S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6125
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              March 10, 2021
                                ___________
 
 Introduced by M. of A. ZINERMAN -- read once and referred to the Commit-
   tee on Economic Development
 
 AN ACT to amend the economic development law, the public authorities law
   and the tax law, in relation to the establishment of a state universi-
   ty-based   center  for  employee  ownership;  and  to  repeal  certain
   provisions of the economic development law relating thereto
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section 104-a of the economic development law is REPEALED
 and a new section 104-a is added to read as follows:
   § 104-A. ESTABLISHMENT OF A STATE UNIVERSITY-BASED CENTER FOR EMPLOYEE
 OWNERSHIP. WITH RESPECT TO  EMPLOYEE  OWNERSHIP,  THE  DEPARTMENT  SHALL
 ESTABLISH  A  STATE  UNIVERSITY-BASED CENTER FOR EMPLOYEE OWNERSHIP "THE
 CENTER".
   1. THE CENTER SHALL:
   (A) PROVIDE EDUCATION AND OUTREACH TO INFORM BUSINESS OWNERS ABOUT THE
 BENEFITS OF EMPLOYEE OWNERSHIP SUCCESSIONS;
   (B)  ORGANIZE  WORKSHOPS  AND  CONFERENCES   ON   EMPLOYEE   OWNERSHIP
 SUCCESSIONS;
   (C)  PREPARE  AND  DISTRIBUTE  MATERIALS CONCERNING EMPLOYEE OWNERSHIP
 SUCCESSIONS;
   (D) PROVIDE INITIAL CONSULTATION  TO  BUSINESS  OWNERS  EXPLORING  THE
 POSSIBILITY OF TRANSFERRING FULL OR PARTIAL OWNERSHIP TO EMPLOYEES;
   (E)  PROVIDE  A  REFERRAL  SERVICE TO HELP BUSINESS OWNERS FIND LEGAL,
 FINANCIAL, AND TECHNICAL ADVICE IN CONNECTION  WITH  EMPLOYEE  OWNERSHIP
 SUCCESSIONS;
   (F)  PARTNER  WITH  KEY  ORGANIZATIONS, SUCH AS PROFESSIONAL AND TRADE
 ASSOCIATIONS,  FINANCIAL  INSTITUTIONS,  UNIONS,  ECONOMIC   DEVELOPMENT
 ORGANIZATIONS, AND OTHER NON-PROFIT ENTITIES, TO PROMOTE EMPLOYEE OWNER-
 SHIP SUCCESSIONS;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07053-01-1
              

 A. 6125                             2
 
   (G)  CONDUCT  INVESTIGATIONS,  RESEARCH,  STUDIES, AND ANALYSES ON THE
 SUBJECT OF EMPLOYEE OWNERSHIP; AND
   (H) SUPPORT THE GROWTH OF ASSOCIATIONS OF EMPLOYEE-OWNED COMPANIES.
   2. THE CENTER SHALL ADDITIONALLY PROVIDE SUPPORT AND ACCESS IN GOVERN-
 MENT  RELATIONS,  INCLUDING  PROVIDING  ACCESS  TO INFORMATION REGARDING
 RULES AND REGULATIONS THAT RELATE  TO  EMPLOYEE  OWNERSHIP  AND  DEVELOP
 PROPOSALS FOR CHANGES IN POLICIES TO PROMOTE EMPLOYEE OWNERSHIP.
   § 2. Section 1836-a of the public authorities law, as added by chapter
 788 of the laws of 1983, is amended to read as follows:
   §  1836-a.  Legislative  findings.  The  legislature  hereby finds and
 declares that [the health, safety and general welfare of the  people  of
 this  state  are directly dependent upon the state economy, and that one
 of the principal problems of our present economy is the permanent  clos-
 ing  of industrial and manufacturing plants, and their relocation out of
 state, which results in the loss of jobs and increasing unemployment.
   It is the purpose of this  subtitle  to  encourage  the  employees  of
 plants that are about to be permanently closed, or relocated, to acquire
 such  plants  and  to  continue to operate them as employee-owned enter-
 prises, thereby retaining the jobs that would  otherwise  be  lost,  and
 strengthening  the  economic  base  of  this  state]  EMPLOYEE OWNERSHIP
 PROGRAM IS A MAINSTREAM ASPECT OF THE UNITED STATES ECONOMY WITH APPROX-
 IMATELY THIRTEEN AND A HALF MILLION WORKERS PARTICIPATING IN  SOME  FORM
 OF EMPLOYEE OWNERSHIP PROGRAM AT OVER SEVEN THOUSAND COMPANIES. THE VAST
 MAJORITY OF SUCH PROGRAMS ARE THE RESULT OF A TRANSFER FROM THE BUSINESS
 OWNERS TO THE EMPLOYEES AND IN ACCORDANCE WITH FEDERAL LAW THAT SEEKS TO
 FACILITATE  SUCH  TRANSFERS.  EMPLOYEE  OWNERSHIP  TRANSFERS  ARE IN THE
 INTEREST OF BUSINESS OWNERS,  WHO  SEEK  TO  LIQUIDATE  THEIR  OWNERSHIP
 INTEREST  AND  RETIRE.  SUCH  TRANSFERS  ARE ALSO IN THE INTEREST OF THE
 EMPLOYEES, WHO GAIN THE OPPORTUNITY TO ENSURE THE FUTURE SURVIVAL OF THE
 FIRM AND THEIR JOBS.
   THE LEGISLATURE ALSO FINDS AND DECLARES    THAT  EMPLOYEE-OWNED  BUSI-
 NESSES  ARE  MORE PRODUCTIVE, ENJOY INCREASED SALES, LOWER TURNOVER RATE
 AND GREATER LONGEVITY, OFFER BETTER EMPLOYMENT  OPPORTUNITIES,  AND  ARE
 MORE  LIKELY TO RETAIN JOBS IN-STATE AND LESS LIKELY TO RELOCATE OUT-OF-
 STATE.   EMPLOYEE-OWNED BUSINESSES  ALSO  SUSTAIN  THE  STATE  TAX  BASE
 THROUGH  EMPLOYEE  AND CORPORATE INCOME TAX, WHILE SAVING COSTS ON UNEM-
 PLOYMENT INSURANCE AND OTHER STATE BENEFIT PROGRAMS. IT IS  THE  PURPOSE
 OF  THIS  SUBTITLE  TO  AMPLIFY  FEDERAL PROGRAMS IN SUPPORT OF EMPLOYEE
 OWNERSHIP AT THE STATE LEVEL THROUGH  LOANS  AND  LOAN  GUARANTEES  THAT
 PROVIDE  FINANCING FOR THE CONVERSION OF EXISTING BUSINESSES TO EMPLOYEE
 OWNERSHIP.
   § 3. Subdivisions 3, 4, 5, 6, 7 and 8 of section 1836-b of the  public
 authorities  law,  subdivisions 3, 6, 7 and 8 as added by chapter 788 of
 the laws of 1983, subdivisions 4 and 5 as amended by chapter 805 of  the
 laws of 1985, are amended to read as follows:
   3.  "Eligible project" means the acquisition [or rehabilitation] by an
 employee ownership association of an existing [industrial or manufactur-
 ing plant] BUSINESS located in this state for the purpose  of  operating
 it as an employee-owned enterprise.
   4.  "Employee  ownership  association"  means  a  corporation, LIMITED
 LIABILITY COMPANY, TRUST, or other association formed by or on behalf of
 the employees of [an  industrial  or  manufacturing  plant]  A  BUSINESS
 located  in  this state for the purpose of assuming ownership or control
 of the [plant] BUSINESS and operating it as an employee-owned enterprise
 or as a worker cooperative as defined in section eighty-one of the coop-
 erative corporations law.

 A. 6125                             3
 
   5. "Employee-owned enterprise" means a business in which the employees
 are represented on the board of directors OR MANAGERS and the  employees
 control  the  majority of the voting stock OR MEMBER INTEREST, or if the
 business is held in a trust which controls the majority  of  the  voting
 stock OR MEMBER INTEREST, the trustees are elected by the employees. The
 term  "employee-owned  enterprise"  shall also refer to a worker cooper-
 ative as defined in section eighty-one of the  cooperative  corporations
 law.
   6.  ["Funding  partner" means an entity which singly or in combination
 with other entities has agreed to finance a portion of the project  cost
 of  an  eligible project, and may include the employee ownership associ-
 ation undertaking the project as well as any financial entity.
   7. "Plant" includes the site, structure, building  and  equipment  and
 all  real  and personal property in connection therewith, whether or not
 in existence, and may include any road, railroad, or utility  or  equip-
 ment appurtenant thereto.
   8.]  "Project  cost" includes all reasonable and necessary costs to be
 incurred in the course of an eligible  project,  including  [any  antic-
 ipated  acquisition,]  THE FAIR MARKET VALUE OF THE BUSINESS INTEREST TO
 BE ACQUIRED, AS WELL AS COSTS  FOR  ANY  ADDITIONAL  construction,  land
 acquisition,  improvements,  equipment,  pertinent rights and easements,
 and associated technical, engineering, legal and financial services.
   § 4. The opening paragraph and paragraphs (a), (b) and (d) of subdivi-
 sion 1 and subdivision 2 of section 1836-c  of  the  public  authorities
 law, as added by chapter 788 of the laws of 1983, are amended to read as
 follows:
   Any  employee  ownership association may apply to [a local development
 corporation serving the municipality in which the  eligible  project  is
 located]  THE  AUTHORITY for an employee ownership assistance loan to be
 used to help finance an eligible project. Such application must  include
 a  written  statement  from  the  entity from which the project is being
 acquired, stating that such entity  consents  to  the  acquisition.  The
 application shall include [in detail]:
   (a)  [the history and membership] A DESCRIPTION of the EMPLOYEE OWNER-
 SHIP association;
   (b) [the history and circumstances of the  plant  to  be  acquired]  A
 DESCRIPTION OF THE BUSINESS;
   (d)  estimate  of  the  number  of jobs [to be saved or created by the
 project] BEFORE AND AFTER THE TRANSACTION; and
   2. The application shall also include a detailed  financial  statement
 of  [funding  partner] ACTUAL AND ANTICIPATED FINANCIAL participation in
 the project, which shall include:
   (a) the identity of all funding [partners] SOURCES; [and]
   (b) THE NATURE OF THE FINANCIAL PARTICIPATION, WHICH MAY INCLUDE,  BUT
 IS  NOT  LIMITED  TO, SELLER NOTES, SENIOR DEBT, JUNIOR DEBT, AND EQUITY
 INVESTMENT; AND
   (C) the terms of the financing agreements with the funding  [partners]
 SOURCES,  including  any  repayment  schedules and finance charges to be
 included in such agreements.
   § 5. Subdivision 1 of section 1836-d of the public authorities law, as
 added by chapter 788 of the laws of 1983, is amended to read as follows:
   1. have a higher level of funding from the funding  [partners]  SOURCE
 OR FINANCIAL PARTICIPANT;
   § 6. The section heading and subdivisions 1 and 3 of section 1836-e of
 the public authorities law, as added by chapter 788 of the laws of 1983,

 A. 6125                             4
 
 are  amended  and  two  new  subdivisions  5  and 6 are added to read as
 follows:
   Loan  agreements  AND LENDING AUTHORITY.  1. If the authority approves
 an application for a loan under this subtitle,  the  [local  development
 corporation] AUTHORITY may enter into a loan agreement with the employee
 ownership   association  whereby  the  [local  development  corporation]
 AUTHORITY agrees to loan  to  the  employee  ownership  association  the
 remaining funds necessary for the eligible project.
   3.  The  [local  development corporation] AUTHORITY may not enter into
 any loan agreement unless the authority determines through an  appropri-
 ate method that there is reasonable assurance of repayment. The authori-
 ty  shall  establish such requirements or terms as it may deem necessary
 or desirable to secure the repayment of the  loan  and  to  protect  the
 interests of the authority and the holders of its bonds.
   5.  (A)  THE  AUTHORITY  MAY  ESTABLISH  A  TRUST FUND ACCOUNT FOR THE
 PURPOSES  OF  PROVIDING  A  LOAN  OR  LOAN  GUARANTEE  PURSUANT  TO  THE
 PROVISIONS  OF  THIS  CHAPTER. THE INITIAL DEPOSIT OF FUNDS TO THE TRUST
 FUND SHALL BE IN AN AMOUNT TO BE DETERMINED BY THE AUTHORITY  BUT  SHALL
 NOT  EXCEED  ONE HUNDRED MILLION DOLLARS FROM AN AMOUNT OTHERWISE AVAIL-
 ABLE FROM FUNDS APPROPRIATED.
   (B) THE AUTHORITY SHALL DEPOSIT INTO THE TRUST FUND ALL INCOME  EARNED
 FROM THE MONEYS PAID BACK FROM LOANS TO BE USED FOR ADDITIONAL LENDING.
   6.  THE  AUTHORITY  SHALL MAKE A LOAN DECISION OR LOAN GUARANTEE DECI-
 SION, AND INFORM THE APPLICANT OF THE  AUTHORITY'S  DECISION,  NO  LATER
 THAN  THIRTY  DAYS AFTER THE AUTHORITY RECEIVES THE APPLICANT'S APPLICA-
 TION FOR AN EMPLOYEE OWNERSHIP LOAN OR EMPLOYEE OWNERSHIP  LOAN  GUARAN-
 TEE. IF THE AUTHORITY REQUESTS THAT AN APPLICANT SUPPLEMENT ITS APPLICA-
 TION  BY  SUBMITTING ADDITIONAL INFORMATION, THE AUTHORITY SHALL HAVE AN
 ADDITIONAL FIFTEEN DAYS AFTER RECEIVING THE  ADDITIONAL  INFORMATION  BY
 WHICH  THE AUTHORITY MUST MAKE A LOAN DECISION OR A LOAN GUARANTEE DECI-
 SION AND INFORM THE APPLICANT OF THE AUTHORITY'S DECISION.
   § 7. Subsection (c) of section 612 of the tax law is amended by adding
 a new paragraph 44 to read as follows:
   (44) ONE HUNDRED PERCENT OF THE CAPITAL GAINS FROM THE SALE  OF  STOCK
 OR  MEMBER  INTEREST  FROM  A  NEW YORK CORPORATION OR LIMITED LIABILITY
 COMPANY TO AN EMPLOYEE-OWNED ENTERPRISE, AS DEFINED IN SUBDIVISION  FIVE
 OF  SECTION EIGHTEEN HUNDRED THIRTY-SIX-B OF THE PUBLIC AUTHORITIES LAW.
 IN ORDER TO QUALIFY FOR SUCH MODIFICATION AS  DESCRIBED  IN  THIS  PARA-
 GRAPH,  SUCH EMPLOYEE-OWNED ENTERPRISE MUST HAVE ITS COMMERCIAL DOMICILE
 IN NEW YORK. IF THE EMPLOYEE-OWNED  ENTERPRISE  IS  AN  "EMPLOYEE  STOCK
 OWNERSHIP  PLAN,"  IT MUST COMPLY WITH FEDERAL REQUIREMENTS AS SUCH PLAN
 IS DEFINED IN 26 U.S.C. § 4975(E)(7).
   § 8. This act shall take effect immediately; provided,  however,  that
 section  one  of this act shall take effect on the one hundred eightieth
 day after it shall have become a law.