NY State Senate Bill 2025-S2318

Senate Bill S2318

2025-2026 Legislative Session

Requires the return of certain financial assistance provided for a project where the project has material shortfalls or material violations and preventing the use of incentives for projects already in development

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Current Bill Status - In Senate Committee Local Government 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 16, 2025	referred to local government

2025-S2318 (ACTIVE) - Details

See Assembly Version of this Bill:: A30
Current Committee:: Senate Local Government
Law Section:: General Municipal Law
Laws Affected:: Amd §§874, 854 & 862, Gen Muni L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S8960, A11003
2021-2022: S1770, A473
2023-2024: S1717, A22

2025-S2318 (ACTIVE) - Summary

Requires the return of all or a part of the financial assistance provided for a project where the project has material shortfalls or material violations; prevents the use of funds, financial incentives, subsidies or tax exemptions for projects already in development.

2025-S2318 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S2318

SPONSOR: SKOUFIS
 
TITLE OF BILL:

An act to amend the general municipal law, in relation to requiring the
return of all or a part of the financial assistance provided for a
project where the project has material shortfalls or material violations
and preventing the use of funds, financial incentives, subsidies or tax
exemptions for projects already in development

 
PURPOSE:

This bill will require that industrial development agencies (IDAs)
implement policies for the return of financial assistance or tax incen-
tives provided to a project determined to show material shortfalls in
job creation and retention or material violations of the project agree-
ment. It also prohibits IDAs from offering financial assistance to
projects that are already in development at the time of an application.

 
SUMMARY OF PROVISIONS:

Section 1: Amends subdivision 11 of section 874 of the general municipal
law to require that local industrial development agencies implement
their policies for the return of financial assistance or tax incentives
provided to a project whenever the agency's annual assessment shows
material shortfalls in job creation and retention projections or materi-
al violations of the terms and conditions of the project agreement. Adds
new subdivision 13, stating that IDAs may not grant tax exemptions to a
project already in development unless environmental contamination
requiring a significant increase in project costs has been discovered
during the development of a project or where a municipality has reas-
sessed all or part of the project site increasing property taxes of more
than 50%.

Section 2: Amends section 854 of the general municipal law by adding a
new subdivision 22 defining the term "in development."

Section 3: Amends section 862 of the general municipal law to add a new
subdivision 3, stating that IDAs may not give financial incentives or
subsidies to a project already in development unless environmental
contamination requiring a significant increase in project costs has been
discovered during the development of a project or where a municipality
has reassessed all or part of the project site increasing property taxes
by more than 50%.

Section 4: Sets effective date.

 
JUSTIFICATION:

Governor Nelson Rockefeller enacted IDAs in 1969 to incentivize economic
activities in New York State by issuing financial assistance to private
companies, primarily in the form of tax breaks. While reasonable incen-
tives are occasionally necessary to attract or retain business, the
extent to which IDAs have been providing question-able benefits brings
into question whose interests are being served by the system. Projects
requesting financial assistance are frequently approved with minimal
scrutiny and little community input. This system appears to favor the

interests of businesses without sufficiently examining if the public
interest is being met.

IDAs often grant private companies financial assistance in return for
economic benefit, typically a promise to create or retain jobs in the
community. IDAs are required to evaluate the success of each annually
project at meeting the job and economic metrics agreed to as a condition
of financial assistance. Additionally, they must develop policies for
the return of all or part of the financial assistance provided for a
project if a project has material shortfalls in job creation and
retention or material violations of the conditions of the agreement.
However, IDA boards have the discretion to implement such policies and
compel the return of taxpayer funds. Too often, projects fall signif-
icantly short of their benefit promises, distressing the economic
welfare of local communities. This bill proposes to address this abuse
by requiring IDA boards to compel the return of taxpayer-funded incen-
tives issued to underperforming projects.

The purpose of IDAs is to incentivize companies to relocate or remain in
its community through the offer of financial assistance. However, it is
essential to prevent IDAs from placing the interests of companies ahead
of the public trust they are designed to serve. The mission of an IDA
should be not simply to incentivize for the sake of incentivizing but to
maximize a community's benefit, particularly when it comes to the
project's ratable. While determining the seriousness of a threat to
locate or relocate elsewhere can be difficult and often subjective, such
scrutiny will benefit the taxpayers IDAs are formed to represent. This
bill would prevent companies that threaten relocation despite already
being under construction from receiving unjustified financial incen-
tives.

 
LEGISLATIVE HISTORY:

Senate

2020: S8960,Referred toRules

2021: S1770,Referred toLocal Government

2022: S1770,Referred toLocal Government

2023: A1717A,Advanced toThird Reading

2024: A1717A,Referred toLocal Government

Assembly

2020: A11003, Referred to Local Governments

2021: A473, Referred to Local Governments

2022: A373, Referred to Ways and Means

2023: No Assembly Same-As

2024: No Assembly Same-As

 
FISCAL IMPLICATIONS:
None to the state.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2025-S2318 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2318
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             January 16, 2025
                                ___________
 
 Introduced  by  Sen. SKOUFIS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Local Government
 
 AN ACT to amend the general municipal law, in relation to requiring  the
   return  of  all  or  a part of the financial assistance provided for a
   project  where  the  project  has  material  shortfalls  or   material
   violations  and  preventing  the  use  of funds, financial incentives,
   subsidies or tax exemptions for projects already in development
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivision 11 of section 874 of the general municipal law,
 as added by chapter 563 of the laws of 2015, is amended and a new subdi-
 vision 13 is added to read as follows:
   (11)  Each  agency  shall  develop policies for the return of all or a
 part of the financial assistance provided for the project, including all
 or part of the amount of any tax exemptions, as specified in the policy,
 which may include but shall not be limited to material shortfalls in job
 creation and retention projections or material violations of  the  terms
 and  conditions  of  project agreements. THE AGENCY SHALL IMPLEMENT SUCH
 POLICIES CREATED IN ACCORDANCE WITH THIS SUBDIVISION TO  RETURN  ALL  OR
 PART  OF  THE  FINANCIAL  ASSISTANCE  PROVIDED FOR ANY PROJECT WHERE THE
 AGENCY'S ANNUAL ASSESSMENT OF A PROJECT SHOWS MATERIAL SHORTFALLS IN JOB
 CREATION AND RETENTION PROJECTIONS OR MATERIAL VIOLATIONS OF  THE  TERMS
 AND  CONDITIONS OF PROJECT AGREEMENTS AS DEFINED BY THE AGENCY'S POLICY.
 IF THE AGENCY DEVIATES FROM ITS POLICY ON ANY PROJECT, THE  AGENCY  MUST
 DRAFT  A  RESOLUTION,  NOTE  THE  DEVIATION IN THE PROJECT'S PAGE IN THE
 PUBLIC AUTHORITIES REPORTING  INFORMATION  SYSTEM  (PARIS)  REPORT,  AND
 RETAIN  RECORD OF SUCH DETERMINATION INCLUDING A DETAILED EXPLANATION IN
 AGENCY FILES. THE AGENCY SHALL ALSO POST SUCH RESOLUTION AND EXPLANATION
 ON THEIR WEBSITE. All such returned amounts of tax exemptions  shall  be
 redistributed  to  the  appropriate  affected  tax  jurisdiction, unless
 agreed to otherwise by any local taxing jurisdiction.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD00326-01-5

 S. 2318                             2
 
   (13) EXCEPT WHERE A SIGNIFICANT INCREASE IN PROJECT COSTS  IS  DISCOV-
 ERED  DURING  THE DEVELOPMENT OF THE PROJECT OR WHERE A MUNICIPALITY HAS
 REASSESSED ALL OR PART OF THE PROJECT SITE RESULTING  IN  A  SIGNIFICANT
 INCREASE  IN  PROPERTY  TAXES, NO TAX EXEMPTIONS SHALL BE GRANTED TO ANY
 PROJECT  IF  THE  PROJECT  IS  ALREADY  IN  DEVELOPMENT AT THE TIME SUCH
 PROJECT APPLIES FOR THE ISSUANCE OF THE TAX EXEMPTION.
   § 2. Section 854 of the general municipal law is amended by  adding  a
 new subdivision 22 to read as follows:
   (22)  "IN  DEVELOPMENT"  -  SHALL  MEAN  A  PROJECT  FOR  WHICH ACTIVE
 CONSTRUCTION, AND ERECTION OF  BUILDING  FOUNDATIONS  OR  STRUCTURE  HAS
 ALREADY COMMENCED AND ALL REQUIRED PERMITS HAVE BEEN ISSUED.
   §  3.  Section 862 of the general municipal law is amended by adding a
 new subdivision 3 to read as follows:
   (3) EXCEPT WHERE A SIGNIFICANT INCREASE IN PROJECT COSTS IS DISCOVERED
 DURING THE DEVELOPMENT OF THE PROJECT OR WHERE A MUNICIPALITY HAS  REAS-
 SESSED  ALL  OR  PART  OF  THE  PROJECT  SITE RESULTING IN A SIGNIFICANT
 INCREASE IN PROPERTY TAXES, NO FUNDS, FINANCIAL INCENTIVES OR  SUBSIDIES
 OF  THE  AGENCY SHALL BE USED IN RESPECT OF ANY PROJECT WHICH IS ALREADY
 IN DEVELOPMENT AT THE TIME SUCH PROJECT APPLIES FOR SUCH  FUNDS,  FINAN-
 CIAL ASSISTANCE, INCENTIVES OR SUBSIDIES.
   § 4. This act shall take effect immediately.

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