Authorizes recoupment by the state or any political subdivision of financial incentives such as awards, loans, grants or tax abatements, awarded businesses for purposes of job training, job creation or retention, or the development of business operations, upon recipient's failure to complete the terms of the incentive.

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S1727-2013 Actions

• Jan 9, 2013: REFERRED TO FINANCE

S1727-2013 Memo

BILL NUMBER:S1727

TITLE OF BILL:
An act
to amend the executive law, in relation to the recoupment of
economic incentives to businesses

PURPOSE:
To require that companies which receive economic incentives for the
purpose of job creation or expansion of operations fulfill their
promise, unless unforeseen circumstances arise.

SUMMARY OF PROVISIONS:
Provides that where the State, a public benefit corporation including
an industrial development authority, or a municipality provides an
economic incentive to a company for the purpose of job training, job
creation or retention, or expansion of operations, such agreement
shall be in writing and state the terms and conditions of the
incentive. Where the company's promise is not fulfilled, the agency
shall be authorized to recoup the incentive in an amount
proportionate to the unfulfilled part of the agreement. The recipient
shall be entitled to a hearing with an opportunity to explain any
non-compliance. Recoupment may be waived where the failure was not
attributable to bad faith or fraud, and was due to unforeseen
circumstances beyond the recipient's control. Unforeseen
circumstances are defined to include market conditions which are of
such magnitude that a waiver of payment is necessary to ensure
continued operations or employment of the company at its locations.
State agencies are required to establish rules regarding the conduct
of the hearing and conditions of repayment. Requires a report to the
Governor and Legislature concerning incentives provided and agency
action regarding noncompliance.

EXISTING LAW:
Currently there are no state laws requiring recoupment of an economic
incentive from a company that defaults on the agreement for which the
incentive was provided.

JUSTIFICATION:
Providing incentives to attract or convince companies to remain in New
York state has become a common practice. Competition by surrounding
states which provide similar incentives has made this practice a
regularly used economic development tool. It is necessary, however,
that public money is invested wisely with companies which try in good
faith to deliver on their promise to create jobs or expand
operations. This bill requires nothing more than that which is
already required of companies
in the private business world - to enter into a contract and
perform as promised in consideration of payment. Yet, because a company
acting in good faith may be unable to carry out its agreement, the bill
authorizes a waiver of repayment upon a showing. that market conditions
prevented compliance.

A company's failure to create or retain jobs, moreover, affects the
lives of the workers at the affected facility. Job security is shaken
and subsequent employment may be difficult to come by. This bill


attempts to provide some assurance that employment disruption will
only occur if due to market conditions, beyond the control of the
company.

LEGISLATIVE HISTORY:
2001-02: S.1587 No action
2003-04: S.1291 No action
2005-06: S.1994 Referred to Finance
2007-08: S.2805 Referred to Finance

FISCAL IMPLICATIONS:
An increase in tax revenues from employed workers and expanded
operations.

EFFECTIVE DATE:
Immediately applicable to all contracts entered into on and after the
date of enactment.

S1727-2013 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    1727

                         2013-2014 Regular Sessions

                              I N  SENATE

                                 (PREFILED)

                               January 9, 2013
                                 ___________

  Introduced  by  Sens.  ESPAILLAT,  CARLUCCI,  KRUEGER  -- read twice and
    ordered printed, and when printed to be committed to the Committee  on
    Finance

  AN  ACT  to  amend  the  executive law, in relation to the recoupment of
    economic incentives to businesses

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


    Section  1. The executive law is amended by adding a new section 163-b
  to read as follows:

    S 163-B. RECOUPMENT OF ECONOMIC  INCENTIVES.  1.  NOTWITHSTANDING  ANY
  INCONSISTENT PROVISION OF LAW, EACH CONTRACT, AGREEMENT OR UNDERSTANDING
  BY  WHICH  A  PERSON,  FIRM, PARTNERSHIP, COMPANY, ASSOCIATION OR CORPO-
  RATION RECEIVES AN AWARD, GRANT, LOAN, TAX ABATEMENT OR  OTHER  BUSINESS
  INCENTIVE  FROM  THE  STATE,  ANY  OF ITS POLITICAL SUBDIVISIONS, OR ANY
  DEPARTMENT, BUREAU, BOARD, COMMISSION, AUTHORITY, OR ANY OTHER AGENCY OR
  INSTRUMENTALITY OF THE STATE  OR  ITS  POLITICAL  SUBDIVISIONS,  OR  ANY
  PUBLIC  BENEFIT  CORPORATION  AS  DEFINED IN SUBDIVISION FOUR OF SECTION
  SIXTY-SIX OF THE GENERAL CONSTRUCTION LAW, OR ANY MUNICIPAL  CORPORATION
  AS DEFINED IN SUBDIVISION THREE OF SECTION THREE-A OF THE GENERAL MUNIC-
  IPAL LAW FOR THE PURPOSES OF JOB TRAINING, JOB CREATION OR RETENTION, OR
  THE  DEVELOPMENT  OF  ITS  OPERATION WITHIN THE STATE, SHALL CONTAIN THE
  FOLLOWING PROVISIONS:

    (A) A STATED PERIOD OF TIME WITHIN WHICH THE TERMS  OF  THE  CONTRACT,
  AGREEMENT OR UNDERSTANDING ARE TO BE FULLY EXECUTED AND COMPLETED;
    (B) A STATED PURPOSE AND THE AMOUNT OF THE AWARD, GRANT OR OTHER BUSI-
  NESS INCENTIVE;
    (C)  WHERE APPLICABLE, THE NUMBER OF PERSONS TO BE TRAINED PURSUANT TO
  THE TERMS OF THE CONTRACT, AGREEMENT OR UNDERSTANDING;
    (D) WHERE APPLICABLE, THE NUMBER OF JOBS TO  BE  CREATED  OR  RETAINED
  PURSUANT TO THE TERMS OF THE CONTRACT, AGREEMENT OR UNDERSTANDING;

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD04982-01-3

 S. 1727                             2

    (E) WHERE APPLICABLE, THE EXTENT OF THE OPERATIONS OR FACILITIES TO BE
  DEVELOPED  PURSUANT  TO  THE  TERMS OF THE CONTRACT, AGREEMENT OR UNDER-
  STANDING; AND
    (F)  NOTICE  TO  THE RECIPIENT THAT THE AWARD, GRANT OR OTHER BUSINESS
  INCENTIVE SHALL BE SUBJECT TO RECOUPMENT PURSUANT TO THIS SECTION.
    2. EXCEPT AS PROVIDED IN SUBDIVISION  THREE  OF  THIS  SECTION,  EVERY
  AWARD,  GRANT OR OTHER BUSINESS INCENTIVE AWARDED PURSUANT TO THIS CHAP-
  TER SHALL BE SUBJECT TO REPAYMENT WITH INTEREST, BY THE RECIPIENT UPON A
  FINDING BY THE AWARDING  ENTITY  THAT  THE  PERSON,  FIRM,  PARTNERSHIP,
  COMPANY,   ASSOCIATION,  OR  CORPORATION  HAS  NOT  FULLY  EXECUTED  AND
  COMPLETED THE STATED PURPOSES OR OBJECTIVES OF THE AWARD, GRANT OR OTHER
  BUSINESS INCENTIVE WITHIN THE STATED PERIOD OF TIME AS SET FORTH IN  THE
  CONTRACT, AGREEMENT OR UNDERSTANDING.
    3.  IF  THE  AWARDING  ENTITY  DETERMINES  THAT  THE RECIPIENT WHO HAS
  RECEIVED AN AWARD, GRANT OR OTHER BUSINESS INCENTIVE UNDER THIS  CHAPTER
  IS  NOT  COMPLYING WITH THE CONTRACT, AGREEMENT OR UNDERSTANDING ENTERED
  INTO WITH THE AWARDING ENTITY, IT SHALL NOTIFY  THE  RECIPIENT  OF  SUCH
  NONCOMPLIANCE.    SUCH NOTICE SHALL STATE THAT THE RECIPIENT IS ENTITLED
  TO A HEARING AND AN OPPORTUNITY TO EXPLAIN  THE  NONCOMPLIANCE.  IF  THE
  ENTITY  FINDS  THAT  THE  RECIPIENT  HAS NOT COMPLIED WITH THE CONTRACT,
  AGREEMENT OR UNDERSTANDING, THE RECIPIENT SHALL BE  REQUIRED  TO  REFUND
  THE FULL AMOUNT OF THE INCENTIVE PROVIDED, HOWEVER, THAT:

    (A)  UPON A FINDING THAT THE RECIPIENT HAS CREATED OR RETAINED SOME OF
  THE JOBS PROMISED UNDER THE CONTRACT, AGREEMENT, OR  UNDERSTANDING,  THE
  RECIPIENT  SHALL  ONLY BE REQUIRED TO REFUND THE AMOUNT WHICH REPRESENTS
  THE JOBS WHICH IT FAILED TO CREATE OR RETAIN, OR
    (B) UPON A FINDING THAT THE RECIPIENT HAS FAILED  TO  DEVELOP  CERTAIN
  FACILITIES  OR  OPERATIONS AS PROMISED UNDER THE CONTRACT, AGREEMENT, OR
  UNDERSTANDING, THE RECIPIENT SHALL REFUND THE AMOUNT OF THE AWARD, GRANT
  OR BUSINESS INCENTIVE AS FOLLOWS:

    (I) WHERE THE RECIPIENT HAS DEVELOPED ONE-THIRD OR LESS OF THE FACILI-
  TIES OR OPERATIONS, THE RECIPIENT SHALL REFUND AT  LEAST  TWO-THIRDS  OF
  THE AWARD, GRANT OR BUSINESS INCENTIVE;
    (II)  WHERE  THE  RECIPIENT  HAS  DEVELOPED  TWO-THIRDS OR LESS OF THE
  FACILITIES OR OPERATIONS, THE RECIPIENT SHALL REFUND AT LEAST  ONE-THIRD
  OF THE AWARD, GRANT OR BUSINESS INCENTIVE;
    (III)  WHERE THE RECIPIENT HAS DEVELOPED MORE THAN TWO-THIRDS BUT LESS
  THAN ALL OF THE FACILITIES OR OPERATIONS AS PROMISED UNDER THE CONTRACT,
  AGREEMENT OR UNDERSTANDING, THE RECIPIENT SHALL REFUND AN  AMOUNT  WHICH
  THE  ENTITY DETERMINES TO BE A REASONABLE PROPORTION OF THE AWARD, GRANT
  OR BUSINESS INCENTIVE NOT FULFILLED.
    4. UPON A FINDING THAT THE RECIPIENT OF THE  AWARD,  GRANT,  OR  OTHER
  BUSINESS  INCENTIVE HAS NOT FULLY EXECUTED AND COMPLETED THE PURPOSES OR
  OBJECTIVES OF THE AWARD, GRANT OR BUSINESS INCENTIVE, THE AWARDING ENTI-
  TY MAY WAIVE REPAYMENT OF SUCH AWARD, GRANT  OR  BUSINESS  INCENTIVE  AS
  REQUIRED  PURSUANT  TO THIS SECTION, UPON A FINDING THAT THE FAILURE WAS
  CAUSED BY UNFORESEEN CIRCUMSTANCES BEYOND THE DIRECT OR INDIRECT CONTROL
  OF THE RECIPIENT PERSON,  FIRM,  PARTNERSHIP,  COMPANY,  ASSOCIATION  OR
  CORPORATION,  AND WAS NOT ATTRIBUTABLE TO BAD FAITH OR FRAUD. UNFORESEEN
  CIRCUMSTANCES SHALL INCLUDE, BUT NOT BE LIMITED  TO,  MARKET  CONDITIONS
  WHICH  ADVERSELY IMPACT UPON A RECIPIENT AND WHICH ARE OF SUCH MAGNITUDE
  THAT A WAIVER OF REPAYMENT IS ABSOLUTELY NECESSARY TO ENSURE THE CONTIN-
  UED OPERATIONS OF THE RECIPIENT AT THE LOCATION FOR WHICH THE  INCENTIVE
  WAS  GRANTED  OR TO ENSURE CONTINUED EMPLOYMENT OF ITS EMPLOYEES AT SUCH
  LOCATION. NO WAIVER OF FULL REPAYMENT MAY BE PROVIDED, HOWEVER, UPON THE
  RELOCATION OUTSIDE OF NEW YORK STATE, OR FROM THE LOCATION SUCH  RECIPI-

 S. 1727                             3

  ENT  OCCUPIED  AT  THE  TIME  THE RECIPIENT RECEIVED THE AWARD, GRANT OR
  BUSINESS INCENTIVE TO ANOTHER LOCATION IN THE STATE. UPON  THE  DETERMI-
  NATION  OF  UNFORESEEN  CIRCUMSTANCES APPROPRIATE TO GRANT A WAIVER, THE
  REPAYMENT  OF  THE  OUTSTANDING  BALANCE OF ANY AWARD, GRANT OR BUSINESS
  INCENTIVE, OR OF ANY TAX CREDITS, INCLUDING  INTEREST  THEREON,  MAY  BE
  DEFERRED  FOR  A  PERIOD  NOT TO EXCEED FIVE YEARS FROM THE DATE OF SUCH
  WAIVER, PROVIDED THAT IF AT THE END OF FIVE  YEARS  THE  CONDITIONS  FOR
  WHICH  THE WAIVER WAS GRANTED CONTINUE, THE AWARDING ENTITY MAY GRANT AN
  ADDITIONAL WAIVER.
    5. EACH ENTITY OF THE STATE WHICH ENTERS INTO AGREEMENTS  PURSUANT  TO
  THIS  CHAPTER  SHALL  ESTABLISH  RULES  AND  REGULATIONS RELATING TO THE
  CONDUCT OF A HEARING AND THE TERMS AND CONDITIONS OF REPAYMENT.
    6. ANY RECIPIENT AGGRIEVED BY A DETERMINATION OF THE  AWARDING  ENTITY
  MAY  SEEK REVIEW OF SUCH DETERMINATION PURSUANT TO ARTICLE SEVENTY-EIGHT
  OF THE CIVIL PRACTICE LAW AND RULES.
    7. UNLESS THE AGREEMENT BETWEEN THE ENTITY AND THE RECIPIENT OTHERWISE
  PROVIDES FOR A PENALTY OF INTEREST IN THE EVENT OF  NON-COMPLIANCE,  FOR
  PURPOSES OF THIS SECTION, INTEREST CHARGED IN THE REPAYMENT OF AN AWARD,
  GRANT  OR  BUSINESS INCENTIVE SHALL BE CALCULATED AT A RATE EQUAL TO THE
  UNDERPAYMENT RATE SET BY THE COMMISSIONER OF TAXATION AND FINANCE PURSU-
  ANT TO THE PROVISIONS OF SUBSECTION (E) OF SECTION ONE THOUSAND  NINETY-
  SIX  OF  THE TAX LAW; AND SHALL BE CALCULATED FROM THE DATE OF DISBURSE-
  MENT OF SUCH AWARD, GRANT OR BUSINESS INCENTIVE.
    8. THE PROVISIONS OF THIS SECTION SHALL NOT  BE  DEEMED  TO  ALTER  OR
  ABRIDGE  ANY  RIGHT OR REMEDY EXISTING AT LAW OR EQUITY OTHERWISE AVAIL-
  ABLE TO THE AWARDING ENTITY.
    9. ON OR BEFORE SEPTEMBER FIRST, TWO THOUSAND THIRTEEN,  AND  ANNUALLY
  THEREAFTER, THE STATE, ANY OF ITS POLITICAL SUBDIVISIONS, OR ANY DEPART-
  MENT,  BUREAU,  BOARD,  COMMISSION,  AUTHORITY,  OR  ANY OTHER AGENCY OR
  INSTRUMENTALITY OF THE STATE  OR  ITS  POLITICAL  SUBDIVISIONS,  OR  ANY
  PUBLIC  BENEFIT  CORPORATION  AS  DEFINED IN SUBDIVISION FOUR OF SECTION
  SIXTY-SIX OF THE GENERAL CONSTRUCTION LAW, OR ANY MUNICIPAL  CORPORATION
  AS DEFINED IN SUBDIVISION THREE OF SECTION THREE-A OF THE GENERAL MUNIC-
  IPAL LAW FOR THE PURPOSES OF JOB TRAINING, JOB CREATION OR RETENTION, OR
  THE DEVELOPMENT OF ITS OPERATION WITHIN THE STATE, SHALL SUBMIT A REPORT
  TO  THE  GOVERNOR, THE TEMPORARY PRESIDENT OF THE SENATE, THE SPEAKER OF
  THE ASSEMBLY, THE SENATE MINORITY LEADER, THE ASSEMBLY  MINORITY  LEADER
  AND  THE  STATE  COMPTROLLER  ON  THE RECOUPMENT OF FINANCIAL INCENTIVES
  PURSUANT TO THIS SECTION. SUCH REPORT SHALL INCLUDE: A LISTING OF RECIP-
  IENTS OF AN AWARD, GRANT  OR  BUSINESS  INCENTIVE  WHO  HAVE  FAILED  TO
  EXECUTE  AND  COMPLETE THE TERMS OF A CONTRACT, AGREEMENT OR UNDERSTAND-
  ING; THE AMOUNT AND TYPE OF AWARD,  GRANT  OR  BUSINESS  INCENTIVE;  THE
  DETERMINATION  OF  THE  AWARDING  ENTITY  WITH  RESPECT TO SUCH FAILURE,
  INCLUDING THE REASONS THEREFOR; THE STATUS OF REPAYMENT  OF  THE  AWARD,
  GRANT  OR  BUSINESS  INCENTIVE BY THE RECIPIENT; ANY WAIVER PROVIDED FOR
  THE REPAYMENT OF AN AWARD, GRANT OR BUSINESS INCENTIVE AND  THE  REASONS
  THEREFOR;  AND  ANY  RECOMMENDATIONS  OF  THE ENTITY WITH RESPECT TO THE
  RECOUPMENT OF FINANCIAL INCENTIVES PURSUANT TO THIS SECTION.
    S 2. This act shall take effect immediately and shall  apply  only  to
  contracts,  agreements  and understandings entered into on or after such
  date.