Establishes requirements for economic development grant recipients and specifies the steps that must be taken by the commissioner of economic development in terms of repayment.
TITLE OF BILL: An act to amend the economic development law and the state finance law, in relation to economic development grant recipients
PURPOSE OR GENERAL IDEA OF BILL: The intent of this legislation is to provide a mechanism by which the state can recover certain economic development grant funds from any person or business organization that reduces the number of New York State employees up to five years after having received financial assistance from the state.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 adds a new paragraph to subdivision 19 of section 100 of economic development law to adopt regulations to establish terms and conditions of repayment of state grants.
Section 2 adds section 11-a to state finance law to establish regulations for economic development grant recipients and conditions under which the grants must be repaid to the state.
Section 3 sets the effective date.
JUSTIFICATION: Clawback provisions are common and necessary for a majority of business transactions. Each year, New York State offers tens of millions of dollars in grant funding to foster economic growth and attract new businesses. However, in cases when these same businesses decide to leave New York State or reduce their New York State employee base, taxpayers may still be left paying the bills. This legislation would provide that grantees shall not reduce the number of New York State employees upon receiving financial assistance from the State or up to five years after receiving such assistance, unless the full amount of the grant and a penalty is repaid to the State. This clawback mechanism is designed to protect taxpayers from continuing to fund businesses that have moved their workforce out of New York State.
PRIOR LEGISLATIVE HISTORY: New bill
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 7627 IN SENATE May 21, 2014 ___________Introduced by Sen. O'BRIEN -- read twice and ordered printed, and when printed to be committed to the Committee on Commerce, Economic Devel- opment and Small Business AN ACT to amend the economic development law and the state finance law, in relation to economic development grant recipients THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 19 of section 100 of the economic development law is amended by adding a new paragraph (c) to read as follows: (C) TO ADOPT REGULATIONS IN ACCORDANCE WITH SECTION ELEVEN-A OF THE STATE FINANCE LAW, TO ESTABLISH THE TERMS AND CONDITIONS OF REPAYMENT, INCLUDING SPECIFYING THE CONDITIONS UNDER WHICH REPAYMENT MAY BE DEFERRED, FOLLOWING A DETERMINATION BY THE COMMISSION OF A LEGITIMATE HARDSHIP. S 2. The state finance law is amended by adding a new section 11-a to read as follows: S 11-A. REQUIREMENTS FOR ECONOMIC DEVELOPMENT GRANT RECIPIENTS. ANY PERSON OR BUSINESS ORGANIZATION WHO RECEIVES AN AWARD OR GRANT THROUGH AN ECONOMIC DEVELOPMENT PROGRAM, WHERE SUCH AWARD OR GRANT ALSO REQUIRES THE CREATION OF JOBS, SHALL NOT REDUCE THE NUMBER OF EMPLOYEES WHO WERE EMPLOYED WITHIN THE STATE AT THE TIME SUCH PERSON OR BUSINESS ORGANIZA- TION ACCEPTED THE FINANCIAL ASSISTANCE FOR FIVE YEARS AFTER RECEIVING SUCH ASSISTANCE OR DURING THE TERM OF THE AWARD OR GRANT, WHICHEVER IS LONGER, UNLESS THE FULL AMOUNT OF ASSISTANCE IS REPAID TO THE STATE AND A PENALTY EQUAL TO FIVE PERCENT OF THE TOTAL ASSISTANCE RECEIVED IS PAID TO THE STATE. AS USED IN THIS SECTION, THE TERM "BUSINESS" SHALL INCLUDE ANY DIVISION OF A BUSINESS OR SUBSIDIARY INSTITUTION CONTROLLED, DIRECT- LY OR INDIRECTLY, BY ANOTHER INSTITUTION. S 3. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14726-02-4