 1, and amendments thereto.
Water Conservation Commitment (Section 2(b)(5)): The firm must commit to practices that will conserve, reuse and replace water, including (but not limited to) efficient fixtures, rainwater harvesting, recirculation, reclaimed water use, and watershed restoration support.
Clawback / Cure (Section 2(c)): 120-day cure period after written notice of breach. If not cured, Commerce can require repayment of all or part of the sales tax exemption received, terminate the exemption, or suspend it.
2. Comparison to Neighboring States (2026)
| State | Main Incentive | Min Investment | Min Jobs | Duration | Power Discount Allowed? | Security Review? | Notes / Strength vs KS |
|---|---|---|---|---|---|---|---|
| Kansas | 100% state + local sales tax | $250M | 20 | 20 years | No | Yes (KIFC) | Strongest security + ratepayer protection |
| Missouri | 100% state + local sales tax | $25M (new) / $5M (expand) | 10 (new) / 5 (expand) | Up to 15 years | Yes (local deals common) | No | Much lower thresholds; heavy local Chapter 100 property tax abatements (often 90%+ for 20+ years) |
| Iowa | Sales tax exemption or refund | $200M (full) or $1M–$10M (partial) | Varies | 10–15 years (recently limited) | Yes | No | Lower bar; also property tax exemption starting 2027 |
| Nebraska | Sales tax exemption on equipment + construction materials | $3M–$37M+ (tiered) | 30+ or maintain employment | Multi-year | Yes | No | Flexible tiers via Advantage/ImagiNE programs |
| Oklahoma | Sales tax exemption on equipment/machinery (and sometimes power for certain NAICS) | None specific | None specific | Ongoing | Partial | No | Broad computer services exemption |
| Colorado | Proposed/debated 20–30 year sales tax exemption (HB26-1030 style) | Varies | Varies | 20–30 years | Yes | No | Not as mature; fiscal pushback ongoing |
Takeaway: Kansas has the highest investment threshold ($250M) and the strongest ratepayer and security protections. Missouri is currently the most aggressive competitor in the KC metro with much lower bars and huge local property tax deals. Iowa and Nebraska are also active but less “hyperscale-focused.”
3. Sample Local Zoning Language That Interacts with SB 98
Here’s clean, professional language you (or a city/county attorney) can adapt for Topeka, Shawnee County, or any Kansas jurisdiction. It is designed to work with SB 98 while giving locals real control.
Section X.XX – Data Centers and Related Facilities
A. Definition. “Data Center” means a facility whose primary purpose is the storage, management, processing, and dissemination of digital data, including but not limited to facilities that would qualify as a “qualified data center” under K.S.A. 2025 Supp. 74-50,331 et seq. (SB 98).
B. Zoning Districts. Data Centers shall be permitted only in the following districts as a Conditional Use or Special Use Permit: [I-2 Heavy Industrial / PUD / specific overlay]. They are prohibited in all residential, agricultural, commercial, and mixed-use districts unless specifically rezoned after public hearing.
C. Additional Requirements for Conditional/Special Use Approval:
1. Minimum lot size of 40 acres (or as determined by City/County).
2. Minimum setbacks of 500 feet from any residential zoning district or dwelling, and 200 feet from any public right-of-way.
3. Noise, vibration, light, and dust standards stricter than general industrial (e.g., no more than 55 dBA at property line, zero detectable off-site vibration).
4. Water Conservation Plan approved by [City Water / County] that demonstrates net-zero or better impact on local aquifers and surface water (air-cooled or closed-loop preferred).
5. Written will-serve letters from the electric utility and water provider confirming capacity without adverse impact on existing customers.
6. Landscape and screening plan that fully conceals the facility from public view within 5 years.
7. Decommissioning bond or escrow in an amount sufficient to restore the site.
8. Community Benefits Agreement (optional but strongly preferred) addressing local hiring, road improvements, and annual payments in lieu of taxes.
D. Interaction with State Incentives. Approval of a Conditional Use Permit does not constitute endorsement for any state incentive under SB 98. The governing body may condition approval on the applicant agreeing not to seek, or to waive, any local portion of the SB 98 sales tax exemption, or on additional local performance guarantees.
E. Temporary Moratorium Authority. The governing body may by resolution impose a temporary moratorium of up to 12 months on new applications for Data Centers while studying impacts.This language has already been used (in pieces) in places like Independence, Spring Hill, and Topeka’s recent discussions.
4. Analysis of the Compass Datacenters Proposal (Topeka / Shawnee County)
Current Status (as of July 16, 2026):
- Proposed ~60 MW campus near the Walmart distribution center area in Shawnee County / Topeka vicinity.
- No formal application submitted yet (as of early July).
- Compass has been in preliminary talks with the City and County.
- City of Topeka just enacted a 12-month moratorium (July 14–15, 2026) on data centers and battery storage systems specifically to study impacts — this freezes any city-side progress.
- Shawnee County approved a resolution in early July raising conditional-use permit fees for “intelligence industry” projects to $15,000 and setting some frameworks.
- Recent public controversy: Compass representative walked away from a scheduled meeting with local landowners when media arrived (July 15).
Under SB 98 Rules:
- 60 MW is large enough that it will almost certainly clear the $250M investment threshold (hyperscale campuses routinely exceed this).
- 20 permanent jobs is easy for them to meet (they typically create more).
- They will need a 10-year power purchase agreement with Evergy and a water plan.
- They must pass KIFC review (Compass is U.S.-based, so this is usually straightforward unless foreign tenants or technology raise flags).
- They are ineligible for any discounted economic-development electricity rates.
Local Leverage Points:
- Zoning / Conditional Use is still required → moratorium and high fees buy time.
- Water, noise, traffic, and visual impact remain fully under local control.
- Public pressure is already high and effective (Topeka moratorium is direct proof).
- You can demand the Community Benefits Agreement language above as a condition of any future approval.
Bottom line on Compass: It is a real prospect but currently stalled by the City’s 12-month pause and rising local opposition. It is a classic “test case” of SB 98 — state incentives are ready and waiting, but local land-use control is still the decisive gate.