S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    181
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 4, 2017
                                ___________
 
 Introduced by M. of A. SANTABARBARA, BRINDISI, FAHY, JENNE, PALMESANO --
   Multi-Sponsored  by -- M. of A. LOPEZ -- read once and referred to the
   Committee on Ways and Means
 
 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.
   § 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-
 THREE 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.
              

                                                            LBD05226-01-7

 A. 181                              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 EIGHTEEN 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 EIGHTEEN 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.
   § 2. The tax law is amended by adding a new  section  43  to  read  as
 follows:
   §  43.  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. 181                              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 EIGHTEEN
 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. 181                              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 52.
   (2)  ARTICLE  22: SECTION 606, SUBSECTION (I), PARAGRAPH (1), SUBPARA-
 GRAPH (B), CLAUSE (XLIII).
   (3) ARTICLE 22: SECTION 606, SUBSECTION (CCC).
   § 3. Section 210-B of the tax law is amended by adding a new  subdivi-
 sion 52 to read as follows:
   52.  UPSTATE REINVESTMENT ZONES TAX CREDIT. (A) ALLOWANCE OF CREDIT. A
 TAXPAYER SHALL BE ALLOWED A  CREDIT,  TO  BE  COMPUTED  AS  PROVIDED  IN
 SECTION  FORTY-THREE  OF  THIS  CHAPTER, AGAINST THE TAX IMPOSED BY THIS
 ARTICLE.
   (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.
   §  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-THREE OF THIS CHAPTER, AGAINST THE  TAX  IMPOSED  BY  THIS
 ARTICLE.
   (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. 181                              5
 
 PROVISIONS  OF SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTICLE. PROVIDED,
 HOWEVER, NO INTEREST WILL BE PAID THEREON.
   §  5. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
 of the tax law is amended by adding a new  clause  (xliii)  to  read  as
 follows:
 (XLIII) UPSTATE REINVESTMENT         AMOUNT OF THE CREDIT UNDER
 ZONES CREDIT UNDER                   SUBDIVISION FIFTY-TWO OF SECTION
 SUBSECTION (CCC)                     TWO HUNDRED TEN-B
   § 6. This act shall take effect immediately and apply to taxable years
 beginning  on or after January 1, 2019. The commissioner of taxation and
 finance is authorized to issue regulations  and  guidance  necessary  to
 implement this act on or before the effective date.