NY State Senate Bill 2009-S1969

Senate Bill S1969

2009-2010 Legislative Session

Authorizes recoupment of financial incentives awarded businesses upon failure to fulfill the terms of such incentive

download bill text pdf

Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to finance
Feb 10, 2009	referred to finance

2009-S1969 (ACTIVE) - Details

See Assembly Version of this Bill:: A3116
Current Committee:: Senate Finance
Law Section:: Executive Law
Laws Affected:: Add §163-b, Exec L
Versions Introduced in Other Legislative Sessions:: 2011-2012: S2972, A3069
2013-2014: S1727
2015-2016: S3727
2017-2018: S2177
2019-2020: S2868
2021-2022: S184
2023-2024: S7291

2009-S1969 (ACTIVE) - Summary

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.

2009-S1969 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER : S1969

 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.

2009-S1969 (ACTIVE) - Bill Text download pdf

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

                                  1969

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            February 10, 2009
                               ___________

Introduced  by  Sen.  STACHOWSKI  -- 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.
                                                           LBD03167-01-9

S. 1969                             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. 1969                             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 NINE, AND ANNUALLY THER-
EAFTER, THE STATE, ANY OF ITS POLITICAL SUBDIVISIONS, OR ANY DEPARTMENT,
BUREAU, BOARD, COMMISSION, AUTHORITY, OR ANY OTHER AGENCY OR  INSTRUMEN-
TALITY 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 MUNICIPAL LAW FOR
THE PURPOSES OF JOB TRAINING, JOB CREATION OR RETENTION, OR THE DEVELOP-
MENT 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 RECIPIENTS OF
AN AWARD, GRANT OR BUSINESS INCENTIVE WHO HAVE  FAILED  TO  EXECUTE  AND
COMPLETE THE TERMS OF A CONTRACT, AGREEMENT OR UNDERSTANDING; 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 INCEN-
TIVE 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  FINAN-
CIAL 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.

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