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A10507 Summary:

BILL NOA10507
 
SAME ASSAME AS S09467
 
SPONSORRules (Stirpe)
 
COSPNSRBronson, Woerner, Buttenschon, Lunsford, Cahill, Clark, Magnarelli, McDonald, Otis, Peoples-Stokes
 
MLTSPNSR
 
Amd §§352, 353, 355 & 359, Ec Dev L
 
Allows for eligibility of green CHIPS projects in the Excelsior tax credit program.
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A10507 Actions:

BILL NOA10507
 
05/31/2022referred to ways and means
06/02/2022reported referred to rules
06/03/2022reported
06/03/2022rules report cal.763
06/03/2022substituted by s9467
 S09467 AMEND= COONEY
 05/31/2022REFERRED TO COMMERCE, ECONOMIC DEVELOPMENT AND SMALL BUSINESS
 06/02/2022COMMITTEE DISCHARGED AND COMMITTED TO RULES
 06/02/2022ORDERED TO THIRD READING CAL.1885
 06/02/2022MESSAGE OF NECESSITY - 3 DAY MESSAGE
 06/02/2022PASSED SENATE
 06/02/2022DELIVERED TO ASSEMBLY
 06/02/2022referred to ways and means
 06/03/2022substituted for a10507
 06/03/2022ordered to third reading rules cal.763
 06/03/2022message of necessity - 3 day message
 06/03/2022passed assembly
 06/03/2022returned to senate
 08/11/2022DELIVERED TO GOVERNOR
 08/11/2022SIGNED CHAP.494
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A10507 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10507
 
SPONSOR: Rules (Stirpe)
  TITLE OF BILL: An act to amend the economic development law, in relation to allowing for eligibility of Green CHIPS projects in the Excelsior tax credit program   PURPOSE: The purpose of the bill is to attract new semiconductor manufacturing and related material supplier projects to New York State, and allow such projects to access potential Federal CHIPS funding, by making certain Green CHIPs projects that make significant investment in New York State eligible for the Excelsior tax credit program.   SUMMARY OF SPECIFIC PROVISIONS: The bill would provide tax credits to an eligible Green CHIPS project offered under the Excelsior tax credit program. To be eligible for the program, among other things, a Green CHIPs project would be required to create at least five hundred net new jobs and spend at least $3 billion in capital investment over a period of ten years. Section 1 adds definitions of "Green CHIPS benefit-cost ratio" and "Green CHIPS project" to section 352 of the Economic Development Law. For purposes of this section "Green CHIPS Projects" are semiconductor manufacturing and related material supplier projects and provides crite- ria for such projects, including a 500 job and $3 billion investment; establishes a benefit cost ratio of 15 to 1; states that such projects would be eligible for ten years of credits for this initial investment in phase one and an additional 10 years of credit for a second phase; Section 2 of the bill amends section 353 of the Economic Development Law to add Green CHIPS projects as eligible participants in the Excelsior program, and to provide that such projects are eligible for a new and separate ten year phase two benefit schedule that may overlap with phase one, provided the Green CHIPS project meets all the statutory require- ments; Section 3 of the bill amends section 355 of the Economic Development Law to establish the benefits that are 'available for Green CHIPS projects, including the jobs tax credit, investment tax credit, research and development tax credit. This section would also provide that only the first $200,000 of gross wages per job will be eligible for a credit, which will be adjusted annually to take into account cost of living adjustments, and to grant special excelsior jobs program rates for gas and electric service to Green CHIPS projects for the entirety of each of its benefit schedules; Section 4 of the bill amends section 359 of the Economic Development Law to exempt the program from the current schedule of benefits; creates a $500 million cap annually for Green CHIPS projects from tax years 2022 through 2041; and provides that any unused credits may be rolled over into future years, all unused credits must be issued by January 1, 2050. Section 5 of the bill provides that this act would take effect imme- diately. Justification: Semiconductors are present in almost every electronic device used today, including smartphones, gaming consoles, cars, and medical equipment. Even with chip manufacturers operating at full capacity they haven't been able to meet demand, leading to a global shortage. In other indus- tries, manufacturers often respond to shortages by increasing output. Unfortunately, construction and production ramp-up for semiconductors are extremely costly and time consuming. This bill strengthens New York's position globally in semiconductor manufacturing, as well as research and development, by incentivizing semiconductor manufacturers to establish and invest in facilities by allowing Green CHIPs projects that make significant investments in New York eligible for the Excelsior tax credit program . This would cement the production of an inelastic product like semiconductors in New York's economy and assist in the alleviation of a global shortage.   PRIOR LEGISLATIVE HISTORY: New Legislation.   FISCAL IMPLICATIONS: Up to $500 million annually for twenty years.   EFFECTIVE DATE: Immediately.
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A10507 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          10507
 
                   IN ASSEMBLY
 
                                      May 31, 2022
                                       ___________
 
        Introduced  by  COMMITTEE  ON  RULES  -- (at request of M. of A. Stirpe,
          Bronson, Woerner, Buttenschon, Lunsford,  Cahill)  --  read  once  and
          referred to the Committee on Ways and Means
 
        AN  ACT  to  amend the economic development law, in relation to allowing
          for eligibility of Green CHIPS projects in the  Excelsior  tax  credit
          program

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Subdivision 16 of section 352 of the  economic  development
     2  law,  as  amended  by  section  1 of part K of chapter 59 of the laws of
     3  2017, is amended and two new subdivisions 3-a and 24 are added  to  read
     4  as follows:
     5    3-a.  "Green CHIPS benefit-cost ratio" means the following calculation
     6  with respect to Green CHIPS projects: the ratio where the  numerator  is
     7  the  sum  of: (a) the value of all remuneration projected to be paid for
     8  all net new jobs during the period of participation in the program;  (b)
     9  the  value  of capital investments to be made by the business enterprise
    10  during the period of participation in the program; and (c) all  research
    11  and development expenditures by the participant in New York State during
    12  the  period  of participation in the program; and the denominator is the
    13  amount of total tax benefits under this article that will  be  used  and
    14  refunded as well as any state grants provided to the participant.
    15    16.  "Preliminary  schedule  of  benefits" means the maximum aggregate
    16  amount of each component of the tax credit that  a  participant  in  the
    17  excelsior  jobs program is eligible to receive pursuant to this article.
    18  The schedule shall indicate the annual amount of each component  of  the
    19  credit  a participant may claim in each of its ten years of eligibility.
    20  The preliminary schedule of benefits shall be issued by  the  department
    21  when  the  department  approves  the  application for admission into the
    22  program. The commissioner may amend that  schedule,  provided  that  the
    23  commissioner  complies  with  the  credit  caps in section three hundred
    24  fifty-nine of this article as applicable.
    25    24. "Green CHIPS project" means a project meeting all of the following
    26  criteria: (a) is within  the  semiconductor  manufacturing  and  related
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD16022-01-2

        A. 10507                            2
 
     1  equipment  and  material  supplier  sector;  (b) includes sustainability
     2  measures to mitigate the project's greenhouse gas emissions impact  over
     3  its  lifetime;  (c)  provides  for  the payment of not less than federal
     4  prevailing  wage  rates  for its project construction; (d) makes commit-
     5  ments to worker and community investment, including through training and
     6  education benefits paid  by  the  participant  and  programs  to  expand
     7  employment  opportunity  for economically disadvantaged individuals; (e)
     8  will create at least five hundred net new jobs and make at  least  three
     9  billion  dollars in qualified investment; and (f) the participant under-
    10  taking a Green CHIPS project shall maintain a Green  CHIPS  benefit-cost
    11  ratio  of  at  least fifteen to one. Such projects are eligible to enter
    12  into a phase one of a Green CHIPS project ten-year benefit term.    Such
    13  projects,  provided  they  are in good standing with all requirements of
    14  this chapter, are also eligible to enter into a phase  two  of  a  Green
    15  CHIPS  project,  and  therefore  to initiate a new and separate ten-year
    16  schedule related to phase two, provided that phase two  will  create  at
    17  least  five  hundred net new jobs beyond those created in phase one, and
    18  that phase two will make at least three  billion  dollars  in  qualified
    19  investment  beyond  the  investment total associated with phase one. For
    20  Green CHIPS projects, phase one and phase two terms may overlap, depend-
    21  ing on the time of initiation for both projects. In no event shall cred-
    22  its be awarded for a Green CHIPS project beyond two thousand fifty.
    23    § 2. Subdivisions 1 and 3 of section 353 of the  economic  development
    24  law,  subdivision  1  as amended by section 2 of part L of chapter 59 of
    25  the laws of 2020, paragraphs (k) and (l) of subdivision 1 as amended and
    26  paragraph (m) as added by section 2 of part D of chapter 59 of the  laws
    27  of  2021, and subdivision 3 as separately amended by section 2 of part K
    28  and section 2 of part ZZ of chapter 59 of the laws of 2017, are  amended
    29  and a new subdivision 7 is added to read as follows:
    30    1. To be a participant in the excelsior jobs program, a business enti-
    31  ty shall operate in New York state predominantly:
    32    (a)  as  a financial services data center or a financial services back
    33  office operation;
    34    (b) in manufacturing;
    35    (c) in software development and new media;
    36    (d) in scientific research and development;
    37    (e) in agriculture;
    38    (f) in the creation or expansion of  back  office  operations  in  the
    39  state;
    40    (g) in a distribution center;
    41    (h)  in  an  industry  with  significant  potential for private-sector
    42  economic growth and development in this  state  as  established  by  the
    43  commissioner  in  regulations  promulgated  pursuant to this article. In
    44  promulgating such regulations the commissioner  shall  include  job  and
    45  investment criteria;
    46    (i) as an entertainment company;
    47    (j) in music production;
    48    (k) as a life sciences company;
    49    (l)  as  a  company operating in one of the industries listed in para-
    50  graphs (b) through (e) of this  subdivision  and  engaging  in  a  green
    51  project  as  defined in section three hundred fifty-two of this article;
    52  [or]
    53    (m) as a participant operating in one  of  the  industries  listed  in
    54  paragraphs (a) through (k) of this subdivision and operating or sponsor-
    55  ing  child  care  services  to its employees as defined in section three
    56  hundred fifty-two of this article; or

        A. 10507                            3
 
     1    (n) as a Green CHIPS project.
     2    3.  For  the  purposes of this article, in order to participate in the
     3  excelsior jobs program, a business  entity  operating  predominantly  in
     4  manufacturing  must create at least five net new jobs; a business entity
     5  operating predominately in agriculture must create at least five net new
     6  jobs; a business entity operating predominantly as a  financial  service
     7  data  center  or  financial services customer back office operation must
     8  create at least twenty-five net new jobs; a  business  entity  operating
     9  predominantly  in  scientific  research  and  development must create at
    10  least five net new jobs; a business entity  operating  predominantly  in
    11  software  development must create at least five net new jobs; a business
    12  entity creating or expanding back office operations must create at least
    13  twenty-five net new jobs; a business entity operating  predominately  in
    14  music  production  must  create  at  least five net new jobs; a business
    15  entity operating predominantly as an entertainment company  must  create
    16  or  obtain at least one hundred net new jobs; or a business entity oper-
    17  ating predominantly as a distribution center in the state must create at
    18  least fifty net new  jobs,  notwithstanding  subdivision  five  of  this
    19  section; or a business entity operating predominately as a life sciences
    20  company  must  create  at  least five net new jobs; or a business entity
    21  must be a regionally significant  project  or  Green  CHIPS  project  as
    22  defined in this article; or
    23    7.  Notwithstanding  subdivision  sixteen  of  section  three  hundred
    24  fifty-two of this article, the department is hereby authorized to  allow
    25  phase  two  of  a  Green  CHIPS project to enter into a new and separate
    26  schedule of benefits which may overlap with the phase  one  of  a  Green
    27  CHIPS  project  schedule  of  benefits, for a new ten-year benefit term.
    28  Notwithstanding paragraph  three  of  subdivision  a  of  section  three
    29  hundred  fifty-four  of  this  article,  such phase two of a Green CHIPS
    30  project shall be admitted into the program. Provided however,  for  such
    31  phase  two  of  a Green CHIPS project, the new benefit term shall exclu-
    32  sively be provided for net new investments, new research and development
    33  expenditures, and net new job creation above the commitments outlined in
    34  the schedule of benefits for a business' phase  one  of  a  Green  CHIPS
    35  project  with  the department. Assuming the requirements of this article
    36  have been met, both a Green CHIPS project and  any  phase  two  of  such
    37  project  shall  be  eligible  for  benefits  under section three hundred
    38  fifty-five of this article.
    39    § 3. Subdivisions 1, 2, 3, and 7 of section 355 of the economic devel-
    40  opment law, subdivisions 1 and 3 as amended by section 4 of  part  L  of
    41  chapter 59 of the laws of 2020, subdivision 2 as amended by section 3 of
    42  part  D of chapter 59 of the laws of 2021, and subdivision 7 as added by
    43  section 4 of part G of chapter 61 of the laws of 2011,  are  amended  to
    44  read as follows:
    45    1. Excelsior jobs tax credit component. A participant in the excelsior
    46  jobs program shall be eligible to claim a credit for each net new job it
    47  creates in New York state. In a project that is not a green project, the
    48  amount of such credit per job shall be equal to the product of the gross
    49  wages  paid and up to 6.85 percent. In a green project, or a Green CHIPS
    50  project, the amount of such credit per job shall be equal to the product
    51  of the gross wages paid and up to 7.5 percent.  Provided, however, given
    52  the transformational nature of Green CHIPS projects, only the first  two
    53  hundred  thousand  dollars  of gross wages per job shall be eligible for
    54  this credit. The maximum amount of gross wages per job for a Green CHIPS
    55  project may be adjusted for inflation at an annual amount determined  by
    56  the commissioner in a manner substantially similar to the cost of living

        A. 10507                            4
 
     1  adjustments  calculated  by  the  United States Social Security Adminis-
     2  tration based on changes in consumer price indices or  a  rate  of  four
     3  percent per year, whichever is higher.
     4    2.  Excelsior  investment  tax  credit component. A participant in the
     5  excelsior jobs program shall be eligible to claim a credit on  qualified
     6  investments.  In a project that is not a green project, the credit shall
     7  be equal to two percent of the cost or other basis  for  federal  income
     8  tax purposes of the qualified investment. In a green project, the credit
     9  shall  be  equal  to five percent of the cost or other basis for federal
    10  income tax purposes of the qualified investment. In a project for  child
    11  care  services  or a Green CHIPS project, the credit shall be up to five
    12  percent of the cost or other basis for federal income  tax  purposes  of
    13  the  qualified  investment  in child care services or in the Green CHIPS
    14  project as applicable. A participant may not claim  both  the  excelsior
    15  investment  tax credit component and the investment tax credit set forth
    16  in subdivision one of section  two  hundred  ten-B,  subsection  (a)  of
    17  section  six  hundred six, the former subsection (i) of section fourteen
    18  hundred fifty-six, or subdivision (q) of section fifteen hundred  eleven
    19  of  the tax law for the same property in any taxable year, except that a
    20  participant may claim both the excelsior investment tax credit component
    21  and the investment tax credit for research and development property.  In
    22  addition,  a  taxpayer  who or which is qualified to claim the excelsior
    23  investment tax credit component and  is  also  qualified  to  claim  the
    24  brownfield  tangible  property credit component under section twenty-one
    25  of the tax law may claim either  the  excelsior  investment  tax  credit
    26  component  or such tangible property credit component, but not both with
    27  regard to a particular piece of property. A credit may  not  be  claimed
    28  until  a  business  enterprise has received a certificate of tax credit,
    29  provided that qualified investments made on or after the issuance of the
    30  certificate of eligibility but before the issuance of the certificate of
    31  tax credit to the business enterprise, may be claimed in the first taxa-
    32  ble year for which the business enterprise is allowed to claim the cred-
    33  it. Expenses incurred prior to the date the certificate  of  eligibility
    34  is  issued  are  not  eligible  to be included in the calculation of the
    35  credit.
    36    3. Excelsior research and development tax credit component. A  partic-
    37  ipant  in the excelsior jobs program shall be eligible to claim a credit
    38  equal to fifty percent of  the  portion  of  the  participant's  federal
    39  research  and  development  tax credit that relates to the participant's
    40  research and development expenditures in New York state during the taxa-
    41  ble year; provided however,  if  not  a  green  project,  the  excelsior
    42  research  and development tax credit shall not exceed six percent of the
    43  qualified research and development expenditures attributable  to  activ-
    44  ities  conducted  in  New  York state, or, if a green project or a Green
    45  CHIPS project, the excelsior research and development tax  credit  shall
    46  not  exceed  eight  percent of the research and development expenditures
    47  attributable to activities conducted in New York state. If  the  federal
    48  research  and  development  credit  has  expired,  then the research and
    49  development expenditures relating to the federal research  and  develop-
    50  ment  credit shall be calculated as if the federal research and develop-
    51  ment credit structure and definition in effect in two thousand nine were
    52  still in effect. Notwithstanding any other provision of this chapter  to
    53  the  contrary,  research  and  development  expenditures  in this state,
    54  including salary or wage expenses  for  jobs  related  to  research  and
    55  development  activities  in this state, may be used as the basis for the
    56  excelsior research and development tax credit component and  the  quali-

        A. 10507                            5
 
     1  fied  emerging  technology  company  facilities, operations and training
     2  credit under the tax law.
     3    7.  For availability of special excelsior jobs program rates governing
     4  the provision of gas or electric service, see  subdivision  twelve-d  of
     5  section sixty-six of the public service law. Such special excelsior jobs
     6  program  rates  may  remain available to participants as defined in this
     7  article for a period of up to ten years commencing in the first  taxable
     8  year  that  the participant receives a certificate of tax credit, or the
     9  first taxable year listed  on  its  preliminary  schedule  of  benefits,
    10  whichever is later. Notwithstanding any other provision of this section,
    11  such  special  excelsior  job  program rates shall remain available to a
    12  Green CHIPS project which enters into a phase two of  such  project  for
    13  the  entirety of both of its schedules of benefits. Provided however, if
    14  a participant is removed from the excelsior  jobs  program  pursuant  to
    15  this article, the excelsior jobs program rates may be denied.
    16    §  4.  Section  359  of  the  economic  development law, as amended by
    17  section 5 of part L of chapter 59 of the laws of  2020,  is  amended  to
    18  read as follows:
    19    §  359. Cap on tax credit. [The] 1. Except with respect to tax credits
    20  issued to Green CHIPS projects as articulated  in  subdivision  four  of
    21  this section, the total amount of tax credits issued by the commissioner
    22  for  any  taxable  year may not exceed the limitations set forth in this
    23  [section] subdivision. [One-half] Except with  respect  to  tax  credits
    24  issued  to  Green  CHIPS  projects as articulated in subdivision four of
    25  this section, one-half of any amount of tax credits not  awarded  for  a
    26  particular  taxable  year  may  be used by the commissioner to award tax
    27  credits in another taxable year.
 
    28  Credit components in the aggregate           With respect to taxable
    29  shall not exceed:                            years beginning in:
 
    30            $ 50 million                               2011
    31            $ 100 million                              2012
    32            $ 150 million                              2013
    33            $ 200 million                              2014
    34            $ 250 million                              2015
    35            $ 183 million                              2016
    36            $ 183 million                              2017
    37            $ 183 million                              2018
    38            $ 183 million                              2019
    39            $ 183 million                              2020
    40            $ 183 million                              2021
    41            $ 133 million                              2022
    42            $ 83 million                               2023
    43            $ 36 million                               2024
    44            $ 200 million                              2025
    45            $ 200 million                              2026
    46            $ 200 million                              2027
    47            $ 200 million                              2028
    48            $ 200 million                              2029

    49    2. Twenty-five percent of tax credits shall be allocated to businesses
    50  accepted into the  program  under  subdivision  four  of  section  three
    51  hundred  fifty-three  of  this  article  and seventy-five percent of tax
    52  credits shall be allocated to businesses accepted into the program under
    53  subdivision three of section three hundred fifty-three of this article.

        A. 10507                            6
 
     1    3. Provided, however, if by September thirtieth of  a  calendar  year,
     2  the department has not allocated the full amount of credits available in
     3  that  year  to  either:  (i)  businesses accepted into the program under
     4  subdivision four of section three hundred fifty-three of this article or
     5  (ii)  businesses  accepted  into  the program under subdivision three of
     6  section three hundred fifty-three of this article, the commissioner  may
     7  allocate  any  remaining  tax  credits  to businesses referenced in this
     8  paragraph as needed; provided, however, that under no circumstances  may
     9  the  aggregate  statutory  cap  for  all  program years be exceeded. One
    10  hundred percent of the unawarded amounts remaining at  the  end  of  two
    11  thousand twenty-nine may be allocated in subsequent years, notwithstand-
    12  ing  the  fifty  percent  limitation  on  any amounts of tax credits not
    13  awarded in taxable years two thousand eleven through two thousand  twen-
    14  ty-nine.  Provided,  however,  no tax credits may be allowed for taxable
    15  years beginning on or after January first, two thousand forty.
    16    4. The total amount of tax credits issued by the commissioner for  the
    17  taxable  years  two  thousand  twenty-two  to two thousand forty-one for
    18  Green CHIPS projects shall not exceed five hundred million per year. One
    19  hundred percent of any amount of tax credits not awarded for  a  partic-
    20  ular  taxable  year may be used by the commissioner to award tax credits
    21  in another taxable year.  Notwithstanding  the  foregoing,  Green  CHIPS
    22  projects may be allowed to claim credits for taxable years up to January
    23  first, two thousand fifty.
    24    § 5. The act shall take effect immediately.
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