Assemblyman Fred W. Thiele, Jr. (I, D, WF-Sag Harbor) announced the Assembly passed a measure he supported to create the SUNY Tax-free Areas to Revitalize and Transform Upstate NY (START-UP NY) program (A.8113). This program will designate tax-free zones for eligible businesses near SUNY and CUNY campuses – as well as private colleges and universities – to foster job creation. Additionally, the measure reduces burdensome regulations for businesses and enhances the Excelsior Jobs Program, which provides investment incentives to businesses in strategic industries such as manufacturing, high-tech and clean energy.
Eligible businesses will have all state taxes waived for 10 years. These taxes would include sales tax, business or corporate tax, MTA mobility tax, franchise fee and all other taxes and fees associated with businesses. Businesses locating in a tax-free area on a SUNY, CUNY or community college campus would pay no property tax. Additionally, employees working in the qualifying business’ tax-free zone would not have to pay income taxes for five years and employees up to a certain income level would pay no income tax for an additional five years. The number of new jobs that can apply for the income tax benefits cannot exceed 10,000 jobs annually.
Assemblyman Thiele, who was recently appointed as Chair of the New York State Assembly Task Force on University-Industry Cooperation, noted, “New York is home to incredibly innovative and successful universities and colleges that serve as key drivers of our state’s economy. In order for New York to keep up in the world’s competitive job market and attract new businesses, we must tap into some of our most valuable resources. START-UP NY will be a great initiative for the Task Force on University-Industry Cooperation to lead and expand. By strengthening and enhancing the partnerships and collaborations between the private sector and higher education institutions we will increase opportunities on the East End, boost economic activity and provide better-paying jobs so we don’t continue losing bright, young talent.”
Eligible campuses and tax-free areas
Under this measure, all eligible SUNY and CUNY campuses and private university and college campuses can enter into lease agreements with private entities on campuses, as long as the property was vacant and the project supports the academic mission of the institution. With almost 93 percent of New Yorkers living within 15 miles of a SUNY campus, this measure will enable countless families to benefit from increased opportunities and economic growth, Thiele noted.
“In so many places across the state, college campuses are the heartbeat of a community,” Assemblyman Thiele said. “By bringing tax-free zones to our campuses, we will be able to bring new opportunities right to our families’ doorsteps and set up shop right at the core of the East End’s economy.”
All SUNY campuses statewide, including university colleges, university centers, technology colleges and community colleges are eligible. For SUNY campuses and community colleges located north of Westchester County, adjacent property up to 200,000 square feet and within one square mile of the main campus would be available for tax-free zones. Property outside of a one-square-mile radius would be subject to a waiver process requiring approval by the Empire State Development Corporation.
The program also provides up to 3 million total square feet of tax-free areas for private college and university campuses located north of Westchester County. The START-UP NY Program Board – consisting of three members appointed by the governor, Assembly speaker and temporary president of the Senate – would allocate tax-free assignments for private universities. Of the 3 million total square feet, 75,000 square feet will be allocated for each of the following areas: Nassau, Suffolk and Westchester counties; Brooklyn; the Bronx; Manhattan; Queens; and Staten Island. Once the cap is reached, the board may assign an additional 75,000 square feet in each area.
Additionally, this measure allows for the designation of an additional 20 sites of other vacant or unused state facilities, like prisons or Office for People With Developmental Disabilities facilities, to become tax-free zones, as long as they have an affiliation with a local college. Each strategic asset may include up to 200,000 square feet of vacant space.
All participating campuses must submit a plan for the space they wish to designate as tax-free, which demonstrates how businesses would locate and align with their academic mission. The plan must include how the partnership would have positive community and economic effects, including potential business competition, as well as potential for job creation.
Projects and businesses eligible for tax-free zones
Under this measure, interested businesses must be a new company in the state or an expanding business that has proven community and economic benefits in addition to creating new jobs. In New York City, Nassau, Suffolk and Westchester counties, a business must be high-tech or a company in the formative stage of development. By doing so, this program will help keep existing start-ups and other high-tech companies in state, making sure our institutions get an adequate return on their investment, Thiele said.
“New York is currently second in the country in establishing high-tech start-up companies, but well over half of these small firms leave the state before five years,” Assemblyman Thiele said. “With the incentives included in this program, we can entice them to stay and grow their business here, capitalizing on the investment our institutions have already put into them.”
To be eligible, businesses must have a bona fide affiliation to the campus, university or college and a commitment to creating jobs in the area. Businesses must apply by Dec. 31, 2020, by which time the commissioner of economic development would evaluate the program’s effectiveness.
“By partnering with our successful higher education institutions, businesses will have a whole new range of resources available to expand and hatch innovative ideas,” Assemblyman Thiele said. “Plus, with the ability to operate tax free, these businesses will have the freedom to provide career paths to homegrown, talented students who are often fleeing to other states in search of opportunities.”
Retailers, restaurants, service, law and real estate, medical or dental offices, financial services and utilities would not be eligible. Administrative and support services would be excluded, however, the commissioner of economic development could waive this exclusion for projects that create 100 or more jobs.
Additionally, the bill prohibits accepting interested businesses that would compete with other businesses in the same community, but operate outside the tax-free area. This way the program protects current businesses, making sure they won’t be affected by new business or competition to the area, Thiele noted.
Anti-fraud measures and other requirements
START-UP NY also includes vital anti-fraud measures, a certification process and conflict of interest provisions. These will be put in place to protect universities from being taken advantage of and to make sure that each project is legitimate and meets all program requirements. Companies that do not meet the terms of the program – including job creation targets – may have their benefits reduced, suspended or terminated. Additionally, the measure grants authority to the state to require companies to repay past tax benefits in cases of fraud.
The Assembly’s measure also will:
- establish Minority- and Women-Owned Businesses and prevailing wage requirements for construction projects on state and public campus land;
- make sure local zoning rules apply to tax-free areas located on off-campus property;
- make sure the college consults with the municipality where land located off-campus is under consideration for a project;
- make sure contracts for projects on CUNY campuses comply with article 9 of the labor law (prevailing wage for service workers);
- allow for project labor agreements (PLA) to be used for projects at SUNY/CUNY and the 20 strategic sites; and
- make sure businesses comply with all applicable worker protection and environmental laws and regulations.
Mandate and Regulatory Relief Council
This legislation broadens the review of regulations and mandates from the Mandate and Regulatory Relief Council’s current focus of local governments to allow it to consider the impacts that are imposed on businesses. It also allows businesses to make requests or recommendations to the council for the consideration of regulations and mandates to eliminate, helping them cut through burdensome red-tape and unnecessary regulations that have stifled growth, Thiele noted.
Excelsior Tax Credit expansion
The measure also enhances the Excelsior Jobs Program by reducing half the job creation requirements for participants, allowing the credits to be more widely available. Specifically, it lowers the minimum job requirements for:
- manufacturers – from 25 to 10;
- agriculture – from 10 to 5;
- financial services – from 100 to 50;
- scientific R&D – from 10 to 5;
- back office – requires that 50 new jobs are created; and
- distribution centers – from 150 to 75.
The measure allows for Excelsior Tax Credit Program tax benefits to be prorated in instances where a business does not meet its job estimates, as long as the business met 75 percent of its estimate. Finally, the bill allows half of any Excelsior Tax Credit unallocated in a given year to be carried over for use in future years.
“Enhancing the Excelsior Jobs Program will help create additional opportunities for businesses and industries to create good-paying jobs at a time when our families need them most,” Assemblyman Thiele said.