Enacts the New York state business incubator support act to develop financially stable successful firms by providing a comprehensive array of entrepreneurial supports, resources, and services, including management guidance, technical assistance, consulting, mentoring, education, networking opportunities, and access to capital and markets, tailored to the individual needs of the business entities being incubated.
TITLE OF BILL: An act to amend the New York state urban development corporation act, in relation to the New York state small business incubator support act
PURPOSE: To create a comprehensive support program for qualified incubators in New York, establish criteria and output metrics, and support for incubator clients.
SUMMARY OF PROVISIONS: Section 1. Intent
Section 2. Creates a new section 16-v in the Urban Development Corporation Act, "New York State Business Incubator Support Act."
1. Designation. Requires designation of programs which meet the criteria established here.
2. Requirements for Designation A program must have been in existence for three years and meet two levels of criteria:
a. It must meet 12 of the criteria listed, including evidence of financial stability and sponsor commitment, and a strategic plan.
b. annually demonstrate that it incubates businesses with survival rates in excess of average startups, and the strategic plan will continue to meet goals for three years succeeding designation and that the program commits to best practices. In addition, must provide data for three years including 1) Clients served; 2) Graduates; 3) Number of graduate firms still in business; 4) Aggregate data on FTEs, compensation paid, gross revenues of firms, debt and equity financing and grant funds, and supply chain data, 5) Numbers of graduates that stay in the community, State, or regional distressed area, 6) Numbers of individuals counseled, mentored, attended classes, completed business plans, (7) the incubator's entrepreneurial and economic impact on the surrounding region and community, and the two most recent audits.
3. Designation. After designation by ESDC, programs are required to annually submit: updated economic information and updated strategic plan and success in meeting goals, affirm that the program continues to meet designation criteria, and additional information ESDC requires. Requires simplified electronic submission forms. Requires ongoing evaluation of programs by several means, including site visits. For programs receiving grants also requires peer review, and review of all grant recipients within a three year period.
4. Grants. There are three levels of grants, each requiring submission of additional data. a Sustaining operating grants, up to $150,000, available only to programs designated as New York State Incubators. This requires match of 2:1, of which 50% can be in-kind. b Planning Grants, one-time grants of up to $15,000 on submittal of appropriate data showing intent and a program plan. c. Stabilization grants for programs which have received planning grants and otherwise meet the designation requirements (but which are not yet designated), grants of up to $25,000 for up to three successive years. No deductions are
allowed for sponsor indirect costs, overhead. The intent is that all public monies be used for program.
4. Procurement. Makes clients of New York State Incubators eligible for purchase of services, commodities, and technology by the State pursuant to the discretionary buying thresholds for State agencies under the State procurement law (Section 163 of the State Finance Law) without a formal competitive process. Also requires ESDC and the Commissioner of Economic Development to work with OGS and through the state procurement council to develop opportunities for teaming on contracts. Requires that incubator clients receive BidLinx and the State Contract Reporter at the lowest rate available to others or at the marginal cost of providing access.
5. Incubators as educational entities. Makes clear that property used by designated incubators which are or which are owned or sponsored by not for profit organizations, including colleges and universities, are tax exempt for purposes of section 420-a of the real property tax law.
6. Other assistance. Requires the ESDC to provide other aid, assistance, and resources to New York State Incubators and their clients as he or she shall deem useful, and to seek assistance of other agencies for that purpose.
7. Service contract. Contract with a statewide a membership association of incubators to provide technical services to incubators.
EXISTING LAW: New bill.
JUSTIFICATION: Business incubators create successful companies which provide jobs, wealth, and assist in giving an entrepreneurial spirit to their communities, making them more attractive as places to do business. They are literally the tide that lifts all boats, and they vastly increase the range of economic opportunities available to the people of this state. Research shows that incubators are successful at this important task despite the condition of the local economy, and according to the National Business Incubator Association (NBIA), 84% of incubator graduates stay in their communities. There are key factors needed for success of incubation programs, including a strong board or advisory council, experienced operators, community relationship, and financial stability. Recognizing the need for stability and operational excellence, some other states have provided support. According to NBIA research, for every $1 of public operating subsidy, clients and graduates of NBIA member incubators generate approximately $30 in local tax revenue The key issue that makes incubators work -and makes them different from stand along programs, office buildings, or office parks - is an integrated comprehensive array of services provided to client firms over an extended period of time, generally three years or less. This bill seeks to provide long term stabilized funding for incubators which meet the output metrics of providing jobs and support to their clients, and which have a positive impact on their communities
FISCAL IMPLICATIONS: To be determined.
EFFECTIVE DATE: Immediate.
STATE OF NEW YORK ________________________________________________________________________ 4078 2013-2014 Regular Sessions IN SENATE March 7, 2013 ___________Introduced by Sens. GOLDEN, BALL, BONACIC, GALLIVAN, GRIFFO, GRISANTI, MAZIARZ, RANZENHOFER, SEWARD, VALESKY, ZELDIN -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions AN ACT to amend the New York state urban development corporation act, in relation to the New York state small business incubator support act THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Legislative findings and intent. The legislature hereby finds and declares that the path to prosperity and the economic recovery of New York state lies in job creation and in broadening economic choice and career opportunities for all citizens of this state, and that achieving these goals can be accelerated by the enhancement of the state's innovation and entrepreneurial spirit via the growth and devel- opment of business incubator programs that provide entrepreneurial, economic, and business development support and resources. The legislature further finds that the goal and purpose of business incubation programs that include physical space or are virtual incu- bation programs is to develop financially stable successful firms by providing a comprehensive array of entrepreneurial supports, resources, and services, including management guidance, technical assistance, consulting, mentoring, education, networking opportunities, access to capital and markets, tailored to the individual needs of the business entities being incubated. The legislature further finds that the concept of business incubation and business development programs originated in New York in 1959 when Joseph Mancuso opened the Batavia Industrial Center in a Batavia factory building, a concept that has since spread from New York throughout the country and the world, to the extent that there are now an estimated 1,400 incubators in North America, and 7,000 in the world.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09545-01-3 S. 4078 2
The legislature further finds that it has been conclusively demon- strated that firms originating and graduating from a New York state incubator program have a markedly better chance of remaining in and expanding employment opportunities in New York state compared to firms that begin outside an incubator environment, that entrepreneurial coun- seling and mentoring has a significant positive effect on firm growth, development, and sustainability, and that research has shown that the success of business incubation programs and the resulting intensifica- tion of the entrepreneurial ethos in an area can often rise above regional economic conditions, so long as high level in-incubator factors are maintained, such as qualified staff, program comprehensiveness and integration, adherence to best practices, the extent of participation by client entrepreneurs in the program, and the vitality and composition of the advisory board. The legislature further finds that these important programs are supported by a mixed variety of local sponsorships, public and private foundation grants, rental and program fee revenues, and other sources of funds, many of them short-term and unstable, and that such instability can act as a barrier that stifles the ability of the business incubation program to meet its goals and achieve maximum effectiveness in job creation and economic impact. The legislature further declares that any incubator support program to be successful shall require metrics of incubators that requires that in order to retain designation, such incubators must provide evidence for evaluation of the relative success of their programs, allow for compar- ison of program effectiveness to other programs similarly composed, targeted, and situated, provide evidence of program and service quality, demonstrate the value provided to clients, demonstrate continued imple- mentation of best practices, and assure that the program continues to meet the requirements for designation. The legislature therefore declares that it is in every respect appro- priate public policy to provide support for incubators in New York, as a means of increasing economic opportunity and choice to the citizens of this state, maintaining high standards for incubation programs, and building and expanding the economy of this state. S 2. Section 1 of chapter 174 of the laws of 1968, constituting the New York state urban development corporation act, is amended by adding a new section 16-v to read as follows: S 16-V. NEW YORK STATE BUSINESS INCUBATOR SUPPORT ACT. 1. NEW YORK STATE INCUBATORS. THE CORPORATION SHALL DESIGNATE PROGRAMS WHICH ON APPLICATION MEET THE REQUIREMENTS OF SUBDIVISION TWO OF THIS SECTION AS NEW YORK STATE INCUBATORS, AND SHALL PROVIDE SUPPORT AND SERVICES DESCRIBED IN THIS SECTION OR WHICH AS MAY OTHERWISE BE AVAILABLE BY AND THROUGH THE CORPORATION OR, ASSISTED BY THE COMMISSIONER OF ECONOMIC DEVELOPMENT AND IN CONSULTATION WITH THE DEPARTMENT OF ECONOMIC DEVELOP- MENT, BY AND THROUGH THE DEPARTMENT OF ECONOMIC DEVELOPMENT. "NEW YORK STATE INCUBATOR" SHALL MEAN A BUSINESS INCUBATION PROGRAM WHICH ALSO PROVIDES PHYSICAL SPACE OR WHICH IS A VIRTUAL INCUBATION PROGRAM THAT HAS BEEN DESIGNATED UPON APPLICATION BY THE CORPORATION AS A NEW YORK STATE INCUBATOR PURSUANT TO THIS SECTION AND WHICH THEREBY BECOMES ELIGIBLE FOR BENEFITS, SUPPORT, SERVICES, AND PROGRAMS AVAILABLE PURSU- ANT TO SUCH DESIGNATION. 2. REQUIREMENTS FOR DESIGNATION. A PROGRAM WISHING TO BE DESIGNATED AS A NEW YORK STATE INCUBATOR PURSUANT TO THIS SECTION SHALL HAVE BEEN IN EXISTENCE AS A PROGRAM WITH, IN, OR AS THE CURRENT ORGANIZATION FOR, A PERIOD OF AT LEAST THREE FISCAL YEARS PRIOR TO THE CURRENT FISCAL YEAR,S. 4078 3
OR DEMONSTRATE CONTINUITY OF STAFFING, PROGRAM, AND PURPOSE SHOWING A CONTINUATION OF THE PROGRAM THROUGH ANOTHER AUSPICE OR GOVERNING ENTITY, AND SHALL PROVIDE THE FOLLOWING IN A MANNER PRESCRIBED BY THE CORPO- RATION: (A) UNLESS OTHERWISE STATED, FOR THE CURRENT AND TWO PREVIOUS FISCAL YEARS THE PROGRAM PROVIDES, POSSESSES, OR HAS DEVELOPED AT LEAST TWELVE OF THE FOLLOWING PROGRAMS, SERVICES, AND ATTRIBUTES, INCLUDING SUBPARA- GRAPH (XIII) OF THIS PARAGRAPH REGARDING STABILITY AND SUPPORT AND SUBPARAGRAPH (XVIII) OF THIS PARAGRAPH REGARDING THE STRATEGIC PLAN: (I) AN INTEGRATED ARRAY OF SERVICES WHICH INCLUDES MANAGEMENT GUID- ANCE, TECHNICAL ASSISTANCE, CONSULTING, MENTORING, BUSINESS PLAN DEVEL- OPMENT, AID IN CREATION OF THE BUSINESS ENTITY, AND ONGOING COUNSELING; (II) ENTREPRENEURIAL EDUCATION OF AT LEAST THIRTY HOURS OF CLASSROOM INSTRUCTION AND TEN HOURS OF TECHNICAL ASSISTANCE, OR THE EQUIVALENT IN INDIVIDUALIZED COUNSELING AND MENTORING SERVICES FOR CLIENTS; (III) OPPORTUNITIES FOR CLIENTS TO NETWORK, COLLABORATE WITH OTHER BUSINESS PROGRAMS, AND GAIN ACCESS TO SERVICES, INCLUDING THROUGH SUCH PROGRAMS AS THE SMALL BUSINESS DEVELOPMENT CENTER, THE LOCAL OR AREA CHAMBER OF COMMERCE OR OTHER BUSINESS ASSOCIATION, PROGRAMS OF THE SMALL BUSINESS ADMINISTRATION, AND/OR OTHER SIMILAR BUSINESS ORGANIZATIONS, ASSOCIATIONS, AND PROGRAMS; (IV) ACCESS TO CAPITAL VIA REFERRAL OR OTHER ARRANGEMENTS WITH FINAN- CIAL INSTITUTIONS, VENTURE CAPITALISTS, ANGEL INVESTORS, INVESTMENT FUNDS MANAGED OR FINANCED BY STATE OR LOCAL ECONOMIC DEVELOPMENT ORGAN- IZATIONS, OR OTHER SIMILAR OR EQUIVALENT CAPITAL SOURCES, EVIDENCED BY WRITTEN AGREEMENTS, MEMORANDUMS OF UNDERSTANDING, LETTERS OF INTENT, OR OTHER ENDORSEMENTS ACCEPTABLE TO THE CORPORATION, AND INCLUDING READYING CLIENTS FOR THE FINANCIAL MEETINGS AND INTERVIEWS; (V) AID IN ACCESSING MARKETS, VIA BID ASSISTANCE OR ACCESS PROGRAMS THAT MAY INCLUDE BUT ARE NOT LIMITED TO LITERATURE REVIEW, ESTABLISHMENT OF A RESOURCE DOCUMENTS ROOM (PHYSICAL OR VIRTUAL), OPPORTUNITY NOTIFI- CATION OF LOCAL, STATE, AND FEDERAL GOVERNMENTAL AND PRIVATE OPPORTU- NITIES, AND IDENTIFICATION OF AND INTRODUCTIONS TO POTENTIAL FIRST CUSTOMERS; (VI) PHYSICAL OFFICE SPACE AND/OR LABORATORY SPACE AND/OR MANUFACTUR- ING SPACE UNDER A WRITTEN AGREEMENT FOR A PERIOD NOT TO EXCEED FIVE YEARS FOR ANY INDIVIDUAL INCUBATOR CLIENT, PROVIDED THAT THE AVERAGE PERIOD DURING WHICH SPACE IS PROVIDED FOR ALL SUCH CLIENTS ACCESSING SPACE SHALL NOT EXCEED THREE YEARS; (VII) POLICIES REQUIRING PARTICIPATION BY CLIENTS IN THE INCUBATOR PROGRAM, INCLUDING DISQUALIFICATION OR SUSPENSION FROM THE PROGRAM FOR FAILURE TO PARTICIPATE; (VIII) CRITERIA FOR GRADUATION FROM THE PROGRAM OR PHYSICAL SPACE, AND TERMS AND CONDITIONS FOR ONGOING RELATIONSHIPS, IF ANY, BETWEEN THE INCUBATOR AND THE CLIENT; (IX) AT LEAST FIFTY PERCENT OF THE TOTAL INCUBATOR BUDGET PROVIDED FROM SOURCES OTHER THAN TENANT RENTS AND FEES AND IN-KIND SUPPORT FROM THE SPONSORING ENTITY, MUST BE FROM SOURCES OTHER THAN NEW YORK STATE GOVERNMENT AGENCIES; (X) AN INDEPENDENT COMMUNITY-BASED BOARD OR ADVISORY BOARD THAT INCLUDES ONE OR MORE EXECUTIVE OFFICERS OF FIRMS THAT HAVE GRADUATED FROM THE INCUBATOR, AND ONE OR MORE PROFESSIONALS IN ONE OF THE FOLLOW- ING AREAS: ACCOUNTING, INTELLECTUAL PROPERTY, LAW (BUSINESS OR CORPO- RATE), OR ECONOMIC DEVELOPMENT; (XI) AN INDEPENDENT ADVISORY COUNCIL OR RELATED NETWORK THAT INCLUDES ONE OR MORE EXECUTIVE OFFICERS OF FIRMS THAT HAVE GRADUATED FROM THES. 4078 4
INCUBATOR, AND INDIVIDUALS WITH EXPERTISE IN AREAS APPROPRIATE TO THE SECTOR OR CONCENTRATION OF CLIENTS, AND THE MISSION AND GOAL OF THE INCUBATOR; (XII) A PROFESSIONAL MANAGEMENT AND SERVICE DELIVERY TEAM WITH EXPERI- ENCE, EXPERTISE, OR CREDENTIALS IN MANAGEMENT, ENTREPRENEURSHIP, BUSI- NESS DEVELOPMENT, OR OTHER EQUIVALENT AREAS; (XIII) INSTITUTIONAL STABILITY AND LONG TERM VIABILITY, INDICATED BY: THE SPONSOR'S COMMITMENT TO FINANCIALLY AND PROGRAMMATICALLY MAINTAIN THE INCUBATOR FOR AT LEAST TWO YEARS IN ADDITION TO THE CURRENT FISCAL YEAR; RECEIPT OF AT LEAST TWO NON-STATE PUBLIC AND PRIVATE GRANT AND/OR OTHER REVENUE SOURCES INCLUDING PROPERTY RENTALS AND PROGRAM FEES THAT ARE OR HAVE PROVEN TO BE PREDICTABLE AND RELIABLE; AND MANAGEABLE DEBT SERVICE NOT EXCEEDING AN AVERAGE OF TWENTY-FIVE PERCENT OF TOTAL BUDGET (EXCLUSIVE OF ANY IN-YEAR CASH ADVANCES AGAINST PROGRAM OR GRANT REVEN- UES); (XIV) A LIMITATION TO TWENTY PERCENT OR LESS OF THE TOTAL INCUBATOR BUDGET FOR ADMINISTRATIVE COSTS, WHICH INCLUDES ONLY THAT PORTION OF THE SALARIES AND BENEFITS OF THE CHIEF EXECUTIVE OFFICER, ANY DEPUTY OR ASSISTANT TO THE CHIEF EXECUTIVE OFFICER, AND THE CHIEF FINANCIAL OFFI- CER OR CONTROLLER, WHICH CANNOT BE ATTRIBUTED TO PROGRAMS OR SERVICES FUNDED FROM NON-STATE REVENUES OR NOT OTHERWISE PAID BY THE INCUBATOR SPONSOR FROM ITS OWN SOURCES; (XV) ACCESS BY CLIENTS TO MENTORING, ADVISORY, OR EDUCATIONAL SERVICES, INCLUDING CLASSROOM TEACHING, FROM INDIVIDUALS WHO ARE LAWYERS, PROFESSIONAL ACCOUNTANTS, OR INDIVIDUALS WHO HAVE BEEN IN BUSI- NESS AT AN EXECUTIVE LEVEL FOR AT LEAST FIVE YEARS; (XVI) A WRITTEN OR OTHERWISE DEMONSTRABLE CONNECTION TO REGIONAL SOURCES OF INNOVATION AND EXPERTISE OR SOURCES OF HUMAN RESOURCES, INCLUDING BUT NOT LIMITED TO A COLLEGE OR UNIVERSITY, AN INDEPENDENT RESEARCH INSTITUTION, A BUSINESS ASSOCIATION, OR TO EMPLOYEES, MEMBERS, OR GRADUATES FROM ANY OF SUCH SOURCES, AND THE PROGRAMS OR ACTIVITIES BY WHICH SUCH SOURCES CAN AND HAVE PROCURED OR PROVIDED SERVICES AND EXPER- TISE TO ADVANCE CLIENT DEVELOPMENT; (XVII) EVIDENCE THAT THE INCUBATOR IS A CENTER OF ENTREPRENEURIAL ACTIVITIES OF A CITY, REGION, OR DISTRESSED PORTION THEREOF, AS DOCU- MENTED BY PROGRAMS AND ACTIVITIES COORDINATED WITH COUNTY OR LOCAL ECONOMIC DEVELOPMENT ORGANIZATIONS, INVESTOR AND FINANCIAL CLUBS OR INSTITUTIONS, OR STUDENT OR YOUTH-ORIENTED ENTREPRENEURIAL ACTIVITIES. FOR PURPOSES OF THIS PARAGRAPH, DISTRESS MAY BE DEMONSTRATED BY LOCATION OF THE PROGRAM OR ITS CLIENTS IN A FEDERAL HISTORICALLY UNDERUTILIZED BUSINESS ZONE (HUB ZONE) OR EMPOWERMENT ZONE, AN AREA THAT IS OR WAS A NEW YORK STATE EMPIRE ZONE, OR CENSUS DATA DEMONSTRATING LOWER MEDIAN INCOME AND EMPLOYMENT, AND HIGHER POVERTY THAN IN THE SURROUNDING COMMU- NITIES WITHIN THE COUNTY OR CITY, PLUS LOWER ACCESS TO CAPITAL, BUSINESS FORMATION STATISTICS, AND OTHER SIMILAR FACTORS; AND (XVIII) A STRATEGIC PLAN THAT DESCRIBES THE IMPACT ON THE REGIONAL ENTREPRENEURIAL ECOSYSTEM THAT THE INCUBATOR IS INTENDED TO HAVE AND COMMITS THE INCUBATOR TO BEST INCUBATION PRACTICES AND DESCRIBES A DEFINED PROCESS THAT ACCELERATES COMMERCIALIZATION AND DEVELOPMENT FOR A CLIENT COMPANY OR ENTITY THROUGH PROVISION OF TECHNICAL ASSISTANCE, DIRECT MENTORSHIP, ENTREPRENEURIAL EDUCATION, AND BUSINESS DEVELOPMENT SERVICES, INCLUDING DEVELOPMENT OF A BUSINESS PLAN AND MARKETS, DEVELOP- MENT OF THE MANAGEMENT TEAM AND AID IN DEVELOPMENT OF PRODUCT, CUSTOM- ERS, AND LOCAL OR REGIONAL SUPPLY CHAIN PARTNERS, ACCESS TO INVESTMENT, AND LAUNCHING OF A SUCCESSFUL BUSINESS WHICH WILL EMPLOY NEW YORKERS;S. 4078 5
(B) ANNUALLY DEMONSTRATE THAT IT MEETS THE GOALS OF CREATING JOBS AND INCUBATING BUSINESSES WITH SURVIVAL RATES IN EXCESS OF AVERAGE STARTUPS, AND THAT THE PROGRAM HAS A STRATEGIC PLAN TO CONTINUE TO MEET SUCH GOALS FOR THE THREE YEARS SUCCEEDING DESIGNATION AND THAT COMMITS THE PROGRAM TO IMPLEMENTING BEST PRACTICES. SUCH DEMONSTRATION SHALL INCLUDE A COMMITMENT BY THE SPONSOR TO CONTINUE TO MAINTAIN THE PROGRAM FOR AT LEAST THREE YEARS AFTER SUCH DESIGNATION. PROGRAMS SHALL PROVIDE THE FOLLOWING DATA FOR: (I) THE PROGRAM YEAR JUST COMPLETED, (II) THE ACCU- MULATED DATA FOR THE THREE YEARS THAT INCLUDES THE PROGRAM YEAR JUST COMPLETED AND THE PRECEDING TWO YEARS, THE FIRST YEAR OF WHICH SHALL BE CONSIDERED THE BASE YEAR, AND (III) USING THE FIRST YEAR OF DATA AS THE BASE YEAR, THE INCREASE OR DECREASE IN EACH FACTOR APPLICABLE FROM THE INITIAL OR BASE YEAR: (1) NUMBER OF CLIENTS SERVED IN THE INCUBATOR; (2) TOTAL NUMBER OF GRADUATES; (3) NUMBER OF GRADUATE FIRMS THAT ARE STILL IN BUSINESS OR HAVE BEEN MERGED OR ACQUIRED; (4) THE FOLLOWING DATA FOR FIRMS IN THE INCUBATION PROGRAM, REPORTED AS AGGREGATE DATA: I. THE NUMBER OF INDIVIDUALS EMPLOYED FULL TIME OR FULL TIME EQUIV- ALENTS, INCLUDING COMPANY PRINCIPALS, WHO ARE WORKING OR ARE INTENDED TO WORK FULL WEEKS FOR A YEAR; II. COMPENSATION PAID; III. GROSS REVENUES OF FIRMS; IV. FIRM DEBT FINANCING FROM ALL SOURCES, INCLUDING BANK, FAMILY, FRIENDS, AND OTHER LOAN SOURCES; V. EQUITY CAPITAL FINANCING FROM ALL SOURCES; VI. GRANT FUNDS FROM ALL SOURCES; VII. WHERE APPLICABLE AND AVAILABLE, THE NUMBER OF FULL TIME EQUIV- ALENT JOBS, CONTRACT VALUATION, AND/OR OTHER ECONOMIC VALUATION, PROVIDED BY NEW YORK STATE SUPPLIERS TO FIRMS THAT ARE INCUBATOR CLIENTS; (5) NUMBERS OF BUSINESSES THAT ON GRADUATION FROM THE INCUBATOR MOVED TO THE SURROUNDING COMMUNITY, OR WITHIN A REGIONAL DISTRESSED AREA, OR WITHIN NEW YORK STATE; (6) NUMBERS OF INDIVIDUALS COUNSELED, MENTORED, ATTENDED CLASSES, COMPLETED BUSINESS PLANS; (7) A DESCRIPTION OF THE ENTREPRENEURIAL AND ECONOMIC IMPACT THAT THE INCUBATOR HAS HAD ON THE SURROUNDING REGION AND COMMUNITY THAT CAN BE ATTRIBUTED TO RESOURCES ASSEMBLED BY THE INCUBATOR OR TO PERSONS PARTIC- IPATING IN ITS PROGRAMS IN ROLES INCLUDING BUT NOT LIMITED TO ADVISORS, MENTORS, INVESTORS, ENTREPRENEURS-IN-RESIDENCE, PROFESSIONAL-SERVICE PROVIDERS, STUDENT INTERNS. THE DESCRIPTION SHALL INSOFAR AS POSSIBLE INCLUDE SUCH QUANTIFIABLE FACTORS AND OUTCOMES AS INCREASED NUMBER OF STARTUPS, INCREASED BUSINESS OR FINANCINGS (INCLUDING AMONG INDIVIDUALS AND ENTITIES WHICH ARE NOT CLIENTS), WIDELY-ATTENDED PROGRAMS AND EVENTS SPONSORED BY THE INCUBATOR OR PRODUCED IN COLLABORATION WITH OTHER INSTITUTIONS OR BUSINESS ASSOCIATIONS OR PROGRAMS, NEWS STORIES, OUTREACH AND ATTENDANCE OF ENTREPRENEURIAL EVENTS AND CLASSES INTO NEW OR NON-TRADITIONAL GROUPS WITHIN THE COMMUNITY, SURVEYS, ENDORSEMENTS BY PUBLIC OFFICIALS, ECONOMIC-DEVELOPMENT AND BUSINESS-ATTRACTION PROFES- SIONALS, AND LEADERS OF BUSINESS ASSOCIATIONS, AND OTHER SIMILAR SIGNIF- ICANT FACTORS. THE PROGRAM SHALL ALSO PROVIDE TO THE CORPORATION THE TWO MOST RECENT AUDITED FINANCIAL STATEMENTS OF THE SPONSORING ENTITY WHOSE ENGAGEMENT SCOPE INCLUDES THE INCUBATOR PROGRAM, OR IF NO SPONSORING ENTITY, THENS. 4078 6
OF THE INCUBATOR PROGRAM. SUCH FINAL STATEMENTS SHALL BE PREPARED BY AN INDEPENDENT AUDITING FIRM WHOSE PRINCIPALS ARE CERTIFIED PUBLIC ACCOUNT- ANTS LICENSED BY THE STATE EDUCATION DEPARTMENT. 3. DESIGNATION. (A) THE CORPORATION SHALL DESIGNATE APPLICANTS WHICH MEET THE REQUIREMENTS OF SUBDIVISION TWO OF THIS SECTION AS NEW YORK STATE INCUBATORS. (B) AS A CONDITION OF MAINTAINING DESIGNATION, EACH INCUBATOR SHALL ANNUALLY SUBMIT TO THE CORPORATION IN A MANNER AND ACCORDING TO A SCHED- ULE ESTABLISHED BY THE CORPORATION: (I) UPDATED INFORMATION AS REQUIRED IN PARAGRAPH (B) OF SUBDIVISION TWO OF THIS SECTION, MAINTAINING THE INITIAL BASE YEAR IN ORDER TO MEAS- URE THE INCREASE OR DECREASE IN EACH FACTOR OR DATA; (II) ITS STRATEGIC PLAN, AS UPDATED ALONG WITH A BRIEF DESCRIPTION OF ITS SUCCESS IN MEETING THE GOALS OF ITS STRATEGIC PLAN; (III) A STATEMENT THAT THE ITEMS LISTED IN PARAGRAPH (A) OF SUBDIVI- SION TWO OF THIS SECTION ARE STILL APPLICABLE TO THE OPERATIONS OF THE INCUBATOR, OR ANY CHANGE IN APPLICABILITY; AND (IV) SUCH ADDITIONAL INFORMATION AS THE COMMISSIONER MAY REQUIRE. (C) THE CORPORATION SHALL DESIGN SIMPLIFIED FORMS TO AID IN THE SUBMISSION OF THE DATA REQUIRED IN THIS SUBDIVISION, WHICH MAY BE SUBMITTED ELECTRONICALLY. SUCH FORMS SHALL STATE THE PURPOSES OF THE REQUIRED DATA SUBMISSIONS. (D) THE CORPORATION SHALL EVALUATE THE OPERATIONS OF THE INCUBATOR USING METHODS INCLUDING BUT NOT LIMITED TO SITE VISITS, REPORTS PURSUANT TO SPECIFIED INFORMATION, AND REVIEW EVALUATIONS. IF THE CORPORATION IS UNSATISFIED WITH THE PROGRESS OF AN INCUBATOR, THE CORPORATION SHALL NOTIFY SUCH INCUBATOR OF THE RESULTS OF ITS EVALUATIONS AND THE FINDINGS OF DEFICIENCIES IN ITS OPERATIONS AND SHALL ALLOW AND COOPERATE WITH SUCH INCUBATOR TO REMEDY SUCH FINDINGS IN A TIMELY MANNER. FOR NEW YORK STATE INCUBATORS WHICH RECEIVE SUSTAINING OPERATING GRANTS PURSUANT TO PARAGRAPH (A) OF SUBDIVISION FOUR OF THIS SECTION, SUCH EVALUATIONS SHALL INCLUDE PEER REVIEW AND SHALL TAKE PLACE NO LESS THAN ONCE EVERY THREE YEARS OR MORE OFTEN FOR ANY INDIVIDUAL INCUBATOR WHICH IS A RECIP- IENT OF SUCH GRANT AT THE DISCRETION OF THE CORPORATION. SUCH PEER REVIEW SHALL BE IMPLEMENTED THROUGH CONTRACT WITH A STATE ASSOCIATION, AS PROVIDED IN SUBDIVISION EIGHT OF THIS SECTION, AND SHALL RESULT IN A WRITTEN REPORT THAT INCLUDES PROGRAMMATIC AND FISCAL EVALUATION OF THE INCUBATION PROGRAM AND RECOMMENDATIONS FOR IMPROVEMENT. MEMBERS OF SUCH PEER REVIEW GROUP SHALL INCLUDE OPERATORS OF OTHER INCUBATOR PROGRAMS, A SIGNIFICANT PORTION OF WHOM SHALL BE DIRECTORS OR OPERATORS OF INCUBA- TORS WHICH ARE LOCATED OUTSIDE OF NEW YORK STATE. 4. GRANTS. (A) SUSTAINING OPERATING GRANTS. A PROGRAM DESIGNATED AS A NEW YORK STATE INCUBATOR SHALL BE ELIGIBLE FOR AN OPERATING GRANT IN AN AMOUNT NOT TO EXCEED ONE HUNDRED FIFTY THOUSAND DOLLARS FROM FUNDS AVAILABLE TO THE CORPORATION OR OTHERWISE APPROPRIATED THEREFOR, PROVIDED HOWEVER THAT: (I) ANY SUCH GRANT SHALL BE MATCHED ON A TWO-TO-ONE BASIS BY THE INSTITUTION RECEIVING THE FUNDS AND COLLABORATIVE PARTNERS IN THE FORM OF CASH OR IN-KIND PERSONNEL, EQUIPMENT, MATERIAL DONATIONS, AND OTHER FACILITY AND OPERATIONS EXPENDITURES, PROVIDED THAT NO MORE THAN FIFTY PERCENT OF SUCH MATCH SHALL BE IN-KIND; (II) A PROGRAM APPLYING FOR A GRANT SHALL DEMONSTRATE FINANCIAL STABILITY AND LONG TERM VIABILITY, AS PROVIDED IN SUBPARAGRAPH (XIII) OF PARAGRAPH (A) OF SUBDIVISION TWO OF THIS SECTION;S. 4078 7
(III) A GRANT RECIPIENT SHALL AGREE TO PROVIDE DATA AS REQUIRED TO THE DEPARTMENT AND SHALL AGREE TO CONFORM TO BEST PRACTICES AS OUTLINED BY STATE AND/OR NATIONAL BUSINESS INCUBATOR ASSOCIATIONS; AND (IV) FAILURE TO ABIDE BY THE REQUIREMENTS OF THIS SUBDIVISION OR TO CURE A DEFAULT AFTER REVIEW AND AGREEMENT WITH THE CORPORATION SHALL RESULT IN LOSS OF THE GRANT AND DISQUALIFICATION OF THE DESIGNEE AS A NEW YORK STATE INCUBATOR. (B) PLANNING GRANTS. A SPONSOR SEEKING TO DEVELOP AN INCUBATOR PROGRAM MAY BE ELIGIBLE FOR A PLANNING GRANT IN AN AMOUNT NOT TO EXCEED FIFTEEN THOUSAND DOLLARS. A SPONSOR SEEKING TO OBTAIN A PLANNING GRANT SHALL PROVIDE THE FOLLOWING BASIC DATA AND OTHER INFORMATION TO DEMONSTRATE VIABILITY TO THE SATISFACTION OF THE CORPORATION: (I) NAME, FINANCIAL STRENGTH, HISTORY, CORPORATE FORM, AND EVIDENCE OF THE COMMITMENT AND FINANCIAL AND PROGRAMMATIC ABILITY OF THE SPONSOR AND ITS CONSULTANTS AND COLLABORATORS TO BRING THE PROJECT TO COMPLETION AND TO SUSTAIN THE PROJECT FOR AT LEAST THREE YEARS AFTER CREATION, INCLUD- ING RELEVANT SIGNED COPIES OF FEDERAL TAX RETURNS FOR THE PRIOR TWO YEARS; (II) A BUSINESS PLAN DETAILING ESTIMATED FINANCING COSTS AND SOURCES, STAFFING, PROGRAM DESIGN, HOW IT WILL MEET SPACE SIZE AND COSTS REQUIRE- MENTS FOR AT LEAST FIVE YEARS, INCLUDING EVIDENCE THAT IT HAS OR WILL SHORTLY HAVE COMPLETE OR CONTINGENT CONTROL OF THE SPACE, AND PROJECT TIMELINE, OUTCOMES AND DELIVERABLES; (III) THE KINDS AND NUMBERS OF SHORT AND LONG TERM JOBS ANTICIPATED TO BE CREATED BY AND THROUGH THE PROJECT, THE TARGET AREAS FOR CLIENT INCU- BATION, AND HOW THE PROJECT WILL RECRUIT AND SELECT THE COMPANIES IT WILL ACCEPT FOR INCUBATION; (IV) THE QUALIFICATIONS THAT MAKE THE PROJECT A UNIQUE AND/OR NECES- SARY ECONOMIC PRIORITY FOR THE REGION, MUNICIPALITY, OR COMMUNITY, BY CREATING JOBS AND ECONOMIC INVESTMENT AND DEVELOPMENT, LEADING COMMUNITY REVITALIZATION, AND OTHER SIMILAR FACTORS; (V) WHETHER THE PROJECT HAS BEEN ENDORSED BY AREA MUNICIPAL OR OTHER AREA REPRESENTATIVE PUBLIC OFFICIALS, AND AREA BUSINESS ASSOCIATIONS; (VI) WHETHER THE PROJECT OR A PHASE OF THE PROJECT HAS BEEN AWARDED STATE OR OTHER FUNDING, THE AMOUNT OF FUNDING RECEIVED, WHETHER ANY EXPENDITURE FOR THE PROJECT HAS BEEN MADE PRIOR TO THE DATE OF THE APPLICATION; AND (VII) A STATEMENT THAT THE APPLICANT IN THIS OR SOME OTHER FORM HAS NOT PREVIOUSLY RECEIVED A PLANNING GRANT PURSUANT TO THIS SECTION. (C) STABILIZATION GRANTS. A PROGRAM WHICH HAS RECEIVED A PLANNING GRANT, AND WHICH OTHERWISE MEETS THE REQUIREMENTS OF PARAGRAPH (A) OF SUBDIVISION TWO OF THIS SECTION, INCLUDING SUBPARAGRAPHS (XIII) AND (XVIII) OF SUCH PARAGRAPH, SHALL BE ELIGIBLE FOR A STABILIZATION GRANT IN AN ANNUAL AMOUNT NOT TO EXCEED TWENTY-FIVE THOUSAND DOLLARS FROM FUNDS AVAILABLE TO THE CORPORATION OR APPROPRIATED THEREFOR. A PROGRAM MAY NOT RECEIVE MORE THAN THREE SUCH STABILIZATION GRANTS, WHICH SHALL ONLY BE AVAILABLE ON SUCCESSIVE YEARS, AND ONLY FOR SO LONG AS THE PROGRAM MEETS THE REQUIREMENTS OF PARAGRAPH (A) OF SUBDIVISION TWO OF THIS SECTION, INCLUDING SUBPARAGRAPHS (XIII) AND (XVIII) OF SUCH PARA- GRAPH. (D) CAPITAL ASSISTANCE. THE CORPORATION SHALL MAKE PROGRAMS DESIGNATED AS NEW YORK STATE INCUBATORS OR WHICH ARE IN RECEIPT OF OR HAVE APPLIED FOR PLANNING OR STABILIZATION GRANTS, AWARE OF OPPORTUNITIES FOR CAPITAL FUNDING OR GRANTS BY OR THROUGH THE CORPORATION OR THE DEPARTMENT OF ECONOMIC DEVELOPMENT.S. 4078 8
(E) NO DEDUCTION. IN ADDITION TO THE FOREGOING REQUIREMENTS, AN INCU- BATOR SPONSOR SHALL AGREE TO DEDICATE ALL FUNDS FROM ANY GRANTS OR SUPPORT RECEIVED PURSUANT TO THIS SUBDIVISION EXCEPT FOR PARAGRAPH (D) OF THIS SUBDIVISION WHICH IS SUBJECT TO SEPARATE AGREEMENTS, TO THE OPERATIONS OF THE INCUBATOR OR THE PLANNING THEREFOR WITHOUT DEDUCTIONS FOR OVERHEAD, INDIRECT COSTS, OR FACILITIES AND ADMINISTRATION CHARGES OF SUCH SPONSOR. 5. PROCUREMENT. (A) A CLIENT OF A NEW YORK STATE INCUBATOR DESIGNATED PURSUANT TO THIS SECTION SHALL BE DEEMED A SMALL BUSINESS CONCERN PURSU- ANT TO SUBDIVISION 6 OF SECTION 163 OF THE STATE FINANCE LAW, AND TO PARAGRAPH N OF SUBDIVISION 2 OF SECTION 161 OF SUCH LAW. THE CORPORATION SHALL COLLABORATE WITH THE COMMISSIONER OF THE OFFICE OF GENERAL SERVICES AND THE COMMISSIONER OF ECONOMIC DEVELOPMENT WHO SHALL USE HIS OR HER MEMBERSHIP ON THE STATE PROCUREMENT COUNCIL, TO ADVANCE, TARGET, AND DEVELOP PROCUREMENT PROGRAMS FOR THE PURCHASE OF SERVICES AND COMMODITIES, INCLUDING TECHNOLOGIES OR COMMODITIES THAT ARE RECYCLED OR REMANUFACTURED, TOWARD CLIENTS OF NEW YORK STATE INCUBATORS. THE CORPO- RATION SHALL ADDITIONALLY, THROUGH MEMBERSHIP ON THE STATE PROCUREMENT COUNCIL AND COLLABORATION WITH THE COMMISSIONER OF GENERAL SERVICES AND OTHER STATE AGENCIES, DEVELOP OPPORTUNITIES FOR TEAMING ON CONTRACTS BETWEEN SMALL BUSINESS CONCERNS WHICH ARE CLIENTS OF NEW YORK STATE INCUBATORS AND OTHER BUSINESS ENTITIES WHICH MAY PROVIDE RESOURCES OR CREDIT NECESSARY FOR THE SUCCESSFUL COMPLETION OF CONTRACT REQUIREMENTS FOR SUCH COMMODITIES, SERVICES, OR TECHNOLOGIES BY SUCH SMALL BUSINESS CONCERNS. (B) THE CORPORATION SHALL PROPOSE AND IMPLEMENT AN INCUBATOR RATE FOR ACCESS BY CLIENTS OF NEW YORK STATE INCUBATORS TO THE PROCUREMENT OPPOR- TUNITIES NEWSLETTER WEBSITE AND TO ENHANCED ACCESS SERVICES OF THE NEWS- LETTER. SUCH RATE SHALL IN NO CASE BE MORE THAN THE MARGINAL COST OF PROVIDING SUCH ACCESS TO CLIENTS OF NEW YORK STATE INCUBATORS. ADDI- TIONALLY THE CORPORATION SHALL PROVIDE ACCESS TO BIDLINX BY CLIENTS OF NEW YORK STATE INCUBATORS AT A RATE NO GREATER THAN THE LOWEST RATE PAID BY ANY USER OF THE SERVICE. IF THE LOWEST RATE PAID BY A USER OF THE SERVICE IS ZERO, THEN THAT SHALL BE THE RATE FOR ACCESS BY CLIENTS OF NEW YORK STATE INCUBATORS. 6. INCUBATORS AS EDUCATIONAL ENTITIES. REAL PROPERTY OWNED OR LEASED BY A NEW YORK STATE INCUBATOR WHICH IS A NONPROFIT ORGANIZATION HAVING TAX EXEMPT STATUS UNDER SECTION 501(C)(3) OF THE UNITED STATES INTERNAL REVENUE CODE, OR WHICH IS A NEW YORK STATE INCUBATOR OWNED AND SPONSORED BY A NONPROFIT ORGANIZATION HAVING SUCH TAX EXEMPT STATUS, OR WHICH IS AFFILIATED WITH A COLLEGE CHARTERED BY THE REGENTS OF THE STATE OF NEW YORK OR A COLLEGE INCORPORATED BY SPECIAL ACT OF THE LEGISLATURE, AND WHICH IS USED FOR THE PURPOSES DESCRIBED IN THIS SECTION OF TRAINING, EDUCATING, MENTORING, AND DEVELOPING CLIENT ENTREPRENEURS AND BUSINESS ENTITIES, WHICH ARE THE CRITERIA FOR DESIGNATION OF A PROGRAM AS A NEW YORK STATE INCUBATOR, SHALL BE DEEMED TO BE PROPERTY OF AN EDUCATIONAL CORPORATION FOR PURPOSES OF SECTION 420-A OF THE REAL PROPERTY TAX LAW, INCLUDING ANY CLASSROOMS, CONFERENCE ROOMS, LABORATORY, MEETING SPACE, ADMINISTRATION AREA, KITCHEN AREA, PARKING, STORAGE, OR OTHER AREA WHICH IS USED PRIMARILY TO PROVIDE DIRECT AND INDIRECT SERVICES TO RESIDENT CLIENTS OF SUCH FACILITY, AND INCLUDING SPACE FOR RESIDENT CLIENTS' OFFICES PURSUANT TO A LICENSE OR LEASE BETWEEN SUCH INCUBATOR AND RESI- DENT CLIENTS, NOTWITHSTANDING THAT SUCH RESIDENT CLIENTS MAY, OR MAY NOT BE, NOT-FOR-PROFIT ORGANIZATIONS. THE EXEMPTION PROVIDED FOR IN THE PRECEDING SENTENCE SHALL ALSO APPLY TO A PROGRAM WHICH MEETS THE REQUIREMENTS ESTABLISHED THEREIN, BUT WHICH IS A PROGRAM THAT THE CORPO-S. 4078 9
RATION HAS DETERMINED IS ELIGIBLE TO RECEIVE OR IS RECEIVING STABILIZA- TION GRANTS PURSUANT TO THIS SECTION. ANY PORTION OF SUCH REAL PROPERTY WHICH IS LEASED OR LICENSED TO AN INDIVIDUAL OR BUSINESS ENTITY WHICH IS NOT A RESIDENT CLIENT OF THE NEW YORK STATE INCUBATOR OR THE PROGRAM DESCRIBED IN THIS SUBDIVISION WHICH IS ELIGIBLE TO RECEIVE OR IS RECEIV- ING STABILIZATION GRANTS, OR WHICH DOES NOT OTHERWISE MEET THE REQUIRE- MENTS OF SUBDIVISION 1 OF SUCH SECTION 420-A OF THE REAL PROPERTY TAX LAW, SHALL BE SUBJECT TO THE PROVISIONS OF SUBDIVISION 2 OF SECTION 420-A OF THE REAL PROPERTY TAX LAW. 7. OTHER ASSISTANCE. THE CORPORATION SHALL MAKE SUCH OTHER AID, ASSISTANCE, AND RESOURCES AVAILABLE TO NEW YORK STATE INCUBATORS AND THEIR CLIENTS AS HE OR SHE SHALL DEEM USEFUL AND APPROPRIATE FOR THE FURTHERANCE OF THE PURPOSES OF THIS ACT, INCLUDING WITHOUT LIMITATION TECHNICAL ASSISTANCE, AID IN MARKETING, AID IN REACHING AND PROVIDING ENTREPRENEURSHIP TRAINING OPPORTUNITIES TO SUCH MARGINALIZED GROUPS AS THOSE COMPOSED OF INDIVIDUALS WHO ARE MINORITY, FEMALE, DISABLED, OR POOR, AND OTHERS, CURRICULUM DEVELOPMENT, AND OTHER SERVICES AND RESOURCES. THE CORPORATION SHALL ALSO SEEK ASSISTANCE FROM OTHER STATE AGENCIES IN THE DEVELOPMENT OF PROCUREMENT AND MARKETING RESOURCES AND TRAINING OPPORTUNITIES FOR NEW YORK STATE INCUBATORS AND THEIR CLIENTS. 8. SERVICE CONTRACT. THE CORPORATION SHALL CONTRACT WITH A STATEWIDE ENTITY WHICH IS A MEMBERSHIP ASSOCIATION OF INCUBATORS AND OTHERS AND WHICH HAS EXPERTISE IN PROVIDING SERVICES TO INCUBATORS FOR THE PURPOSE OF PROVIDING SERVICES TO ENTITIES DESIGNATED AS NEW YORK STATE INCUBA- TORS AND TO ENTITIES SEEKING TO APPLY OR APPLYING TO BECOME NEW YORK STATE INCUBATORS OR WHICH OTHERWISE ARE INCLUDED AS RECIPIENTS OF SERVICES PURSUANT TO THIS SECTION. SUCH SERVICES SHALL INCLUDE ADVISING CONCERNING BEST PRACTICES OF INCUBATION AND DEVELOPMENT OF PLANS TO INCORPORATE AND INTEGRATE SUCH PRACTICES, DEVELOPMENT OF DATA CONCERNING INCUBATION IN THIS STATE AND RECOMMENDATIONS FOR IMPROVEMENT, AID IN MARKETING AND EVENT SPONSORSHIP, AND SUCH OTHER SERVICES AS THE CORPO- RATION SHALL DEEM NECESSARY AND APPROPRIATE TO THE STRENGTHENING OF BUSINESS INCUBATION IN THIS STATE. S 3. This act shall take effect immediately.