BILL NUMBER:S1252

TITLE OF BILL:
An act
to amend
the New York state
urban development corporation act, in relation to authorizing the
corporation to form a limited liability company for a specific purpose
and providing for the repeal of such provisions upon expiration
thereof

PURPOSE:

This bill would, allow New York State to participate in the federal
New Markets Tax Credit (NMTC) Program by creating the necessary
authority for the Empire State Development Corporation (ESDC) to form
limited liability companies.

SUMMARY OF PROVISIONS:

Section 1 of the bill would amend the opening paragraph of § 12 of § 1
of Chapter 174 of the Laws of 1968 constituting the New York State
Urban Development Corporation (UDC) Act, to authorize ESDC to form
LLCs pursuant to Limited Liability Company (LLC) Law § 203 for the
sole purpose of the participation in the federal NMTC Program. This
section would also provide that all projects awarded New Markets Tax
              

Credits by ESDC or its subsidiary shall be submitted to the Public
Authorities Control Board for approval, in accordance with the
'provisions of Public Authorities Law § 51. Finally, this section
would provide that ESDC report annually on the NMTC Program.

Section 2 of the bill would provide for an immediate effective date,
as well as a five year sunset provision.

EXISTING LAW:

Current law does not permit ESDC to form LLCs.

PRIOR LEGISLATIVE HISTORY:

2011:  Referred to Corporations, Authorities & Commissions
2010:  Referred to Corporations, Authorities & Commissions
       Reported to Finance
       Passed Senate - Aye: 61  Nay: 0

STATEMENT IN SUPPORT:

In May of 2009, ESDC was awarded a $30 million allocation of federal
NMTCs under the American Recovery and Reinvestment Act (ARRA) in
order to facilitate and increase private sector investment in
economic and community
development in low income communities. This amendment to the UDC Act
would permit credits to flow to investors and foster economic
development in distressed communities throughout the State.


Enabling ESDC to form LLCs for the purpose in question will enable the
State to take advantage of a benefit under the federal stimulus
package. This benefit comes at no cost to the State. Currently, New
York is at a disadvantage relative to other states that take part in
the NMTC program. Other states can form LLCs and LLCs are the only
type of entity that can effectively utilize the NMTC benefit.
Accordingly, necessary private investors have no incentive to invest
in New York projects using the NMTC allocation awarded to ESDC in 2009.

Since the award in May of $30 million from the ARRA, ESDC has
identified several eligible projects with funding gaps that could be
filled with an NMTC investment. Additionally, the federal government
is expected to announce another round of NMTC awards in 2010, but New
York will not be able to compete for an additional allocation of
NMTCs until the proposed amendment has been adopted and the current
allocation is awarded.

BUDGET IMPLICATIONS:

None to the State. Allocation of this funding will create a
significant economic benefit to underserved communities in the State.
Since its creation in 2000, the NMTC Program has resulted in the
investment of over $14 billion of private sector capital in low
income communities around the country.

EFFECTIVE DATE:

This bill would take effect immediately and expire five years later.