S T A T E O F N E W Y O R K
________________________________________________________________________
5598
2009-2010 Regular Sessions
I N S E N A T E
May 20, 2009
___________
Introduced by Sens. STACHOWSKI, AUBERTINE, BRESLIN, THOMPSON, VALESKY --
read twice and ordered printed, and when printed to be committed to
the Committee on Local Government
AN ACT to amend the general municipal law, in relation to certification
and decertification of businesses as empire zone enterprises
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subdivisions (a) and (w) of section 959 of the general
municipal law, as amended by section 3 of part S-1 of chapter 57 of the
laws of 2009, are amended and a new subdivision (a-1) is added to read
as follows:
(a) After consultation with the director of the budget, the commis-
sioner of labor, and the commissioner of taxation and finance, promul-
gate regulations, which, notwithstanding any provisions to the contrary
in the state administrative procedure act, may be adopted on an emergen-
cy basis, governing (i) criteria of eligibility for empire zone desig-
nation, provided, however, that such criteria be approved by the direc-
tor of the budget; (ii) the application process; (iii) the certification
by the commissioner as to the eligibility of business enterprises for
benefits referred to in section nine hundred sixty-six of this article,
which shall be governed by criteria including, but not limited to: (1)
whether the business enterprise, if certified, is reasonably likely to
create new employment or prevent a loss of employment in the zone, (2)
whether such new employment opportunities will be for individuals who
will perform a substantial part of their employment activities in the
zone, (3) whether certification will have the undesired effect of caus-
ing individuals to transfer from existing employment with another busi-
ness enterprise to similar employment with the business enterprise so
certified, and transferring existing employment from one or more other
municipalities, towns or villages in the state, or transferring existing
employment from one or more other businesses in the zone, (4) whether
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11998-01-9
S. 5598 2
such enterprise is likely to enhance the economic climate of the zone,
(5) whether the commissioner of labor establishes that such business
enterprise, during the three years preceding the submission of an appli-
cation for certification, has engaged in a substantial violation or a
pattern of violations of laws regulating unemployment insurance, workers
compensation, public work, child labor, employment of minorities and
women, safety and health, or other laws for the protection of workers as
determined by final judgment of a judicial or administrative proceeding;
(6) whether such business meets the requirements of the cost benefit
analysis as established in paragraph (p) of section nine hundred fifty-
seven of this article, and (7) if the commissioner of labor establishes
that the business enterprise has been found in a criminal proceeding to
have violated, in the previous three years, any of the laws referred to
in subparagraph five of this paragraph or regulations promulgated pursu-
ant to such laws, the conditions of any permit issued thereunder, or
similar statute, regulation, order or permit condition of any other
government agency, foreign or domestic, such business shall not be
certified; provided, however, that a business enterprise that has shift-
ed its operations, or some portions thereof, from an area within New
York state not designated as an empire zone or zone equivalent area to
an area so designated shall not be certified to receive such benefits
except where such shift is entirely within a municipality and has been
approved by the local governing body of such municipality or in situ-
ations where it has been established, after a public hearing, that
extraordinary circumstances exist which warrant the relocation of a
business, in whole or part, into an empire zone or a zone equivalent
area from another municipality and the municipality from which the busi-
ness is relocating approves of such relocation; or where such shift in
operations is from a business incubator facility operated by a munici-
pality or by a public or private not-for-profit entity which provides
space and business support services to newly established firms; and (iv)
the decertification by the commissioner, upon the recommendation of the
commissioner of labor, so as to revoke the certification of business
enterprises for benefits referred to in section nine hundred sixty-six
of this article with respect to an empire zone or zone equivalent area
upon a finding that the business enterprise has committed substantial
violations of laws for the protection of workers including all federal,
state and local labor laws, rules or regulations; and (v) the decertif-
ication by the commissioner so as to revoke the certification of busi-
ness enterprises for benefits referred to in section nine hundred
sixty-six of this article with respect to an empire zone or zone equiv-
alent area upon a finding of any one of the following: (1) the business
enterprise made material misrepresentations of fact on its application
for certification or in any of its business annual reports, or the busi-
ness enterprise failed to disclose facts in its application for certif-
ication that would constitute grounds for not issuing a certification;
(2) the business enterprise has failed to construct, expand, rehabili-
tate or operate or invest in its facility substantially in accordance
with the representations contained in its application for certification;
(3) the business enterprise has failed to create new employment or
prevent a loss of employment in the empire zone or zone equivalent area;
(4) where applicable, the business enterprise has failed to submit an
annual report after it has applied for zone tax benefits or program
assistance based on new hires or investments or failed to submit other
information when due; (5) the business enterprise, if first certified
pursuant to this article prior to the first day of August, two thousand
S. 5598 3
two, caused individuals to transfer from existing employment with anoth-
er business enterprise with similar ownership and located in New York
state to similar employment with the certified business enterprise or if
the enterprise acquired, purchased, leased, or had transferred to it
real property previously owned by an entity with similar ownership,
regardless of form of incorporation or organization; (6) the business
enterprise has failed to provide economic returns to the state in the
form of total remuneration to its employees (i.e. wages and benefits)
and investments in its facility greater in value to the tax benefits the
business enterprise used and had refunded to it; PROVIDED, HOWEVER,
QUALIFIED EMPIRE ZONE ENTERPRISES THAT HAVE MORE THAN ONE EMPIRE ZONE
LOCATION WITH THE SAME FEDERAL TAX IDENTIFICATION NUMBER MAY ELECT TO BE
REVIEWED IN AGGREGATE AND NOT PER EMPIRE ZONE LOCATION; PROVIDED,
FURTHER THAT QUALIFIED EMPIRE ZONE ENTERPRISES WHICH HAVE DIFFERENT
FEDERAL TAX IDENTIFICATION NUMBERS AND ARE SUBSIDIARIES OF A PARENT
BUSINESS ENTERPRISE MAY ELECT TO BE REVIEWED IN AGGREGATE BASED UPON THE
PARENT BUSINESS ENTERPRISE AND NOT PER SUBSIDIARY OR EMPIRE ZONE
LOCATION; or (7) the business enterprise has changed ownership RESULTING
IN THE BUSINESS ENTERPRISE HAVING A DIFFERENT FEDERAL TAX IDENTIFICATION
NUMBER THAN THAT WHICH THEY WERE ORIGINALLY CERTIFIED UNDER or moved its
operations out of the empire zone; said regulations shall provide that
whenever any business enterprise is decertified with respect to an
empire zone: (A) the [date determined to be the earliest event consti-
tuting grounds for revoking certification shall be the effective date of
decertification] EFFECTIVE DATE OF DECERTIFICATION SHALL NOT BE EARLIER
THAN THE FIRST DAY OF THE BUSINESS ENTITY'S TAXABLE YEAR BEGINNING ON OR
AFTER JANUARY FIRST, TWO THOUSAND NINE; (B) its certified single enter-
prise, if any, may also be decertified; and (C) the commissioner shall
notify the commissioner of taxation and finance that such decertif-
ication has occurred, and such notification should include the effective
date of such decertification and the zone or zone equivalent area to
which such decertification applies;
(A-1) NOTWITHSTANDING THE PROVISIONS IN PARAGRAPH (A) OF THIS SECTION,
A BUSINESS ENTERPRISE WHICH MEETS THE CRITERIA SET FORTH IN CLAUSE FIVE
OF PARAGRAPH (V) OF SUBDIVISION (A) OF THIS SECTION WILL NOT BE SUBJECT
TO DECERTIFICATION IF: (I) THE BUSINESS ENTERPRISE HAS PROVIDED ECONOMIC
RETURNS TO THE STATE IN THE FORM OF TOTAL REMUNERATION TO ITS EMPLOYEES
(I.E. WAGES AND BENEFITS) AND INVESTMENTS IN ITS FACILITY GREATER IN
VALUE TO THE TAX BENEFITS THE BUSINESS ENTERPRISE USED AND HAD REFUNDED
TO IT; AND (II) EITHER (1) THE BUSINESS ENTERPRISE HAS PAID WAGES AND
BENEFITS TO ITS EMPLOYEES WHO WERE NEVER EMPLOYED WITHIN THE STATE BY A
RELATED PERSON TO THE QEZE AND MADE CAPITAL INVESTMENTS IN ITS FACILI-
TIES IN ZONE LOCATIONS, AND THE TOTAL AMOUNT OF SUCH WAGES, BENEFITS,
AND CAPITAL INVESTMENT IS GREATER IN VALUE THAN THE TAX BENEFITS THE
BUSINESS ENTERPRISE USED AND HAD REFUNDED TO IT; OR (2) THE BUSINESS
ENTERPRISE HAS PAID WAGES AND BENEFITS TO ITS EMPLOYEES WHO WERE NEVER
EMPLOYED WITHIN THE STATE BY A RELATED PERSON TO THE QEZE AND MADE CAPI-
TAL INVESTMENTS IN ITS FACILITIES IN ZONE LOCATIONS, AND SUCH WAGES,
BENEFITS, AND CAPITAL INVESTMENT TOTAL MORE THAN THIRTY MILLION DOLLARS.
FOR PURPOSES OF THIS SUBDIVISION THE TERM "RELATED PERSON" IS DEFINED IN
SUBPARAGRAPH (C) OF PARAGRAPH THREE OF SUBSECTION (B) OF SECTION FOUR
HUNDRED SIXTY-FIVE OF THE INTERNAL REVENUE CODE, AND SHALL INCLUDE AN
ENTITY WHICH WOULD HAVE QUALIFIED AS A "RELATED PERSON" TO THE QEZE IF
IT HAD NOT BEEN DISSOLVED, LIQUIDATED, MERGED WITH ANOTHER ENTITY, OR
OTHERWISE CEASED TO EXIST OR OPERATE. THE ANALYSES SET FORTH IN PARA-
GRAPHS (I) AND (II) OF THIS SUBDIVISION SHALL BE BASED UPON THE WAGES
S. 5598 4
AND BENEFITS PAID AND CAPITAL INVESTMENTS MADE FROM THE FIRST DAY OF THE
BUSINESS ENTERPRISE'S TAXABLE YEAR DURING WHICH THE BUSINESS ENTERPRISE
WAS CERTIFIED THROUGH THE LAST DAY OF THE BUSINESS ENTERPRISE'S TAXABLE
YEAR BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND SEVEN. SUCH
ANALYSIS SHALL BE BASED ON A REVIEW OF THE AGGREGATE ECONOMIC RETURNS AT
ALL ZONE CERTIFIED LOCATIONS. THE VALUE OF THE TAX BENEFITS THE BUSINESS
ENTERPRISE USED AND HAD REFUNDED TO IT FOR THE ANALYSIS SET FORTH IN
PARAGRAPHS (I) AND (II) OF THIS SUBDIVISION WILL EQUAL THOSE TAX BENE-
FITS USED OR REFUNDED TO THE BUSINESS ENTERPRISE DURING ALL TAXABLE
YEARS FROM THE TAXABLE YEAR DURING WHICH THE BUSINESS ENTERPRISE WAS
CERTIFIED THROUGH THE LAST DAY OF THE BUSINESS ENTERPRISE'S TAXABLE YEAR
BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND SEVEN.
(w) Conduct a review during calendar year two thousand nine of all
business enterprises to determine whether the business enterprises
should be decertified pursuant to subparagraphs five and six of para-
graph (v) of subdivision (a) of this section and the regulations promul-
gated under this article. SUCH REVIEW SHOULD BE COMPLETED AND THE FIND-
INGS REPORTED TO THE DEPARTMENT OF TAXATION AND FINANCE BY JUNE
THIRTIETH, TWO THOUSAND NINE. After such review, the commissioner shall
issue an empire zone retention certificate to each firm that the commis-
sioner determines is not subject to decertification under subparagraphs
five and six of paragraph (v) of subdivision (a) of this section. SUCH
RETENTION CERTIFICATES SHALL ALSO BE ISSUED TO THE DEPARTMENT OF TAXA-
TION AND FINANCE. WITHIN THIRTY DAYS OF RECEIPT THE DEPARTMENT OF TAXA-
TION AND FINANCE SHALL PROVIDE ANY REFUNDS, TO ELIGIBLE QUALIFIED EMPIRE
ZONE ENTERPRISES, THAT THEY HAVE CLAIMED ON THEIR TAX FILINGS FOR WHICH
THEY ARE QUALIFIED TO RECEIVE. The decertification referred to in
subparagraph six of paragraph (v) of subdivision (a) of this section
shall be based upon an analysis of data contained in at least three
business annual reports filed by the business enterprise. If any busi-
ness enterprise fails the analysis described in the immediately preced-
ing sentence, or if the commissioner makes the finding described in
subparagraph five of paragraph (v) of subdivision (a) of this section,
the commissioner shall revoke the certification of such business enter-
prise pursuant to paragraph (iv) of subdivision (a) of this section and
as specified herein; provided, however, the commissioner may consider,
after consultation with the director of the budget, and in his or her
sole discretion, other economic, social and environmental factors when
evaluating the costs and benefits of a project to the state and whether
continued certification is warranted based on such factors. The commis-
sioner shall provide written notification to such business enterprise of
his or her determination to revoke the certification, including the
reasons therefor. Such notification shall state that the business enter-
prise may appeal the determination by sending a written notice to the
empire zone designation board of such appeal no later than fifteen busi-
ness days from the date of the commissioner's revocation notification.
Provided that the business enterprise appeals the commissioner's deter-
mination within fifteen business days of the commissioner's revocation
notification, the business enterprise may present a written submission
to the empire zone designation board no later than sixty days following
the date the commissioner's revocation notification was sent to the
business enterprise explaining why its certification should be contin-
ued. The empire zone designation board shall consider the explanation
provided by the business enterprise, but shall only reverse the determi-
nation to revoke the business enterprise's certification if the empire
zone designation board unanimously finds that there was insufficient
S. 5598 5
evidence presented demonstrating that the commissioner's finding, with
respect to subparagraph six of paragraph (v) of subdivision (a) of this
section, was in error, or that, with respect to subparagraph five of
paragraph (v) of subdivision (a) of this section, any extraordinary
circumstances occurred which would justify the continued certification
of the business enterprise.
S 2. This act shall take effect immediately.
