Former CEO & Chairman of the Board at Morgan Stanley John J. Mack to serve as Economic Development Advisor to NYS & Special Advisor to Board of ESD
Albany, NY (October 22, 2013)
Governor Andrew M. Cuomo today formally launched START-UP NY, the game-changing initiative that, starting today, will create tax-free zones to attract and grow new businesses across the state. The Governor was joined by John J. Mack, Senior Advisor and former CEO and Chairman of the Board at Morgan Stanley, as well as more than 300 international and domestic business, high-tech industry, academic and community leaders for the launch in New York City today.
“Hundreds of business leaders and CEOs from around the globe have come together for the official launch of START-UP NY to take advantage of the most ambitious economic development program in New York State’s recent history,” Governor Cuomo said. “In a tax free environment, no one can match what New York has to offer. Businesses that are looking to startup or expand, and most importantly create jobs, should look no further. We are leveraging our world-class SUNY system and prestigious private universities to partner with new businesses, providing direct access to advanced research, development resources, experts in high-tech and other industries and all with zero taxes for ten whole years. With an opportunity like that, its no wonder that companies are lining up for the launch of START-UP NY.”
START-UP NY seeks to accelerate entrepreneurialism and job creation across the state on a large scale, with a particular focus on Upstate New York. The State University of New York campus system, along with other college communities, serves as the framework of the START-UP NY program to attract high-tech and other start-ups, venture capital, new business and investments from across the world. Under the program, businesses have the opportunity to operate completely tax-free for 10 years on eligible campuses and spaces. Businesses will partner with the higher education institutions in the SUNY system as well as other universities and be able to access industry experts and advanced research laboratories.
Businesses can visit www.startup-ny.com to more about the program, find answers to frequently asked questions, and search for eligible space.
“Governor Cuomo’s transformative new approach to drawing businesses and jobs to New York, particularly to Upstate, capitalizes on SUNY’s academic strengths and unique position as an economic engine across the state,” said SUNY Chancellor Nancy L. Zimpher. “Enthusiasm at SUNY campuses across New York is high as we anticipate a windfall of innovation-driven public-private partnerships that, because of the START-UP NY program, will create jobs and amazing new opportunities for students and researchers.”
New Economic Development Advisor to NYS & Special Advisor to Board of ESD
The Governor also announced that John J. Mack will serve as Economic Development Advisor to the State of New York and Special Advisor to the Board of Empire State Development (ESD), which includes the Department of Economic Development (DED) and the Urban Development Corporation (UDC). In his two roles, Mr. Mack will advise the Governor and ESD on various economic development programs and issues, including START-UP NY, to help grow New York’s economy and make the state a more attractive place for businesses.
John Mack said, “Governor Cuomo has demonstrated a steadfast commitment to encouraging and pursuing opportunities for economic development in New York. With programs like START-UP NY, which offers businesses the unparalleled opportunity of a tax-free environment with New York’s world-class resources for research and development, the Governor is pursuing a truly innovative approach to growing the State’s economy. I am honored to serve both the Governor and Empire State Development as they continue working to build a new New York.”
Mr. Mack is currently a Senior Advisor of Morgan Stanley. He retired as Chairman of the Board of Morgan Stanley at the end of 2011 and also served as Chief Executive Officer of Morgan Stanley from June 2005 until December 2009.
Mr. Mack first joined Morgan Stanley in May 1972 as a member of the Firm's bond department and rose steadily to positions of increasing responsibility. He was named a Vice President of the Firm in 1976, a Principal in 1977 and a Managing Director in 1979. From 1985 to 1992, Mr. Mack headed the firm's Worldwide Taxable Fixed Income Division. In 1987, he became a member of the Board of Directors. In March 1992, he assumed responsibility for Morgan Stanley's day-to-day operations as Chairman of the Operating Committee. He was named President of Morgan Stanley in June 1993. Mr. Mack served as President, Chief Operating Officer and a Director of Morgan Stanley Dean Witter & Co. from May 1997 when the firm was created by the merger of Morgan Stanley and Dean Witter, two of the world's leading financial services companies.
Before rejoining Morgan Stanley as Chairman and CEO in June 2005, Mr. Mack served as Co-Chief Executive Officer of Credit Suisse Group and Chief Executive Officer of Credit Suisse First Boston.
Mr. Mack is a graduate of Duke University. He serves as Chairman of the Board of Trustees of New York-Presbyterian Hospital and the University Hospital of both Columbia and Cornell, the Chairman of the Board of Tri Alpha Energy, a Board Member of the Bloomberg Family Foundation, Glencore International AG, Lending Club, and Rosneft; he is a member of the Business Council and the Business Roundtable. In addition, Mr. Mack serves on the Advisory Board for China Investment Corporation, the International Business Leaders Advisory Council for the Mayor of Beijing, and the Executive Committee of the Partnership for New York City. Mr. Mack is a Senior Advisor for KKR and a director of Corinthian Ophthalmic. He is a member of the International Business Council of the World Economic Forum, the NYC Financial Services Advisory Committee, and the Shanghai International Financial Advisory Council.
About START-UP NY
Tax-Free: Participating companies in START-UP NY will not pay any taxes (no income tax; no business, corporate state or local taxes; no sales tax; no property tax; and no franchise fees) for 10 years. Employees in participating companies will pay no income taxes for the first five years. For the second five years, employees will pay no taxes on income up to $200,000 of wages for individuals, $250,000 for a head of household, and $300,000 for taxpayers filing a joint return. The number of net new jobs eligible for personal income tax benefits will not exceed 10,000 new jobs per year.
Eligibility: In order to locate into a START-UP NY tax-free community, a business needs to be aligned with or further the academic mission of the campus, college or university sponsoring the tax-free community. Businesses participating in the program will need to have positive community and economic benefits. Every business must create and maintain net new jobs in order to participate. Businesses must:
- Be a new start-up company;
- Be a company from out-of-state that is relocating to New York State; or
- Be the expansion of an existing New York State company – for example, a company creating a new line of business or opening a new advanced manufacturing facility – as long as it can demonstrate that it is creating new jobs and not moving existing jobs.
In addition, New York State start-ups that “hatch” from New York State incubators will be eligible to enter tax-free communities and be eligible for the benefits under the program.
In New York City, Long Island and Westchester County, businesses must be start-ups or high-tech companies. Statewide, certain types of businesses are excluded from the program, including retail and wholesale businesses; restaurants and hospitality; professional practices like law firms and medical practices; and energy production and distribution companies.
Companies will be eligible to enter into the program until December 31, 2020 and by that time, ESD will prepare an evaluation of the effectiveness of the program in order to determine whether eligibility should be extended.
Each university community will develop a plan for the types of businesses it intends to attract and the locations that will be tax-free. Businesses will apply directly to the participating college and, once a business is accepted, ESD will have 60 days to review the application to ensure eligibility.
Bans Competition with Existing Businesses: Under the START-UP NY program, businesses that might compete unfairly with other local businesses outside the tax-free area would be ineligible to participate.
Eligible Colleges and Universities: SUNY, CUNY and independent colleges and universities will all have the opportunity to develop tax-free communities.
SUNY: Every SUNY community college and 4-year college/university can establish a tax-free community using:
- Vacant land on the SUNY campus (for every campus outside of New York City);
- Vacant space in buildings on the SUNY campus (for every campus outside of NYC);
- Any business incubator with a bona fide affiliation to the campus, university or college; and
- Up to 200,000 square feet within one mile of a campus (for every campus north or west of Westchester County), or further with approval from ESD.
CUNY: CUNY will be able to establish a tax-free community on a campus in each borough – Manhattan, the Bronx, Queens, Brooklyn and Staten Island – in an area of economic distress. CUNY Tax-Free NY communities may include:
- Vacant land on the CUNY campus;
- Vacant space in buildings on the CUNY campus; and
- Any business incubator with a bona fide affiliation to the campus, university or college.
Private Colleges: The program also provides 3 million square feet (with the potential of another 600,000 more) of tax-free areas primarily dedicated to private colleges and universities on land north of Westchester County, to be allocated by the START-UP NY program board (consisting of three members with significant experience in academic-based entrepreneurship appointed by the Governor, the Speaker of the Assembly and the Temporary President of the Senate) in a manner that ensures regional balance and balance among eligible rural, urban and suburban areas in the State.
For private colleges and universities north of Westchester County, the tax-free areas can include vacant land and vacant space on- or off-campus, as well as any business incubator with a bona fide affiliation to the campus, university or college.
Of these 3 million square feet, 75,000 square feet will be allocated for each of the following: Nassau County, Suffolk County, Westchester County, Brooklyn, the Bronx, Manhattan, Queens and Staten Island. Private colleges and universities in New York City and Westchester, Suffolk and Nassau Counties, as well as SUNY and CUNY campuses not specifically designated, may apply to sponsor these tax-free areas on college campuses. Once the 75,000 square foot cap is reached in these counties and boroughs, the board may designate up to an additional 75,000 square feet in each. Therefore, a potential of 150,000 square feet of space will be available in these counties and boroughs.
20 Strategic State Properties: In addition, the 3-member board can also designate up to 20 strategic State assets as tax-free communities. These must be State-owned vacant land, State-owned vacant facilities or State-owned facilities that are in the process of closing and becoming vacant. Each will be affiliated with a SUNY, CUNY or independent college or university to attract new employers and new jobs and transform the site into a regional economic engine.
Robust Protections Against Fraud: START-UP NY includes strong provisions to protect against fraud. Businesses will have to submit certification to ESD, and falsifying certifications will be a felony. The legislation also includes strict provisions to guard against abuses such as shifting jobs among related entities or “shirtchanging,” when a company simply reincorporates under a new name and claims its existing employees are now new jobs. In addition, START-UP NY includes measures to prevent self-dealing and conflicts of interest. In cases of fraud, the State will be empowered to claw-back benefits granted to the business. Companies that do not meet the terms of the program – including meeting their job creation targets – may have their benefits reduced, suspended or terminated. ESD will have the authority to review company data to ensure that jobs have been created and maintained, and to end participation by companies that have not created net new jobs. ESD will be required to publish a comprehensive annual report to enable the public to evaluate the program’s impact.