New York's Tax-Free Zones: An Emerging Technology Company's Dream Come True?Written by SiliconAlley Staff
Posted on July 26, 2013
Governor Andrew M. Cuomo has outlined details of the Tax-Free NY initiative to business groups and representatives of chambers of commerce from across the state. The business community will assist SUNY campuses and university communities across the state attract new businesses, start-ups, and entrepreneurs to take advantage of the Tax-Free NY initiative.
"With business leaders, local elected officials, and college presidents in all corners of the state eager to take advantage of the economic potential of Tax-Free NY communities, it is important to make sure we are ready to launch the initiative the moment the Legislature passes it," Governor Cuomo said. "The coalition of chambers of commerce and business groups that we have assembled today will help our university communities hit the ground running, attracting new businesses and entrepreneurs to Upstate New York.”
Details outlined by the Governor include:
Private Campuses: A total of 3 million sq. feet of tax-free commercial space at private campuses will be available under the Tax-Free NY initiative. All independent colleges are eligible, but property must be located north of Westchester. Campuses will apply in a competitive process to designate commercial space on their properties as tax-free. The selections will be made by a majority of a 3-member board selected by the Governor, Senate and Assembly. Preference will be given to private campuses with existing business incubators.
Start-ups Launched from Existing Incubators: Startups “hatched” from a NYS incubator will be eligible to move into a tax-free community, even if they are not a new business. Currently, an estimated 75% of high tech start-ups launched in New York State leave in the first year.
Strategically-located State Property: Tax-Free NY will designate 20 strategically located state properties as tax-free communities. The properties will be selected by a majority of the 3-member board.
Protecting Against Fraud: Tax-Free NY will include a series of provisions to protect against fraud. Businesses will have to submit certification to ESD, and falsifying certifications will be a crime. The initiative will include strict provisions to guard against "shirtchanging," or when a company reincorporates under a new name and claims its existing employees are now new jobs. The initiative will also include 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.
SUNY Campuses and Surrounding Area: Tax-Free communities will include SUNY campuses and an additional 200K sq. ft. that could be located within one mile of the campus. ESD would have the authority to grant a waiver to go beyond 1 mile. For projects on public education campuses, plans will be reviewed by SUNY and ESD. Plans that do not meet the Tax-Free NY program requirements will be disapproved by ESD.
A long list of leaders from the business community who have expressed support for Tax-Free NY, including the following:
Jamie Dimon, CEO, JPMorgan, said, “Tax-Free NY is the type of visionary thinking we need from our leaders. Upstate New York has great strengths – like universities and entrepreneurs – that we need to continue to support. This is a creative way to do that, and to position Upstate for jobs and growth in new and promising industries.”
Kenneth Langone, Co-Founder, Home Depot, said, “I've said it repeatedly: States need to begin helping businesses by lifting the tax burden and also creating an environment in which employees want to raise their families. Governor Cuomo has answered that call with his Tax Free Communities initiative.”
Jeff Immelt, Chairman and CEO, GE, said, “As a company with 9,000 employees in New York State, I applaud Governor Cuomo for taking this initiative to help spur the state's economy. This collaboration among the state's university system, business leaders and entrepreneurs is a creative approach to creating jobs across the state.”
The full lis of business leaders who have expressed support for Tax-Free NY is here.