S T A T E   O F   N E W   Y O R K
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                                 8004--A
                                                        Cal. No. 326

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                              June 4, 2015
                               ___________

Introduced  by  M.  of  A. SANTABARBARA -- read once and referred to the
  Committee on Ways and Means -- advanced to a  third  reading,  amended
  and ordered reprinted, retaining its place on the order of third read-
  ing

AN  ACT  to  amend  the  economic  development  law  and the tax law, in
  relation to tax credits for upstate reinvestment zones

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The  economic  development law is amended by adding a new
article 23 to read as follows:
                               ARTICLE 23
                       UPSTATE REINVESTMENT ZONES
SECTION 460. POWER TO ADMINISTER  THE  UPSTATE  REINVESTMENT  ZONES  TAX
               CREDIT.
  S  460. POWER TO ADMINISTER THE UPSTATE REINVESTMENT ZONES TAX CREDIT.
(A) THE COMMISSIONER IS AUTHORIZED TO ADMINISTER THE  UPSTATE  REINVEST-
MENT  ZONES  TAX  CREDIT PROGRAM TO PROVIDE TAX INCENTIVES TO BUSINESSES
FOR THE QUALIFIED PURCHASE OF A BUILDING OR BUILDINGS OR QUALIFIED REHA-
BILITATION EXPENDITURES IN SUCH ZONE. THE COMMISSIONER IS AUTHORIZED  TO
ALLOCATE UP TO TEN MILLION DOLLARS OF TAX CREDITS UNDER THIS PROGRAM PER
YEAR.    THE  AMOUNT  OF CREDIT SHALL BE TWENTY PERCENT OF THE QUALIFIED
PURCHASE AND QUALIFIED  REHABILITATION  EXPENDITURES  OF  BUILDINGS  AND
REHABILITATIONS,   AS  SUCH  AMOUNT  IS  COMPUTED  PURSUANT  TO  SECTION
FORTY-TWO OF THE TAX LAW.
  (B) DEFINITIONS. (1) THE TERM "UPSTATE REINVESTMENT ZONE"  SHALL  MEAN
AN  AREA:    (I)  THAT,  ACCORDING TO THE MOST RECENT AMERICAN COMMUNITY
SURVEY BY THE UNITED STATES CENSUS BUREAU, LIES WITHIN  A  CENSUS  TRACT
WITH  A POVERTY RATE EQUAL TO OR GREATER THAN TWENTY PERCENT OR AN UNEM-
PLOYMENT RATE THAT IS EQUAL TO OR GREATER THAN ONE AND ONE-HALF  PERCENT
TIMES  THE  NATIONAL  AVERAGE  UNEMPLOYMENT  RATE AND (II) IS WITHIN THE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11419-02-5
              

A. 8004--A                          2

INCORPORATED BOUNDARIES OF A VILLAGE, TOWN OR CITY HAVING  A  POPULATION
OF LESS THAN ONE MILLION.
  (2)  THE  TERM "QUALIFIED PURCHASE" SHALL MEAN THE COST OR OTHER BASIS
FOR FEDERAL INCOME TAX PURPOSES OF  ACQUISITION  COST  OF  BUILDING  FOR
WHICH  DEPRECIATION  IS ALLOWED UNDER SECTION ONE HUNDRED SIXTY-EIGHT OF
THE INTERNAL REVENUE CODE AND WHICH IS (I) NONRESIDENTIAL PROPERTY, (II)
RESIDENTIAL PROPERTY, OR (III) AN ADDITION OR  IMPROVEMENT  TO  PROPERTY
DESCRIBED IN SUBPARAGRAPH (I) OR (II) OF THIS PARAGRAPH.
  (3) THE TERM "QUALIFIED REHABILITATION EXPENDITURES" SHALL MEAN QUALI-
FIED  EXPENDITURES  AS  DEFINED  IN  PARAGRAPH  (2) OF SUBSECTION (C) OF
SECTION FORTY-SEVEN OF THE INTERNAL REVENUE CODE OTHER THAN  THE  QUALI-
FIED PURCHASE MADE IN PARAGRAPH TWO OF THIS SUBDIVISION.
  (C)  ALLOCATION  OF  CREDITS.  (1) THE AGGREGATE AMOUNT OF TAX CREDITS
ALLOWED UNDER THIS SUBDIVISION IN ANY TAXABLE YEAR SHALL BE TEN  MILLION
DOLLARS.  SUCH  AGGREGATE  AMOUNT  OF  CREDITS SHALL BE ALLOCATED BY THE
COMMISSIONER AMONG TAXPAYERS IN THE  ORDER  IN  WHICH  APPLICATIONS  ARE
RECEIVED.  IF  THE  TOTAL AMOUNT OF ALLOCATED CREDITS APPLIED FOR IN ANY
PARTICULAR YEAR EXCEEDS THE AGGREGATE AMOUNT OF TAX CREDITS ALLOWED  FOR
SUCH  YEAR  UNDER  THIS  SECTION, SUCH EXCESS SHALL BE TREATED AS HAVING
BEEN APPLIED FOR ON THE FIRST DAY OF THE SUBSEQUENT YEAR.
  (2) THE COMMISSIONER SHALL PROMULGATE REGULATIONS BY DECEMBER  THIRTY-
FIRST,  TWO  THOUSAND SIXTEEN TO ESTABLISH PROCEDURES FOR THE ALLOCATION
OF TAX CREDITS AS REQUIRED. SUCH RULES  AND  REGULATIONS  SHALL  INCLUDE
PROVISIONS  DESCRIBING  THE  APPLICATION PROCESS, THE DUE DATES FOR SUCH
APPLICATIONS, THE STANDARDS WHICH SHALL BE USED TO EVALUATE THE APPLICA-
TIONS, THE DOCUMENTATION THAT WILL BE PROVIDED TO TAXPAYERS TO  SUBSTAN-
TIATE  TO  THE  COMMISSIONER THE AMOUNT OF TAX CREDITS ALLOCATED TO SUCH
TAXPAYERS, AND SUCH OTHER PROVISIONS AS DEEMED NECESSARY  AND  APPROPRI-
ATE.   NOTWITHSTANDING ANY OTHER PROVISIONS TO THE CONTRARY IN THE STATE
ADMINISTRATIVE PROCEDURE ACT, SUCH RULES AND REGULATIONS MAY BE  ADOPTED
ON  AN  EMERGENCY BASIS IF NECESSARY TO MEET SUCH DECEMBER THIRTY-FIRST,
TWO THOUSAND SIXTEEN DEADLINE.
  (D) IN ORDER TO BE ELIGIBLE FOR  THE  TAX  CREDITS,  A  TAXPAYER  MUST
SUBMIT  AN APPLICATION (IN A FORM PRESCRIBED BY THE COMMISSIONER) TO THE
COMMISSIONER. THE COMMISSIONER SHALL ESTABLISH GUIDELINES  AND  CRITERIA
FOR A DESIGNATION OF UPSTATE REINVESTMENT ZONES.
  (E) IF, AFTER REVIEWING THE APPLICATION SUBMITTED BY THE TAXPAYER, THE
COMMISSIONER  DETERMINES THAT SUCH QUALIFIED PURCHASE OF THE BUILDING OR
QUALIFIED REHABILITATION EXPENDITURES WERE MADE IN AN UPSTATE  REINVEST-
MENT  ZONE, THEN THE COMMISSIONER SHALL ISSUE THE TAXPAYER A CERTIFICATE
OF ELIGIBILITY THAT ESTABLISHES THE TAXPAYER AS A QUALIFIED TAXPAYER.
  S 2. The tax law is amended by adding a new  section  42  to  read  as
follows:
  S  42.  UPSTATE REINVESTMENT ZONES TAX CREDIT. (A) A TAXPAYER SHALL BE
ALLOWED A CREDIT, TO BE COMPUTED AS HEREINAFTER  PROVIDED,  AGAINST  THE
TAX  IMPOSED  BY  ARTICLES NINE-A AND TWENTY-TWO OF THIS CHAPTER FOR THE
DEVELOPMENT TO UPSTATE REINVESTMENT ZONES INCLUDING, BUT NOT LIMITED TO,
THE QUALIFIED PURCHASE OF BUILDINGS AND QUALIFIED REHABILITATION EXPEND-
ITURES OF BUILDINGS IN SUCH ZONES WHERE AT LEAST FIFTY  PERCENT  OF  THE
SQUARE  FOOTAGE  OF SUCH BUILDINGS, AT THE TIME OF PURCHASE OR REHABILI-
TATION, IS VACANT OR OTHERWISE UNUSED. THE AMOUNT OF THE CREDIT SHALL BE
TWENTY PERCENT OF THE QUALIFIED PURCHASE  AND  QUALIFIED  REHABILITATION
EXPENDITURES  OF  BUILDINGS  AND REHABILITATIONS IN SUCH ZONES WITH SUCH
CREDIT SUBJECT TO RESTRICTIONS SET FORTH  IN  SUBDIVISION  (D)  OF  THIS
SECTION.    THIS CREDIT WILL NOT BE ALLOWED IF THE QUALIFIED PURCHASE OF
BUILDINGS AND QUALIFIED REHABILITATION EXPENDITURES  OF  BUILDINGS  THAT

A. 8004--A                          3

ARE THE BASIS FOR THIS CREDIT ARE INCLUDED IN THE CALCULATION OF ANOTHER
CREDIT CLAIMED BY THE TAXPAYER UNDER THIS CHAPTER.
  (B)  FOR  THE  PURPOSE  OF THIS SECTION, THE TERM "QUALIFIED PURCHASE"
SHALL MEAN THE COST OR OTHER BASIS FOR FEDERAL INCOME  TAX  PURPOSES  OF
ACQUISITION  COST  OF  BUILDING  FOR WHICH DEPRECIATION IS ALLOWED UNDER
SECTION ONE HUNDRED SIXTY-EIGHT OF THE INTERNAL REVENUE CODE  AND  WHICH
IS  (1)  NONRESIDENTIAL  PROPERTY,  (2)  RESIDENTIAL PROPERTY, OR (3) AN
ADDITION OR IMPROVEMENT TO PROPERTY DESCRIBED IN PARAGRAPH (1) OR (2) OF
THIS SUBDIVISION.   THE  TERM  "QUALIFIED  REHABILITATION  EXPENDITURES"
SHALL  MEAN  QUALIFIED  EXPENDITURES  AS  DEFINED  IN  PARAGRAPH  (2) OF
SUBSECTION (C) OF SECTION FORTY-SEVEN OF THE INTERNAL REVENUE CODE.
  (C) FOR THE PURPOSE OF THIS SECTION, THE  TERM  "UPSTATE  REINVESTMENT
ZONES" SHALL MEAN AN AREA:  (I) THAT, ACCORDING TO THE MOST RECENT AMER-
ICAN  COMMUNITY SURVEY BY THE UNITED STATES CENSUS BUREAU, LIES WITHIN A
CENSUS TRACT WITH A POVERTY RATE EQUAL TO OR GREATER THAN TWENTY PERCENT
OR AN UNEMPLOYMENT RATE THAT  IS  EQUAL  TO  OR  GREATER  THAN  ONE  AND
ONE-HALF  PERCENT  TIMES THE NATIONAL AVERAGE UNEMPLOYMENT RATE AND (II)
IS WITHIN THE INCORPORATED BOUNDARIES OF A VILLAGE, TOWN OR CITY  HAVING
A POPULATION OF LESS THAN ONE MILLION.
  (D)  THE  SUM OF ALL TAX CREDITS GRANTED PURSUANT TO THE PROVISIONS OF
THIS SECTION SHALL NOT EXCEED FIVE HUNDRED THOUSAND DOLLARS FOR ANY  ONE
TAXPAYER  INCLUDING  SUCH  PARTY'S AFFILIATES AND RELATED ENTITIES FOR A
TAXABLE YEAR.  IF THE TAXPAYER IS A PARTNER IN A PARTNERSHIP, MEMBER  OF
A  LIMITED LIABILITY COMPANY OR SHAREHOLDER OF A NEW YORK S CORPORATION,
THEN THE ANNUAL LIMIT BY THE PRECEDING SENTENCE SHALL BE APPLIED AT  THE
ENTITY  LEVEL, SO THAT THE AGGREGATE CREDIT ALLOWED TO ALL THE PARTNERS,
MEMBERS OR SHAREHOLDERS OF EACH SUCH ENTITY IN THE TAXABLE YEAR DOES NOT
EXCEED THE FIVE HUNDRED THOUSAND DOLLAR ANNUAL LIMIT.
  (E) (1) THE  AGGREGATE  AMOUNT  OF  TAX  CREDITS  ALLOWED  UNDER  THIS
SECTION,  IN  ANY TAXABLE YEAR SHALL BE TEN MILLION DOLLARS. SUCH AGGRE-
GATE AMOUNT OF CREDITS SHALL BE ALLOCATED BY THE COMMISSIONER OF ECONOM-
IC DEVELOPMENT AMONG TAXPAYERS IN THE ORDER IN  WHICH  APPLICATIONS  ARE
RECEIVED.  IF  THE  TOTAL AMOUNT OF ALLOCATED CREDITS APPLIED FOR IN ANY
PARTICULAR YEAR EXCEEDS THE AGGREGATE AMOUNT OF TAX CREDITS ALLOWED  FOR
SUCH  YEAR  UNDER  THIS  SECTION, SUCH EXCESS SHALL BE TREATED AS HAVING
BEEN APPLIED FOR ON THE FIRST DAY OF THE SUBSEQUENT YEAR.
  (2) THE COMMISSIONER OF THE DEPARTMENT OF ECONOMIC  DEVELOPMENT  SHALL
PROMULGATE REGULATIONS BY DECEMBER THIRTY-FIRST, TWO THOUSAND SIXTEEN TO
ESTABLISH  PROCEDURES  FOR  THE  ALLOCATION  OF  TAX CREDITS AS REQUIRED
PURSUANT TO SECTION FOUR HUNDRED SIXTY OF THE ECONOMIC DEVELOPMENT  LAW.
SUCH  RULES  AND  REGULATIONS  SHALL  INCLUDE  PROVISIONS DESCRIBING THE
APPLICATION PROCESS, THE DUE DATES FOR SUCH APPLICATIONS, THE  STANDARDS
WHICH SHALL BE USED TO EVALUATE THE APPLICATIONS, THE DOCUMENTATION THAT
WILL  BE  PROVIDED  TO  TAXPAYERS  TO SUBSTANTIATE TO THE DEPARTMENT THE
AMOUNT OF TAX CREDITS  ALLOCATED  TO  SUCH  TAXPAYERS,  AND  SUCH  OTHER
PROVISIONS AS DEEMED NECESSARY AND APPROPRIATE.
  (F)  THE  CREDIT ALLOWED UNDER THIS SECTION FOR ANY TAXABLE YEAR SHALL
NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE AMOUNT  PRESCRIBED
IN  PARAGRAPH  (D) OF SUBDIVISION ONE OF SECTION TWO HUNDRED TEN OF THIS
CHAPTER.  PROVIDED, HOWEVER, THAT IF THE AMOUNT OF THE CREDIT  ALLOWABLE
UNDER  THIS SECTION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT,
THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE  CREDITED  OR
REFUNDED  IN  ACCORDANCE  WITH  THE  PROVISIONS  OF SECTION ONE THOUSAND
EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED  FURTHER,  THE  PROVISIONS   OF
SUBSECTION  (C)  OF  SECTION  ONE  THOUSAND EIGHTY-EIGHT OF THIS CHAPTER
NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON.

A. 8004--A                          4

  (G) THE TAXPAYER MAY BE REQUIRED TO  ATTACH  TO  ITS  TAX  RETURN  ITS
CERTIFICATE OF ELIGIBILITY ISSUED BY THE COMMISSIONER OF ECONOMIC DEVEL-
OPMENT  PURSUANT  TO SECTION FOUR HUNDRED SIXTY OF THE ECONOMIC DEVELOP-
MENT LAW.
  (H)  WHERE  THE  BUILDING WHICH WAS THE BASIS FOR THE ALLOWANCE OF THE
CREDIT PROVIDED FOR UNDER THIS SECTION IS SOLD BEFORE THE CLOSE  OF  THE
RECAPTURE  PERIOD,  THE  TAXPAYER SHALL ADD BACK, IN THE TAXABLE YEAR IN
WHICH SUCH BUILDING WAS SOLD, THE CREDIT RECAPTURE  AMOUNT.  THE  CREDIT
RECAPTURE  AMOUNT  IS  THE  PRODUCT OF THE CREDIT AMOUNT CLAIMED AND THE
RECAPTURE PERCENTAGE IN ACCORDANCE WITH THE FOLLOWING TABLE.

IF THE BUILDING IS SOLD WITHIN               THE RECAPTURE PERCENTAGE

(I) ONE FULL YEAR AFTER PLACED IN                      100
SERVICE
(II) ONE FULL YEAR AFTER THE CLOSE OF THE              80
PERIOD DESCRIBED IN PARAGRAPH (I)
(III) ONE FULL YEAR AFTER THE CLOSE OF THE             60
PERIOD DESCRIBED IN PARAGRAPH (II)
(IV) ONE FULL YEAR AFTER THE CLOSE OF THE              40
PERIOD DESCRIBED IN PARAGRAPH (III)
(V) ONE FULL YEAR AFTER THE CLOSE OF THE               20
PERIOD DESCRIBED IN PARAGRAPH (IV)
  (I) CROSS-REFERENCES. FOR APPLICATION OF THE CREDIT  PROVIDED  FOR  IN
THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
  (1) ARTICLE 9A: SECTION 210-B, SUBDIVISION 51.
  (2)  ARTICLE  22: SECTION 606, SUBSECTION (I), PARAGRAPH (1), SUBPARA-
GRAPH (B), CLAUSE (XLI).
  (3) ARTICLE 22: SECTION 606, SUBSECTION (CCC).
  S 3. Section 210-B of the tax law is amended by adding a new  subdivi-
sion 51 to read as follows:
  51.  UPSTATE REINVESTMENT ZONES TAX CREDIT. (A) ALLOWANCE OF CREDIT. A
TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO  BE  COMPUTED  AS  PROVIDED  IN
SECTION FORTY-TWO OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE.
  (B)  APPLICATION  OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR MAY NOT REDUCE THE TAX DUE FOR SUCH  YEAR  TO  LESS
THAN  THE  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
SECTION TWO HUNDRED TEN OF THIS ARTICLE. HOWEVER, IF THE AMOUNT OF CRED-
IT ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES  THE  TAX
TO SUCH AMOUNT, ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE
YEAR WILL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED
IN  ACCORDANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF
THIS CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS  OF  SUBSECTION  (C)  OF
SECTION  ONE  THOUSAND  EIGHTY-SIX  OF  THIS CHAPTER NOTWITHSTANDING, NO
INTEREST WILL BE PAID THEREON.
  S 4. Section 606 of the tax law is amended by adding a new  subsection
(ccc) to read as follows:
  (CCC)  UPSTATE REINVESTMENT ZONES TAX CREDIT. (A) ALLOWANCE OF CREDIT.
A TAXPAYER SHALL BE ALLOWED A CREDIT, TO  BE  COMPUTED  AS  PROVIDED  IN
SECTION FORTY-TWO OF THIS CHAPTER, AGAINST THE TAX IMPOSED BY THIS ARTI-
CLE.
  (B)  APPLICATION  OF CREDIT. IF THE AMOUNT OF THE CREDIT ALLOWED UNDER
THIS SUBSECTION EXCEEDS THE TAXPAYER'S TAX FOR  THE  TAXABLE  YEAR,  ANY
AMOUNT  OF CREDIT NOT DEDUCTIBLE IN THAT TAXABLE YEAR WILL BE TREATED AS
AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH  THE

A. 8004--A                          5

PROVISIONS  OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE. PROVIDED,
HOWEVER, NO INTEREST WILL BE PAID THEREON.
  S  5. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding  a  new  clause  (xli)  to  read  as
follows:
(XLI) UPSTATE REINVESTMENT           AMOUNT OF THE CREDIT UNDER
ZONES CREDIT UNDER                   SUBDIVISION FIFTY-ONE OF SECTION
SUBSECTION (CCC)                     TWO HUNDRED TEN-B
  S 6. This act shall take effect immediately and apply to taxable years
beginning  on or after January 1, 2017. The commissioner of taxation and
finance is authorized to issue regulations  and  guidance  necessary  to
implement this act on or before the effective date.