NY State Senate Bill 2015-S3727

Senate Bill S3727

2015-2016 Legislative Session

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

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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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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2016	referred to finance
Feb 17, 2015	referred to finance

co-Sponsors

2015-S3727 (ACTIVE) - Details

Current Committee:: Senate Finance
Law Section:: Executive Law
Laws Affected:: Add §163-b, Exec L
Versions Introduced in Other Legislative Sessions:: 2009-2010: S1969
2011-2012: S2972
2013-2014: S1727
2017-2018: S2177
2019-2020: S2868
2021-2022: S184
2023-2024: S7291

2015-S3727 (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.

2015-S3727 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S3727

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.

2015-S3727 (ACTIVE) - Bill Text download pdf

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

                                  3727

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            February 17, 2015
                               ___________

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.
                                                           LBD08542-01-5

S. 3727                             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. 3727                             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  FIFTEEN,  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.

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Senate Bill S3727

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