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Start-up NY by K. Kamlet

Start-up NY by K. Kamlet

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Published by Leonard E Sienko Jr
Tax-free zones offer help to upstate

START-UP NY program spawns misunderstandings about implementation
Tax-free zones offer help to upstate

START-UP NY program spawns misunderstandings about implementation

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Categories:Types, Legal forms
Published by: Leonard E Sienko Jr on Apr 21, 2014
Copyright:Traditional Copyright: All rights reserved

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05/15/2014

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Press and Sun Bulletin 04/20/2014, Page A13
 
Tax-free zones offer help to upstate START-UP NY program spawns misunderstandings about implementation ones o o upstat
 
By Ken Kamlet
 The START-UP NY law was signed by Gov. Andrew Cuomo at Binghamton University on June 24, 2013, with bipartisan legislative support. Critics abound, including Republican gubernatorial challenger Rob Astorino. The START-UP law rewards eligible businesses that locate in campus-designated “Tax-Free NY Areas,” with 10 years of freedom from all state and local taxes, including an exemption for employees from personal income taxes. As an impartial attorney who has carefully reviewed the law and the regulations that followed in November 2013, my goal here is to clear up some of the associated misconceptions. BU’s approval as an official sponsor of Tax-Free Areas under the START-UP program for eligible businesses was announced on April 8. It joins the ranks of eight other public and one private campus. SUNY Broome has prepared its own draft START-UP plan, which will shortly be submitted to Empire State Development (ESD) for approval.
 
According to Per Stromhaug, director of BU’s START-UP program, four companies have already been identified as possible participants at BU. SUNY-Broome’s draft plan, prepared by Deb Morello (Stromhaug’s counterpart), identifies nine “target industries” and cites initial discussions with six potential applicants. The draft also indicates that Broome County Industrial Development Agency (BCIDA) has identified six off-campus properties that “could be made available” for use under the local program.
 » Myth No.1: Tax-Free Areas can only be established on campus or within one mile of a campus.
 Not so. Beyond one mile, land may still be determined to be eligible if affiliated with the campus and approved by ESD. The campus has maximum autonomy for on-campus vacant land or building space. Within a mile of campus, this autonomy is only slightly diminished for vacant land or space owned or leased by the campus, up to 200,000 square feet per campus. Eligible land may also include so-called “strategic state assets” — up to 20 statewide. A “campus” includes, in addition to directly owned or leased property, property held in trust for, or owned or leased by a not-for-profit for the benefit of, or operated for, the college or university. In Broome County, the BU “campus” currently includes the University Downtown Center in Binghamton, the planned hightech incubator in the city, and the location of shared laboratory space on the Huron Campus in Endicott/ Town of Union. When SUNY Broome occupies the former Broome County Library on Exchange Street, that will become part of its “campus.”
 » Myth No. 2: The START-UP program unfairly gives rewards to newcomers, including competitors, that are not given to
 
loyal, longstanding businesses.
 While across-the-board tax breaks would have been more equitable, given limited state resources and the desire to primarily benefit upstate businesses, a predominantly SUNY-oriented program was a reasonable way to accomplish that objective. The law and the regulations protect existing businesses from unfair tax-free competition at least four ways. The sponsoring campus is required to reject any business that would compete with other businesses in the same community. START-UP applicants must describe whether or not they will compete with other businesses in the community. ESD’s review of applications must expressly consider their competitive impact within the community. Finally, the regulations define a “community” for this purpose as the census tract(s) containing an approved Tax-Free NY Area and the immediately contiguous tracts.
 » Myth No. 3: The START-UP program will do more harm than good to participating local governments because the program will deprive them of critical tax revenues for 10 years.
 Not so for several reasons. First, SUNY-owned or SUNY-controlled real property is already exempt from local property taxes. Before the campus plan can include any off-campus locations, the sponsoring campus must first consult with the municipality. The plan must also give “preference” to “underutilized properties” (vacant, abandoned, distressed, and/or contaminated property) — such properties yield limited if any real property tax revenues. New businesses, even if they pay no direct taxes, increase the flow of capital in the community through money paid to local vendors, spent by new workers, or used to buy or rent housing. Finally, many new businesses will stay well

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