A06125 Summary:

COSPNSRBarron, Gottfried
Rpld & add §104-a, Ec Dev L; amd §§1836-a, 1836-b, 1836-c, 1836-d & 1836-e, Pub Auth L; amd §612, Tax L
Relates to the establishment of a state university-based center for employee ownership.
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A06125 Actions:

03/10/2021referred to economic development
01/05/2022referred to economic development
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A06125 Committee Votes:

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A06125 Floor Votes:

There are no votes for this bill in this legislative session.
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A06125 Text:

                STATE OF NEW YORK
                               2021-2022 Regular Sessions
                   IN ASSEMBLY
                                     March 10, 2021
        Introduced by M. of A. ZINERMAN -- read once and referred to the Commit-
          tee on Economic Development
        AN ACT to amend the economic development law, the public authorities law
          and the tax law, in relation to the establishment of a state universi-
          ty-based   center  for  employee  ownership;  and  to  repeal  certain
          provisions of the economic development law relating thereto
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  Section 104-a of the economic development law is REPEALED
     2  and a new section 104-a is added to read as follows:
     3    § 104-a. Establishment of a state university-based center for employee
     4  ownership. With respect to  employee  ownership,  the  department  shall
     5  establish  a  state  university-based center for employee ownership "the
     6  center".
     7    1. The center shall:
     8    (a) provide education and outreach to inform business owners about the
     9  benefits of employee ownership successions;
    10    (b)  organize  workshops  and  conferences   on   employee   ownership
    11  successions;
    12    (c)  prepare  and  distribute  materials concerning employee ownership
    13  successions;
    14    (d) provide initial consultation  to  business  owners  exploring  the
    15  possibility of transferring full or partial ownership to employees;
    16    (e)  provide  a  referral  service to help business owners find legal,
    17  financial, and technical advice in connection  with  employee  ownership
    18  successions;
    19    (f)  partner  with  key  organizations, such as professional and trade
    20  associations,  financial  institutions,  unions,  economic   development
    21  organizations, and other non-profit entities, to promote employee owner-
    22  ship successions;
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

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     1    (g)  conduct  investigations,  research,  studies, and analyses on the
     2  subject of employee ownership; and
     3    (h) support the growth of associations of employee-owned companies.
     4    2. The center shall additionally provide support and access in govern-
     5  ment  relations,  including  providing  access  to information regarding
     6  rules and regulations that relate  to  employee  ownership  and  develop
     7  proposals for changes in policies to promote employee ownership.
     8    § 2. Section 1836-a of the public authorities law, as added by chapter
     9  788 of the laws of 1983, is amended to read as follows:
    10    §  1836-a.  Legislative  findings.  The  legislature  hereby finds and
    11  declares that [the health, safety and general welfare of the  people  of
    12  this  state  are directly dependent upon the state economy, and that one
    13  of the principal problems of our present economy is the permanent  clos-
    14  ing  of industrial and manufacturing plants, and their relocation out of
    15  state, which results in the loss of jobs and increasing unemployment.
    16    It is the purpose of this  subtitle  to  encourage  the  employees  of
    17  plants that are about to be permanently closed, or relocated, to acquire
    18  such  plants  and  to  continue to operate them as employee-owned enter-
    19  prises, thereby retaining the jobs that would  otherwise  be  lost,  and
    20  strengthening  the  economic  base  of  this  state]  employee ownership
    21  program is a mainstream aspect of the United States economy with approx-
    22  imately thirteen and a half million workers participating in  some  form
    23  of employee ownership program at over seven thousand companies. The vast
    24  majority of such programs are the result of a transfer from the business
    25  owners to the employees and in accordance with federal law that seeks to
    26  facilitate  such  transfers.  Employee  ownership  transfers  are in the
    27  interest of business owners,  who  seek  to  liquidate  their  ownership
    28  interest  and  retire.  Such  transfers  are also in the interest of the
    29  employees, who gain the opportunity to ensure the future survival of the
    30  firm and their jobs.
    31    The legislature also finds and declares    that  employee-owned  busi-
    32  nesses  are  more productive, enjoy increased sales, lower turnover rate
    33  and greater longevity, offer better employment  opportunities,  and  are
    34  more  likely to retain jobs in-state and less likely to relocate out-of-
    35  state.   Employee-owned businesses  also  sustain  the  state  tax  base
    36  through  employee  and corporate income tax, while saving costs on unem-
    37  ployment insurance and other state benefit programs. It is  the  purpose
    38  of  this  subtitle  to  amplify  federal programs in support of employee
    39  ownership at the state level through  loans  and  loan  guarantees  that
    40  provide  financing for the conversion of existing businesses to employee
    41  ownership.
    42    § 3. Subdivisions 3, 4, 5, 6, 7 and 8 of section 1836-b of the  public
    43  authorities  law,  subdivisions 3, 6, 7 and 8 as added by chapter 788 of
    44  the laws of 1983, subdivisions 4 and 5 as amended by chapter 805 of  the
    45  laws of 1985, are amended to read as follows:
    46    3.  "Eligible project" means the acquisition [or rehabilitation] by an
    47  employee ownership association of an existing [industrial or manufactur-
    48  ing plant] business located in this state for the purpose  of  operating
    49  it as an employee-owned enterprise.
    50    4.  "Employee  ownership  association"  means  a  corporation, limited
    51  liability company, trust, or other association formed by or on behalf of
    52  the employees of [an  industrial  or  manufacturing  plant]  a  business
    53  located  in  this state for the purpose of assuming ownership or control
    54  of the [plant] business and operating it as an employee-owned enterprise
    55  or as a worker cooperative as defined in section eighty-one of the coop-
    56  erative corporations law.

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     1    5. "Employee-owned enterprise" means a business in which the employees
     2  are represented on the board of directors or managers and the  employees
     3  control  the  majority of the voting stock or member interest, or if the
     4  business is held in a trust which controls the majority  of  the  voting
     5  stock or member interest, the trustees are elected by the employees. The
     6  term  "employee-owned  enterprise"  shall also refer to a worker cooper-
     7  ative as defined in section eighty-one of the  cooperative  corporations
     8  law.
     9    6.  ["Funding  partner" means an entity which singly or in combination
    10  with other entities has agreed to finance a portion of the project  cost
    11  of  an  eligible project, and may include the employee ownership associ-
    12  ation undertaking the project as well as any financial entity.
    13    7. "Plant" includes the site, structure, building  and  equipment  and
    14  all  real  and personal property in connection therewith, whether or not
    15  in existence, and may include any road, railroad, or utility  or  equip-
    16  ment appurtenant thereto.
    17    8.]  "Project  cost" includes all reasonable and necessary costs to be
    18  incurred in the course of an eligible  project,  including  [any  antic-
    19  ipated  acquisition,]  the fair market value of the business interest to
    20  be acquired, as well as costs  for  any  additional  construction,  land
    21  acquisition,  improvements,  equipment,  pertinent rights and easements,
    22  and associated technical, engineering, legal and financial services.
    23    § 4. The opening paragraph and paragraphs (a), (b) and (d) of subdivi-
    24  sion 1 and subdivision 2 of section 1836-c  of  the  public  authorities
    25  law, as added by chapter 788 of the laws of 1983, are amended to read as
    26  follows:
    27    Any  employee  ownership association may apply to [a local development
    28  corporation serving the municipality in which the  eligible  project  is
    29  located]  the  authority for an employee ownership assistance loan to be
    30  used to help finance an eligible project. Such application must  include
    31  a  written  statement  from  the  entity from which the project is being
    32  acquired, stating that such entity  consents  to  the  acquisition.  The
    33  application shall include [in detail]:
    34    (a)  [the history and membership] a description of the employee owner-
    35  ship association;
    36    (b) [the history and circumstances of the  plant  to  be  acquired]  a
    37  description of the business;
    38    (d)  estimate  of  the  number  of jobs [to be saved or created by the
    39  project] before and after the transaction; and
    40    2. The application shall also include a detailed  financial  statement
    41  of  [funding  partner] actual and anticipated financial participation in
    42  the project, which shall include:
    43    (a) the identity of all funding [partners] sources; [and]
    44    (b) the nature of the financial participation, which may include,  but
    45  is  not  limited  to, seller notes, senior debt, junior debt, and equity
    46  investment; and
    47    (c) the terms of the financing agreements with the funding  [partners]
    48  sources,  including  any  repayment  schedules and finance charges to be
    49  included in such agreements.
    50    § 5. Subdivision 1 of section 1836-d of the public authorities law, as
    51  added by chapter 788 of the laws of 1983, is amended to read as follows:
    52    1. have a higher level of funding from the funding  [partners]  source
    53  or financial participant;
    54    § 6. The section heading and subdivisions 1 and 3 of section 1836-e of
    55  the public authorities law, as added by chapter 788 of the laws of 1983,

        A. 6125                             4
     1  are  amended  and  two  new  subdivisions  5  and 6 are added to read as
     2  follows:
     3    Loan  agreements  and lending authority.  1. If the authority approves
     4  an application for a loan under this subtitle,  the  [local  development
     5  corporation] authority may enter into a loan agreement with the employee
     6  ownership   association  whereby  the  [local  development  corporation]
     7  authority agrees to loan  to  the  employee  ownership  association  the
     8  remaining funds necessary for the eligible project.
     9    3.  The  [local  development corporation] authority may not enter into
    10  any loan agreement unless the authority determines through an  appropri-
    11  ate method that there is reasonable assurance of repayment. The authori-
    12  ty  shall  establish such requirements or terms as it may deem necessary
    13  or desirable to secure the repayment of the  loan  and  to  protect  the
    14  interests of the authority and the holders of its bonds.
    15    5.  (a)  The  authority  may  establish  a  trust fund account for the
    16  purposes  of  providing  a  loan  or  loan  guarantee  pursuant  to  the
    17  provisions  of  this  chapter. The initial deposit of funds to the trust
    18  fund shall be in an amount to be determined by the authority  but  shall
    19  not  exceed  one hundred million dollars from an amount otherwise avail-
    20  able from funds appropriated.
    21    (b) The authority shall deposit into the trust fund all income  earned
    22  from the moneys paid back from loans to be used for additional lending.
    23    6.  The  authority  shall make a loan decision or loan guarantee deci-
    24  sion, and inform the applicant of the  authority's  decision,  no  later
    25  than  thirty  days after the authority receives the applicant's applica-
    26  tion for an employee ownership loan or employee ownership  loan  guaran-
    27  tee. If the authority requests that an applicant supplement its applica-
    28  tion  by  submitting additional information, the authority shall have an
    29  additional fifteen days after receiving the  additional  information  by
    30  which  the authority must make a loan decision or a loan guarantee deci-
    31  sion and inform the applicant of the authority's decision.
    32    § 7. Subsection (c) of section 612 of the tax law is amended by adding
    33  a new paragraph 44 to read as follows:
    34    (44) One hundred percent of the capital gains from the sale  of  stock
    35  or  member  interest  from  a  New York corporation or limited liability
    36  company to an employee-owned enterprise, as defined in subdivision  five
    37  of  section eighteen hundred thirty-six-b of the public authorities law.
    38  In order to qualify for such modification as  described  in  this  para-
    39  graph,  such employee-owned enterprise must have its commercial domicile
    40  in New York. If the employee-owned  enterprise  is  an  "employee  stock
    41  ownership  plan,"  it must comply with federal requirements as such plan
    42  is defined in 26 U.S.C. § 4975(e)(7).
    43    § 8. This act shall take effect immediately; provided,  however,  that
    44  section  one  of this act shall take effect on the one hundred eightieth
    45  day after it shall have become a law.
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