NY State Senate Bill 2019-S2868

Senate Bill S2868

2019-2020 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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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to finance
Jan 30, 2019	referred to finance

2019-S2868 (ACTIVE) - Details

See Assembly Version of this Bill:: A7259
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
2015-2016: S3727
2017-2018: S2177
2021-2022: S184, A1349
2023-2024: S7291, A199

2019-S2868 (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.

2019-S2868 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S2868

SPONSOR: KAPLAN
 
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 prom-
ise, 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 writ-
ing 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. Unfore-
seen 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 agen-
cies are required to establish rules regarding the conduct of the hear-
ing 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 regu-
larly 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 compa-
nies 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
2015-16: Referred to Finance
2017-2018 S. 2177 Referred to Finance

 
FISCAL IMPLICATIONS:

An increase in tax revenues from employed workers and expanded oper-
ations.

 
EFFECTIVE DATE:
Immediately applicable to all contracts entered into on and after the
date of enactment.

2019-S2868 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2868
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 30, 2019
                                ___________
 
 Introduced  by  Sen.  KAPLAN -- 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:
   §  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.
                                                            LBD09002-01-9

 S. 2868                             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. 2868                             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 NINETEEN,  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.
   § 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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