EDV-05-13-00001-E Empire State Jobs Retention Program Tax Credit
1/30/13 N.Y. St. Reg. EDV-05-13-00001-E
NEW YORK STATE REGISTER
VOLUME XXXV, ISSUE 5
January 30, 2013
RULE MAKING ACTIVITIES
DEPARTMENT OF ECONOMIC DEVELOPMENT
EMERGENCY RULE MAKING
I.D No. EDV-05-13-00001-E
Filing No. 38
Filing Date. Jan. 11, 2013
Effective Date. Jan. 11, 2013
Empire State Jobs Retention Program Tax Credit
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Addition of Parts 210-216 to Title 5 NYCRR.
Statutory authority:
Economic Development Law, art. 20
Finding of necessity for emergency rule:
Preservation of general welfare.
Specific reasons underlying the finding of necessity:
Regulatory action is needed immediately to implement the Empire State Jobs Retention Program (“the Program”) which was created by Chapter 56 of the Laws of 2011. The Program is created to support the retention of the state’s most strategic businesses in the event of an emergency. The program creates a jobs tax credit for each job of a strategic business directly impacted by an emergency and retained and protects state taxpayer’s dollars by ensuring that New York provide tax benefits only to businesses that can demonstrate substantial physical damage and economic harm resulting from an event leading to an emergency declaration by the governor.
The emergency rule is required in order to immediately implement the statute contained in Article 20 of the Economic Development Law, creating the Empire State Jobs Retention Program. The statute directed the Commissioner of Economic Development to adopt regulations with respect to an application process and eligibility criteria and authorized the adoption of such regulations on an emergency basis notwithstanding any provisions to the contrary in the state administrative procedures act.
In 2011, many parts of New York State were devastated by Hurricane Irene and Tropical Storm Lee. The impact of these storms is still being felt and the State needs to be able to respond quickly to provide economic development assistance to strategic businesses whose operations were several damaged or destroyed by these disasters and ensure that the impacted jobs are retained in NYS.
The Empire State Jobs Retention Program will be one of the State’s key economic development tools for assisting strategic businesses impacted by Hurricane Irene and Tropical Storm Lee. It is imperative that this Program be implemented immediately so that the State can respond quickly to the dislocation and potential job losses that resulted from the devastation caused at certain facilities.
It bears noting that section 426 of the Economic Development Law directs the Commissioner of Economic Development to promulgate regulations and explicitly indicates that such regulations may be adopted on an emergency basis.
Subject:
Empire State Jobs Retention Program tax credit.
Purpose:
Allow Department to implement the Empire State Jobs Retention Program tax credit.
Substance of emergency rule:
The regulation creates new Parts 210-216 in 5 NYCRR as follows:
1) The regulation adds the definitions relevant to the empire state jobs retention program (the “Program”). Key definitions include, but are not limited to, certificate of eligibility, preliminary schedule of benefits, impacted jobs, new business, significant capital investment and substantial physical damage and economic harm.
2) The regulation creates the application and review process for the Program. In order to become a participant in the Program, an applicant must submit a complete application within (1) one hundred eighty days of the declaration of an emergency by the governor in the county in which the business enterprise is located or (2) one hundred eighty days of the enactment of Chapter 56 of the Laws of 2011, if such date is later than the date specified in (1) above. An applicant must also agree to a variety of requirements, including, but not limited to, the following: (a) allowing the exchange of its tax information between Department of Taxation and Finance and Department of Economic Development (the “Department”); (b) allowing the exchange of its tax and employer information between the Department of Labor and the Department; (c) agreeing to be permanently disqualified for empire zones benefits at any location or locations that qualify for empire state jobs retention benefits if admitted into the Program for such location or locations.
3) Upon receiving a complete application, the Commissioner of the Department shall review the application to ensure it meets eligibility criteria set forth in the statute (see 4 below). If it does not, the application shall not be accepted. If it does meet the eligibility criteria, the Commissioner may admit the applicant into the Program. If admitted into the Program, an applicant will receive a certificate of eligibility and a preliminary schedule of benefits by year based on the applicant’s projections as set forth in its application.
4) The regulation sets forth the eligibility criteria for the Program. In order to qualify for the Program, a participant must: (1) be operating predominantly in one of the following strategic industries: (a) financial services data center or a financial services back office operation; (b) manufacturing; (c) software development and new media; (d) scientific research and development; (e) agriculture; (f) the creation or expansion of back office operations in the state; or (g) distribution center; and (2) must be located in a county in which an emergency has been declared by the governor on or after January first, two thousand eleven, must demonstrate substantial physical damage and economic harm resulting from the event leading to the emergency declaration by the governor, and must have had at least one hundred full-time equivalent jobs in the county in which an emergency has been declared by the governor on the day immediately preceding the day on which the event leading to the emergency declaration by the governor occurred, and must retain or exceed that number of jobs in New York state. Jobs impacted but not retained by a participant are not eligible for the jobs retention tax credit.
In addition a business entity must be in compliance with all worker protection and environmental laws and regulations and must not owe past due federal or state taxes or local property taxes, unless those taxes are being paid pursuant to an executed payment plan. A not-for-profit business entity, a business entity whose primary function is the provision of services including personal services, business services, or the provision of utilities, a business entity engaged predominantly in the retail or entertainment industry, and a business entity engaged in the generation or distribution of electricity, the distribution of natural gas, or the production of steam associated with the generation of electricity are not eligible to participate in the program.
5) The regulation sets forth the eleven (11) evaluation standards that the Commissioner can utilize when determining whether to admit an applicant to the Program. These include, but are not limited to, the following: (1) whether the applicant is proposing to substantially renovate contaminated, abandoned or underutilized facilities; or (2) whether the applicant will use energy-efficient measures, including, but not limited to, the reduction of greenhouse gas and emissions and the Leadership in Energy and Environmental Design (LEED) green building rating system for the project identified in its application; or (3) the degree of economic distress in the area where the applicant will locate the project identified in its application; or (4) the degree of applicant’s financial viability, strength of financials, readiness and likelihood of completion of the project identified in the application; or (5) the degree to which the project identified in the application supports New York State’s minority and women business enterprises; or (6) the degree to which the project identified in the application supports the principles of Smart Growth; or (7) the estimated return on investment that the project identified in the application will provide to the State; or (8) the overall economic impact that the project identified in the application will have on a region, including, but not limited to, the impact of any direct and indirect jobs that will be retained or created; or (9) the degree to which other state or local incentive programs are available to the applicant; or (10) the likelihood that the project identified in the application would be located outside of New York State or would not occur but for the availability of state or local incentives; or (11) the recommendation of the relevant regional economic development council or the commissioner’s determination that the proposed project aligns with the regional strategic priorities of the respective region.
6) The regulation states that the Commissioner shall prepare a program report on a quarterly basis for posting on the Department’s website.
7) The regulation calls for removal of a participant in the Program for failing to meet the application requirements or eligibility criteria of the statute. Upon removal, a participant will be notified in writing and have the right to appeal such removal.
8) The regulation lays out the appeal process for participant’s who have been removed from the Program. A participant will have thirty (30) days to appeal to the Department. An appeal officer will be appointed and shall evaluate the merits of the appeal and any response from the Department. The appeal officer will determine whether a hearing is necessary and the level of formality required. The appeal officer will prepare a report and make recommendations to the Commissioner. The Commissioner will then issue a final decision in the case.
The full text of the emergency rule is available at the Department’s website at http://esd.ny.gov/BusinessPrograms.html.
This notice is intended
to serve only as an emergency adoption, to be valid for 90 days or less. This rule expires April 10, 2013.
Text of rule and any required statements and analyses may be obtained from:
Thomas P Regan, NYS Department of Economic Development, 30 South Pearl Street, Albany NY 12245, (518) 292-5123, email: tregan@empire.state.ny.us
Regulatory Impact Statement
STATUTORY AUTHORITY:
Chapter 56 of the Laws of 2011 established Article 20 of the Economic Development Law, creating the Empire State Jobs Retention Program credit and authorizing the Commissioner of Economic Development to adopt, on an emergency basis, rules and regulations governing the Program.
LEGISLATIVE OBJECTIVES:
The emergency rulemaking accords with the public policy objectives the Legislature sought to advance because they directly address the legislative findings and declarations that New York State needs, as a matter of public policy, to create competitive financial incentives to retain strategic businesses and jobs that are at risk of leaving the state due to the impact on its business operations of an event leading to an emergency declaration by the governor. The Empire State Jobs Retention Program is created to support the retention of the state’s most strategic businesses in the event of an emergency. The Program creates a jobs tax credit for each retained job of a strategic business directly impacted by an emergency and protects state taxpayer’s dollars by ensuring that New York provide tax benefits only to businesses that can demonstrate substantial physical damage and economic harm resulting from an event leading to an emergency declaration by the governor. The emergency rule is specifically authorized by the Legislature.
NEEDS AND BENEFITS:
The emergency rule is required in order to immediately implement the statute contained in Article 20 of the Economic Development Law, creating the Empire State Jobs Retention Program. The statute directed the Commissioner of Economic Development to adopt regulations with respect to an application process and eligibility criteria and authorized the adoption of such regulations on an emergency basis notwithstanding any provisions to the contrary in the state administrative procedures act.
In 2011, many parts of New York State were devastated by Hurricane Irene and Tropical Storm Lee. The impact of these storms is still being felt and the State needs to be able to respond quickly to provide economic development assistance to strategic businesses whose operations were several damaged or destroyed by these disasters and ensure that the impacted jobs are retained in New York State.
The Empire State Jobs Retention Program will be one of the State’s key economic development tools for assisting strategic businesses impacted by Hurricane Irene and Tropical Storm Lee. It is imperative that this Program be implemented immediately so that the State can respond quickly to the dislocation and potential job losses that resulted from the devastation caused at certain facilities.
This rule will establish the process and procedures for launching this new Program in the most efficient and cost-effective manner while protecting all New York State taxpayers with rules to ensure accountability, performance and adherence to commitments by businesses choosing to participate in the Program.
COSTS:
A. Costs to private regulated parties: None. There are no regulated parties in the Empire State Jobs Retention Program, only voluntary participants.
B. Costs to the agency, the State, and local governments: The Department of Economic Development does not anticipate any significant costs with respect to implementation of this program. There is no additional cost to local governments.
C. Costs to the State government: None. There will be no additional costs to New York State as a result of the emergency rule making.
LOCAL GOVERNMENT MANDATES:
None. There are no mandates on local governments with respect to the Empire State Jobs Retention Program. This emergency rule does not impose any costs to local governments for administration of the Empire State Jobs Retention Program.
PAPERWORK:
The emergency rule requires businesses choosing to participate in the Empire State Jobs Retention Program to establish and maintain complete and accurate books relating to their participation in the Program for a period of three years beyond their participation in the Program. However, this requirement does not impose significant additional paperwork burdens on businesses choosing to participate in the Program but instead simply requires that information currently established and maintained be shared with the Department in order to verify that the business has met its job retention commitments.
DUPLICATION:
The emergency rule does not duplicate any state or federal statutes or regulations.
ALTERNATIVES:
No alternatives were considered with regard to amending the regulations in response to statutory revisions.
FEDERAL STANDARDS:
There are no federal standards in regard to the Empire State Jobs Retention Program. Therefore, the emergency rule does not exceed any Federal standard.
COMPLIANCE SCHEDULE:
The period of time the state needs to assure compliance is negligible, and the Department of Economic Development expects to be compliant immediately.
Regulatory Flexibility Analysis
1. Effect of rule
The emergency rule imposes record-keeping requirements on all businesses (small, medium and large) that choose to participate in the Empire State Jobs Retention Program. The emergency rule requires all businesses that participate in the Program to establish and maintain complete and accurate books relating to their participation in the Program for the duration of their term in the Program plus three additional years. Local governments are unaffected by this rule.
2. Compliance requirements
Each business choosing to participate in the Empire State Jobs Retention Program must establish and maintain complete and accurate books, records, documents, accounts, and other evidence relating to such business’s application for entry into the program and relating to annual reporting requirements. Local governments are unaffected by this rule.
3. Professional services
The information that businesses choosing to participate in the Empire State Jobs Retention Program would be required to keep is information such businesses already must establish and maintain in order to operate, i.e. wage reporting, financial records, tax information, etc. No additional professional services would be needed by businesses in order to establish and maintain the required records. Local governments are unaffected by this rule.
4. Compliance costs
Businesses (small, medium or large) that choose to participate in the Empire State Jobs Retention Program must retain jobs in order to receive any tax incentives under the Program. If businesses choosing to participate in the Program do not fulfill their job retention, such businesses would not receive the tax incentives. There are no other initial capital costs that would be incurred by businesses choosing to participate in the Empire State Jobs Retention Program. Annual compliance costs are estimated to be negligible for businesses because the information they must provide to demonstrate their compliance with their commitments is information that is already established and maintained as part of their normal operations. Local governments are unaffected by this rule.
5. Economic and technological feasibility
The Department of Economic Development (“DED”) estimates that complying with this record-keeping is both economically and technologically feasible. Local governments are unaffected by this rule.
6. Minimizing adverse impact
DED finds no adverse economic impact on small or large businesses with respect to this rule. Local governments are unaffected by this rule.
7. Small business and local government participation
DED is in compliance with SAPA Section 202-b(6), which ensures that small businesses and local governments have an opportunity to participate in the rule-making process. DED has conducted outreach within the small and large business communities and maintains continuous contact with small and large businesses with regard to their participation in this program. Local governments are unaffected by this rule.
Rural Area Flexibility Analysis
The Empire State Jobs Retention Program is a tax credit program which creates a jobs tax credit for each retained job of a strategic business directly impacted by an emergency and protects state taxpayer’s dollars by ensuring that New York provide tax benefits only to businesses that can demonstrate substantial physical damage and economic harm resulting from an event leading to an emergency declaration by the governor. The emergency rule does not impose any special reporting, record keeping or other compliance requirements on private entities in rural areas. Therefore, the emergency rule will not have a substantial adverse economic impact on rural areas nor on the reporting, record keeping or other compliance requirements on public or private entities in such rural areas. Accordingly, a rural area flexibility analysis is not required and one has not been prepared.
Job Impact Statement
The emergency rule relates to the Empire State Jobs Retention Program. The proposed program creates a jobs tax credit for each retained job of a strategic business directly impacted by an emergency and protects state taxpayer’s dollars by ensuring that New York provide tax benefits only to businesses that can demonstrate substantial physical damage and economic harm resulting from an event leading to an emergency declaration by the governor.
This Program, given its design and purpose, will have a substantial positive impact on job retention. The emergency rule will immediately enable the Department to fulfill its mission of job retention in the state’s most strategic businesses. Because this emergency rule will authorize the Department to immediately begin offering financial incentives to firms that retain jobs that are at the risk of the leaving the state due to an event leading to an emergency declaration by the governor, it will have a positive impact on job and employment opportunities. Accordingly, a job impact statement is not required and one has not been prepared.
