June 19, 2013
Albany, NY

Governor Cuomo and Legislative Leaders Announce Agreement on Start-Up NY Legislation That Will Implement Tax-Free NY Initiative

TOP Governor Cuomo and Legislative Leaders Announce...

Governor Andrew M. Cuomo, Senate Majority Coalition Co-Leaders Dean Skelos and Jeff Klein, and Assembly Speaker Sheldon Silver today announced an agreement on legislation START-UP NY (SUNY Tax-free Areas to Revitalize and Transform UPstate NY) that will enact the Governor's Tax-Free NY initiative.


The New Economy is growing in higher education and there is a positive synergy between academia and entrepreneurial activity. START-UP NY will foster entrepreneurialism and job creation on a large scale by transforming public higher education through tax-free communities across the state, particularly upstate. The State University of New York campus system, along with other college communities, will serve 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. START-UP NY will entice companies to bring their ventures to Upstate New York by offering new businesses the opportunity to operate completely tax-free including no income tax for employees, no sales, property or business tax while also partnering with the world-class higher education institutions in the SUNY system. In addition, the START-UP NY program will help existing companies, especially high-tech firms and start-ups, stay in New York and grow.


Upstate New York has seen too many years of decline, and our communities have lost too many of their young people, Governor Cuomo said. We desperately need to jumpstart the Upstate economy and these new tax-free communities will give New York an edge like weve never had before when it comes to attracting businesses, start-ups, and new investment. Todays agreement on the START-UP NY legislation is a major victory for our Upstate communities as we are now set to launch what will be one of the most ambitious economic development programs our state has seen in decades.


Senate Majority Coalition Co-Leader Dean Skelos said, Senate Majority Coalition Co-Leader Dean G. Skelos said: "Start-Up New York will complement our ongoing efforts to cut taxes to help businesses create new, private sector jobs - - which must continue to be our top priority. This comprehensive legislation will make New York a more attractive place to locate and grow a business, and address the burdensome regulations that hold our job creators back. I commend the Governor and the Assembly for working cooperatively towards this agreement."


Senate Majority Coalition Co-Leader Jeff Klein said, Senate Majority Coalition Co-Leader and Independent Conference Leader Jeffrey D. Klein said, "Over the past three years, we have made economic growth and job creation a top priority. Over the past year, we have reduced small business taxes, provided tax incentives for job creation, and invested in innovation hot spots and regional economic programs throughout New York State. But we know that we can do more. In order to compete in todays hypercompetitive global marketplace, we need to constantly develop new, bold, and creative ideas that can attract the best and fastest growing companies, especially in areas that are struggling. Start-Up New York holds the potential to do exactly that. By drawing new business investment to New York, tax free business zones have the potential to revitalize some of our states neediest counties, by providing jobs and upward mobility to thousands of unemployed and underemployed New Yorkers."


Assembly Speaker Sheldon Silver said, In the Assembly, we have always maintained a commitment to our students and our exceptional higher education institutions, which are the keys to New Yorks economic success. This new program will foster business creation and expansion around our universities. It will have a significant economic impact by providing job opportunities at thriving businesses right in our own communities and help a new generation of New Yorkers achieve their academic and professional goals. Details of the START-UP NY legislation include:


Tax-Free: Participating companies in START-UP NY will not pay any taxes (e.g. business/corporate taxes, sales taxes and property taxes) 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.


Business Eligibility: In order to locate into a START-UP NY tax-free community, a business will need 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. A number of types of companies will be prohibited from participating, including retail and wholesale businesses and restaurants. In New York City and Nassau, Suffolk and Westchester counties, the business must also be a high-tech company or a new start-up company.


Companies will be eligible to enter into the program until December 31, 2020 and by that time Empire State Development (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 would compete 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 programs impact.


Enhances the Excelsior Jobs Program. In 2011, Governor Cuomo led the charge to reform the Excelsior Jobs program to provide flexibility to enhance the program. This program continues that effort by further enhancing the program to maximize job growth opportunities in the State.


Expanding the Mandate Relief Council to include Cost-drivers to Business. Under the program, the Mandate Relief Council is expanded to bec

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