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.
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.
STATE OF NEW YORK ________________________________________________________________________ 1727 2013-2014 Regular Sessions IN 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.