5 NYCRR — Department of Economic Development

Chapter I GENERAL REGULATIONS

Part 1 PUBLIC ACCESS TO RECORDS

5 CRR-NY 1.1 Purpose {#sec-5-crr-ny-1.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.1}

The purpose of this Part is to set forth the methods and procedures governing the availability, location and nature of those records of the Department of Economic Development subject to the provisions of article 6 of the Public Officers Law, known as the Freedom of Information Law.

5 CRR-NY 1.2 Definitions {#sec-5-crr-ny-1.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.2}

For the purpose of this Part:

(a) The term department means the New York State Department of Economic Development.

(b) The term record means any information kept, held, filed, produced or reproduced by or for the department.

(c) The term records access officer means the department' s assistant counsel designated pursuant to section 1.3 of this Part.

(d) The term workday means the hours between 9 a.m. and 5 p.m. any day except Saturday, Sunday, a public holiday or a day on which the department is otherwise closed for general business.

5 CRR-NY 1.3 Designation of records access officer {#sec-5-crr-ny-1.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.3}

(a) The records access officer of the department is the department' s assistant counsel who is designated by the deputy commissioner and counsel of the department.

(b) The records access officer shall:

(1) maintain an up-to-date subject matter list of records maintained by the department;

(2) assist in identifying requested records if necessary;

(3) upon locating requested records, take one of the following actions:

(i) make the records available for inspection;

(ii) deny access to the records in whole or in part and explain in writing the reason for such denial; or

(iii) furnish a written acknowledgment of the receipt of such a request and a statement of the approximate date when such request will be granted or denied.

(4) upon request for copies of records determined by the records access officer to be available for inspection:

(i) make copies available upon payment of established fees; or

(ii) permit the requester to copy the records.

(d) Upon failure to locate requested records, the records access officer shall certify that:

(1) the department is not the custodian of the records requested; or

(2) the records of which the department is custodian cannot be found after diligent search; or

(3) the information supplied by the requester is not sufficiently detailed to enable the records access officer to determine whether or not the department maintains such records.

(e) The business address of the records access officer is Records Access Officer, Counsel's Office, Department of Economic Development, 30 South Pearl Street, Albany, NY 12245.

5 CRR-NY 1.4 Hours for public inspection {#sec-5-crr-ny-1.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.4}

Requests for public access to records shall be accepted and records produced on any workday.

5 CRR-NY 1.5 Subject matter list {#sec-5-crr-ny-1.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.5}

(a) The records access officer shall maintain a reasonably detailed current list, by subject matter, of all records in the possession of the department, whether or not such records are available for public access pursuant to section 87(2) of the Public Officers Law.

(b) The subject matter list shall be sufficiently detailed to permit identification of the category of the record sought.

(c) The subject matter list shall be updated not less than twice per year. The most recent update shall appear on the first page of the subject matter list.

5 CRR-NY 1.6 Requests for public access to records {#sec-5-crr-ny-1.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.6}

(a) Any person wishing to inspect and/or obtain a copy of any record should state the request in writing to the records access officer, provided that the records access officer may accept an oral request if in his judgment there is no need for the request to be in writing.

(b) A request shall reasonably describe the record or records in question in order to enable the records access officer to locate the records requested. Whenever possible, a person requesting records shall supply information regarding dates, file designations or other information that may help to describe the records sought.

(c) The records access officer shall, within five business days of receipt of a request, provide or deny access to records or furnish a written acknowledgment of receipt of the request and a statement of the approximate date when the request shall be granted or denied. This statement shall include, where appropriate, a statement that access shall be determined in accordance with section 89(5) of the Public Officers Law. If access to a record is neither granted nor denied within 10 business days after the date of acknowledgment of receipt of a request, such action may be construed as a denial of access that may be appealed by writing to the deputy commissioner and counsel of the department as set forth in section 1.9 of this Part.

5 CRR-NY 1.7 Protection of certain records {#sec-5-crr-ny-1.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.7}

(a) In accordance with the provisions of section 89(2) of the Public Officers Law, the records access officer may delete from any record identifying details the disclosure of which would result in an unwarranted invasion of personal privacy prior to making such record available for inspection and/or copying. In the event of any such deletion, the records access officer shall provide written notice of that fact to the person given access to the record. If the record is such that the personal matters cannot be fully deleted without substantively affecting the record or the identifying details cannot be effectively deleted, the records access officer shall deny access to such record as provided in section 1.8 of this Part.

(b) Information that is submitted to the department in the course of rendering its economic development services, or is derived from such information, may be excepted from disclosure pursuant to section 87(2)(d) of the Public Officers Law on the grounds that the information contains trade secrets, proprietary information, or that the information if disclosed would cause substantial injury to the competitive position of the enterprise submitting such information. A commercial enterprise may submit a request to the records access officer seeking an exception as provided for herein. Such exception may extend to information contained in the request itself, if disclosure would defeat the purpose for which the exception is sought.

(c) The request for such an exception shall be in writing and state the reasons for the requested exception. It shall also specify the information or portions of the information for which the exception is requested.

(d) Information submitted as provided in subdivisions (b) and (c) of this section shall be reviewed by the records access officer and it shall be his duty to make determinations concerning the designation of individuals within the department who shall maintain custody of such records or who may inspect such records. Any such designation shall be in writing and shall be available for inspection.

(e) Information submitted as provided in subdivisions (b) and (c) of this section shall be excepted from disclosure and shall be maintained apart from other records in a locked file cabinet or other secure facility, until 15 days after the entitlement to such exception has been finally determined or such further time as may be ordered by a court of competent jurisdiction.

(f) On the initiative of the department at any time, or upon the request of any person for a record excepted from disclosure pursuant to subdivision (b) and following of this section, the department shall:

(1) give notice to the person who requested the exception of any request for disclosure and/or of the department's intention to determine whether such exception should be granted or continued;

(2) permit the person who asked for the exception within 10 business days of receipt of such notice from the department, to submit a written statement of the necessity for the granting or continuation of the exception from disclosure;

(3) within seven business days of receipt of such written statement, or within seven business days of the expiration of the period prescribed for submission of such statement, issue a written determination granting, continuing or terminating the exception from disclosure and stating the reasons therefor; copies of such determination shall be served upon the person, if any, requesting the record, the person who asked for the exception and the Committee on Open Government.

(g) A denial of an exception from disclosure under subdivision (f) of this section may be appealed by the persons submitting the information and a denial of access to the record may be appealed by the person requesting the record as follows:

(1) Within seven business days of receipt of written notice denying the request for an exception or for disclosure, the person asking for the exception or the person requesting disclosure may appeal to the Deputy Commissioner and Counsel, Department of Economic Development, 30 South Pearl Street, Albany, NY 12245.

(2) The appeal must be in writing and set forth the name and address of the person asking for the exception or the person requesting disclosure; the date of asking for an exception or of the request for disclosure and to whom it was delivered; the specific record to which exception or disclosure was denied; the reasons given for such denial; and whether the denial was in writing or is considered to be a denial because of failure of the department to respond in a timely manner.

(3) The appeal shall be determined within 10 business days of the receipt of the appeal. Written notice of the determination shall be served upon the person, if any, requesting the record, the person who asked for the exception and the Committee on Open Government. The notice shall contain a statement of the reasons for the determination.

(h) A proceeding to review an adverse determination pursuant to subdivision (g) of this section may be commenced pursuant to article 78 of the Civil Practice Law and Rules; provided, however, that such proceeding must be commenced within 15 days of the service of the written notice containing the adverse determination provided for in paragraph (g)(3) of this section.

(i) Nothing in this section shall be construed to deny any person access, pursuant to the provisions of the Freedom of Information Law or this Part, to any record or part excepted from disclosure upon the written consent of the person who had requested the exception.

5 CRR-NY 1.8 Grant or denial of access to records {#sec-5-crr-ny-1.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.8}

(a) Unless the records access officer determines that an application to inspect and/or copy records includes a request for information that may be excepted from disclosure pursuant to section 87 or 89 of the Public Officers Law or section 1.7 of this Part, the request shall be granted.

(b) Any denial of access to records shall be in writing, stating the reasons therefor and advising the person requesting such access of the right to appeal. In the event that access is denied on the grounds that the information was submitted by a person who was granted an exception from disclosure pursuant to section 1.7 of this Part, the appeal shall be conducted pursuant to section 1.7(g). In the event that access is denied for any other reason, the appeal shall be conducted pursuant to section 1.9 of this Part.

(c) If requested records are not provided promptly, as required in section 1.6(c) of this Part, such failure shall also be deemed a denial of access.

5 CRR-NY 1.9 Appeals {#sec-5-crr-ny-1.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.9}

(a) Any person whose application to inspect and/or copy records has been denied on any grounds other than the grounds that the information was submitted by a person who was granted an exception from disclosure pursuant to section 1.7 of this Part (in which case the appeal must be submitted pursuant to section 1.7[g]) may appeal within 30 days of such denial to the Deputy Commissioner and Counsel, Department of Economic Development, 30 South Pearl Street, Albany, NY 12245. Such appeal must be in writing and must set forth the name and address of the person requesting the records; the date of the request for records and to whom it was delivered; the specific records to which access was denied; the reasons given for such denial; and whether the denial was in writing or is considered to be a denial because of failure of the department to respond promptly to a request for records.

(b) The deputy commissioner and counsel of the department, upon receipt of an appeal in compliance with this section, shall review the request for access to records of the department and affirm, modify or reverse the denial. The deputy commissioner and counsel shall inform the person requesting access to records of the decision in writing within 10 business days of receipt of a properly filed appeal and of his right to appeal any denial pursuant to article 78 of the Civil Practice Law and Rules.

(c) The deputy commissioner and counsel shall immediately transmit to the Committee on Open Government copies of all appeals and the determinations thereon.

5 CRR-NY 1.10 Fees {#sec-5-crr-ny-1.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.10}

(a) Any fees authorized herein shall be payable in advance. The following fees shall be applicable with respect to services rendered to members of the public:

(1) computer time—charges shall be based on current rates and computer resources used and shall not exceed actual cost;

(2) photocopies—25 cents per page.

(b) There will be no fee for the following services:

(1) any certification pursuant to this Part;

(2) inspection of records; or

(3) search for records, other than computer time.

5 CRR-NY 1.11 Public notice {#sec-5-crr-ny-1.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.11}

A notice containing the title or name and business address of the records access officer and of the appeals officer, and the location where records can be seen or copied shall be posted conspicuously at each departmental office.

5 CRR-NY 1.12 Severability {#sec-5-crr-ny-1.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.12}

If any provisions of this Part or the application thereof to any person or circumstance is adjudged invalid by a court of competent jurisdiction, such judgment shall not affect or impair the validity of the other provisions of this Part or the application thereof to other persons and circumstances.

Part 2 ACCESS TO PERSONAL INFORMATION

5 CRR-NY 2.1 Purpose {#sec-5-crr-ny-2.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.1}

It is the purpose of the Department of Economic Development to comply fully with the provisions of the Personal Privacy Protection Law; to maintain only in its records the personal information relevant and necessary to accomplish a purpose or duty of the department; to insure that records which pertain to an individual are accurate, relevant, timely and complete; and to assure that rights of the individual and of the public pursuant to the law are preserved and protected.

5 CRR-NY 2.2 Definitions {#sec-5-crr-ny-2.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.2}

For the purposes of this Part:

(a) The term department means the New York State Department of Economic Development.

(b) The term committee means the Committee on Open Government.

(d) The term personal information means any information concerning a data subject which, because of name, number, symbol, mark or other identifier, can be used to identify the data subject.

(e) The term disclose means to reveal, release, transfer, disseminate or otherwise communicate personal information or records orally, in writing or by electronic or any means to other than the data subject.

(f) The term record means any item, collection or grouping of personal information about a data subject which is maintained and is retrievable by use of the name or other identifier of the data subject. The term record shall not include personal information which is not used to make any determination about the data subject if it is:

(1) a telephone book or directory which is used exclusively for telephone and directory information;

(2) any card catalog, book or other resource material in any library;

(3) any compilation of information containing names and addresses only which is used exclusively for the purpose of mailing department information;

(4) personal information required by law to be maintained, and required by law to be used, only for statistical research or reporting purposes;

(5) information requested by the department which is necessary for the department to answer unsolicited requests by the data subject for information; or

(6) correspondence files.

(g) The term routine use means, with respect to the disclosure of a record or personal information, any use of such record or personal information relevant to the purposes for which it was collected, and which use is necessary to the statutory duties of the department or is necessary to the department for its operation of a program specifically authorized by law.

(h) The term system of records means any group of records under the actual or constructive control of the department pertaining to one or more data subjects from which personal information is retrievable by use of the name or other identifier of a data subject.

5 CRR-NY 2.3 Personal privacy compliance officer {#sec-5-crr-ny-2.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.3}

(a) The department Director of Human Resources Management is hereby designated the personal privacy compliance officer and is responsible for ensuring that the department complies with the provisions of the Personal Privacy Protection Law and the regulations herein.

(b) The personal privacy compliance officer shall:

(1) coordinate and make the department's response to requests for access to, or amendment, correction or disclosure of records as provided in this Part;

(2) maintain a current list of department records that contain personal information retrievable by use of a data subject's name or other identifier;

(3) assist data subjects seeking to determine if the department maintains records pertaining to them;

(4) (i) make the record available for inspection in a form comprehensible to the data subject and permit the data subject to copy the record; or

(ii) deny access to the record, in whole or in part, and explain the reasons therefor in writing;

(5) upon request, certify that a copy of a record is a true copy; or

(6) upon request, certify that:

(i) the department does not have possession of the record sought;

(ii) the department cannot locate the record sought after having made a diligent search; or

(iii) the information sought cannot be retrieved by use of the description furnished to the department, or by use of the name or other identifier of the data subject without the use of extraordinary search methods by the department.

5 CRR-NY 2.4 Collection of information to be included in records {#sec-5-crr-ny-2.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.4}

(a) Personal information shall be collected directly from data subjects whenever practicable, except when collected for the purpose of making quasi-judicial determinations.

(b) Each data subject who is requested to supply information to be maintained in a record shall be provided with a notice containing the following information:

(1) the name of the subdivision of the department requesting the personal information and the name or title of the system of records in which such information will be maintained;

(2) the title, business address and telephone number of the department official who is responsible for the system of records;

(3) the authority granted by law which authorizes the collection and maintenance of the personal information;

(4) the effects, if any, upon such data subject of not providing all or part of the information requested;

(5) the principal purpose or purposes for which the information is to be collected; and

(6) the uses which may be made of the information pursuant to paragraphs (b), (e) and (f) of subdivision 1 of section 96 of the Public Officers Law.

5 CRR-NY 2.5 Proof of identity {#sec-5-crr-ny-2.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.5}

(a) When records are to be made available in person following a request made either in person or by mail, the department may require appropriate identification such as a driver license, an identifier assigned by the department, a photograph or some similar means to confirm the identity of the data subject.

(b) When a request is made by mail, the department may require that it be acknowledged or that an identifier generally known only by a data subject be included, or the department may require other similar appropriate identification.

5 CRR-NY 2.6 Location and hours {#sec-5-crr-ny-2.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.6}

(a) Records shall be made available at the main office of the department, located at 30 South Pearl Street, Albany, NY 12245.

(b) The department shall accept requests for records and produce records during regular business hours, which are between 9 a.m. and 5 p.m., any day except Saturday, Sunday, a public holiday or a day on which the department is otherwise closed.

5 CRR-NY 2.7 Requests for records {#sec-5-crr-ny-2.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.7}

(a) Requests for access to, correction or amendment of records shall be made in writing. All requests shall be filed with or referred to the personal privacy compliance officer.

(b) A request shall reasonably describe the record sought. When possible, the data subject should supply identifying information to assist the department in locating the records sought.

5 CRR-NY 2.8 Access to records {#sec-5-crr-ny-2.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.8}

(a) Within five business days of the receipt by the department of a request for access to a record, the personal privacy compliance officer shall make such record available to the data subject, deny such request in whole or in part and provide the reasons therefor in writing, or furnish a written acknowledgment of the receipt of such request and a statement of the approximate date when such request will be granted or denied, which date shall not exceed 30 days from the date of the acknowledgment.

(b) Within 30 business days of receipt of a written request from a data subject for correction or amendment of a record or personal information, the personal privacy compliance officer shall either:

(1) make the correction in whole or in part and notify the data subject that, upon his or her request, such correction or amendment will be provided to any or all persons or governmental units to which the record or personal information has been disclosed; or

(2) refuse to correct or amend the record and notify the data subject of the reasons therefor.

(c) A failure to grant or deny access to records within five business days of the receipt of a request or within 30 days of an acknowledgment of the receipt for a request, or a failure to respond to a request for amendment or correction of a record within 30 business days of receipt of such a request, shall constitute a denial that may be appealed.

(d) Nothing in this section shall impair a right of any department officer or employee under the terms of a current collective bargaining agreement.

5 CRR-NY 2.9 Appeal of denial {#sec-5-crr-ny-2.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.9}

(a) Any data subject whose request under section 2.7 or 2.8 of this Part is denied in whole or in part, within 30 business days, may appeal such denial in writing to the deputy commissioner and counsel of the department.

(b) Within seven business days of the receipt of an appeal of a denial of access, or within 30 business days of an appeal of a denial of a request for correction or amendment, the deputy commissioner and counsel shall either:

(1) provide access to or correct or amend the record and notify the data subject that, upon request, the correction or amendment shall be provided to any or all persons or governmental units to which the record or personal information has been disclosed; or

(2) (i) fully explain in writing to the data subject the factual and statutory reasons for further denial and inform the data subject of his or her right to seek judicial review of the determination under section 97 of the Public Officers Law;

(ii) inform the data subject of the right to file with the department a statement of reasonable length setting forth the reasons for disagreement with the determination and that upon request of the data subject, the statement of disagreement will be provided to any or all persons or governmental units to which the record has been disclosed;

(iii) clearly note any portions of the record which are disputed, and attach the statement of disagreement as part of the record, provided that a concise statement of the reasons for not making the requested amendment or correction may also be included in the record; and

(iv) immediately forward to the committee a copy of the appeal, together with the determination and the reasons set forth.

5 CRR-NY 2.10 Statement of disagreement by data subject {#sec-5-crr-ny-2.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.10}

(a) If correction or amendment of a record or personal information is denied in whole or in part upon appeal, the determination rendered upon such appeal shall inform the data subject of the right to:

(1) file with the department a statement of reasonable length setting forth the data subject's reasons for disagreement with the determination; and

(2) request that such a statement of disagreement be provided to any person or governmental unit to which the record has been or is disclosed pursuant to paragraph (d), (i) or (l) of subdivision 1 of section 96 of the Public Officers Law.

(b) Upon receipt of a statement of disagreement by a data subject, the personal privacy compliance officer shall:

(1) clearly note any portions of the record that are disputed; and

(2) attach the data subject's statement as part of the record.

(c) When providing a data subject's statement of disagreement to a person or governmental unit in conjunction with a disclosure made pursuant to paragraph (d), (i) or (l) of subdivision 1 of section 96 of the Public Officers Law, the department may also include a concise statement of its reasons for not making the requested amendment or correction.

5 CRR-NY 2.11 Disclosures {#sec-5-crr-ny-2.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.11}

(a) For disclosures pursuant to section 96 of the Public Officers Law, the personal privacy compliance officer shall:

(1) keep an accurate accounting of the date, nature and purpose of each disclosure of a record or personal information, and the name and address of the person or governmental unit to whom the disclosure is made;

(2) retain such accounting made for at least five years after the disclosure for which the accounting is made, or for the life of the record disclosed, whichever is longer;

(3) at the request of the data subject, inform any person or other governmental unit to which a disclosure has been or is made of any correction, amendment or notation of dispute made by the department, provided that an accounting of the prior disclosure was made or that the data subject to whom the record pertains provides the name of such person or governmental unit; and

(4) with respect to disclosures made for inclusion in a public safety agency record or to a governmental unit or component thereof whose primary function is the enforcement of civil or criminal statutes, comply with the provisions of paragraphs (d) and (e) of subdivision 3 of section 94 of the Public Officers Law.

5 CRR-NY 2.12 Fees {#sec-5-crr-ny-2.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.12}

(a) There shall be no fee charged for:

(1) inspection of records;

(2) search for records; or

(3) any certification of a record.

(b) The fee for photocopies not exceeding 9 by 14 inches shall be 25 cents per page.

(c) If a record or personal information cannot be photocopied, the fee shall be the actual cost of reproduction, excluding fixed costs of the department.

5 CRR-NY 2.13 Severability {#sec-5-crr-ny-2.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.13}

If any provision of this Part or the application thereof to any person or circumstances is adjudged invalid by a court of competent jurisdiction, such judgment shall not affect or impair the validity of the other provisions of this Part or the application thereof to other persons and circumstances.

Part 3 DECLARATORY RULINGS

5 CRR-NY 3.1 Declaratory rulings {#sec-5-crr-ny-3.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 3.1}

The department may, on petition, issue a declaratory ruling with respect to the applicability to any person, property or state of facts of any rule or statute enforceable by the department; and whether any action taken by it should be taken pursuant to a regulation.

5 CRR-NY 3.2 Procedures {#sec-5-crr-ny-3.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 3.2}

(a) Requests for declaratory rulings shall be made to the department' s deputy commissioner and counsel, in a form prescribed by the department, which shall contain sufficient information to identify with particularity the person, the property or the state of facts and the rule or statute enforceable by the department, the applicability of which is sought to be determined or shall identify with particularity the action, with respect to which the declaratory ruling is sought.

(b) Such request may be accompanied by a memorandum in support setting forth the reasons for the request. Requests pursuant to this subdivision shall be granted or denied by the department's deputy commissioner and counsel, within 30 days of the date on which such request is received in proper form by the department's deputy commissioner and counsel, provided that in the case of a request for a declaratory ruling with respect to whether an action by the department should be taken pursuant to a rule, the request shall be granted or denied by the department's deputy commissioner and counsel within 60 days of such date.

Department of Economic Development 30 South Pearl Street Albany, New York 12245

Request for Declaratory Ruling

Name ___ Business Phone __

Representing

Address

Mailing Address (if different)

Ruling Requested (Specify with particularity which person, what property, or what state of facts and rule or statute enforceable by the Department, applicability of which is sought to be determined, or identify with particularity the action with respect to which the declaratory ruling is sought):

Except as otherwise provided in section 4.2, an annual fee of $125 shall be charged for the New York State Contract Reporter, the procurement opportunities newsletter published by the Department of Economic Development.

5 CRR-NY 4.2 Exemptions {#sec-5-crr-ny-4.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 4.2}

No fee shall be charged for furnishing a procurement opportunities newsletter to the Governor, a member of the Legislature, the head of any State department or a representative of the press. The Director of the Budget may prescribe other cases in which no fee shall be charged.

Chapter II ECONOMIC DEVELOPMENT ZONES

Part 10 DEFINITIONS AND ZONE DESIGNATION APPLICATION PROCESS

5 CRR-NY 10.1 Purpose and general description {#sec-5-crr-ny-10.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.1}

The purpose of these regulations is to set forth the application process for designation of areas as empire zones pursuant to article 18-B of the General Municipal Law, as well as to provide definitions of terms pertinent to this Chapter. The Commissioner of Economic Development shall announce periodically the commencement of and timetable for rounds of competition for designation of empire zones. The application process shall be conducted as prescribed in application forms prepared and distributed by the commissioner, who shall receive and review the applications and make recommendations to the empire zones designation board.

5 CRR-NY 10.2 Definitions {#sec-5-crr-ny-10.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.2}

(a) Applicant means the county, city, town or village submitting an application in the manner authorized by local law for designation of an area as an empire zone.

(b) Applicant municipality means the county, city, town or village that applied for and received empire zone designation.

(1) a county executive or manager of a county;

(2) in a county not having a county executive or manager, the chairperson or other presiding officer of the county legislative body;

(3) a mayor of a city or village, except where a city or village has a manager, it shall mean such a manager; or

(4) a supervisor of a town, except where a town has a manager, it shall mean such manager.

(d) Commissioner means the Commissioner of Economic Development.

(e) Community development projects mean projects sponsored by not-for-profit organizations which have been approved by the zone board, which will advance the zone development plan. For purposes described in sections 210.20, 606(l), 1456(d) and 1511(h) of the Tax Law, such projects shall be limited to child care programs serving zone residents and businesses; community development projects in direct support of economic development and business revitalization activities, such as commercial revitalization projects; and business development activities of local development corporations.

(f) Concurring municipality means a city, town or village that is required to agree with the applicant municipality's proposed addition or removal of empire zone acreage from within such city, town or village's municipal borders.

(g) Cost-benefit analysis means a method of determining whether to certify a business enterprise based on the business enterprise's projected job creation and/or investment in the zone, versus the total amount of empire zone tax benefits the business enterprise will potentially be allowed to use and have refunded to it and shall be a ratio of at least 10:1 for manufacturing enterprises and 20:1 for all other business enterprises, the numerator of which is the sum of:

(1) the estimated value of all wages and benefits paid for the first three years of certification to all existing and projected employees of the business enterprise in the zone; and

(2) the estimated value of capital investments for the first three years of certification in the zone, and the denominator of which is the estimated amount of total empire zone tax benefits that may be used and may be refunded for the first three years of certification.

(h) Department means the Department of Economic Development.

(i) Empire zone means an area within the State that has been designated as an empire zone pursuant to article 18-B of the General Municipal Law.

(j) Zone equivalent area means an area designated as such pursuant to former subdivision (bb) of section 959 of the General Municipal Law.

(k) Empire zone capital tax credits or zone capital tax credits means tax credits available pursuant to sections 210.20, 606(l), 1456(d) and 1511(h) of the Tax Law.

(l) Human resource development means job preparation and placement, skills training, education for zone residents and employees of zone businesses, child and family care services and facilities, and activities to improve the health benefits and other benefits provided by zone businesses to their employees.

(m) Local empire zone administrative board means the entity designated by the applicant that is responsible for recommending business enterprises for certification pursuant to section 959(a)(iii) of the General Municipal Law and for monitoring, evaluating and coordinating all empire zone benefits on behalf of the applicant. Such entity shall consist of at least six members, and shall be representative of local businesses, organized labor, community organizations, financial institutions, local educational institutions and residents of the empire zone.

(n) Minority business enterprise shall have the same meaning as provided in section 310 of the Executive Law.

(o) Minority group member shall have the same meaning as provided in section 310 of the Executive Law.

(p) Empire zone capital tax credits or zone capital tax credits means tax credits available pursuant to sections 210.20, 606(1), 1456(d) and 1511(h) of the Tax Law.

(q) Qualified investment means the contribution of property to a corporation in exchange for original issue capital stock or other ownership interest, the contribution of property to a partnership in exchange for an interest in the partnership, and similar contributions to any other type of business entity not in corporate or partnership form in exchange for an ownership interest in such an entity.

(r) Women-owned business enterprise shall have the same meaning as provided in section 310 of the Executive Law.

(s) Zone administrative entity means a community-based local development corporation or entity contracting with the local empire zone board pursuant to section 963(a)(viii) of the General Municipal Law or the municipality in which the zone is located in those instances where the municipality actively participates in the local administration of the zone program.

(t) Zone capital corporation means an entity incorporated for the purpose of raising funds through private and public grants, donations or investments, to be used in making investments in and loans to certified zone businesses to encourage the establishment or expansion of such businesses, thereby providing new job opportunities within an empire zone.

(u) Regionally significant project means:

(1) a manufacturer projecting the creation of 50 or more net new jobs in the State of New York;

(2) an agri-business or high tech or biotech business making a capital investment of $10 million and creating 20 or more net new jobs in the State of New York;

(3) a financial or insurance services or distribution center creating 300 or more net new jobs in the State of New York; or

(4) a clean energy research and development enterprise.

Such business shall be eligible as a regionally significant project as determined by the local empire zone administrative board and the commissioner, provided however, to be eligible as a regionally significant project the business seeking such status must be a business that exports a substantial portion of its products or services outside of the State and where at least 60 percent of the business's product/service is, or would be, sold, delivered or provided to customers/clients that are outside of the metropolitan statistical area if the project would be located in a community that is within a metropolitan statistical area, or outside of the county, if the project would be located in a community that is not part of a metropolitan statistical area. A regionally significant project would not be eligible for a business that is the retail or service operations of such enterprise or that is otherwise captive to the local market. Other projects may be considered by the empire zone designation board.

(v) Clean energy research and development enterprise means any electric generating facility that used pulverized coal technology, circulating fluidized bed technology or integrated gasification combined cycle technology and that is capable of capturing carbon dioxide for sequestration or capable of being retrofitted to capture carbon dioxide for sequestration.

(w) Qualified investment project means a project:

(1) located within an empire zone;

(2) at which 500 or more jobs will be created, provided such jobs are new to the State and are in addition to any other jobs previously created by the owner of such project in the State;

(3) which will consist of tangible personal property and other tangible property, including buildings and structural components of buildings, described in subparagraphs (i), (ii), (iii), (iv) and clause (A) or (C) of subparagraph (v) of paragraph (b) of subdivision 12-B of section 210 of the Tax Law, the basis of which for Federal income tax purposes will equal or exceed $750 million. Provided however, the owner of such project does not employ more than 200 persons in the State at the time such project is commenced.

(x) Significant capital investment project means a project:

(1) located within an empire zone;

(2) which will be either a newly constructed facility or a newly constructed addition to or expansion of a qualified investment project, consisting of tangible personal property and other tangible property, including buildings and structural components of buildings, described in subparagraphs (i), (ii), (iii), (iv) and clause (A) or (C) of subparagraph (v) of paragraph (b) of subdivision 12-B of section 210 of the Tax Law, the basis of which for Federal income tax purposes will equal or exceed $750 million;

(3) which is constructed after the basis for Federal income tax purposes of the property comprising such qualified investment project equals or exceeds $750 million; and

(4) at which 500 or more jobs will be created, provided such jobs are new to the State and are in addition to any other jobs previously created by the owner of such project in the State.

(y) Change of ownership shall include a reformation, reorganization or acquisition of the certified business enterprise where an owner of that enterprise, or a related person or affiliate of that enterprise, does not retain, directly or indirectly, any percent of the ownership interest or control of the enterprise formed as a result of the reformation, reorganization or acquisition.

(z) Zone development plan means a plan submitted for approval to the commissioner by the local empire zone administrative board and shall demonstrate the methods by which the applicant intends to promote the development of new business and the expansion of existing business within the empire zone. Elements of the plan shall include, but not be limited to, the following:

(1) a statement indicating how empire zone designation would assist in the revitalization of the area in which such zone is proposed to be located;

(2) a description of the method by which industrial development agencies or other public finance agencies shall grant a preference for allocation of private activity bonding authority for projects located in the proposed empire zone;

(3) a description of proposals for infrastructure improvements and investments and a timetable for their completion;

(4) a statement identifying those local tax incentives proposed to be offered within the zone;

(5) a description of a procedure to expedite the issuance of any required local permits or licenses;

(6) a description of other activities to be undertaken by municipal agencies, business entities, not-for-profit corporations, community-based organizations or any other persons, which are designed to promote private sector business investment and job development in the empire zone, and a description of the job training or job placement services to be made available to empire zone residents in need of such training or services and a description of the process for listing all new jobs through the appropriate Department of Labor division then providing employment services;

(7) an inventory of real property located within the proposed empire zone that is owned by a municipality or the State and is currently unused by the municipality or the State;

(8) a description of the business development programs and services to be available to stimulate the creation of new small businesses, including new small minority and women business enterprises;

(9) a description of efforts that will be undertaken to prevent or discourage the displacement of residents of the proposed empire zone and a description of provisions to identify and serve the needs of displaced workers;

(10) a description of activities designed to ensure the meaningful participation of minority and women business enterprises in empire zone development activities;

(11) a description of provisions for the participation of not-for-profit and business corporations in the development of the plan and in strategies for implementation of the plan;

(12) a description of the marketing strategy to be employed by the applicant to promote business development in the zone and the resources to be committed by the applicant and other organizations to the implementation of such strategy;

(13) a description of the method by which the applicant will evaluate the success of any activities to be undertaken in the proposed empire zone; provided, however, that the applicant shall take into consideration the factors upon which the selection of the area was based in any evaluation;

(14) a description of provisions for participation in and allocation of funds by the affected local workforce investment board and administrative entity established pursuant to the Workforce Investment Act of 1998 (P.L. 105-220, 29 U.S.C. 2801 et seq., as amended) to provide workforce development and job training in the zone;

(15) a statement of the reasons why the particular geographic configuration of the zone was selected;

(16) a description of the structure and duties of the local zone administrative board to be established within each empire zone;

(17) a description of the special programs to be operated by educational institutions and other training entities in the area to prepare and train zone residents for employment by businesses located within and outside the zone including five-year job creation targets, goals for community hires residing within or near the zone, and goals for targeted hires;

(18) a statement from the appropriate regional development council setting forth the specific resources to be allocated for business development in the zone;

(19) a description of facilities for licensed and certified child day care for the children of persons engaged in training for employment in, or employed in, the zone;

(20) a description of specific strategies and priorities for economic revitalization of the zone and of indicators to be used to measure performance against objectives;

(21) a statement of human resource development goals for the empire zone and specific strategies for achieving them;

(22) a description of how the applicant will use zone designation to coordinate economic development programs and providers at the local level to service the zone;

(23) a description of the organizational actions to be taken by the local empire zone administrative board and zone administrative entities to implement specified business, community and human resource development goals and strategies;

(24) a description of the financial commitments which the applicant is prepared to make to the zone, including, but not limited to, specific commitments for infrastructure improvements;

(25) a description of how the local economic development entities, as described in section 961(b)(xii) of the General Municipal Law will integrate its services to allow for the best possible economic development support for the zone; and

(26) a description of specific strategies and actions taken by the local empire zone administration board and zone administrative entities to integrate economic goals with the objectives of community well-being and environmental protection, such as open space protection, that will promote new development patterns in order to take advantage of resources and opportunities, such as existing public sewer and water infrastructure, without comprising the needs of future generations.

(aa) Benefit-to-cost ratio means the calculation of the estimated value of:

(1) all wages and benefits, projected to be paid by a business enterprise to all existing and projected employees of the business enterprise in the zone; plus

(2) all capital investments projected to be made by the business enterprise in the zone, divided by the estimated amount of total empire zone tax benefits that may be used and may be refunded.

(ab) Capital investments means investments in tangible personal property or other tangible property which is depreciable pursuant to section 179(d) of the United States Internal Revenue Code. Capital investments do not include operating expenses such as office supplies, utilities, rent, and other recurring expenses.

(ac) Single business enterprise means two or more related business enterprises characterized by an absence of arms length relationships found among enterprises that are not integrated. Factors to be considered, among other things, in determining the existence of a single business enterprise are interrelation of operations, common management, centralized control of labor relations, common ownership and common financial control.

5 CRR-NY 10.3 Authorized applicants {#sec-5-crr-ny-10.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.3}

(a) Applications for empire zone designations may be submitted by a city, county (other than a county located wholly within a city), town or village or a zone within it that satisfies the requirements of article 18-B of the General Municipal Law and these regulations. A city, county (other than a county located with a city), town or village must adopt a local law authorizing such municipal corporation to prepare and submit an application to the commissioner for designation of an area therein as an empire zone. The adoption of such local law shall occur prior to submission of an application for such designation, and shall describe the boundaries of such area in a manner and form prescribed by the department.

(b) Applications, described in section 10.8 of this Part, must:

(1) be signed by the chief executive officer of the county, city, town or village making the application, or by such chief executive officer's designee, and must be received by the commissioner on or before the date announced by the commissioner for each round;

(2) include a statement signed by the chief executive, or by such chief executive's designee that the information contained in such application, to the maximum extent possible, is accurate and complete;

(3) if submitted by a city, town or village for a zone located wholly or partly within another municipality, include a copy of a local law or resolution by the governing body of such municipality, except for the county, concurring in the application; and

(4) if submitted by a county, include a copy of a local law or resolution by the governing body of each city, town or village in which the zone is to be located, concurring in the application.

5 CRR-NY 10.4 Eligibility {#sec-5-crr-ny-10.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.4}

(a) To be eligible to compete for designation as an empire zone, an area or each constituent part thereof must be characterized by pervasive poverty, high unemployment and general economic distress; correspond to traditional neighborhood or community boundaries and, where appropriate, be bounded by major natural or man-made physical boundaries, such as bodies of water, railroad lines, or limited-access highways; must meet the requirements set forth in subdivision (b), (d), (f) or (h) of this section pursuant to the most recent census data available, where applicable, or, in lieu of census data, pursuant to other data deemed reliable by the commissioner, and meet the zoning and land availability criteria set forth in subdivisions (j) and (k) of this section. Zones designated pursuant to subdivisions (b) and (h) of this section shall be known as “investment zones” and zones designated pursuant to subdivisions (d) and (f) of this section shall be known as “development zones”.

(b) An area shall be eligible for designation if it includes a United States census tract or tracts or block-numbering area or areas, or portions thereof, each full census tract or portion of a block- numbering area of which, according to the most recent census data available, has:

(1) a poverty rate of at least 20 percent for the year to which the data relate;

(2) an unemployment rate of at least 1.25 times the statewide unemployment rate for the year to which the data relate;

(3) a population of at least 2,000.

(c) Each zone designated under subdivision (b) of this section must be wholly contained within up to three distinct and separate contiguous areas; provided, however, that empire zones designated prior to April 1, 2005 shall identify such distinct and separate contiguous areas, which shall equal up to their total allotted acreage at the time of designation, by January 1, 2006. Provided further, however, that notwithstanding the provisions of paragraphs (b)(1)-(3) of this section, section 10.5 of this Part and section 957(d) of the General Municipal Law, a regionally significant project may be located outside of the investment zone's distinct and separate contiguous areas but within the zone applicant's municipal boundaries. Provided further, however, if the investment zone is located in a county that does not have a development zone such regionally significant project may be located within the county's boundaries.

(d) Any county may apply for designation of an area within a municipality as an empire zone if:

(1) the average rate of unemployment in the county in the two most recent calendar years was at least 1.25 times the State average for those years;

(2) the rate of poverty in the county for individuals was 13 percent according to the most recent census data available; and

(3) the county does not contain a census tract or tracts, portion of a block-numbering area, or a city, town or village which, according to the most recent census data available, has:

(i) a poverty rate of at least 20 percent for the year to which the data relate;

(ii) an unemployment rate of at least 1.25 times the statewide unemployment rate for the year to which the data relate; and

(iii) a population of at least 2,000.

(e) Each zone designated under subdivision (d) of this section must be wholly contained within up to six distinct and separate contiguous areas; or, in the case of a zone located in more than one county, up to 12 distinct and separate contiguous areas; provided, however, that empire zones designated prior to April 1, 2005 shall identify such distinct and separate contiguous areas, which shall equal up to their total allotted acreage at the time of designation, by January 1, 2006. A zone created pursuant to this subdivision shall apply to have up to three separate and distinct contiguous areas designated as investment zones under subdivisions (b) and (h) of this section; provided that:

(1) 75 percent of the acreage used to define the boundaries of a distinct and separate contiguous area as an investment zone must be in either an eligible or contiguous census tract; and

(2) if the applicant county already contains an applicant municipality with its own empire zone, and the eligible census tracts in the county are located exclusively within the boundaries of the applicant municipality, then the applicant county is not required to locate the investment zones within the boundaries of the applicant municipality.

(f) Notwithstanding the provisions of subdivision (b) or (d) of this section, any county may apply for designation of an area within a municipality as an empire zone provided that the following requirements are met:

(1) at the time of application, the unemployment rate of the metropolitan statistical area must exceed the national average of unemployment and the metropolitan statistical area must have experienced or is likely to experience within three years the lesser of a loss of 4,000 direct jobs or a dislocation of workers equal to one-half percent of the employed population of the metropolitan statistical area and at least 50 percent of the job loss or dislocation of workers must result from the action of a single employer, or 80 percent of such job loss or dislocation must occur in a single North American Industry Classification (two-digit code); or

(2) at the time of application, the unemployment rate of the metropolitan statistical area must be equal to or less than the national average of unemployment and the metropolitan statistical area must have experienced or is likely to experience within three years the lesser of a loss of 8,000 direct jobs or a dislocation of workers equal to one percent of the employed population of the metropolitan statistical area and at least 50 percent of the job loss or dislocation of workers must result from the action of a single employer, or 80 percent of such job loss or dislocation must occur in a single North American Industry Classification (two-digit code); or

(3) at the time of application, the unemployment rate of the labor market area must exceed the national average of unemployment and the labor market area must have experienced or is likely to experience within three years the lesser of a loss of 500 direct jobs or a dislocation of workers equal to two percent of the employed population of the labor market area; or

(4) at the time of application, the unemployment rate of the labor market area must be equal to or less than the national average of unemployment and the labor market area must have experienced or is likely to experience within three years the lesser of a loss of 1,000 direct jobs or a dislocation of workers equal to four percent of the employed population of the labor market area; or

(5) at the time of application, the municipality is declared a natural disaster area by the President of the United States; or

(6) at the time of application, the municipality contains:

(i) a defense or military base or facility which has been designated for closure or realignment; or

(ii) a State-operated hospital or facility listed in section 7.17 or 13.17 of the Mental Hygiene Law which has been designated by either the Commissioner of Mental Health or the Commissioner of Mental Retardation and Developmental Disabilities for contraction or discontinuance within two years from the date of the official announcement of the solicitation of applications for zone designation;

provided, however, that no more than one-third of the zones designated shall be based on applications filed pursuant to this paragraph.

(g) Each zone designated under subdivision (f) of this section must be wholly contained within up to six distinct and separate contiguous areas; or, in the case of a zone located more than one county, up to 12 distinct and separate contiguous areas; provided, however, that empire zones designated prior to April 1, 2005 shall identify such distinct and separate contiguous areas, which shall equal up to their total allotted acreage at the time of designation, by January 1, 2006. A zone created pursuant to this subdivision shall apply to have up to three separate and distinct contiguous areas designated as investment zones under subdivisions (b) and (h) of this section; provided that:

(1) 75 percent of the acreage used to define the boundaries of a distinct and separate contiguous area as an investment zone must be in either an eligible or contiguous census tract; and

(h) An area shall be eligible for designation if it includes a United States census tract or tracts or block numbering area or areas or portions thereof, each full census tract or portion of a block numbering area of which according to the most recent census data available has:

(1) at the time of application, an unemployment rate equal to or exceeding the unemployment rate of the State of New York;

(2) a rate of poverty for individuals of at least 20 percent;

(3) a number of households receiving public assistance of 14 percent or more;

(4) the municipality is considered a non-metropolitan area; and

(5) there is no other empire zone in the county in which designation is sought.

(i) Each zone designated under subdivision (h) of this section must be wholly contained within up to three distinct and separate contiguous areas; provided, however, that empire zones designated prior to April 1, 2005 shall identify the three distinct and separate contiguous areas, which shall equal up to their total allotted acreage at the time of designation by January 1, 2006; provided, however, the existing zone must include as much designated acreage into the distinct and separate contiguous areas as possible. Provided further, however, that notwithstanding the provisions of paragraphs (h)(1)-(5) of this section, section 10.5 of this Part and section 957(d) of the General Municipal Law, a regionally significant project may be located outside of the investment zone's distinct and separate contiguous areas but within the boundaries of the applicant municipality. Provided further, however, if the investment zone is located in a county that does not have a development zone such significant project must be located within the county's boundaries.

(j) If an area for which application is made is governed by zoning laws or other laws or regulations governing land use, such laws or regulations must allow at least 25 percent of such areas to be used for commercial or industrial activity.

(k) At least 25 percent of the total land within the proposed zone must be vacant, abandoned or otherwise available for industrial or commercial development.

(l) Any zone designated pursuant to subdivisions (b), (d), (f) and (h) of this section may apply to the commissioner to add one additional distinct and separate contiguous area, upon demonstration that the distinct and separate contiguous areas created pursuant to subdivisions (c), (e), (g) and (i) of this section:

(1) lack sufficient existing infrastructure to accommodate business development and, there are other areas of the applicant municipality that can be characterized by pervasive poverty, high unemployment, and general economic distress, are in need of economic revitalization, and could benefit from designation as an empire zone; or

(2) such additional area is necessary for a project and constructing the project in the three or six proposed distinct and separate contiguous areas, as the case may be, would be inconsistent with open space conservation and wetland protection; or

(3) lack sufficient acreage for further economic development.

Provided, however, such additional distinct and separate contiguous area shall not result in an empire zone that exceeds 1,280 acres.

(m) Any certified business located outside of an empire zone's distinct and separate contiguous areas, pursuant to this section, shall be allowed the empire zone benefits until they are decertified. Such status shall apply to an expansion of the certified business within the parcel or portion thereof that was originally located in the zone before redesignation. Each zone must identify any such business by December 30, 2005.

(n) The boundaries that comprise the distinct and separate contiguous areas must include at least the real property on one side of a public thoroughfare when such street is used as a boundary. No boundary shall be constructed as to connect one tax parcel to another tax parcel by using a thoroughfare's center line, sidewalk or other similar means of connecting a non-contiguous area to the zone's distinct and separate contiguous areas.

5 CRR-NY 10.5 Nearby or contiguous lands {#sec-5-crr-ny-10.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.5}

(a) Lands nearby or contiguous to areas described in section 10.4(b) and (h) of this Part may be eligible to be included within an empire zone if, upon the request of the applicant for such designation, the commissioner finds that such additional lands have significant potential for business development and job creation which will enhance economic revitalization of the zone and benefit zone residents. This request shall be included in the original application for designation of an area as an empire zone; for an existing zone or in a request for a boundary revision.

(b) Factors to be considered by the commissioner in determining whether such additional lands have significant potential for business development and job creation are:

(1) existing infrastructure, such as water, sewers and roadways;

(2) lands and/or buildings immediately available for development;

(3) access to public transportation;

(4) labor force available in the immediate area;

(5) nearby training facilities; and

(6) existing business base capable of expansion.

(1) such lands and/or buildings are vacant, abandoned, or otherwise available for commercial or industrial purposes, except when it can be demonstrated that inclusion in the zone of certain occupied buildings will result in a significant business investment and/or increase in employment;

(2) other available lands do not have the potential for timely development at a reasonable cost;

(3) these lands are necessary to meet the 25 percent minimum for developable lands within a zone; and

(4) that new jobs likely to be created are accessible to residents of the zone.

5 CRR-NY 10.6 Size and boundaries {#sec-5-crr-ny-10.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.6}

(a) Except as provided in subdivision (c) of this section, an area for which designation as an empire zone is sought shall not exceed two square miles for any proposed or existing zone. Such area shall be defined by one or more borders determined by the applicant, which need not be entirely coterminous with the borders of census tracts or block-numbering areas. Each zone shall be located entirely within traditional neighborhood or community boundaries and, where appropriate, be bounded by major natural or man-made physical boundaries, such as bodies of water, railroad lines, or limited-access highways.

(b) An area for which designation as an empire zone is sought shall not exceed two square miles for any zone within a town with a population of less than 25,000, provided that such zone is not wholly within a village. Such area shall be defined by a continuous border, which shall be determined by the applicant, and which need not be entirely coterminous with the borders of census tracts or block-number areas.

(c) Any zone lands designated for regionally significant projects as defined in section 10.2(u) of this Part shall not be included within the two square mile limitation.

5 CRR-NY 10.7 Competition criteria {#sec-5-crr-ny-10.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.7}

The following factors may be considered by the commissioner in determining which of the competing applications he or she shall recommend to the empire zones designation board:

(a) demonstration of chronic and severe economic distress and the reasons therefor as evidenced by population and employment decline, increase in unemployment and public assistance recipients, decline in real property values, relative decline in per capita income, the extent of abandoned property and deteriorated industrial, commercial and residential properties, a decline in the number of business establishments, obsolescence in plant capacity, loss of markets to foreign competition, the unavailability of expansion financing, poor access to markets, the retirement of local owners of companies;

(b) a demonstration of the potential of the area to attract private investment that will provide employment to persons in the area who are unemployed or economically disadvantaged;

(c) a demonstration of substantial public and private commitments to a long-term economic revitalization program for the area and the local capacity to manage such a program;

(d) a demonstration of the manner in which the overall economic development plan enunciates the needs of the area and sets forth proposals to meet them;

(e) a demonstration of the manner in which progress in implementing the zone development plan will be routinely evaluated on the local level and how information essential for periodic evaluations will be compiled;

(f) the extent to which the applicant has made financial commitments for zone activities, including but not limited to, marketing of the zone for business development, human resource services for zone residents and businesses, and services for small and minority and women-owned businesses; and

(g) the likelihood that any publicly controlled or other developable lands and buildings within the proposed zone will be made available for industrial and commercial development.

5 CRR-NY 10.8 Applications {#sec-5-crr-ny-10.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.8}

No application for designation of an area as an empire zone shall be accepted unless the applicant demonstrates that it has, to the maximum extent feasible, solicited and considered the views of residents of the proposed zone, the views of State and local officials elected to represent such residents, and the local private organizations representing such residents. The chief executive officer shall ensure that the information contained in the application, to the maximum extent possible, is accurate and complete. The application shall be signed and submitted by the chief executive officer of the county, city, town or village making the application, or by such chief executive officer's designee, by the date determined by the commissioner for each round, and shall include, but not be limited to, the following:

(a) a copy of a local law authorizing the city, county (other than a county located wholly within a city), town or village to prepare and submit an application to the commissioner for designation of an area therein as an empire zone. Such local law shall also designate the boundaries of such area, the title of the official who shall serve as the local empire zone administrator and the generic composition of the local empire zone administrative board, whose chairman shall be an officer or employee of the applicant;

(b) a description of the physical characteristics of the proposed empire zone area, infrastructure, existing business base, housing conditions, training, education and human resource needs, characteristics of the labor force and occupational trends in the area, and economic problems faced by businesses and residents within the proposed zone;

(c) a copy of the zone development plan. The zone development plan shall be resubmitted by the local zone administrative board as economic conditions change within the zone, or when other factors trigger a need for a change in the zone development plan as determined by the local zone administrative board; provided however, changes in a zone development plan must be approved by the commissioner;

(d) a copy of the local law or resolution adopting such empire zone development plan by the local governing body of the area in which the economic development zone is to be located, with such local law or resolution identifying the composition of the local empire zone administrative board;

(e) any maps, as indicated on the application form, of the area comprising the proposed empire zone, showing existing streets, highways, waterways, natural boundaries and other physical features;

(f) a statement from the workforce investment board, established by the Workforce Investment Act of 1998 (P.L. 105-220, 29 U.S.C. 2801, et seq., as amended) that encompasses the proposed empire zone, setting forth the assistance to be provided and the resources to be allocated for the training of residents in the area and the operation of a workforce development and job training program;

(g) a statement from the industrial development authority serving the municipality in which the zone is located, and from any other development finance entity supported by public money, setting forth the assistance to be provided and the resources to be allocated to business development activities in the zone;

(h) the statement and any local law or resolution specified in section 10.3 of this Part;

(i) a statement of the goals and objectives, both short-term and long-term, for the economic revitalization of the proposed zone;

(j) a description of plans and strategies for providing and improving human resource development services to residents of the area comprising the proposed zone and to employees of businesses within such area, and the methods by which performance in implementing such plans and strategies will be evaluated;

(k) identification of financial commitments the applicant will make to the zone for activities, including but not limited to, marketing of the zone for business development, human resource services for zone residents and businesses, and services for small and minority and women-owned businesses;

(l) identification of publicly controlled and other developable lands and buildings within the proposed zone which are or could be made available for industrial and commercial development;

(m) a statement from the applicant and local economic development entities, including but not limited to the local development corporation, local development councils, authorities, agencies, and all other such entities concerned with the economic development of the municipality, ensuring the complete integration and cooperation of resources and services for the purposes of providing essential support for the zone administrator in order for the zone to realize such goals; and

(n) a statement demonstrating that there is no viable alternative area available that has existing public sewer or water infrastructure other than the proposed empire zone.

5 CRR-NY 10.9 Commissioner's review of applications; recommendation {#sec-5-crr-ny-10.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.9}

(a) The commissioner shall review and analyze each application and make recommendations to the empire zones designation board for designation of areas as empire zones. An applicant which is not recommended by the commissioner to the empire zones designation board may reapply to the commissioner in a subsequent round of competition.

(b) By January 1, 2006, each existing empire zone must identify to the empire zones designation board its distinct and separate contiguous areas. The empire zones designation board shall approve the initial distinct and separate contiguous areas so identified. Provided, however, such approval shall be by unanimous vote.

5 CRR-NY 10.10 Boundary revisions {#sec-5-crr-ny-10.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.10}

(a) The applicant municipality of an empire zone may, by resolution, submit to the commissioner a request to revise the boundaries of such empire zone. The commissioner may approve such revision subject to the following provisions:

(1) the commissioner must determine that a change in circumstances has occurred since the establishment of the existing borders which makes revision of such borders necessary or desirable; and

(2) the commissioner shall affirm that such revision would not have the effect of producing an empire zone which does not satisfy the criteria for empire zone designation established by sections 10.3(a), (b)(3) and (4), 10.4, 10.5 and 10.6 of this Part;

(3) the commissioner may grant approval of revisions of the borders of an empire zone after prior public notice and a public hearing if such revision adds territory to an existing empire zone; and

(4) the commissioner may grant approval of a revision of the borders of an empire zone after public notice of such proposed revision and a public hearing at least 30 days prior to the effective date of such revision, if such revision removes territory from an existing empire zone.

(b) The effective date of a boundary revision shall be the later of: the date a local law was adopted by the applicant municipality revising the description of the borders of an empire zone; the date the last resolution or law was adopted by a concurring municipality agreeing to the revision proposed by the applicant municipality; or 30 days after a public hearing for revisions that add or remove zone acreage.

(c) It is the policy to allow each zone no more than one boundary revision within a 12-month period. If, however, there is a change involving extenuating factors within the 12-month period, such as the attraction/retention of a regionally significant project as defined in section 10.2(u) of this Part, which is consistent with the applicable zone's zone development plan, the request will be considered.

(d) Any request to revise the boundaries of an existing empire zone that would add or remove acreage from a zone shall not be submitted until the provisions of this subdivision are satisfied and the designation of the distinct and separate contiguous areas are submitted as required by section 957 of the General Municipal Law, unless the zone administrative board demonstrates that prior to April 1, 2005 it has been working in conjunction with a business for the purpose of submitting such boundary revision that would result in the creation of jobs within the zone. For purposes of section 187-j and articles 9-A, 22, 32 and 33 of the Tax Law, such business shall be deemed to have been certified prior to April 1, 2005.

(e) Notwithstanding the provisions of this section, for any empire zone acreage designated as a result of a revision of the borders of an empire zone prior to April 1, 2005 that is outside of the distinct and separate contiguous areas that has not demonstrated any appreciable commercial activity and/or any appreciable capital improvement over a two-year period from the time of designation, such acreage shall be identified by the local empire zone administrative board, which shall determine whether such acreage has been proposed for development in a manner consistent with the applicable zone's zone development plan. If such acreage has not been proposed for development in such manner, the local empire zone administrative board shall remove such acreage from the zone. Any affected business or businesses shall be immediately decertified.

5 CRR-NY 10.11 [Renumbered] {#sec-5-crr-ny-10.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.11}

Part 11 CERTIFICATION OF BUSINESS ENTERPRISES

5 CRR-NY 11.1 Purpose and general description {#sec-5-crr-ny-11.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.1}

(a) The purpose of this Part is to set forth the application process for certification of business enterprises as eligible for benefits pursuant to article 18-B of the General Municipal Law.

(b) A business enterprise which operates a facility in an empire zone and which is certified pursuant to this Part may be eligible for one or more of the following benefits, providing all applicable statutory criteria have been satisfied:

(1) a reduction in utility costs, assessed prior to 1994, of certain businesses other than those primarily engaged in the retail sale of tangible personal property, pursuant to section 186-a.8 of the Tax Law;

(2) an investment tax credit against the franchise tax on business corporations pursuant to section 210.12-B and an employment incentive credit pursuant to section 210.12-C of the Tax Law;

(3) an investment tax credit against the personal income tax pursuant to section 606(i) and (j) of the Tax Law, and an empire zone employment incentive credit pursuant to section 606(i) and (j)-(l) of the Tax Law;

(4) an empire zone wage tax credit against the franchise tax on business corporations, the personal income tax, the franchise tax on banking corporations and the franchise tax on insurance corporations pursuant to sections 210.19, 606(i), (k), 1456(e) and 1511(g), respectively, of the Tax Law;

(5) an empire zone real property tax credit against the franchise tax on agricultural cooperatives pursuant to section 187-j of the Tax Law, an empire zone investment tax credit against the franchise tax on agricultural pursuant to section 187-k of the Tax Law, the empire zone employment incentive credit against the franchise tax on agricultural cooperatives pursuant to section 187-l of the Tax Law, and the empire zone wage tax credit against the franchise tax on agricultural cooperatives pursuant to section 198-m of the Tax Law;

(6) a special empire zone rate for gas or electric service equal to the incremental cost of providing such service pursuant to section 66(12-c) of the Public Service Law. Such empire zone rates may remain available to certified business enterprises for a period of up to 10 years following initial certification, unless such certification is revoked, notwithstanding the expiration of the designation of an empire zone;

(7) a qualified empire zone enterprise credit for real property taxes pursuant to sections 14, 15, 210(27), 187(j), 606(bb), (i), 1456(o) and 1511(r) of the Tax Law;

(8) a qualified empire zone enterprise tax reduction credit pursuant to sections 14, 15, 210(28), 606(i), (cc), 1456(p) and 1511(s) of the Tax Law; and

(9) a qualified empire zone enterprise sales and use tax exemption pursuant to sections 14 and 1115(z) of the Tax Law.

(1) a real property tax exemption pursuant to section 485-e of the Real Property Tax Law;

(2) a tax credit for qualified investments in or contributions to empire zone capital corporations, qualified investments in certified zone businesses and contributions to community development projects pursuant to sections 210.20, 606(i), (l), 1456(d) and 1511(h) of the Tax Law; and

(3) a refund or credit of State and local sales taxes for certain purchases pursuant to sections 1119(a) and 1210 of the Tax Law.

5 CRR-NY 11.2 Authorized applicants {#sec-5-crr-ny-11.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.2}

A business enterprise which owns or operates a facility in an empire zone, or which plans to do so, may apply for certification pursuant to this Part.

5 CRR-NY 11.3 Contents of application {#sec-5-crr-ny-11.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.3}

Application for certification of a business enterprise shall be made on a form prescribed by the commissioner, which may include, but not be limited to:

(a) Identification of applicant:

(1) name and form of business organization of applicant;

(2) taxpayer identification number;

(3) New York State unemployment insurance registration number; and

(4) names of parent, subsidiary and affiliated business organizations, if any.

(b) Description of existing business, including:

(1) list of addresses of each facility in New York State;

(2) list of goods and services produced at each facility in New York State;

(3) number of employees at each facility in New York State as of the March 31st, June 30th, September 30th or December 31st preceding the date of the application, whichever is latest; and

(4) names of the workers' compensation and disability benefits insurance carriers and policy numbers for each existing facility in New York State.

(1) all determinations by administrative agencies or courts that the applicant or any of its officers or directors violated any Federal or State law for the protection of workers within the preceding three years, including laws regulating labor standards, discrimination in employment, provision of workers' compensation or disability insurance, unemployment insurance tax liability and occupational safety and health;

(2) description of any denial of services to the applicant by the New York State Department of Labor's Employment Service within the preceding three years; and

(3) a certification by the applicant that it is not currently and, other than as indicated in the application, has not for the preceding three years, been found by an administrative agency or court to be in violation of any Federal or State law for the protection of workers.

(d) Description of business to be conducted in facility located in or planned for the empire zone, including:

(1) identification of owner;

(2) identification of operator;

(3) location of facility;

(4) list of goods and services to be produced;

(5) four-digit North American industrial classification code of business of zone facility, if code is known;

(6) total annual sales projected for zone facility;

(7) total annual retail sales of tangible personal property projected for zone facility;

(8) whether the business has previously applied for certification and been denied; and

(9) whether the business has previously received a certification which has been revoked.

(e) Description of investment to be made in the facility, including:

(1) any construction, rehabilitation or renovation;

(2) purchase or lease of equipment;

(3) estimated total cost of investment; and

(4) estimated schedule for start of any construction, rehabilitation or renovation of the facility and for completion.

(f) Existing and projected additional employment at facility, including:

(1) number of existing full-time employees and number of existing part-time employees; and

(2) projected number of additional full-time and part-time positions to be created within 12 months and within 24 months as a result of investment in the zone, for positions in which a substantial part of the work will be performed in the zone, listed by occupation, including starting wages and promotional opportunities.

(g) To be eligible for certification, a business enterprise must agree, in its application for certification, to:

(1) list, for purposes of recruitment, all openings for jobs and training programs in the empire zone, exclusive of general executive officers, with the local job service office of the New York State Department of Labor or demonstrate to the satisfaction of the commissioner and the Commissioner of Labor what other comparable methods will be used to recruit targeted individuals for such openings. For the purposes of this Part, the term targeted individual shall mean a New York resident who is:

(i) an eligible individual under the provisions of the work opportunity tax credit (Internal Revenue Code section 51, as added by P.L. 95-30 and subsequently amended);

(ii) eligible for benefits under the provisions of the Workforce Investment Act (29 U.S.C. section 2801 et seq., as added by P.L. 105-220 and subsequently amended) as a dislocated worker or low-income individual;

(iii) a recipient of public assistance benefits;

(iv) an individual whose income is below the most recently established poverty rate promulgated by the United States Department of Commerce, or a member of a family whose family income is below the most recently established poverty rate promulgated by the appropriate Federal agency; or

(v) an honorably discharged veteran from any branch of the Armed Forces;

(2) submit the information specified in section 11.7 of this Part to the local empire zone administrator and the State; and

(3) not shift its operations, or some portion thereof, to an empire zone from an area within New York State which has not been designated an empire zone, unless the shift in operations is entirely within a municipality and has been approved by the local government body of such municipality or in situations where it has been established, after a public hearing, that extraordinary circumstances exist which warrant the relocation of a business, in whole or in part, into an empire zone from another municipality and the municipality from which the business is relocating approves of such relocation; or where such shift in operations is from a business incubator facility operated by a municipality or by a public or private not-for-profit entity which provides space and business support services to newly established firms;

(4) authorize the Commissioner of Labor to disclose, to employees of both the New York State Departments of Labor and Economic Development, as well as the local empire zone administrative board, all records filed by the company in making unemployment insurance (U.I.) reports and contributions required by State Labor and Tax Law, including, but not limited to, all information contained in or relating to the quarterly combined withholding, wage reporting and U.I. returns, the registration for U.I., the new hire file, and all records of U.I. delinquencies. In addition, this authorization shall include all information contained in any survey reports requested by the Department of Labor on behalf of the U.S. Department of Labor, Bureau of Labor Statistics including, but not limited to, the current employment, occupational employment, multiple worksite, and annual refiling surveys. The use of information and records released pursuant to this authorization shall be limited to government purposes concerning the certification of this company for empire zone benefits and incentives under article 18-B of the General Municipal Law, monitoring compliance with empire zone program criteria, and reviewing the performance of empire zone programs;

(5) certify that the business enterprise, or its agent, has disclosed all violations during the three years preceding the submission of this application for certification, involving violations of the laws regulating unemployment insurance, workers' compensation, public work, child labor, employment of minorities and women, safety and health, labor standards, or other laws for the protection of workers or environmental conservation, and acknowledges that a failure to disclose this information or a failure to respond to the requests to completion, or updating, of the information requested herein, may result in a denial of certification.

(h) A business enterprise that applies for any tax, utility rate or management assistance benefits provided by the New York State Empire Zone Act shall, in its application for certification, acknowledge in writing the obligation to provide 90 days' written notice to the commissioner, the local empire zone administrator, the local empire zone administrative board, and the employees of the business enterprise of any intent to close or partially close a facility within the zone. Upon receiving such notice, the commissioner shall immediately send copies thereof to the Commissioner of Labor and the director of the Job Training Partnership Council. For purposes of this subdivision, closing shall mean the permanent termination of operations of a business facility, and partial closing shall mean the permanent termination of a portion of the operations of a business facility that will immediately reduce the work force by 50 employees or more or will reduce the work force by at least 50 percent over a one-year period, whichever is greater.

5 CRR-NY 11.4 Criteria and determinations for certification {#sec-5-crr-ny-11.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.4}

The local empire zone administrative board, when evaluating certification applications of business enterprises for recommendation to the commissioner, and the commissioner, when determining whether to approve or disapprove those applications for certification, shall consider the following criteria:

(a) whether the business enterprise, if certified, is reasonably likely to create new employment or prevent a loss of employment in the empire zone;

(b) whether such new employment opportunities will be for individuals who will perform a substantial part of their activities in the empire zone;

(c) whether such business enterprise or single business enterprise, as defined in section 10.2(ac) of this Title, is likely to enhance the economic climate of the empire zone;

(d) whether certification will have the undesired effect of causing individuals to transfer from existing employment with another business enterprise to similar employment with the business enterprise so certified, and transferring existing employment from one or more other municipalities in the State, or transferring existing employment from one or more other businesses in the zone. For purposes of this paragraph, a transfer of employment shall not be deemed to occur when a business relocates to an empire zone from a business incubator facility operated by a municipality or by a public or private not-for-profit entity which provides space and business support services to newly established firms;

(e) whether such business enterprise conforms with the zone development plan;

(f) whether such business enterprise or single business enterprise has made provision for empire zone recruitment for openings for jobs and training programs in the empire zone;

(g) whether, as set forth in section 10.2(g) and (aa) of this Title, such business enterprise or single business enterprise has a benefit-to-cost ratio of at least 10:1 for manufacturing enterprises and 20:1 for all other business enterprises, the numerator of which is the sum of:

(1) the estimated value of all wages and benefits paid for the first three years of certification to all existing and projected employees of the business enterprise in the zone; and

(h) the Commissioner of Labor's determination as to whether such business enterprise or single business enterprise during the three years preceding the submission of an application for certification, has engaged in a substantial violation or a pattern of violations of laws regulating unemployment insurance, workers' compensation, public work, child labor, employment of minorities and women, safety and health, or other laws for the protection of workers as determined by final judgment of a judicial or administrative proceeding.

5 CRR-NY 11.5 Evaluation of application {#sec-5-crr-ny-11.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.5}

(a) Completed applications for certification shall be submitted by the business enterprise to the local empire zone administrative board.

(b) The local zone administrative board shall first determine whether the facility is, or is planned to be, located in the empire zone. If the local zone administrative board determines that the facility is, or is planned to be, located in the empire zone, the local empire zone administrative board shall make a determination to recommend or not recommend a business enterprise for certification based upon the business enterprise's completed application. If the local zone administrative board recommends a business enterprise for certification, the chair of the local empire zone administrative board shall so indicate that recommendation by signing the application in the space provided therefore and forward the completed application to the commissioner and retain a copy. Provided, however, if the applicant is in a pending boundary revision or awaiting approval of a regionally significant project, the chair of the local zone administrative board shall not send the application to the commissioner prior to the official approval of such boundary revision or regionally significant project.

(c) If the completed application is recommended by the local empire zone administrative board, the commissioner shall send the application to the Commissioner of Labor for review pursuant to section 959(a)(iii)(5) and (7) of the General Municipal Law. Upon completion of that review, the Commissioner of Labor shall notify the commissioner whether the business enterprise, during the three years preceding the submission of an application for certification, has:

(1) engaged in a substantial violation or a pattern of violations of laws regulating unemployment insurance, workers compensation, public work, child labor, employment of minorities and women, safety and health, or other laws for the protection of workers as determined by final judgement of a judicial or administrative proceeding, further, the Commissioner of Labor shall notify the commissioner if the business enterprise failed to disclose on its application any findings that it had violated the laws regulating unemployment insurance, workers' compensation, public work, child labor, employment of minorities and women, safety and health, labor standards, or any other laws for the protection of workers during the three years preceding the date upon which it submitted its application; or

(2) been found in a criminal proceeding to have violated, in the previous three years, any of the foregoing laws or regulations promulgated pursuant to such laws, the conditions of any permit issued thereunder, or similar statute, regulation, order or permit condition of any other government agency, foreign or domestic.

In the evert the Commissioner of Labor determines that the business enterprise has been found in a criminal proceeding to have committed the violations referred to in paragraph (2) of this subdivision, the business enterprise shall not be certified.

(d) The commissioner shall have the right to reject, in the commissioner's sole discretion, any application that the commissioner determines is incomplete, without making any determination to approve or disapprove the application. In the event of such rejection, the commissioner shall return the application to the local zone administrative board that recommended the business enterprise for certification.

(e) Except for a determination by the Commissioner of Labor in accordance with the last sentence of subdivision (c) of this section, the commissioner shall approve or disapprove an application for certification in his or her discretion after consideration of the criteria set forth in section 11.4 of this Part. If the commissioner approves the application, he or she shall thereafter send to the local empire zone administrators the application and a numbered certificate, as described in section 11.6 of this Part, authorizing the business enterprise to operate as a certified empire zone business. Upon receiving the application and the numbered certificate, the executed numbered certificate of empire zone certification shall be issued to the applicant.

5 CRR-NY 11.6 Form of certification {#sec-5-crr-ny-11.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.6}

(a) The commissioner shall develop a certificate form to be signed by the commissioner, which shall include, but not be limited to, the location of the empire zone, the name of the business enterprise, the street address of the applicable facility or facilities within the zone, the date the certification is issued, and the effective date of the certificate, and the period for which the certificate is in effect.

(b) The effective date of certification shall be the date the chair of the local empire zone administrative board signed the application indicating that the local zone administrative board recommended the business enterprise for certification, unless, upon petition by the business enterprise the commissioner approves as an effective date:

(1) the date the application for certification is approved by the commissioner; or

(2) in the case of a business enterprise that submitted an application for a regionally significant project to the Department of Economic Development prior to April 7, 2009 but submitted an application for certification on or after April 7, 2009, the date the commissioner determined the project to be eligible as a regionally significant project in accordance with section 10.2(u) of this Title. Such petition must be submitted to the commissioner prior to his/her approval of the business enterprise's application for certification.

5 CRR-NY 11.7 Annual report of certified businesses {#sec-5-crr-ny-11.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.7}

Each certified business enterprise shall annually submit a report to the local empire zone administrative board on a form to be prescribed by the commissioner. Such report shall include but not be limited to the following:

(a) business certification information to include: organization name, organization address in the zone, contact information, Federal employment ID number, New York State unemployment insurance number, state of formation or incorporation, and verification that the business is authorized to conduct business in the State of New York;

(b) employment numbers calculated in the same manner in which the employment number is required to be calculated by section 14 of the Tax Law including: total existing full-time equivalent jobs in the zone as of the date of certification within that zone, total existing jobs in the zone for the year in which the report is being provided, total remuneration paid to employees in the zone each quarter of the reported year, total number of employees of all zones, total annual remuneration in all zones, total annual remuneration paid in New York State for the reported year, total employment number in New York State for the reported year as shown on each business' NYS-45 wage reporting form filed with the Department of Labor;

(c) capital investment to include investments in tangible personal property on other tangible property which is depreciable pursuant to section 179(d) of the United States Internal Revenue Code. Capital Investments do not include operating expenses such as office supplies, utilities, rent, and other recurring expenses;

(d) tax benefits used and refunded: provide an estimation of the amount of the following credits used and refunded for the reported year by the certified business, or by the taxpayers within the certified business including its shareholders, members, partners or the owner of a sole proprietorship; wage tax credits, investment tax credits, employment incentive tax credits, real property tax credit, and tax reduction credit; and

(e) other benefits; estimated valued to the certified business of the sales tax benefits for the reported year. The local empire zone administrative board shall send such reports to the commissioner.

5 CRR-NY 11.8 Denial of certification {#sec-5-crr-ny-11.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.8}

(a) The commissioner may deny a business enterprise's application for certification based upon any of the criteria set forth in section 11.4 of this Part. If the commissioner has denied a business enterprise's application for certification, the commissioner shall notify the business enterprise of such denial and its right to a hearing pursuant to the procedures set forth in Part 13 of this Title in writing in a notice of denial of certification. A notice of denial of certification may be served by the department on the business enterprise by certified, registered or overnight mail sent to the business enterprise at the address for the business enterprise indicated on its application.

(b) A business enterprise that has been denied certification by the Commissioner of Economic Development may request a hearing within 30 days of its receipt of the notice of denial of certification. Failure to request a hearing within 30 days will be deemed a waiver of the business enterprise's right to a hearing.

5 CRR-NY 11.9 Revocation of certification {#sec-5-crr-ny-11.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.9}

(a) The commissioner may revoke the certification of a business enterprise upon a finding of any one of the following:

(1) the business enterprise made material misrepresentations of fact on its application for certification or on a business annual report, or the business enterprise failed to disclose facts in its application for certification that would constitute grounds for not issuing a certification;

(2) the business enterprise has failed to construct, expand, rehabilitate, invest in or operate its facility substantially in accordance with the representations contained in its application for certification;

(3) the business enterprise has failed to create new employment or prevent a loss of employment in the empire zone;

(4) the business enterprise has failed to submit an annual report pursuant to section 11.7 of this Part by the deadline established by the commissioner after it has applied for zone tax benefits or program assistance based on new hires or investments or failed to submit other information;

(5) the business enterprise has changed ownership or moved its operations out of the empire zone; or

(6) the business enterprise has failed to pay the projected wages and benefits and to make the projected capital investments as set forth in the cost benefit analysis provided on the business enterprise's application for certification.

(b) The commissioner may also, upon the recommendation of the Commissioner of Labor, revoke the certification of a business enterprise or the single business enterprise to which it belongs upon a finding that the business enterprise has committed substantial violations of laws for the protection of workers including all Federal, State and local labor laws, rules or regulations.

(1) if certified prior to the first day of August 2002, the business enterprise caused individuals to transfer from existing employment with another business enterprise with similar ownership and located in New York State to similar employment with the certified business enterprise or if the enterprise acquired, purchased, leased, or had transferred to it real property previously owned by an entity with similar ownership regardless of form of incorporation or organization; or

(2) a business enterprise that has submitted at least three years of business annual reports has failed to provide economic returns to the State in the form of total remuneration to its employees (i.e., wages and benefits) and investments in its facility that add to a greater value than the tax benefits the business enterprise used and had refunded to it; a business enterprise that has submitted at least three years of business annual reports shall have failed this analysis if the sum of:

(i) the actual value of all wages and benefits paid to all employees of the business enterprise in the zone, as indicated in the business enterprise's business annual reports submitted and reporting for any of the years from and including 2001 through and including 2007; and

(ii) the value of capital investments in the zone, as indicated in the business enterprise's business annual reports submitted and reporting for any of the years from and including 2001 through and including 2007, does not exceed the total amount of State tax benefits the business enterprise used and had refunded to it or its members, partners or shareholders under the empire zones program as indicated in the business annual reports submitted and reporting for any of the years from and including 2001 through and including 2007;

provided, however, if the commissioner makes the finding described in paragraph (1) of this subdivision or the business enterprise fails the analysis described in paragraph (2) of this subdivision, the commissioner may consider, after consultation with the Director of the Budget, and in his or her sole discretion, other economic, social and environmental factors when evaluating the benefits of a project in the State and whether continued certification is warranted based on such factors. The effective date of decertification pursuant to this subdivision shall be January 1, 2008.

(d) Prior to the Commissioner of Economic Development rendering a decision revoking a business enterprise's certification pursuant to subdivision (a) or (b) of this section, the department shall notify the business enterprise of the intent to revoke the certification of the business enterprise (“notice of intent to revoke certification”) and its right to a hearing pursuant to the procedures set forth in Part 13 of this Title. A notice of intent to revoke certification pursuant to subdivision (a) or (b) of this section may be served by the department on the business enterprise by certified, registered or overnight mail sent to the business enterprise at the address for the business enterprise indicated on the last annual report filed by the business enterprise in accordance with section 11.7 of this Part. A business enterprise shall have 30 days within which to request a hearing from its receipt of the notice of intent to revoke certification that was sent pursuant to subdivision (a) or (b) of this section. Failure to request a hearing within such 30 day period will be deemed a waiver of the business enterprise's right to a hearing.

(e) Notice of revocation of certification pursuant to subdivision (a) or (b) of this section shall be served by certified, registered or overnight mail to the business enterprise by the department. The department shall simultaneously send copies to the Commissioners of Labor, Taxation and Finance, the chair of the local zone administrative board and any applicable utility company.

(f) The commissioner is under no obligation to send a notice of intent to revoke certification to a business enterprise prior to rendering a decision to revoke the certification of a business enterprise pursuant to subdivision (c) of this section. If the commissioner has revoked the certification of a business enterprise pursuant to subdivision (c) of this section, the commissioner shall notify the business enterprise of such revocation in writing in a notice of revocation of certification. Such notice shall explain the reason or reasons for the revocation of certification, and shall refer to the particular section or sections of laws and regulations that are the basis for such revocation. Such notice shall state the effective date of decertification, and advise the business enterprise that it may appeal the revocation in accordance with Part 14 of this Title. A notice of revocation of certification pursuant to subdivision (c) of this section may be served by the department on the business enterprise by certified, registered or overnight mail sent to the business enterprise at the address for the business enterprise indicated on the last annual report filed by the business enterprise in accordance with section 11.7 of this Part.

5 CRR-NY 11.10 Certification after revocation {#sec-5-crr-ny-11.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.10}

Pursuant to the procedures set forth in section 11.5 of this Part, a business enterprise may be certified after its certification has been revoked, upon a showing that the conditions which resulted in the revocation of certification have been resolved. The effective date of certification for a business enterprise that is certified after revocation shall be the effective date of the enterprise's original certification and the Tax Law, rules and regulations in place on the date of the first certification shall apply, provided that the enterprise shall not be eligible for empire zone tax benefits during the period when its certification was revoked. Provided further, a business enterprise seeking certification after revocation shall be subject to the laws, rules, and regulations governing certification in effect at the time.

Part 12 RECORDKEEPING, INSPECTION AND AUDIT

5 CRR-NY 12.1 Recordkeeping {#sec-5-crr-ny-12.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 12.1}

The business enterprise shall establish and maintain complete and accurate books, records, documents, accounts and other evidence directly pertinent to the information provided in its application for certification and its business annual reports (collectively, the “records”). The records must be kept for the balance of the calendar year in which they were made and for six additional years thereafter.

5 CRR-NY 12.2 Inspection and audit {#sec-5-crr-ny-12.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 12.2}

The department, the Department of Taxation and Finance, and the Department of Labor shall have access to the records during normal business hours at an office of the business enterprise within the State of New York for the term specified in section 12.1 of this Part for the purposes of inspection, auditing and copying. The aforementioned agencies shall take reasonable steps to protect from public disclosure any of the records which are exempt from disclosure under section 87 of the Public Officers Law provided that:

(a) the business enterprise shall timely inform an appropriate official from the agency conducting the inspection and audit, in writing, that said records should not be disclosed;

(b) said records shall be sufficiently identified; and

Nothing herein shall diminish, or in any way adversely affect, New York State's right to discovery in any pending or future litigation.

5 CRR-NY 12.3-12.15 [Repealed] {#sec-5-crr-ny-12.3-12.15 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 12.3-12.15}

Part 13 PROCEDURES FOR APPEALING A DENIAL OF CERTIFICATION PURSUANT TO SECTIONS 11.5 AND 11.8 OF THIS TITLE AND REVOCATION OF CERTIFICATION PURSUANT TO SECTIONS 11.9(A) AND (B) OF THIS TITLE

5 CRR-NY 13.1 Applicability {#sec-5-crr-ny-13.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.1}

This Part shall apply to all appeals of denials of certification pursuant to sections 11.5 and 11.8 of this Title and revocations of certification pursuant to section 11.9(a) and (b) of this Title.

5 CRR-NY 13.2 Definitions {#sec-5-crr-ny-13.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.2}

(a) CPLR means the Civil Practice Law and Rules.

(b) Party means the staff of the Department of Economic Development and all persons designated as petitioner, respondent, or intervenor in any adjudicatory proceeding subject to this Part.

(c) Report means the hearing officer's summary of the hearing record, including their findings of fact, conclusions and recommendations on the findings.

5 CRR-NY 13.3 Designation of hearing officer {#sec-5-crr-ny-13.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.3}

(a) The designation of a hearing officer shall be made by the Commissioner of Economic Development in writing and filed with the Department of Economic Development.

(b) Upon being notified that a hearing officer declines or fails to serve, or in the case of death, resignation or removal of a hearing officer, a successor hearing officer shall be designated by the Commissioner of Economic Development to continue the proceeding.

5 CRR-NY 13.4 Notice of hearing {#sec-5-crr-ny-13.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.4}

(a) The notice of hearing shall contain a statement of the legal authority and jurisdiction under which the proceeding is to be held; a reference to the particular sections of the statutes and regulations not satisfied or violated; a short and plain statement of the matters asserted or at issue; and the time, place and date for a hearing no later than 60 days following receipt of the request for a hearing.

(b) The notice of hearing shall be served at least 30 days prior to the date of the hearing and shall be by certified or registered mail, or by service consistent with article 3 of the CPLR. Where service is by mail, service shall be deemed complete five days after mailing.

5 CRR-NY 13.5 Adjournment {#sec-5-crr-ny-13.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.5}

A request for an adjournment of the hearing should be in writing and submitted to the hearing officer and other parties prior to the hearing. Adjournments shall be granted only by the hearing officer and only after the hearing officer has consulted all parties. When granted, adjournments should be to a specified time, day and place.

5 CRR-NY 13.6 Responsive pleadings {#sec-5-crr-ny-13.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.6}

(a) The respondent shall file and other parties may file a responsive pleading. All responsive pleadings must be served upon the hearing officer, members of the administrative tribunal and other parties. The responsive pleading shall specify which allegations are admitted, which allegations are denied and which allegations a party has insufficient information upon which to form an opinion.

(b) The responsive pleading shall be served within 20 days of receipt of the notice of hearing by a party.

5 CRR-NY 13.7 Amendment of pleadings {#sec-5-crr-ny-13.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.7}

Any party may amend or supplement a pleading at any time prior to the submission of the hearing officer's report to the administrative tribunal, by leave of the hearing officer, if there is no substantial prejudice to any other party.

5 CRR-NY 13.8 Service of papers {#sec-5-crr-ny-13.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.8}

All notices and papers connected with a hearing, other than the notice of hearing may be served by first class mail. Except where otherwise provided, service by mail shall be deemed complete five days after mailing.

5 CRR-NY 13.9 Disclosure {#sec-5-crr-ny-13.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.9}

(a)

(1) Upon the service of a notice of hearing, any party to the proceeding may demand in writing from any other party disclosure of any of the following, which such other party intends to introduce at the hearing:

(i) names of witnesses; however, a summary of the testimony to be given by the witnesses shall not be required to be disclosed;

(ii) a list of documentary evidence;

(iii) photocopies of documentary evidence listed in subparagraph (ii) of this paragraph in the possession of the party upon whom the demand has been made; and

(iv) a brief description of physical or other evidence which cannot be photocopied.

(2) The demand for disclosure shall be made at least 15 days prior to the first scheduled date of the hearing. At least seven days prior to the first scheduled date of the hearing, the party upon whom the demand has been made shall make the disclosure described in subparagraphs (1)(i) through (iv) of this subdivision or a statement that the party does not have anything to disclose. If, after such disclosure or statement, a party determines to present witnesses or introduce evidence not previously disclosed, the party shall disclose the same as soon as practicable.

(3) Upon application of any party, the hearing officer:

(i) upon good cause shown, may allow demands and responses within time periods other than those described in paragraph (2) of this subdivision;

(ii) shall allow a party not to disclose information or material protected by statutory or case law from disclosure;

(iii) upon good cause shown, may limit, condition or regulate the use by the party to whom disclosure is made of information or material disclosed; and

(iv) may preclude a party that unreasonably fails to respond to a timely demand for disclosure or to supplement its disclosure from introducing evidence or presenting witnesses not disclosed.

5 CRR-NY 13.10 The hearing officer {#sec-5-crr-ny-13.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.10}

(a) No hearing officer shall preside who has any bias with respect to any matter involved in the hearing. No hearing officer shall communicate, directly or indirectly, in connection with any issue that relates in any way to the merits of a hearing pending before the hearing officer with any person except upon notice and opportunity for all parties to participate. A hearing officer may consult on questions of law with supervisors or agency attorneys, provided that such supervisors, or attorneys have not been engaged in investigative or prosecuting functions in connection with the hearing under consideration or a factually related hearing. A hearing officer may also consult with supervisors, support staff or court reporters on ministerial matters such as scheduling or the location of a hearing. Any party may file in good faith with the Department of Economic Development a request, together with a supporting affidavit, that a hearing officer be removed on the basis of personal bias or other good cause.

(b) The hearing officer shall conduct the hearing in a fair and impartial manner.

(1) rule upon requests, including, but not limited to, all requests for adjournments;

(2) set the time and place of the hearing;

(3) administer oaths and affirmations;

(4) issue subpoenas requiring the attendance and testimony of witnesses and the production of books, records, contracts, papers and other evidence;

(5) summon and examine witnesses, including, but not limited to, the authority to direct a party, without necessity of subpoena, to appear and to testify;

(6) admit or exclude evidence;

(7) limit the number of times any witness may testify, repetitious examination or cross- examination, and the amount of corroborative or cumulative testimony;

(8) hear argument on facts or law;

(9) order the parties to appear for a prehearing conference to consider matters which may simplify the issues or expedite the proceeding;

(10) order that opening statements be made; and

(11) do all acts and take all measures necessary, but not otherwise prohibited by this Part, for the maintenance of order and the efficient conduct of the hearing.

(d) The hearing officer shall not have the power to:

(1) remove testimony from the transcript by deletion, expungement or otherwise; and

(2) dismiss the charges unless otherwise authorized by the administrative tribunal.

(a) At any time prior to issuance of the final order or determination, parties may enter into a stipulation for the resolution of any or all issues.

(b) The administrative tribunal may jointly issue a consent order upon agreement or stipulation of the parties. A consent order shall have the same force and effect as an order issued after a hearing.

5 CRR-NY 13.12 The hearing {#sec-5-crr-ny-13.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.12}

(a) Appearances.

(1) A party may appear in person or by an attorney. If a party appears by an attorney, service of papers shall be made upon the attorney.

(2) Any person appearing on behalf of a party in a representative capacity may be required to demonstrate authority to act in such capacity.

(3) If a party fails to appear at the hearing, issues on which the absent party has the burden of proof may be resolved against that party.

(4) At any time before a report is submitted to the administrative tribunal, the hearing officer may open a default or relieve any part of the consequences of any default upon good cause shown.

(b) Conduct of hearing and evidence.

(1) Each witness shall be sworn or give an affirmation.

(2) The rules of evidence need not be observed.

(3) Each party shall have the right to present evidence and to cross-examine witnesses.

(4) All evidence presented shall be made a part of the record. All such documentary evidence may be received in the form of copies or excerpts or by incorporation by reference. In the case of incorporation by reference, the materials so incorporated shall be available for examination by the parties before being received into evidence.

(5) The petitioner has the burden of proof and of going forward.

(1) A verbatim record of the proceedings shall be made by whatever means the Commissioner of Economic Development deems appropriate.

(2) The record of the hearing shall include: the notice of hearing, responsive pleadings, motions and requests and objections, and rulings thereon, the transcript or recording of the testimony taken at the hearing, exhibits, stipulations, if any, and any decision, determination, opinion, order or report rendered.

5 CRR-NY 13.13 Hearing officer's report {#sec-5-crr-ny-13.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.13}

Within 30 days of the close of the record, including receipt of the transcript, the hearing officer shall prepare a report and submit it to the Commissioner of Economic Development and to all parties.

5 CRR-NY 13.14 Final determination and order {#sec-5-crr-ny-13.14 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.14}

(a) After receipt of the hearing officer's report, the Commissioner of Economic Development shall make a final determination.

(b) The final determination shall be embodied in a written order which shall contain findings of fact and conclusions of law or reasons for the final determination. If the Commissioner of Economic Development issues a decision that includes findings of fact or conclusions of law that conflict with the findings or conclusions of the hearing officer, it shall set forth in writing the reasons therefor.

5 CRR-NY 13.15 Waiver of rules {#sec-5-crr-ny-13.15 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.15}

Any of the foregoing rules may be waived by agreement of the parties or, if a hearing has convened, by agreement of the parties and with consent of the hearing officer.

Part 14 PROCEDURES FOR APPEALING A REVOCATION OF CERTIFICATION PURSUANT TO SECTION 11.9(C) OF THIS TITLE

5 CRR-NY 14.1 Applicability {#sec-5-crr-ny-14.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 14.1}

This Part shall apply to all appeals of revocations of certification pursuant to section 11.9(c) of this Title.

5 CRR-NY 14.2 Notice of appeal {#sec-5-crr-ny-14.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 14.2}

(a) A business enterprise that received a notice of revocation of certification in accordance with section 11.9(c) of this Title may send a written notice to the Empire Zone Designation Board appealing the revocation of certification by no later than 15 business days from the date of the notice of revocation of certification. Failure by a business enterprise to appeal the commissioner's revocation of certification within the aforementioned 15 business day period will be deemed a waiver of the business enterprise's right to an appeal.

(b) Provided that the business enterprise sends a notice of appeal within the 15 business day period referred to in subdivision (a) of this section to the address set forth in subdivision (c) of this section, the business enterprise may send a written submission to the Empire Zone Designation Board no later than 60 days following the date of the notice of revocation of certification explaining why its certification should be continued. This written submission must contain specific factual information (along with documentation establishing that information) and all legal arguments that demonstrate that the commissioner's finding, with respect to section 11.9(c)(2) of this Title, was in error, or that, with respect to section 11.9(c)(1) of this Title, any extraordinary circumstances occurred which would justify the continued certification of the business enterprise.

(c) All notice of appeals and written submissions to the Empire Zone Designation Board as described in subdivision (b) of this section shall be sent care of the commissioner at the following address.

Commissioner of Economic Development

New York State Department of Economic Development

30 South Pearl Street

Albany, New York 12245

5 CRR-NY 14.3 Authority of Empire Zone Designation Board {#sec-5-crr-ny-14.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 14.3}

(a) The Empire Zone Designation Board shall evaluate the merits of the appeal. The Empire Zone Designation Board shall consider the notice of appeal provided by the business enterprise, but shall only reserve the determination to revoke the business enterprise's certification if the Empire Zone Designation Board unanimously finds that there was sufficient evidence presented demonstrating that the commissioner's finding, with respect to section 11.9(c)(2) of this Title was in error, or that, with respect to section 11.9(c)(1) of this Title, any extraordinary circumstances occurred which would justify the continued certification of the business enterprise.

5 CRR-NY 14.4 Appeal decision {#sec-5-crr-ny-14.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 14.4}

The Empire Zone Designation Board will issue a decision and serve a copy on the business enterprise or its representative.

5 CRR-NY 14.5 [Renumbered] {#sec-5-crr-ny-14.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 14.5}

5 CRR-NY 14.6 [Expired] {#sec-5-crr-ny-14.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 14.6}

Part 15 ZONE CAPITAL CORPORATIONS

5 CRR-NY 15.1 Purpose and scope {#sec-5-crr-ny-15.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 15.1}

Prior to the establishment of a zone capital corporation, the commissioner must approve of: its formation; board of directors and management; and procedures for making, servicing and monitoring investments. The purpose of these regulations is to set forth the requirements and procedures for obtaining such approval, as well as operating and reporting requirements.

5 CRR-NY 15.2 Establishment and purpose of a zone capital corporation {#sec-5-crr-ny-15.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 15.2}

No more than three empire zone capital corporations may be established in each zone for the purpose of raising funds through private and public grants, donations and investments, to be used in making investments in and loans to certified zone businesses for the purpose of encouraging the establishment or expansion of businesses and the creation of new jobs within the zone. A zone capital corporation may serve one or more zones within an economic development region, established pursuant to article 11 of the Economic Development Law, or zones within two or more of such regions.

5 CRR-NY 15.3 Loans and investments {#sec-5-crr-ny-15.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 15.3}

(a) Within a zone located within one or more municipalities with a total population of more than 25,000, an empire zone capital corporation must accumulate at least $200,000 in capital stock before any investment in or loan to any business may be made. Within a zone located within one or more municipalities with a total population of 25,000 or less, a zone capital corporation must accumulate at least $100,000 in capital stock before any business loan or investment may be made.

(b) In no event may an empire zone capital corporation acquire an ownership interest in any zone certified business amounting to over 25 percent of the ownership interest of such business.

5 CRR-NY 15.4 Operating procedures {#sec-5-crr-ny-15.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 15.4}

(a) Each zone capital corporation must establish an investment committee for the purpose of evaluating applications for loans and equity investments. Such committee must include members with the business and financial expertise necessary to evaluate applications for loans and/or equity investments.

(b) To the maximum extent feasible, each empire zone capital corporation must undertake measures and procedures to ensure meaningful participation by minority and women-owned businesses, as well as locally owned business enterprises in the activities and investments of the corporation.

5 CRR-NY 15.5 Application; approval process {#sec-5-crr-ny-15.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 15.5}

(a) Application for formation of an empire zone capital corporation; its board of directors and management; and procedures for making, servicing and monitoring its investments, shall be made on a form prescribed by the commissioner which shall include, but not be limited to:

(1) identification of applicant;

(2) narrative description of the geographic area the proposed zone capital corporation includes;

(3) names and resumes of proposed zone capital corporation board of directors, management, and investment committee;

(4) proposed articles of incorporation and proposed bylaws for the zone capital corporation;

(5) proposed zone capital corporation management plan; and

(6) description of proposed investment procedures, including:

(i) procedures for originating and servicing investments and loans;

(ii) procedures for ensuring meaningful participation by women and minority owned businesses and locally owned businesses; and

(iii) underwriting criteria.

An Opinion of Counsel must accompany any information supplied by a proposed zone capital corporation regarding procedures for originating and servicing investments and loans and § 13.3 underwriting criteria. An affirmation of facts must accompany any information supplied in an application for purposes of securing the approvals referenced in subdivision (b) of this section.

(b) Applications shall be reviewed by the local empire zone administrative board to determine whether they are complete and meet the requirements of zone capital corporations enumerated in section 964 of the General Municipal Law. The local empire zone administrative board shall forward all applications and their approval or disapproval to the commissioner for approval or disapproval.

(c) Final approval of the formation of a zone capital corporation will be subject to receipt by the department, subsequent to its contingent approval, of the filing notice and certificate of incorporation for the proposed zone capital corporation.

5 CRR-NY 15.6 Reporting requirements {#sec-5-crr-ny-15.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 15.6}

A zone capital corporation shall submit to the local empire zone administrative board an annual report on its activities, which shall include but not be limited to:

(a) annual year end financial statements, audited by a certified public accountant, itemizing any and all loans and/or investments and indicating the purpose of such loans and/or investments;

(b) certification by a certified public accountant that the zone capital corporation did not acquire an equity position of over 25 percent in any certified zone business; and

(c) a signed statement from each investor in and/or contributor to the zone capital corporation claiming a zone capital tax credit, indicating the amount of such credit and the tax year proposed to claim such a credit.

Part 16 ZONE CAPITAL CREDITS

5 CRR-NY 16.1 Purpose and scope {#sec-5-crr-ny-16.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 16.1}

The purpose of these regulations is to describe and set forth the criteria of eligibility for empire zone capital tax credits. Upon certification by the commissioner, an empire zone capital tax credit of 25 percent of the following qualified investments will be allowed: investments or contributions to an empire zone capital corporation, direct equity investments in certified zone businesses and contributions of money to certain community development projects.

5 CRR-NY 16.2 Qualified investments and contributions {#sec-5-crr-ny-16.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 16.2}

(a) The empire zone capital tax credit of 25 percent will be allowed, upon certification by the commissioner, for the following investments and contributions:

(1) qualified investment made in, or contributions in the form of donations made to, one or more empire zone capital corporations;

(2) qualified investments in certified zone businesses that during the 12-month period immediately preceding the month in which the investments were made employed full-time within the State an average number of individuals (excluding general executive officers) of 250 or fewer, computed pursuant to the empire zone wage tax credit provisions of section 210 of the Tax Law. However, investments made by or on behalf of an owner of the business, including, but not limited to, a stockholder, partner, or sole proprietor, or any related person, as defined in subdivision (b)(3)(C) of section 465 of the Internal Revenue Code, are not qualified investments; and

(3) contributions of money to community development projects.

(b) Tax implications resulting from the sale, transfer or disposition of an interest arising from a qualified investment or contribution shall be pursuant to sections 210.20(d), 606(1), 1456(d) and 1511(h) of the State Tax Law.

5 CRR-NY 16.3 Availability, apportionment and amount {#sec-5-crr-ny-16.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 16.3}

(a) The total amount of zone capital tax credits available to each zone shall be $2.5 million; provided, however, that no more than $500,000 in zone capital tax credits shall be available in any zone for qualified investments in certified zone businesses. The total amount of zone capital tax credits allowable to a taxpayer for all years, taken in the aggregate, may not exceed $300,000 with respect to the total of qualified investments and contributions, and may not exceed $100,000 with respect to the investments and contribution described in each of paragraphs (1)-(3) of section 14.2(a) of this Part. Carryover of economic development zone capital tax credits shall be pursuant to sections 210.20(b), 606(1), 1456(d) and 1511(h) of the State Tax Law.

(b) Apportionment of zone capital tax credits within a zone between capital investments in and contributions to zone capital corporations, direct equity investments in certified zone businesses and contributions to community development projects shall be determined and accounted for by the local economic development zone administrative board in consultation with the zone administrative entity. The local economic development zone administrative board shall notify the commissioner of the apportionment of zone capital tax credits within the zone on a form prescribed by the commissioner.

5 CRR-NY 16.4 Criteria of eligibility {#sec-5-crr-ny-16.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 16.4}

(a) In order for a qualified direct equity investment to be certified by the commissioner to be eligible for economic development zone capital tax credits, it must be demonstrated that:

(1) the investment in a certified zone business will contribute, significantly, to an activity having tangible economic benefits, such as start-up, expansion or industrial modernization of the certified zone business;

(2) the certified zone business has the potential to create jobs; and

(3) the direct equity investment is necessary to increase the amount of capital available to the certified zone business, provided, however, that such investment is not intended nor will be used to refinance existing debt or replace existing equity in such zone business.

(b) In order for a qualified contribution to a community development project to be certified for the purpose of becoming eligible for empire zone capital tax credits, it must be demonstrated that it will advance the zone development plan designed to promote the development of new business and the expansion of existing business within the zone where the contribution is proposed.

5 CRR-NY 16.5 Determination for certification {#sec-5-crr-ny-16.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 16.5}

The local economic development zone administrative board shall, in accordance with these regulations, determine the eligibility of direct equity investments in certified zone businesses and contributions to community development projects for zone capital tax credits. This determination shall be subject to review by the commissioner who shall accept or reject the determination of the local economic development zone administrative board in accordance with criteria set forth in section 14.4 of this Part.

5 CRR-NY 16.6 Community development projects {#sec-5-crr-ny-16.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 16.6}

(a) All community development projects as defined in section 10.2(e) of this Title approved by the commissioner prior to April 1, 2005 herein shall be considered to be located in the applicable zone regardless of the designation of distinct and separate contiguous areas pursuant to section 10.4 of this Title.

(b) Any request to revise the boundaries of an existing empire zone to include a community development project shall not be submitted until the provisions of this subdivision are satisfied and the designation of the distinct and separate contiguous areas are submitted as required by section 10.4 of this Title unless the local empire zone administrative board demonstrates that prior to April 1, 2005 it had been working in conjunction with a business for the purpose of submitting a boundary revision that would result in the creation of jobs within the zone. Such project shall be considered to be located in the zone even if it is not located in the distinct and separate contiguous areas for purposes of section 10.4 of this Title. Such community development project shall be deemed to have been certified prior to April 1, 2005.

Chapter III INDUSTRIAL EFFECTIVENESS PROGRAM

Part 20 THE QUALIFICATION PROCESS

5 CRR-NY 20.1 Purpose {#sec-5-crr-ny-20.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.1}

The purpose of this Part is to set forth the qualification process to receive funding assistance under the Industrial Effectiveness Program. The program seeks to preserve and create permanent private sector jobs by encouraging New York manufacturing firms and industrial sectors to undertake productivity and other operational improvements to remain competitive, profitable and viable, and by aiding local buy outs of New York firms by employees, managers or other residents of the State. The program further seeks to mobilize State and local resources to provide targeted technical and financial assistance to eligible firms. The Department of Economic Development, with the cooperation and assistance of the New York State Urban Development Corporation, administers and provides services under the program.

5 CRR-NY 20.2 Purposes of the Industrial Effectiveness Program {#sec-5-crr-ny-20.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.2}

(a) To assist industrial firms with the introduction of improved management and labor practices and production processes in order to enhance their productivity and competitiveness.

(b) To aid the development of new markets and ownership structures in order to improve the long-term viability of industrial firms.

(d) To develop strategies for mobilizing State and community resources to respond to the needs of distressed industrial firms and to manufacturing plant closings and partial closings.

(e) To assist industrial firms in obtaining financing from publicly sponsored financing assistance programs and from private lending institutions.

5 CRR-NY 20.3 Definitions {#sec-5-crr-ny-20.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.3}

(a) Adjustment plan shall mean an industrial firm's internal strategy and plan of action for resolving productivity and competitive problems in order to be able to operate profitably in the future.

(b) Closing, partial closing or relocation out-of-state shall mean the permanent cessation of an entire business at a location within the State or of a major discrete portion of a business, or relocation out-of-state of a business, based on specific actions by a firm, or its parent, or evidence of factors that would support a conclusion that a closing, partial closing or relocation out-of-state is likely to occur.

(d) Corporate restructuring or turnaround plan shall mean measures to be undertaken by a potentially viable firm that faces the likelihood of a closing, partial closing or relocation out of New York State and the loss of substantial numbers of jobs.

(e) Department shall mean the Department of Economic Development.

(f) Full feasibility study shall mean an investigation and evaluation of the viability or potential profitability of an industrial firm or group of industrial firms, including those firms for which local buy-out assistance has been requested or those seeking to implement a corporate restructuring or corporate turnaround. A feasibility study shall include, but not be limited to, an assessment of the potential profitability and prospects for job preservation and future job growth; the condition, stability and growth potential of the industry in domestic and international markets; the financial condition; essential changes and productivity improvements needed to remain viable; the firm's overall market and market niches in relation to its industry; the quality of management and the firm's ability to innovate and change; labor and management relations; work-force skills and training needs; whether adequate time exists to effectuate a local buy out or revitalize a firm; relations with suppliers and customers; and cooperation of the sellers. A full feasibility study may include the planning, design and introduction of remedial measures to effect a local buy out, or to improve productivity and competitiveness. A more detailed description of the assistance available for a feasibility study may be found at Part 21 of this Title.

(g) Group of industrial firms shall mean two or more industrial firms with common problems.

(h) Industrial effectiveness assistance shall mean any or all of the assistance made available under the Industrial Effectiveness Program as administered by the department with the cooperation and assistance of the UDC, other than the attraction, retention and expansion assistance provided pursuant to section 7(b)(3) of chapter 839 of the Laws of 1987.

(i) Industrial firm shall mean a manufacturing firm involved with extracting, smelting, recovering, developing, preparing, compounding, converting, assembling or producing in any manner, minerals, raw materials, products or substances of any kind or nature, and shall include facilities related thereto for storage, warehousing or distribution, for research and development or for the discovery of new, and the refinement of known, substances, processes and products. For local buy-out assistance, such a firm shall also include an ongoing business, the assets of an existing firm, or the assets of a firm that has been closed for no more than one year as of the date of application to the department or UDC for assistance.

(j) Interagency advisory committee shall mean a committee which shall be chaired by the commissioner or his designee, and shall consist of representatives of the New York State Job Development Authority, UDC, New York State Science and Technology Foundation and the department, and other appropriate agencies as determined by the commissioner.

(k) Local buy out shall mean the transfer of the ownership and control of a viable industrial firm to its employees or managers, or to other investors resident in New York State, where such transfer will create or retain substantial numbers of private sector jobs by preventing the closing, partial closing, or the relocation out-of-state of an industrial firm. A more detailed description of the assistance available for a local buy out may be found at Parts 21 and 23 of this Title.

(l) Medium-sized industrial firm shall mean an industrial firm that employs less than 500 persons within the State on a full-time basis.

(m) Minority business enterprise shall mean any business enterprise which is at least 51 percent owned by, or in the case of a publicly owned business, at least 51 percent of the stock of which is owned by, minority-group members where such ownership interest is real, substantial and continuing and where such minority-group members have the authority to independently control the day-to-day business decisions of the entity.

(n) Minority-group member shall mean a U.S. citizen or permanent resident alien who is and can demonstrate membership in one of the following groups:

(1) Black persons having origin in any of the Black African racial groups not of Hispanic origin;

(2) Hispanic persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American descent of either Indian or Hispanic origin, regardless of race;

(3) Asian and Pacific Islander persons having origins in the Far East, Southeast Asia, and Indian subcontinent or the Pacific Islands; or

(4) American Indian or Alaskan Native persons having origins in any of the original peoples of North America.

(o) Potential for future profitability shall mean that a reasonable prospect exists that the firm can remain or become competitive and profitable and preserve or create jobs for a substantial period of time.

(p) Preliminary feasibility study shall mean a preliminary diagnosis and assessment within a short period of time of an industrial firm's problems, opportunities and potential viability, the feasibility of any proposed activity, and such other assistance as may be required.

(q) Productivity assessment shall mean an evaluation of the existing and potential productivity and profitability of an industrial firm or group of industrial firms, and recommendations for productivity improvements, including but not limited to analysis of products, market position, financial condition, ownership structure, production processes, labor/management relations, worker skills and training needs, plant and equipment, and business strategy. A productivity assessment may include the planning, design and introduction of remedial measures to improve productivity and competitiveness. Productivity assessments may be of four types, as follows:

(1) Preliminary productivity assessment shall mean an assessment to obtain within a short period of time a general overview and impression of an industrial firm's productivity, competitive situation and potential profitability.

(2) Full productivity assessment shall mean an in-depth evaluation of the existing and potential productivity and profitability of an industrial firm or group of firms, which includes a diagnosis of problems, weaknesses, strengths and opportunities; and which may include the planning, design and introduction of remedial measures to improve productivity and competitiveness.

(3) Limited productivity assessment shall mean an in-depth evaluation of one or more specific productivity or competitive problems of an industrial firm or group of firms which is causing loss of competitiveness and profitability in circumstances where a full productivity assessment is not warranted; or short-term management consulting services of a specialized nature to small- or medium-sized industrial firms.

(4) Productivity assessment for groups of industrial firms shall mean assistance to a group of industrial firms with common competitive problems in diagnosing their competitiveness situations, profitability and viability, and devising joint remedial strategies for resolving them. A more detailed description of the assistance available for each type of productivity assessment may be found at Part 22 of this Title.

(r) Program shall mean the Industrial Effectiveness Program created by the Omnibus Economic Development Act of 1987, chapter 839 of the Laws of 1987, other than expansion, attraction, retention and assistance provided pursuant to section 7(b)(3) of chapter 839 of the Laws of 1987.

(s) Project loans shall mean loans to industrial firms pursuant to section 7(b)(2) of the Omnibus Economic Development Act of 1987.

(t) Purchasing group shall mean employees, managers or other investors resident in the State who are contemplating a local buy out of an industrial firm located in the State.

(u) Small-sized industrial firm shall mean an industrial firm that employs 100 or less persons within the State on a full-time basis.

(v) Specialized industrial effectiveness financial assistance shall mean working capital loans for costs associated with:

(1) the introduction of new production processes and management systems;

(2) expansion or diversification of product lines;

(3) expansion into new markets;

(4) the redesign of production facilities; or

(5) implementing a corporate restructuring or turnaround plan for an industrial firm that is potentially viable, but faces the likelihood of a closing, partial closing or relocation out of New York State, and the loss of substantial numbers of jobs; and

(6) subordinated loans for up to 10 percent of the cost of a local buy out to effect the transfer of the ownership and control of a viable industrial firm to its employees, managers or other investors resident in the State, all as more fully set forth in Part 23 of this Title.

(w) Substantial numbers of jobs shall mean at least 25 jobs will be created or retained over a substantial period of time, or a fewer number of jobs where the firm represents a significant portion of total employment in the community, or where the closing, partial closing or relocation out-of-state of a firm is likely to have a major adverse impact on a community.

(x) Transfer of ownership and control shall mean a plan to transfer to a purchasing group within a period not exceeding 10 years at least 51 percent of the ownership interest required to exercise authority and control over the affairs of a firm.

(y) UDC shall mean the New York State Urban Development Corporation, created by chapter 174 of the Laws of 1968, as amended.

(z) UDC Act shall mean chapter 174 of the Laws of 1968, as amended.

(aa) Viable industrial firm shall mean an industrial firm which is profitable and competitive, or which demonstrates the capacity to become profitable and competitive, and to develop as a successful business, within a reasonable period of time.

(bb) Women-owned business enterprise means any business enterprise which is at least 51 percent owned by, or in the case of a publicly owned business at least 51 percent of the stock of which is owned by, citizens or permanent-resident aliens who are women, where such ownership interest is real, substantial and continuing and where such persons have the authority to independently control the day-to-day business decisions of the entity.

5 CRR-NY 20.4 Threshold criteria to qualify industrial firms for industrial effectiveness assistance {#sec-5-crr-ny-20.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.4}

(a) Except as provided in section 20.6 of this Part, the department shall qualify individual industrial firms to apply for industrial effectiveness assistance based on an initial evaluation of the following factors:

(1) the existence of one or more competitive problems that is having or is likely to have a major, long-term adverse impact on a firm's economic well-being and profitability and which is attributable to causes other than in-state competition;

(2) the firm's financial condition and key indicators of future economic health indicate it has potential for future profitability and a reasonable chance with remedial action of becoming viable and preserving or creating employment over a substantial period of time;

(3) comprehension by owners and managers of the firm's problems, weaknesses, strengths and opportunities, and their competence and capability to make necessary changes to address competitive problems;

(4) management's commitment to consider employees' interests, and its willingness to elicit the support and participation of the labor force in any program to improve productivity and competitiveness;

(5) the firm's commitment to self-help measures to improve its competitive position;

(6) the firm's commitment to full cooperation with the department as exhibited by its willingness to supply information necessary for assistance in a timely manner and to share the costs of assistance, all as more fully set forth in Part 22 of this Title; and

(7) State assistance is likely to materially contribute to a firm's efforts to improve its competitive position, resulting in an economic development benefit.

(b) The department shall apply such other criteria for specific industrial effectiveness assistance to qualified individual firms as are set forth elsewhere in this Chapter.

5 CRR-NY 20.5 Threshold criteria to qualify groups of industrial firms for industrial effectiveness assistance {#sec-5-crr-ny-20.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.5}

The department shall qualify groups of industrial firms to apply for industrial effectiveness assistance based on an initial review of the following factors:

(a) the group lends itself to a collaborative effort and a collective response to common competitive problems;

(b) all companies in the group have committed to a joint effort to address common competitive problems;

(c) management's commitment to consider employees' interests, and its willingness to elicit the support and participation of the labor force in any program to improve productivity and competitiveness; and

(d) State assistance is likely to materially contribute to a group's efforts to improve its competitive position, resulting in an economic development benefit.

5 CRR-NY 20.6 Threshold criteria to qualify industrial firms or purchasing groups for local buy-out assistance {#sec-5-crr-ny-20.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.6}

(a) The department shall qualify industrial firms or purchasing groups to apply for local buy-out assistance, based on an initial review of the following factors:

(1) the firm is potentially viable;

(2) ownership and control of the firm is to be transferred to employees, managers or other residents of New York State;

(3) the local buy out will create or retain substantial numbers of private sector jobs;

(4) the local buy out will prevent the closing, partial closing or relocation out-of-state of the firm;

(5) the purchasing group evidences leadership capabilities and cohesiveness to effectively own and operate the firm and to provide competent management;

(6) the firm appears strong enough, financially and otherwise, to survive a transition in ownership, and the buy out is likely to make the firm stronger over the long term;

(7) the purchasing group is committed to the firm's continued existence in New York State;

(8) the purchasing group evidences commitment to the growth and development of the firm and is prepared to make tangible investments in its future;

(9) the local buy out will serve the interests of employees and of the community where the firm is located; and

(10) employees and labor organizations representing employees within the firm or, in companies without labor organizations, other employee groups, support the local buy out, and they and the purchasing group are willing to work together to enhance the firm's competitive position.

5 CRR-NY 20.7 Administration {#sec-5-crr-ny-20.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.7}

In its administration of the program, the department shall:

(a) provide productivity assessments and feasibility studies to qualified industrial firms or groups of firms that have requested such assistance pursuant to procedures set forth in Parts 21 and 22 of this Title;

(b) identify public and private sources of expertise available to assess productivity problems of industrial firms and to work under contract or in cooperation with the department in assisting such firms to undertake productivity improvement activities pursuant to procedures set forth in Part 24 of this Title;

(c) identify individuals and firms with a distinctive competence in at least one area related to industrial productivity, such as industrial management, operations, production technology, marketing or labor relations and training, and a demonstrated ability to serve small- and medium-sized industrial firms;

(d) design and conduct seminars and workshops to inform industrial managers, union leaders, trade associations, and other appropriate individuals and organizations, of industrial productivity-improvement methods and approaches and to demonstrate their successful adoption in similar firms;

(e) publish a periodic newsletter to report on productivity research projects and case studies, market the program's services and provide such other information as the commissioner deems appropriate;

(f) conduct educational programs to inform industrial firms, labor organizations, banking organizations and other financial institutions, and industrial or local development agencies, of the benefits and risks associated with, and methods for effectuating, the transfer of ownership of industrial firms to employees, managers or other local investors;

(g) promote the services and assistance available under the program for industrial firms, to such firms and to municipal officials and agencies, regional and local economic development entities, technology development organizations, trade associations, business and labor organizations and other appropriate entities;

(h) provide short-term management consulting services to industrial firms, directly or through contracts, in order to assist such firms with assessing management, operations, market, or financial problems pursuant to procedures set forth in Part 22 of this Title;

(i) provide information on State-sponsored programs offering financial or technical assistance to industrial firms, and aid such firms in applying for assistance;

(j) identify industrial firms in danger of closing or substantially reducing operations; and

(k) coordinate with other State agencies and authorities in the delivery of industrial effectiveness services to individual firms and groups of firms.

5 CRR-NY 20.8 Preference in outreach {#sec-5-crr-ny-20.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.8}

The department shall direct its outreach efforts to:

(a) small- and medium-sized individual firms which, because of limited resources, internal capacity and information, require assistance from the State to diagnose and resolve competitive problems;

(b) firms, both large and small, located in State-designated economic development zones or in other economically distressed areas or regions heavily impacted by closings or major contractions of industrial firms;

(c) firms, both large and small, in other than economically distressed areas where assistance will serve an important public purpose, such as helping to save the sole employer in a community or a firm that is essential to a community's overall economic revitalization, or preserving employment for residents of an adjacent economically distressed area;

(d) minority- or women-owned enterprises or enterprises owned by dislocated workers, as defined in the Federal Job Training Partnership Act (P.L. 97-300, as amended);

(e) firms whose competitive disadvantage is caused by special advantages of foreign competition, such as low wages, price-cutting practices to penetrate markets, or government subsidies or supports;

(f) firms with job growth potential;

(g) productivity improvement projects that will serve as a model for other firms in the same industry sector or geographic area; and

(h) local buy outs by employees or managers.

5 CRR-NY 20.9 Qualification procedures {#sec-5-crr-ny-20.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.9}

(a) The department's regional offices, the New York State Science and Technology Foundation, the UDC, or other State agencies, authorities, offices or commissions, or local economic development entities, may refer an industrial firm or group of firms to the department to be qualified to apply for industrial effectiveness assistance.

(b) The department shall assign industrial effectiveness experts or specialists to visit and conduct interviews with the firm or group of firms, to review financial statements, and to complete a qualification for assistance questionnaire. The specialist shall report and recommend to the department whether the firm or group of firms should be qualified to apply for assistance under the program.

(c) Qualification of an industrial firm or group of industrial firms by the department pursuant to section 20.4, 20.5 or 20.6 of this Part shall make the firm or group of firms eligible to apply to the department for industrial effectiveness assistance.

(d) The department shall enter into such contractual agreements as are appropriate and necessary to facilitate the conduct of the program.

5 CRR-NY 20.10 Exemption from disclosure requirements {#sec-5-crr-ny-20.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.10}

To the fullest extent permitted by law, all information regarding the financial condition, marketing plans, manufacturing processes, production costs, productivity rates, customer lists, or other trade secrets and proprietary information of a person or entity requesting assistance from the department, which is submitted by such person or entity to the department in connection with an application for assistance or with a productivity assessment or feasibility study, shall be confidential and exempt from public disclosure.

5 CRR-NY 20.11 Reports {#sec-5-crr-ny-20.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 20.11}

Industrial firms which participate in the program shall report to the department in the form prescribed by the commissioner, in relation to the activities undertaken as a result of the productivity assessment or feasibility study performed on its behalf. Such reports shall discuss:

(a) assistance received by the firm;

(b) its progress in improving its productivity, competitiveness and profitability; and

(c) the economic impact of assistance under the program, including numbers of jobs created or retained and whether the continued location and growth of the industrial firm within New York has been assured.

Part 21 FEASIBILITY STUDIES

5 CRR-NY 21.1 Purpose {#sec-5-crr-ny-21.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 21.1}

The purpose of this Part is to provide guidance to industrial firms wishing to obtain industrial effectiveness assistance in the form of a preliminary or full feasibility study.

5 CRR-NY 21.2 Eligibility requirements {#sec-5-crr-ny-21.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 21.2}

(a) The department, or the UDC upon the approval of the commissioner, may provide financial assistance for a preliminary feasibility study of an industrial firm, group of industrial firms, or purchasing group qualified pursuant to Part 20 of this Title, which has demonstrated its commitment to fully cooperate with the department and experts conducting such study.

(b) The department, or UDC upon approval by the commissioner, may provide financial assistance for a full feasibility study to an industrial firm qualified pursuant to Part 20 of this Title which has a preliminary feasibility study or an equivalent assessment, acceptable to the department, which concludes:

(1) that the firm has potential for future profitability and a reasonable chance of becoming viable, and that the proposed local buy out or corporate restructuring or turnaround plan appears to be feasible;

(2) that management and the labor force are willing to jointly participate in a full study and resolution of productivity and management problems and to fully cooperate with the department and its experts;

(3) that the interests of employees would be served by such a study; and

(4) that the firm or purchasing group is committed to the full study, including but not limited to the cost-sharing financial contribution required by Part 25 of this Title.

5 CRR-NY 21.3 Terms {#sec-5-crr-ny-21.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 21.3}

(a) For a preliminary feasibility study:

(1) the department, or the UDC upon the approval of the commissioner, may provide financial support not to exceed $15,000 for a preliminary feasibility study for a local buy out of an industrial firm, except that upon a showing of special circumstances, the commissioner may authorize additional financial support; and

(2) the department, or the UDC upon the approval of the commissioner, may provide financial support not to exceed $10,000 for a preliminary feasibility study of a corporate restructuring or turnaround plan, except that upon a showing of special circumstances, the commissioner may authorize additional financial support.

(b) The department, or the UDC upon the approval of the commissioner, may provide financial support not to exceed $150,000 for a full feasibility study.

5 CRR-NY 21.4 Procedures {#sec-5-crr-ny-21.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 21.4}

(a) For a preliminary feasibility study:

(1) A qualified industrial firm or purchasing group shall complete and submit to the department a short-form application on forms provided by the department which shall include, but not be limited to, a description of the firm, its competitive situation, financial circumstances, assistance requested, proposed use of experts and method of selection, costs, support of the labor force for the study, the nature and extent of the firm's participation in and commitments to the study, commitments to make available necessary financial and other information, confidentiality provisions, and reporting requirements.

(2) Upon review and approval of the application by the department, a written agreement shall be entered into with the firm or purchasing group.

(3) The department, or an expert or experts retained by the department, shall perform the preliminary assessment.

(4) The department shall review the work of the expert preparing the preliminary feasibility study prior to its submission to insure that it adequately addresses the scope of services. Such preliminary feasibility study shall be delivered to the firm and to the department.

(b) For a full feasibility study:

(1) The firm or purchasing group shall prepare an application on forms provided by the department which shall include, but not be limited to, a detailed scope of services, estimated costs and schedule for completion of each task, commitments by the firm to meet the cost- sharing contributions set forth in Part 25 of this Title, and to make available financial and other information, confidentiality provisions, proposed use of experts and method of selection, evidence of support and participation of the labor force in the study reporting requirements, and such other information as the department may deem necessary and appropriate.

(2) In the case of a local buy out, the firm or purchasing group shall also supply evidence of support for the proposed buy out by members of the purchasing group, employees and labor organizations of the firm, and a letter from the owner or owners of the industrial firm indicating support of the local buy out and willingness to sell or transfer ownership interests to the purchasing group.

(3) In the case of a corporate restructuring or turnaround, the firm or purchasing group shall also provide information concerning major suppliers, customers, financial sources and other major creditors.

(4) Upon review and approval of the application by the commissioner, a written agreement shall be entered into with the firm or purchasing group.

(5) Full feasibility studies will be conducted by experts retained by the department, the industrial firm or purchasing group, and supervised by the department. Experts shall review their draft findings and recommendations with the department and the firm or purchasing group prior to submission of the full feasibility study. A final full feasibility study shall be delivered to the department and the firm or purchasing group.

(6) If the department determines, based upon recommendations in the study that further assistance is warranted, it may amend the agreement with the firm or purchasing group to provide for additional services to plan, design and introduce remedial measures required to effect a local buy out or corporate restructuring or turnaround, or to improve productivity and competitiveness.

Part 22 PRODUCTIVITY ASSESSMENTS

5 CRR-NY 22.1 Purpose {#sec-5-crr-ny-22.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 22.1}

The purpose of this Part is to provide guidance to industrial firms wishing to obtain industrial effectiveness assistance in the form of a productivity assessment.

5 CRR-NY 22.2 Eligibility requirements {#sec-5-crr-ny-22.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 22.2}

(a) The department, or UDC upon approval of the commissioner, may fund a preliminary productivity assessment of an industrial firm or group of industrial firms qualified pursuant to Part 20 of this Title, which has demonstrated a commitment to fully cooperate with the department and its experts conducting such assessment.

(b) The department, or UDC upon approval of the commissioner, may fund a limited, problem-specific productivity assessment of an industrial firm or group of firms qualified pursuant to Part 20 of this Title, which has a preliminary productivity assessment or an equivalent assessment acceptable to the department, concluding:

(1) that the firm is viable and has the potential for future profitability;

(2) that management and labor force are willing to jointly participate in an assessment and resolution of productivity and management problems;

(3) that interests of the employees would be served by such an assessment;

(4) that such an assessment would address the major competitive problem of the firm adversely affecting its viability and profitability;

(5) that the firm evidences a clear and substantial commitment to addressing its other needs, including maximum commitment of its own resources;

(6) that the time and cost of a full productivity assessment is not warranted in view of the firm's limited needs; and

(7) that resolution of one or more specific competitive problems for which the limited problem-specific productivity assessment assistance is requested can have a significant economic benefit.

(c) The department may fund a limited productivity assessment in the form of short-term management consultant services to assist a small- or medium-sized industrial firm qualified for assistance pursuant to Part 20 of this Title, which demonstrates:

(1) that the firm is viable, and has the potential for future profitability;

(2) that such services potentially can have a significant economic benefit;

(3) that the firm has a clear need for specialized expertise not available within the firm;

(4) that management is innovative and receptive to change and likely to continue with the productivity improvement after State assistance has ended;

(5) that such assistance will help the firm to address a major problem, the solution for which can have an important impact on its long-term competitiveness;

(6) that the firm's problem is directly attributable to competition from outside New York State; and

(7) that the firm is effectively using its resources to improve productivity and competitiveness in other areas.

(d) The department, or the UDC upon the approval by the commissioner, may provide financial assistance for a full productivity assessment of an industrial firm qualified pursuant to Part 20 of this Title:

(1) Which has a preliminary assessment or an equivalent assessment, acceptable to the department, concluding:

(i) that the firm is viable and has the potential for future profitability;

(ii) that management and the labor force are willing to jointly participate in a full assessment and resolution of productivity and management problems;

(iii) that the interests of the employees would be served by a full assessment;

(iv) that resolution of competitive problems which are the subject of the request for full assessment assistance can result in a significant economic benefit; and

(v) that the firm is committed to a full assessment, including but not limited to the cost- sharing contribution requirements of Part 25 of this Title.

(2) As part of the full productivity assessment, the department's acceptance of a firm's adjustment plan, based on the diagnosis and recommendations contained in such assessment, shall be a prerequisite for additional services from the department or UDC to plan, design and introduce measures to improve competitiveness. Factors to be considered by the department in approving such additional assistance shall include:

(i) whether the adjustment plan adequately addresses problems identified by the diagnosis and recommendations for corrective action;

(ii) whether the adjustment plan contains a sound and detailed strategy for actions to be taken by the firm to continue as a successful business;

(iii) whether additional assistance from the department or UDC will significantly contribute to the firm's adjustment plan;

(iv) whether assistance requested from the State is not available to the firm internally or from other private sources at affordable cost;

(v) whether the firm has committed to undertake other remedial measures called for by the adjustment plan for which State assistance is not requested; and

(vi) whether a reasonable prospect exists that the adjustment plan will enable the firm to become competitive, profitable and successful, and to preserve or create substantial numbers of jobs for a substantial period of time.

(e) The department or UDC may provide financial assistance for a full productivity assessment to a group of industrial firms, qualified pursuant to Part 20 of this Title, which has a preliminary assessment or equivalent assessment, acceptable to the department, which concludes:

(1) that the firms comprising the group are experiencing common competitive problems and are potentially viable;

(2) that management and labor of the firms are willing to participate in joint assessment and resolution of productivity and management problems, and that interests of employees of the firms would be served by such assistance;

(3) that all firms in the group are prepared to commit necessary internal resources to assist in the performance of the study; and

(4) that owners and managers of all firms in the group are committed to a cooperative effort to address their productivity and competitiveness problems, including but not limited to a commitment of the cost-sharing contribution required for the study provided for in Part 25 of this Title.

5 CRR-NY 22.3 Terms {#sec-5-crr-ny-22.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 22.3}

(a) For a preliminary productivity assessment, the department, or UDC upon approval by the commissioner, may provide financial assistance not to exceed $10,000, except that upon a showing of special circumstances, the commissioner may authorize additional financial support.

(b) For a limited productivity assessment, financial assistance may be provided for:

(1) a limited problem-specific productivity assessment by the department, or UDC upon approval by the commissioner, not to exceed $25,000 per firm or group of firms, except that, upon a showing of special circumstances, the commissioner may authorize additional financial support; and

(2) short-term management consulting services by the department to a small- or medium-sized firm not to exceed $5,000.

(c) For a full productivity assessment, the department, or the UDC upon the approval of the commissioner, may provide financial assistance not to exceed $150,000.

(d) For a full productivity assessment for a group of industrial firms, the department, or the UDC upon approval of the commissioner, may provide financial assistance not to exceed $150,000 per group.

5 CRR-NY 22.4 Procedures {#sec-5-crr-ny-22.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 22.4}

(a) The firm or group of firms shall complete an application, or a short-form application in the case of a preliminary productivity assessment or a limited productivity assessment involving short-term management consulting services, which shall include, but not be limited to, a description of the firm or group of firms, the competitive situation, financial circumstances, assistance requested, costs, cost-sharing arrangements, confidentiality requests, proposed use of experts and method of selection, evidence of support and participation of the labor force in the study, reporting requirements, and such other information as the department shall deem appropriate.

(b) Upon review and approval of the application by the department, or UDC upon approval of the commissioner, a written agreement shall be executed with the firm or group of firms.

(d) The department and the firm shall review the draft findings and recommendations prior to submission of the final productivity assessment to ensure that it adequately addresses the issues in the scope of services. A final productivity assessment will be submitted to the department and the firm or group of firms.

(e) If the department determines, based upon recommendations in a full productivity assessment, that further assistance is warranted, it may amend the agreement with the firm or group of firms to provide for additional services in preparing an adjustment plan and in planning, designing and introducing remedial measures to improve productivity and competitiveness.

Part 23 SPECIALIZED INDUSTRIAL EFFECTIVENESS FINANCIAL ASSISTANCE

5 CRR-NY 23.1 Purpose {#sec-5-crr-ny-23.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.1}

The purpose of this Part is to set forth the eligibility requirements, terms and procedures to receive specialized industrial effectiveness financing assistance under the program for local buy outs, and working capital loans for productivity improvements, and to implement corporate restructuring or turnaround plans. The program seeks to preserve and create permanent private sector jobs by encouraging New York manufacturing firms and industrial sectors to undertake productivity and other improvements to remain profitable and viable, and by assisting local buy outs of industrial firms by employees, managers and other residents of the State.

5 CRR-NY 23.2 Local buy-out financing assistance {#sec-5-crr-ny-23.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.2}

(a) The UDC, in cooperation with the department, may provide assistance to qualified firms for local buy outs through project loans to fill the financing gap between the equity contribution of the purchaser, secured debt financing provided by other sources, any financial participation by the seller, and the selling price of the firm.

(b) A local buy out must involve transfer of ownership and control of a viable industrial firm to employees, managers or other investors resident in the State.

(c) Only local buy outs which will create or retain substantial numbers of jobs by preventing a closing, partial closing or relocation out-of-state of an industrial firm will be eligible for loans.

5 CRR-NY 23.3 Criteria for local buy-out financial assistance {#sec-5-crr-ny-23.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.3}

(a) The UDC is required to make industrial effectiveness project findings under the UDC Act. Assistance will be predicated upon the ability of the UDC to make the following findings:

(1) that a feasibility study or productivity assessment exists demonstrating the potential for future profitability of the firm requesting financial assistance, and such study or assessment has been reviewed and approved by the Commissioner of Economic Development;

(2) that for loans to implement a corporate restructuring or turnaround plan, the management of the industrial firm requesting assistance is capable and the firm has a sound business development plan that includes measures to ensure labor and management cooperation and to effect changes required to continue as a successful business;

(3) that the requested financial assistance is not available from other public or private financing sources;

(4) that the area in which the project is to be located is a substandard or insanitary area, or is in danger of becoming a substandard or insanitary area, wherein there exists a condition of substantial and persistent unemployment or underemployment; and

(5) that there is a feasible method for the relocation of families and individuals displaced from the project area into decent, safe and sanitary dwellings, which are or will be provided in the project area or in other areas not generally less desirable in regard to public utilities and public and commercial facilities, at rents or prices within the financial needs of such families or individuals and reasonably accessible to their places of employment.

(b) In addition to the foregoing, the UDC shall evaluate applications submitted in accordance with the following criteria:

(1) the firm has been qualified for assistance pursuant to Part 20 of this Title;

(2) the firm has a comprehensive and sound business development and financial plan that includes detailed strategies and remedial measures to ensure labor and management cooperation, to effect changes required to continue as a successful business, to ensure capable management after the buy out, and which demonstrates that the financial circumstances of the firm and the purchasing group make the buy out feasible;

(3) the firm has taken or is committed to take such steps as the UDC deems necessary to ensure that it has a reasonable chance to continue as a successful business, including but not limited to changes in its operations, management or financing, and is prepared to include such as a condition of financing in the loan agreement;

(4) the other financing required for the local buy out is committed;

(5) the local buy out is unlikely to occur without the UDC loan assistance, and the firm is likely to close, partially close or relocate out-of-state, resulting in the loss of substantial numbers of jobs;

(6) the firm is an important employer in the community, and the local buy out is in the interest of both employees and the community and will not expose employees to excessive risks and potential liabilities;

(7) the ratio of the number of jobs to be created or retained to the amount of assistance requested from the UDC is warranted. In general, the UDC will not finance projects that anticipate a return of less than one job for every $15,000 of State assistance;

(8) the firm has the ability to repay the loan; and

(9) the firm has agreed to first consider, for any new positions opened as a result of the project loan, persons eligible to participate in Federal Job Training Partnership Act (P.L. 97-300, as amended) programs who shall be referred to the firm by administrative entities of service delivery areas created pursuant to such act or by the Job Service Division of the Department of Labor.

5 CRR-NY 23.4 Terms of local buy-out loans {#sec-5-crr-ny-23.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.4}

(a) A project loan shall not exceed $1 million.

(b) A project loan shall not exceed up to 10 percent of the cost of the local buy out or the amount of the purchaser's equity contribution, whichever amount is less.

(c) Loans shall be made only to fill a financing gap between the equity contribution of the purchaser, secured debt financing provided by other sources, any financial participation by the seller, and the selling price of the company.

(d) Such loans shall be secured, but the security interest may be subordinate to the security interest on any other private or public financial assistance provided to the purchaser.

(e) The term of the loan shall be of the shortest duration consistent with the needs of the business, but not exceeding 20 years.

(f) The interest rate of a loan shall be determined by the UDC, and the UDC may accept warrants in addition to any interest charges.

(g) Standard repayment terms will include level debt service payments over the term of the project loan. In certain circumstances deferred or graduated payments may be permitted, provided that the project loan be fully amortized over the remainder of the loan term.

5 CRR-NY 23.5 Procedure for local buy-out assistance {#sec-5-crr-ny-23.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.5}

(a) Application forms shall be developed by the UDC and the department.

(b) An industrial firm shall submit an application for a local buy-out loan to the UDC and the department, which may include, but need not be limited to, the following:

(1) a feasibility study and business development and financing plan;

(2) information about the proposed project's total project cost, total assistance requested, use of loan funds, other proposed sources of funding, and the number of jobs to be preserved or created;

(3) a complete set of financial statements and a list of proposed collateral, with appraisals;

(4) a description of the need for the requested funds and of the expected economic development impact of the loan;

(5) in the case of a transfer to employees, information about the extent of support by employees and labor unions which represent employees of the firm;

(6) a letter from the present owners, or those otherwise authorized to act on behalf of the business, indicating agreement to sell the business or otherwise transfer ownership at the specified price;

(7) commitments of financing from all other sources;

(8) evidence that adequate private and/or public financing is not available at affordable rates or terms to fill the financial gap;

(9) estimates of the total number of jobs to be created or retained immediately and after a three-year time period immediately following the receipt of the loan; and

(10) such other information as the UDC and the department shall require.

(c) The loan application shall be reviewed by the UDC with the assistance of the department and submitted to the interagency advisory committee for its review, analysis and recommendation to the UDC chairman. The UDC chairman shall submit a recommended project to the UDC directors for preliminary approval.

(d) In the event the UDC directors preliminarily approve a project, the UDC will schedule a public hearing in accordance with the UDC Act. Upon completion of the public hearing and a written comment period, the project will be submitted to the UDC directors for final approval. In the event the UDC directors give final approval, the project will be submitted for approval to the State Public Authorities Control Board.

5 CRR-NY 23.6 Working capital loans to improve productivity and competitiveness {#sec-5-crr-ny-23.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.6}

The UDC, in cooperation with the department, may provide working capital loans to encourage the introduction of new production processes, the expansion or diversification of product lines or expansion into new markets by qualified industrial firms with non-competitive product lines or outmoded production operations. For new production process and product expansion or diversification, loans shall be available for commercial development of a process or product line which has advanced beyond the research and development stage and is readily capable of being, or has been, reduced to practice.

5 CRR-NY 23.7 Criteria for working capital loans to improve productivity and competitiveness {#sec-5-crr-ny-23.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.7}

(a) The UDC is required to make industrial effectiveness project findings under the UDC Act. Assistance will be predicated upon the ability of the UDC to make the following findings:

(1) that a feasibility study or productivity assessment exists demonstrating the potential for future profitability of the firm requesting financial assistance and such study or assessment has been reviewed and approved by the Commissioner of Economic Development;

(3) that the requested financial assistance is not available from other public or private financing sources;

(b) In addition to the foregoing, the UDC shall evaluate applications submitted in accordance with the following criteria:

(1) the firm has been qualified for assistance pursuant to Part 20 of this Title;

(2) the firm has an adjustment plan or a sound business development plan;

(3) the project addresses a primary cause of the firm's competitive problem, is essential to its overall plan to improve long-term competitiveness, and is likely to improve the productivity, market position or competitive strength of the firm;

(4) other financing required for the project has been committed;

(5) the firm is an important employer in the community, and the project will serve the interests of employees and of the community;

(6) the project is intended to maintain employment of all or a substantial part of the existing work force to the maximum extent;

(7) the firm is prepared to give contractual assurances that the products, processes and techniques to be financed will be developed and produced in the State and that benefits of the project shall remain in the State;

(8) in the case of an expansion or diversification of a product line, the product has a good probability of becoming commercially successful;

(9) the ratio of number of jobs to be created or retained to the amount of assistance requested from the UDC is warranted. In general, financing will not be approved for projects that anticipate a return of less than one job for each $15,000 of State assistance;

(10) the firm has agreed to first consider, for new employment opportunities opened as a result of the project loan, persons eligible to participate in Federal Job Training Partnership Act (P.L. 97-300, as amended) programs, who shall be referred to the firm by administrative entities of service delivery areas created pursuant to such act or by the Job Service Division of the Department of Labor; and

(11) the firm has the ability to repay the loan.

5 CRR-NY 23.8 Terms for working capital loans to improve productivity and competitiveness {#sec-5-crr-ny-23.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.8}

(a) A project loan may not exceed $250,000 or 50 percent of the total project cost, whichever amount is less.

(b) The loan term shall not exceed three years.

(d) Preference shall be given to loans that are secured by fixed assets; however, security interests may be subordinate to the security interest on any other public or private financial assistance provided to the firm.

(e) The UDC may also defer payment of interest and/or principal on a loan based on a demonstration that deferral is necessary for the success of a working capital loan to improve productivity and competitiveness and that the firm will be able to handle the level of repayment when loan payments are resumed.

5 CRR-NY 23.9 Procedures for working capital loans to improve productivity and competitiveness {#sec-5-crr-ny-23.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.9}

(a) Application forms shall be developed by the UDC and the department.

(b) An industrial firm shall submit an application for a working capital loan to the UDC and the department, which may include, but need not be limited to, the following:

(1) the financial history and condition of the firm and projections based on certified financial statements;

(2) the nature of the proposed new process or product, marketing initiative, statement of commercial feasibility, and estimated timetable for project completion;

(3) how the working capital loan will be used in conjunction with the proposed activity;

(4) the present and potential markets for the proposed new product or process, and identification of competing products or processes serving the same markets;

(5) how the potential new product or production process or marketing initiative will stimulate new business and its impact on the existing work force;

(6) how the project fits into the firm's overall plan for enhancing competitiveness, and actions the firm is taking or intends to take in other areas to improve productivity;

(7) the economic benefit of the proposed project for which financing is requested in terms of jobs created or preserved or other significant economic impact;

(8) commitments of financing for the project from all other sources;

(9) efforts to obtain the requested financing from other public and private sources or from internal resources; and

(10) such other information as the UDC and the department shall require.

5 CRR-NY 23.10 Working capital loans for corporate restructuring or corporate turnaround plans {#sec-5-crr-ny-23.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.10}

The UDC, in cooperation with the department, may provide flexible working capital project loans to implement a corporate restructuring or turnaround plan for qualified industrial firms with the potential for future profitability that face the likelihood of a closing, partial closing or relocation out-of-state and the loss of a substantial number of jobs. Such loans shall be made only to supplement other public and private financing where all of the financial aid needed by a firm for a corporate restructuring or turnaround plan is not available from other sources, and where a UDC loan is needed to implement a specific action called for by the firm's restructuring or turnaround plan or to meet immediate working capital needs of the firm to continue operations while the restructuring or turnaround is being effected.

5 CRR-NY 23.11 Criteria for working capital loans for corporate restructuring or corporate turnaround plans {#sec-5-crr-ny-23.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.11}

(a) The UDC is required to make industrial effectiveness project findings under the UDC Act. Assistance will be predicated upon the ability of the UDC to make the following findings:

(3) that the requested financial assistance is not available from other public or private financing sources;

(b) In addition to the foregoing, the UDC shall evaluate applications submitted in accordance with the following criteria:

(1) the firm has been qualified for assistance pursuant to Part 20 of this Title;

(2) the firm faces the loss of a substantial number of jobs as the result of a closing, partial closing, or relocation out-of-state of the firm;

(3) the firm is an important employer in the community, and efforts to revitalize the firm will serve the long-term interests of both employees and the community;

(4) the social costs to employees and the community resulting from a large employment loss, plant closing, or business failure, and fiscal benefits to the State and the community from maintaining operations of the firm, outweigh the financial risks to the State;

(5) the project loan will significantly contribute to the success of the corporate restructuring or turnaround plan, and implementation of such plan is unlikely to occur without State assistance;

(6) the other financing required for the project has been committed;

(7) the firm has taken, or is committed to take, such steps as the UDC deems necessary to ensure that it has a reasonable chance to continue as a successful business, including but not limited to changes in its operations, management or financing, and is prepared to include such as a condition of financing in the loan agreement;

(8) the corporate restructuring or turnaround plan reflects consideration and fair treatment of employees, and the firm's adjustment plan seeks to preserve the jobs of employees to the maximum extent possible;

(9) there exists a reasonable prospect for repayment of the working capital loan; and

(10) the firm has agreed to first consider, for new employment opportunities opened as a result of the project loan, persons eligible to participate in the Federal Job Training Partnership Act (P.L. 97-300, as amended) programs, who shall be referred to the firm by administrative entities of service delivery areas created pursuant to such act on or by the Job Service Division of the Department of Labor.

5 CRR-NY 23.12 Terms for working capital loans for corporate restructuring or corporate turnaround plans {#sec-5-crr-ny-23.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.12}

(a) The project loan may not exceed $400,000 or 50 percent of project cost, whichever amount is less. The 50 percent of the working capital requirement not provided by UDC must come from outside sources.

(b) The loan term shall not exceed three years.

(d) Preference shall be given to loans secured by fixed assets; however, security interests may be subordinate to the security interests of any other private or public financial assistance provided to the firm.

(e) The UDC may also defer payment of interest and/or principal on a loan based on a demonstration that deferral is necessary for the success of a working capital loan to improve productivity and competitiveness, and that the firm will be able to handle the level of repayment when loan payments are resumed.

(f) Relocation out-of-state by the firm while the loan is outstanding shall require immediate repayment of the full amount of the loan.

5 CRR-NY 23.13 Procedures for working capital loans for corporate restructuring or corporate turnaround plans {#sec-5-crr-ny-23.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 23.13}

(a) Application forms shall be developed by the UDC and the department.

(b) An industrial firm shall submit an application for a working capital loan to the UDC and the department, and attach copies of its feasibility study and business development and financing plan detailing the firm's restructuring or turnaround plan. Such application may include, but need not be limited to, the following:

(1) how the working capital loan is essential for, and will be used in connection with, the corporate restructuring or turnaround plan;

(2) sources of other financing required for the plan, and nature and extent of commitments for such financing;

(3) efforts to obtain the financing requested from other public and private sources or from internal resources; and

(4) the economic benefit of the corporate restructuring or turnaround in terms of employment preserved and impact on the community.

Part 24 SELECTING EXPERTS

5 CRR-NY 24.1 Purpose {#sec-5-crr-ny-24.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 24.1}

The purpose of this Part is to set forth the procedures and criteria to be used in selecting and retaining experts to diagnose competitive problems of specific industrial firms or groups of firms, to recommend remedial measures, and to perform other industrial effectiveness assistance under the program.

5 CRR-NY 24.2 Identification of qualified experts {#sec-5-crr-ny-24.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 24.2}

(a) From time to time, and no less than annually, the department shall undertake efforts to identify consultants, including minority-group members and women, qualified to provide expert services under the program. Such efforts shall include, but not be limited to:

(1) advertising in print media; and

(2) written solicitations of individuals, firms, professional associations and agencies that provide, or have access to, industrial effectiveness expertise.

(b) Individuals or other entities which indicate an interest in providing consulting services under the program shall be required to submit to the department an information questionnaire, including but not limited to expertise, background, experience and qualifications of principals, employees and potential subcontractors; possible conflicts of interest; standing in the professional community; familiarity with manufacturing operations; special experience and competencies; previous clients; fee schedules. Such information shall be updated annually.

(c) Based on the foregoing process, the department shall develop a list of experts qualified to provide services under the program.

5 CRR-NY 24.3 Procedures and criteria for selecting and retaining experts {#sec-5-crr-ny-24.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 24.3}

(a) The department, or other State entity pursuant to agreement with the department, shall solicit and retain experts pursuant to contracting procedures applicable to the department or to such other State entity. Any agreement between the department and an expert selected shall include, among other provisions, an affirmation by the firm to be served regarding the approval of the expert, the scope of the services and terms of the firm's participation.

(b) In circumstances where the department or other State entity does not retain the expert, industrial firms assisted may select and retain experts consistent with guidelines established by the commissioner governing competitive bidding requirements, sole source contracts, and justifi cation for selection, as will best promote the public interest, taking into consideration the reliability of the expert, the expert's understanding of the scope of work, the nature of the services to be supplied, the conformity of the proposal with the solicitation, the experience and expertise of the principals, the costs, and the time required to perform.

(1) As a condition of State assistance, an expert selected by a firm shall be approved by the department based upon a written explanation by the firm of the selection process, justification for consultant selected, the scope of work, rate of payment and completion schedule, and a certification that no potential conflict of interest exists between the firm and the expert.

(2) The contract between the firm and the expert shall provide for supervision of consultant services by the department and for termination of State acceptance in the event that the expert does not fulfill its contractual obligations to the firm.

Part 25 FEES

5 CRR-NY 25.1 Purpose {#sec-5-crr-ny-25.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 25.1}

The purpose of this Part is to set forth the fees to be charged for assistance provided under the program to industrial firms or to groups of industrial firms, and the nature and extent of financial commitments required of owners or managers of assisted firms.

5 CRR-NY 25.2 Application fees {#sec-5-crr-ny-25.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 25.2}

(a) The department shall charge a fee of $100 for applications for full feasibility studies, full productivity assessments, limited problem-specific productivity assessments, and for specialized industrial effectiveness financial assistance.

(b) The department shall not charge application fees for preliminary feasibility studies, preliminary productivity assessments, or for limited productivity assessments involving short- term management consulting services.

(a) The department shall require an industrial firm or group of industrial firms, or purchasing group in the case of a local buy out, to cost-share industrial effectiveness technical assistance as follows:

(1) for preliminary feasibility studies and preliminary productivity assessments, the firm or group shall pay at least 25 percent of the total cost in cash or through in-kind services according to a schedule established by the department;

(2) for full feasibility studies and full or limited productivity assessments, other than short- term management consulting services, the firm or group shall pay at least 50 percent of the total cost in cash or through in-kind services according to a schedule established by the department; and

(3) for limited productivity assessments involving short-term management consulting services, the firm or group shall pay at least 50 percent of the total cost in cash.

(b) Total cost, for purposes of calculating the cost sharing shall:

(1) include all reasonable and necessary costs incurred in the course of assistance, including but not limited to direct and indirect costs to the State related to professional services of staff and outside consultants, plus the value of services to be provided by the firm, group of firms or purchasing group which are not a part of employees' ordinary duties and services; and

(2) exclude costs of State assistance in assisting a firm, group of firms or purchasing group to qualify or prepare an application for assistance, selecting consultants, preparing cost-sharing service agreements, and providing general information to applicants.

(c) A firm, group of firms or purchasing group that intends to provide in-kind services to fulfill its matching requirement shall submit to the department a statement of the type of in-kind service to be provided, why it is essential for purposes of the project, the estimated value of the services, and the expertise and background of individuals designated to perform the in-kind services.

(d) In the case of a preliminary or full feasibility study for a local buy out which is subsequently consummated, the purchasing group or firm must repay with interest the State's contribution to such study. Such repayment shall be made at either the closing date of the acquisition or within one year from the date of final disbursement of funds, whichever is later.

5 CRR-NY 25.4 Administrative fee {#sec-5-crr-ny-25.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 25.4}

The UDC shall assess an administrative fee of up to 1.5 percent of the project loan payable by the borrower at closing. The UDC may allocate the administrative fee to cover the project-related expenses it deems appropriate. In addition, the borrower will be obligated to pay for all expenses related to the project loan, including but not limited to expenses, expenses related to appraisals, surveys, title insurance and other requirements deemed appropriate by the UDC.

Chapter IV ECONOMIC DEVELOPMENT SKILLS TRAINING PROGRAM

Part 30 APPLICATION, EVALUATION AND ADMINISTRATION

5 CRR-NY 30.1 Purpose and general description {#sec-5-crr-ny-30.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 30.1}

The purpose of this Part is to set forth the application process, evaluation criteria and administration procedures for financial assistance under the Economic Development Skills Training Program. The purpose of the Economic Development Skills Training Program is to provide assistance to eligible applicants for the purpose of providing skills development training which fosters economic development by creating or preserving jobs in New York State.

5 CRR-NY 30.2 Definitions {#sec-5-crr-ny-30.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 30.2}

(a) Commissioner means the Commissioner of Economic Development.

(b) Department means the Department of Economic Development.

(1) has been terminated or laid off from employment, or who has received a notice of termination or layoff from employment, and is eligible for, currently receiving, or has exhausted any entitlement to unemployment compensation, and who is unlikely to return to a previous industry or occupation; or

(2) has been terminated from employment, or who has received a notice of termination of employment, as a result of any permanent closure of a plant or facility; or

(3) is long-term unemployed and has limited opportunities for employment or reemployment in the same or a similar occupation in the area in which such individual resides, including any older individual who has substantial barriers to employment by reason of age; or

(4) was self-employed (including a farmer) and is unemployed as a result of general economic conditions in the community in which the individual resides or because of natural disasters as defined by the United States Secretary of Labor.

(d) Displaced homemaker means an individual who:

(1) has worked in the home providing unpaid household services for family members;

(2) is not gainfully employed;

(3) has had, or would have, difficulty in securing gainful employment; and

(4) has been dependent on the income of another family member but is no longer supported by such income, or has been dependent on federal assistance but is no longer eligible for such assistance, or is being supported as the parent of minor children by government assistance or spousal support.

(e) Distressed area means:

(1) a county in which:

(i) the income levels of 20 percent or more of the inhabitants are below the poverty level, as shown by the most recent decennial census, as reported by the United States Census Bureau; or

(ii) the average annual rate of unemployment for the two most recent calendar years was 20 percent or more above the State average, as reported by the Commissioner of Labor; or

(iii) three of the following five characteristics exist:

(a) the average annual rate of unemployment for the two most recent calendar years was 10 percent or more above the State average, as reported by the Commissioner of Labor;

(b) the rate of growth in resident employment during the preceding five calendar years was less than 90 percent of the statewide average, as reported by the Commissioner of Labor;

(c) the rate of growth in per capita personal income during the preceding five calendar years was less than 90 percent of the statewide average, as reported by the United States Bureau of Economic Analysis;

(d) the total population has declined since the last decennial census, as reported by the United States Census Bureau; or

(e) the percentage of inhabitants whose incomes are below the poverty level is greater than the percentage of inhabitants of the State whose incomes are below the poverty level, as shown by the most recent decennial census, as reported by the United States Census Bureau;

(2) a municipality, or portion of a municipality, located in a county where such county is not a distressed area, but such municipality, or portion of a municipality, is characterized by the following:

(i) (a) the percentage of inhabitants with incomes below the poverty level is more than 25 percent greater than the percentage of inhabitants of the State whose incomes are below the poverty level, as shown by the most recent decennial census as reported by the United States Census Bureau; and

(b) the rate of unemployment is 125 percent or more of the rate of unemployment in the State, as reported by the Commissioner of Labor; or

(ii) (a) the percentage of inhabitants with incomes below the poverty level exceeds the percentage of inhabitants with incomes below the poverty level in the economic development region, as shown by the most recent decennial census as reported by the United States Census Bureau; and

(b) the rate of unemployment is 150 percent or more of the rate of unemployment in the economic development region, as reported by the Commissioner of Labor; or

(3) an area eligible for designation as an economic development zone.

(f) Economically disadvantaged individual means an individual who receives, or is a member of a family who receives, cash public assistance payments, or is a member of a family which has a total family income for the six-month period prior to enrollment in programs funded pursuant to the Economic Development Skills Training Program, which, in relation to family size, was not in excess of the higher of the poverty level or 70 percent of the lower living standard income level, or is receiving food stamps.

(g) Educational agency means a school district, board of cooperative educational services, community college, agricultural and technical college, or degree-granting institution of higher education, or an independent not-for-profit organization which meets the standards of instructional quality established in regulation by the Commissioner of Education. These standards shall include, but not be limited to, qualifications of administrative and instructional personnel, quality of established curricula, facilities and equipment, recordkeeping, admission, grading, attendance, and record of placement of completers which meets standards of acceptability as established by the Commissioner of Education.

(h) Equipment means tangible personal property which will further the objectives of the supported program and for which a definite value and evidence in support thereof have been provided.

(i) Eligible applicant means an organization or group of organizations which has demonstrated effectiveness in the delivery of training services and which is one of the following or a group consisting of two or more of the following:

(1) an educational agency;

(2) a business;

(3) an industry group or association;

(4) an employee union or organization;

(5) a community-based organization; or

(6) a grant recipient or administrative entity of a service delivery area and private industry council as described by the Job Training Partnership Act (29 USC 1501 et seq., as added by P.L. 97-300 and subsequently amended).

(j) Financial support means anything of value contributed by an eligible applicant which is reasonably calculated to support directly the development and expansion of an Economic Development Skills Training Program project and which represents an addition to any financial support previously or customarily provided to such education agencies by the contributor, including, but not limited to, funds, equipment, facilities, faculty and scholarships for matriculating students and trainees.

(k) Interagency review committee means a committee chaired by the commissioner and consisting of representatives from the State Education Department, the Department of Labor, the Department of Social Services, the State University, the City University and the State Job Training Partnership Council. Such other State agencies, authorities, boards or commissions shall be consulted as the commissioner shall deem appropriate.

(l) Minority business enterprise means a business enterprise which is at least 51 percent owned by citizens or permanent resident aliens who are of Black, Hispanic, Asian, American Indian, Pacific Islander or Alaskan Native origin, where such ownership interest is real, substantial and continuing and where such persons have the authority to control independently the day-to-day business decisions of the enterprise.

(m) On-the-job training costs means wages paid by an employer to on-the-job training participants, extraordinary expenses attributable to on-the-job training or expenses attributable to the lower productivity of on-the-job training participants.

(n) Small business means a business which is resident in this State, independently owned and operated, not dominant in its field and employs 200 or fewer workers.

(o) Targeted individuals means residents of the State who are dislocated workers, economically disadvantaged individuals or displaced homemakers.

(p) Technical assistance means professional and any other assistance provided by an eligible applicant which is reasonably calculated to support directly the development and expansion of a particular project funded pursuant to the Economic Development Skills Training Program and which represents an addition to any technical assistance previously or customarily provided.

(q) Women-owned business enterprise means a business enterprise which is at least 51 percent owned by citizens or permanent resident aliens who are women, where such ownership interest is real, substantial and continuing and where such persons have the authority to control independently the day-to-day business decisions of the enterprise.

5 CRR-NY 30.3 Eligible purposes; conditions {#sec-5-crr-ny-30.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 30.3}

(a) Eligible applicants may submit applications to the department for assistance for skills training programs, including:

(1) training for entry-level employment and worker skills upgrading; or

(2) payment of on-the-job training costs for a period not to exceed 12 weeks, or classroom instruction costs, or a combination thereof.

(b) Any assistance provided under the Economic Development Skills Training Program shall be matched at least equally by financing or contribution from other sources.

(c) Assistance provided under the Economic Development Skills Training Program shall not be used in any way which impairs the provisions of any existing collective bargaining agreement. Where possible, consultation with the appropriate labor organization shall be undertaken by the applicant.

5 CRR-NY 30.4 Evaluation criteria {#sec-5-crr-ny-30.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 30.4}

Applications for assistance under the Economic Development Skills Training Program shall be evaluated according to the following criteria:

(a) the demonstrated need for State assistance;

(b) the number and types of employees to be affected, including the potential for increased productivity and wages;

(c) the economic development benefits of the project, including but not limited to whether the assistance to be provided will support the creation or preservation of jobs;

(d) the employer's contribution to the actual cost of training;

(e) the potential for entry-level opportunities resulting from promotions created by skills upgrading;

(f) the willingness of assisted businesses to fill entry-level vacancies resulting from skills upgrading with job-ready clients referred from programs conducted under the Job Training Partnership Act or the Job Service Division of the Department of Labor;

(g) whether the proposed training meets the human resource needs identified by the applicant;

(h) whether the assisted business is located in a distressed area, especially in an economic development zone;

(i) the degree to which requested assistance will be matched by financing or other types of contributions from other sources which would equal or exceed the assistance sought from the Economic Development Skills Training Program;

(j) whether the proposed assistance will aid a small business or businesses, or a minority- or a women-owned business enterprise or enterprises;

(k) whether the proposed assistance will either aid targeted individuals, or be used to provide skills upgrading for currently employed individuals which will result in the creation of new jobs which will be filled by targeted individuals;

(l) the extent to which the proposed training project is consistent with the annual statewide economic development strategic plan; and

(m) such other criteria as the commissioner deems appropriate.

5 CRR-NY 30.5 Application process {#sec-5-crr-ny-30.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 30.5}

(a) Applications for assistance under the Economic Development Skills Training Program shall be in the form prescribed by the commissioner and may be submitted by an eligible applicant at any time to any office of the department.

(b) Applications shall include, but not be limited to, the following:

(1) a description of the proposed project, including the type of skills training or education to be provided;

(2) an estimate of the total cost of the proposed project and an itemization of estimated costs associated with equipment, personnel, facilities and materials;

(3) a description of the economic development benefits expected to be achieved by the proposed project;

(4) a description, which may include data available from the Department of Labor, of the employment needs expected to be filled, including the number and types of jobs to be created or preserved;

(5) a statement of the technical assistance and financial support to be provided by the eligible applicant and the business or businesses for which a proposed project is designed, and from other sources;

(6) a demonstration of the extent to which assistance will be used to complement and leverage services available to businesses under other State-, local- or Federal-assisted training programs;

(7) a statement that for any positions opened as a result of training assistance, businesses shall first consider persons eligible to participate in Job Training Partnership Act programs who shall be referred to such businesses by administrative entities of service delivery areas created pursuant to such act or the Job Service Division of the Department of Labor;

(8) a projection of anticipated outcomes, including, as appropriate, job placement rates, the number of jobs to be opened to targeted individuals as a result of skills-upgrading activities, and promotion, or wage increases for persons participating in skills-upgrading projects;

(9) commitments from individual businesses to hire individuals who have successfully completed training;

(10) a statement, where appropriate, of the extent to which the proposed assistance will be used to aid small businesses;

(11) a statement, where appropriate, of the extent to which the proposed assistance will either aid targeted individuals, or be used to provide skills upgrading for currently employed individuals which will result in the creation of new jobs which will be filled by targeted individuals;

(12) a statement that the proposed training shall not impair the provisions of any existing collective bargaining agreement and that, where possible, consultation with the appropriate labor organization has been undertaken by the applicant;

(13) a description of arrangements developed through other resources to provide child-care assistance for trainees in need of such assistance; and

(14) a statement describing how the proposed project conforms to the annual statewide economic development strategic plan.

5 CRR-NY 30.6 Evaluation process {#sec-5-crr-ny-30.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 30.6}

(a) In the case of a proposal for Economic Development Skills Training Program assistance which is not in excess of $25,000, the commissioner shall obtain the recommendation of the appropriate regional office of the department, evaluate the proposal in accordance with the evaluation criteria set forth in section 30.4 of this Part and determine whether such application shall be approved.

(b) In the case of a proposal for Economic Development Skills Training Program assistance which exceeds $25,000, the commissioner shall obtain the recommendation of the appropriate regional office of the department and shall forward the proposal to the Interagency Review Committee for its recommendation. The commissioner may consult with such other State agencies, authorities, boards or commissions as he deems appropriate. Upon receipt of such recommendations, the commissioner shall evaluate the proposal in accordance with the evaluation criteria set forth in section 30.4 of this Part and determine whether such application shall be approved. In the event the Interagency Review Committee fails to make a recommendation to the commissioner within 30 days after receiving a proposal, the commissioner may determine whether such application shall be approved notwithstanding the failure of the Interagency Review Committee to act.

(c) The commissioner shall insure that determinations on proposals are made in such manner that at least 50 percent of the money available for the purposes of the Economic Development Skills Training Program shall be expended to assist small businesses.

(d) The commissioner shall insure that determinations on proposals are made in such manner that at least 50 percent of the money available for the Economic Development Skills Training Program shall be expended to assist targeted individuals, or to provide skills upgrading for currently employed individuals which will result in the creation of new jobs which will be filled by targeted individuals.

(e) The department shall notify an applicant in writing of the determination made by the commissioner. Notice of an approved proposal shall be transmitted to the applicable private industry council established under the Job Training Partnership Act.

5 CRR-NY 30.7 Execution of awards {#sec-5-crr-ny-30.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 30.7}

(a) When the commissioner approves an application for Economic Development Skills Training Program assistance, the department, upon the recommendation of the Interagency Review Committee, shall execute and monitor the necessary grants and contracts or shall authorize one or more agencies to execute and monitor such assistance, pursuant to a written agreement between the approved applicant and such authorized agency or agencies, to be prepared by such agency or agencies, as set forth below. Each such written agreement shall provide that the approved applicant shall be entitled to receive payment of the full amount of Economic Development Skills Training Program assistance awarded only if the contractor demonstrates that the anticipated outcomes described in the application have been achieved or exceeded; provided, however, that each such written agreement may provide for payments in advance of the performance or completion of training activities and for repayment of such advance payments in the event that the anticipated outcomes are not substantially achieved.

(b) The Department of Labor shall be authorized to execute and monitor awards of assistance for projects which provide on-the-job training reimbursements to businesses and for labor exchange and other related services, as are agreed upon by the Department of Economic Development and the Department of Labor.

(c) The Education Department shall be authorized to execute and monitor awards of assistance for projects which provide classroom-based training which will be delivered by school districts, boards of cooperative educational services, and private degree-granting institutions of higher education.

(d) The State University of New York or the City University of New York shall be authorized to execute and monitor awards of assistance for projects which provide classroom-based training which will be delivered by community colleges, agricultural and technical colleges, and public degree-granting institutions of higher education.

5 CRR-NY 30.8 Reporting {#sec-5-crr-ny-30.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 30.8}

(a) Each eligible applicant receiving Economic Development Skills Training Program financial assistance shall submit quarterly and annual project reports to the department and the agency or agencies authorized to administer the eligible applicant's project pursuant to section 30.7 of this Part, which shall include, but not be limited to:

(1) the number of individuals enrolled in each project, classified according to gender, age, race, income, employment status, and as to the number of individuals who are dislocated workers, economically disadvantaged individuals, displaced homemakers, or public assistance recipients;

(2) the number and type of businesses participating in each project;

(3) the nature of the matching assistance required in each project;

(4) the number and type of educational agencies participating in each project;

(5) the job placement rate of each project and the overall placement rate of all Economic Development Skills Training Program projects administered by the applicant; and

(6) such other information as the commissioner may require.

(b) Each eligible applicant receiving Economic Development Skills Training Program financial assistance shall submit quarterly and annual financial reports to the department and the agency or agencies authorized to administer the eligible applicant's project pursuant to section 30.7 of this Part, which shall set forth receipts and expenditures of funds pursuant to the Economic Development Skills Training Program.

Chapter V ENTREPRENEURIAL ASSISTANCE PROGRAM

Part 40 MINORITY- AND WOMEN-OWNED BUSINESS ENTERPRISE DEVELOPMENT CENTERS—THE APPLICATION PROCESS

5 CRR-NY 40.1 Purpose and general description {#sec-5-crr-ny-40.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 40.1}

The purpose of this Part is to set forth the application and evaluation process for designation of pilot minority- and women-owned business enterprise development centers, on a competitive basis, under the Entrepreneurial Assistance Program. The pilot minority- and women-owned business enterprise development centers shall provide intensive community-based management and technical assistance targeted primarily to minority-group members and women who are seeking to start or are starting new business ventures.

5 CRR-NY 40.2 Definitions {#sec-5-crr-ny-40.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 40.2}

(a) Applicant means a not-for-profit corporation, operated by a board of directors representing community leaders in business, education, finance and government, which is located in an area accessible to minority-group members and women.

(b) Clients means minority-group members and women who are seeking to start or who are starting new business ventures, including those business ventures in the early stages of business development.

(d) Department means the Department of Economic Development.

(e) Development center means the minority- and women-owned business enterprise development center selected and designated by the department to receive a grant pursuant to the Entrepreneurial Assistance Program.

(f) Minority business enterprise means any business enterprise which is at least 51 percent owned by, or in the case of a publicly owned business at least 51 percent of the stock of which is owned by, minority-group members where such ownership interest is real, substantial and continuing, and where such minority-group members have the authority to independently control the day-to-day business decisions of the entity.

(g) Minority-group member means a United States citizen or permanent-resident alien who is and can demonstrate membership in one of the following groups:

(1) Black persons having origins in any of the Black African racial groups not of Hispanic origin;

(2) Hispanic persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American descent of either Indian or Hispanic origin, regardless of race;

(3) Asian and Pacific Islander persons having origins in the Far East, Southeast Asia, and Indian subcontinent or the Pacific Islands; or

(4) American Indian or Alaskan Native persons having origins in any of the original peoples of North America.

(h) Women-owned business enterprise means any business enterprise which is at least 51 percent owned by, or in the case of a publicly owned business at least 51 percent of the stock of which is owned by, citizens or permanent-resident aliens who are women, where such ownership interest is real, substantial and continuing and where such persons have the authority to independently control the day-to-day business decisions of the entity.

5 CRR-NY 40.3 Goals and objectives {#sec-5-crr-ny-40.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 40.3}

The development center shall seek to:

(a) expand economic opportunity for clients through the development of entrepreneurship among these populations;

(b) promote the participation of clients in new and small business development in New York State;

(c) assist in the revitalization of distressed communities through the encouragement of entrepreneurship by community residents;

(d) provide employment opportunities through related job growth;

(e) assist minority-group members and women in overcoming the barriers to successful entrepreneurship by providing intensive managerial and technical support;

(f) test on a regional basis various approaches to the enhancement of entrepreneurial skills among clients and to the improvement of service delivery to these populations; and

(g) such other goals and objectives as the department may find necessary or appropriate.

5 CRR-NY 40.4 Requirements of development centers {#sec-5-crr-ny-40.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 40.4}

(a) Each development center shall:

(1) establish an advisory group of community business experts, at least one half of whom shall be representative of the clients to be served by the development center, which shall constitute a support network to provide counseling and mentoring services to clients from the concept stage of development through the first one to two years of existence on a regular basis, and as needed thereafter during the first five years of a new venture; and

(2) establish a referral and coordination system with existing area small business assistance programs and financing sources.

(b) Each development center shall provide needed services to clients, including but not limited to:

(1) orientation and screening of prospective entrepreneurs;

(2) analysis of business concepts and technical feasibility;

(3) market analysis;

(4) management analysis and counseling;

(5) business planning and financial planning assistance;

(6) referrals to financial resources; and

(7) referrals to existing educational programs for training in such areas as marketing, accounting and other such training programs as may be necessary and available.

5 CRR-NY 40.5 Application process {#sec-5-crr-ny-40.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 40.5}

(a) Periodically, the department shall issue a request for proposal for development centers under the Entrepreneurial Assistance Program. Such request shall set forth the date by which and the office to which proposals must be submitted, the number of copies of the proposal to be submitted, and shall specify the information to be contained in each proposal.

(b) Proposals by applicants shall include, but not be limited to, the following:

(1) a description of the applicant;

(2) a copy of the applicant's certificate of incorporation;

(3) a list of the applicant's board of directors, the duration of each director's term of office and a description or resume of each director, focusing on his/her community leadership role in business, education, finance and government;

(4) the location of the proposed development center and a description of how it will be accessible to clients;

(5) a description of the advisory group of community business experts to be established, including their names and resumes, if known, and a commitment by the applicant to require that at least half of the advisory group members shall be minority-group members and women;

(6) a description of services to be provided by the applicant to clients as described in section 40.4 of this Part;

(7) a copy of the proposed development center's budget, including a description of the financial assistance provided from Federal, State, local and private sources;

(8) a list of current or proposed staff of the development center, including resumes of current staff and job descriptions for anticipated staffing;

(9) a plan to supplement State and local funding through fees for services which may be based on a sliding scale based on ability to pay;

(10) the need for and anticipated impact of the proposed development center on the community in which it will function;

(11) a description of how the proposed development center would be replicated in other communities; and

(12) plans for a reporting system to be used in evaluating the success of the development center.

(c) The department shall review the proposal in accordance with the evaluation criteria specified in section 40.6 of this Part. The commissioner shall approve or disapprove the proposals and so notify the applicants in writing. The department shall enter into such contractual agreements as are necessary or appropriate to facilitate the conduct of the Entrepreneurial Assistance Program.

5 CRR-NY 40.6 Evaluation criteria {#sec-5-crr-ny-40.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 40.6}

The department shall evaluate the proposals based upon the applicant's demonstration of the following:

(a) the applicant's understanding of the goals and objectives in section 40.3 of this Part;

(b) the level of participation in the proposed development center of local leaders in post-secondary education, business, finance and government;

(c) the level of financial and other assistance provided at the State, Federal and local levels, including private sources, to support the operations of the proposed development center;

(d) the plans of the proposed development center to supplement State, Federal and local funding through fees for services which may be based on a sliding scale based on ability to pay;

(e) the need for and anticipated impact of the proposed development center on the community in which it will function;

(f) the quality of the work plan and staff of the proposed development center;

(g) the extent of economic distress in the area to be served;

(h) the extent to which the applicant has experience in providing business management and technical assistance to clients;

(i) the extent to which the applicant coordinates with other assistance programs targeted to small and new businesses;

(j) the extent to which the applicant understands the economic conditions and needs of the community and the region;

(k) the applicant's documented commitment to affirmative action principles;

(l) the extent to which the applicant's proposal could be replicated in other areas of the State; and

(m) such other criteria as the department shall deem relevant.

5 CRR-NY 40.7 Reporting {#sec-5-crr-ny-40.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 40.7}

(a) Each development center shall submit program reports as prescribed by the department which shall contain, but not be limited to, a discussion and analysis of the progress of the services provided by the development center and such other information as the department deems pertinent to evaluating the effectiveness of the support centers, such as:

(1) the extent to which the development center serves minority-group members and women;

(2) the extent to which the development center coordinates with other assistance programs targeted to small and new businesses;

(3) the ability of the development center to leverage other sources of funding and support; and

(4) the success of the development center in aiding minority-group members and women to start up new businesses, including the number of new business start-ups resulting from the development center's services.

(b) Each development center shall submit financial reports, in a form prescribed by the department, which shall set forth receipts and expenditures of funds pursuant to the Entrepreneurial Assistance Program.

Part 41 ENTREPRENEURSHIP SUPPORT CENTERS—THE APPLICATION PROCESS

5 CRR-NY 41.1 Purpose and general description {#sec-5-crr-ny-41.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 41.1}

The purpose of this Part is to set forth the application and evaluation process for designation of entrepreneurship support centers, on a competitive basis, under the Entrepreneurial Assistance Program. Entrepreneurship support centers shall provide training to dislocated workers, minorities and women in the principles and practice of entrepreneurship, in order to prepare such persons to pursue self-employment opportunities.

5 CRR-NY 41.2 Definitions {#sec-5-crr-ny-41.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 41.2}

(a) Applicant means vocational education agencies, not-for-profit corporations including but not limited to local development corporations, chambers of commerce and community-based organizations, or any combination thereof.

(b) Commissioner means the Commissioner of Economic Development.

(d) Dislocated worker means an individual who:

(1) has been terminated or laid off from employment, or who has received a notice of termination or layoff from employment, and is eligible for, currently receiving, or has exhausted any entitlement to, unemployment compensation, and who is unlikely to return to a previous industry or occupation;

(2) has been terminated or who has received a notice of termination of employment, as a result of any permanent closure of a plant or facility;

(4) was self-employed (including a farmer) and is unemployed as a result of general economic conditions in the community in which the individual resides, or because of natural disasters as defined by the United States Secretary of Labor.

(e) Minority business enterprise means any business enterprise which is at least 51 percent owned by, or in the case of a publicly owned business at least 51 percent of the stock of which is owned by, minority-group members where such ownership interest is real, substantial and continuing, and where such persons have the authority to independently control the day-to-day business decisions of the entity.

(f) Minority-group member or minority means a United States citizen or permanent-resident alien who is and can demonstrate membership in one of the following groups:

(1) Black persons having origins in any of the Black African racial groups not of Hispanic origin;

(2) Hispanic persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American descent of either Indian or Hispanic origin, regardless of race;

(3) Asian and Pacific Islander persons having origins in the Far East, Southeast Asia, the Indian subcontinent or the Pacific Islands; or

(4) American Indian or Alaskan Native persons having origins in any of the original peoples of North America.

(g) Participant means a woman, a minority-group member or a displaced worker.

(h) Small business means a business which is resident in the State, is independently owned and operated, is not dominant in its field and employs 100 or less persons.

(i) Support center means the entrepreneurship support centers selected and designated by the department to receive grants pursuant to the Entrepreneurial Assistance Program.

(j) Training program means instruction in the skills necessary for business development and small business management. Such programs may include, but not be limited to, the development of business plans, marketing, advertising, financial planning, accounting and loan packaging.

(k) Vocational education agency means a community college or board of cooperative educational services operating within the State.

(l) Women-owned business enterprise means any business enterprise which is at least 51 percent owned by, or in the case of a publicly owned business at least 51 percent of the stock of which is owned by, citizens or permanent-resident aliens who are women, where such ownership interest is real, substantial and continuing and where such persons have the authority to independently control the day-to-day business decisions of the entity.

5 CRR-NY 41.3 Grant restrictions {#sec-5-crr-ny-41.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 41.3}

(a) No grant shall be made to any one or any consortium of applicants in excess of $50,000.

(b) Grants shall be disbursed for payment of the cost of services and expenses of the program director, instructors, faculty and support personnel of the support center, and any other person providing instruction and counseling in furtherance of the training program of the support center.

5 CRR-NY 41.4 Requirements of support centers {#sec-5-crr-ny-41.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 41.4}

(a) The training program of each support center must include at least 60 hours of classroom instruction and at least 30 hours of one-to-one counseling for each participant. The support center training program must be supplemented by ongoing technical assistance for business development for participants who have completed the training program.

(b) Training programs of support centers shall be required to meet the standards of instructional quality established in regulations by the Commissioner of Education. These standards shall include, but not be limited to, qualifications of the administrative and instructional personnel, quality of the curricula, quality of facilities and equipment, recordkeeping, admission, attendance, and record of placement of completers which meets standards of acceptability as established by the Commissioner of Education, in conjunction with the Commissioner of Labor.

5 CRR-NY 41.5 Application process {#sec-5-crr-ny-41.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 41.5}

(a) Periodically, the department shall issue a request for proposal for support centers under the Entrepreneurial Assistance Program. Such request shall set forth the date by which and the office to which proposals must be submitted, the number of copies of the proposal to be submitted, and shall specify the information to be contained in each proposal.

(b) Proposals by applicants shall include, but not be limited to, the following:

(1) a description of the applicant;

(2) a description of and a plan for implementing the training program to be offered, including but not limited to a discussion of how the training program will meet the requirements of section 41.4 of this Part, and how the training will be scheduled to meet the needs of individuals with ongoing business responsibilities;

(3) a listing of instructors from the vocational education agencies, not-for-profit corporations and the community participating in the program, and their curricula vitae;

(4) the designation of and credentials for a program director;

(5) a plan for providing ongoing technical assistance to program graduates, including coordination with providers of other entrepreneurial assistance programs and with providers of small business technical assistance and services;

(6) a plan for marketing the training program to prospective participants;

(7) plans for a reporting system to be used in evaluating the success of the development center; and

(8) a program budget, including fees for services, if any, matching funds or in-kind contributions to be provided by the applicant or other sources; and

(9) a description of how the proposed support center could be replicated in other communities.

(c) The department shall review the proposal in accordance with the evaluation criteria specified in section 41.6 of this Part. The commissioner shall approve or disapprove the proposals and so notify the applicants in writing. The department shall enter into such contractual agreements as are necessary or appropriate to facilitate the conduct of the Entrepreneurial Assistance Program.

5 CRR-NY 41.6 Evaluation criteria {#sec-5-crr-ny-41.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 41.6}

The department shall evaluate the proposals submitted, based upon the applicant's demonstration of the following:

(a) the applicant's understanding of the needs of minority-group members, women and dislocated workers;

(b) the applicant's understanding of the existing resources and service gaps in the community and region;

(d) the level of financial assistance and other in-kind contributions provided by other entities, including the level, source and nature of matching funds;

(e) the applicant's experience in providing training in business development and small business management;

(f) the applicant's capacity to provide individual counseling to participants;

(g) the applicant's capacity to provide ongoing technical assistance for graduates;

(h) the applicant's working relationships and ability to coordinate services with existing sources of small and new business assistance in the community and region;

(i) the quality of the training program's design, including outreach and promotion;

(j) the feasibility of the applicant's plan for implementing the training program;

(k) the level of experience and professional qualifications of the training program and instructional staff; and

(l) such other criteria as the department shall deem relevant.

5 CRR-NY 41.7 Reporting {#sec-5-crr-ny-41.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 41.7}

(a) Each support center shall submit programmatic reports, as prescribed by the department, which shall contain, but not be limited to, a discussion and analysis of the progress of the services provided by the support center, and such other information as the department deems pertinent to evaluating the effectiveness of the support center, such as:

(1) the extent to which the training program serves minority-group members, women and dislocated workers;

(2) the extent to which the training program is coordinated with other assistance programs targeted to small and new businesses;

(3) the ability of the program to leverage other sources of funding and support; and

(4) the success of the training program in aiding minority-group members, women and dislocated workers to start up new businesses, including the number of new business start-ups resulting from the program and the quality of the supplemental technical assistance offered to graduates.

(b) Each support center shall submit financial reports, in a form prescribed by the department, which shall set forth receipts and expenditures of funds pursuant to the Entrepreneurial Assistance Program.

Chapter VI EXPORT TRADE DEMONSTRATION PROJECT PROGRAM

Part 50 THE APPLICATION PROCESS

5 CRR-NY 50.1 Purpose and general description {#sec-5-crr-ny-50.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 50.1}

The purpose of the Export Trade Demonstration Project Program is to provide State funding, on a competitive basis, for eligible export trade demonstration projects designed to encourage and assist businesses, industrial firms or industry groups to engage in export trade, and to coordinate other State economic development programs with such projects. The purpose of this Part is to set forth the application process for funding for export trade demonstration projects.

5 CRR-NY 50.2 Definitions {#sec-5-crr-ny-50.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 50.2}

(a) Commissioner means the Commissioner of Economic Development.

(b) Department means the Department of Economic Development.

(c) Eligible applicant or applicant means a public benefit corporation, not-for-profit corporation, local development corporation, industrial development authority, trade association, educational institution, and other not-for-profit organizations which promote economic development.

(d) Eligible project includes, but is not limited to, any project to provide one or more of the following services: export market analysis, foreign direct investment leads, export trade promotion, export trade education, export trade finance technical assistance, or export trade finance.

(e) Export trade committee means a committee established to make recommendations to the commissioner for approval of export trade demonstration projects. Members of the committee shall include, among others: the commissioner, who shall chair the committee; a representative of the Port Authority of New York and New Jersey; and at least two representatives of the private sector experienced in export trade, selected by the commissioner, at least one of whom shall be from a small business.

(f) Export Trade Demonstration Project Program or program shall mean the program established pursuant to article 10, section 221, of the Economic Development Law as enacted by chapter 839 of the Laws of 1987.

(g) Small business means one which is resident in the State, independently owned and operated, not dominant in its field, and employs 500 or less persons.

5 CRR-NY 50.3 Grant limits {#sec-5-crr-ny-50.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 50.3}

(a) No single grant for an export trade demonstration project providing technical assistance shall exceed $100,000.

(b) No single grant for an export trade demonstration project providing financial assistance shall exceed $200,000.

5 CRR-NY 50.4 Application process {#sec-5-crr-ny-50.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 50.4}

(a) Periodically, the department shall issue a request for proposals under the Export Trade Demonstration Project Program. Such request shall set forth the date by which proposals must be submitted, the number of copies of the proposals to be submitted, the office to which they should be forwarded, and shall specify the information to be contained in each proposal.

(b) Proposals shall include, but not be limited to, the following:

(1) information on the nature of the applicant's organization, its purposes, and background of its principals;

(2) a demonstration of the applicant's ability to provide the proposed services;

(3) the potential for the initiation or expansion of export sales in the areas to be served;

(4) for export trade demonstration projects providing financial assistance:

(i) a description of the availability or nonavailability of export credit from other sources in the area to be served;

(ii) a demonstration of commitment by a financial institution to participate in the program; and

(iii) a description of the nature and extent of such financial institution's participation in the program;

(5) for export trade projects providing technical assistance, a description of the availability or nonavailability of export technical assistance from other sources in the area to be served;

(6) the methods to be used to coordinate the delivery of State and local export promotion resources;

(7) an indication of the possibility that the services to be funded would become self-sustaining;

(8) a demonstration of the potential to duplicate the project elsewhere in the State;

(9) a description of the participation of local and regional economic development organizations; and

(10) a budget, including matching funds, in-kind and otherwise, to be provided by the applicant.

5 CRR-NY 50.5 Evaluation; approval {#sec-5-crr-ny-50.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 50.5}

(a) The appropriate regional office of the department shall review proposals for funding for export trade demonstration projects to determine whether they are complete and meet the purposes of the new Export Trade Demonstration Project Program, and shall forward its recommendations to the Export Trade Committee.

(b) The Export Trade Committee shall review proposed export trade demonstration project proposals and make recommendations to the commissioner.

(1) are resident in New York State;

(2) are independently owned and operated;

(3) are not dominant in their field;

(4) employ 500 employees or less; and

(5) are located in a geographic area demonstrating a need for such services.

(d) The commissioner shall approve or disapprove the proposals and so notify the applicants in writing. The department shall enter into such contractual agreements as are appropriate or necessary to facilitate the conduct of the Export Trade Demonstration Project Program.

5 CRR-NY 50.6 Reporting {#sec-5-crr-ny-50.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 50.6}

(a) Applicants which participate in the Export Trade Demonstration Project Program shall submit quarterly and annual project reports to the department in relation to the export trade demonstration project, including the information set forth below:

(1) For technical assistance projects:

(i) a description of the project;

(ii) its potential application to other areas of the State;

(iii) the success of the project in meeting its stated objectives;

(iv) the economic impact of the project on the area served;

(v) the degree of local and regional participation, financial and otherwise;

(vi) the coordination with State and local export promotion programs and resources;

(vii) the approximate dollar amount of export sales and investment of foreign capital generated by the project; and

(viii) such other information as the department deems pertinent to evaluating the effectiveness of the project.

(2) For financial assistance projects;

(i) a description of the project;

(ii) its potential application to other areas of the State;

(iii) the success of the project in meeting its stated goals and objectives;

(iv) the economic impact of each project on the area served;

(v) the degree of local and regional participation, financial and otherwise;

(vi) the coordination of each project with State and local export promotion programs and resources; and

(vii) such other information as the department deems pertinent to evaluating the effectiveness of the project.

(b) Applicants which participate in the Export Trade Demonstration Project Program shall submit quarterly and annual financial reports in a form prescribed by the department which shall set forth receipts and expenditures of funds pursuant to the Export Trade Demonstration Project Program.

Chapter VII INDUSTRIAL INFRASTRUCTURE DEVELOPMENT PROGRAM

Part 60 THE APPLICATION PROCESS

5 CRR-NY 60.1 Purpose and general description {#sec-5-crr-ny-60.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 60.1}

The purpose of this Part is to set forth the application process to receive funding under the Industrial Infrastructure Development Program. The purpose of the program is to provide State funding for eligible industrial infrastructure development projects which are an integral part of an economic development effort within the State. The appropriation for this program will be used where there is a demonstrated need for State participation in the industrial infrastructure development project and where funding from existing programs is not available or appropriate.

5 CRR-NY 60.2 Definitions {#sec-5-crr-ny-60.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 60.2}

(a) Commissioner means the Commissioner of Economic Development.

(b) Department means the Department of Economic Development.

(c) Eligible applicant or applicant means any State agency involved in promoting the economic development of the State, including but not limited to: the Departments of Economic Development, Agriculture and Markets, and Transportation; the Urban Development Corporation and the Job Development Authority; a municipality; an industrial development agency; or a local development corporation.

(d) Eligible project means an industrial infrastructure development project which is an integral part of an economic development effort which will retain, attract, expand or revitalize an industrial facility. A project upon which construction of the infrastructure has been initiated is not defined as an eligible project.

(e) Industrial facility means any type of facility to be used or occupied by any person in an enterprise deemed to offer a reasonable likelihood for promoting the creation or retention of job opportunities in the State, and includes, but is not limited to, industrial or manufacturing plants, facilities for research and development purposes, facilities for conducting wholesale receiving and distributing operations, facilities for conducting office operations, warehousing operations, agricultural operations, or any other operations dealing in the exchange of goods, wares, services, or other types of property of any type or description. A facility supporting primarily retail commercial operations is not defined as an industrial facility.

(f) Industrial Infrastructure Development Program or program shall mean the program established by article 13, section 250, of the Economic Development Law, as enacted by chapter 839 of the Laws of 1987.

(g) Industrial infrastructure development project means a project for the design, acquisition of property, construction and/or reconstruction in connection with storm and sanitary sewers, electric and gas service distribution lines, water supply systems, drainage systems, and site clearance, preparation, improvements and demolition.

(h) Primarily retail commercial operations means those operations at which the majority of sales are retail sales of goods or services to customers who personally visit the facility supporting the operations to obtain such goods or services.

(i) State agency means an office, department, board, commission, bureau, division, public corporation, agency or instrumentality of the State.

5 CRR-NY 60.3 Eligible and ineligible costs {#sec-5-crr-ny-60.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 60.3}

(a) The following costs are eligible for funding under this program:

(1) industrial infrastructure development project design costs;

(2) costs for completing and updating plans, specifications and estimates, where preliminary engineering or related planning has already been undertaken, and where additional engineering work or related planning is required to permit construction of the industrial infrastructure development project;

(3) costs associated with standard construction activities which are reasonable costs of construction work performed under contract; and

(4) costs for acquisition of real property.

(b) The following costs are ineligible for funding under this program:

(1) expenses or other engineering costs incurred prior to the industrial infrastructure development project initiation, related to administration, planning or estimates;

(2) any expense required to carry out the overall responsibilities of the eligible applicant, such as administrative costs; and

(3) municipal personal services costs of a regular and recurring nature.

(c) For any single industrial infrastructure development project, costs shall not exceed $250,000 of the State funds appropriated for this program, and the length of the loan shall not exceed the useful life of the eligible project. Loans shall be secured by fixed assets, wherever possible.

5 CRR-NY 60.4 Evaluation criteria {#sec-5-crr-ny-60.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 60.4}

The department shall evaluate the proposals submitted in accordance with the following criteria:

(a) the total number of jobs created or retained per dollar invested in the industrial infrastructure development project, with preference given to projects that will create or retain at least one permanent job for each $15,000 of assistance provided;

(b) consistency with the appropriate regional economic development strategy;

(c) the impact on existing and proposed economic development projects and programs and appropriateness of the proposed industrial infrastructure development project concept, taking into consideration whether the project is an integral part of an economic development project which will retain or create jobs;

(d) the impact on existing infrastructure facilities and services, if any;

(e) the availability of alternate funding sources, within a reasonable period of time, at affordable rates or terms, for the industrial infrastructure project;

(f) the repayment ability of the party who is designated to make such repayment;

(g) demonstration by the industrial facility of its commitment and ability to carry out the economic development project related to the industrial infrastructure development project; and

(h) demonstration of commitment of financing from public or private sources for the industrial infrastructure development project.

5 CRR-NY 60.5 Preliminary applications {#sec-5-crr-ny-60.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 60.5}

(a) Preliminary applications for assistance under the Industrial Infrastructure Development Program shall be in the form prescribed by the commissioner, and may be submitted by an eligible applicant at any time to the appropriate regional office of the department.

(b) Preliminary applications shall include, but not be limited to, a brief description of the following:

(1) a description of the industrial infrastructure development project, including:

(i) provisions for public use and maintenance for the useful life of the facility to be provided by the applicant, if appropriate;

(ii) an affirmation by the responsible public or corporate official that the industrial infrastructure development project has met all environmental requirements under the State Environmental Quality Review Act and other applicable Federal, State and local statutes, ordinances and regulations;

(iii) documentation which indicates that estimated costs for the industrial infrastructure development project are both reasonable and proper for such work; and

(iv) a visual representation of the industrial infrastructure development project in map format;

(2) a description of how the economic development project related to the industrial infrastructure development project is consistent with the regional economic development strategy and the State's economic development goals;

(3) an estimate of the number of jobs to be created or retained by the economic development project;

(4) a description of the financing and implementation schedule for the economic development project which clearly demonstrates the need for State participation in the industrial infrastructure development project component;

(5) an affirmation by the responsible public or corporate official to the effect that other existing financing programs are not available or appropriate for the industrial infrastructure development project due to lack of funding;

(6) identification of other sources of public and private financing committed to the project; and

(7) a description of the method or plans for repayment to the State of at least 50 percent of the industrial infrastructure development project costs. Such description should thoroughly address the circumstances and justification for not repaying the entire amount proposed to be funded under this program.

5 CRR-NY 60.6 Department review of preliminary applications; determination {#sec-5-crr-ny-60.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 60.6}

The appropriate regional office of the department shall review the preliminary applications, and upon a determination that they are complete and in compliance with the regional economic development strategy, shall forward the preliminary applications with a recommendation and comments to the department's central office for a determination of eligibility and availability of funds. The department shall review the preliminary application in accordance with the evaluation criteria specified in section 60.4 of this Part, and shall approve or disapprove the preliminary applications and so notify the applicants. If the department determines that a preliminary application is inadequate, the applicant shall be so notified and given the opportunity to reapply.

5 CRR-NY 60.7 Final applications {#sec-5-crr-ny-60.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 60.7}

(a) Applicants whose preliminary applications have been approved shall submit final applications to the department's central office, which final applications shall contain such further information, documentation and explanation regarding the contents of the preliminary applications as may be necessary or appropriate for the department to make a final determination.

(b) The department may charge a fee to the eligible applicant in order to recover the actual costs of preparing or reviewing a draft environmental impact statement, if such a document is found to be necessary by the department. All fees will be in accordance with 6 NYCRR Part 617.

5 CRR-NY 60.8 Department review of final applications; determination {#sec-5-crr-ny-60.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 60.8}

The department shall review each final application in accordance with the evaluation criteria specified in section 60.4 of this Part, and shall approve or disapprove final applications and shall so notify applicants. The department shall enter into such contractual agreements as are appropriate and necessary to facilitate the conduct of the Industrial Infrastructure Development Program.

5 CRR-NY 60.9 Reporting {#sec-5-crr-ny-60.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 60.9}

(a) Eligible applicants participating in the Industrial Infrastructure Development Program shall submit quarterly and annual project reports as prescribed by the department which shall contain, but not be limited to, a discussion and analysis of the progress of the eligible project, and such other information as the department deems pertinent to evaluating the status of the project.

(b) Eligible applicants participating in the Industrial Infrastructure Development Program shall submit quarterly and annual financial reports in a form prescribed by the department which shall set forth receipts and expenditures of funds pursuant to the Industrial Infrastructure Development Program.

Chapter VIII OFFICE OF WASTE PREVENTION SERVICES

Part 70 WASTE PREVENTION PROGRAM

5 CRR-NY 70.1 Purpose and scope {#sec-5-crr-ny-70.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.1}

The purpose of these regulations is to set forth the eligibility requirements and application procedures for financial assistance under the Waste Prevention Program. The program provides funding for feasibility studies, and waste prevention financing through loans, principal reductions, loan guarantees and interest subsidies for eligible projects. Program funds are targeted to businesses, including nonprofit organizations, for the purpose of improving the economic and environmental performance of business through waste prevention.

5 CRR-NY 70.2 Definitions {#sec-5-crr-ny-70.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.2}

(a) Applicant or eligible applicant means any small to medium size business or nonprofit organization which employs less than 500 workers or has gross annual sales of less than $10 million.

(b) Department means the Department of Economic Development.

(c) Eligible project or project shall mean actions taken by or on behalf of a New York business involving the acquisition, construction, alteration, repair or improvement of a building, fixtures, machinery or equipment, provided that such project results in:

(1) source reduction or material substitution, provided that the substitution of one hazardous substance, product or nonproduct output for another does not result in the creation of a new risk;

(2) in-process recycling;

(3) recycling or reuse of non-hazardous solid wastes;

(4) increased energy efficiency;

(5) conservation of the use of water or other natural resources that improve process economics;

(6) elimination of the purchase of materials, the production of which for the use of said firm would result in more waste or resource consumption; or

(7) other practices or technologies that reduce the use of hazardous materials or otherwise improve air or water quality.

Eligible project shall not include end-of-pipe pollution control technologies or practices where such controls or practices are designed primarily to achieve compliance with the Environmental Conservation Law or regulations promulgated pursuant thereto; energy recovery or incineration; or out-of-process recycling or reuse of hazardous waste or hazardous substances.

(d) Feasibility study shall mean a technical or economic analysis of the feasibility of specific applications of waste prevention technologies or practices or both.

(e) Financing institution means any domestic insurance company, not-for-profit corporation, bank, trust company, savings bank, savings and loan association or credit union incorporated, chartered, organized or licensed under the laws of New York State, any other state of the United States or the Federal government. This term also includes any public authority, public benefit corporation, or municipality which provides program assistance to program recipients.

(f) Out-of-process recycling of hazardous materials shall mean the use of hazardous wastes, collected after the manufacturing process, as raw materials or feedstocks for off-site production of other materials or products;

(g) Program shall mean the Waste Prevention Program.

(h) Program assistance means funding for a loan or a feasibility study provided by the department or an interest subsidy, principal reduction or loan guarantee provided by the department for a loan made by a financing institution.

(i) Program recipient means an applicant approved by the department for program assistance.

(j) Secondary materials shall mean material recovered from or otherwise destined for the waste stream, including but not limited to post-consumer material, industrial scrap material and overstock or obsolete inventories from distributors, wholesalers and other companies, but shall not include those materials and by-products generated from and commonly reused within an original manufacturing process.

(k) Technical feasibility study shall mean a report which identifies and analyzes in detail the waste prevention project which the applicant proposes to implement. The report shall include the cost of implementation of the project, a construction schedule and a description of how the project will:

(1) minimize, reduce or eliminate the generation of wastes;

(2) use or reuse wastes;

(3) increase energy efficiency or water conservation;

(4) improve air or water quality; and/or

(5) improve process economics.

(l) Waste shall mean:

(1) solid waste - all putrescible and non-putrescible materials or substances discarded or rejected as being spent, useless, worthless, or in excess to the owners at the time of such discard or rejection, including but not limited to garbage, refuse, industrial and commercial waste, sludges from air or water control facilities, rubbish, ashes, contained gaseous material, incinerator residue, demolition and construction debris, discarded automobiles and offal but not including sewage and other highly diluted water carried materials or substances and those in gaseous form, as defined in subdivision one of section 27-0701 of the Environmental Conservation Law (ECL);

(2) air contaminant - a dust, fume, gas, mist, odor, smoke, vapor, pollen, noise or any combination thereof, as defined in subdivision two of section 19-0107 of the ECL;

(3) industrial waste - any liquid, gaseous, solid or waste substance or a combination thereof resulting from any process of industry, manufacturing, trade, or business or from the development or recovery of any natural resources, which may cause or might reasonably be expected to cause pollution of the waters of the State in contravention of the standards adopted under the Environmental Conservation Law; and

(4) hazardous waste - those wastes which appear on the list, or satisfies the characteristics of hazardous waste, promulgated pursuant to section 27-0903 of the Environmental Conservation Law.

Such term shall not include source, special nuclear or by-product material as defined in the Atomic Energy Act of 1954, as amended.

(m) Waste prevention technologies shall mean any technology employed to prevent wastes or to process secondary materials for use or reuse but shall not include technology employed for incineration of waste nor the processing of waste for use as refuse derived fuel.

5 CRR-NY 70.3 Eligibility for program assistance {#sec-5-crr-ny-70.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.3}

(a) The department may provide, within available appropriations, program assistance to an applicant which employs less than 500 workers or had gross annual sales of less than $10 million during the last fiscal year.

(b) In order to receive program assistance, an applicant must demonstrate that its proposed project was not commenced prior to the date of application to the department for program assistance.

5 CRR-NY 70.4 Feasibility studies {#sec-5-crr-ny-70.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.4}

(a) General.

The department shall award program assistance for the partial funding of feasibility studies on a competitive basis. The department shall announce dates for submission of applications and accept applications not less than twice annually, subject to the availability of funds.

(b) Maximum award.

The department will periodically set an upper limit on awards for feasibility studies, but in no case will awards exceed $200,000 or 80 percent of the total study cost, whichever is less.

The department reserves the option to specify preferences for awards for feasibility studies that address factors critical to the expansion or development of waste prevention technologies and/or practices.

5 CRR-NY 70.5 Loans {#sec-5-crr-ny-70.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.5}

(a) General.

Loans for qualifying waste prevention projects may be made by either the department or a financing institution at fixed or variable interest rates.

(b) Loans funded by the department.

(1) Department loans may not exceed $500,000 or 50 percent of the total project cost, whichever is less. Payment terms and security arrangements will be flexible, depending on the particular characteristics of the project. Loans that are secured by fixed assets will be preferred.

(2) The interest rate on a department loan will be set at the time the department approves the loan application and will reflect market conditions, the program recipient's ability to repay and project requirements.

(3) The term for a department loan shall be determined by the department in its sole discretion, but shall not exceed 10 years.

(4) Written commitments from other funding sources necessary for completion of the project will be required before disbursement of a department loan.

(5) Personal guarantees. The department may require, as a condition to providing a loan, that the proprietors, partners, officers, directors, or holders of 20 percent or more of the stock of a program recipient personally guarantee repayment of all or a portion of the loan.

(1) The department shall review the terms of any proposed financing institution loan to a program recipient. To obtain program assistance, financing institution loans shall be amortized over the term of the loan; provided, however, that deferred or graduated payments may be permitted for good cause shown, in the sole discretion of the department. The department may refuse to grant program assistance if the proposed interest rate on a financing institution loan is determined by the department to be unreasonably high after considering prevailing market conditions and the interest rates on other loans.

(2) The department's commitment of program assistance for loans made by a financing institution will be final and the loan shall be closed only after the applicant and the financing institution receive written notification from the department approving both the loan application and the terms of the financing institution's loan commitment, and stating the type and material terms of the program assistance which will be provided by the department.

(3) For loans in which the principal amount is paid to the program recipient by the financing institution in installments as the work progresses, program assistance shall not be made available by the department prior to the payment by the financing institution of the final installment.

5 CRR-NY 70.6 Loan guarantees {#sec-5-crr-ny-70.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.6}

(a) Maximum amount of loan guarantee.

(1) Loan guarantees may be provided to program recipients on loan amounts not exceeding $250,000 or 75 percent of the outstanding principal on a loan, whichever is less.

(2) In the sole discretion of the department, the maximum percentage of the outstanding principal on a loan to be guaranteed may be adjusted, and different maximum percentages may be established for different types of applicants, to reflect market changes, loan demand, applicant need, and the possible need to stimulate participation in the program by certain audiences.

(b) Term.

The term for a loan guarantee shall be determined by the department, in its sole discretion, but shall not exceed 10 years.

Applications for loan guarantees shall be submitted by the financing institution on behalf of the applicant. In addition to the application requirements set forth in section 70.10 of this Part, applications for loan guarantees shall include the following:

(1) a statement by the financing institution that the loan application will be rejected unless a loan guarantee is provided, together with an analysis prepared by the financing institution which explains why a loan guarantee is required;

(2) a copy of the applicant's loan application and the loan analysis report prepared for the financing institution, and a copy of the financing institution's written approval or disapproval of the loan with respect to the applicant, if available; and

(3) a statement signed by the applicant requesting the loan guarantee and authorizing the release of bank records, credit reports, and other pertinent information to the department.

(d) Personal guarantees.

The department may require, as a condition to providing a loan guarantee, that the proprietors, partners, officers, directors, or holders of 20 percent or more of the stock of a program recipient personally guarantee repayment of all or a portion of the loan.

(e) Payment of guarantee.

The department shall make payment to a financing institution under a loan guarantee after the occurrence of an event of default pursuant to the loan agreement between the program recipient and the financing institution, upon the financing institution delivering a written request for payment to the department by certified mail, return receipt requested, accompanied by a loan history report and evidence satisfactory to the department that the financing institution has taken all reasonable and necessary action to protect its rights and collect the defaulted payments from all available sources.

(f) Calculating the loss.

The amount to be paid by the department to the financing institution under a loan guarantee shall be the amount of outstanding principal remaining on the loan, multiplied by the percentage of such outstanding principal guaranteed by the department, less the net proceeds from the sale of secured property and any amounts paid under any other guarantees given to secure the loan.

(g) Guarantee termination.

The guarantee of the department shall automatically terminate if:

(1) the claim of loss filed by the financing institution is satisfied; or

(2) the loan is satisfied; or

(3) any provisions of the loan are modified or waived by the financing institution without the prior written approval of the department.

5 CRR-NY 70.7 Principal reductions {#sec-5-crr-ny-70.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.7}

(a) Maximum amount of principal reductions.

Principal reductions provided to program recipients on loans shall be limited to $250,000 or 50 percent of the outstanding principal on a loan, whichever is less.

(b) Applications for principal reductions.

In addition to the application requirements set forth in section 70.10 of this Part, applicants for principal reductions shall submit the following:

(1) a copy of the loan analysis report prepared for the financing institution, and a copy of the financing institution's written approval or disapproval of the loan with respect to the applicant, if available; and

(2) a statement signed by the applicant requesting the principal reduction and authorizing the release of bank records, credit reports, and other pertinent information to the department.

A principal reduction will be approved only where the department determines that there is a reasonable assurance that the applicant will be able to repay the loan.

5 CRR-NY 70.8 Interest subsidies {#sec-5-crr-ny-70.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.8}

(a) Maximum amount of interest subsidy.

(1) Interest subsidies on loans shall be available to program recipients on loans from financing institutions in principal amounts up to $500,000.

(2) The interest subsidy rate which the department shall pay on loans to program recipients by financing institutions shall be equal to the difference between the loan interest rate and the base rate established by the Department. The base rate shall initially be five percent, provided, however, that such base rate shall at no time exceed 75 percent of the prime rate published daily in the Wall Street Journal.

(b) Term.

The term of an interest subsidy shall be determined by the department, in its sole discretion, but shall not exceed 10 years.

(1) The amount of an interest subsidy shall be the difference between the total interest due on a loan over the term of the loan, calculated at the financing institution's lending rate at the time of closing, and the interest due on such loan over such period, calculated at the base rate, multiplied by a fraction equal to the interest subsidy term divided by the term of the loan. The total amount of the interest subsidy may be discounted to reflect the payment of interest subsidies in advance of their becoming due.

(2) For variable rate loans, the amount of the interest subsidy will not change during the subsidy period, regardless of fluctuations in the financing institution's lending rate on that loan, except in cases where such lending rate drops to a level where the interest subsidy would result in the program recipient receiving a negative net interest rate. In such cases, the amount of the interest subsidy will be reduced accordingly.

(d) Default on interest subsidized loan.

Except as otherwise provided for in this subdivision, where a program recipient defaults on an interest subsidized loan, interest subsidies shall be terminated and any interest subsidy payments being held by the financing institution shall be returned to the department. The financing institution shall notify the department, in writing, of the default within 30 calendar days of its occurrence. The department, in its sole discretion, may authorize the financing institution to continue to receive interest subsidies on behalf of the program recipient for a period of time mutually agreed upon by the department and the financing institution, in order for the financing institution to work out a revised payment schedule with the program recipient. If continued interest subsidies are authorized by the department and loan payments are not resumed by the program recipient within 90 days of the initial default, then all subsidy payments will be terminated immediately. Where a new payment schedule is established between the financing institution and the program recipient, the total interest subsidy originally approved by the department will remain unchanged; provided, however, the department may establish a revised schedule of interest subsidy payments on behalf of the program recipient.

(e) Prepayment of loan.

In the event of the prepayment of a loan, the financing institution shall promptly return to the department any unapplied portion of the interest subsidy being held by the financing institution.

5 CRR-NY 70.9 Financing institutions {#sec-5-crr-ny-70.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.9}

The department will enter into an agreement with a financing institution which indicates its willingness to make a loan, on such terms and conditions as the department and the financing institution shall agree. Such financing institution will be responsible for the closing and administration of the loan. Program assistance will be provided directly to a financing institution, subject to the provisions of this Part and the provisions of the agreement between the department and the financing institution.

5 CRR-NY 70.10 Applications for program assistance {#sec-5-crr-ny-70.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.10}

(a) An applicant shall file an application for program assistance with the department on forms provided by the department.

(b) Applications for feasibility studies shall include, but not be limited to:

(1) a detailed statement of tasks to be performed, estimated costs and schedule for completion of each task;

(2) a description of the specific secondary materials and/or waste prevention technology or practice to be addressed by the study;

(3) a description of the nature of the secondary materials processing activity or waste prevention technology or practice for which the study results will be applied (e.g., separation, processing, manufacturing, process or procedure modifications, reformulation or redesign of products, equipment modifications, etc.);

(4) a commitment by the applicant to meet required cost-sharing contributions;

(5) the name and qualifications of the firm or individual who will perform the feasibility study;

(6) the ultimate results to be achieved by the applicant, in terms of cost savings to the business and environmental benefits to the State, should the feasibility study prove successful; and

(7) submission of financial and such other information as the department may deem necessary and appropriate.

(c) Applications for program assistance, other than feasibility studies, may include, but not be limited to, the following:

(1) a description of the applicant, including history, ownership, size, and primary products manufactured;

(2) a description of the proposed project, including total project cost, total program assistance requested, type of program assistance requested, location of the project, and the current status of the project;

(3) a complete set of financial statements or income tax returns for at least the three preceding fiscal years, if available, and operating pro formas going forward one year;

(4) a description of the need for the requested program assistance, a specific justification of the request, and a description of the expected impact of the program assistance on the applicant and the community;

(5) a budget breakdown of the sources and uses of funds associated with the proposed project;

(6) a list of proposed collateral, with appraisals;

(7) a list of all known security interests in the project property;

(8) a technical feasibility study, conforming with the requirements of section 70.13 of this Part;

(9) if applicable, construction bids, containing cost estimates for the proposed waste prevention project. Cost estimates and schedules must reflect the total installed cost of the project, including materials, labor, and construction management and design fees. Construction management fees greater than 15 percent of the cost of materials and labor for the project are not eligible for program assistance. At least two construction bids are required for all projects. The department may, in its sole discretion, waive the above bid requirements where the applicant demonstrates good cause for the waiver;

(10) in the case of in-house projects, schedules reflecting the total installed cost of the project, including construction management and design costs, wages and projected hours to be worked on the proposed project, and two suppliers' estimates of the cost of the materials to be used for the project. Construction management costs greater than 15 percent of the cost of materials and labor for the project are not eligible for program assistance. Documentation of actual in-house labor costs incurred for approved projects shall be maintained by the program recipient for review and audit by the department for a period of six years;

(11) if applicable, a copy of the applicant's loan application to a financing institution, and the commitment issued by a financing institution to make a loan, including the terms and conditions of such loan;

(12) written commitments from other funding sources necessary for completion of the project; provided, however, that such commitments may be submitted either with the application or following review of the application and a determination of project eligibility by the department;

(13) authorization from the building owner to undertake the project, where the program application is being submitted by an applicant other than the building owner; and

(14) such additional information as may be required by the department.

5 CRR-NY 70.11 Evaluation criteria {#sec-5-crr-ny-70.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.11}

(a) Applications for feasibility studies shall be evaluated using the following criteria:

(1) the extent to which preliminary economic and/or technical work has determined that the waste prevention technology and/or practice to be studied is likely to be employed or become commercially viable;

(2) the potential for applying the results of the feasibility study to other business enterprises;

(3) the potential impact that the feasibility study results would have on reducing the amount of waste requiring disposal;

(4) the potential environmental benefits to the State to be derived from the waste prevention technology and/or practice being studied;

(5) the potential cost savings to the business to be derived from the waste prevention technology and/or practice being studied;

(6) the total cost of the feasibility study, including the degree to which the requested grants would leverage matching cash funds from the applicant and other sources;

(7) the ability and qualifications of the person or firm to perform the feasibility study;

(8) the financial need of the applicant; and

(9) the degree of the applicant's ability and commitment to implement the feasibility study results.

(b) Applications for program assistance, other than feasibility studies, shall be evaluated using the following criteria:

(1) conformity with program eligibility requirements;

(2) soundness of the business enterprise;

(3) credit history;

(4) depth of management experience;

(5) ability to repay the loan;

(6) potential impact of the project on reducing the quantity of waste requiring disposal;

(7) the adequacy of the collateral available to secure the loan; and

(8) such other criteria as the department may deem appropriate.

5 CRR-NY 70.12 Notification of award {#sec-5-crr-ny-70.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.12}

(a) Feasibility studies.

Following the final date for submission of applications, the department shall provide timely written notification of awards to applicants. The feasibility study funds will be disbursed according to a schedule of payments to be negotiated at the time of contract.

(b) Other program assistance.

The department shall provide written notification to the applicant and, if applicable, the financing institution offering the loan, of the department's approval of the applicant's application and of the type and amount of approved program assistance. Such approval may be conditioned upon the financing institution making the loan to the applicant within a time period specified by the department.

5 CRR-NY 70.13 Technical feasibility studies {#sec-5-crr-ny-70.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.13}

(a) A technical feasibility study must have been performed or updated within one year of the date of submission of a program application to the department.

(b) Technical feasibility studies with respect to a construction project must be prepared under the supervision of and stamped with the seal and signature of a registered architect or professional engineer.

(c) A technical feasibility study must contain the following information regarding the project for which program assistance is being requested:

(1) a description of how the project will minimize, reduce or eliminate the generation of wastes, use or reuse wastes, increase energy efficiency or water conservation, improve air or water quality and/or improve process economics;

(2) a detailed breakdown of project costs;

(3) for projects involving construction, the proposed construction-to-occupancy schedule and copies of the preliminary architectural drawings, scope of work and schematics; and

(4) evidence satisfactory to the department that all applicable Federal, State and local permits, certificates and approvals have been applied for.

(d) Conflict of interest prohibited.

A person performing a technical feasibility study is permitted to provide construction management services to a program recipient, but such person may not be involved in the sale or installation of the proposed waste prevention technology.

5 CRR-NY 70.14 General conditions of program assistance {#sec-5-crr-ny-70.14 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.14}

(a) Use of proceeds.

The program recipient must use the program assistance, to finance the implementation of the project or the feasibility study approved by the department.

(b) Completion of work.

A feasibility study or project which receives program assistance must be completed within one year after the funding award date or loan closing. The department may extend this period on a case-by-case basis where the program recipient has demonstrated reasonable cause for the delay.

Within 45 days of completion of the project, the program recipient must provide the department with a certificate of completion, signed by the program recipient and the contractor, certifying that the project was completed in accordance with the descriptions and cost estimates provided to the department.

(d) Changes in scope of work.

The program recipient shall promptly provide written notice to the department of any necessary changes in a project which differ from the program application submitted to the department, and no such changes in the scope of work shall occur unless approved in writing by the department.

(e) Change in project cost.

The program recipient shall promptly provide written notice to the department of any change in the cost of a project which differs by either more than 10 percent or $20,000 from the selected contractor's cost estimate, or the program recipient schedules and selected estimate in the case of an in-house project, submitted to the department, and a justification therefor. No such change in project costs shall occur unless approved in writing by the department; provided, however, that under no circumstances will program assistance be available for an amount exceeding the cost of the project.

(f) Site inspection.

The program recipient must provide the department, or its designated agents, with reasonable access to the project site before, during, and after the construction phase of the project in order to monitor and inspect the work being undertaken with program assistance.

(g) Applicable laws and permits.

The program recipient performs all work in compliance with all applicable Federal, State, and local laws, rules and regulations. Prior to the commencement of work, the program recipient must obtain all permits, certificates and approvals which may be required in connection with the performance and completion of the work.

(h) Documentation of work.

The program recipient must retain for a period of six years after the date of closing on the loan all cancelled checks, receipts and contracts used in connection with the work on the project, and must produce them at the request of the department for the purpose of verifying the cost of the project.

(i) Reimbursement for failure to comply.

If the program recipient fails to comply with the requirements of this Part, the program recipient may be disqualified from participating in the program, program assistance may be rescinded, and the applicant may be required to reimburse the department for all or a portion of the program assistance which the department has advanced.

(j) Removal of project from New York State.

Immediate repayment of all program assistance, plus interest and a penalty equal to 50 percent of the principal amount of the program assistance, will be required if all or any portion of a building, fixtures, machinery or equipment funded through a project is transferred out of New York State, prior to the expiration of the useful life of the building, fixtures, machinery or equipment. The useful life shall be negotiated between the applicant and the department prior to execution of the program assistance agreement.

5 CRR-NY 70.15 Reports {#sec-5-crr-ny-70.15 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.15}

(a) Feasibility studies.

(1) Program recipients shall keep the department apprised of their progress, both formally and informally. Any changes in the feasibility study plan must be communicated to the department at the earliest possible date.

(2) Program recipients must, at a minimum, submit a report to the department at the midpoint of the feasibility study, reporting on its progress, including:

(i) a description of tasks completed;

(ii) conformance to the feasibility study schedule, highlighting any deviation from the original scope of work and schedule of tasks, and the reasons for such deviation; and

(iii) a financial status report.

(3) Program recipients must submit final reports to the department, prior to the final disbursement of funds, which shall include, but not be limited to:

(i) a detailed summary of the feasibility study findings;

(ii) an assessment of the supply conditions (e.g., availability, quantities, sources, etc.) for the secondary materials in question, if appropriate;

(iii) a description of the size and location of markets for the product derived from the secondary materials reuse or recycling technology being studied, where applicable;

(iv) a description of how the waste prevention technology and/or practice will minimize, reduce or eliminate the generation of wastes, use or reuse wastes, increase energy efficiency or water conservation, improve air or water quality and/or improve process economics;

(v) the cost of implementation of the waste prevention technology or practice and a construction schedule, if applicable;

(vi) a description of how the firm intends to act on the results; and

(vii) a description of receipts and expenditures of funds in connection with the feasibility study.

(b) Other program assistance.

On each anniversary date of the loan closing during the term of program assistance, the program recipient shall submit to the department a copy of the applicant's most recent fiscal year end financial statement and an assessment of the amount of waste minimized, reduced, eliminated, used or reused, the increase in energy efficiency or water conservation, or the improvement of air or water quality, as applicable, pursuant to the project undertaken.

5 CRR-NY 70.16 Severability {#sec-5-crr-ny-70.16 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 70.16}

Any provision of this Part or its application to any person or circumstance found to be invalid shall be ineffective to the extent of such invalidation without affecting the remainder of this Part or the application of those provisions to persons or circumstances other than those to which it is held invalid.

Part 71 AGRICULTURAL WASTEWATER ENERGY CONSERVATION LOAN PROGRAM

5 CRR-NY 71.1 Purpose and scope {#sec-5-crr-ny-71.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.1}

The purpose of these regulations is to set forth the eligibility requirements and application procedures for financial assistance under the Agricultural Wastewater Energy Conservation Loan Program. The program provides loans, principal reductions, loan guarantees and interest subsidies through cooperating financial institutions for eligible wastewater treatment projects. Program funds are targeted to businesses engaged in farm production or food processing for the purposes of encouraging and improving wastewater treatment and reducing energy consumption.

5 CRR-NY 71.2 Definitions {#sec-5-crr-ny-71.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.2}

(a) Applicant means any individual, partnership, cooperative or corporation applying for financial assistance under the program.

(b) Department means the Department of Economic Development.

(c) Financing institution means any domestic insurance company, not-for-profit corporation, bank, trust company, savings bank, savings and loan association or credit union incorporated, chartered, organized or licensed under the laws of New York State, any other state of the United States or the Federal government. This term also includes any public authority, public benefit corporation, or municipality which provides program assistance to program recipients.

(d) Program shall mean the New York State Agricultural Wastewater Energy Conservation Loan Program.

(e) Program assistance means a loan made by the department or an interest subsidy, principal reduction or loan guarantee provided by the department for a loan made by a financing institution.

(f) Program recipient means an applicant approved by the department for program assistance.

(g) Technical feasibility study means a report which identifies and analyzes in detail cost- effective capital improvements constituting the wastewater treatment project which the applicant proposes to implement.

(h) Wastewater treatment project or project means the acquisition, construction, alteration, repair or improvement of a building, fixtures, machinery or equipment constituting a facility, which provides treatment of wastewater to improve its quality and which reduces energy consumption.

5 CRR-NY 71.3 Eligibility for program assistance {#sec-5-crr-ny-71.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.3}

(a) The department may provide, within available appropriations, program assistance for a wastewater treatment project to an applicant which:

(1) is a business engaged in food processing;

(2) employs less than 500 workers or had gross annual sales of less than $10 million during the last fiscal year; and

(3) which owns the building to be improved or has a lease or management agreement for such building.

(b) In order to receive program assistance, an applicant must demonstrate that its proposed wastewater treatment project:

(1) will result in energy cost savings equal to the cost of the project within a period of not less than one year, nor more than 10 years; and

(2) was not commenced prior to the date of application to the department for program assistance.

5 CRR-NY 71.4 Loans {#sec-5-crr-ny-71.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.4}

(a) General.

Loans for qualifying wastewater treatment projects may be made by either the department or a financing institution, at fixed or variable rates.

(b) Loans funded by department.

(1) Department loans may not exceed $250,000 or the cost of the project, whichever is less. Payment terms and security arrangements will be flexible, depending on the particular characteristics of the project. Loans that are secured by fixed assets will be preferred.

(3) The term for a department loan shall be determined by the department in its sole discretion, but shall not exceed 10 years.

(4) Written commitments from other funding sources necessary for completion of the project will be required before disbursement of a department loan.

(1) The department shall review the terms of any proposed financing institution loan to a program recipient. To obtain program assistance, financing institution loans shall be amortized over the term of the loan; provided, however, that deferred or graduated payments may be permitted for good cause shown, in the sole discretion of the department. The department may refuse to grant program assistance if the proposed interest rate on a financing institution loan is determined by the department to be unreasonably high, after considering prevailing market conditions and the interest rates on other loans.

5 CRR-NY 71.5 Loan guarantees {#sec-5-crr-ny-71.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.5}

(a) Maximum amount of loan guarantee.

(1) Loan guarantees may be provided to program recipients on loan amounts not exceeding $250,000 or 75 percent of the outstanding principal on a loan, whichever is less.

(2) In the sole discretion of the department, the maximum percentage of the outstanding principal on a loan to be guaranteed may be adjusted, and different maximum percentages may be established for different types of applicants, to reflect market changes, loan demand, applicant need and the possible need to stimulate participation in the program by certain types of applicants.

(b) Term.

The term for a loan guarantee shall be determined by the department, in its sole discretion, but shall not exceed 10 years.

Applications for loan guarantees shall be submitted by the financing institution on behalf of the applicant. In addition to the application requirements set forth in section 71.9 of this Part, applications for loan guarantees shall include the following:

(2) a copy of the applicant's loan application and loan analysis report prepared for the financing institution, and a copy of the financing institution's written approval or disapproval of the loan with respect to the applicant, if available; and

(3) a statement signed by the applicant requesting the loan guarantee and authorizing the release of bank records, credit reports, and other pertinent information to the department.

(d) Personal guarantees.

(e) Payment of guarantee.

(f) Calculating the loss.

(g) Guarantee termination.

The guarantee of the department shall automatically terminate if:

(1) the claim of loss filed by the financing institution is satisfied;

(2) the loan is satisfied; or

(3) any provisions of the loan are modified or waived by the financing institution without the prior written approval of the department.

5 CRR-NY 71.6 Principal reductions {#sec-5-crr-ny-71.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.6}

(a) Maximum amount of principal reductions.

Principal reductions provided to program recipients on loans shall be limited to $125,000 or 50 percent of the outstanding principal on a loan, whichever is less.

(b) Applications for principal reductions.

In addition to the application requirements set forth in section 71.9 of this Part, applicants for principal reductions shall submit the following:

(2) a statement signed by the applicant requesting the principal reduction and authorizing the release of bank records, credit reports, and other pertinent information to the department.

A principal reduction will be approved only where the department determines that there is a reasonable assurance that the applicant will be able to repay the loan.

5 CRR-NY 71.7 Interest subsidies {#sec-5-crr-ny-71.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.7}

(a) Maximum amount of interest subsidy.

(1) Interest subsidies shall be available to program recipients on loans from financing institutions in principal amounts up to $250,000.

(2) Rate.

The interest subsidy which the department shall pay on loans to program recipients by financing institutions shall be equal to the difference between the loan interest rate and the base rate established by the department. The base rate shall initially be five percent, provided, however, that such base rate shall at no time exceed 75 percent of the prime rate published daily in the Wall Street Journal.

(b) Term.

The term of an interest subsidy shall be determined by the department, in its sole discretion, but shall not exceed 10 years.

(d) Default on interest subsidized loan.

Except as otherwise provided for in this subdivision, where a program recipient defaults on a loan, interest subsidies shall be terminated and any interest subsidy payments being held by the financing institution shall be returned to the department. The financing institution shall notify the department, in writing, of the default within 30 calendar days of its occurrence. The department, in its sole discretion, may authorize the financing institution to continue to receive interest subsidies on behalf of the program recipient for a period of time mutually agreed upon by the department and the financing institution, in order for the financing institution to work out a revised payment schedule with the program recipient. If continued interest subsidies are authorized by the department and loan payments are not resumed by the program recipient within 90 days of the initial default, then all subsidy payments will be terminated immediately. Where a new payment schedule is established between the financing institution and the program recipient, the total interest subsidy originally approved by the department will remain unchanged; provided, however, the department may establish a revised schedule of interest subsidy payments on behalf of the program recipient.

(e) Prepayment of loan.

In the event of the prepayment of a loan, the financing institution shall promptly return to the department any unapplied portion of the interest subsidy being held by the financing institution.

5 CRR-NY 71.8 Financing institutions {#sec-5-crr-ny-71.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.8}

The department will enter into an agreement with a financing institution which indicates its willingness to make a loan, on such terms and conditions as the department and the financing institution shall agree. Such financing institution will be responsible for the closing and administration of the loan. Program assistance will be provided directly to the financing institution, subject to the provisions of this Part and the provisions of the agreement between the department and the financing institution.

5 CRR-NY 71.9 Applications for program assistance {#sec-5-crr-ny-71.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.9}

(a) An applicant shall file an application for program assistance with the department on forms provided by the department.

(b) Program applications may include, but not be limited to, the following:

(1) a description of the applicant, including history, ownership, size, and primary products manufactured;

(3) a complete set of financial statements or income tax returns for at least the three preceding fiscal years, if available, and operating pro formas going forward one year;

(5) a budget breakdown of the sources and uses of funds associated with the proposed project;

(6) a list of proposed collateral, with appraisals;

(7) a list of all known security interests in the project property;

(8) a technical feasibility study, conforming with the requirements of section 71.12 of this Part;

(9) if applicable, construction bids containing cost estimates for the proposed wastewater treatment project. Cost estimates and schedules must reflect the total installed cost of the project, including materials, labor, and construction management and design fees. Construction management fees greater than 15 percent of the cost of materials and labor for the project are not eligible for program assistance. At least two construction bids are required for all wastewater treatment projects. The department may, in its sole discretion, waive the above bid requirements where the applicant demonstrates good cause for the waiver;

(13) authorization from the building owner to undertake the project, where the program application is being submitted by an applicant other than the building owner; and

(14) such additional information as may be required by the department.

5 CRR-NY 71.10 Evaluation criteria {#sec-5-crr-ny-71.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.10}

The department shall evaluate applications for program assistance using the following criteria:

(a) conformity with program eligibility requirements;

(b) soundness of the business enterprise;

(d) depth of management experience;

(e) ability to repay the loan;

(f) contribution of the project to local water quality improvement;

(g) the adequacy of the collateral available to secure the loan; and

(h) such other criteria as the department may deem appropriate.

5 CRR-NY 71.11 Notification of award {#sec-5-crr-ny-71.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.11}

The department will provide written notification to the applicant and, if applicable, the financing institution offering the loan, of the department's approval of the applicant's application and of the type and amount of approved program assistance. Such approval may be conditional upon the financing institution making the loan to the applicant within a time period specified by the department.

5 CRR-NY 71.12 Technical feasibility studies {#sec-5-crr-ny-71.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.12}

(a) A technical feasibility study must have been performed or updated within one year of the date of submission of a program application to the department. Updates must include a recalculation of the paybacks of the original technical feasibility study's proposed energy conservation improvements, based on current fuel costs.

(c) A technical feasibility study must contain the following information regarding the wastewater treatment project for which program assistance is being requested:

(1) a detailed description of the improvement to be implemented, including the daily volume of wastewater to be treated, the improvement in water quality projected to result from the project, and any necessary sketches or diagrams;

(2) a detailed breakdown of project costs;

(3) for projects involving construction, the proposed construction-to-occupancy schedule and copies of the preliminary architectural drawings, scope of work and schematics;

(4) energy calculations for the proposed wastewater treatment project, including:

(i) simple payback, calculated by dividing the total installed cost of the project presented in the selected contractor's bid, or in the applicant's schedules and selected estimate in the case of an in-house project, by the projected annual energy cost savings. Ongoing operation and maintenance costs, finance charges, and the cost of preparing and updating technical feasibility studies shall not be included in the total installed cost;

(ii) a full explanation of the methodology used in calculating energy savings. The department may provide standard calculation sheets, which must be used whenever provided. If standard calculation sheets have not been provided by the department, the methodology used to calculate energy savings will be reviewed for adequacy and reasonableness by the department;

(iii) all calculations, including units of measurement and formulae, of annual fuel use, and annual Btu and energy cost savings, with all assumptions and parameters clearly presented. The annual Btu and energy cost savings shall be based on actual consumption records for the applicant's existing wastewater treatment system for the prior 12-month period, and shall not include savings from taxes, dollar savings due to switching to lower cost fuels, and other savings which may be deemed inappropriate by the department. All formulae and calculations shall be based on generally accepted engineering standards and practices, and shall be reviewed for completeness and reasonableness by the department; and

(5) evidence satisfactory to the department that all applicable Federal, State and local permits, certificates and approvals have been applied for.

(d) Conflict of interest prohibited.

5 CRR-NY 71.13 General conditions of program assistance {#sec-5-crr-ny-71.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 71.13}

(a) Use of loan proceeds.

The program recipient must use the loan proceeds to finance the implementation of the wastewater treatment project approved by the department.

(b) Completion of work.

Work on wastewater treatment projects which receive program assistance must be completed within one year after the loan closing. The department may extend this period on a case-by-case basis where the program recipient has demonstrated reasonable cause for the delay.

Within 45 days of completion of the project, the program recipient must provide the department with a certificate of completion, signed by the program recipient and the contractor, certifying that the wastewater treatment project was completed in accordance with the descriptions and cost estimates provided to the department.

(d) Changes in scope of work.

The program recipient shall promptly provide written notice to the department of any necessary changes in a wastewater treatment project which differ from the program application submitted to the department, and no such change in the scope of work shall occur unless approved in writing by the department.

(e) Change in project cost.

The program recipient shall promptly provide written notice to the department of any change in the cost of a wastewater treatment project which differs by either more than 10 percent or $20,000 from the selected contractor's cost estimate, or the program recipient's schedules and selected estimate in the case of an in-house project, submitted to the department, and a justification therefor. No such change in project costs shall occur unless approved in writing by the department; provided, however, that under no circumstances will program assistance be available for an amount exceeding the cost of the project.

(f) Site inspection.

The program recipient must provide the department, or its designated agents, with reasonable access to the project site before, during, and after the construction phase of the wastewater treatment project in order to monitor and inspect the work being undertaken with program assistance.

(g) Applicable laws and permits.

The program recipient must perform all work in compliance with all applicable Federal, State, and local laws, rules and regulations. Prior to the commencement of work, the program recipient must obtain all permits, certificates and approvals which may be required in connection with the performance and completion of the work.

(h) Documentation of work.

The program recipient must retain for a period of six years after the date of closing on the loan all cancelled checks, receipts and contracts used in connection with the work on the wastewater treatment project, and must produce them at the request of the department for the purpose of verifying the cost of the project.

(i) Reporting.

On each anniversary date of the loan closing during the term of program assistance, the program recipient shall submit to the department a copy of the applicant's most recent fiscal year end financial statement and an assessment, based on generally accepted engineering standards and practices, of energy cost savings achieved during the preceding year as a result of the wastewater treatment project.

(j) Reimbursement for failure to comply.

Part 72 WASTE PREVENTION ASSISTANCE PROGRAM

5 CRR-NY 72.1 Purpose and scope {#sec-5-crr-ny-72.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.1}

The purpose of these regulations is to set forth the requirements and procedures for the department's contracting under the Waste Prevention Assistance Program. Program funds shall be used to promote economic development and environmental improvement. The program is targeted to municipalities and non-profit organizations, in partnership with New York companies, to spark business growth and competitiveness, and create jobs while protecting and enhancing the quality of the environment.

5 CRR-NY 72.2 Definitions {#sec-5-crr-ny-72.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.2}

(a) Applicant shall mean a municipality, two or more municipalities or a non-profit organization.

(b) Project co-implementor shall mean the municipality, non-profit organization or New York business that assists the applicant in the achievement of the results of a waste prevention assistance project. This includes, but is not limited to, providers of technical assistance support services and secondary materials processing or manufacturing facilities operators. In this situation, the applicant remains the sole recipient of State assistance payments.

(d) Cost or project cost shall mean the capital cost of an eligible project, including engineering and architectural services, surveys, plans and specifications; transportation facilities at the site or sites of the project; lands acquired pursuant to conditions set forth in section 72.4 of this Part; and other direct capital expenses incident to such project, including directly related costs for technical assistance, less any Federal assistance and assistance from any New York State solid waste or recycling program received or to be received.

(e) Department shall mean the Department of Economic Development.

(f) Eligible project or waste prevention project or project shall mean actions taken by or on behalf of a New York business involving the acquisition, construction, alteration, repair or improvement of a building, fixtures, machinery or equipment, provided that such project results in:

(1) source reduction or material substitution, provided that the substitution of one hazardous substance, product or nonproduct output for another does not result in the creation of a new environmental, health or safety risk;

(2) in-process recycling;

(3) recycling or reuse of non-hazardous solid wastes;

(4) increased energy efficiency;

(5) conservation of the use of water or other natural resources that improve in process economics;

(6) elimination of the purchase of materials, the production of which for the use of said firm would result in more waste or resource consumption; or

(7) other practices or technologies that reduce the use of hazardous materials or otherwise improve air or water quality.

(g) Federal assistance means funds available, other than by loan, from the Federal government, either directly or through allocation by the State for construction or program implementation purposes pursuant to any Federal law or program.

(h) Municipality shall mean a local public authority or public benefit corporation, a county, city, town, village, or Indian tribe residing within New York State, or any combination thereof.

(i) Out-of-process recycling of hazardous materials shall mean the use of hazardous wastes, collected after the manufacturing process, as raw materials or feedstocks for off-site production of other materials or products;

(j) Program shall mean the Waste Prevention Assistance Program.

(k) Secondary materials shall mean material recovered from or otherwise destined for the waste stream, including but not limited to, postconsumer material, industrial scrap material and overstock or obsolete inventories from distributors, wholesalers and other companies, but shall not include those materials and by-products generated from and commonly reused within an original manufacturing process.

(l) Source separated organic materials shall mean readily degradable organic material such as food, yard and wood waste, including agricultural and food processing waste, which is collected separate from mixed solid waste, but does not include sewage, sewage sludge, sludge or septage.

(m) State assistance payment means the payment of moneys by the State to municipalities and non-profit organizations for undertaking, pursuant to contract, projects authorized by this Part.

(n) Waste shall mean:

(1) solid waste - all putrescible and non-putrescible materials or substances discarded or rejected as being spent, useless, worthless or in excess to the owners at the time of such discard or rejection, including but not limited to garbage, refuse, industrial and commercial waste, sludges from air or water control facilities, rubbish, ashes, contained gaseous material, incinerator residue, demolition and construction debris, discarded automobiles and offal but not including sewage and other highly diluted water carried materials or substances and those in gaseous form, as defined in subdivision one of section 27-0701 of the Environmental Conservation Law (ECL);

(2) air contaminant - a dust, fume, gas, mist, odor, smoke, vapor, pollen, noise or any combination thereof, as defined in subdivision two of section 19-0107 of the ECL;

(3) industrial waste - any liquid, gaseous, solid or waste substance or a combination thereof resulting from any process of industry, manufacturing, trade, or business or from the development or recovery of any natural resources, which may cause or might reasonably be expected to cause pollution of the waters of the state in contravention of the standards adopted under the Environmental Conservation Law; and

(4) hazardous waste - those wastes which appear on the list, or satisfies the characteristics of hazardous waste, promulgated pursuant to section 27-0903 of the Environmental Conservation Law.

Such term shall not include source, special nuclear or by-product material as defined in the Atomic Energy Act of 1954, as amended.

5 CRR-NY 72.3 General conditions of program {#sec-5-crr-ny-72.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.3}

(a) The department shall provide, on a competitive basis, State assistance payments to applicants for the partial funding of secondary materials market development or waste prevention activities.

(b) State assistance payments shall not exceed 50 percent of the project cost.

(c) The department may consult with the Department of Environmental Conservation prior to entering into contracts with applicants to provide State assistance payments towards the cost of secondary materials utilization or waste prevention projects.

5 CRR-NY 72.4 Eligible costs {#sec-5-crr-ny-72.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.4}

(a) Costs generally may not be incurred prior to a written commitment from the department. Exceptions may be made when the applicant can satisfactorily demonstrate undue hardship, the lack of other available funding or the exigency of the project. In no event, shall a cost be eligible if incurred prior to July 22, 1998.

(b) Costs funded with Federal assistance or through other State waste prevention programs shall not be eligible for funding under this program.

(d) Project costs may be eligible only after the department determines their eligibility and approves such costs through review of a program application.

(e) Eligible cost items include, but are not limited to the following:

(1) Capital costs incurred for the acquisition, construction, alteration, repair or improvement of a building, fixtures, machinery or equipment associated with the following activities:

(i) source reduction;

(ii) material or feedstock substitution resulting in the use of less toxic or non-toxic materials, provided that said substitution does not result in the creation of a new risk;

(iii) in-process recycling;

(iv) recycling or reuse of non-hazardous solid wastes;

(v) increased energy efficiency;

(vi) conservation of the use of water or other natural resources which improves the economics of business operations;

(vii) elimination of materials purchases, which would result in waste reduction and resource conservation; and

(viii) other practices or technologies that reduce the use of hazardous materials or otherwise improve air or water quality.

(2) Engineering, architectural and other professional consulting services performed in relation to the project.

(3) Land surveys certified by an individual licensed to practice land surveying in the State of New York. Costs for salaries of applicant or project co-implementor employees performing this function are not eligible.

(4) Legal services rendered in connection with the project, including, but not limited to, costs related to bond development. Costs for salaries of applicant or project co-implementor employees performing this function are not eligible.

(5) Construction and infrastructure costs associated with site preparation and improvement, such as drainage and sewer systems, demolition, relocation of utilities, purchase and installation of materials and equipment, erection of structures and associated costs necessary to implement the project including, but not limited to, insurance, labor, building materials and materials storage, temporary utilities, security, performance bonds and permits for eligible items. Labor overtime costs may be eligible if such costs were incurred on an emergency basis and proper documentation is provided to the department. Eligibility for State assistance for all construction costs are limited to the term of the State assistance contract.

(6) Land costs for not more than the reasonable amount of land required for the project.

(7) Directly related transportation facility costs, including, but not limited to:

(i) acquisition and/or development of transportation facilities such as access roads, docks, wharves, rail spurs and railheads, for the purpose of facilitating the movement of recyclable materials to market;

(ii) land acquisition for the construction of transportation facilities, not to exceed a reasonable amount of land required for the project; and

(iii) engineering, architectural, legal and other professional consulting services.

(8) Directly related technical assistance costs, include, but are limited to:

(i) personal service expenses for project employees and support staff engaged in, but not limited to, source reduction or material substitution practices, in-process recycling, recycling or reuse of non-hazardous solid wastes, energy efficiency practices, conservation of water or other natural resources that improve process economics of businesses, waste or resource reduction practices, and/or other practices which reduce the use of hazardous materials or improve air or water quality, implementing education, training or quality control programs, preparing and distributing educational or training materials. Only that portion of the employee's time directly related to the project will be eligible for reimbursement. Costs which are funded by other State waste prevention programs or Federal programs are ineligible for assistance;

(ii) corresponding fringe benefit costs for above noted personal service costs;

(iii) non-personal service expenses in support of the personnel assigned to the project, including, but not limited to, supplies and materials, publications, travel, printing, postage, office equipment rental and repair, office space rental, telephone, utilities and office equipment purchases; and

(iv) contractual services costs associated with parties hired to perform any of the above described functions.

5 CRR-NY 72.5 Program applications {#sec-5-crr-ny-72.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.5}

(a) The department shall accept and approve program applications periodically, pursuant to a schedule issued by the department.

(b) The application shall be in a form prescribed by the department which shall include, but not be limited to:

(1) the name and address of the applicant;

(2) a description of the project including, but not limited to its location and the geographic area and groups to be served;

(3) the name and address of the project co-implementor(s), if different from the applicant;

(4) a description of the waste reduction, pollution prevention or resource conservation goals to be achieved by the project and activities that will be undertaken to achieve them;

(5) a budget, including, but not limited to, an estimate of the total cost of the project, including total program assistance requested, other proposed source(s) of funds, any other direct or indirect assistance received or to be received for the project and proposed use of funds;

(6) a description of the management and technical expertise and experience of the project principals, especially as it relates to the proposed project; and

(7) a schedule for implementation and completion of the project.

5 CRR-NY 72.6 Evaluation criteria {#sec-5-crr-ny-72.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.6}

The department shall, at a minimum, consider the following criteria, as applicable, in reviewing and approving applications for secondary materials market development or waste prevention projects:

(a) applicant eligibility;

(b) the ability of the applicant to achieve the goals of the project including minimizing, reducing or eliminating the generation of wastes, the use or reuse of waste, increasing energy efficiency and/or water conservation, improving air or water quality and/or improving process economics in the business;

(c) the extent and nature of the commitment of the applicant and other participants to implement the short and long term goals of the proposed project;

(d) whether the project principals demonstrate a sufficient knowledge and expertise to ensure successful completion of the project;

(e) the economic and technical feasibility of the proposed project, including the extent to which preliminary research or an evaluation of the technical and economic merits of the proposed project has been completed by qualified experts in the field, and the results of such preliminary analysis indicates with reasonable certainty that the proposed project can be successfully implemented;

(f) whether the project contributes to a strong secondary materials processing and manufacturing capacity in the applicant community or the State as a whole;

(g) the financial need of the applicant and/or co-implementor;

(h) whether the project represents a cost effective investment of State funds;

(i) the appropriateness of the project in fulfilling regional economic development and environmental improvement needs; and

(j) the extent to which selection of the project would ensure, to the extent practicable, a regional distribution of projects across the State.

5 CRR-NY 72.7 Notification of award {#sec-5-crr-ny-72.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.7}

Following the deadline for submission of applications as established by the department, the department shall provide timely written notification of awards to applicants.

5 CRR-NY 72.8 Provisions for contracting {#sec-5-crr-ny-72.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.8}

The department shall enter into contracts with applicants to provide State assistance payments toward the cost of projects. Such contracts shall include but not be limited to the following provisions:

(a) an estimate of the cost of the project as determined by the commissioner;

(b) an agreement by the commissioner to make State assistance payments toward the actual cost of the project by periodically reimbursing the applicant during the progress of project development or following completion of the project as may be agreed upon by the parties, provided that the actual cost does not exceed the estimate established pursuant to this Part and where applicable, that retainage of up to 20 percent of the State assistance contract amount may be withheld until final department determination that the project has been successfully completed;

(1) proceed expeditiously with and complete the project as approved by the commissioner;

(2) continue operation of the project and not to dispose of the project or any portion thereof or change its use without the approval of the commissioner, for the life of the project; and to not sell, lease or otherwise dispose of or use lands acquired under this Part for any purpose inconsistent with the project under which such land is acquired;

(3) operate and maintain the project in accordance with all applicable Federal, State, and local laws, rules and regulations;

(4) provide for the payment of the applicant's share of the cost of the project; and

(5) repay, within one year of notification by the commissioner, any State assistance payment made toward the cost of the project or an equitable portion of such moneys declared appropriate by the commissioner, unless the following actions are deemed immediately necessary to protect public health and safety, if the applicant:

(i) fails to complete the project as approved;

(ii) disposes of the project, or any portion thereof, without the prior written approval of the commissioner; or

(iii) changes the use of the project, or any portion thereof, without the prior written approval of the commissioner; and

(6) repay any State assistance payment, plus interest and a penalty equal to 50 percent of the State assistance payment, made toward the cost of the project, if all or any portion of a building, fixtures, machinery or equipment, funded through the Waste Prevention Assistance Program, is transferred out of New York State, prior to the expiration of the useful life of such building, fixtures, machinery or equipment. The term of the useful life shall be reasonable and negotiated by the applicant and the department prior to contract execution.

5 CRR-NY 72.9 State assistance payments {#sec-5-crr-ny-72.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.9}

(a) Reimbursement requests under program contracts shall be submitted to the department on forms and in a manner to be prescribed by the department. Two methods of reimbursement are available to applicants. The appropriate method for the proposed project will be negotiated by both parties prior to contract execution. The two methods are as follows:

(1) reimbursement may be made periodically, during the progress of project development, for those portions of the project which have been completed; or

(2) reimbursement will be made at the time of completion of the full project.

(b) Final payments for all projects will require substantiation that project goals have been fulfilled.

5 CRR-NY 72.10 General conditions of award {#sec-5-crr-ny-72.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.10}

As applicable, program applicants must comply with the following general conditions:

(a) Certificate of completion.

For projects that include capital costs, within 45 days of completion of the project, the recipient of State assistance payments must provide the department with a certificate of completion, signed by the recipient and the contractor, certifying that the project was completed in accordance with the descriptions and cost estimates provided to the department.

(b) Changes in scope of work.

Program contractors shall promptly provide written notice to the department of any necessary changes in an approved project which differ from the contract submitted to the department, and no such changes in the scope of work shall occur unless approved in writing in advance by the department.

Program contractors shall promptly provide written notice to the department of any change in the capital cost of the project which differs by more than 10 percent from the selected contractor's cost estimate, submitted to the department at the time of application, and a justification therefor. No such change in project costs shall occur unless approved in writing in advance by the department, provided, however, that under no circumstances will total State assistance payments exceed the total initial estimated cost as determined in the contract.

(d) Site inspection.

For projects that include capital costs, the program contractor must provide the department, or its designated agents, with reasonable access to the project site before, during, and after the construction or equipment installation phase of the project in order to monitor and inspect the work being undertaken.

(e) Applicable permits.

Prior to commencement of work, the program contractor must obtain all permits, certificates and approvals which may be required in connection with performance and completion of work.

(f) Documentation of work.

The program contractor must retain for a period of six years after the completion of the project, all checks, receipts, and contracts used in connection with the work on the project, and must produce them at the request of the department for the purpose of verifying the cost of the project.

(g) Use of final products.

No final useful product of a waste prevention assistance project shall be landfilled or disposed in any manner or incinerated, with or without energy recovery.

(h) Composting projects.

In order to be eligible for an award, composting projects must include only source separated organic material.

(i) Ownership.

Applicants must own, in their entirety, all equipment, facilities and land to be acquired through State assistance payments for the purpose of a waste prevention assistance project.

5 CRR-NY 72.11 Reports {#sec-5-crr-ny-72.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.11}

(a) Program contractors shall provide periodic and annual reports, as applicable, regarding the project, at such time and in such manner as prescribed by the commissioner.

(b) Program contractors shall notify the commissioner, on a timely basis, of the receipt of Federal and/or other financial assistance for the project.

5 CRR-NY 72.12 Severability {#sec-5-crr-ny-72.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 72.12}

Chapter IX STATE TRAVEL GUIDE

Part 80 STATE TRAVEL GUIDE

5 CRR-NY 80.1 General description and purpose {#sec-5-crr-ny-80.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 80.1}

The Commissioner of Economic Development is authorized and directed to collect, compile and distribute information and literature as to the facilities, advantages and attractions of the State of New York, the historical and scenic points and places of interest within the State and the transportation and highway facilities of the State. In discharge of this power, the commissioner may enter into a contract for services relative to the publication of a State travel guide, in one or more seasonal editions, to promote tourism. Such contract may provide for the sale of advertising by the contractor, which advertising shall not exceed 30 percent of the space available in the State travel guide. The purpose of these rules and regulations is to set forth the methods and procedures governing the preparation of bids, selection of a contractor and the publication of the State travel guide.

5 CRR-NY 80.2 Definitions {#sec-5-crr-ny-80.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 80.2}

(a) Commissioner means the Commissioner of Economic Development.

(b) Department means the Department of Economic Development.

(c) Executive review committee means the committee comprised of department staff which reviews the proposals of qualifying firms.

(d) Publisher means the firms selected by the commissioner to provide services relative to the publication of the Travel Guide.

(e) Travel Guide means the publication of advantages and attractions of the State, the historical and scenic points of interest within the State, and the transportation and highway facilities in the State, to be published in one or more seasonal editions.

(f) Qualifying firms are those bidders submitting proposals to provide services relative to the publication of the Travel Guide chosen to make presentations to the department's Executive Review Committee.

5 CRR-NY 80.3 Administration {#sec-5-crr-ny-80.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 80.3}

In its administration of the program, the Department of Economic Development shall:

(a) develop and issue biannually a request for proposals for the publication of the Travel Guide;

(b) conduct pre-bid conferences;

(d) review individual presentations and determine whether follow up site visits to qualifying firms will be necessary;

(e) award the contract for services relative to the publication of the Travel Guide;

(f) approve, at critical stages, Travel Guide development and advertising standards and rates;

(g) approve placement of all advertisements; and

(h) insure that advertising shall be limited to no more than 30 percent of the space available in the Travel Guide.

5 CRR-NY 80.4 Proposal content and conditions {#sec-5-crr-ny-80.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 80.4}

Proposals in response to the department's request for proposals shall include, but not be limited to:

(a) a detailed estimate of the cost to the department for the publication of the Travel Guide, and preliminary estimates of cost projections for the following two years;

(b) a brief description of the experience of each staff member of the bidder who will be involved with the department's account; the successful bidder will be permitted to substitute staff provided the department's written approval is obtained; such approval shall be based upon experience in the field and knowledge of New York State, as well as of the project;

(d) a client list and pertinent samples of recently completed projects with results involving key clients;

(e) a plan, detailing costs, for dissemination of the Travel Guide which shall be sent to consumers in response to requests generated by the department's tourism advertising campaign, provided, however, that the department may elect to eliminate this requirement;

(f) editorial content which is reflective of, but not limited to, the department's research on New York State traveler interest;

(g) any subcontracting firm or firms which the bidder has chosen to use, the reason for choosing such firm(s), and the bidder's association and/or experience with such firm; the department, an equal opportunity contractor, reserves the right to review and approve all subcontracting firms; approval shall be based upon experience in the field and knowledge of New York State, as well as of the project; and

(h) any patented or proprietary information, clearly identified, and also described in a cover letter submitted with the proposal.

5 CRR-NY 80.5 Selection criteria {#sec-5-crr-ny-80.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 80.5}

The contract for publication shall be awarded after consideration of factors which shall include, but not be limited to, the following:

(a) demonstrated understanding of the objective of the project;

(b) demonstrated ability to perform the required services, including sales force and production staff capabilities;

(d) evaluation of the bidder's client list, including samples of work;

(e) cost effectiveness;

(f) site inspection of the bidder's facilities should the Department elect to conduct such inspection;

(g) most favorable financial advantage for the State;

(h) best representation of the State of New York and its services; and

(i) greatest utility to the traveller.

5 CRR-NY 80.6 Selection procedure and deadlines {#sec-5-crr-ny-80.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 80.6}

(a) It is each bidder's responsibility to insure timely submission of its proposal. Bids received after the scheduled date and time will not be accepted. Electronically transmitted proposals will not be accepted. Only those firms which have supplied complete information will be considered. No partial proposals will be considered. Properly defined alternate proposals, which result in a savings to the State of New York, will be considered.

(b) After being contacted by the department, qualifying firms shall make individual presentations before the department's Executive Review Committee at the department's offices in either Albany or New York City. Sites shall be determined by the department prior to contact. The Executive Review Committee shall review the proposals and oral presentations in accordance with the criteria specified in section 80.5 of this Part. The commissioner shall review the recommendation of the Executive Review Committee and select the winning proposal.

(1) reject all proposals;

(2) waive or modify minor irregularities in proposals received;

(3) negotiate with the bidders, within bid requirements, to best serve the interests of the State of New York;

(4) amend the specifications after their release, with proper notice given all bidders, to modify their proposals to reflect the changed specifications; and

(5) utilize any or all ideas submitted in the proposals received, unless those ideas are covered by legal patent or proprietary rights.

5 CRR-NY 80.7 Publisher's responsibilities {#sec-5-crr-ny-80.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 80.7}

At the option of the department, the publisher shall be responsible for all or some phases of development, production and dissemination of the Travel Guide, under the direction of the department. In fulfillment of this obligation, the publisher shall, where applicable:

(a) develop a program which meets the criteria established by the department in the publication of the Travel Guide;

(b) upon the request of the department, provide a plan for the dissemination of the Travel Guide; and

5 CRR-NY 80.8 Contractual information {#sec-5-crr-ny-80.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 80.8}

A contract detailing the responsibilities of the department and the publisher will be drafted by the department. The contract term shall be for two years, with an option to extend for one additional year at rates to be negotiated. After the department and the publisher execute the contract, it shall be submitted for approval to the Attorney General' s Office and the Office of the State Comptroller. The contract shall address, but not be limited to, the following issues:

(a) services to be provided by the publisher;

(b) reports required, which shall include, but not be limited to, weekly inventory reports of collateral materials, monthly progress reports setting forth activities per departmental campaign for the preceding month, and quarterly activity and financial reports;

(c) payment for services to be performed; such payment shall be made upon receipt of monthly progress reports and duly authenticated invoices/vouchers detailing expenses; and

(d) subcontracts or purchases after contract is awarded, which are over $2,500, and which shall adhere to the following:

(1) subcontracts or purchases which are sole sourced shall include a detailed justification for sole sourcing; and

(2) subcontracts or purchases which are competitively bid shall include bids from a minimum of five qualified firms, and the lowest responsible bidder shall be accepted; and

(e) minority and women-owned business enterprise commitments, which require the publisher to use its best efforts to solicit and obtain the participation of certified minority and women- owned businesses on the contract and to periodically report on such efforts.

Chapter X NEW YORK STATE JOB INCENTIVE BOARD

Part 101 JOB INCENTIVE BOARD

5 CRR-NY 101.1 Members {#sec-5-crr-ny-101.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 101.1}

The members of the board shall be the Commissioner of Commerce, the Commissioner of Taxation and Finance, the Commissioner of Labor, the Commissioner of Agriculture and Markets, the Secretary of State, the Commissioner of Housing and Community Renewal, the chairman of the State Board of Equalization and Assessment, and such other State officer as the Governor shall designate, all serving ex officio and without salary.

5 CRR-NY 101.2 Chairman {#sec-5-crr-ny-101.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 101.2}

The Commissioner of Commerce shall serve as board chairman.

5 CRR-NY 101.3 Quorum {#sec-5-crr-ny-101.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 101.3}

A majority of the members shall constitute a quorum for the transaction of all business.

5 CRR-NY 101.4 Alternates {#sec-5-crr-ny-101.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 101.4}

Each member of the board may, by official order filed in the office of the agency of which he is commissioner or director, designate a deputy or other representative in such agency to perform his duties on the board. The bureau shall be notified in writing of any designation.

5 CRR-NY 101.5 Offices {#sec-5-crr-ny-101.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 101.5}

The offices of the board and the bureau are located in the Department of Commerce, 99 Washington Avenue, Albany, NY 12245.

Part 102 POWERS AND DUTIES OF BOARD

5 CRR-NY 102.1 Eligible areas {#sec-5-crr-ny-102.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.1}

The board shall, from time to time, determine and designate areas eligible for location of business concerns applying for tax credits and exemptions.

5 CRR-NY 102.2 Application {#sec-5-crr-ny-102.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.2}

(a) Applications for certificates of eligibility shall be submitted, upon forms supplied by the board, in detail sufficient for the board to determine eligibility.

(b) In applying for credits for retained jobs, it shall be the burden of the applicant to demonstrate, to the satisfaction of the board, in a sworn written statement that the investment for which credit is sought is reasonably necessary:

(1) to preserve jobs in existence at the time of the application;

(2) to discourage the applicant from relocating to a site outside the State; or

(3) to discourage the applicant from ceasing operations or going out of business.

(c) In consideration of the nature of the job incentive program as an incentive measure, the board shall not consider the granting of credit for jobs retained if the application for a certificate of eligibility before the board is received after the start of a project. For purposes of this section, a project shall be deemed to start on the earliest of the following dates:

(1) the date local building permits are issued for construction, reconstruction, erection or improvement of a business facility for which eligibility is sought;

(2) the date a lease is executed for a business facility for which eligibility is sought; or

(3) the date equipment purchased or leased as part of an investment for which eligibility is sought is delivered to a business facility.

5 CRR-NY 102.3 Approval of application {#sec-5-crr-ny-102.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.3}

(a) The board shall determine whether or not an applicant is or may become eligible to receive credits under article 9-A, 9-B, 9-C, 23, 32 or 33 of the Tax Law, or exemptions under section 485 of the Real Property Tax Law, or both.

(b) The board shall not approve any application which concerns the removal of a business facility from one area of the State to another area of the State, or in the abandonment of one or more plants or facilities of the applicant within the State, unless the applicant demonstrates to the satisfaction of the board, in a sworn written statement by a corporate officer, partner or sole proprietor, that the proposed facility is:

(1) reasonably necessary to discourage the applicant from removing such other facility to a location outside the State; or

(2) reasonably necessary to preserve the competitive position of the applicant in its respective industry.

An applicant may be deemed to meet the requirements of paragraph (1) of this subdivision if, in his submission to the board, he demonstrates: (i) the feasibility of out-of-state relocation; and (ii) that such relocation would provide a significant reduction in production costs compared to production costs at the existing location. An applicant may be deemed to meet the requirements of paragraph (2) of this subdivision if, in his submission to the board, he demonstrates that such relocation will be instrumental in halting at least three consecutive years of declining profitability of its existing facility or in providing a significant reduction in operating or production costs. For purposes of this section, area shall mean county, except that in reference to the city of New York, area shall mean the city of New York.

(1) the size and nature of the new investment relative to the value of existing investment in New York State;

(2) the percentage of increase of employment at the proposed business facility;

(3) the number of existing jobs that will be retained by reason of the new investment; and

(4) the feasibility of out-of-state relocation.

(d) If a business concern does not seek State tax credits and/or real property tax exemptions within two years of the projected completion date of the project which has been proposed in the application and approved by the board, such approval shall lapse, unless extended at the discretion of the board upon the written request of the applicant. Nothing contained herein shall be deemed to prohibit a firm from reapplying for approval of a project after the initial approval for the same project has lapsed.

5 CRR-NY 102.4 Letter of intent {#sec-5-crr-ny-102.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.4}

Upon approval of an application, the board shall issue a letter of intent informing the applicant that, if there is compliance with the provisions of section 118 of the Commerce Law, a certificate of eligibility for tax credits or a certificate of eligibility for real property tax exemptions, or both, shall be issued.

5 CRR-NY 102.5 Affidavit of compliance {#sec-5-crr-ny-102.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.5}

Before any certification, the applicant must submit an affidavit of compliance.

(a) In the case of a certificate of eligibility for tax credits, the affidavit of compliance shall include:

(1) the name and address of the applicant;

(2) the fiscal year of the applicant for tax purposes;

(3) the date on which the eligible business facility first became eligible;

(4) the amount of each element of eligible property values and any itemized schedules that the board may require;

(5) the number of jobs created and/or retained;

(6) the total amount of wages, salaries or other compensation paid during the eligible period to employees holding jobs created or retained;

(7) a statement that an approved training program has been provided at the business facility or facilities; and

(8) any other statements the board may deem appropriate to assist it in determining original or continuing eligibility in the program.

(b) In the case of a certificate of eligibility for real property tax exemptions, the affidavit of compliance shall include:

(1) the name and address of the applicant;

(2) the eligible area and the next taxable status date to which the certificate relates;

(3) the date of the application;

(4) the amount of expenditures paid or incurred for capital improvements of depreciable real property in the eligible business facility or facilities;

(5) a statement that at least five jobs have been created or retained at the facility or facilities; and

(6) a statement that an approved training program has been provided at the business facility or facilities.

(c) In any affidavit of compliance, an applicant must affirm that the statements made are true to the best of his knowledge, under penalty of making a punishable false written statement in accordance with section 210.45 of the Penal Law.

5 CRR-NY 102.6 Certificate of eligibility {#sec-5-crr-ny-102.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.6}

The board shall issue, revoke or modify a certificate of eligibility after satisfactory verification of the affidavit of compliance and any other information that the board may deem pertinent.

(a) In the case of a certificate of eligibility for tax credits, no such certificate shall be issued until after the close of the applicant's taxable year.

(b) In the case of a certificate of eligibility for real property tax exemptions, such certificate may be issued at any time before the applicable taxable status date. The board shall issue a certificate of eligibility for real property tax exemptions only when a local law or resolution has been adopted in the eligible area of the eligible business facility pursuant to section 485 of the Real Property Tax Law.

5 CRR-NY 102.7 Contents of certificate of eligibility {#sec-5-crr-ny-102.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.7}

(a) A certificate of eligibility for tax credits, and any renewal or extension thereof, shall include:

(1) the name of the business concern;

(2) the location of the eligible business facility or facilities;

(3) the taxable year to which the certificate relates;

(4) the total amount of eligible property values included in the business facility or facilities, and the prorated amount thereof for tax credit purposes;

(5) the total amount of eligible wages paid at the facility for jobs created or retained; and

(6) a list of jobs created or retained by the business facility or facilities.

(b) A certificate of eligibility for real property tax exemptions, and any renewal or extension thereof, shall include:

(1) the name of the business concern;

(2) the location of the eligible business facility or facilities;

(3) the taxable status date to which the certificate relates;

(4) the city, county, town, village or school board that has enacted a local law or resolution in the eligible area of the facility or facilities; and

(5) a brief description of the improvements made to the business facility or facilities.

5 CRR-NY 102.8 Renewal or extension of certificate {#sec-5-crr-ny-102.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.8}

No renewal or extension may be granted for more than one year, but successive annual renewals or extensions may be granted. However, no such annual renewal or extension shall extend beyond the ninth year after that to which the original certificate relates.

5 CRR-NY 102.9 Revocation or modification of certificate {#sec-5-crr-ny-102.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.9}

Any certificate may be revoked or modified by the board in accordance with section 120 of the Commerce Law.

5 CRR-NY 102.10 Contiguous census tracts {#sec-5-crr-ny-102.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.10}

The board may designate as an eligible area any city census tract which is otherwise not eligible if:

(a) the tract is contiguous to one or more eligible census tracts;

(b) the board has received an application for a business facility located in such tract; and

(c) the tract is not substantially different in character from its contiguous eligible tract or tracts in terms of land use, median family income and employment opportunity.

5 CRR-NY 102.11 Retail facility {#sec-5-crr-ny-102.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.11}

A facility used primarily for retail sales shall not be eligible for tax credits and exemptions under the job incentive program. In determining whether or not a facility is primarily a retail facility, the board will consider the following factors:

(a) whether more than 50 percent of the full-time employees or equivalent full-time employees are engaged in making retail sales of goods or services to retail customers who personally visit such facility;

(b) whether more than 50 percent of the space in the business facility is being used in making retail sales of goods or services to retail customers who personally visit such facility;

(c) whether more than 50 percent of the receipts received at the facility by the applicant are derived from retail sales of goods or services to retail customers who personally visit such facility.

5 CRR-NY 102.12 [Renumbered] {#sec-5-crr-ny-102.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.12}

5 CRR-NY 102.13 International banking facility {#sec-5-crr-ny-102.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.13}

An international banking facility shall have the meaning as set forth in the New York State Banking Law or regulations promulgated thereunder or as set forth in the Laws of the United States or regulations of the Board of Governors of the Federal Reserve System. A banking corporation taxable under article 32 of the Tax Law that operates an international banking facility must exclude from eligibility the property and wages attributable to the international banking facility. The wage expense attributable to the international banking facility will be computed as set forth in 20 NYCRR Part 38. The portion of property values and rental values relating to a depreciation expense or rent expense allocated to the international banking facility pursuant to 20 NYCRR Part 38 shall not qualify as eligible property values.

5 CRR-NY 102.14 Variances {#sec-5-crr-ny-102.14 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.14}

The board may, upon written application from any business concern, grant a variance from one or more specific rules or regulations, consistent with the following:

(a) Any application for a variance hereunder must:

(1) identify the specific rule or regulation from which a variance is sought; and

(2) demonstrate that the application of the identified rule or regulation would, on the basis of conditions unique and peculiar to the applicant's particular situation, have the effect of preventing an applicant from receiving benefits which, in view of the overall intent of the job incentive program, should be available to the applicant.

(b) In granting any variance hereunder, the board may impose specific conditions reasonably necessary to assure that the facility for which eligibility is sought will create or retain jobs consistent with the statutory provisions of the job incentive program, the purpose of these rules and regulations, and the performance expected from application of these rules and regulations.

5 CRR-NY 102.15 Review of board action {#sec-5-crr-ny-102.15 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 102.15}

Any determination of the board with reference to the issuance, denial, modification or revocation of a certificate of eligibility, or any renewal or extension thereof, shall be reviewable under article 78 of the Civil Practice Law and Rules.

Part 103 REVOCATION HEARINGS

5 CRR-NY 103.0 Introduction {#sec-5-crr-ny-103.0 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.0}

The board shall order that a hearing be held when it has reason to believe it may be necessary to revoke or modify a certificate of eligibility pursuant to subdivision (f) of section 120 of the Commerce Law.

5 CRR-NY 103.1 Appearances {#sec-5-crr-ny-103.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.1}

Any person who would be aggrieved by the determination of the board in revoking or modifying a certificate of eligibility may appear and be heard in person, or by a duly appointed representative, and may produce, under oath, evidence relevant and material to such revocation.

5 CRR-NY 103.2 Counsel {#sec-5-crr-ny-103.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.2}

A party may be represented by counsel; provided, however, that said counsel shall be a member of the bar of the State of New York in good standing.

5 CRR-NY 103.3 Authority for representation {#sec-5-crr-ny-103.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.3}

Any person appearing before the board in a representative capacity may be required to show his authority to act in such capacity.

5 CRR-NY 103.4 Hearings {#sec-5-crr-ny-103.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.4}

Hearings shall be conducted by a hearing officer who may be a member of the board or a person designated and empowered by the board. The hearing officer shall rule upon matters of procedure and introduction of evidence, and shall conduct the hearing in such manner, in his discretion, as will best serve the purpose of the attainment of justice. Objections may be taken to rulings of the hearing officer, with the reasons given for such objections. After the conclusion of the hearing, the hearing officer shall make, in writing, his findings as to whether the evidence sustains the charges, or any of them, relating to revocation or modification of the certificate of eligibility, and shall designate which charges he has found sustained by the evidence and shall forward such findings to the board. A copy of such report shall be served upon the certificate holder or his attorney by ordinary mail prior to submission of such report to the board, provided a request therefor is made on the record at the hearing. The report, when served, shall be accompanied by a statement in writing advising that the recipient may controvert any of the findings contained therein within the time limited in such statement. The stenographic record of the hearing shall be referred, together with the hearing officer's report, and statement controverting the findings contained therein, for due consideration and appraisal by the board.

5 CRR-NY 103.5 Notice of hearing {#sec-5-crr-ny-103.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.5}

All parties shall be given reasonable notice of such hearing, which notice shall include:

(a) a statement of the time, place and nature of the hearing;

(b) a statement of the legal authority and jurisdiction under which the hearing is to be held;

(d) a short and plain statement of matters asserted.

5 CRR-NY 103.6 Answer {#sec-5-crr-ny-103.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.6}

The certificate holder shall, within 30 days of the date of the notice of hearing, respond to the statement of matters asserted in the notice. Failure to serve an answer to the notice shall constitute an admission of the matters asserted and a waiver of the right to any hearing.

5 CRR-NY 103.7 Service {#sec-5-crr-ny-103.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.7}

Service of all documents and notices shall be made by personal service or by deposit in first class mail in a depository maintained by the United States Postal Service. Nonpersonal service shall be deemed complete on mailing.

5 CRR-NY 103.8 Waiver of hearing {#sec-5-crr-ny-103.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.8}

A certificate holder may waive his right to a hearing by submitting to the board a written waiver therefor.

5 CRR-NY 103.9 Evidence {#sec-5-crr-ny-103.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.9}

(a) Irrelevant or unduly repetitious evidence may be excluded. Every decision, determination or order shall be founded upon a preponderance of reliable and probative evidence based on the entire record. The hearing officer shall not be bound by the technical rules of evidence. Objections to evidentiary offers may be made and shall be noted in the record. For the purpose of expediting the hearing, and when the interests of parties will not be substantially prejudiced thereby, all or part of the evidence may be submitted in written form. All testimony, written or oral, shall be sworn testimony.

(b) All evidence, including records and documents in the possession of the board, of which it desires to avail itself, shall be offered and made a part of the record, and all such documentary evidence may be received in the form of copies of excerpts, or by incorporation by reference. In cases of incorporation by reference, the materials so incorporated shall be available for examination by the parties before being received in evidence.

5 CRR-NY 103.10 Argument {#sec-5-crr-ny-103.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.10}

All parties shall be afforded an opportunity to present written argument on issues of law, and an opportunity to present oral evidence on issues of fact. Oral arguments shall be at the discretion of the hearing officer. All arguments shall be included in the stenographic record of the hearing.

5 CRR-NY 103.11 Briefs {#sec-5-crr-ny-103.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.11}

Briefs, in triplicate, may be filed by any party to the proceedings, and will become a part of the record, provided copies thereof are first served upon all parties, and the original with affidavit of service is submitted within the time fixed by the hearing officer.

5 CRR-NY 103.12 Adjournments {#sec-5-crr-ny-103.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.12}

Applications for adjournments may be granted, for good cause, by the hearing officer.

5 CRR-NY 103.13 Motions, etc., order of proof {#sec-5-crr-ny-103.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.13}

(a) The order of proof in hearings before the board is as follows:

(1) testimony by the witness or witnesses in support of the charges preferred against the certificate holder;

(2) cross-examination of such witnesses;

(3) testimony by the certificate holder or his witnesses in defense;

(4) cross-examination of the certificate holder and of such witnesses.

(b) Motions may be made at the option of the certificate holder or his attorney, but are not required, and are not necessary to protect any right of the certificate holder.

5 CRR-NY 103.14 Rehearing {#sec-5-crr-ny-103.14 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 103.14}

There shall be no rehearing unless an application is made to the board therefor, based upon newly discovered evidence which is material and relevant to the issues presented at the hearing.

Chapter XI EXPORT ASSISTANCE FOR BUSINESS AND INDUSTRY ASSOCIATIONS

Part 110 THE APPLICATION PROCESS

5 CRR-NY 110.1 Purpose and general description {#sec-5-crr-ny-110.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 110.1}

The purpose of providing financial assistance to business and industry associations for export trade development and promotion is to provide State funding, on a competitive basis, to eligible business and industry associations which will encourage and assist their member businesses to engage in export trade. The purpose of these regulations is to set forth the application process for funding such business and industry associations.

5 CRR-NY 110.2 Definitions {#sec-5-crr-ny-110.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 110.2}

(a) Commissioner means the Commissioner of the Department of Economic Development.

(b) Department means the Department of Economic Development.

(c) Eligible applicant or applicant means a not-for-profit corporation or other voluntary association or organization whose members have engaged in or are likely to engage in export trade.

(d) Eligible project includes, but is not limited to, any short-term project pursuant to which an applicant would provide its members with one or more of the following services: export market research; export trade promotion; export trade education; export trade finance technical assistance; export trade finance; or any other service designed to develop or promote export trade. Examples of eligible projects shall include, but not be limited to, conferences and seminars on specific trade issues; publications, such as export service directories and guides as well as newsletters; regional or industry specific trade research; and other services designed to develop or promote export trade.

(e) Financial assistance shall mean the financial assistance provided pursuant to article 10, section 220(9) of the Economic Development Law, as enacted by chapter 291 of the Laws of 1990, and this Part.

5 CRR-NY 110.3 Grant limits {#sec-5-crr-ny-110.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 110.3}

Except upon good cause shown to the commissioner, no grant for financial assistance to an eligible applicant shall exceed $5,000.

5 CRR-NY 110.4 Application process {#sec-5-crr-ny-110.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 110.4}

(a) Periodically, the department shall issue a request for proposals for financial assistance. Such request shall specify the date by which proposals must be submitted, the number of copies of the proposal to be submitted, the office to which they should be submitted, the information to be contained in each proposal, and any other information which the commissioner deems relevant to determining whether to provide financial assistance.

(b) Alternatively, eligible applicants shall submit to the department an application for financial assistance in such a form and manner as the commissioner shall deem necessary or desirable.

(1) a description of the applicant's organization, purposes, and background;

(2) a description of the services the applicant proposes to provide to its members with the financial assistance;

(3) a description of the applicant's ability to provide the proposed services;

(4) a description of the potential for the development or promotion of export trade by the applicant's members using the applicant's proposed services;

(5) a statement of the availability of such proposed services from sources other than the applicant;

(6) a description of the methods by which the applicant proposes to coordinate its services with the services provided by the department and other public and private sector entities; and

(7) a budget, including matching funds, in-kind and otherwise, to be provided by the applicant.

5 CRR-NY 110.5 Evaluation; approval {#sec-5-crr-ny-110.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 110.5}

(a) The Deputy Commissioner of the International Division of the department shall review all proposals and applications for financial assistance to determine whether they are complete and meet the purpose of providing financial assistance, and shall forward his or her recommendations to the commissioner for a final decision.

(b) The department shall give preference to proposals and applications which result in benefiting an applicant's member businesses which offer goods or services substantially produced in New York State.

(c) The commissioner shall approve or disapprove of the proposals and applications, and so notify the applicants in writing. The department shall provide financial assistance by purchase orders or separate written contracts, as is appropriate or necessary.

5 CRR-NY 110.6 Reporting {#sec-5-crr-ny-110.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 110.6}

(a) Applicants receiving financial assistance shall submit to the department project reports in relation to the provision of services contained in their approved proposals and applications, including the information set forth below:

(1) a description of the services provided by the applicant to its members with the financial assistance;

(2) a description of the degree to which the applicant's members engaged in export trade using the services funded by the financial assistance;

(3) the approximate value of exports generated by the services funded by the financial assistance;

(4) a description of the degree to which the applicant coordinated its services with services provided by other public and private sector entities; and

(5) such other information the department deems pertinent to evaluating the effectiveness of the services funded by the financial assistance.

(b) Applicants receiving financial assistance shall submit to the department financial reports, in a form and manner prescribed by the department, which shall set forth receipts and expenditures of the financial assistance.

Chapter XII GLOBAL EXPORT MARKET SERVICE—EXPORT DIAGNOSTIC AND MARKET DEVELOPMENT PROGRAM

Part 120 ADMINISTRATION, APPLICATION AND EVALUATION

5 CRR-NY 120.1 Purpose and general description {#sec-5-crr-ny-120.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.1}

The purpose of the Global Export Market Service is to improve the competitive position in international markets of businesses and industries, including agricultural businesses, whose principal place of business is located in New York, by assisting them to commence or increase exporting. The Global Export Market Service shall be administered in conjunction with the Industrial Effectiveness Program, set forth in article 7 of the Economic Development Law. The purpose of these regulations is to set forth the process by which the foregoing businesses and industries, as well as experts, can participate in the Global Export Market Service.

5 CRR-NY 120.2 Definitions {#sec-5-crr-ny-120.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.2}

(a) Agricultural equipment means tangible personal property consisting of machinery or equipment used or intended to be used to grow, produce, process or pack agricultural products.

(b) Agricultural products includes all agricultural, horticultural, floricultural, and vegetable and fruit products of the soil, grapes and wines, grains, timber products, Christmas trees, livestock and meats, poultry, eggs, dairy products, nuts, honey, maple tree sap and maple products produced therefrom, wool, hides, hay, straw or articles of food, drink, confectionery or condiment used or intended for use by human beings or animals, and all substances or ingredients to be added to food for any purpose.

(c) Aquatic products means food or fiber products obtained through the process of the culture, cultivation or harvest of aquatic plants and animals, including mariculture, or by harvest from bodies of water when such products are cultured or landed.

(d) Business or industry group or association means a not-for-profit corporation or other voluntary association or organization formed for agricultural, horticultural, animal husbandry, professional, commercial, industrial, trade or service purposes, and some of whose members are small and medium sized businesses.

(e) Commissioner means the Commissioner of Economic Development.

(f) Department means the Department of Economic Development.

(g) Deputy Commissioner means the Deputy Commissioner of the International Division of the Department.

(h) Eligible agricultural products means agricultural products grown, produced, or primarily processed in New York; agricultural equipment primarily produced in New York; or aquatic products cultured, cultivated or harvested from the waters in and around New York or cultured or landed in New York, which are likely to be in demand in international markets.

(i) Eligible applicant means:

(1) a small or medium sized business having no more than 500 employees, or business or industry group or association; or

(2) any commercial merchant, dealer, distributor, broker, grower, producer, processor, handler, packer, industry group or association or cooperative offering for sale or trade eligible agricultural products.

(j) Export diagnostic assessment means an assessment of the potential of an eligible applicant to commence or increase exporting. An export diagnostic assessment may include, but shall not be limited to, an evaluation of the export potential for an eligible applicant's goods or services in international markets and an eligible applicant's management, organization and distribution in relation to its ability to commence or increase exporting.

(k) Export market development plan means an analysis of specific actions an eligible applicant should undertake to commence or increase exporting. An export market development plan may include, but shall not be limited to, designing and implementing recommendations for an eligible applicant:

(1) to adapt its products to international technical specifications and standards;

(2) to pursue exporting in specific regional and/or industrial markets;

(3) to contract with agents, distributors or others;

(4) to establish its own internal international division;

(5) to establish materials management and export documentation capabilities; and

(6) to make such other changes to and improvements in its management, organization, operations, distribution or production to commence or increase exporting.

(l) Service means the Global Export Market Service.

(m) Small or medium sized business means a sole proprietorship, partnership, corporation or other business organization having no more than 500 employees, which is commercially viable, and offers for sale or trade goods or services which are likely to be in demand in international markets and are substantially produced in New York.

5 CRR-NY 120.3 Administration {#sec-5-crr-ny-120.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.3}

In its administration of the service, the department shall:

(a) identify and retain consultants with expertise in at least one area related to export development or promotion and provide eligible applicants with a list of such consultants;

(b) provide export diagnostic assessments and export market development plans, either directly or by experts retained or supervised by the department, to eligible applicants that have requested such assistance directly or upon referral by the department's regional offices, the New York State Science and Technology Foundation, the New York State Urban Development Corporation, the New York Job Development Authority, the Department of Agriculture and Markets, the Port Authority of New York and New Jersey, or Federal, State, regional and local trade and economic development organizations;

(c) provide information on other government-sponsored programs offering technical and financial assistance to exporters or potential exporters;

(d) promote awareness of the Service among businesses, business or industry organizations, and Federal, State, regional and local trade and economic development agencies, with the assistance of appropriate State agencies;

(e) identify eligible applicants offering for sale or trade eligible agricultural products;

(f) undertake activities to assist eligible applicants to commence or increase exporting eligible agricultural products; and

(g) provide information to eligible applicants on other government-sponsored programs offering technical and financial assistance to promote exports of agricultural products, agricultural equipment or aquatic products.

5 CRR-NY 120.4 Procedures for identifying, selecting and retaining experts {#sec-5-crr-ny-120.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.4}

(a) From time to time, and no less than annually, the department shall undertake efforts to identify consultants with expertise in at least one area related to export development and promotion. Such efforts may include, but shall not be limited to:

(1) advertising in print media;

(2) publishing notices in the New York State Contract Reporter; and

(3) soliciting in writing individuals, firms, professional associations and agencies which provide or have access to special expertise in areas related to export development and promotion.

(b) Consultants that express an interest in providing services under the service shall be required to submit to the deputy commissioner, in such a form and manner as the commissioner shall deem necessary or desirable, information, including, but not limited to, their expertise, background, experience, qualifications, possible conflicts of interest, standing in the professional community, special experience and competencies, previous clients, and fee schedules. Such information shall be updated annually.

(c) The deputy commissioner shall develop and maintain a list of consultants that have demonstrated to the deputy commissioner they have expertise in at least one area of export development or promotion. The deputy commissioner may remove the name of a consultant from such list where cause is shown.

(d) The department shall retain or supervise such consultants pursuant to contracting procedures applicable to the department, as the commissioner shall deem necessary or desirable.

5 CRR-NY 120.5 Project limits {#sec-5-crr-ny-120.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.5}

(a) Except upon good cause shown to the commissioner, the department shall not expend greater than $5,000 for an export diagnostic assessment for a small or medium sized business or greater than $10,000 for an export diagnostic assessment for a business or industry group association.

(b) Except upon good cause shown to the commissioner, the department shall not expend greater than $25,000 for an export market development plan for a small or medium sized business or greater than $50,000 for an export market development plan for a business or industry group or association.

Any expenditure for an export diagnostic assessment or export market development plan shall be based upon an application approved by the commissioner, and in no case shall the level of contribution by the eligible applicant toward such assistance be less than 50 percent of the total costs of such assistance.

5 CRR-NY 120.7 Application process {#sec-5-crr-ny-120.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.7}

(a) Eligible applicants shall submit to the department an application to participate in the service in such a form and manner as the commissioner shall deem necessary or desirable. The application shall elicit such information as is necessary to enable the department to make the evaluations required by section 120.8 of this Part and such other information as the commissioner shall deem necessary or desirable.

(b) The department shall notify the applicant in writing concerning the disposition of its application. In the event that the commissioner approves of the application, in whole or part, the department shall enter into such contractual agreements to provide assistance under the service as is necessary or desirable to effectuate the commissioner's approval.

5 CRR-NY 120.8 Evaluation criteria {#sec-5-crr-ny-120.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.8}

The department shall evaluate all applications to participate in the service based upon the eligible applicant's demonstration of the following:

(a) whether the application is complete;

(b) the eligibility of the applicant;

(d) the applicant's commitment to participate in the service;

(e) the applicant's capability to carry out recommendations resulting from participation in the service; and

(f) the likely benefit derived from participation in the service to the economy of the region in which the applicant is located in relation to the cost to the State of providing the assistance.

5 CRR-NY 120.9 Reporting {#sec-5-crr-ny-120.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.9}

Every eligible applicant participating in the service shall provide the department with such reports relating to such participation as the commissioner shall deem to be necessary or desirable.

5 CRR-NY 120.10 Exemption from disclosure requirements {#sec-5-crr-ny-120.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.10}

The information contained in the reports described in section 120.9 of this Part shall be exempt from disclosure to the fullest extent permitted under section 87(2) of the Public Officers Law and any other applicable law.

5 CRR-NY 120.11 Job listings {#sec-5-crr-ny-120.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 120.11}

For any position opened as a result of assistance provided under this service, businesses so assisted shall first consider persons eligible to participate in Federal Job Training Partnership Act (P.L. 97-300) programs, who shall be referred to the business by administrative entities of service delivery areas created pursuant to such act or by the Job Service Division of the Department of Labor.

Chapter XIII EXPORT FINANCE SERVICE

Part 130 ADMINISTRATION

5 CRR-NY 130.1 Purposes and general description {#sec-5-crr-ny-130.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 130.1}

The purposes of the Export Finance Service are: to promote and increase the provision of export finance in New York by public and private organizations; to assist New York exporters and potential exporters in obtaining export finance from public and private organizations; to develop a directory of export finance programs in New York available from public and private organizations; to provide intermediary services to match New York exporters and potential exporters with export finance available from public and private organizations; to encourage public and private organizations to provide export finance to New York exporters and potential exporters; to identify sources of expertise in the public and private sectors to assist New York exporters and potential exporters in obtaining export finance, and to provide such exporters and potential exporters with a list of such sources of expertise. The purpose of these regulations is to set forth the manner in which these purposes will be achieved.

5 CRR-NY 130.2 Definitions {#sec-5-crr-ny-130.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 130.2}

(a) Commissioner means the Commissioner of Economic Development.

(b) Department means the Department of Economic Development.

(c) Eligible participant means a sole proprietorship, partnership, corporation or other business organization which offers for sale goods or services which are likely to be in demand in international markets and are substantially produced in New York.

(d) Export finance means pre-order financing to support market development activities prior to an export sale, working capital to support the acquisition of inventory and other expenditures to finance the production of goods for export, accounts receivable financing to cover the costs between shipping goods and receiving payment from an export sale, customer financing to provide medium- and long-term financing to foreign buyers, and export insurance to insure sellers and buyers for risks associated with export transactions.

(e) Public and private organizations means commercial banks, insurance companies, the Small Business Administration, the Export-Import Bank of the United States, the New York Job Development Authority, the Port Authority of New York and New Jersey, the New York Business Development Corporation, other international, Federal, State, regional and local economic development organizations and other organizations identified by the commissioner as potential providers of export finance.

(f) Service means the Export Finance Service.

5 CRR-NY 130.3 Administration {#sec-5-crr-ny-130.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 130.3}

In its administration of the service, the department shall:

(a) identify and assess export finance programs being offered in New York by public and private organizations;

(b) develop a directory of export finance programs being offered in New York by public and private organizations;

(c) identify and assess sources of expertise in the public and private sectors to assist exporters or potential exporters in obtaining export finance;

(d) develop a list of sources of expertise in the public and private sectors to assist exporters or potential exporters in obtaining export finance;

(e) assess and report on the availability of export finance in New York;

(f) provide recommendations concerning increasing the provision of export finance in New York by public and private organizations;

(g) educate exporters and potential exporters on obtaining export finance from public and private organizations;

(h) counsel exporters and potential exporters, individually or collectively, on obtaining export finance from public and private organizations;

(i) provide intermediary services to match exporters or potential exporters with export finance being offered by public and private organizations; and

(j) encourage public and private organizations to provide export finance to exporters and potential exporters.

5 CRR-NY 130.4 Requests to receive assistance; evaluation; approval {#sec-5-crr-ny-130.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 130.4}

(a) Eligible participants wishing to receive counselling on obtaining export finance from public and private organizations or intermediary services to match such participant with export finance being offered by public and private organizations shall provide the department with information on the following matters: the commercial viability of the eligible participant, whether it offers for sale or trade goods or services which are likely to be in demand in international markets and are substantially produced in New York, the eligible participant's knowledge of exporting, the eligible participant's commitment to exporting and such other information as the commissioner shall deem necessary or desirable. Such information shall be provided in such a form and manner as the commissioner shall deem necessary or desirable, including, but limited to, by means of an application.

(b) The department shall evaluate all requests to receive counselling on obtaining export finance or intermediary services in the service based upon the eligible participant's demonstration of the following:

(1) the commercial viability of the eligible participant;

(2) whether it offers for sale or trade goods or services which are likely to be in demand in international markets and are substantially produced in New York;

(3) the eligible participant's knowledge of exporting; and

(4) the eligible participant's commitment to exporting.

(c) The department shall review the information provided by eligible participants in accordance with the evaluation criteria specified in subdivision (b) of this section. The department shall approve or disapprove of requests to receive counselling on obtaining export finance or intermediary service in the service, and shall so notify the eligible participants in such a form and manner as the commissioner shall deem necessary or desirable. The department shall enter into such contractual agreements to provide assistance under the service as is necessary or desirable.

5 CRR-NY 130.5 Application fees and reimbursable costs {#sec-5-crr-ny-130.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 130.5}

(a) The department shall not charge a fee for any assistance required by section 225 of the Economic Development Law which is provided under the service. The department shall charge a $250 fee for assistance not mandated by section 225 of the Economic Development Law but which is provided under the service, including, but not limited to, the performance of credit analyses and the written presentation of information to public and private organizations on behalf of eligible participants to obtain export finance. The department shall charge an additional fee of one-half of one percent of the principal amount of any loan or line of credit (less the $250 fee previously paid) in the event that its provision of such assistance results in the eligible participant obtaining export finance.

(b) Eligible participants shall reimburse the department for external expenses incurred by the department in the performance of assistance not mandated by section 225 of the Economic Development Law but which are provided under the service, including, but not limited to, obtaining of credit information concerning the eligible participant and travel on behalf of the eligible participant.

5 CRR-NY 130.6 Exemption from disclosure requirements {#sec-5-crr-ny-130.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 130.6}

The information provided by eligible participants pursuant to section 130.4 of this Part shall be exempt from disclosure to the fullest extent permitted under section 87(2) of the Public Officers Law and any other applicable law.

Chapter XIV DIVISION OF MINORITY AND WOMEN'S BUSINESS DEVELOPMENT

Part 140 DEFINITIONS

5 CRR-NY 140.1 Definitions {#sec-5-crr-ny-140.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 140.1}

(a) Affirmative Action Program and Equal Employment Opportunity Program.

A program involving the implementation of procedures and methods for the identification, recruitment and employment of minority group members and women. Such programs must include equal access to advancement and procedures for investigating claims of discrimination because of race, creed, color, national origin, sex, age, disability or marital status. The overall result to be sought is to expand the employment opportunities of minority group members and women, also referred to as workforce diversity requirements.

(b) Applicant.

A business enterprise which has applied for certification as a bona fide minority- or woman-owned business enterprise.

Any entity, including a sole proprietorship, partnership, limited liability partnership, limited liability company or corporation, including not-for-profit corporations, which is authorized to and engages in lawful business transactions in accordance with New York law.

(d) Certified enterprise or certified business.

A business enterprise which has been approved by the division of minority- or woman-owned business enterprise status subsequent to verification that the business enterprise is owned, operated, and controlled by minority group members or women, and that also meets the financial requirements of subdivision (af) of this section, and is a small business pursuant to subdivision (ah) of this section.

(e) Chief diversity officer.

The Governor's principal advisor and representative regarding all matters related to State agency procurement policies concerning minority- and women-owned business enterprises and State agency government workforce diversity.

(f) Commercially useful function.

A minority- or women-owned business enterprise performs a commercially useful function when it is responsible for execution of the work of the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved. To perform a commercially useful function, a minority- or women-owned business enterprise must, where applicable and in accordance with any State agency specifications, also be responsible, with respect to materials and supplies used on the contract, for ordering and negotiating price, determining quality and quantity and installing. A minority- or women-owned business enterprise does not perform a commercially useful function if its role adds no substantive value and is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of participation. Factors to be used in assessing whether a minority- or women-owned business is performing a commercially useful function include:

(1) the amount of work subcontracted;

(2) industry practices;

(3) whether the amount the minority- or women-owned business enterprise is to be paid under the contract is commensurate with the work it is to perform;

(4) the credit claimed towards minority- or women-owned business enterprise utilization goals for the performance of the work by the minority- or women-owned business enterprise; and

(5) any other relevant factors.

(g) Contract scope of work.

For purposes of this Subtitle, contract scope of work shall mean the scope of work set forth in the State contract including, but not limited to, services, products or other deliverables required by such contract and specific tasks required by such contract.

(h) Contracting agency.

A party to a State contract, as defined in subdivision (al) of this section, and in the case of contractual opportunities emanating from financing provided by the New York State Housing Finance Agency, Housing Trust Fund Corporation or Affordable Housing Corporation, as described in subdivision (aj) of this section.

(i) Contracting categories.

Major procurement categories for which State agencies shall establish a master goal plan or, where applicable, an update to the master goal plan, as defined in subdivisions (y) and (ap) of this section, respectively, and a four-year growth plan, as defined in subdivision (av) of this section, to promote the participation of certified minority- and women-owned business enterprises.

(j) Contractor.

An individual, a business enterprise, a not-for-profit corporation, or any other party to a State contract, or a bidder in conjunction with the award of a State contract or a proposed party to a State contract.

(k) Day or business day.

A State business day unless otherwise specified.

(l) Director.

The director of the New York State Department of Economic Development, Division of Minority and Women's Business Development, who may also be referred to as the executive director.

(m) Directory.

The directory of certified enterprises, prepared by the director, for use by State agencies and contractors in complying with the provisions of article 15-A of the Executive Law.

(n) Disparity study.

The latest published study of New York State minority- and women-owned business enterprise programs commissioned by the State pursuant to section 312-a of the Executive Law.

(o) Diversity practices.

The contractor's past, present, and prospective practices and policies with respect to:

(1) utilizing certified minority- or women-owned business enterprises in contracts awarded by State agencies, other public entities or private sector companies, as subcontractors and suppliers; and

(2) entering into partnerships, joint ventures or other similar arrangements with certified minority- or women-owned business enterprises as defined in this Part or other applicable Federal, State, or local statutes or regulations, or certified by the certifying entities recognized by the division governing an entity's utilization of minority- or women-owned business enterprises; and

(3) any other information requested by the State agency or activities, supported by affidavit, that demonstrate the contractor's commitment to a policy of diversity practices related to minority- or women-owned business enterprises.

(p) Division.

The office in charge of minority and women's business development in the Department of Economic Development.

(q) Equal employment opportunities or EEO.

A contractor and subcontractor's conscientious and active efforts to afford employment opportunities to minority group members and women without discrimination because of race, creed, color, national origin, sex, age, disability or marital status.

(r) Expenditure.

Any payment by a State agency, including but not limited to payments made pursuant to a State contract, purchase order, invoice or non-personal services.

(s) Articles of procurement.

Shall mean a commodity, service, technology, public work, construction, revenue contract, the purchase, sale, or lease of real property or an acquisition or granting of other interest in real property that is the subject of a governmental procurement, as defined in State Finance Law section 139-j.

(t) Goals.

The term referring to the percentage of aggregate agency expenditures targeted for the participation of certified minority- and/or women-owned business enterprises sought to be included in State procurement opportunities as prime contractors, subcontractors, suppliers, consultants, joint ventures, teaming agreements, or other similar arrangements. Goals may be expressed as agency-specific or contract goals.

(u) Hearing officer.

An individual who has been appointed by the director to hear:

(1) appeals of decisions denying or revoking certification; and

(2) complaints regarding:

(i) a State agency's denial of a waiver;

(ii) a State agency's disqualification of a contractor before an award is made;

(iii) a contractor's failure or refusal to abide by a utilization plan after an award is made; or

(iv) a contractor's noncompliance with equal employment opportunity obligations after an award is made.

(v) Joint venture.

A contractual agreement joining together two or more business enterprises, one of which is a certified minority- or woman-owned business enterprise, for the purpose of performing on a State contract. The certified minority- or woman-owned business enterprise must provide a percentage of value added services representing an equitable interest in the joint venture. All parties agree to share in the profits and losses of the business endeavor according to their percentage of equitable interest.

(w) Labor force availability data.

Data pertaining to the relevant availability and expected levels of participation of minority group members and women on State contracts. The data is developed by the New York State Department of Economic Development, Division of Minority and Women's Business Development, in cooperation with and including but not limited to, the Department of Labor and any other New York State or Federal governmental data collecting agency that collects such data, and is based upon the most recent census data provided by the New York State Department of Labor, Bureau of Labor Market Information, aggregated by the Division of Minority and Women's Business Development into Federal occupational categories.

(x) Lessee.

An individual or a business enterprise, including concession vendors, or any other party to a lease in which the lessor is a State agency as defined in subdivision (ai) of this section.

(y) Master goal plan.

An agency-specific annual goal plan, which establishes agency goals and identifies expenditures, strategies, personnel, processes and procedures intended to increase the participation of certified minority- and women-owned business enterprises in the subject State agency’s procurement.

(z) Mentor-protégé agreement.

A contract between a prime contractor, the mentor, and a minority- or women-owned business enterprise, the "protégé," in which there is a transfer of knowledge, technology, or other resources, which promotes the economic growth of the minority- or women-owned business enterprise or fosters the establishment of a long term business relationship between the parties.

(aa) Minority group member.

A United States citizen or permanent resident alien who is and can demonstrate membership in one of the following groups:

(1) black persons having origins in any of the African racial groups;

(2) Hispanic/Latino persons of Mexican, Puerto Rican, Dominican, Cuban, Central American or South American descent of either Native American or Latin American origin, regardless of race;

(3) Native American or Alaskan native persons having origins in any of the original peoples of North America; or

(4) Asian and Pacific Islander persons having origins in any of the Far East countries, South East Asia, the Indian Subcontinent or the Pacific Islands.

(ab) Minority-owned business enterprise.

A business enterprise that is:

(1) at least 51 percent owned by one or more United States citizens or permanent resident aliens who are minority group members;

(2) an enterprise in which such minority ownership is real, substantial and continuing;

(3) an enterprise in which such minority ownership has and exercises the authority to control and operate, independently, the day-to-day business decisions of the business enterprise;

(4) an enterprise authorized to do business in this State and is independently owned and operated;

(5) an enterprise owned, either directly or through a holding company established for the exclusive and sole purpose of leasing machinery, equipment, or vehicles exclusively to the certified minority- or women-owned business enterprise, by an individual or individuals, whose ownership, control and operation are relied upon for certification, with an individual personal net worth at the time of application that does not exceed $15,000,000, as adjusted annually on the first of January for inflation according to the consumer price index of the previous year starting in 2020; or such other amount that the director shall determine on an industry-by-industry basis; and

(6) an enterprise that is a small business pursuant to subdivision (ah) of this section.

(ac) New York State Department of Economic Development, Division of Minority and Women's Business Development or “division”.

The office responsible for implementing the requirements of article 15-A of the Executive Law.

(ad) New York State minority- and women-owned business enterprise certification application.

The form that the division requires an applicant to submit for purposes of applying for minority- or woman-owned business enterprise status.

(ae) Not dominant in its field.

A business enterprise which does not exercise a controlling influence on an industry in its field of operation.

(af) Personal net worth.

The aggregate adjusted net value of the assets of an individual remaining after total liabilities are deducted. Personal net worth includes the individual's share of assets held jointly with said individual's spouse and does not include the individual's ownership interest in the certified minority- and women- owned business enterprise, the individual's equity in his or her primary residence, ownership interest in a holding company established for the exclusive and sole purpose of leasing machinery, equipment, or vehicles exclusively to the certified minority- or women-owned business enterprise, that is majority owned by the minority group member or woman relied upon for certification, and the holding company does not own any other assets of any kind; or up to $750,000 of the present cash value of any qualified retirement savings plan or individual retirement account held by the individual less any penalties for early withdrawal. Personal net worth shall be calculated on an individual basis and shall not be aggregated in instances where there are multiple individuals relied upon for certification.

(ag) Significant business presence.

A business authorized to do business in New York State, and that makes a contribution to the New York State economy through payment of taxes, or the purchase of made in New York State products or materials, or that has any payroll in New York State.

(ah) Small business.

A business which has a significant business presence in the State, is independently owned and operated, and is not dominant in its field, but in no event employs more than 300 people. In determining whether the enterprise meets the definition of a small business as herein provided, consideration shall be given to Federal small business administration standards prescribed in 13 CFR section 121.201, effective as of August 22, 2008. A copy of 13 CFR section 121.201 can be accessed at the Office of Size Standards, Small Business Administration, 409 3rd Street, SW, Washington, DC 20416.

(ai) State agency:

(1) any State department;

(2) any division, board, commission or bureau of any State department;

(3) the State University of New York and the City University of New York, including all their constituent units except community colleges and the independent institutions operating statutory or contract colleges on behalf of the State;

(4) a board, a majority of whose members are appointed by the Governor or who serve by virtue of being State officers or employees as defined in subparagraph (i), (ii) or (iii) of section 73(1)(i) of the Public Officers Law;

(5) A State authority, as defined in subdivision (1) of section (2) of the Public Authorities Law, and the following: Albany County Airport Authority; Albany Port District Commission; Alfred, Almond, Hornellsville Sewer Authority; Battery Park City Authority; Cayuga County Water and Sewer Authority; (Nelson A. Rockefeller) Empire State Plaza Performing Arts Center Corporation; Industrial Exhibit Authority; Livingston County Water and Sewer Authority; Long Island Power Authority; Long Island Rail Road; Long Island Market Authority; Manhattan and Bronx Surface Transit Operating Authority; Metro-North Commuter Railroad; Metropolitan Suburban Bus Authority; Metropolitan Transportation Authority; Natural Heritage Trust; New York City Transit Authority; New York Convention Center Operating Corporation; New York State Bridge Authority; New York State Olympic Regional Development Authority; New York State Thruway Authority; Niagara Falls Public Water Authority; Niagara Falls Water Board; Port of Oswego Authority; Power Authority of the State of New York; Roosevelt Island Operating Corporation; Schenectady Metroplex Development Authority; State Insurance Fund; Staten Island Rapid Transit Operating Authority; State University Construction Fund; Syracuse Regional Airport Authority; Triborough Bridge and Tunnel Authority; Upper Mohawk Valley Regional Water Board; Upper Mohawk Valley Regional Water Finance Authority; Upper Mohawk Valley Memorial Auditorium Authority; and Urban Development Corporation and its subsidiary corporations; and

(6) The following only to the extent of State contracts entered into for its own account or for the benefit of a State agency as defined in paragraphs (1) through (5) of this subdivision: Dormitory Authority of the State of New York; Facilities Development Corporation; New York State Energy Research and Development Authority.

(aj) State-assisted housing project.

A project which receives a grant or loan for all or part of the total project cost from the New York State Housing Finance Agency, the Affordable Housing Corporation, Housing Trust Fund Corporation or the Division of Housing and Community Renewal.

(1) A permanent housing project for homeless families or project as defined in section 64(5) of the Private Housing Finance Law.

(2) A project as defined in section 1101(12) of the Private Housing Finance Law provided said project is located in a large county and consists of more than 12 residential units at a single site. For purposes of this paragraph, large county shall have the same meaning as set forth in section 310(5) of article 15-A of the Executive Law.

(3) Affordable home ownership development programs or project as defined in section 1111(8) of the Private Housing Finance Law provided said project is located in a metropolitan area as herein defined and consists of more than 12 residential units at a single site. For purposes of this paragraph metropolitan area shall have the same meaning as set forth in section 310(6) of article 15-A of the Executive Law.

(4) A turnkey/enhanced rental project or project as defined in section 1106-a(2) of the Private Housing Finance Law.

(5) Infrastructure improvements as defined in section 1131(2) of the Private Housing Finance Law, to the extent that such infrastructure improvements are applied for in connection with a State-assisted housing project as defined in paragraphs (1) through (4) of this subdivision and provided further that the applicant for such infrastructure improvements and for such State-assisted housing project is identical.

(ak) State contract.

For purposes of this Subtitle, State contract shall mean:

(1) any written agreement, and amendment(s) thereto, providing for a total expenditure in excess of $25,000, whereby a State agency is committed to expend or does expend funds in return for labor, services, including legal, financial and other professional services, travel, supplies, equipment, materials or any combination of the foregoing, to be performed for, or rendered or furnished to the contracting agency;

(2) a written agreement in excess of $100,000 whereby a contracting agency is committed to expend or does expend funds for the acquisition, construction, demolition, replacement, major repair or renovation of real property and improvements thereon;

(3) a written agreement in excess of $100,000 whereby the owner of a State-assisted housing project is committed to expend or does expend funds for the acquisition, construction, demolition, replacement, major repair or renovation of real property and improvements thereon for such project;

(4) leases of real property by a State agency to a lessee where the terms of such leases provide for the State agency to be engaged in construction, demolition, replacement, major repair or renovation of real property and improvements thereon, and the cost of such construction, demolition, replacement, major repair or renovation of real property and improvements thereon is in excess of $100,000;

(5) a written agreement whereby a State agency purchases, sells, leases, acquires or grants an interest in real property and where the terms of such agreement provide for a party to such agreement to:

(i) perform construction, construction-related services, or services necessary to complete the transfer of interest in real property; or

(ii) purchase a commodity related to the activities set forth in subparagraph (5)(i) of this subdivision;

(6) all revenue contracts and articles of procurement as defined in State Finance Law section 139-j, provided that any such agreement for the purchase, sale or lease of real property or an acquisition or granting of other interest in real property must satisfy the requirements set forth in subparagraphs (kk)(5)(i)-(ii) of this subdivision.

(al) Subcontract.

Any agreement for a total expenditure in excess of $25,000 resulting from a State contract providing for services, including non-staffing expenditures, supplies or materials of any kind between a business enterprise and a prime contractor, in which a portion of the prime contractor's obligation under the State contract is undertaken or assumed by a business enterprise not owned or controlled by the prime contractor.

(am) Substantially fails.

A contracting agency has failed to make a good faith effort as determined by the division to meet 60 percent of its annual agency-specific goals.

(an) Supplemental application.

The form that the division requires an applicant to submit for purposes of applying for expeditious certification based on certification as a minority- and women-owned business enterprise by entities referenced in sections 144.5 and 144.6 of this Title.

(ao) Teaming agreement.

A utilization plan arrangement between two or more parties, one of which is a certified minority- or women-owned business enterprise, to perform on a specific State contract if awarded to the team. The team itself may be a joint venture, or one of the team members may be designated to act as the prime contractor, and the other member(s) designated to act as subcontractors.

(ap) Update to the master goal plan.

An annual update to an existing master goal plan that is submitted by an agency to the division in lieu of a full master goal plan as defined in subdivision (x) of this section.

(aq) Utilization plan.

The plan which must be submitted by a contractor to a State agency listing certified minority- and/or women-owned business enterprises that the contractor intends to use in the performance of a proposed State contract, or any components of the contract scope of work which the contractor intends certified minority- and/or women-owned business enterprises to perform. The plan shall specifically contain a list, including the name, address and telephone number of each certified enterprise with which the contractor intends to subcontract, or otherwise submit in connection with satisfaction of the contract goals.

(ar) Value added.

A substantive increase to the performance of a State contract by a certified minority- and/or women-owned business enterprise as a joint venture partner, subcontractor, consultant, or supplier, where such a certified minority- and/or women-owned business enterprise performs a commercially useful function pursuant to subdivision (f) of this section.

(as) Verification.

Any act necessary to determine whether a business enterprise seeking to be certified by the division is owned, controlled and operated by principals who are members of a minority group, as defined in subdivision (aa) of this section, or women; and that those principals' personal net worth does not exceed the limitations listed in subdivision (af) of this section. Such acts may include, but are not limited to, request(s) for documents in addition to the initial application and inspection of the place of business.

(at) Waiver form.

The form provided by a State agency to a contractor as part of a solicitation, relative to a request by the contractor to set aside or modify the participation of certified minority- and women-owned business enterprises in the performance of State contracts.

(au) Women-owned business enterprise.

(1) A business enterprise that is:

(i) at least 51 percent owned by one or more United States citizens or permanent resident aliens who are women;

(ii) an enterprise in which the ownership interest of such women is real, substantial and continuing;

(iii) an enterprise in which such women ownership has and exercises the authority to control and operate, independently, the day-to-day business decisions of the enterprise;

(iv) an enterprise authorized to do business in this State and which is independently owned and operated;

(v) an enterprise owned, either directly or through a holding company established for the exclusive and sole purpose of leasing machinery, equipment, or vehicles exclusively to the certified minority- or women-owned business enterprise, by an individual or individuals, whose ownership, control and operation are relied upon for certification, with an individual personal net worth at the time of application that does not exceed $15,000,000, as adjusted annually on the first of January for inflation according to the consumer price index of the previous year starting in 2020; or such other amount that the director shall determine on an industry-by-industry basis; and

(vi) an enterprise that is a small business pursuant to subdivision (ah) of this section.

(2) An enterprise owned by a minority group member who is also a woman may be certified as a minority-owned business enterprise, a women-owned business enterprise, or both, and may be counted towards either a minority-owned business enterprise goal or a women-owned business enterprise goal, in regard to any contract or any goal, set by a State agency, but such participation may not be counted towards both such goals and may not be divided between the minority-owned business enterprise goal and the women-owned business enterprise goal by a State agency.

(av) Four-year growth plan.

The plan which must be submitted by contracting agencies as part of its annual goal plan or as otherwise prescribed by the division, to determine a means of promoting and increasing participation by minority-owned and women-owned business enterprises with respect to State contracts and subcontracts.

(aw) Statewide advocate.

The statewide advocate shall mean the person appointed by the commissioner to serve in the capacity of the minority- and women-owned business enterprise statewide advocate. The statewide advocate shall have all the powers and duties prescribed under article 15-A.

Part 141 STATE AGENCY RESPONSIBILITIES

5 CRR-NY 141.1 Purpose, scope and applicability {#sec-5-crr-ny-141.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 141.1}

The purpose of this Part is to establish standards, criteria and procedures by which State agencies set annual goals for direct and indirect contracting opportunities with certified minority- and women-owned business enterprises, and the processes by which these master goal plans are submitted, including what information needs to be reported, and procedures and consequences for State agencies that fail to achieve their goals without a good faith effort to maximize contractual opportunities for certified enterprises.

5 CRR-NY 141.2 Annual State agency-specific goals {#sec-5-crr-ny-141.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 141.2}

(a) Each State agency shall develop and adopt agency-specific goals in accordance with sections 313(1-b) and (1-c) of the Executive Law, and which are consistent with the finding of the disparity study.

(b) Agency-specific goals shall be reflected in the State agency’s master goal plan and any subsequent updates to the master goal plan, as well as for any four-year growth plan, for the inclusion of certified:

(1) minority-owned business enterprises;

(2) women-owned business enterprises; and

(3) minority- and women-owned business enterprises with justifications for such goals.

(c) Agency-specific goals shall be set upon a review of the scope, character and relevant expenditures associated with the State contracts that are expected to be let or performed during the relevant fiscal year and shall be based on specific factors concerning said State contracts, which shall include, where applicable, the following:

(1) statewide availability of minority- and women-owned business enterprises for construction, construction related services, non-construction related services and commodities contained within the disparity study and section 313(1) of article 15-A of the Executive Law;

(2) statewide disparities of minority- or women-owned business participation in State contracting for construction, construction related services, non-construction related services or commodities that the agency expects to contract for, as reflected in the disparity study;

(3) the availability of certified minority- and women-owned business enterprises for the State agency’s State contracts found in the directory of certified minority- and women-owned businesses (https://ny.newnycontracts.com);

(4) the geographic location(s) of the performance of the State agency’s contracts;

(5) the extent to which geography is material to the performance of the State contract and the ability of certified minority- and women-owned business enterprises that are located outside of the geographic location(s) to perform on State contracts notwithstanding their location; and

(6) such other factors as the State agency can specifically delineate and justify with supporting facts and documentation.

(d) Agency-specific goals shall be established on a State fiscal year basis or, where the State agency operates on a different fiscal year and upon the approval of the director, the State agency’s fiscal year.

5 CRR-NY 141.3 Master goal plan {#sec-5-crr-ny-141.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 141.3}

(a) Each State agency is responsible for and required to have an active master goal plan, or an update to the master goal plan as prescribed by the director, and a four-year growth plan, as described in subdivision (e) of this section, on file with the division.

(b) In the event a State agency is deficient with regard to the requirement set forth in subdivision (a) of this section, the subject State agency shall take affirmative measures to submit a master goal plan to the division within 30 days of receipt of a written notice of such a deficiency.

(1) agency-specific goals set pursuant to section 141.2 of this Part for minority-owned business enterprises; women-owned business enterprises; and minority- and women-owned business enterprises;

(2) agency-specific goals expressed as a percentage of aggregate agency expenditures, specifically including each of the following contracting categories, or in limited circumstances due to administrative necessity, other such categories established by the director, referenced in or pursuant to the disparity study:

(i) construction;

(ii) construction related services;

(iii) non-construction related services; and

(iv) commodities;

(3) a description of any practices, procedures, strategies or actions, in addition to those referenced in these regulations, that may be implemented by the agency to ensure maximum feasible participation by certified minority- and women-owned business enterprises in State contracts;

(4) a list of personnel responsible for the implementation of article 15-A of the Executive Law, which shall include their title, a description of their responsibilities, the percentage of their time allocated to implementation of article 15-A of the Executive Law and the State agency organization chart showing lines of authority and reporting between listed personnel and senior executive staff;

(5) any other applicable appropriation and expenditure, which may not be subject to goals, but that the State agency deems relevant or necessary to the promotion and participation of minority- and women-owned business enterprises in State procurement; and

(6) such other information that a State agency deems relevant or necessary to its master goal plan.

(d) The master goal plan shall be the basis for each State agency’s prospective efforts, practices and procedures to reasonably achieve the maximum feasible participation of minority- and women-owned business enterprises in the State agency’s procurement.

(e) Four-year growth plan.

Every four years, beginning September 15, 2020, each agency shall include in such annual report its four-year growth plan pursuant to section 311 of the Executive Law, to determine a means of promoting and increasing participation by minority-owned and women-owned business enterprises with respect to State contracts and subcontracts; and such reports shall be due in a form and manner as described by the director by no later than January 15th, beginning in 2021.

(f) Annual growth plan.

Each State agency shall, in their master goal plan or master goal plan update, report to the director, all activities taken to promote minority group members and women, as well as the increased participation by certified minority- or women-owned business enterprises on State contracts and subcontracts. Such submission as it pertains to this section shall be submitted to the division by no later than May 15th of each reporting year, or at such time determined by the director.

5 CRR-NY 141.4 State agency master goal plan submission procedure {#sec-5-crr-ny-141.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 141.4}

(a) All State agencies subject to article 15-A of the Executive Law shall submit and/or have an active master goal plan in force and on file with the division.

(b) The director shall make a copy of the disparity study available on the division’s website.

(c) Each State agency shall submit a master goal plan or an update to the master goal plan, pursuant to subdivision (e) of this section, to the director on or before January 15th of each year, or at such time determined by the director pursuant to section 141.5(c) of this Part, in such form as may be required by the director.

(d) The director may, in limited instances where exigent circumstances warrant such a measure and upon the approval of the chief diversity officer, require a State agency to submit an interim master goal plan or an interim update to the master goal plan on a date certain and such plan shall be in effect until such time as the director has received and approved a master goal plan pursuant to subdivision (c) of this section and section 141.5(b) of this Part, respectively.

(e) In instances where a State agency has an accepted master goal plan on file with the division and such State agency is in good standing with the division regarding its good faith efforts to achieve the maximum feasible portion of its agency-specific goals as outlined therein, the director may, at his or her discretion, permit a State agency to submit an update to the master goal plan in lieu of a submission of a new master goal plan. Notwithstanding the foregoing, a new master goal plan must be submitted to the division by each State agency a minimum of once every four years.

(f) Any agency that refuses or fails to submit a master goal plan pursuant to this section shall be deemed to have failed to achieve its good faith standard pursuant to section 313 of the Executive Law and shall be referred to the chief diversity officer for appropriate action.

5 CRR-NY 141.5 State agency master goal plan review {#sec-5-crr-ny-141.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 141.5}

(a) The director shall review the agency master goal plan to determine:

(1) whether the goals within the plan are reasonable and reflective of a process that has employed a rigorous assessment of the agency’s total procurement portfolio as it relates to the participation of minority- and women-owned business enterprises in agency contracts;

(2) whether the factual basis and supporting documentation for such goals comport with the requirements set forth in section 141.2 of this Part;

(3) whether the goals set by the State agency adequately reflect the availability of certified minority- and women-owned business enterprises for the agency’s contracts; and

(4) whether other factors raised in the master goal plan have a legitimate substantive impact on the goals set by the State agency.

(b) Following the submission of a master goal plan by a State agency and review of such a master goal plan by the director, the director shall:

(1) provide written notice of the acceptance of the master goal plan;

(2) provide written notice of and reasoning for the rejection of the master goal plan and direct the agency to submit new goals in accordance with this Part and instruction by the director;

(3) provide written notice of the necessity for an extension of the time period during which the master goal plan will be reviewed; or

(4) provide written notice of the need for additional documentation or explanation, which shall be provided by the agency within a time frame as set forth by the director.

(c) Where subsequent to a State agency’s submission of a master goal plan the director determines that a State agency has failed to achieve its good faith standard, as defined in section 141.7 of this Part, the director shall, notwithstanding subdivision (b) of this section, direct in writing that the annual agency-specific goals, as required by 141.2 of this Part, be adjusted as set forth by the director and adopted by the subject State agency.

(d) A State agency shall resubmit its master goal plan within 30 days of receipt of a notice of rejection incorporating recommended modifications or stating any reasons why modifications recommended by the director cannot be incorporated in the State agency’s master goal plan.

(e) Updates to the master goal plan submitted by a State agency shall be subject to the same provisions, contained within this section, that govern the review of master goal plans.

5 CRR-NY 141.6 State agency compliance reporting {#sec-5-crr-ny-141.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 141.6}

(a) Each State agency shall submit a quarterly compliance report in a form and manner required by the director. The report is submitted quarterly over the fiscal year. The four reporting quarters are April 1st – June 30th (1st quarter due July 15th); July 1st – September 31st (2nd quarter due October 15th); October 1st – December 31st (3rd quarter due January 15th); and January 1st – March 31st (4th quarter due April 15th). The compliance report shall include the following information regarding State contracts and subcontracts awarded in the interval since the last compliance report:

(1) the number of State contracts awarded, the maximum dollar amount obligated pursuant to those contracts, and total expenditures pursuant to all such contracts;

(2) the number of State contracts awarded to certified minority- or women-owned business enterprises, the maximum dollar amount obligated pursuant to all those contracts, and the total expenditures made pursuant to all such contracts;

(3) the number of State contracts awarded which include a utilization plan for business participation by certified minority- or women-owned business enterprises as subcontractors, the maximum amount obligated pursuant to those contracts, and the total expenditures made pursuant to all such contracts, and the percentage of those expenditures awarded pursuant to certified minority- and women-owned business enterprises;

(4) the number of State contracts awarded upon which a waiver was granted from goals required by the contracts for business participation by certified minority- or women-owned business enterprises, and the maximum amount obligated pursuant to those contracts as well as a summary of the waivers;

(5) the number of State contracts awarded which required goals for employment of minority group members and women;

(6) the number of State contracts awarded for which waivers of employment goals required by the contracts have been granted;

(7) a justification of any waivers granted pursuant to paragraphs (4) and (6) of this section;

(8) a statement of whether it is in compliance with its agency goal plan based on information provided in the compliance report, and if it is not in compliance with its agency goal plan, a description of the actions which will be taken to comply with the State agency goal plan;

(9) whether the State agency has been required to prepare a remedial plan and, if so, the plan (attached as an exhibit) and the extent to which the agency has complied with each element of the plan; and

(10) any additional information relevant or necessary to demonstrate the State agency’s compliance for utilization of certified minority- and women-owned business enterprises in its contracts or procurement practices.

(b) Each State agency required to submit an annual report to the governor and legislature pursuant to section 164 of the Executive Law shall include its annual goals for contracts with certified minority- and women-owned business enterprises; the number and dollar amount of actual contracts and subcontracts issued to certified minority- and women-owned business enterprises; and, a summary of all waivers of the requirements of subdivisions six and seven of section 313 of the Executive Law allowed by the reporting agency during the preceding year, including a description of the basis of the waiver request and the rationale for granting such waiver. Each State agency shall also include in such annual report whether or not it has been required to prepare a remedial plan (attached as an exhibit), and, if so, the plan and the extent to which the State agency has complied with each element of the plan.

5 CRR-NY 141.7 State agencies’ good faith efforts {#sec-5-crr-ny-141.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 141.7}

(a) State agencies shall make a good faith effort to achieve the maximum feasible portion of the State agency's goals adopted pursuant to this title.

(b) To determine whether the State agency has exercised good faith, the director must consider the following:

(1) whether there are certified minority- and/or women-owned business enterprises that could participate in the type of procurement opportunities that the agency has to offer as prime contractors or subcontractors;

(2) whether the State agency has attempted to unbundle State contracts and solicit bids from the certified minority- and women-owned businesses;

(3) whether there are certified minority- and/or women owned business enterprises, located outside of the regions in which State contracts are to be performed, that could participate in procurement opportunities;

(4) whether the State agency has considered encouraging joint ventures, teaming agreements, partnerships, or other similar arrangements between prime contractors and certified minority- and women-owned business enterprises to participate in the State agency’s procurement opportunities;

(5) the number of opportunities that the State agency had to make discretionary purchases from certified minority- and women-owned business enterprises versus the number of times the State agency actually made discretionary purchases from certified minority- and women-owned business enterprises;

(6) the amounts paid to certified minority- and women-owned business enterprises as a result of the State agency’s discretionary purchasing as set forth in article 15-A or other applicable law;

(7) whether the State agency developed selective bidder lists that included certified minority- and/or women-owned business enterprises;

(8) the number of times that the State agency negotiated with certified minority- and women-owned businesses directly;

(9) whether the State agency has processes and procedures in place to ensure that it has assessed each State contract for certified minority- and women-owned business enterprise contract goals as required by section 142.2 of this Part;

(10) whether the State agency’s practices and procedures comport with article 15-A of the Executive Law and Part 142 of these regulations with respect to utilization plans, utilization reports and waivers;

(11) whether the State agency has submitted compliance reports pursuant to section 141.6 of this Part; and

(12) any other information submitted by the State agency or other criteria that the director deems relevant to determining whether the State agency exercised good faith, including but not limited to, the agency’s compliance with the provisions of article 15-A of the Executive Law and these regulations.

5 CRR-NY 141.8 State agency remediation {#sec-5-crr-ny-141.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 141.8}

(a) Each State agency that substantially fails to make a good faith effort as defined by the director to achieve the maximum, feasible participation of minority- and women-owned business enterprises in such agency’s contracting shall be required to submit to the director a remedial action plan to remedy such failure.

(b) Such remedial action plan shall, at a minimum, identify the factors that contributed to the State agency’s substantial failure to meet its agency-specific goals and outline strategies, practices, procedures and measures that the State agency will employ to reasonably meet the maximum feasible portion of the agency-specific goals.

(c) If it is determined by the director that any State agency has failed to act in good faith to implement the remedial action plan, within one year, the director shall provide written notice of such a finding, which shall be publicly available, and direct implementation of the following affirmative measures, as appropriate:

(1) expansion of sufficient and effective solicitation efforts to certified minority- and women-owned business enterprises;

(2) review of all procurement opportunities to determine whether procurements can be unbundled into smaller quantities that may expand the participation of certified minority- and women-owned business enterprises;

(3) elimination of extended experience, capitalization requirements, or bonding requirements, where feasible, as a means to expand participation by certified minority- and women-owned business enterprises;

(4) identification of specific expenditures as particularly attractive or appropriate for participation by certified minority- and women-owned business enterprises; and

(5) maximization of the number of awards made to certified minority- and women-owned business enterprises pursuant to section 163(6) of the State Finance Law.

(d) Upon a finding by the director that a State agency has failed to take affirmative measures to implement the remedial action plan and to follow any of the remedial actions set forth by the director, and in the absence of any objective progress towards the State agency's goals, the director may require that some or all of the State agency's procurements, for a specified period of time, be placed under the direction and control of another State agency or agencies.

Part 142 REQUIREMENTS AND PROCEDURES REGARDING PARTICIPATION BY CERTIFIED MINORITY- AND WOMEN-OWNED BUSINESS ENTERPRISES ON STATE CONTRACTS

5 CRR-NY 142.1 Purpose, scope and applicability {#sec-5-crr-ny-142.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.1}

(a) The purpose of this Part is to provide standards, criteria and procedures for establishing contract goals; to regulate, prepare, submit, and review utilization plans, to prescribe the elements of a contractor’s good faith efforts to be reviewed when a waiver of goals is requested, and to provide procedures for evaluating compliance and resolving disputes related to participation by certified minority- and women-owned business enterprises on State contracts.

(b) This Part shall also provide standards, criteria and procedures relating to the awarding of State contracts. Such standards, criteria and procedures shall relate to the past, present and prospective use of certified minority- and women-owned business enterprises as a subcontractor, joint ventures or partners and the establishment of quantitative factors for certified minority- and-women-owned business enterprise status.

5 CRR-NY 142.2 Establishing contract goals and identifying subcontract opportunities for certified businesses {#sec-5-crr-ny-142.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.2}

(a) Where practical, feasible and appropriate, and in a manner consistent with the findings of the disparity study, State agencies shall establish the following goals on all State contracts:

(1) overall minority- and women-owned business enterprises;

(2) minority-owned business enterprises; and

(3) women-owned business enterprises.

(b) State agencies shall notify contractors in bid documents, requests for proposals, contract announcements advertisements or otherwise in writing of the goals established on State contracts.

(c) State agencies shall provide an electronic link to the current list of certified minority- and women-owned business enterprises to each prospective contractor.

(d) In determining appropriate goals for a particular State contract, State agencies shall give consideration to the following factors:

(1) the contract and subcontract scope(s) of work;

(2) the potential subcontract opportunities available in the prime contract;

(3) the relevant availability data and industry specific disparities contained within the disparity study with respect to the scope of the contract and potential subcontracting opportunities;

(4) the number and types of certified minority- and women-owned business enterprises found in the directory of certified minority- and women-owned businesses available to perform the State contract work;

(5) the geographic location of the contract performance;

(6) the extent to which geography is material to the performance of the contract;

(7) the ability of certified minority- and women-owned enterprises located outside of the geographic location of contract performance, notwithstanding the regional location of the certified enterprise, to perform on the State contract;

(8) the total dollar value of the work required by the State contract in relation to the dollar value of the subcontracting opportunities;

(9) the relationship of the monetary size and term of the State contract to the monetary size and term of the project for which the State contract is awarded; and

(10) the agency’s annual agency-specific goal established pursuant to section 141.2 of this Part.

(e) In the event that a State contract is entered into on an emergency basis or where an amendment or change order has been added to a State contract providing for a total expenditure in excess of $25,000, the contracting agency may require the contractor to submit a utilization plan and to comply with the post award requirements of this Part during the life of the contract.

5 CRR-NY 142.3 Diversity practices, bidding and award considerations {#sec-5-crr-ny-142.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.3}

(a) The contracting State agency shall determine whether it is practical, feasible and appropriate to include in the evaluation of bids or proposals the diversity practices of all contractors making submissions for the award of any State contract that is:

(1) awarded on the basis of best value, or otherwise awarded as a response to a request for a proposal and/or a request for qualifications; and

(2) anticipated to result in an award of $250,000 or greater; and

(3) not a contract based on lowest price.

(b) A determination by a contracting agency as to whether it is practical, feasible and appropriate to assess the diversity practices of all contractors making such submissions shall include consideration of the following:

(1) nature of the labor, services, supplies, equipment and materials being procured;

(2) method of procurement undertaken to make the award; and

(3) availability of certified minority- and women-owned business enterprises for contract performance.

(c) If a contracting agency makes a determination that the evaluation of diversity practices is not practicable, feasible, or appropriate for a subject State contract, such determination shall be supported by findings in writing.

(d) After a determination has been made to assess the diversity practices of prime contractors submitting bids or proposals in connection with the award of a State contract, the contracting agency shall require the submission of diversity practices information as part of a contractor’s bid or proposal and establish a quantitative factor for scoring diversity practices.

(e) Diversity practices information submitted for assessment by all contractors must be fully documented and, if required by the director, subject to audit. Such submissions shall include, but not necessarily be limited to, the following:

(1) the percentage of such prime contractor’s gross revenues involving the use of minority- and/or women-owned business enterprise subcontractors for servicing clients and/or manufacturing products and/or performing on contracts in the contractor’s prior fiscal year of business activity;

(2) the percentage of such contractor’s gross revenues involving the use of joint ventures, partnerships, or other similar arrangements with certified minority- and/or women-owned business enterprises in the contractor’s prior year of business activity;

(3) the percentage of such contractors’ gross revenues that the contractor paid to certified minority- and/or women-owned business enterprise subcontractors and paid to certified minority- and/or women-owned business enterprise joint ventures, partnerships, or other similar arrangements;

(4) the percentage of such contractor’s non-contract related/overhead expenses for the prior fiscal year of business activity that were certified minority- and/or women-owned business enterprise expenditures;

(5) any training or mentoring programs provided for certified minority- and/or women-owned business enterprises by such contractor;

(6) any supplier and subcontractor diversity goals involved in such contractor’s procurements;

(7) any established goals for certified minority- and/or women-owned business enterprise suppliers or a total purchasing budget allocated to certified minority- and/or women-owned business suppliers by such contractors;

(8) the utilization plan for the award as required by section 142.4 of this Part; and

(9) any other information that demonstrates such contractor’s commitment to diversity practices.

(f) The director shall provide each State agency with numerical guidelines for assessing a contractor’s past, present and prospective practices and policies with respect to:

(1) utilizing certified minority- and women-owned business enterprises in contracts awarded by State agencies, other public entities or private sector companies, as subcontractors and suppliers;

(2) entering into partnerships, joint ventures or other similar arrangements with certified minority- and women-owned business enterprises as defined in this Part or other applicable Federal, State, or local statutes or regulations, or certified by the certifying entities recognized by the division governing an entity’s utilization of minority- and women-owned business enterprises; and

(3) any other information requested by the State agency or activities that demonstrate the contractor’s commitment to a policy of diversity practices related to minority- and women-owned business enterprises.

(g) When numerical guidelines pursuant to subdivision (f) of this section or other numerical guidelines created by the State agency and submitted to and approved by the director, are used in the assessment of a response to a bid or proposal, it shall be included in the solicitation. The assessment is to be used as one of the factors in determining the award of such a contract.

(h) Nothing in this section shall prevent the director from establishing, notwithstanding subdivision (e) of this section, contract specific numerical guidelines for individual State contracts where necessary.

5 CRR-NY 142.4 Utilization plans {#sec-5-crr-ny-142.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.4}

(a) State agencies shall require contractors to submit utilization plans for achieving contract goals established for the participation of certified minority- and women-owned business enterprises performing commercially useful functions in relation to State contracts. A form for the utilization plan shall be provided by the State agency to the contractor for any request for bids, proposals or qualifications, or negotiated contracts, for which contract goals are established with:

(1) bid documents where a State contract is awarded pursuant to solicitation of bids;

(2) requests for proposals or qualifications in the case of State contracts awarded pursuant to a request for proposals or qualifications; and

(3) proposed contracts where a State contract will be awarded pursuant to negotiation without solicitation of bids or a request for proposals.

(b) Utilization plan forms submitted by contractors shall include, at a minimum, the following required information:

(1) the name, address and telephone number of the contractor;

(2) the Federal identification number of the contractor;

(3) the names, addresses, and Federal identification numbers of certified minority- and women-owned business enterprises which the contractor intends to use to perform a commercially useful function on the State contract and a description of the contract scope of work which the contractor intends to structure to achieve maximum feasible participation pursuant to the prescribed State contract goals;

(4) the estimated or, if known, actual dollar amounts to be paid to and performance dates of each component of a State contract which the contractor intends to be performed by a certified minority- or woman-owned business enterprise; and

(5) a statement that the utilization of certified minority- and women-owned business enterprises for non-commercially useful functions may not be counted towards utilization of certified minority- and women-owned business enterprises in the utilization plan.

(c) In the event that a contractor responding to a State agency’s solicitation is a joint venture, teaming agreement, or other similar arrangement that includes a certified minority- and women-owned business enterprise, such a contractor must submit the following to the State agency for its review and approval:

(1) the name, address, telephone number, and Federal identification of each partner or party to the agreement;

(2) the Federal identification number of the joint venture or entity established to respond to the solicitation, if applicable;

(3) a copy of the joint venture, teaming agreement, or other similar arrangement, which describes the percentage of interest owned by each party to the agreement and the value added by each party; and

(4) a copy of the mentor-protégé agreement between the parties, if applicable, and if not described in the joint venture, teaming agreement, or other similar arrangement.

(d) To the extent practicable, upon completion of the restrictive period of a procurement, each contracting agency when notifying a contractor of a winning bid award shall also notify any minority- or women-owned business enterprise identified in the contractor’s submitted utilization plan of such contractor’s receipt of the winning bid award. Upon completion of the restrictive period of a procurement, each contractor of a winning bid award shall also provide written notice to any minority- or women-owned business enterprise identified in the contractor’s submitted utilization plan of such contractor’s receipt of the winning bid award. Notice by a contracting agency of a minority- or women-owned business being placed on a utilization plan that is part of a contractor’s winning bid, does not guarantee that such minority- or women-owned business will be selected to perform work on that contract.

(e) Certified minority- or women-owned business enterprises may list themselves on utilization plans toward the achievement of prescribed certified minority- and women-owned business enterprise contract goals.

(f) Proceeds from State contracts that are paid to certified minority- and women-owned business enterprises that are not performing commercially useful functions shall be disregarded by State agencies for utilization purposes.

5 CRR-NY 142.5 Posting of utilization plans {#sec-5-crr-ny-142.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.5}

(a) Upon execution of a State contract, State agencies shall post the utilization plan or waiver consistent with sections 141.6(b) and 142.7(e) of this Part, if granted, and the following information on the State agency’s website within 10 days after approval by a State agency:

(1) the name and address of the contractor;

(2) the contract number;

(3) the project number, if applicable;

(4) the contract award date;

(5) the estimated date of completion;

(6) the amount obligated under the contract;

(7) a description of work required by the State contract as provided to the Comptroller of the State, where applicable;

(8) the name and address of certified enterprises referenced in the utilization plan and contract work they shall perform; and

(9) a description of any waivers granted.

(b) After commencement of contract work, any waivers of compliance issued by the contracting agency or modifications to the utilization plan shall be posted on the State agency’s website within 10 days of the contracting agency making such a decision.

5 CRR-NY 142.6 Submission and review of utilization plans {#sec-5-crr-ny-142.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.6}

(a) In the case of a request for proposals, request for qualifications, or negotiated State contracts, for which contract goals have been set, the time for submitting the utilization plan shall be upon submission of any proposal, qualifications, or negotiated contract. The State agency may waive or modify this requirement by sending a written notice to the director with an explanation 10 days before solicitations are issued.

(b) In the case of any bid submission, utilization plans shall be submitted after the opening of bids, but in no case more than 10 business days after the contractor receives notice from a State agency that the contractor has submitted a low bid, provided the agency may adopt a longer time period for submission of utilization plans as to all or particular categories of its contracts upon filing of such period and any supporting justification with the director, and subject to rejection or modification by the director. Any such modification or rejection shall apply to contract solicitations on or after the date of the rejection or modification.

(c) The State agency shall review a utilization plan submitted by a contractor and issue a written notice of acceptance or deficiency regarding the utilization plan no later than 20 days after receipt of the utilization plan, and prior to the execution of the contract resulting from said procurement. A State agency may accept a utilization plan if:

(1) the contract goals, as determined by the State agency in the solicitation or bid, are to be provided by one or more certified minority- and/or women-owned business enterprises;

(2) the contractor submits a utilization plan which only partially satisfies the contract goals set forth in the solicitation, but is supported by the contractor’s documented good faith efforts to submit a utilization plan as requested;

(3) the contractor is a joint venture, teaming agreement, or other similar arrangement, with a certified minority- or women-owned business enterprise whose value added or participation is equal to the percentage of the contract goals set forth in the solicitation;

(4) the contractor submits a mentor-protégé agreement acceptable to the agency, which does not meet the goals set forth in the solicitation, but reflects an investment by the mentor in the protégé roughly equal to the difference between the contract goals set forth in the solicitation and the percentage of value added participation provided by the protégé.

(d) The notice of deficiency regarding the utilization plan shall include the following information:

(1) a statement that the contract shall not be awarded until a utilization plan has been approved or a waiver granted;

(2) a specific request for the reasons why any certified minority- or women-owned business enterprise was not selected to perform the scope of work which the State agency has determined can be reasonably structured by the contractor into subcontract(s) or other component(s) for purposes of complying with the State contract certified enterprise goal(s); and

(3) any other facts relevant to the utilization plan.

(e) Unless otherwise specified in the information, instructions or requirements and any addenda provided to contractors for purposes of soliciting bids or proposals, a contractor must provide a State agency with a written remedy in response to a notice of deficiency within seven business days of its receipt.

(f) If the contractor's written remedy to a notice of deficiency is not timely provided or if the written notice is found by the State agency to be inadequate such a failure to remedy the deficiency may be grounds for disqualification for non-responsiveness or the State agency may notify the contractor and request the contractor to submit a waiver form within five business days. Failure to file the waiver form in a timely manner may be grounds for disqualification of the bid for non-responsiveness.

(g) Failure of the contractor to comply with the requirements of subdivision (e) of this section may result in the disqualification of the contractor under this Part.

(h) The time requirements of this section shall apply unless otherwise agreed to in writing by the State agency and the contractor.

(i) If a contractor changes its utilization plan after submission, it shall be required to notify the State agency in writing of such change and obtain approval from the State agency in accordance with this section and section 142.8 of this Part.

5 CRR-NY 142.7 Waivers {#sec-5-crr-ny-142.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.7}

(a) A State agency shall not grant any automatic waivers of goal requirements on a State contract but may grant a partial or total waiver of goal requirements established on a State contract only upon the submission of a waiver form by a contractor, documenting good faith efforts, as defined in section 142.8 of this Part, by the contractor to meet the goal requirements of the State contract, and in consideration of the following factors:

(1) the number and types of certified minority- or women-owned business enterprises available to perform on any subcontractable scopes of the contract;

(2) the total dollar value of the State contract;

(3) the contract scope of work to be performed;

(4) the project size;

(5) the project term;

(6) the availability of other business enterprises located in the region qualified to do the work to be performed;

(7) the ability of certified minority- and women-owned business enterprises located outside the region to perform the State contract;

(8) whether certified minority- or women-owned businesses which have been solicited by the contractor exhibited interest in submitting proposals for a particular project by attending, or having attended, a pre-bid conference, if any, scheduled by the State agency awarding the State contract with certified minority- and women-owned business enterprises;

(9) whether the contractor provided timely written notification of subcontracting opportunities on the State contract to appropriate certified businesses that appear in the directory of certified businesses prepared pursuant to section 311(3)(f) of the Executive Law; and

(10) the extent to which contractor’s own actions, including but not limited to, any failure by contractor to discharge the contractor’s duties pursuant to this Part or article 15-A of the Executive Law, contributed to contractor’s inability to meet the maximum feasible portion of the contract goals.

(b) Requests for a partial or total waiver of goal requirements established on a State contract made prior to the award of the contract may be made simultaneously with the submission of the utilization plan for that State contract. If a contractor is found non-responsive or non-responsible by a State agency, the request for a waiver shall be deemed moot.

(c) Requests for a partial or total waiver made subsequent to award of a State contract may be made at any time during the term of the State contract but prior to the submission of a request for final payment on that contract.

(d) Forms for requests of a partial or total waiver of goal requirements established on a State contract, shall include a request for the following information, where applicable:

(1) the names of general circulation, media, trade association and minority- and women-oriented publications in which bids were solicited for purposes of complying with goal requirements established for certified minority- and women-owned business enterprise participation;

(2) the dates for which bid solicitations for certified minority- and women- owned business participation were published in any of the publications named pursuant to paragraph (1) of this subdivision and the text of the bid solicitation;

(3) a list of certified minority- and women-owned business enterprises appearing in the directory which were solicited in writing to provide bids for purposes of complying with a State agency's goal requirements for certified minority- and women-owned business enterprise participation;

(4) proof of dates on which such solicitations were made in writing and copies of solicitations made, or a sample copy of the solicitation if an identical solicitation was made of all certified minority- and women-owned business enterprises;

(5) copies of responses made by certified minority- and women-owned business enterprises to solicitations made by the contractor;

(6) a description of any contract documents, plans or specifications made available to certified minority- and women-owned business enterprises for purposes of soliciting their bids, and the dates and manner in which these documents were made available;

(7) documentation of any negotiations between the contractor and/or certified minority- and women-owned business enterprises undertaken for purposes of complying with goal requirements established for certified minority- and women-owned business enterprise participation;

(8) any other information determined relevant by the State agency or the contractor; and

(9) a statement setting forth the contractor's basis for requesting a partial or total waiver.

(e) Upon the issuance of all waivers of compliance, the contracting agency shall publish on its website on a monthly basis, if practicable, but no less than on a quarterly basis:

(1) information identifying the contract, including the value of the contract;

(2) the name of the contractor receiving the waiver;

(3) the date of the waiver; and

(4) the specific contract provisions to which the waiver applies.

(f) The division may require State agencies to submit requests for waivers for compliance review prior to final approval. The director of the division shall not participate in such compliance review.

5 CRR-NY 142.8 Contractor's efforts to utilize certified business enterprises {#sec-5-crr-ny-142.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.8}

(a) Contractors must document their good faith efforts toward utilizing certified minority- and women-owned business enterprises, including but not limited to, those identified within a utilization plan. Such documented efforts, shall include, at a minimum:

(1) copies of its solicitations of certified minority- and women-owned business enterprises and any responses thereto;

(2) if responses to the contractor’s solicitations were received, but a certified minority- or woman-owned business enterprise was not selected, the specific reasons that such enterprise was not selected;

(3) copies of any advertisements for participation by certified minority- and women-owned business enterprises timely published in appropriate general circulation, trade and minority- or women-oriented publications, together with the listing(s) and date(s) of the publication of such advertisements;

(4) the dates of attendance at any pre-bid, pre-award, or other meetings, if any, scheduled by the State agency awarding the State contract, with certified minority- and women-owned business enterprises which the State agency determined were capable of performing the State contract scope of work for the purpose of fulfilling the contract participation goals;

(5) information describing the specific steps undertaken to reasonably structure the contract scope of work for the purpose of subcontracting with, or obtaining supplies from, certified minority- and women-owned business enterprises.

(b) In addition to the information provided by the contractor in subdivision (a) of this section, the State agency may also consider the following to determine whether the contractor has demonstrated good faith efforts:

(1) where applicable, whether the contractor submitted an amended utilization plan consistent with the subcontract or supplier opportunities in the contract;

(2) the number of certified minority- and women-owned business enterprises in the region listed in the directory of certified businesses that could, in the judgment of the State agency, perform work required by the State contract scope of work;

(3) the actions taken by the contractor to contact and assess the ability of certified minority- and women-owned business enterprises located outside of the region in which the State contract scope of work is to be performed to participate on the State contract;

(4) whether the contractor provided relevant plans, specifications or terms and conditions to certified minority- and women-owned business enterprises sufficiently in advance to enable them to prepare an informed response to a contractor request for participation as a subcontractor or supplier;

(5) the terms and conditions of any subcontract or provision of suppliers offered to certified minority- or women-owned business enterprises and a comparison of such terms and conditions with those offered in the ordinary course of the contractor’s business and to other subcontractors or suppliers of the contractor;

(6) whether the contractor offered to make up any inability to comply with the certified minority- and women-owned business enterprises goals in the subject State contract in other State contracts being performed or awarded to the contractor;

(7) the extent to which contractor’s own actions, including but not limited to, any failure by contractor to discharge contractor’s duties pursuant to this Part or article 15-A of the Executive Law, contributed to contractor’s inability to meet the maximum feasible portion of the contract goals;

(8) whether the contractor knowingly utilized one or more certified minority- and/or women-owned business enterprises, in the performance of the subject State contract, that contractor knew or reasonably should have known could not perform a commercially useful function;

(9) whether the contractor submitted compliance reports pursuant to section 142.11 of this Part, which identified certified minority- and/or women-owned business enterprises that contractor knew or reasonably should have known did not perform a commercially useful function on a State contract on which goals were assigned pursuant to section 142.2 of this Part; and

(10) any other information that is relevant or appropriate to determining whether the contractor has demonstrated a good faith effort.

5 CRR-NY 142.9 Contractor disqualification {#sec-5-crr-ny-142.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.9}

(a) Where a State agency determines, after having given notice of deficiency pursuant to section 142.6(c) of this Part, that a contractor has failed to submit an acceptable utilization plan or satisfactorily document its good faith efforts, the State agency may proceed with the next ranked bidder:

(1) twelve days after sending a written notice of deficiency, as specified in section 142.6 of this Part, to the contractor, and the State agency has not received a request for an administrative hearing from the contractor;

(2) after the mailing of a notice of disqualification, specifying the grounds for such disqualification, provided that the contractor has not filed a complaint with the director; or

(3) after receiving a written notification of a resolution from the director, or a decision of the division’s hearing officer. The State agency shall serve a copy of its complaint upon the contractor by personal service or certified mail, return receipt requested.

(b) A contractor who has received a written notice of disqualification may, within five days of receipt of such a notice, file a complaint with the director pursuant to section 316 of the Executive Law. The contractor shall serve a copy of its complaint upon the director and the State agency by personal service or certified mail, return receipt requested.

5 CRR-NY 142.10 Contractor compliance reporting {#sec-5-crr-ny-142.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.10}

(a) State agencies are responsible for determining compliance by contractors with goals established in State contracts.

(b) A State agency may determine that a contractor is complying with contract goals set forth in the utilization plan if:

(1) the contractor is a certified minority- or women-owned business enterprise and is responsible for 100 percent of the contract performance;

(2) the State agency has verified that the contract goals are being achieved with certified, value added enterprises; or

(3) a review of contractor compliance reports and the determination of compliance is consistent with procedures or actions described in the State agency's master goal plan.

5 CRR-NY 142.11 Contractor compliance reports {#sec-5-crr-ny-142.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.11}

(a) Contractor compliance reports shall be submitted by contractors with respect to State contracts for which a utilization plan was required and approved by a State agency.

(b) Contractor compliance reports shall be filed at intervals required by information, instructions or requirements pursuant to which bids and proposals have been solicited, or the terms and conditions of a State contract awarded pursuant to negotiation.

(1) the name, address and telephone number of each certified minority- or woman-owned business enterprise the contractor is using or intends to use to comply with the utilization plan;

(2) a brief description of the contract scope of work to be performed for the contractor by each certified minority- or woman-owned business enterprise and the scheduled dates for performance;

(3) a statement of whether the contractor has a written agreement with each certified minority- or woman-owned business enterprise, and if requested, copies of such agreements, the contractor is using or intends to use;

(4) the actual total cost of the contract scope of work to be performed by each certified minority- or woman-owned business enterprise for the contract;

(5) the actual amounts of any payments made by the contractor to each certified minority- or woman-owned business enterprise as of the date the compliance report was submitted; and

(6) a statement indicating that the contractor complied with the requirement to provide written notice to any minority- or women-owned business enterprise identified in the contractor’s submitted utilization plan, of such contractor’s receipt of the winning bid award. Upon request by an agency, a contractor must provide copies of the written notification that it sent to the minority- or women-owned business enterprises that were identified in the contractor’s utilization plan submitted in conjunction with its bid, in accordance with section 142.4(d) of this Part.

(d) Proceeds from State contracts that are paid to certified minority- and women-owned business enterprises that are not performing commercially useful functions shall be disregarded by State agencies for utilization purposes.

5 CRR-NY 142.12 Contractor and State agency complaints {#sec-5-crr-ny-142.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.12}

(a) Subsequent to the award of a State contract to a contractor that becomes deficient with regard to its utilization plan, the contractor may file a complaint with the director pursuant to Executive Law, section 316, by personal service or certified mail, return receipt requested, provided that the complaint is filed within 20 days following paragraph (1), (2), or (3) of this subdivision. The complaint should state the reasons for the information:

(1) the contractor's receipt of a written determination by a State agency that the contractor is not entitled to a partial or full waiver of the goals established in a State contract for participation by certified minority- and women-owned business enterprises; or

(2) the contractor’s receipt of a written determination by a State agency that the contractor has not acted in good faith, has failed, is failing, or is refusing to comply with goals; or

(3) twenty days have passed from the date of the State agency's receiving a written request from the contractor, sent by certified mail, return receipt requested, for a partial or total waiver of goal requirements for participation by certified minority- and women-owned business enterprises, and no written determination has been issued by the State agency.

(b) Within 20 days of the State agency determination that the contractor has not acted in good faith, has failed, is failing, or is refusing to comply with goals for participation by certified minority- and/or women-owned business enterprises established in the State contract, a State agency may:

(1) after giving contractor an opportunity to be heard, make a determination that contractor has failed to meet the contract goals and assess liquidated or such other damages as were identified in the contract; or

(2) file a complaint with the director, pursuant to Executive Law, section 316, by personal service or certified mail, return receipt requested, accompanied by the reasons for the State agency’s determination for which the complaint is filed, together with a demand for relief, such as disbarment, damages or fines pursuant to the terms.

(c) A copy of any complaints filed with the director shall also either be personally served or mailed certified mail, return receipt requested, by the party making the complaint to the party against whom the complaint is being filed.

(d) Upon receipt by the director of a complaint, the party against whom the complaint has been filed shall be provided with an opportunity to respond to the complaint. If within 30 days of receipt of the complaint, the director is unable to resolve the complaint to the satisfaction of the State agency and the contractor, the complaint shall be referred to the division’s hearing officer for a hearing. The hearing shall be held in accordance with the procedures outlined in section 145.3 of this Title.

(e) Upon conclusion of the administrative hearing, the hearing officer shall submit to the director his or her decision regarding the alleged violation of the contract or the refusal of the State agency to grant a waiver request by the contractor. The decision of the hearing officer with respect to an alleged violation of the State contract or the refusal of the State agency to grant a waiver shall be final and may only be vacated or modified as provided in article 78 of the civil practice law and rules upon an application made within the time provided by such article.

(f) Upon conclusion of the administrative hearing and the rendering of a decision, the hearing officer shall also recommend to the director a remedy, including, if appropriate, the imposition of sanctions, fines or penalties.

(g) The director, within 10 days of receipt of the decision, shall file a determination with regard to the imposition of any fines, sanctions or penalties and shall cause a copy of such determination to be served upon the contractor by personal service or by certified mail, return receipt requested. The determination of the director as to the imposition of any fines, sanctions or penalties shall be final and may only be vacated or modified as provided in article 78 of the Civil Practice Law and rules upon an application made within the time provided by such article.

5 CRR-NY 142.13 Provisions in contracts; violations; and debarment {#sec-5-crr-ny-142.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.13}

(a) Every contracting agency shall include a provision in its State contracts expressly providing that any contractor who willfully and intentionally fails to comply with the minority- and women-owned participation requirements of these regulations as set forth in such State contract shall be liable to the contracting agency for liquidated or other appropriate damages, as otherwise specified in the contract, and shall provide for other appropriate remedies on account of such breach. Damages shall be calculated based on the actual cost incurred by the State agency related to the State agency’s expenses for personnel, supplies and overhead related to establishing, monitoring, and reviewing certified minority- and women-owned business enterprise programmatic goals and affirmative action and equal opportunity compliance, or the amount stated in the solicitation as liquidated damages. A contracting agency that elects to proceed against a contractor for breach of contract as provided in this section shall be precluded from seeking enforcement pursuant to section 316 of the Executive Law. The contracting agency shall, however, include a summary of all enforcement actions undertaken pursuant to this section in its annual report submitted pursuant to subdivision three of section 315 of the Executive Law.

(b) The penalties or debarment imposed for any violation which is premised upon either a fraudulent or intentional misrepresentation by the contractor or the contractor's willful and intentional disregard of the minority- and women-owned participation requirement included in the contract may include a determination that the contractor shall be ineligible to submit a bid to any contracting State agency or be awarded any State contract for a period not to exceed one year following the final determination; provided however, if a contractor has previously been determined to be ineligible to submit a bid pursuant to this section, the penalties imposed for any subsequent violation, if such violation occurs within five years of the first violation, may include a determination that the contractor shall be ineligible to submit a bid to any contracting State agency or be awarded any State contract for a period not to exceed five years following the final determination. The division shall maintain a website listing all contractors that have been deemed ineligible to submit a bid pursuant to this section and the date after which each contractor shall once again become eligible to submit bids.

(c) The director shall establish guidelines for the implementation of a debarment process which includes notice of hearing and referral to the division’s hearing officer for a hearing. The hearing shall be held in accordance with section 145.3 of this Title.

5 CRR-NY 142.14 Quantitative scoring factors for State contracts {#sec-5-crr-ny-142.14 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 142.14}

On contracts where State agencies do not assess diversity practices pursuant to section 142.3 of this Part, State agencies may establish and include a quantitative factor in the scoring of bids or proposals submitted to agencies for bidders that are certified minority- or women-owned business enterprises.

Part 143 WORK FORCE DIVERSITY REQUIREMENTS AND PROCEDURES REGARDING EQUAL EMPLOYMENT OPPORTUNITIES FOR MINORITY GROUP MEMBERS AND WOMEN ON STATE CONTRACTS

5 CRR-NY 143.1 Purpose, scope and applicability {#sec-5-crr-ny-143.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 143.1}

(a) The requirements of this Part apply to all documents soliciting bids or proposals for State contracts which are issued on or after the effective date of this Part.

(b) In the event that a State contract is entered into on an emergency basis or where an amendment or change order has been added to a State contract providing for a total expenditure in excess of $ 25,000, the contracting agency may require the contractor to submit an EEO policy statement and to comply with the post award requirements of this Part during the life of the contract.

(c) Pursuant to Executive Law, section 312(3), the requirements of this Part shall not be binding upon contractors or subcontractors in the performance of work or the provision of services or any other activity that are unrelated, separate or distinct from the State contract as expressed by its terms.

(d) Based on the restrictions set forth in the applicability provisions of Executive Law, section 312(6), the requirements of sections 143.4 and 143.6 of this Part shall not apply to any employment outside this State or application for employment outside this State or solicitations or advertisements therefor.

5 CRR-NY 143.2 General work force diversity requirements for State agencies awarding contracts {#sec-5-crr-ny-143.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 143.2}

(a) State agencies shall include in their master goal plan submitted pursuant to section 141.3 of this Title steps the agency will take to implement and to ensure compliance with the EEO requirements of this Part for approval by the director. The agency shall annually provide relevant updated information as a part of the agency master goal plan submission process.

(b) The director shall provide all contracting agencies with the labor force availability data on Federal occupational categories upon request. Contracting agencies shall include relevant portions of such data in all documents soliciting bids or proposals for State contracts or provide the data to contractors within the time frame established by the agency for a contractor's pre-award submission of an EEO policy statement and staffing plan required by this section. The director shall make efforts to assist contractors in utilizing the data to determine the expected levels of participation of minority group members and women on State contracts.

(c) In relation to the labor force availability data, the director will provide contracting agencies guidance and assistance in identifying the relevant labor force availability pool of employees based on:

(1) the reasonable recruitment area for the type of job category;

(2) the location of the job; and

(3) consideration for selecting the optimal availability pool.

(d) State agencies shall include in all State contracts and all documents soliciting bids or proposals for State contracts the following language:

(1) As to the performance of the State contract, contractors and subcontractors shall undertake or continue programs to ensure that minority group members and women are afforded equal employment opportunities without discrimination because of race, creed, color, national origin, sex, age, disability or marital status. For these purposes, equal opportunity shall apply in the areas of recruitment, employment, job assignment, promotion, upgrading, demotion, transfer, layoff, or termination and rates of pay or other forms of compensation.

(2) Prior to the award of a State contract, the contractor shall submit an equal employment opportunity policy statement to the contracting agency within the time frame established by that agency.

(3) As a part of the contractor's EEO policy statement, the contractor, as a precondition to entering into a valid and binding State contract, shall agree to the following in the performance of the State contract:

(i) The contractor will not discriminate against any employee or applicant for employment, will undertake or continue existing programs of affirmative action to ensure that minority group members and women are afforded equal employment opportunities without discrimination because of race, creed, color, national origin, sex, age, disability or marital status, and shall make and document its conscientious and active efforts to employ and utilize minority group members and women in its work force on State contracts.

(ii) The contractor shall state in all solicitations or advertisements for employees that, in the performance of the State contract, all qualified applicants will be afforded equal employment opportunities without discrimination because of race, creed, color, national origin, sex, age, disability or marital status.

(iii) At the request of the contracting agency, the contractor shall request each employment agency, labor union, or authorized representative of workers with which it has a collective bargaining or other agreement or understanding, to furnish a written statement that such employment agency, labor union, or representative will not discriminate, and that such union or representative will affirmatively cooperate in the implementation of the contractor's obligations herein.

(4) Except for construction contracts, prior to an award of a State contract, the contractor may be required to submit to the contracting agency a staffing plan of the anticipated work force to be utilized on the State contract or, where required, information on the contractor's total work force, including apprentices, broken down by specified ethnic background, gender, and Federal occupational categories or other appropriate categories specified by the contracting agency. The form of the staffing plan shall be supplied by the contracting agency.

(5) After an award of a State contract, the contractor may be required by the contracting agency to submit a workforce utilization report, to the contracting agency in a form and manner required by the agency, of the work force actually utilized on the State contract, broken down by specified ethnic background, gender, and Federal occupational categories or other appropriate categories specified by the contracting agency.

(e) Where applicable, the contractor shall include the provisions of subdivision (d) of this section in every subcontract in such a manner that the requirements of the provisions will be binding upon each subcontractor as to work in connection with the State contract, including the requirement that subcontractors shall undertake or continue existing programs of affirmative action to ensure that minority group members and women are afforded equal employment opportunities without discrimination because of race, creed, color, national origin, sex, age, disability or marital status, and, when requested, provide to the contractor information on the ethnic background, gender, and Federal occupational categories of the employees to be utilized on the State contract.

(f) To ensure compliance with the requirements of this Part, a contracting agency shall inquire of a contractor whether the work force to be utilized in the performance of the State contract can be separated out from the contractor's and/or subcontractor's total work force and where the work of the State contract is to be performed.

(g) A contracting agency may require the contractor to submit compliance reports, pursuant to section 143.5 of this Part, relating to their operations and implementation of their affirmative action or equal employment opportunity program in effect as of the date the State contract is executed and may require the contractor to obtain similar reports from the subcontractors utilized during the contract.

(h) If a contractor or subcontractor does not have an existing affirmative action program, the contracting agency may provide to the contractor or subcontractor a model plan of an affirmative action program. Upon request, the director shall provide a contracting agency with a model plan of an affirmative action program.

(i) Upon request, the director shall provide a contracting agency with information on specific recruitment sources for minority group members and women, and contracting agencies shall make such information available to contractors.

5 CRR-NY 143.3 Work force diversity bidding and award requirements {#sec-5-crr-ny-143.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 143.3}

(a) State agencies shall require as part of all bid requests and contract solicitations that the contractor submit to the contracting agency an EEO policy statement and, may require, a staffing plan, as described in section 143.2 of this Part. A contracting agency's approved master goal plan may specify, with reasons, that the pre-award submission of a staffing plan will not be required for particular contracts.

(b) Prior to the award of a State contract and in the case where the work force to be utilized in the performance of the State contract cannot be separated out from the contractor's and/or subcontractor's total work force (for example, certain commodities contracts), the contractor shall, where required by the contracting agency, submit to the contracting agency, in lieu of a staffing plan, information on the contractor's and/or subcontractor's total work force broken down by ethnic background, gender, and Federal occupational categories or other appropriate categories specified by the contracting agency.

(c) A contractor's failure to submit an EEO policy statement and, where required by the contracting agency, staffing plan or total work force data shall result in the rejection of the contractor's bid or proposal, unless the contractor provides the contracting agency with a reasonable justification in writing for such failure (e.g., the failure to submit a staffing plan where a contractor has a work force of 10 employees or less), or makes a commitment to submit an EEO policy statement and a staffing plan or total work force data by a date to be specified by the contracting agency.

(d) The contracting agency shall be responsible for determining the time frames for the pre-award submission of the EEO policy statement and staffing plan or total work force data and for determining whether all bidders or only the lowest responsible bidder(s) or finalists shall be required to submit such documentation.

(e) After the award of the State contract and in the case where the work force to be utilized in the performance of the State contract can be separated out from the contractor's and/or subcontractor's total work force, a contracting agency may require the contractor to submit a work force employment utilization report in a form developed by the director. In instances where such a report is required, the work force employment utilization report form shall be provided to the contractor by the contracting agency at the time of the execution of the contract. The work force utilization report shall include the following information:

(1) the total number of employees performing work on the State contract;

(2) for commodities, services/consulting, and professional construction consultant contracts (including not-for-profit contracts within those industries), the contractor's and all subcontractor's work force on the State contract broken down by specified ethnic background, gender, and Federal occupational categories; and

(3) for construction contracts, the hours a contractor's and all subcontractor's employees worked on activities related to that contract, and a breakdown of those hours by ethnic background, gender and the construction related job titles that fall within relevant Federal occupational categories.

(f) For construction contracts, a contractor shall submit to the contracting agency a work force utilization report on a monthly basis throughout the life of the contract.

(g) For all other contracts where the work force to be utilized in the performance of the State contract can be separated out from the contractor's and/or subcontractor's total work force, the contracting agency shall require a contractor to submit work force utilization reports on a quarterly basis throughout the life of the contract when the contractor's and/or subcontractor's work force on the State contract changes. In the case where the contractor's and/or subcontractor's work force does not change within the quarterly period, the contractor shall so notify the contracting agency in writing.

(h) After an award of the State contract and in the case where the work force to be utilized in the performance of the State contract cannot be separated out from the contractor's and/or subcontractor's total work force, the contractor may submit to the contracting agency information on the contractor's and/or subcontractor's total work force broken down by specified ethnic background, gender, and Federal occupational categories. Such total work force data may be submitted by the contractor to the contracting agency on a semi-annual basis during the life of the particular State contract or during the course of an extended and ongoing contractual relationship involving various State contracts entered into between the contractor and contracting agency.

(i) For all State contracts that are bid and awarded by the Office of General Services, the Office of General Services shall be solely responsible for requiring contractors to submit work force employment utilization reports and all other required information.

5 CRR-NY 143.4 Contractor work force diversity compliance {#sec-5-crr-ny-143.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 143.4}

(a) Contracting agencies shall be responsible for monitoring a contractor's compliance with the requirements of this Part.

(b) In addition to general monitoring of contract performance, contracting agencies shall be responsible for conducting in-depth compliance reviews on selected State contracts during the course of the year. In addition, the number of compliance reviews a contracting agency shall conduct will be established in the agency's approved master goal plan and may be based upon such factors as the number and type of contracts the State agency awards annually.

(c) In determining which contracts should be subject to an in-depth compliance review, a contracting agency shall, in part, base its determination on the results of its comparison of the ratios of women and minority group members in a contractor's work force to the relevant availability and expected levels of participation of minority group members and women on State contracts.

(d) A contracting agency shall notify the contractor in writing of the State agency's intent to conduct a compliance review 10 days prior to commencing the review. The contractor shall submit and/or have available for inspection at the time of the review books, records, payroll records, and other relevant documentation of the contractor's employment of minority group members and women on a specific State contract for the period to be reviewed.

(e) If the contractor fails to provide the information requested by the State agency within 10 days of the request, such failure shall be deemed a material breach of contract and subject to an administrative hearing pursuant to section 143.6 of this Part or any other relief to which the State agency is entitled.

(f) A contracting agency shall review such documentation thoroughly to determine whether the contractor made conscientious and active efforts to employ and utilize minority group members and women on the State contract. In making its determination, the contracting agency shall evaluate the contractor's efforts based upon consideration of the following factors:

(1) whether the contractor established and maintained a current list of recruitment sources for minority group members and women, and whether the contractor provided written notification to such recruitment sources that the contractor had employment opportunities at the time such opportunities became available;

(2) whether the contractor sent letters to recruiting sources, labor unions, or authorized representatives of workers with which the contractor has a collective bargaining or other agreement or understanding requesting their assistance in locating minority group members and women for employment;

(3) whether the contractor disseminated its equal employment opportunity policy by including it in any advertising in the news media and, in particular, minority and women news media;

(4) whether the contractor notified other contractors and subcontractors with whom it does or anticipated doing business to discuss the contractor's equal employment opportunity policy;

(5) whether internal procedures exist for, at minimum, annual dissemination of the contractor's equal employment opportunity policy to employees, specifically to employees having any responsibility for hiring, assignment, layoff, termination, or other employment decisions;

(6) whether the contractor encourages and utilizes minority group members and women employees to assist in recruiting other employees; and

(7) whether the contractor has apprentice training programs approved by the New York State Department of Labor which provide for training and hiring of minority group members and women.

5 CRR-NY 143.5 Work force diversity reporting requirements for contracting agencies {#sec-5-crr-ny-143.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 143.5}

(a) The director may require contracting agencies to report to the division on the information contained in the work force employment utilization reports in a form and manner required by the director quarterly on the 15th day of January, April, July, and October of each year. The contracting agency's report shall include, but is not limited to, the following information regarding the State contracts for which the State agency received work force utilization reports on during the preceding quarterly interval:

(1) an aggregation, by location of work, of the work forces employed on all State contracts in the industries of commodities, services/consulting, and professional construction consulting broken down by ethnic background, gender and Federal occupational categories;

(2) for construction contracts, an aggregation, by location of work, of the hours worked during the reporting period on activities related to those contracts, and a breakdown of those hours by ethnic background, gender and the construction related job titles that fall within relevant Federal occupational categories; and

(3) a list of all contracts included in the aggregation of data, contract number, contract amount and location of work.

(b) Where required by the director, contracting agencies shall submit to the division on a semi-annual basis copies of the total work force data submitted by contractors in the cases where the work force utilized on a State contract could not be separated out from the contractor's and/or subcontractor's total work force.

(c) Where a State agency enters into a State contract with a total expenditure in excess of $250,000 contractors shall submit company workforce diversity data to the State agency prior to the execution the subject State contract. The director shall provide each State agency with a company workforce diversity data form for data collection purposes.

5 CRR-NY 143.6 Work force diversity dispute resolution procedure {#sec-5-crr-ny-143.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 143.6}

(a) If a contracting agency determines that a contractor is in noncompliance with the requirements of this Part, the contracting agency shall make every effort to resolve the matter and to bring the contractor into compliance with such requirements. If the contracting agency is unsuccessful in its efforts, the contracting agency shall submit a written complaint to the director, pursuant to section 316 of the Executive Law, regarding the contractor's noncompliance and shall recommend to the director that the director review and attempt to resolve the noncompliance matter. The contracting agency shall serve a copy of its complaint upon the contractor by personal service or certified mail, return receipt requested.

(b) For all State contracts that it bids and awards, the Office of General Services shall have the function of determining a contractor's compliance with the EEO requirements of this Part.

(c) The director shall attempt to resolve a noncompliance dispute between the contracting agency and the contractor or subcontractor. If a resolution of the noncompliance dispute is satisfactory to the parties, the parties shall so indicate by signing a dispute resolution memorandum indicating that the matter has been resolved and stating the terms of the resolution.

(d) If the director is unable to resolve the noncompliance dispute to the satisfaction of the parties, the director shall refer the contracting agency's complaint, within 30 calendar days of the receipt of the complaint, to the division's hearing officer for a hearing.

(e) Upon conclusion of the administrative hearing, the hearing officer shall submit to the director a decision regarding the noncompliance dispute and the imposition of sanctions, fines or penalties, as provided for in the relevant sections of the contract, if appropriate, or a dismissal of the State agency's complaint, if appropriate.

(f) The director, within 10 business days of receipt of the decision, shall mail a determination of such matter to the contracting agency and shall cause a copy of such determination, along with a copy of article 15-A of the Executive Law, to be served upon the contractor or subcontractor by personal service or by certified mail, return receipt requested.

(g) The decision of the hearing officer shall be final and may only be vacated or modified as provided in article 78 of the Civil Practice Law and Rules.

(h) Nothing in this section is meant to diminish or supersede a contracting agency's authority and responsibility to enforce the requirements of its contracts.

Part 144 STATEWIDE CERTIFICATION PROGRAM

5 CRR-NY 144.1 Purpose and general description {#sec-5-crr-ny-144.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 144.1}

(a) This Part implements section 314 of the Executive Law.

Section 314 of the Executive Law authorizes the director to establish rules and regulations providing for criteria for the certification of minority- and women-owned business enterprises, procedures for the receipt and evaluation of applications to certify business enterprises as minority- and women-owned business enterprises, and procedures for the revocation of certification of business enterprises as minority- and women-owned business enterprises.

5 CRR-NY 144.2 Certification criteria {#sec-5-crr-ny-144.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 144.2}

(a) In order to be certified as a minority- or women-owned business enterprise, a business enterprise must be owned, operated, and controlled by one or more minority group members or women, must be independent of other business entities, and must meet such other certification criteria as are described herein.

(b) Ownership.

In order to establish real, substantial, and continuing majority ownership of a business enterprise by one or more minority group members or women, and to ensure that the benefits of certification accrue to such minority group members or women, each application to certify a business enterprise as a minority- or women-owned business enterprise must meet the following criteria:

(1) Fifty-one percent ownership interest.

Minority group members or women relied upon for certification must own at least 51 percent of the business enterprise for which certification is sought. Such minority group members or women must be United States citizens or permanent resident aliens.

(2) Capital contribution.

Minority group members or women relied upon for certification must demonstrate a capital contribution to the business enterprise for which certification is sought proportionate to their equity interest therein.

(i) Sources of a capital contribution. Minority group members and women may demonstrate a capital contribution by providing documentary evidence of, for example and without limitation, one or more of the following:

(a) money;

(b) property;

(d) expertise, provided that the contribution of such expertise must be uncompensated, the expertise must be specialized and directly applicable to one or more critical aspects of the operation of the business enterprise, and a reasonable assessment of the fair market value of the expertise must be clearly documented.

(3) Risks and profits.

Minority group members and women relied upon for certification must share in the risks and profits of the business enterprise for which certification is sought in proportion to their equity interest therein. In determining whether the profits of the business enterprise are shared proportionately with minority group members or women, the division may consider for example and without limitation, means by which the proceeds of the business enterprise are conveyed to individuals or entities.

(4) Customary incidents of ownership.

Minority group members and women relied upon for certification must not be encumbered in their ability to realize the benefits of ownership of the business enterprise for which certification is sought, or subject to undue restrictions against alienating such ownership interests.

(5) Pro forma ownership.

Ownership interests in a business enterprise may not be allocated to minority group members or women, either through business formation or the transfer of ownership interests, solely for the purpose of securing certification of such business enterprise as a minority- or women-owned business enterprise. Where a minority group member or woman relied upon for certification obtains his or her ownership interest in a business enterprise through a transfer from a male person who is not a minority group member, such minority group member or woman must demonstrate that such transfer was supported by reasonable consideration, and must meet all other certification criteria described herein.

Minority group members and women relied upon for certification must make day-to-day decisions concerning the operation of the business enterprise for which certification is sought. The division shall evaluate whether minority group members or women operate a business enterprise for which certification is sought based upon the following criteria:

(1) Competence in the industry. Minority group members and women relied upon for certification must possess adequate, industry-specific competence to make critical business decisions without relying upon other persons. This requirement cannot be satisfied by expertise or experience in office management or general business administration, among other things. In evaluating whether a minority group member or woman possesses adequate, industry-specific competence, the division shall consider factors including, but not limited to:

(i) whether individuals employed by the business enterprise for which certification is sought are required to obtain licenses or certifications to provide products or services to the clients of the business enterprise;

(ii) the extent to which academic credentials exist for persons employed in the industry; and

(iii) the extent to which industry-specific expertise may be obtained via direct work experience.

(2) Operational decisions.

Minority group members and women relied upon for certification must make operational decisions on a day-to-day basis with respect to the critical functions of the business enterprise for which certification is sought. The critical functions of a business enterprise shall be determined by the division based upon the following factors, but is not limited to:

(i) the products or services the business enterprise provides to clients; and

(ii) the means by which the business enterprise obtains contracts or orders.

(3) Time devoted to operation of the business enterprise.

Minority group members and women relied upon for certification must devote time on an ongoing basis to the daily operation of the business enterprise for which certification is sought.

(d) Control.

Minority group members and women relied upon for certification must have the power to control the business enterprise for which certification is sought. The division shall assess whether minority group members and women possess such control based upon the following criteria:

(1) Control of business management.

A minority group member or woman relied upon for certification must be the highest-ranking officer of the business enterprise for which certification is sought, and, where applicable, control the board of directors or serve as a general partner. Any agreements describing the management of the business enterprise shall be consistent with the foregoing.

(2) Control of business negotiations.

Minority group members and women relied upon for certification must negotiate business contracts and represent themselves to clients as the principals of business entities for which certification is sought, as demonstrated by fully executed business agreements.

(e) Independence.

Business enterprises for which certification is sought must operate independently. In order to determine whether such business enterprises operate independently, the division shall consider but not be limited to the following criteria:

(1) whether the business enterprise shares resources with another entity, including, but not limited to, personnel, equipment, office space, warehouse and other storage space, and yard space;

(2) whether the business enterprise transacts business primarily with one other entity; and

(3) whether the business enterprise receives tangible benefits as a result of a connection to another entity, and whether such benefits are consistent with standard industry practices.

(f) Other certification criteria.

Applications to certify business enterprises as minority- and women-owned business enterprises must satisfy the following additional criteria:

(1) Personal net worth.

Minority group members and women relied upon for certification must demonstrate an individual personal net worth at the time of application that does not exceed $15,000,000, as adjusted annually on January 1st for inflation according to the consumer price index of the previous year starting in 2020; or such other amount that the director shall determine on an industry-by-industry basis, based on, for example and without limitation, factual findings by the division concerning the individuals within the industries under consideration. Regulations relating to the classification of any industry-by-industry personal net worth thresholds above the $15,000,000 threshold shall, to the extent practicable, be implemented within six months of the completion of the division’s review needed to establish such thresholds, by the director.

(2) Small business requirement.

Any business enterprise for which certification as a minority- or women-owned business enterprise is sought must be a small business, as that term is defined in Part 140 of this Title.

(3) Authorization to do business.

Any business enterprise for which certification as a minority- or women-owned business enterprise is sought must be authorized to do business, and demonstrate that it actively conducts business, in the State of New York.

(4) Additional requirements.

The following requirements apply to all applicants seeking minority- and women-owned business enterprise status and inclusion in the directory or certified businesses:

(i) documentation may be required to substantiate the claim of membership in a minority group. This documentation may include, but is not limited to: birth certificates; naturalization papers, registration on Indian tribal rolls of federally recognized tribes by the United States Department of the Interior or of tribes set forth in section 2 of the Indian Law, and nonresident visas;

(ii) sharing of tax and employer information:

(a) each business applying for minority- or women-owned business enterprise certification pursuant to section 144.2 of this Part must agree to allow:

(1) the Department of Taxation and Finance to share its tax information with the division; and

(2) the Department of Labor to share its tax and employer information with the division;

(b) such information provided pursuant to this subparagraph shall be kept confidential by the division as such information is kept by the Department of Taxation and Finance or the Department of Labor and use of such information shall be limited to the certification application process, or other uses approved by the business enterprise or applicant.

5 CRR-NY 144.3 Submission of an application {#sec-5-crr-ny-144.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 144.3}

(a) Timing and procedure for submission of an application.

Applications to certify business enterprises as minority- and women-owned business enterprises shall be submitted at such time and in such manner as prescribed in this subdivision.

(1) Time of submission.

Applications to certify a business enterprise as a minority- or women-owned business enterprise may be submitted after such business enterprise has been engaged in business activities for at least one year. Where an application is submitted on behalf of a business enterprise that has not been in business for at least one year, the division may, at its discretion, reject such application as described in this Part.

(2) Manner of submission.

Applications shall be submitted electronically, in such form as the director shall require. An applicant may request to submit an application in paper form.

(i) Requests to submit a paper application shall be made to the director at 633 Third Avenue, 33rd Floor, New York, NY 10017.

(ii) Requests to submit a paper application must contain the name of the business enterprise for which the paper application is requested, and the business address of such business enterprise.

(iii) Upon receipt of a request to submit a paper application, the division shall generate a paper application bearing the name of the business enterprise for which the paper application is requested and return the paper application to the business address provided in the request for a paper application.

(b) Processing of an application by the division.

The division shall review applications to certify business enterprises as minority- and women-owned business enterprises based upon the certification criteria described herein in accordance with the procedures of this subdivision.

(1) Initial review of applications.

The division shall notify an applicant of the status of an application within 21 days of receipt of such application. Such notification shall identify deficiencies in the application, if any.

(i) Notification that additional information is needed. Upon receipt of an incomplete application, the division shall, as part of its notification as to the status of the application, identify documents or information the division requires to deem the application complete. Such notification shall indicate that an applicant must provide any identified documents or information to the division within 20 days of the date of the notification. If an applicant does not provide the requested documents or information within 20 days of the date of notification, the division may reject the application.

(ii) Receipt of response to notification that additional information is needed. Upon receipt of a response to a notification that additional information is needed, the division shall, within 21 days, notify an applicant that the application is complete or determine that additional documents or information are needed to deem the application complete. If the division determines that additional documents or information are required to deem the application complete, the division shall send a second notification that additional information is needed. Such notification shall indicate that an applicant must provide any identified documents or information to the division within 20 days of the date of the notification. If an applicant does not provide the requested documents or information within 20 days of the date of notification, the division may reject the application.

(iii) Receipt of response to second notification that additional information is needed. Upon receipt of a response to a second notification that additional information is needed, the division shall, within 21 days, notify an applicant that the application is complete or determine that additional documents or information are needed to deem the application complete. If the division determines that additional documents or information are required to deem the application complete, the division shall send a third notification that additional information is needed. Such notification shall indicate that an applicant must provide any identified documents or information to the division within 20 days of the date of the notification. If an applicant does not provide the requested documents or information within 20 days of the date of notification, the division may reject the application.

(iv) Receipt of response to third notification that additional information is needed. Upon receipt of a response to a third notification that additional information is needed, the division shall, within 21 days, notify an applicant that the application is complete or, upon determining that the application remains incomplete, reject the application.

(2) Site visit or telephone interview.

The division may, at its discretion, require minority group members or women relied upon to certify business enterprises as minority- and women-owned business enterprises to be subject to a site visit or a telephone interview. Refusal by minority group members or women to participate in a site visit or telephone interview, or failure to appear at a scheduled site visit or telephone interview, may result in the rejection of any application by such minority group members or women.

(3) Complete application.

Upon receipt of a complete application, the division shall make a determination to approve or deny such application within 45 days of receipt thereof.

(c)

Rejection of an application. An applicant whose application has been rejected may not reapply for certification of a business enterprise as a minority- or women-owned business enterprise for 90 days. The division shall notify an applicant of its determination to reject an application in writing. Such notification shall identify the reason for its rejection of the application, and state that the applicant may not reapply for ninety (90) days from the date of the notification of rejection.

(d) Approval of an application.

Upon the determination by the dvision to approve an application, the dvision shall send the applicant written notice of its determination. Such notification shall indicate whether the business enterprise has been certified as a minority-owned business enterprise, a women-owned business enterprise, or both; state that the business enterprise shall be certified for a period of five years commencing upon the date of approval of the application; state that the business enterprise shall be listed in the directory; and require that the division be informed of any material change to the circumstances of the application, including, but not limited to, the ownership of the business enterprise and the primary place of business of the business enterprise, within 30 days of such change.

(e) Denial of an application.

Upon the determination by the division to deny an application, the division shall send the applicant written notice of its determination. Such notification shall identify the certification criteria that form the basis of the denial and describe the procedures by which an applicant may appeal a denial determination as set forth in Part 145 of this Title.

(1) Failure to appeal a denial determination.

In the event that an applicant fails to submit a timely request for an appeal, as described in section 145.2 of Part 145 of this Title, the denial determination shall be final. An applicant whose application has been finally denied may not reapply for two years from the date of receipt of the written notice of denial without the approval of the director.

(2) In the event that an applicant appeals such denial determination, and such denial determination is upheld following a complete exhaustion of all appeals, the applicant may not reapply for certification for two years from the date of a final determination and/or judicial order, whichever is later.

5 CRR-NY 144.4 Revocation of certification as a minority- or women-owned business enterprise {#sec-5-crr-ny-144.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 144.4}

(a) The director shall revoke the minority- or woman-owned business enterprise status of a certified business for a period of two years, if it is demonstrated that minority group members or women no longer own and control the business enterprise in accordance with rules set forth in section 144.2 of this Part.

(b) A certified business enterprise must notify the division within 30 days of any material change in the information contained in the original application. A material change is any development that would materially affect eligibility, based on all certification criteria, including but not limited to: a change in ethnicity, sex, percentage of ownership in the business enterprise, address, officers or services provided by the certified business. If a material change is indicated, a review may be conducted by the division.

The director may, upon becoming aware of facts suggesting that a certified minority- or women-owned business enterprise no longer meets the certification criteria of this Part or cannot perform a commercially useful function, initiate a review of a certified minority- or women-owned business enterprise during the course of its certification according to the procedures of this subdivision.

(1) Notification of review.

Upon determining to conduct a review of the continued eligibility of a business enterprise to be certified as a minority- or women-owned business enterprise, the director shall notify such certified minority- or women-owned business enterprise in writing of his or her intent to conduct a review.

(i) Contents of notification of review. The notification of review shall specify the grounds of the review, including the certification criteria that the director has become aware that the certified minority- or women-owned business enterprise may no longer satisfy, and request information or documents related to the grounds for the review.

(ii) The director may, at his or her discretion, request that minority group member or women owners relied upon for certification of the minority- or women-owned business enterprise under review participate in a phone interview or be subject to a site visit.

(2) After completing his or her review of the continued eligibility of a certified minority- or women-owned business enterprise, the director shall notify such business enterprise of the results of the review in writing; within 30 days of completion of such review.

(d) Notification of intent to revoke certification.

In the event that the director determines that a business enterprise is no longer eligible to be certified as a minority- or women-owned business enterprise, after conducting a review of such business enterprise, the director shall notify such business enterprise via personal service or certified mail, return receipt requested, of his or her intent to revoke its certification as a minority- or women-owned business enterprise.

(1) Contents of notice of intent to revoke certification. The notification of intent to revoke certification shall identify the certification criteria that form the basis of the revocation and describe the procedures by which the revocation may be appealed pursuant to Part 145 of this Title.

(e) Notice of revocation of certification.

In the event that a business enterprise fails to timely appeal a notification of intent to revoke certification or following an appeal pursuant to section 145.2 of this Title, the director may issue a notice of revocation of certification and remove such business enterprise from the directory. Such notice shall indicate that the certification of the business enterprise as a minority- or women-owned business enterprise is revoked as of the date of the notice, that the business enterprise has been removed from the directory as of the date of the notice, and that the business enterprise may not reapply for certification as a minority- or women-owned business enterprise for two years from the date of the notice of revocation of certification.

(f) Revocation for convictions of fraud.

The director, upon becoming aware of a final judgment of conviction by any court of competent jurisdiction, for fraud by any person of a New York State certified minority- or women-owned business enterprise, as it relates to the business enterprise’s certification criteria of this Part, or of a conviction for fraudulently misrepresenting the status of the business enterprise, shall revoke such business enterprise’s certification in accordance with the procedures of this subdivision.

(1) Where a person has been convicted of fraud as a misdemeanor, that person may not reapply for certification as a minority- or women-owned business enterprise for two years from the date of revocation.

(2) Where a person has been convicted of fraud as a felony, that person may not reapply for certification as a minority- or women-owned business enterprise for up to five years from the date of revocation.

(3) Where a person has been convicted two times for fraud as a felony, within 10 years of the first conviction, that person shall be banned from applying for certification as a minority- or women-owned business for life.

(g) The final decision of the director shall be subject to review, pursuant to article 78 of the Civil Practice Law and Rules.

(h) During the pendency of a challenge, a presumption of eligibility shall remain in effect for the challenged certified minority- and women-owned business enterprise.

5 CRR-NY 144.5 Criteria for acceptance of Federal certification in lieu of completing and submitting the New York State minority- and women-owned business enterprise certification application {#sec-5-crr-ny-144.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 144.5}

(a) The division may approve an applicant as a certified business without requiring that applicant to complete the New York State minority- and woman-owned business enterprise certification application provided:

(1) the applicant demonstrates that it holds a current Federal certification pursuant to title 49 CFR part 26 or title 13 CFR part 124 by submitting a true copy of the certification to the division;

(2) the applicant completes the supplemental application;

(3) the applicant provides a signed authorization for the exchange of information between the division and the certifying entity for the purpose of determining the applicant's eligibility for certification;

(4) an owner, a partner or a principal officer that is authorized to act on behalf of the applicant signed and has notarized an attestation that the information submitted in connection with the Federal certification is accurate to the best of that person's knowledge; and

(5) the applicant provides proof satisfactory to the division that the applicant is owned, operated and controlled by women or minority group members and that the individual or individuals whose ownership, control and operation are relied upon for certification, meet the requirements of personal net worth and the definition of small business set forth in these regulations. Documentation referenced in section 144.2(f)(4)(i) of this Part may be required to substantiate the claim of membership in a minority group or gender.

(b) Notwithstanding anything to the contrary in subdivision (a) of this section, the division reserves the right to:

(1) conduct an investigation of an applicant (which may include, but not be limited to, conducting a site visit to the applicant's place of business, and or requesting documentation from the applicant) to verify that the applicant meets all of the eligibility criteria set forth in Executive Law section 314 and section 144.2 of this Part; and

(2) reject or deny certification if the division is not satisfied that the applicant meets all of the eligibility criteria set forth in Executive Law section 314 and section 144.2 of this Part.

(c) After verification by the division that an applicant has satisfied all of the criteria in subdivisions (a) and (b) of this section, such applicant shall become certified as a minority- or women-owned business enterprise without completing the New York State minority- and woman-owned business enterprise certification application.

(d) The process described in sections 144.3 and 144.4 of this Part and sections 145.1 and 145.2 of Part 145 will apply to supplemental applications.

5 CRR-NY 144.6 Criteria for acceptance of New York municipal certification in lieu of completing and submitting the New York State minority- and women- owned business enterprise certification application {#sec-5-crr-ny-144.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 144.6}

(1) the applicant demonstrates that it holds a current New York municipal certification with an active municipal certification program by submitting a true copy of the certification to division;

(2) the applicant completes the supplemental application;

(3) the applicant provides a signed authorization for the exchange of information between the division and the municipal certifying entity for the purpose of determining the applicant's eligibility for certification;

(4) an owner, a partner or a principal officer that is authorized to act on behalf of the applicant signed and has notarized an attestation that the information submitted in connection with the New York municipal certification is accurate to the best of that person's knowledge; and

(5) the applicant provides proof satisfactory to the division that the applicant is owned, operated and controlled by women or minority group members and that the individual or individuals whose ownership, control and operation are relied upon for certification, meet the requirements of personal net worth and the definition of small business set forth in this regulation. Documentation referenced in section 144.2(f)(4)(i) of this Part may be required to substantiate the claim of membership in a minority group or gender.

(b) Notwithstanding anything to the contrary in subdivision (a) of this section, the division reserves the right to:

(2) reject or deny certification if the division is not satisfied that the applicant meets all of the eligibility criteria set forth in Executive Law section 314 and section 144.2 of this Part.

(c) After verification by the division that an applicant has satisfied all of the criteria in subdivisions (a) and (b) if applicable, such applicant shall become certified as a minority- or women-owned business enterprise without completing the New York State minority- and woman-owned business enterprise certification application.

(d) The process described in sections 144.3 and 144.4 of this Part and sections 145.1 and 145.2 of this Title will apply to supplemental application.

5 CRR-NY 144.7 Criteria for acceptance of DD form 214 by the United States Department of Defense in lieu of other documents as proof of race or ethnicity and certain personal information of an applicant for purposes of certification of the applicant’s business as a minority- owned business {#sec-5-crr-ny-144.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 144.7}

(a) Any applicant applying for certification as a minority-owned business, who was a military service member, and upon such applicant’s retirement, separation, or discharge from active duty in the armed forces of the United States, and who has been provided the DD form 214, may submit such form to prove his or her race or ethnicity, date of birth, place of birth, and verification of address for purposes of certification, in lieu of requiring the applicant to otherwise prove his or her race or ethnicity, provided the DD form 214 contains such information.

5 CRR-NY 144.8 [Repealed] {#sec-5-crr-ny-144.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 144.8}

5 CRR-NY 144.9 to 144.10 to 144.10 [Repealed] {#sec-5-crr-ny-144.9-to-144.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 144.9 to 144.10}

Part 145 APPEALS

5 CRR-NY 145.1 Purpose and general description {#sec-5-crr-ny-145.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 145.1}

(a) This Part implements section 314(3) and 316 of the Executive Law. Section 314(3) of the Executive Law requires the director to provide for an administrative hearing in the event that a business enterprise is denied certification as a minority- or women-owned business enterprise and in cases where the director intends to revoke the certification of a minority- or women- owned business enterprise or in cases concerning contractor/agency complaints.

5 CRR-NY 145.2 Appeal procedures concerning denials to certify a business enterprise as a minority- or women-owned business enterprise or notification of intent to revoke certification {#sec-5-crr-ny-145.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 145.2}

(a) Initiation of an appeal.

Upon denial of an application to certify a business enterprise as a minority- or women-owned business enterprise, pursuant to section 144.3 of this Title, or the issuance of a notification of intent to revoke certification as a minority-or women- owned business enterprise pursuant to section 144.4(b) of this Title, such business enterprise may request an appeal pursuant to the provisions of this subdivision.

(1) Request for an appeal.

Upon receipt of a notice of determination to deny an application to certify a business enterprise as a minority- or women-owned business enterprise, pursuant to section 144.3(e) or 144.4(b) of this Title, such business enterprise may submit a request for an appeal to be presided over by an independent hearing officer.

(i) Deadline for request for an appeal. A request for an appeal shall be made within 30 days from the date of receipt of a notice of determination to deny an application or notification of intent to revoke certification. Failure by a business enterprise to request an appeal within 30 days of the date of a notice of determination to deny an application or notification of intent to revoke certification shall constitute a forfeiture by such business enterprise of its right to request an appeal. In the case of an applicant’s failure to timely appeal a determination to deny an application, such business enterprise will be barred from reapplying for certification for a period of two years, or in such instance where a business enterprise was denied recertification, such business enterprise will also be removed from the directory.

(ii) Contents of a request for an appeal. A request for an appeal shall be made in writing, and shall identify whether the business enterprise wishes to proceed with an in-person hearing before an independent hearing officer or via written submissions to an independent hearing officer.

(2) Notice of hearing or written appeal.

Upon receipt of a timely request for an appeal, the division shall appoint an independent hearing officer and provide the business enterprise requesting the appeal with a notice of hearing or a notice of written appeal.

(i) Appointment of the independent hearing officer. The director shall appoint any impartial person to serve as an independent hearing officer. If, at any time, the director learns that an individual appointed to serve as an independent hearing officer would experience a conflict of interest in serving as an independent hearing officer, or that such individual’s service as an independent hearing officer would give rise to an appearance of impropriety, the director shall remove the independent hearing officer and appoint a replacement independent hearing officer.

(ii) Contents of notice of hearing. A notice of hearing shall be in writing, and shall contain the following information:

(a) the time and location of the hearing;

(b) the identity of the hearing officer who shall preside over the hearing, to the extent known;

(d) the certification criteria at issue;

(e) the identity of the individual who shall represent the division in the hearing, to the extent known;

(f) a statement that interpreter services shall be made available to deaf persons; and

(g) the procedure to request an adjournment of the hearing.

(iii) Contents of notice of written appeal. A notice of written appeal shall be in writing, and shall contain the following information:

(a) the deadline by which the business enterprise must submit its complete written appeal, and any exhibits thereto is 60 days from the date of its receipt of written notice of determination to deny its application for certification or notification of intent to revoke certification;

(b) the identity of the hearing officer who shall adjudicate the written appeal, to the extent known;

(d) the certification criteria at issue;

(e) the identity of the individual who shall submit a response to the written appeal of the business enterprise on behalf of the division, to the extent known; and

(f) the procedure to request an extension for the submission of a written appeal.

(3) Request for an adjournment of a hearing or extension for submission of a written appeal. A business enterprise may request an adjournment of a hearing, or an extension to submit a written appeal, pursuant to the provisions of this paragraph.

(i) Request for an adjournment of a hearing. A request for an adjournment of a hearing must be made to the independent hearing officer identified in the notice of hearing at least seven business days prior to the scheduled date of the hearing, and must state the reason for the request. The independent hearing officer may, at his or her discretion, grant a timely request for an adjournment of a hearing.

(ii) Request for an extension for the submission of a written appeal. A request for an extension for the submission of a written appeal must be made to the independent hearing officer identified in the notice of written appeal at least seven business days prior to the date by which the business enterprise must submit its complete written appeal and must state the reason for the request. The independent hearing officer may, at his or her discretion, grant a timely request for an extension to submit a written appeal.

(4) Requests to withdraw an appeal. The hearing officer will consider a request for an appeal to be withdrawn under the following circumstances:

(i) the hearing officer has received a written or verbal statement from the petitioner, or the petitioner’s attorney; stating that the request for a hearing be withdrawn.

(b) Conduct of the appeal.

The independent hearing officer shall, subject to the provisions of this subdivision, conduct the appeal in such order and manner as he or she deems appropriate. In the case of an appeal of a determination to deny certification, the burden of proof shall rest with the applicant.

(1) Conduct of a hearing.

All parties may shall be given the opportunity to present evidence and oral argument, provided, however, the evidence presented shall be limited to such relevant documentation that, in the case of denial, was before the division at the time of the denial determination, and in the case of intent to revoke, was before the division at the time of notification of intent to revoke; and the independent hearing officer may exclude irrelevant or unduly repetitious evidence from the appeal record.

(i) Recording of the proceedings. The division shall record the proceedings via an electronic recording device.

(ii) Entering testimony into the appeal record. All testimony received into the appeal record shall be under oath or affirmation.

(iii) Rules of evidence and procedure. The independent hearing officer shall not be bound by the rules of evidence and procedure.

(iv) Representation. All parties may appear at the hearing with legal counsel.

(v) Witnesses. All parties shall have the right to call witnesses and to examine other parties and their witnesses.

(2) Conduct of a written appeal.

All parties shall be accorded full opportunity to present evidence and written arguments, provided, however, that the independent hearing officer may exclude irrelevant or unduly repetitious evidence from the appeal record. Relevant evidence shall be limited to the documentary record that was before the division at the time of denial or time of notification of intent to revoke.

(3) Requests for limited discovery.

Limited document discovery shall be permitted to a petitioner in any proceeding before a hearing officer. Depositions, interrogatories and other disclosure devices are not permitted.

(i) The documents to be discovered shall be limited to those which, as of the date of the discovery request, the division has in its possession and which were before the division at the time of denial or at the time of intent to revoke.

(ii) A request for limited discovery of documents shall be made in writing to the individual representing the division in the proceeding, as set forth in the notice of hearing, with a copy sent to the hearing officer designated to conduct the hearing, at least 21 days prior to the date of the hearing.

(iii) The request shall set forth the specific documents being requested.

(iv) Requested documents which are properly discoverable shall be provided to the requesting party, if applicable, within 21 days after the receipt of the written request, unless due to the volume of documents being requested, the copying of such documents cannot reasonably be completed within such period.

(v) Where the documents cannot be provided within 21 days, written notice of such shall be given to the requesting party, with a copy to be sent to the hearing officer designated to conduct the hearing. Such notice shall state when the requested documents are expected to be provided and the reason(s) for the time to produce.

(4) Closing of the appeal record.

The independent hearing officer shall close the appeal record at his or her discretion and may request additional information of the parties based upon the proceedings of a hearing or written appeal. Such additional information shall be limited to information that was before the division at the time of denial or at the time of intent to revoke.

(5) Standard of review.

In the case of an appeal pursuant to section 144.3(e) of this Title, the independent hearing officer shall, based upon the information contained in the appeal record, determine whether the division’s determination to deny an application by a business enterprise to be certified as a minority- or women-owned business enterprise was supported by substantial evidence. In the case of an appeal pursuant to section 144.4(b) of this Title, the independent hearing officer shall, based upon the information contained in the appeal record, determine whether the division’s intent to revoke the certification of a business enterprise as a minority- or women-owned business enterprise is supported by the preponderance of the evidence.

(6) Findings of the independent hearing officer.

The independent hearing officer shall render a recommended order and serve a copy of such recommended order to the parties by personal service, electronic mail, or certified mail, return receipt requested, within 60 days of the date upon which the appeal record was closed.

(7) Final order.

The director shall, within 30 days of receipt of a recommended order from an independent hearing officer, render a final order. Such final order may accept, reject, or modify the findings of the independent hearing officer, and must also provide the reasoning for such final determination. The director shall provide a copy of the final order to the business enterprise that is the subject of the final order via personal service, electronic mail, or certified mail, return receipt requested.

(c) In the absence, disability, or disqualification of a hearing officer or for other good cause, a hearing may be transferred to another hearing officer.

5 CRR-NY 145.3 Appeal procedures concerning contractor and State agency complaints {#sec-5-crr-ny-145.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 145.3}

(a) Initiation of an appeal.

If within 30 days of receipt of a complaint made pursuant to section 142.12(a), (b), or 143.6 of this Title, the director is unable to resolve the complaint to the satisfaction of the State agency and the contractor, the complaint shall be referred to the division's hearing officer for a hearing, conducted in accordance with the procedures set forth in this section.

(b) Notice of hearing or written appeal.

The division shall appoint an independent hearing officer to preside over the appeal and provide written notice of hearing to the parties. The notice shall include, but not be limited to, the following information:

(1) a statement of the legal authority and jurisdiction pursuant to which the hearing is being held;

(2) where possible, a reference to the specific sections of the statute, regulations and/or standards involved;

(3) a statement of the matters raised and the issue(s) to be determined, provided, however, that nothing shall preclude the consideration at the hearing of relevant issues not raised in the notice, in a manner consistent with the petitioner's right to respond to such issues;

(4) the identity of the hearing officer designated to conduct the hearing, to the extent known;

(5) the identity of the individual representing the division or State agency in the proceeding to the extent known;

(6) the procedure to apply for an adjournment or withdrawal of the petitioner's request for a hearing or written appeal; and

(7) in the case of a hearing, the time and location of the hearing or in the case of a written appeal, the date by which the written appeal and exhibits thereto must be submitted as well as the date by which any response is due.

A request for an adjournment of a hearing or written appeal submission must be made to the independent hearing officer identified in the notice of hearing at least seven business days prior to the scheduled date of the hearing and must state the reason for the request. The independent hearing officer may, at his or her discretion, grant a timely request for an adjournment of a hearing or submission of written appeal.

(d) Request to withdraw an appeal.

The hearing officer will consider a request for an appeal to be withdrawn under the following circumstances: the hearing officer has received a written or verbal statement from a party requesting the hearing or written appeal be withdrawn.

(e) Appointment of the independent hearing officer.

The director shall appoint any impartial person to serve as an independent hearing officer. If, at any time, the director learns that an individual appointed to serve as an independent hearing officer would experience a conflict of interest in serving as an independent hearing officer, or that such individual’s service as an independent hearing officer would give rise to an appearance of impropriety, the director shall remove the independent hearing officer and appoint a replacement independent hearing officer.

(f) Limited discovery shall be permitted to the petitioner.

Depositions, interrogatories and other disclosure devices are not permitted.

(1) The documents to be discovered shall be limited to those which, as of the date of the discovery request, the State agency has in its possession and which were before the director at the time of the complaint.

(2) A request for limited discovery of documents shall be made in writing to the individual representing the State agency in the proceeding, as set forth in the notice of hearing, with a copy sent to the hearing officer designated to conduct the hearing, at least 21 days prior to the date of the hearing or date by which the written appeal submission is due.

(3) The request shall set forth the specific documents being requested.

(4) Requested documents which are properly discoverable shall be provided to the requesting party, if applicable, within 21 days after the receipt of the written request, unless due to the volume of documents being requested, the copying of such documents cannot reasonably be completed within such period.

(5) Where the documents cannot be provided within 21 days, written notice of such shall be given to the requesting party, with a copy to be sent to the hearing officer designated to conduct the appeal. Such notice shall state when the requested documents are expected to be provided and the reason(s) for the time to produce.

(g) Conduct of the appeal.

The independent hearing officer shall, subject to the provisions of this subdivision, conduct the appeal in such order and manner as he or she deems appropriate

(1) Conduct of a hearing.

All parties may shall be given the opportunity to present evidence and oral argument, provided, however, the evidence presented shall be limited to such relevant documentation that before the director at the time of the complaint and the independent hearing officer may exclude irrelevant or unduly repetitious evidence from the appeal record.

(i) Recording of the proceedings. The division shall record the proceedings via an electronic recording device.

(ii) Entering testimony into the appeal record. All testimony received into the appeal record shall be under oath or affirmation.

(iii) Rules of evidence and procedure. The independent hearing officer shall not be bound by the rules of evidence and procedure.

(iv) Representation. All parties may appear at the hearing with legal counsel.

(v) Witnesses. All parties shall have the right to call witnesses and to examine and cross-examine other parties and their witnesses.

(2) Conduct of a written appeal.

(h) Closing of the appeal record.

The independent hearing officer shall close the appeal record at his or her discretion and may request additional information of the parties based upon the proceedings of a hearing. Such additional information shall be limited to information that was before the director during dispute resolution under section 142.12(d) or 143.6(c) of this Title.

(i) Resolution of complaints under section 142.12.

Upon conclusion of the administrative hearing or written appeal, the procedures set forth in section 142.12(e)-(g) of this Title shall apply.

(j) Resolution of complaints made under section 143.6

Upon conclusion of the administrative hearing or written appeal, the procedures set forth in section 143.6(e)-(g) of this Title shall apply.

Part 146 ANNUAL REPORT OF THE DIVISION

5 CRR-NY 146.1 Purpose and general description {#sec-5-crr-ny-146.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 146.1}

(a) This Part implements section 315(4) of the Executive Law. Section 315(4) requires the division to prepare an annual report on the activities of the division, and on developments in the effort to promote the utilization of minority- and women-owned business enterprises in State contracting activity.

5 CRR-NY 146.2 The division’s annual report {#sec-5-crr-ny-146.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 146.2}

(a) The division shall submit an annual report to the chief diversity officer on or before November 1st of each year which:

(1) summarizes the report submitted by each contracting agency pursuant to section 141.6 of this Title;

(2) contains such comparative or other information as the director deems appropriate, including, but not limited to, goals compared to actual participation of certified minority- and women-owned business enterprises in State contracting, to evaluate the effectiveness of the activities undertaken by each such contracting agency to promote increased participation by certified minority- and women-owned business enterprises with respect to State contracts and subcontracts;

(3) contains a summary of all waivers granted by each contracting agency pursuant to section 142.7 of this Title during the period covered by the report, including a description of the basis of the waiver request and the contracting agency’s rationale for granting any such waiver;

(4) contains a listing of annual participation rates for each agency, the total number of certified minority- and women-owned businesses for that reporting year, and the total dollar value of State expenditures on certified minority- and women-owned business contracts and subcontracts for that reporting year;

(5) describes any efforts to create a database or other information storage and retrieval system containing information relevant to contracting with certified minority- and women-owned business enterprises; and

(6) contains a summary of:

(i) all determinations of violations of this article by a contractor or a contracting agency made during the period covered by the annual report; and

(ii) the penalties or sanctions, if any, assessed in connection with such determinations and the rationale for such penalties or sanctions;

(7) contains information on which expenditures each agency deemed exempt from participation goals and the rationale for each such exemption.

(b) Copies of the annual report shall be provided to the commissioner, the Governor, the comptroller, the temporary President of the Senate, the speaker of the assembly, the minority leader of the Senate, the minority leader of the assembly and shall also be made widely available to the public via, among other things, publication on a website maintained by the division.

Part 147 SEVERABILITY

5 CRR-NY 147.1 Severability {#sec-5-crr-ny-147.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 147.1}

(a) If any clause, sentence, paragraph, section or part of these regulations shall be adjudged by any court of competent jurisdiction to be invalid, the judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, section or part of this act directly involved in the controversy in which the judgment shall have been rendered.

Chapter XVI EXCELSIOR LINKED DEPOSIT PROGRAM

Part 160 ADMINISTRATION, APPLICATION AND EVALUATION

5 CRR-NY 160.1 Purpose and general description {#sec-5-crr-ny-160.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 160.1}

The Excelsior Linked Deposit Program authorizes the Comptroller to deposit State funds and the Commissioner of Taxation and Finance to deposit funds of public authorities and public benefit corporations with participating banks, thrifts, farm credit system institutions, and the New York Business Development Corporation at a reduced rate of return when such banks, thrifts, farm credit system institutions, and the New York Business Development Corporation make lower cost loans, on the basis of such linked deposits, to qualifying businesses to improve productivity, competitiveness, access to new markets, and exporting capabilities. The Commissioner of Economic Development is charged with administering the program. The purpose of these regulations is to set forth the eligibility requirements and application procedures for participation by businesses and banks and thrifts in the program.

5 CRR-NY 160.2 Definitions {#sec-5-crr-ny-160.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 160.2}

(a) Agricultural business means a business that produces products defined in subdivision (2) of section 301 of the Agriculture and Markets Law.

(b) Authorized depositor means the Comptroller with respect to linked deposits made by the Comptroller and the Commissioner of Taxation and Finance with respect to linked deposits made by the Commissioner of Taxation and Finance.

(d) Census bureau means the Bureau of the Census of the United States Department of Commerce.

(e) Certified business means a business located in an empire zone created pursuant to article 18-B of the General Municipal Law and, at the time of application to the program, certified pursuant to such article as eligible for the benefits referred to in section 966 of such article.

(f) Certified minority- or women-owned business means any minority-or women- owned business enterprise, as defined in section 310 of the Executive Law, and, at the time of application to the program, certified pursuant to section 314 of the Executive Law.

(g) Commissioner means the Commissioner of Economic Development.

(h) Comptroller means the Comptroller of the State of New York.

(i) Defense industry manufacturer means a manufacturing firm as defined in subdivision (t) of this section, 25 percent or more of the gross revenues of which derive, either directly as a prime contractor or indirectly as a subcontractor of a prime contractor, from Department of Defense or other military contracts.

(j) Department means the Department of Economic Development.

(k) Department of Defense means the United States Department of Defense.

(l) Empire zone means an empire zone created pursuant to article 18-B of the General Municipal Law.

(m) Eligible business means:

(1) a manufacturing firm or agricultural business that has its principal place of business in New York State and that employs 500 or fewer employees within New York State on a full-time basis;

(2) a certified business with a facility located in an empire zone, which business has its principal place of business in New York State and which employs 100 or fewer employees within New York State on a full-time basis;

(3) any firm seeking financing through the program for an export project, which firm has its principal place of business in New York State and employs 100 or fewer employees within New York State on a full-time basis;

(4) any business located in a highly distressed area, as defined herein, which business is not a retail business, has its principal place of business in New York State, and employs 100 or fewer employees within New York State on a full-time basis; provided, however, that a retail business located in a highly distressed area may be considered an eligible business, if the commissioner determines that:

(i) the financing provided through the program will retain permanent, full-time jobs in the highly distressed area; or

(ii) the financing provided through the program will increase the overall number of retail jobs in the local retail market within which the business is located;

(5) any certified minority- or women-owned business that has its principal place of business in New York State and is seeking financing necessary to carry out a specific procurement contract with an agency or public authority or other entity of the New York State or Federal governments, provided that a minority- or women-owned business which does not seek financing necessary to carry out such a procurement contract shall not be precluded from qualifying as an eligible business for any other purpose enumerated herein;

(6) any service business that:

(i) is not dominant in its field within New York State during the preceding 10 years;

(ii) has its principal place of business in New York State and employs 100 or fewer employees within New York State on a full-time basis;

(iii) is seeking financing for a project that will result in the retention or creation of permanent, full-time, private-sector jobs within New York State;

(iv) does not sell a service rendered at a facility personally by an individual for another individual, directly, without the intervention of a third party, or professional services such as health, legal, accounting, engineering, or architectural services; and

(v) is independently owned and operated;

for purposes of this paragraph, independently owned and operated means that the business is not a subsidiary or affiliate of another operating company and is not operated under a franchise or similar agreement; and

(7) a qualifying technology or innovation business which business employs 100 or fewer employees within the State on a full-time basis and engages in:

(i) biotechnologies, which shall be defined as technologies involving the scientific manipulation of living organisms, especially at the molecular and/or the submolecular genetic level, to produce products conducive to improving the lives and health of plants, animals, and humans; and the associated scientific research, pharmacological, mechanical, and computational applications and services connected with these improvements;

(ii) information and communication technologies, equipment, and systems that involve advanced computer software and hardware, visualization technologies, and human interface technologies;

(iii) advanced materials and processing technologies that involve the development, modification, or improvement of one or more materials or methods to produce devices and structures with improved performance characteristics or special functional attributes, or to activate, speed up, or otherwise alter chemical, biochemical, or medical processes;

(iv) electronic and photonic devices and components for use in producing electronic, optoelectronic, mechanical equipment and products of electronic distribution with interactive media content;

(v) energy efficiency, renewable energy and environmental technologies, products, devices, and services; or

(vi) small-scale systems integration and packaging.

(n) Eligible projects means:

(1) export projects designed to increase a firm's export activities; or

(2) for eligible manufacturing, technology or innovation, agricultural, and service firms, projects that involve one or more of the following:

(i) the preparation of strategic plans for improving productivity and competitiveness;

(ii) the introduction of modern equipment and/or the expansion of facilities as part of a business modernization plan;

(iii) the introduction of advanced technologies to improve productivity and quality;

(iv) improvements in production processes and operations, including agricultural operations;

(v) introduction of computerized information, reporting and control systems;

(vi) reorganization or improvement of work place systems and the introduction to total quality and employee participation programs;

(vii) development and introduction of new products;

(viii) identification and development of new markets, including entry into foreign markets;

(ix) financial restructuring for purposes of enabling specific modernization activities, however, refinancing of existing debt solely to obtain a lower interest rate shall be ineligible;

(x) buyouts of viable companies by employees or buyouts of viable companies by local owners residing in New York State;

(xi) provision of working capital for other business modernization activities that will improve the competitiveness and productivity of a firm and result in the creation or retention of permanent, full-time jobs; or

(3) for certified businesses located in empire zones, and for eligible retail businesses located in highly distressed areas, projects that will create or retain full-time, permanent jobs within the empire zone or highly distressed area, as the case may be;

(4) for defense industry manufacturers, projects designed to reduce dependence on Department of Defense and other military contracts and to change or diversify production in order to take advantage of any market other than that serving the Department of Defense or other military procurers; or

(5) for certified minority- and women-owned businesses, projects to provide financing necessary to carry out a specific procurement contract with an agency or public authority or other entity of the New York State or Federal governments. For purposes of this paragraph, procurement contract shall include construction contracts.

(o) Highly distressed area means:

(1) a census tract or tracts or block numbering area or areas or such census tract or block numbering area contiguous thereto which, according to the most recent census data available, has:

(i) a poverty rate of at least 20 percent for the year to which the data relates or at least 20 percent of the households receiving public assistance; and

(ii) an unemployment rate of at least one and twenty-five one hundredths times the statewide unemployment rate for the year to which the data relates; or

(2) a city, town, village or county within a city with a population of one million or more for which:

(i) the ratio of the full value property wealth, as determined by the comptroller for the year 1990, per resident to the statewide average full value property wealth per resident; and

(ii) the ratio of the income per resident, as shown in the 1990 census, to the statewide average income per resident; are each 55 percent or less of the statewide average;

(3) an empire zone shall not be considered a highly distressed area for purposes of this subdivision.

(p) Lender means:

(1) any commercial bank that is or shall become an approved depository of State funds by meeting such qualifications and executing such documents as required by an authorized depositor and that agrees to participate in the program as evidenced by executing a linked deposit agreement, provided for in section 160.3 of this Part, with an authorized depositor;

(2) any thrift which an authorized depositor determines is eligible to accept linked deposits based upon criteria applied by the authorized depositor in making determinations under section 105 of the State Finance Law, and which agrees to participate in the program as evidenced by executing a linked deposit agreement with an authorized depositor, provided that any linked deposit in such thrift shall be secured in the same manner as moneys deposited pursuant to section 105 of the State Finance Law and such thrifts shall pledge assets or furnish other security satisfactory in form and amount to the authorized depositor for the repayment of moneys;

(3) any farm credit system institution which an authorized depositor determines is eligible to accept linked deposits based upon criteria applied by the authorized depositor in making determinations under section 105 of the State Finance Law, and which agrees to participate in the program as evidenced by executing a linked deposit agreement with an authorized depositor, provided that any linked deposit in such farm credit system institution shall be secured in the same manner as moneys deposited pursuant to section 105 of the State Finance Law and such farm credit system institutions shall pledge assets or furnish other security satisfactory in form and amount to the authorized depositor for repayment of moneys; or

(4) the New York Business Development Corporation.

(q) Linked deposit means a deposit, or for farm credit system institutions an investment eligible to be held by such institution, placed with a lender by the Comptroller or the Commissioner of Taxation and Finance for a period of four years at a fixed linked deposit interest rate, provided the lender agrees to:

(1) lend the equivalent value of such deposit to an eligible business at the fixed interest rate provided in section 218 of the State Finance Law; and

(2) permit the deposit to be comprised of a series of 90-day, six-month or one-year deposits each bearing an interest rate equal to the linked deposit interest rate fixed at the time the original deposit is placed.

(r) Linked deposit interest rate means:

(1) for a linked deposit made in connection with a linked loan to a certified business in an economic development zone or to an eligible business located in an highly distressed area or to a qualifying technology or innovation business as defined in paragraph (m)(7) of this section or to a certified minority- or women-owned business enterprise for an eligible project defined in paragraph (n)(5) of this section or to a defense industry manufacturer for a project defined in paragraph (n)(4) of this section, a fixed rate of interest which is 300 basis points below the lender's posted four year certificate of deposit rate or, if the lender does not offer a four year certificate of deposit or publicly post its four year certificate of deposit rate, is 300 basis points below the average statewide rate for four year certificates of deposit as determined by the commissioner;

(2) for linked deposit made in connection with any linked loan other than those specified in paragraph (1) of this subdivision, a fixed rate of interest which is 200 basis points below the lender's posted four year certificate of deposit rate, or, if the lender does not offer a four year certificate of deposit or publicly post its four year certificate of deposit rate, is 200 basis points below the average statewide rate for four year certificates of deposit as determined by the commissioner.

(3) In no event shall the linked deposit interest rate be less than zero.

(s) Linked loan means a loan for purposes of an eligible project, in an amount not to exceed $2,000,000, bearing interest for the first four years at the interest rate provided in 218 of the State Finance Law, and linked to a deposit by an authorized depositor of equal value. Upon notice to authorized depositors and lenders, the commissioner may establish a lower maximum amount of a linked loan to ensure fulfillment of program purposes.

(t) Manufacturing firm means a firm involved with extracting, smelting, recovering, developing, preparing, compounding, converting, assembling or producing in any manner, minerals, raw materials, products or substances of any kind or nature, and shall include facilities related thereto for storage, warehousing or distribution, for research and development or for the discovery of new, and the refinement of known, substances, processes, and products.

(u) Program means the Excelsior Linked Deposit Program.

(v) Retail business means a business that:

(1) sells merchandise to the general public for personal or household use or sells merchandise both to the general public for personal or household use and to businesses;

(2) buys and receives, as well as sells, merchandise;

(3) has an identified place of business and engages in activities to attract the general public to buy merchandise; and

(4) to the extent it renders services, does so incidental to the sale of merchandise.

(w) Service business means a business that engages in activities that add value without producing a product and creates intangible outputs rather than tangible goods. For purposes of this subdivision, service business shall not include:

(1) a business that sells a service rendered at a facility personally by an individual for another individual, directly and without the intervention of a third party, such as, but not limited to, brokerage of real estate, securities, or insurance; or

(2) professional services rendered by licensed individuals, such as, but not limited to, health, legal, accounting, engineering or architectural services.

(x) Thrift means any savings bank or savings and loan association, Federal savings bank or Federal savings and loan association.

5 CRR-NY 160.3 Lender participation in program {#sec-5-crr-ny-160.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 160.3}

(a) The commissioner shall, with the assistance of the Superintendent of Financial Services, market the program to lenders and solicit the participation of lenders in the program. In order to participate in the program, a lender shall:

(1) be authorized to accept linked deposits as follows:

(i) if a commercial bank, be an authorized depository of State funds, or become an authorized depository of State funds by executing such undertakings and collateral agreements as are required by each authorized depositor; or

(ii) if a thrift, farm credit system institution or the New York State Business Development Corporation:

(a) be determined by an authorized depositor as eligible to accept linked deposits based upon criteria applied by the authorized depositor in making determinations under section 105 of the State Finance Law;

(b) agree to participate in the program;

(c) secure any linked deposit in the same manner as moneys deposited pursuant to section 105 of the State Finance Law; and

(d) pledge assets or furnish other security satisfactory in form and amount to the authorized depositor for the repayment of moneys; and

(2) execute a linked deposit agreement with each authorized depositor. Such agreement shall be in such form as required by the authorized depositors and shall govern linked deposits made by the authorized depositors in connection with the participating lender's linked loans. Upon making a linked loan, the participating lender shall file with the authorized depositor a written linked loan designation, in such form as shall be required by the authorized depositor, which shall serve to identify the linked deposit relating to such loan as a deposit governed by the linked deposit agreement. In no event shall any defect in a linked deposit agreement be asserted as a defense by a borrower on a linked loan.

(b) Lenders participating in the program shall not, for any loan made pursuant to the program, charge any discount, points, origination fees, handling fees, service charges, refinancing fees or penalties or any charge other than those normally charged and in such amounts normally charged by the lender, for loans of the type being made, without regard to the program.

5 CRR-NY 160.4 Application procedure {#sec-5-crr-ny-160.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 160.4}

(a) Eligible businesses seeking a linked loan for an eligible project shall first make a loan application to a lender in the manner customarily required by such lender. The lender shall make its credit decision with respect to such loan application in accordance with its customary standards. Upon approval of such loan, the lender shall submit to the department, a linked deposit application.

(b) The linked deposit application shall require such information as the commissioner shall deem necessary and shall be in as simple a form as possible. It shall elicit, but not be limited to, the following:

(1) the principal amount and interest rate of the loan;

(2) identifying information for the lender and the borrower, including the borrower's principal place of business;

(3) a description of the borrower's business;

(4) a description of the project for which the loan has been sought;

(5) information on the importance of the project to the competitive position and profitability of the borrower;

(6) information relating to the number jobs to be retained or created in connection with the project; and

(7) a request by the borrower, if applicable, to treat information about its business as confidential pursuant to section 87(2)(d) of the Public Officers Law.

(1) a lender's certification to the effect that:

(i) the linked deposit interest rate was calculated based upon the current interest rate that would be charged for the loan in the absence of the program, and the linked deposit interest rate will be a fixed interest rate charged during the term of the linked deposit applicable to the loan, even if the rate is determined upon variable rate conditions;

(ii) no fees other than those normally charged in such amounts normally charged will be charged by the lender in connection with the loan;

(iii) the lender agrees to give prompt notice to the authorized depositor of any increase in interest rate of the linked loan as a consequence of default on or renegotiation of the linked loan or the linked loan is charged off, prepayment of all or part of a linked loan, or sale or assignment of all or part of a linked loan; and

(iv) the information provided by the lender in the application is, to the best of lender's knowledge after due inquiry, true and correct;

(2) a borrower's certification to the effect that:

(i) the borrower is not currently participating in the program;

(ii) inability to obtain the reduced rate of interest provided by the program would impede the ability of the borrower to undertake the project. For this purpose, impede shall mean that the borrower would consider delaying or reducing the scale of the project for which the loan has been sought or would experience other difficulties in proceeding with the project; and

(iii) the information contained in the application is, to the best of the borrower's knowledge, true and correct.

(d) The commissioner shall approve or reject an application within 28 days after receipt of a fully complete application, and shall notify the lender in writing. Notification may be made, alternatively, by facsimile transmission followed by a confirmation hard copy.

5 CRR-NY 160.5 Evaluation criteria {#sec-5-crr-ny-160.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 160.5}

The commissioner shall evaluate all linked deposit applications based upon the following:

(a) the eligibility of the borrower for the program;

(b) the eligibility of the project for which the loan has been sought for the program;

(c) the significance of the eligible project for improving the competitive position and profitability of the eligible business;

(d) the importance of a reduced cost of borrowing through a linked loan to the ability of the eligible business to undertake the eligible project; and

(e) the number of jobs likely to be created or retained, or other substantial economic benefits likely to be achieved as a result of the eligible project.

5 CRR-NY 160.6 Liability; early repayment; withdrawal; sale or assignment {#sec-5-crr-ny-160.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 160.6}

(a) No liability shall be imposed on the State or any of its departments or employees for payment or delays in payment of the principal of or interest on a linked loan.

(b) Any delay in payment or default on a linked loan shall in no way affect the linked deposit agreement between the lender and the authorized depositor.

(c) In the event the interest rate of the linked loan is increased as a consequence of default on or renegotiation of the linked loan or the linked loan is charged off, the lender shall give the authorized depositor prompt notice of such event, and the authorized depositor shall thereafter withdraw, without penalty for early withdrawal, the linked deposit on not less than seven days prior written notice to the lender.

(d) Upon prepayment of all or part of a linked loan, the lender shall within 30 days give the authorized depositor notice of such payment, and the authorized depositor shall thereafter withdraw, without penalty for early withdrawal, all or a pro rata part, as the case may be, of the linked deposit upon not less than seven days' prior written notice to the lender. In such event, the interest rate payable on the linked deposit or the portion thereof being withdrawn, from the date of prepayment of the linked loan to the date of withdrawal shall be the interest rate upon which the linked deposit interest rate was calculated without regard to the applicable basis point reduction.

(e) Upon sale or assignment of all or part of a linked loan, the lender shall within 30 days give the authorized depositor notice of such sale or assignment, and the authorized depositor shall thereafter withdraw, without penalty for early withdrawal, all or pro rata part, as the case may be, of the linked deposit upon not less than seven days prior written notice to the lender. In such event, the interest rate payable on the linked deposit or the portion thereof being withdrawn, from the date of sale or of assignment of the linked loan to the date of withdrawal shall be the interest rate upon which the linked deposit interest rate was calculated without regard to the applicable basis point reduction.

5 CRR-NY 160.7 Monitoring {#sec-5-crr-ny-160.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 160.7}

The commissioner shall monitor the program activities of lenders and businesses that participate in the program. The commissioner may require periodic reports or request other information from participating lenders and businesses relating to the status of linked loans and projects financed by such loans.

5 CRR-NY 160.8 Renewal of linked deposit {#sec-5-crr-ny-160.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 160.8}

A lender may, on behalf of a borrower, apply to the commissioner to request a renewal of the linked deposit for an additional four-year period to correspond with a second four-year period of a borrower’s linked loan. The commissioner may grant such application if the commissioner determines that the borrower, during the second four-year period of the linked loan, will create additional industrial modernization benefits or additional export trade benefits or additional jobs. If the commissioner grants such application, the commissioner shall notify the authorized depositor who made the linked deposit that the commissioner has determined that the application satisfies the requirements of this Part and shall request the authorized depositor to continue the linked deposit with the lender for an additional four-year period in accordance with section 98-a of the State Finance Law and with the authorized depositor’s established procedures. Such linked deposit shall continue to be secured in accordance with the provisions of section 105 of the State Finance Law. The fixed interest rate on the continued linked deposit shall be the linked deposit interest rate in effect on the first day of the continuation of the linked deposit. The authorized depositor and the lender shall enter into a written deposit agreement governing the continuation of the linked deposit. The interest rate payable on the linked loan for the second four year period shall be, in the case of a certified business in an Empire Zone or an eligible business located in an highly distressed area or a minority or women-owned business enterprise, three percentage points below the interest rate the lender would have charged for the loan in effect on the first day of the continuation of the linked deposit; or in the case of a business not located in an Empire Zone or highly distressed area or which is not a minority or women-owned business enterprise, two percentage points below the interest rate the lender would have charged for the loan in the absence of a linked deposit in effect on the first day of the continuation of the linked deposit.

Chapter XVII EMPIRE STATE FILM PRODUCTION TAX CREDIT PROGRAM

Part 170 EMPIRE STATE FILM PRODUCTION TAX CREDIT PROGRAM

5 CRR-NY 170.1 Purpose and general description {#sec-5-crr-ny-170.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.1}

(a) The purpose of these regulations is to set forth the application process for the Empire State Film Production Tax Credit Program established by chapter 60 of the Laws of 2004 and amended by chapter 57 of the Laws of 2009 and 2010, chapter 268 of the Laws of 2012, and chapter 59 of the Laws of 2013. Pursuant to chapter 60 of the Laws of 2004, the Department of Economic Development has been granted the authority to promulgate regulations to establish procedures for the allocation of such credits, including, but not limited to, the application process, standards for application evaluations, and any other provisions deemed necessary and appropriate. The Department of Economic Development shall administer the program, including the issuance of tax credit certificates.

(b) A taxpayer that is a qualified film production company or that is a sole proprietor of or a member of a partnership that is a qualified film production company and which is subject to tax under articles nine-A or twenty-two of this chapter shall be allowed a credit against such tax, pursuant to the provisions referenced in section 24(c) of the Tax Law, to be computed as hereinafter provided.

5 CRR-NY 170.2 Definitions {#sec-5-crr-ny-170.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.2}

As used in this regulation, the following terms shall have the following meanings:

(a) Authorized applicant means a qualified film production company that is scheduled to begin principal and ongoing photography on a qualified film after submitting a complete initial application to the department and intends to shoot a portion of principal and ongoing photography on a stage at a qualified film production facility on a set or sets.

(b) Allocation year means the particular tax year for which tax credits allocated pursuant to section 24(e) of the Tax Law, which year shall be determined based upon receipt of a complete final application.

(c) Certificate of conditional eligibility means a notification by the department to the authorized applicant indicating that the applicant appears to meet the criteria set forth in section 170.6(a) of this Part and is being considered for the Empire State film production tax credit, pending successful completion and approval of the final application. Such notification may include, but not be limited to, the following information: name and address of the authorized applicant, taxpayer identification number, a statement that the initial application meets the criteria for conditional eligibility under section 170.6(a)(1)-(12) of this Part and a disclaimer stating that actual receipt of the tax credit is subject to completion and approval of the final application.

(d) Certificate of tax credit means a certificate issued by the department which states the amount of the Empire State film production tax credit that the approved applicant has qualified for, based on the department’s analysis under section 24 of the Tax Law and the provisions of this Part. Such certificate may include, but not be limited to, the following information: name and address of the approved applicant, name of the qualified film the credit applies to, the amount of the tax credit to be received by the approved applicant, allocation year of the tax credit earned, a disclaimer stating that the tax credit shall not be claimed before the later of either the taxable year the production of the qualified film is complete or the taxable year immediately following the allocation year for which the film has been allocated credit, and a disclaimer stating that actual receipt of the tax credit is subject to the statutory maximum amount of credits that are allocated for the program.

(e) Complete application means that all required information is provided in the form and manner prescribed by the department.

(f) Completion of a qualified film means that the process of post production of a qualified film has been finished and a cut negative, video master or other final locked form of the qualified film is ready for the striking of prints or electronic copies, and/or ready for broadcast or delivery to a distributor. All activities and expenses related to marketing and distribution, including, but not limited to, the making of release prints, video dupes or other forms of copies, promotional images, and poster art are considered to occur after the production of a qualified film is completed.

(g) Commissioner means the Commissioner of the New York State Department of Economic Development.

(h) Department means the New York State Department of Economic Development.

(i) End credit requirements means those acknowledgements that a qualified film production company or qualified independent film production company, which has applied for credit under the provisions of this section, agrees to include in each qualified film as a condition for the granting of the credit. Each qualified film shall include either:

(1) in the end credits, the phrase “filmed with the support of the New York State Governor’s Office of Motion Picture and Television Development” and a logo provided by the Governor’s Office of Motion Picture and Television Development; or

(2) for each qualified film distributed by DVD, or other media for the secondary market, a New York promotional video approved by the Governor’s Office of Motion Picture and Television Development.

(j) Feature-length film means a production intended for commercial distribution to a motion picture theater or directly to the consumer viewing market that has a running time of at least 75 minutes in length.

(k) Film production facility means a building and/or complex of buildings and their improvements and associated back-lot facilities in which films are or are intended to be regularly produced and which contain at least one sound stage; provided, however, that an armory owned by the State or City of New York located in the City of New York shall not be considered to be a “film production facility” unless such facility is used by a level one qualified production or it meets the criteria contained in the definition of a qualified film production facility in subdivision (z) of this section. Specifically, an armory located in the City of New York used by a level two qualified production must be certified by the Department.

(l) Final application means information concerning actual expenditures regarding a qualified film that could make it eligible for the Empire State film production tax credit under section 24 of the Tax Law and the provisions of this Part provided in a form and manner as prescribed by the department and submitted by an applicant after it has completed production of a qualified film. Such application may include, but not be limited to: actual data with regard to the qualified film’s total budget, the total production costs at film production facilities in and outside of New York, the total number of shooting days in and outside of New York and any other information the department determines is necessary.

(m) Initial application means information concerning projected expenditures regarding a qualified film that could make it eligible for the Empire State film production tax credit under section 24 of the Tax Law and the provisions of this Part provided in a form and manner as prescribed by the department and submitted by an authorized applicant. Such application may include, but is not limited to, the following information: the estimated total budget for the qualified film, estimates of expenditures at a qualifying production facility, estimates of shooting days and expenditures in New York State and outside of New York State and any other information the Department determines is necessary.

(n) Level one qualified production means a qualified production that has a maximum production budget of $15 million and is being produced by a qualified independent production company in which no more than five percent of the beneficial ownership is owned directly or indirectly by a publicly traded entity.

(o) Level two qualified production means a qualified production that has a production budget over $15 million, or which is being produced by a qualified film production company in which more than five percent of the beneficial ownership is owned, directly or indirectly, by a publicly traded entity.

(p) Pre-production means the process of preparation for actual physical production which begins after a qualified film has received a firm agreement of financial commitment with, for example, the establishment of a dedicated production office, the hiring of key crew members such as a unit production manager and location manager, and includes, but is not limited to, activities such as location scouting, hiring of crew, and execution of contracts with vendors of equipment and stage space.

(q) Principally engaged in the production of a qualified film and controls the qualified film during production means that the legal entity is responsible for payment of the direct production expenses (including pre- and post-production) and is a signatory to the qualified film’s contracts with its payroll company and facility operators.

(r) Post-production means the final stage in a qualified film’s production after principal and ongoing photography is completed, including, but not limited to, editing, Foley recording, automatic dialogue replacement, sound editing, special effects, scoring and music editing, beginning and end credits, negative cutting, soundtrack production, the addition of sound/visual effects, and dubbing. Advertising and marketing activities and expenses are not included in post-production.

(s) Premature application means an initial application in which the department reasonably determines that the applicant cannot commence principal and ongoing photography within 180 days of the date the initial application was submitted. Such determination shall be based on, among other things, completeness of the applicant’s answers on the initial application and lack of documentation supporting an applicant’s initial application.

(t) Principal and ongoing photography means the filming of the major and significant portions of a qualified film that involves the principal actors/actresses.

(u) Production costs means any costs for tangible property used and services performed directly and predominantly in the production (including pre-production and post-production) of a qualified film. Production costs shall not include:

(1) costs for a story, script or scenario to be used for a qualified film;

(2) licensing or rights associated with the production of a qualified film; or

(3) wages or salaries or other compensation for writers, directors, including music directors, producers, including, but not limited to, line producers, performers (other than background actors with no scripted lines) and qualified certified public accountants.

Production costs generally include technical and crew production costs, such as expenditures for film production facilities, or any part thereof, props, makeup, wardrobe, film processing, camera, sound recording, set construction, lighting, shooting, editing and meals.

(v) Program means the Empire State film production tax credit program.

(w) Qualified certified public accountant means a New York State certified public accountant approved by the department to conduct a third party verification.

(x) Qualified film means a feature-length film, television film, relocated television production, television pilot and/or each episode of a television series, regardless of the medium by means of which the film, pilot or episode is created or conveyed. Qualified film shall not include:

(1) a documentary film, news or current affairs program, interview or talk program (unless such talk program meets the requirements of subdivision (ac) of this section, how-to (i.e., instructional) film or program, film or program consisting primarily of stock footage, sporting event or sporting program, game show, award ceremony, film or program intended primarily for industrial, corporate or institutional end-users, fund-raising film or program, daytime drama (i.e., daytime soap opera), commercials, music videos or “reality” program; or

(2) a production for which records are required under section 2257 of title 18, United States Code, to be maintained with respect to any performer in such production (reporting of books, films, etc. with respect to sexually explicit conduct); or

(3) a compilation of short films or webisodes aggregated to meet either the definition of television film or television series under these regulations. title 18, United States Code, is available for public inspection and copying at the following address: New York State Department of Economic Development, 625 Broadway, 8th Floor, Albany, NY 12245.

(y) Qualified film production company means a corporation, partnership, limited partnership, or other entity or individual which or who is principally engaged in the production of a qualified film and controls the qualified film during production.

(z) Qualified film production facility means a film production facility in New York State, which contains at least one sound stage having a minimum of 7,000 square feet of contiguous production space; provided, however, that except with respect to a qualified film production facility being used by a qualified independent film production company:

(1) a film production facility in the City of New York must contain at least one sound stage having a minimum of 7,000 square feet of contiguous production space that is sound proof with a Noise Criteria of 30 or better, has sufficient heating and air conditioning for shooting without the need for supplemental units, incorporates a permanent grid and sufficient built-in electric service for shooting without the need for generators, and is column-free with a clear height of at least 16 feet under the permanent grid; and

(2) an armory owned by the State or City of New York located in the City of New York that does not satisfy the criteria of paragraph (1) of this subdivision shall be treated as a qualified film production facility upon certification by the department of a petition submitted to the department by a qualified film production company establishing that no qualified film production facility is available in the City of New York that has stage space available for shooting such company’s film. Such petition shall be submitted no later than 90 days prior to the start of principal photography for the qualified film and the department shall have 10 days to certify or reject the petition. A stage will be deemed unavailable if consideration has been paid for its use or such stage is currently under an agreement with an option for use and, in either circumstance, such period of use includes the petitioner’s estimated start date of principal photography.

(aa) Qualified independent film production company means a corporation, partnership, limited partnership, or other entity or individual, that or who:

(1) is principally engaged in the production of a qualified film with a maximum budget of $15 million; and

(2) controls the qualified film during production; and

(3) either is not a publicly traded entity, or no more than five percent of the beneficial ownership of which is owned, directly or indirectly, by a publicly traded entity.

(ab) Qualified production costs means production costs only to the extent such costs are attributable to the use of tangible property or the performance of services within New York State directly and predominantly in the production (including pre-production and post-production) of a qualified film. For the purpose of this definition, attributable to the use of tangible property or the performance of services within New York State shall only include costs and their pro rata portions which are incurred directly in New York State.

(ac) Relocated television production shall mean, notwithstanding the limitations in subparagraph (i) of paragraph three of subdivision (a) of section 31 of the Tax Law, a television production that is a talk or variety program that filmed at least five seasons outside the State prior to its first relocated season in New York, the episodes are filmed before a studio audience of 200 or more, and the relocated television production incurs at least $30 million in annual production costs in the State, or at least $10 million in capital expenditures at a qualified film production facility in the State.

(ad) Sound stage means a large interior room or space which provides a controlled environment in which filming takes place on sets built or assembled specifically for the production.

(ae) Television film means a production that has a running time of at least 90 minutes in length (inclusive of commercial advertisement and interstitial programming, if any) regardless of the medium or mode of its distribution.

(af) Television pilot means the initial episode produced for a proposed television series. This category will include shorter formats which are known as television presentation, a production of at least 15 minutes in length, produced for the purpose of selling a proposed television series, but not intended for broadcast.

(ag) Television series means a regularly occurring production intended to run in its initial broadcast, regardless of the medium or mode of its distribution, in a series of narrative and/or thematically related episodes, each of which has a running time of at least 30 minutes in length (inclusive of commercial advertisement and interstitial programming, if any).

(ah) Third party verification means a review conducted by a qualified certified public accountant of an applicant’s final application using agreed upon procedures as prescribed by the department to verify that all criteria pursuant to section 170.6(b) of this Part have been met. Such agreed upon procedures shall be posted online.

5 CRR-NY 170.3 Eligibility {#sec-5-crr-ny-170.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.3}

For the purposes of this Part, only an authorized applicant shall be eligible to apply for the Empire State film production tax credit.

5 CRR-NY 170.4 Application process {#sec-5-crr-ny-170.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.4}

(a) Initial application.

(1) An authorized applicant shall submit an initial application to the department prior to the start of principal photography.

(2) After submission of the initial application, the department may, in its sole discretion, require the authorized applicant to have an interview with the department to discuss the details of the initial application. A producer, the line producer or unit production manager, and production accountant or their designee, approved by the department, shall attend such meeting.

(3) The department shall review the initial application and determine whether the applicant meets the eligibility criteria set forth in section 170.6(a) of this Part.

(4) After review of the initial application, the department will notify the authorized applicant of its eligibility and may issue a certificate of conditional eligibility to the authorized applicant.

(b) Final application.

Upon receipt of the final application, the department may request additional documentation, including copies of receipts of qualified production costs, to help determine if the production is a qualified film and qualifies for the Empire State film production tax credit. The department shall approve or disapprove the final application based upon criteria set forth in section 170.6(b)(1)-(9) of this Part. If the final application is approved, the department shall issue a certificate of tax credit to the approved applicant. The department shall provide a copy of such certificate of tax credit to the Department of Taxation and Finance. If the final application is disapproved, the department shall provide the applicant with a notice of disapproval which shall state the reasons therefor. Such disapproval shall be a rejection of the applicant’s final application. A disapproved applicant may appeal such decision pursuant to section 170.8 of this Part or reapply pursuant to the provisions of this Part.

5 CRR-NY 170.5 Allocation of Empire State film production tax credit {#sec-5-crr-ny-170.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.5}

The amount of the credits given for each calendar year shall be allocated in order of priority based upon receipt of a complete final application. In the event that an approved applicant’s Empire State film production tax credit would exceed the maximum amount of credits allowed for that given year, the approved applicant’s credit will be allocated on a priority basis in the immediately succeeding calendar year.

5 CRR-NY 170.6 Criteria for evaluation of applications {#sec-5-crr-ny-170.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.6}

(a) Initial application.

An initial application shall be reviewed by the department to determine, in its discretion, that all of the following criteria are met:

(1) the application is complete;

(2) the application is not premature;

(3) the authorized applicant is a qualified film production company or a sole proprietor of a qualified film production company;

(4) the authorized applicant intends to shoot a portion of principal and ongoing photography on a stage at a qualified film production facility on a set or sets;

(5) the authorized applicant is planning to produce a qualified film;

(6) the authorized applicant’s projected qualified production costs (excluding post-production credits) paid or incurred which are attributable to the use of tangible property or the performance of services at a qualified film production facility in the production of a qualified film is likely to equal or exceed 75 percent of the projected production costs (excluding post production costs) paid or incurred which are attributable to the use of tangible property or the performance of services at any film production facility within and without the State in the production of the qualified film;

(7) if the qualified film being produced is a level two qualified production (other than a pilot), then the applicant intends to shoot at least 10 percent of its principal photography days at a qualified film production facility;

(8) if the qualified film being produced is a television pilot and is a level two qualified production, the applicant intends to shoot at least one full day of principal photography at a qualified film production facility;

(9) the authorized applicant did not knowingly submit false or misleading information to the department;

(10) the authorized applicant certifies that it will purchase taxable tangible property and services, defined as qualified production costs, only from companies registered to collect and remit New York State and local sales and use taxes;

(11) the authorized applicant intends to comply with the end credit requirements set forth in section 170.2(i) of this Part;

(12) if the applicant is seeking credit on any costs incurred in New York outside a qualified film production facility, and the projected qualified production costs (excluding post-production costs) paid or incurred which are attributable to the use of tangible property or the performance of services at a qualified film production facility in the production of a qualified film are less than $3 million, then the shooting days spent in New York outside of a film production facility in the production of the qualified film are projected to equal or exceed 75 percent of the total shooting days spent within and without New York outside of a film production facility in the production of such qualified film.

(b) Final application.

A final application shall not be approved by the commissioner unless the commissioner determines, in his or her discretion, that the following criteria are met:

(1) the application is complete;

(2) the applicant shot a portion of principal and ongoing photography on a stage at a qualified film production facility on a set or sets;

(3) if the qualified film produced was a level two qualified production (other than a pilot), then the applicant shot at least 10 percent of its principal photography days at a qualified film production facility;

(4) if the qualified film that was produced was a television pilot and was a level two production, then the applicant shot at least one full day of principal photography at a qualified film production facility;

(5) a qualified film was produced and completed;

(6) the applicant’s actual qualified production costs paid or incurred (excluding post-production costs) which are attributable to the use of tangible property or the performance of services at a qualified film production facility in the production of the qualified film equaled or exceeded 75 percent of the production costs (excluding post production costs) paid or incurred which are attributable to the use of tangible property or the performance of services at any film production facility within and without the State in the production of the qualified film;

(7) the authorized applicant did not knowingly submit false or misleading information to the department;

(8) in the event that the actual qualified production costs (excluding post-production costs) paid or incurred which are attributable to the use of tangible property or the performance of services at a qualified film production facility in the production of a qualified film are less than $3 million, then the shooting days spent in New York outside of a film production facility in the production of a qualified film equaled or exceeded 75 percent of the total shooting days spent within and without New York outside of a film production facility in the production of such qualified film. If the shooting days spent in New York equaled or exceeded the 75 percent threshold, the department shall include in its calculation of the Empire State film production tax credit the portion of qualified production costs attributable to the use of tangible property or the performance of services in the production of a qualified film outside of a qualified film production facility; and

(9) the applicant has supplied documentation (e.g. still shot, frame grab, finished DVD or other documentation such as the department may require) that the end credit requirements set forth in section 170.2(i) of this Part have been met.

5 CRR-NY 170.7 Third party verifications {#sec-5-crr-ny-170.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.7}

The department may accept from an applicant a third party verification as part of an applicant’s final application. Submission of a third party verification shall be voluntary and shall be subject to review and approval by the department pursuant to section 170.6(b) of this Part. The voluntary submission of a third party verification by an approved applicant as part of its final application shall in no way or manner affect the review and approval by the department of a final application submitted by an approved applicant that elects not to submit a third party verification. Such final application shall be subject to review and approval by the department pursuant to section 170.6(b) of this Part.

5 CRR-NY 170.8 Record retention {#sec-5-crr-ny-170.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.8}

All authorized and approved applicants must maintain records, in paper or electronic form, of any qualified productions costs used to calculate their potential or actual benefit(s) under this program for a minimum of three years from the date the applicant claims the tax credit. The department shall have the right to request such records upon reasonable notice.

5 CRR-NY 170.9 Appeal process {#sec-5-crr-ny-170.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.9}

If the applicant’s final application is disapproved by the department, or if the approved applicant disagrees with the amount of the tax credit granted by the department, the applicant shall have a right to appeal. In the case of an appeal from a disapproval of a final application, such appeal shall be made by sending a letter to the New York State Department of Economic Development, Attn: Counsel’s Office, 625 Broadway, 8th Floor, Albany, NY 12245, within 30 days from the date of the denial letter issued by the department. In the case of an appeal from a disagreement of the amount of the tax credit issued, such appeal shall be made by sending a letter to the same address as listed above within 30 days from the date of issuance of the certificate of tax credit. Failure to request an appeal within 30 days will be deemed a waiver of applicant’s right to appeal.

Upon receipt of a timely letter of appeal, an independent hearing officer will be appointed by the commissioner to handle the appeal. The independent hearing officer shall make a report on the appeal to the commissioner. The commissioner or his or her designee shall issue a final order within 60 days of the report. A copy of the final order will be issued to the appellant within 10 days after the date the commissioner or his or her designee renders the final order.

5 CRR-NY 170.10 Exchange of information with Department of Taxation and Finance {#sec-5-crr-ny-170.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.10}

Notwithstanding any provision of this chapter, employees and officers of the department and the Department of Taxation and Finance shall be allowed and are directed to share and exchange information regarding the credits applied for, allowed, or claimed pursuant to this Part and taxpayers who are applying for credits or who are claiming credits, including information contained in or derived from credit claim forms submitted to the department and applications for credit submitted to the department.

5 CRR-NY 170.11 Quarterly report {#sec-5-crr-ny-170.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.11}

The department shall file a report on a quarterly basis with the director of the Division of the Budget and the chairmen of the Assembly Ways and Means Committee and Senate Finance Committee. The report shall be filed within 15 days after the close of the calendar quarter. The report must contain the following information for the calendar quarter:

(a) the total dollar amount of certificates of tax credits issued during each month of the calendar quarter, broken down by month;

(b) the number of film projects which have been issued certificates of tax credits of less than $1 million per project and the total dollar amount of credits issued to those projects;

(c) the number of film projects which have been issued certificates of tax credits of $1 million or more but less than $5 million per project and the total dollar amount of credits issued to those projects;

(d) the number of film projects which have been issued certificates of tax credits of $5 million or more per project and the total dollar amount of credits issued to those projects;

(e) a list of each film project which has been issued a certificate of tax credit and for each of those projects:

(1) the number of employees associated with the project;

(2) the qualified costs for the project;

(3) the total expenditures on goods and services in New York State for the project;

(4) the credit-eligible man hours for each project; and

(5) the total wages for such credit-eligible man hours for each project;

(f)

(1) the name of each taxpayer issued a certificate of tax credit for each project and the county of residence or incorporation of such taxpayer; or if the taxpayer does not reside or is not incorporated in New York, then the state of residence or incorporation; provided, however, if the taxpayer claims a tax credit because the taxpayer is a member of a limited liability company, a partner in a partnership, or a shareholder in a subchapter S corporation, the name of each limited liability company, partnership, or subchapter S corporation earning any of those tax credits must be included in the report instead of information about the taxpayer claiming the tax credit;

(2) the amount of the tax credit issued to each taxpayer; provided, however, if the taxpayer claims a tax credit because the taxpayer is a member of a limited liability company, a partner in a partnership or a shareholder in a subchapter S corporation, the amount of tax credit earned by each entity must be included in the report instead of information about the taxpayer claiming the tax credit; and

(3) information identifying the project associated with each taxpayer for which a tax credit was claimed under section 24 or section 31, as added by chapter 57 of the Laws of 2010, of the Tax Law, including the name of the film and county in which the project is located.

5 CRR-NY 170.12 Biennial report {#sec-5-crr-ny-170.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 170.12}

The department shall file a report on a biennial basis with the director of the Division of the Budget and the chairs of the Assembly Ways and Means Committee and Senate Finance Committee. The report shall be filed within 15 days after the close of the calendar year. The first report shall cover a two year period that begins on January 1, 2013. The report must be prepared by an independent third party auditor and include:

(a) information regarding the Empire State film production credit and post production credit programs including the efficiency of operations, reliability of financial reporting, compliance with laws and regulations, and distribution of assets and funds;

(b) an economic impact study prepared by an independent third party of the film credit programs; and

(c) any other information and/or other statistical information that the commissioner deems to be useful in analyzing the effects of the program.

Part 171 EMPIRE STATE ENTERTAINMENT DIVERSITY JOB TRAINING DEVELOPMENT FUND

5 CRR-NY 171.1 Purpose and general description {#sec-5-crr-ny-171.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.1}

Chapter 39 of the Laws of 2019 created the empire state entertainment diversity job training development fund. Monies in the fund shall be expended for job creation and training programs approved by the commissioner of economic development that support efforts to recruit, hire, promote, retain, develop and train a diverse and inclusive workforce as production company employees in the motion picture and television industry within the State of New York including, but not limited to, those programs that promote development in economically distressed areas of the State.

5 CRR-NY 171.2 Definitions {#sec-5-crr-ny-171.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.2}

For the purposes of this section, the terms below shall have the following meaning:

(a) Diverse workers shall include women and workers who can demonstrate membership in any one of the following groups:

(1) black persons having origins in any of the black African racial groups;

(2) Hispanic/Latino persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American of either Indian or Hispanic origin, regardless of race;

(3) Native American or Alaskan native persons having origins in any of the original peoples of North America; or

(4) Asian and Pacific Islander persons having origins in any of the Far East countries, South East Asia, the Indian subcontinent or the Pacific Islands.

(b) Economically distressed areas of the State shall mean locations within New York City that are characterized by a poverty rate greater than 20 percent or locations outside of New York City with a poverty rate greater than the statewide average poverty rate.

(c) Eligible applicant shall mean a not for profit organization or corporation, guild or labor union who applies for funding under this program.

(d) Eligible training program means a training program designed to recruit, hire, promote, retain, develop and train a diverse and inclusive workforce as production company employees in the motion picture and television industry within the State of New York including, but not limited to, programs that promote development in economically distressed areas of the State.

(e) Commissioner shall mean the Commissioner of the Department of Economic Development.

(f) Department shall mean the New York State Department of Economic Development.

(g) Evaluation criteria shall mean the criteria set forth in section 171.8 of this Part.

(h) Match, matching share, or matching funds shall mean that portion of the total cost of a program that the grantee must provide, pursuant to section 171.4(a) of this Part.

(i) Scoring committee shall mean a group of ESD employees and members of the motion picture and television industry who score applications pursuant to the criteria set forth in section 171.8 of this Part.

5 CRR-NY 171.3 Available assistance {#sec-5-crr-ny-171.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.3}

(a) The fund makes available financial assistance in the form of grants for job creation and training programs approved by the Commissioner of Economic Development that support efforts to recruit, hire, promote, retain, develop and train a diverse and inclusive workforce as production company employees in the motion picture and television production and post-production industries within the State of New York including, but not limited to, those programs that promote development in economically distressed areas of the State.

(b) The grant assistance provided in connection with this Part shall be taken from the Empire State Entertainment Diversity Job Training Development Fund pursuant to section 24(e) and 31(f) of the Tax Law.

5 CRR-NY 171.4 Eligibility/matching funds {#sec-5-crr-ny-171.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.4}

(a) Eligible applicants may apply for matching funds if they are operating an eligible training program. To qualify for a matching grant, the department requires a 2:1 matching requirement of dollars coming from an eligible applicant to support its program for training diverse workers or those located in economically distressed areas of the State. Funds eligible for matching are those contributed by the eligible applicant to be used only for the eligible program. Funds deriving from State or Federal grants are not eligible to be calculated for the 2:1 matching requirement.

(b) All matching funds must be expended during the grant term and where practicable on a pro rata basis with grant funding.

(c) All items identified as matching funds will be reviewed by the department, which will approve such matching funds as the department may determine, in its sole discretion, to be reasonable as to amount and relation to the program.

(d) Grant funds will be disbursed on a quarterly reimbursement basis. Grantees shall submit invoices quarterly with supporting documentation satisfactory to the department, as work is performed and costs incurred.

(e) Grants are intended to reimburse eligible applicants for training provided directly by such applicants to its workforce, or future workforce, and shall not be contracted out to a third party for the purpose of obtaining these grant funds.

(f) Grant funds and matching funds may not be utilized to cover qualified costs pursuant to section 24 or 31 of the Tax Law.

5 CRR-NY 171.5 Utilization of grant funds {#sec-5-crr-ny-171.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.5}

(a) Grant funds may be used by an eligible applicant for the following purposes:

(1) instructor salaries and equipment;

(2) training and certification programs designed to promote diverse workers and and/or those workers located in economically distressed areas of the State including, but not limited to:

(i) grip related training programs;

(ii) carpentry related training programs;

(iii) electrical related training programs;

(iv) editor related training programs;

(v) production assistant related training programs;

(vi) showrunner related training programs;

(vii) writer related training programs; and

(viii) other training programs as directed by the commissioner.

(b) Grant funds may not be used by an applicant for the following purposes:

(1) training programs for corporate (studio or production company) employees; and

(2) producer related training programs.

(c) The minimum grant amount for any eligible training program is $25,000. The maximum grant amount for any eligible training program is $500,000.

5 CRR-NY 171.6 Application process {#sec-5-crr-ny-171.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.6}

(a) Applications from eligible applicants will be accepted on a monthly basis, with a submission deadline of the 20th of the month (except if the deadline falls on a weekend, it shall be extended to the next business day). Eligible applicants requesting assistance shall provide information about the program and the applicant, as applicable, in a form provided by the department including, without limitation, the following:

(1) a description of the program, including information indicating how the proposed program will create jobs creation and training programs that support efforts to recruit, hire, promote, retain, develop and train a diverse and inclusive workforce as production company employees in the motion picture and television industry within the State of New York;

(2) the number and amount of other funding, including Federal, that the applicant has applied for, is eligible for or has received for the same initiative;

(3) the number of individuals being trained as a result of the proposed project or activity;

(4) applicant’s history; ownership structure; size; and services rendered;

(5) information about the proposed program including, but not limited to, total project cost, total program assistance requested, a budget breakdown of the sources and proposed uses of all funding, a description of the need for the requested program funding and justification for the amount requested;

(6) a description of how the program will be implemented, including the readiness of the project with a specific timeline, outlining the milestones from the project start to its completion;

(7) the region or regions that will be impacted by this project. Identify all of the regional partners that you will be working with to deliver on this project;

(8) the project partners, including the project leader and others involved in the implementation of or supporting the employment of individuals completing the project. Please be specific about the role of each partner and whether participation is assured; and

(9) anticipated program results.

(b) Upon receipt of the application, the department shall review the application for eligibility, completeness, and conformance with the applicable requirements of these guidelines. Questions regarding this process may be submitted to the department via email at [email protected].

(c) The department may issue a request for proposals for contracts for services in lieu of an application where it deems it appropriate. Such request for proposals will set forth eligibility guidelines which may differ from those contained herein.

5 CRR-NY 171.7 Evaluation of grant applications {#sec-5-crr-ny-171.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.7}

Grant applications shall be initially evaluated by a scoring committee. The scoring committee shall then forward their recommendation to the commissioner for his/her approval.

5 CRR-NY 171.8 Evaluation criteria {#sec-5-crr-ny-171.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.8}

(a) The scoring committee shall evaluate applications in accordance with the following criteria:

The ability of the program to:

(1) address a demonstrated need across the film and television production and post-production industries, specifically is there currently or is there an anticipated in the future need for additional workforce in this job function in these industries;

(2) create a pathway to jobs and connections with employment and/or union partnerships;

(3) further diversify the employment in the industry from a socio-economic, regional, and diversity perspective;

(4) target residents in economically distressed areas of the State;

(5) be completed in a timely fashion.

5 CRR-NY 171.9 Selection criteria/scoring {#sec-5-crr-ny-171.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.9}

(a) Applications will be evaluated on the criteria detailed in section 171.8(a) of this Part on a scale of one to five, where:

(1) “1” = does not meet qualification expectation;

(2) “2” = meets some but not all qualification expectations;

(3) “3” = meets qualification expectations;

(4) “4” = exceeds qualification expectations; and

(5) “5” = highly exceeds qualification expectations.

(b) Selection criteria will be weighted as follows:

| | | | --- | --- | | Criteria Category | Weight | | (1) Demonstrated need in the industry for additional hires in this program area. | 20 percent | | (2) Pathway to job placement and relationship with employers. | 20 percent | | (3) Targeting of diverse workers and/or workers from economically distressed. areas of the State | 20 percent | | (4) Overall budget, project’s return on investment for program participants and funding dollars. | 20 percent | | (5) Feasibility of implementation and timeline of project. | 10 percent | | (6) Uniqueness and competitiveness of proposed program. | 10 percent |

(c) The department intends to make grant awards through a competitive grant solicitation to qualifying applicants, until all grant funds are fully committed. The department reserves the right to update/amend the above selection criteria as needed.

5 CRR-NY 171.10 Reporting requirements {#sec-5-crr-ny-171.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 171.10}

(a) Participants shall submit quarterly reports during the pendency of the training program satisfactory to the department on the operation and accomplishments of the program including, without limitation, a description of the program undertaken, the number of participants in the training program, the number of hours both in classroom and on the job training and the number of trainees who went on to jobs in the motion picture and television industry.

(b) After completing their training program, participants must submit biannual reports to the department for a period of five years thereafter detailing the placement and job status of training graduates from their program.

Chapter XVIII EMPIRE STATE COMMERCIAL PRODUCTION CREDIT PROGRAM

Part 180 EMPIRE STATE COMMERCIAL PRODUCTION CREDIT PROGRAM

5 CRR-NY 180.1 Purpose and general description {#sec-5-crr-ny-180.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 180.1}

(a) The purpose of these regulations is to set forth the application process for the Empire State Commercial Production Credit Program established by chapter 62 of the Laws of 2006 as amended. Pursuant to chapter 62 of the Laws of 2006, the commissioner has been granted the authority to promulgate regulations to establish procedures for the allocation of such credits, including, but not limited to, the application process, standards for application evaluations, the documentation that will be provided to taxpayers to substantiate to the New York State Department of Taxation and Finance the amount of credits allocated to such taxpayers and any other provisions deemed necessary and appropriate. The department shall administer the program, including the issuance of tax credit certificates.

(b) An individual who has been issued a certificate of tax credit or is a partner in a partnership, member in a limited liability company, or a shareholder of an S corporation which has been issued a certificate of tax credit shall be allowed to claim an Empire State commercial production tax credit pursuant to section 28, section 210-B(23) and section 606(jj) of the Tax Law.

5 CRR-NY 180.2 Definitions {#sec-5-crr-ny-180.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 180.2}

As used in this regulation, the following terms shall have the following meanings:

(a) Advertisement means an openly and identifiably sponsored public promotion or announcement of goods, services, companies or ideas. For the purposes of this definition, advertisement shall not include music videos or "infomercials."

(b) Applicant means a qualified commercial production company or a sole proprietor of a qualified commercial production company which is subject to tax or the partners or members of which are subject to tax under article 9-A or 22 of the Tax Law.

(c) Application means a document created by the department and submitted by an applicant after it has completed a year of production of qualified commercials. Such application shall include, but not be limited to: actual data with regard to each individual qualified commercial's total budget, the actual costs incurred within the metropolitan commuter transportation district and the actual costs incurred outside such district and any other information the department determines is necessary to properly evaluate the application.

(d) Certificate of tax credit means a certificate issued by the department which states the amount of the Empire State commercial production credit that the applicant has qualified for, based on the department's analysis under section 28 of the Tax Law and the provisions of this Part. Such certificate shall include, but not be limited to, the following information: name and address of the applicant, the amount of the tax credit to be received by the applicant and a designation of which component program the money has been allotted from pursuant to section 28(a)(i) or (ii) of the Tax Law.

(e) Component program means one of the two tax credit programs (the downstate credit or the upstate credit) established pursuant to section 28(a)(2)(i) and (ii) of the Tax Law and section 180.5 of this Part.

(f) Commissioner means the commissioner of the department.

(g) Downstate program means the tax credit component program established in section 28(a)(2)(i) of the Tax Law which applies to eligible production companies who film or record qualified commercials within the metropolitan commuter transportation district.

(h) Metropolitan commuter transportation district means the area of New York State defined in section 1262 of the Public Authorities Law.

(i) Department means the New York State Department of Economic Development.

(j) Post-production costs means any includes costs associated with the production of original content for a qualified commercial employing techniques traditionally used in post-production for visual effects, graphic design, animation and musical composition including, but not limited to, editing, sound editing, special effects, graphics, and color timing costs. Post-production costs shall not include:

(1) the editing of previously produced content for a qualified commercial or payments not made directly by a qualified commercial production company.

(k) Production costs means any costs for tangible property used and services performed directly and predominantly in the production (including pre-production and post-production) of a qualified commercial. Production costs shall not include:

(1) costs for a story, script or scenario to be used for a qualified commercial; and

(2) wages or salaries or other compensation for writers, directors, including music directors, producers and performers (other than background actors with no scripted lines who are employed by a qualified company and musicians).

Production costs generally include technical and crew production costs, such as expenditures for commercial production facilities and/or locations costs, or any part thereof, film, audiotape, videotape or digital medium, props, makeup, wardrobe, commercial processing, camera, sound recording, set construction, lighting, shooting, editing and meals.

(l) Qualified commercial means an advertisement of any length that is recorded on film, audiotape, videotape or digital medium in New York for multi-market distribution by way of radio, television networks, cable, satellite, motion picture theaters or internet. Qualified commercial shall not include:

(1) news or current affairs program, interview or talk program, network promos i.e., commercials promoting television series or movies, "how-to" (i.e., instructional) commercial or program, commercial or program consisting entirely of stock footage, trailers promoting theatrical films, sporting event or sporting program, game show, award ceremony, daytime drama (i.e., daytime "soap opera") or "reality" program;

(2) a production involving sexually explicit conduct subject to the recordkeeping requirements of section 2257 of title 18 of the United States Code.

For the purpose of this definition the term qualified commercial shall include a package of commercials which includes two or more commercials which are bid and produced under a single agency/client contract in which a specified number of deliverables are produced together within a defined timeframe by a qualified commercial production company.

(m) Qualified commercial production company means a corporation, partnership, limited partnership or other entity or individual which or who:

(1) is responsible for the direct payment of production expenses and is a signatory to the qualified commercial’s contracts with its payroll company and facility operators; and

(2) is not the distributor, or the contracting entity for production of such commercial, nor is a variable interest entity of such distributor or contracting entity.

(n) Qualified production costs means production costs only to the extent such costs are attributable to the use of tangible property or the performance of services within New York State directly and predominantly in the production (including pre-production and post-production) of a qualified commercial. For the purpose of this definition, "attributable to the use of tangible property or the performance of services within New York State" shall include only pro rata portions of costs which are incurred directly in New York State.

(o) Upstate program means the tax credit component program established in section 28(a)(2)(ii) of the Tax Law which applies to eligible production companies who film or record qualified commercials outside the metropolitan commuter transportation district but within the State of New York.

5 CRR-NY 180.3 Application process {#sec-5-crr-ny-180.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 180.3}

(a) Applications must be received by the department between the first day of business in January of the year succeeding the year in which the commercial work was performed and April 1st of such year.

(b) An applicant shall submit an application to the department which shall contain qualified commercial work produced in a calendar year.

(c) An applicant may request and shall receive a preliminary interview with the department to discuss the details of the application before the application is submitted. Such interview should occur within 90 days after the completion of the first commercial for which the applicant seeks a tax credit.

(d) The department shall approve or disapprove the application based upon criteria set forth in section 180.4 of this Part.

(e) The department may request additional documentation, including copies of receipts of payment for qualified production costs, to help determine if the production is a qualified commercial and qualifies for the Empire State commercial production credit. If the application is approved, the department shall issue a certificate of tax credit to the applicant. The department shall provide a copy of such certificate of tax credit to the Department of Taxation and Finance. If the application is disapproved, the department shall provide the applicant with a notice of disapproval which shall state the reasons therefor. Such disapproval shall be a rejection of the applicant's application. A disapproved applicant may appeal such disapproval pursuant to the provisions of this Part.

5 CRR-NY 180.4 Criteria for evaluation of applications {#sec-5-crr-ny-180.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 180.4}

(a) In the event that any of the following criteria are not met, the department shall disapprove the application. The department shall determine whether:

(1) the application is substantially complete; for the purpose of this section an application must reflect all the applicant's qualified commercial work done within the calendar year for which the applicant is applying, and an applicant may not add additional commercial work to his or her application after it has been submitted to the department;

(2) the applicant is a qualified commercial production company or a sole proprietor of a qualified commercial production company which is subject to tax or the partners or members of which are subject to tax under article 9A or 22 of the Tax Law;

(3) at least 75 percent of the production costs (excluding post-production) paid or incurred directly or predominantly in the actual filming or recording of each qualified commercial must be qualified production costs;

(4) the qualified production costs listed on the application correspond to one or more of the department's two component programs as established by section 28(a)(2)(i) and (ii) of the Tax Law and meet their individual criteria established in section 180.5 of this Part; and

(5) the applicant did not knowingly submit false or misleading information to the department.

5 CRR-NY 180.5 Criteria for eligibility and calculation of credit component programs {#sec-5-crr-ny-180.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 180.5}

(a) Downstate Credit Program.

In order to be eligible for this credit, a qualified commercial production company must film or record qualified commercials within the metropolitan commuter transportation district. The amount of the credit shall be the product (or pro rata share of the product, in the case of a member of a partnership) of 20 percent of the qualified production costs paid or incurred in the production of a qualified commercial, provided that the qualified production costs paid or incurred are attributable to the use of tangible property or in the performance of services within the State in the production of such qualified commercial.

To be eligible for the credit, the total qualified production costs of a qualified production company in the aggregate incurred in the metropolitan commuter transportation district during the calendar year must be greater than $500,000 and such credit shall be applied only to qualified production costs exceeding such amount in the calendar year.

(b) Upstate Credit Program.

In order to be eligible for this credit, a qualified commercial must film or record qualified commercials outside the metropolitan commuter transportation district. The amount of the credit shall be the product (or pro rata share of the product, in the case of a member of a partnership) of 30 percent of the qualified production costs paid or incurred in the production of a qualified commercial, provided that the qualified production costs paid or incurred are attributable to the use of tangible property or the performance of services within the State in the production of such qualified commercial.

To be eligible for the credit, the total qualified production costs of a qualified production company in the aggregate incurred outside the metropolitan commuter transportation district but within the State of New York during the calendar year must be greater than $100,000. Such credit shall be applied to all qualified production costs in the calendar year.

5 CRR-NY 180.6 Treatment of commercials with dual expenses {#sec-5-crr-ny-180.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 180.6}

A qualified commercial may incur expenses in both the upstate and downstate component programs. In the event that this occurs, the department shall apply expenses incurred geographically in upstate to the upstate program and expenses incurred geographically downstate to the downstate program.

5 CRR-NY 180.7 Record retention {#sec-5-crr-ny-180.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 180.7}

All applicants must maintain records, in paper or electronic form, of any qualified productions costs used to calculate their potential or actual benefit(s) under this program for a minimum of three years from the date the applicant claims the tax credit on its New York State tax return. The department shall have the right to request such records upon reasonable notice.

5 CRR-NY 180.8 Appeal process {#sec-5-crr-ny-180.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 180.8}

If the applicant's application is disapproved by the department, or if the applicant disagrees with the amount of the tax credit granted by the department, the applicant shall have a right to appeal. In the case of an appeal from a disapproval of an application, such appeal shall be made by sending a letter to the New York State Department of Economic Development, Attn: Counsel's Office, 625 Broadway, Albany, NY 12245, within 30 days from the date of the denial letter issued by the department. In the case of an appeal from a disagreement of the amount of the tax credit issued, such appeal shall be made by sending a letter to the same address as listed above within 30 days from the date of issuance of the certificate of tax credit. Failure to request an appeal within 30 days will finalize the denial decision and/or the amount of the tax credit.

Upon receipt of a timely letter of appeal, an independent hearing officer will be appointed by the commissioner to handle the appeal. The independent hearing officer shall make a report on the appeal to the commissioner. The commissioner or his designee shall issue a final order within 60 days of the report. A copy of the final order will be issued to the appellant within 10 days after the date the commissioner or his designee renders the final order.

5 CRR-NY 180.9 Commissioner discretion during State emergency {#sec-5-crr-ny-180.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 180.9}

Notwithstanding the above regulations, with respect to applications in this program from businesses that have provided the commissioner information sufficient to determine that they have been negatively impacted by a State of Emergency, the commissioner, subject to approval by Division of Budget, shall have discretion to suspend or modify the provisions of these regulations or parts thereof as a result of such emergency to allow for the submission of 2019 applications to the program by September 1, 2020. Such discretion shall expire on September 1, 2020 or upon the actual expiration of the Governor’s Executive Order declaring such emergency, whichever is later.

Chapter XIX EXCELSIOR JOBS PROGRAM

Part 190 PURPOSE AND DEFINITIONS

5 CRR-NY 190.1 Purpose and general description {#sec-5-crr-ny-190.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 190.1}

(a) The purpose of these regulations is to set forth the administrative process governing the Excelsior Jobs Program (program) and specifically to establish an application process, standards for application evaluation and procedures for businesses claiming the tax credit under this program. Chapter 59 of the Laws of 2010 establishes the program and grants the Commissioner of the Department of Economic Development the authority to promulgate regulations to establish procedures for the allocation of the Excelsior Jobs Program credit, which consists of four components: the Excelsior Jobs Tax Credit Component, the Excelsior Investment Tax Credit Component, the Excelsior Research and Development Tax Credit Component, and the Excelsior Real Property Tax Credit Component.

5 CRR-NY 190.2 Definitions {#sec-5-crr-ny-190.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 190.2}

As used in this regulation, the following terms shall have the following meanings:

(a) Agriculture means both agricultural production (establishments performing the complete farm or ranch operation, such as farm owner-operators, tenant farm operators, and sharecroppers) and agricultural support (establishments that perform one or more activities associated with farm operation, such as soil preparation, planting, harvesting, and management, on a contract or fee basis).

(b) Applicant means a business enterprise that is operating in New York State or is planning to operate in the State.

(c) Application means the form that the department determines must be submitted by an applicant in order to be considered for acceptance into the program.

(d) Back office operations means a business function that may include one or more of the following activities: customer service, information technology and data processing, human resources, accounting and related administrative functions.

(e) Benefit-cost ratio means the following calculation: the numerator is the sum of:

(1) the value of all remuneration projected to be paid for all net new jobs during the period of participation in the program; and

(2) the value of capital investments to be made by the business enterprise during the period of anticipated participation in the program, and the denominator is the amount of total tax credits that may be issued pursuant to article 17 of the Economic Development Law.

(f) Business services, for the purposes of this regulation, shall only refer to the provision of professional services licensed by the State or by the courts of this State.

(g) Certificate of eligibility means the document issued by the department to an applicant that has completed an application to be admitted into the Excelsior Jobs Program and has been accepted into the program by the department. Possession of a certificate of eligibility does not by itself guarantee eligibility to claim the tax credit.

(h) Certificate of tax credit means the document issued to a participant by the department that entitles a participant to claim the tax credit pursuant to section 355 of the Economic Development Law. The certificate specifies the exact amount of each of the tax credit components and the taxable year in which such credit may be claimed. The certificate of tax credit shall be issued annually only after the department has verified that the participant has met all applicable eligibility criteria. The certificate may also include such information as the commissioner deems necessary.

(i) Commissioner means Commissioner of the Department of Economic Development.

(j) Department means the Department of Economic Development.

(k) Make products or develop technologies that are primarily aimed at reducing greenhousegas emissions or supporting the use of clean energy in accordance with goals described in chapter 106 of the Laws of 2019 means the creation of products or the development of proven technologies that are commercialized or ready to be commercialized and moved into market and are aimed at reducing greenhouse gas emissions or supporting the deployment or adoption of clean energy.

(l) Distribution center means a large scale facility involving processing, repackaging and/or movement of finished or semi-finished goods to retail locations or other end users across a multi-state area. Retail locations includes delivery of goods directly to consumers.

(m) Eligible real property taxes has the same meaning as in section 15(e) of the Tax Law, provided that the definition in subdivision (e) of this section shall be read as if it specifically referenced the Excelsior Jobs Program and participants in that program.

(n) Entertainment company means a corporation, partnership, limited partnership, or other entity principally engaged in the production or post production of:

(1) motion pictures, which shall include feature-length films and television films;

(2) instructional videos;

(3) televised commercial advertisements;

(4) animated films or cartoons;

(5) music videos;

(6) television programs, which shall include but not be limited to, television series, television pilots, and single television episodes; or

(7) programs primarily intended for radio broadcast.

Entertainment company shall not include:

(i) principally engaged in the live performance of events, including but not limited to, theatrical productions, concerts, circuses, and sporting events;

(ii) principally engaged in the production of content intended primarily for industrial, corporate or institutional end-users;

(iii) principally engaged in the production of fundraising films or programs; or

(iv) engaged in the production of content for which records are required under section 2257 of Title 18, United States Code, to be maintained with respect to any performer in such production.

(o) Financial services data centers or financial services customer back office operations means operations that manage the data or accounts of existing customers, or provide product or service information and support to customers of financial services companies, including banks, other lenders, securities and commodities brokers and dealers, investment banks, portfolio managers, trust offices, and insurance companies.

(p) Green project means a project deemed by the commissioner to make products ordevelop technologies that are primarily aimed at reducing greenhouse gas emissions or supporting the use of clean energy in accordance with goals described in chapter 106 of the Laws of 2019. Green project shall include, but not be limited to, the manufacture or development of products or technologies or supply chain components primarily for renewable energy systems as defined in section 66-p of the Public Service Law, vehicles that use non-hydrocarbon fuels and produce zero or near zero emissions, heat pumps, energy efficiency, clean energy storage and other products that significantly reduce greenhouse gas emissions by minimizing the utilization of depletable resources or by improving industrial efficiency. Green project shall not include a project primarily composed of:

(1) necessarily local activities such as retail, building construction, or the installation, deployment or adoption of a clean energy product ortechnologyatanend user's site; or

(2) the production of products or development of technologies that would produce only marginal and incremental energy savings or environmental benefits ancillary to the core function of the product or technology.

(q) High value-added products means durable goods requiring assembly by skilled technicians, automation, or other advanced technology.

(r) Improving industrial efficiency means achieving significant reductions in thegreenhouse gas emissions associated with an industrial process, through a variety of potential measures aimed at reducing onsite energy consumption and/or converting fuel sources to zero and low-emission fuels where the resulting product does not have a significant negative impact on State’s clean energy goals as set forth in chapter 106 of the Laws of 2019 and as determined by the department.

(s) Industry with significant potential for private sector growth and economic development in the State means any industry where it can be demonstrated that employment in the industry could grow to any of the following:

(1) 4,000 or more in a metropolitan statistical area or to one-half of one percent of the employed population in the metropolitan statistical area; or

(2) 500 or more in a labor market area, or to one percent of the employed population in the labor market area; or

(3) to a level that exceeds the percentage level that the industry employs on a national basis.

Such demonstrated potential shall be on the basis of one or more key attributes of the metropolitan statistical area or labor market area that a business enterprise in the industry would consider essential in any decision to locate or expand within such metropolitan statistical area or labor market area. For a business in an industry that meets the criteria indicated above to be eligible as an applicant to the program, the business enterprise must create at least 300 net new jobs and make significant capital investments of at least $30 million. Nothing in this section shall allow any business entity excluded under section 191.2(g) of this Title to become a participant in this program.

(t) Investment zone shall mean an area within the State that had been designated under section 958(a)(i) and (d) of the General Municipal Law that was wholly contained within up to four distinct and separate contiguous areas as of the date immediately preceding the date the designation of such area expired pursuant to section 969 of the General Municipal Law. Investment zones are the designated distinct and separate contiguous areas of the municipality that qualified for investment zone status as those areas existed on June 29, 2010.

(u) Life sciences means agricultural biotechnology, biogenerics, bioinformatics, biomedical engineering, biopharmaceuticals, academic medical centers, biotechnology, chemical synthesis, chemistry technology, medical diagnostics, genomics, medical image analysis, marine biology, medical devices, medical nanotechnology, natural product pharmaceuticals, proteomics, regenerative medicine, RNA interference, stem cell research, medical and neurological clinical trials, health robotics and veterinary science.

(v) Life sciences company means a business entity or an organization or institution that devotes the majority of its efforts in the various stages of research, development, technology transfer and commercialization related to any life sciences field.

(w) Manufacturing means the process of working raw materials into products suitable for use or which gives new shapes, new quality or new combinations to matter which has already gone through some artificial process by the use of machinery, tools, appliances, or other similar equipment. Manufacturing does not include an operation that involves only the assembly of components, provided, however, the assembly of motor vehicles or other high value-added products shall be considered manufacturing.

(x) Music production means the process of creating sound recordings of at least eight minutes, recorded in professional sound studios, intended for commercial release. Music production does not include recording of live concerts, or recordings that are primarily spoken word or wildlife or nature sounds, or produced for instructional use or advertising or promotional purposes.

(y) Net new jobs means jobs created in this State that:

(1) are new to the State;

(2) have not been transferred from employment with another business located in this State including from a related person in this State or through an acquisition, merger, consolidation, or other reorganization of businesses or the acquisition of assets of another business;

(3) are either full-time wage-paying jobs or equivalent to a full-time wage-paying job requiring at least 35 hours per week;

(4) are filled for more than six months; and

(5) are in excess of the applicant’s employment at the project location as of the date the applicant is admitted into the Excelsior Jobs Program, provided that applicant’s employment in New York State during each of their benefit years exceeds its employment base which shall be calculated as the average of the applicant’s employment in New York State for each of the four quarters immediately prior to the date set forth in the certificate of eligibility, or, if the applicant was not in business in New York State during all four quarters, the employment base shall be calculated as the average of the applicant’s employment in New York State for each of those quarters immediately prior to the date set forth in the certificate of eligibility in which the applicant was in business in New York State.

(z) New media means the application of information technology to traditional communications outlets, particularly through interactive modes such as the Internet, including video games, web search portals, interactive web-based content, and interactive advertising. New media also includes the post production process for film and television projects which involves the following activities: picture, sound and music editing; rerecording and mixing; visual effects, graphic design, original scoring, animation and musical composition.

(aa) Participant means a business entity that:

(1) has completed an application prescribed by the department to be admitted into the program;

(2) has been issued a certificate of eligibility by the department;

(3) has demonstrated that it meets the eligibility criteria in section 353 and section 354(2) of the Economic Development Law as further defined in sections 191.1 and 191.2 of this Title; and

(4) has been certified as a participant by the commissioner.

(ab) Preliminary schedule of benefits means the maximum aggregate amount of each component of the tax credit that a participant in the program is eligible to receive pursuant to this regulation. The preliminary schedule of benefits shall indicate the annual amount of each component of the credit a participant may claim in each of its 10 years of eligibility. The preliminary schedule of benefits shall be issued by the department when the department approves the application for admission into the program. The commissioner may amend that schedule, provided that the commissioner complies with the credit caps in section 359 of the Economic Development Law.

(ac) Program means the Excelsior Jobs Program.

(ad) Qualified investment means an investment in tangible property (including, a building or a structural component of a building) owned by a business entity that:

(1) is depreciable pursuant to section 167 of the Internal Revenue Code;

(2) has a useful life of four years or more;

(3) is acquired by purchase as defined in section 179(d) of the Internal Revenue Code;

(4) has a situs in this State; and

(5) is placed in service in the State on or after the date the certificate of eligibility is issued to the business entity.

(ae) Regionally significant project means:

(1) a manufacturer creating at least 10 net new jobs in the State and making a significant capital investment in the State;

(2) a business creating at least 10 net new jobs in agriculture in the State and making a significant capital investment in the State;

(3) a financial services firm or back office operation creating at least 100 net new jobs in the State and making a significant capital investment in the State;

(4) a distribution center creating at least 100 net new jobs in the State and making a significant capital investment in the State;

(5) a scientific research and development firm creating at least 10 net new jobs in the State and making a significant capital investment in the State;

(6) an entertainment company creating or obtaining at least 200 net new jobs in the State and making significant capital investment in the State;

(7) a life sciences company creating at least 20 net new jobs in the State and making significant capital investment in the State.

Other businesses creating 150 or more net new jobs in the State and making a significant capital investment in the State also may be considered eligible as a regionally significant project by the commissioner. In order to be a regionally significant project under this subdivision a business must export a substantial portion of its products or services outside of the State or outside of a metropolitan statistical area, or county within the State.

(af) Related person means a related person pursuant to section 465(b)(3)(c) of the Internal Revenue Code.

(ag) Remuneration means wages and benefits paid to an employee by a participant in the program. Under no circumstances shall remuneration include mandated benefits including, but not limited to, Federal Insurance Contributions Act (FICA), Medicare tax, unemployment insurance or workers' compensation insurance.

(ah) Research and development expenditures mean the expenses of the business entity that are qualified research expenses under the Federal research and development credit under section 41 of the Internal Revenue Code and are attributable to activities conducted in the State. If the Federal research and development credit has expired, then the research and development expenditures shall be calculated as if the Federal research and development credit structure and definition in effect in Federal tax year 2009 were still in effect.

(ai) Scientific research and development means conducting research and experimental development in the physical, engineering, and life sciences, including but not limited to agriculture, electronics, environmental, biology, botany, biotechnology, computers, chemistry, food, fisheries, forests, geology, health, mathematics, medicine, oceanography, pharmacy, physics, veterinary, and other allied subjects. For the purposes of this article, scientific research and development does not include medical or veterinary laboratory testing facilities.

(aj) Significant capital investment means a project which will be either a newly constructed facility or a newly constructed addition to, expansion of or improvement of a facility, consisting of tangible personal property and other tangible property, including buildings and structural components of buildings, that are depreciable pursuant to section 167 of the Internal Revenue Code, have a useful life of four years or more, are acquired by purchase as defined in section 179(d) of the Internal Revenue Code, and that is equal to or exceeds:

(1) $1,000,000 for a manufacturer;

(2) $250,000 for an agriculture business;

(3) $3,000,000 for a financial services firm or back office operation;

(4) $15,000,000 for a distribution center;

(5) $3,000,000 for a scientific research and development firm; or

(6) $3,000,000 for other businesses.

(ak) Software development means the creation of coded computer instructions or production or post production of video games, as defined in section 611(1-a) of the General Business Law, other than those embedded and used exclusively in advertising, promotional websites or microsites, and also includes new media.

(al) Smart growth means the sensible, planned, efficient growth that integrates economic development and job creation with community quality-of-life by preserving and enhancing the built and natural environments. Smart growth encourages growth in developed areas with existing infrastructure to sustain it, particularly municipal centers, downtowns, urban cores, historic districts and older first-tier suburbs.

Part 191 APPLICATION AND REVIEW PROCESS

5 CRR-NY 191.1 Application and review process {#sec-5-crr-ny-191.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 191.1}

(a) An applicant must submit a complete application as prescribed by the commissioner.

(b) As part of such application, an applicant must:

(1) agree to allow the Department of Taxation and Finance to share its tax information with the department. Note that the form created by the department to effectuate this information transfer may only be executed by a person with authority to act on the business entity's behalf in this regard. However, any information shared as a result of this agreement shall not be available for disclosure or inspection under the State Freedom of Information Law; and

(2) agree to allow the Department of Labor to share its tax and employer information with the department. Note that the form created by the department to effectuate this information transfer may only be executed by a person with authority to act on the business entity's behalf in this regard. However, any information shared as a result of this agreement shall not be available for disclosure or inspection under the State Freedom of Information Law; and

(3) allow the department and its agents access to any and all books and records deemed relevant by the department to monitor compliance with the provisions of article 17 of the Economic Development Law; and

(4) agree to be permanently disqualified for empire zone benefits at any location or locations that qualify for Excelsior Jobs Program benefits if admitted into the Excelsior Jobs Program for such location or locations; and

(5) provide, upon request by the department, all of the following information:

(i) a plan outlining the schedule for meeting the job and investment requirements (such plan must include details on job titles and expected salaries);

(ii) the prior three years of Federal and State income or franchise tax returns, unemployment insurance quarterly returns, real property tax bills and audited financial statements;

(iii) the amount and description of projected qualified investments for which it plans to claim the Excelsior Investment Tax Credit;

(iv) an estimate of the portion of any Federal research and development tax credits, attributable to research and development activities conducted in New York State, that it anticipates claiming for the years it expects to claim the Excelsior Research and Development Credit;

(v) the employer identification or social security numbers for all related persons to the applicant, including those of any members of a limited liability company or partners in a partnership; and

(6) provide a clear and detailed presentation of all related persons to the applicant to assure the department that jobs are not being shifted within the State; and

(7) certify, under penalty of perjury, that it is in substantial compliance with all environmental, worker protection, and local, State, and Federal tax laws.

(c) The commissioner, upon receipt of a complete application from an applicant, shall determine whether the applicant meets the eligibility criteria set forth in section 191.2 of this Part. An applicant that does not meet the eligibility criteria set forth in section 191.2 of this Part shall not be accepted into the program.

(d) Having determined that an application is complete and that the applicant meets the eligibility criteria set forth in section 191.2 of this Part, the department may admit the applicant and issue a certificate of eligibility as defined in section 190.2(g) of this Title and a preliminary schedule of benefits that indicates the annual amount of each component of the credit an applicant may be entitled to in each of its 10 years of eligibility. The commissioner may amend a preliminary schedule of benefits provided that the commissioner complies with the credit caps in section 359 of the Economic Development Law.

5 CRR-NY 191.2 Eligibility criteria {#sec-5-crr-ny-191.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 191.2}

(a) To be a participant in the program, an applicant must be operating predominantly in a strategic industry and meet the respective job requirements for strategic industries or be a regionally significant project. When determining whether an applicant is operating predominantly in a strategic industry, or as a regionally significant project, the commissioner will examine the nature of the business activity at the location for the proposed project and will make eligibility determinations based on such activity.

(b) Strategic industries shall consist of the following:

(1) financial services data center or a financial services back office operation;

(2) manufacturing;

(3) software development;

(4) scientific research and development;

(5) agriculture;

(6) the creation or expansion of back office operations in the State;

(7) distribution center;

(8) entertainment;

(9) music production;

(10) life sciences;

(11) an industry with significant potential for private-sector economic growth and development in this State; or

(12) a company operating in one of the industries listed in paragraphs (2) through (5) of this subdivision and engaging in a green project as defined in section 190.2(p) of this Title.

Notwithstanding subdivision (g) of this section, a business entity operating predominantly in manufacturing must create at least five net new jobs; a business entity operating predominately in agriculture must create at least five net new jobs; a business entity operating predominantly as a financial service data center or financial services customer back office operation must create at least 25 net new jobs; a business entity operating predominantly in scientific research and development must create at least five net new jobs; a business entity operating predominantly in software development must create at least five net new jobs; a business entity creating or expanding back office operations must create at least 25 net new jobs or a business entity operating predominantly as a distribution center in the State must create at least 50 net new jobs; a business entity operating predominantly as an entertainment company must create or obtain at least 100 net new jobs; a business entity operating predominantly in music production must create at least five net new jobs; or a business entity operating predominately as a life sciences company must create at least five net new jobs.

(d) A business entity operating predominantly in one of the strategic industries referenced in paragraphs (b)(1)-(7) and (10)-(11) of this section but which does not meet the job requirements of subdivision (c) of this section must have at least 25 full-time job equivalents unless such business is a business entity operating predominantly in manufacturing then it must have at least five full-time job equivalents, and must demonstrate that its benefit-cost ratio is at least 10 to 1.

(e) A business entity must be in substantial compliance with all worker protection and environmental laws and regulations.

(f) A business entity may not owe past due State or local taxes; provided, however, in the case of a tax certiorari proceeding a business entity would not be considered in arrears until a final decision is made with respect to such proceeding.

(g) A not-for-profit business entity, a business entity whose primary function is the provision of services including personal services, business services, or the provision of utilities, a business entity engaged predominantly in the retail or entertainment industry, other than a business operating as an entertainment company and other than a business entity engaged in music production, and a business entity engaged in the generation or distribution of electricity, the distribution of natural gas, or the production of steam associated with the generation of electricity are not eligible to participate in the program.

(h) A business entity must demonstrate that it has satisfied the job requirements for strategic industries indicated in subdivision (c) of this section. A business entity certified as a regionally significant project must demonstrate that it is a regionally significant project as defined in section 190.2(ae) of this Title and satisfies the job and investment requirements therein.

5 CRR-NY 191.3 Evaluation standards {#sec-5-crr-ny-191.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 191.3}

(a) The evaluation standards which may be utilized by the commissioner when determining whether to admit an applicant to the program include the following:

(1) whether the applicant is proposing to substantially renovate contaminated, abandoned or underutilized facilities; or

(2) whether the applicant will use energy-efficient measures, including, but not limited to, the reduction of greenhouse gas and emissions and the Leadership in Energy and Environmental Design (LEED) green building rating system for the project identified in its application; or

(3) the degree of economic distress in the area where the applicant will locate the project identified in its application; or

(4) the degree of applicant's financial viability, strength of financials, readiness and likelihood of completion of the project identified in the application; or

(5) the degree to which the project identified in the application supports New York State's minority and women business enterprises or service-disabled veteran-owned business enterprises; or

(6) the degree to which the project identified in the application supports the principles of smart growth as defined in section 190.2(ai) of this Title; or

(7) the estimated return on investment that the project identified in the application will provide to the State; or

(8) the overall economic impact that the project identified in the application will have on a region, including, but not limited to, the impact of any direct and indirect jobs that will be created; or

(9) the degree to which other State or local incentive programs are available to the applicant; or

(10) the likelihood that the project identified in the application would be located outside of New York State or would not occur but for the availability of State or local incentives; or

(11) the recommendation of the relevant regional economic development council or the commissioner's determination that the proposed project aligns with the regional strategic priorities of the respective region.

(b) In addition, the commissioner shall make all reasonable efforts to allocate tax credits in a geographically proportionate manner throughout the State.

Part 192 CLAIMING CREDITS

5 CRR-NY 192.1 Claiming credits {#sec-5-crr-ny-192.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 192.1}

(a) A participant must submit evidence of achieving the applicable job and investment requirements to the department in order to receive benefits under the program.

(b) Such evidence may include, but not be limited to, submission of the NYS-45 form and, where applicable, submission of receipts specifically documenting research and development expenditures and/or qualified investments as such terms are defined in section 352 of the Economic Development Law. This evidence will serve to demonstrate that the participant has satisfied all applicable eligibility requirements and form the basis for the tax credit components.

(c) If a participant fails to demonstrate that it has satisfied the eligibility requirements set forth in section 191.2(h) of this Title, the department shall not issue such participant a certificate of tax credit. If a participant certified as a regionally significant project fails to demonstrate that it has satisfied the eligibility requirements set forth in section 191.2(h) of this Title, the department shall not issue such participant a certificate of tax credit. Provided, however, if the participant fails to fully satisfy the job creation projections in the preliminary schedule of benefits, the commissioner shall reduce the tax credits to an amount in proportion to the percentage of the job creation achieved. If the participant fails to create at least 75 percent of the job creation projections, the commissioner shall not issue such participant a certificate of tax credit.

(d) If a participant certified pursuant to section 191.2(d) of this Title fails to demonstrate that it has 25 full-time job equivalents or, if such business is a business entity operating predominantly in manufacturing, 10 full-time job equivalents or fails to demonstrate that it has a benefit-cost ratio of at least 10 to 1, the department shall not issue such participant a tax credit.

(e) After reviewing such evidence and finding it sufficient, the department shall calculate the appropriate amount of tax credit and issue a certificate of tax credit for one taxable year. The certificate shall specify the exact amount of each of the tax credit components that a participant may claim pursuant to Part 193 of this Title, and shall specify the taxable year in which such credit may be claimed. The tax credit components may only be claimed on tax returns for the tax year indicated on the certificate. If the participant is a business entity that passes through the tax credit components to its owners (such as partners in a partnership or members in a limited liability company), such owners can only claim their share of the credit components on the tax return that corresponds to the tax year indicated on the certificate issued to the participant. In order to receive a certificate of tax credit for subsequent taxable years, the participant must submit to the department a performance report demonstrating that the participant continues to satisfy the eligibility criteria specified in sections 353 and 354(2) of the Economic Development Law. If such eligibility criteria are met, a participant can receive tax credits based on the interim job, investment or research and development milestones indicated in the preliminary schedule of benefits in accordance with subdivision (c) of this section.

(f) A participant's increase in employment, qualified investment, or Federal research and development tax credit attributable to research and development activities in New York State above its projections listed in its application shall not result in an increase in tax benefits under this regulation. However, if the participant's expenditures are less than the estimated amounts, the credit component shall be less than the estimate.

(g) No costs used by an entertainment company as the basis for the allowance of a tax credit described in this Part shall be used by such entertainment company to claim any other credit allowed pursuant to the Tax Law.

Part 193 CALCULATION OF THE TAX CREDITS

5 CRR-NY 193.1 Calculation of tax credits {#sec-5-crr-ny-193.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 193.1}

(a) The department shall calculate the amount of each tax credit component for which the participant is eligible pursuant to section 355 of the Economic Development Law. The amount of each component shall be separately stated on the certificate of tax credit.

(b) Excelsior Jobs Program Credit Component.

A participant in the program shall be eligible to claim a credit for each net new job it creates in New York State. In a project that is not a green project, the amount of such credit per job shall be equal to the product of gross wages and up to 6.85 percent. In a green project, the amount of such credit per job shall be equal to the product of the gross wages paid and up to 7.5 percent.

A participant in the program shall be eligible to claim a credit on qualified investments. In a project that is not a green project, the credit shall be equal to two percent of the cost or other basis for Federal income tax purposes of the qualified investment. In a green project, the credit shall be equal to five percent of the cost or other basis for Federal income tax purposes of the qualified investment. A participant may not claim both the Excelsior Investment Tax Credit Component and the investment tax credit set forth in section 210-B(1), section 606(a), the former section 1456(i), or section 1511(q) of the Tax Law for the same property in any taxable year, except that a participant may claim both the excelsior investment tax credit component and the investment tax credit for research and development property. In addition, a taxpayer who or which is qualified to claim the Excelsior Investment Tax Credit Component and is also qualified to claim the Brownfield Tangible Property Credit component under section 21 of the Tax Law may claim either the Excelsior Investment Tax Credit Component or such tangible property credit component, but not both with regard to a particular piece of property. The Excelsior Investment Tax Credit Component may not be claimed until a participant has received a certificate of tax credit, provided that qualified investments made on or after the issuance of the certificate of eligibility but before the issuance of the certificate of tax credit to the participant, may be claimed in the first taxable year for which the participant is allowed to claim the credit. Expenses incurred prior to the date the certificate of eligibility is issued are not eligible to be included in the calculation of the credit.

(d) Excelsior Research and Development Tax Credit Component.

A participant in the program shall be eligible to claim a credit equal to 50 percent of the portion of the participant's Federal research and development tax credit that relates to the participant's research and development expenditures in New York State during the taxable year, provided, however, if not a green project, the excelsior research and development tax credit shall not exceed six percent of the qualified research and development expenditures attributable to activities conducted in New York State, or, if a green project, the excelsior research and development tax credit shall not exceed eight percent of the research and development expenditures attributable to activities conducted in New York State. If the Federal research and development credit has expired, then the research and development expenditures relating to the Federal research and development credit shall be calculated as if the Federal research and development credit structure and definition in effect in 2009 were still in effect. Notwithstanding any other provision of this chapter to the contrary, research and development expenditures in this State, including salary or wage expenses for jobs related to research and development activities in this State, may be used as a basis for the excelsior research and development tax credit component and the qualified emerging technology company facilities, operations and training credit under the tax law.

(e) Excelsior Real Property Tax Credit Component.

(1) A participant in the program who either qualified as a regionally significant project or is located in an investment zone shall be eligible to claim an excelsior real property tax credit for a period of 10 years. In the first year, the credit shall be equal to 50 percent of the eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone.

(2) In the remaining years the credit shall be computed according to the following schedule:

(i) Year two: 45 percent of eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone;

(ii) Year three: 40 percent of eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone;

(iii) Year four: 35 percent of eligible real property taxes on real property comprising the regionally significant project or located in the investment zone;

(iv) Year five: 30 percent of eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone;

(v) Year six: 25 percent of eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone;

(vi) Year seven: 20 percent of eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone;

(vii) Year eight: 15 percent of eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone;

(viii) Year nine: 10 percent of eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone; and

(ix) Year ten: five percent of eligible real property taxes on the real property comprising the regionally significant project or located in the investment zone.

(3) For purposes of this credit component, the term eligible real property taxes shall have the same meaning as in section 15(e) of the Tax Law, provided that such subdivision (e) shall be read as if it specifically referenced the Excelsior Jobs Program and participants in that program.

(4) In calculating the excelsior real property tax credit and determining the maximum aggregate amount of such credit component in the preliminary schedule of benefits, the commissioner shall include any improvements projected to be made by the taxpayer to the property comprising the regionally significant project or located in the investment zone as listed in its application for participation in the Excelsior Jobs Program. Provided, however, the actual amount of the excelsior real property tax credit issued by the department for a taxable year cannot exceed the real property taxes assessed and paid by a participant during that taxable year when issued a certificate of tax credit pursuant to section 192.1(e) of this Title.

5 CRR-NY 193.2 Refundability of credits {#sec-5-crr-ny-193.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 193.2}

(a) The tax credit components established in this section shall be refundable as provided in the Tax Law. If a participant fails to satisfy the eligibility criteria, specifically the applicable job creation and/or investment requirements indicated in the preliminary schedule of benefits in any one year, it will lose the ability to claim credit for that year.

(b) The event of such failure shall not extend the original 10-year eligibility period.

5 CRR-NY 193.3 Excelsior Jobs Program rates for gas or electric service {#sec-5-crr-ny-193.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 193.3}

(a) Special Excelsior Jobs Program rates for gas or electric service, as further described in subdivision 12-d of section 66 of the Public Service Law, may remain available to participants as defined in this article for a period of up to 10 years commencing in the first taxable year that the participant receives a certificate of tax credit, or the first taxable year listed on its preliminary schedule of benefits, whichever is later. Provided however, if a participant is removed from the Excelsior Jobs Program pursuant to this article, the Excelsior Jobs Program rates may be denied.

Part 194 RECORD RETENTION AND REPORTING REQUIREMENTS

5 CRR-NY 194.1 Record retention {#sec-5-crr-ny-194.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 194.1}

(a) Each participant shall keep all relevant records for their duration of program participation plus three years.

(b) The department shall have the right to inspect all relevant records upon reasonable notice to the participant.

5 CRR-NY 194.2 Reporting {#sec-5-crr-ny-194.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 194.2}

(a) Each participant must submit a performance report annually, in such form as the commissioner may require within 30 days of the end of its taxable year.

(b) The commissioner shall prepare on a quarterly basis a program report for posting on the department's website. The first report will be due June 30, 2011, and every three months thereafter. Such report shall include, but not be limited to, the following information: number of applicants; number of participants approved; names of participants; total amount of benefits certified; benefits received per participant; total number of net new jobs created; number of net new jobs created per participant; aggregate new investment in the State; new investment per participant; and such other information as the commissioner determines necessary.

Part 195 REMOVAL FROM PROGRAM

5 CRR-NY 195.1 Removal from program {#sec-5-crr-ny-195.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 195.1}

(a) The commissioner shall remove any participant from the program for failing to meet any of the requirements set forth in section 191.1(b) of this Title, or for failing to meet the minimum job or investment requirements set forth in section 191.2(c) and (d) of this Title.

(b) If the commissioner has removed the participant from the program pursuant to subdivision (a) of this section, the commissioner shall notify the participant of such removal in writing. Such notice of removal shall explain the reason or reasons for the removal from the program. The notice of removal shall state the effective date of removal, and advise the participant that it may appeal the removal in accordance with Part 196 of this Title. Such notice may be served by the department on the participant by certified, registered or overnight mail sent to the participant at the address last provided to the department by the participant.

Part 196 APPEAL PROCEDURES

5 CRR-NY 196.1 Applicability {#sec-5-crr-ny-196.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 196.1}

(a) This Part shall apply to all appeals taken as a result of a participant being removed from the program pursuant to section 195.1(a) of this Title.

5 CRR-NY 196.2 Designation of appeal officers {#sec-5-crr-ny-196.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 196.2}

(a) The commissioner may designate any impartial person or persons to act as an appeal officer.

5 CRR-NY 196.3 Notice of appeal {#sec-5-crr-ny-196.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 196.3}

(a) A participant that received a notice of removal pursuant to section 195.1(b) of this Title may send a written notice (notice of appeal) to the commissioner appealing the removal by no later than 30 days from the date of the mailing of the notice. Failure by a participant to appeal the commissioner's denial or removal of certification within the aforementioned 30 day period will be deemed a waiver of the participant's right to an appeal.

(b) The notice of appeal must contain specific factual information and documentation supporting the basis for the appeal and all legal arguments that are the basis for the participant's challenge to the removal.

(d) Counsel to the department may file a response to the notice of appeal with the appeal officer. Any response should address the factual and legal allegations contained in the notice of appeal. A copy of the response shall be sent to the participant, or to the attorney representing the participant.

5 CRR-NY 196.4 Authority of appeal officer {#sec-5-crr-ny-196.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 196.4}

(a) The appeal officer shall evaluate the merits of the appeal and any response from counsel to the department. Where the appeal officer deems it appropriate, the appeal officer may require the participant or counsel to the department to address additional issues and/or submit additional information regarding the appeal. If the appeal officer requires submission of additional documents by either participant or counsel to the department, both parties shall receive copies of all submissions.

(b) Nothing herein shall preclude the appeal officer from obtaining information from any outside source, as he or she deems appropriate.

(c) The appeal officer shall determine whether he or she deems it necessary to conduct a fact-finding hearing, and the level of formality of any hearing conducted.

5 CRR-NY 196.5 Appeal officer's report {#sec-5-crr-ny-196.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 196.5}

(a) The appeal officer shall prepare a report and make recommendations to the commissioner. The recommendations may be in the form of a proposed decision which will contain findings of fact and conclusions of law. This report, along with the entire record, shall be transmitted to the commissioner, the counsel to the department, and the business entity that filed the appeal.

5 CRR-NY 196.6 Appeal decision {#sec-5-crr-ny-196.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 196.6}

(a) After receipt of the appeal officer's report, the commissioner will issue a final determination and serve a copy on the participant or its representative. If the commissioner issues a final determination that includes findings of fact or conclusions of law that conflict with the recommendations of the appeal officer, the determination shall set forth the reasons therefor.

Part 197 COMMISSIONER DISCRETION DURING STATE EMERGENCY

5 CRR-NY 197.1 Applicability {#sec-5-crr-ny-197.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 197.1}

Notwithstanding the above regulations, with respect to applications in this program from businesses that have provided the commissioner information sufficient to determine that they have been negatively impacted by a State of Emergency, the commissioner, subject to approval by Division of Budget, shall have discretion to suspend or modify the provisions of these regulations or parts thereof as a result of the State emergency in order to allow an affected business with an active preliminary schedule of benefits to have their 2020 benefit year and commensurate commitments deferred to 2021, thereby extending their preliminary schedule of benefits by one additional year. Such discretion shall expire on December 31, 2020 or upon the actual expiration of the Governor’s Executive Order declaring such emergency, whichever is later.

Chapter XX ECONOMIC TRANSFORMATION AND FACILITY REDEVELOPMENT PROGRAM

Part 200 PURPOSE AND DEFINITIONS

5 CRR-NY 200.1 Purpose and general description {#sec-5-crr-ny-200.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 200.1}

(a) Chapter 61 of the Laws of 2011 establishes the Economic Transformation and Facility Redevelopment Program (the program). The purpose of these regulations is to set forth the administrative process governing the certification of participants in the program and specifically to establish an application process, eligibility criteria and requirements for participants to remain certified in the program. The program enables participants to claim the Economic Transformation and Facility Redevelopment Program Tax Credit, as defined in section 35 of the Tax Law, which consists of four components: the Economic Transformation and Facility Redevelopment Program Jobs Tax Credit Component, the Economic Transformation and Facility Redevelopment Program Investment Tax Credit Component, the Economic Transformation and Facility Redevelopment Program Job Training Tax Credit Component, and the Economic Transformation and Facility Redevelopment Program Real Property Tax Credit Component. In addition, participants may be eligible for a sales tax refund pursuant to section 35 of the Tax Law and a Real Property Tax exemption pursuant to section 485-p of the Real Property Tax Law.

5 CRR-NY 200.2 Definitions {#sec-5-crr-ny-200.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 200.2}

As used in this regulation, the following terms shall have the following meanings:

(a) Benefit-cost ratio means the following calculation: the numerator is the sum of:

(1) the value of all remuneration projected to be paid for all net new jobs during the period of participation in the program; and

(2) the cost of qualified investments to be made by the business entity during the period of participation in the program, and the denominator is the amount of total tax benefits under this article that is projected to be used and refunded.

(b) Certificate of eligibility means the document issued by the department to an applicant that demonstrates that the applicant has been admitted as a participant into the Economic Transformation and Facility Redevelopment Program by the department. Possession of a certificate of eligibility does not by itself guarantee the eligibility of the participant to claim the tax credits allowed pursuant to section 35 of the Tax Law.

(1) are new to the area;

(2) have not been transferred from employment in this State with the participant or with a related person in this State, and are not replacing jobs with similar titles or job responsibilities;

(3) are either full-time wage-paying jobs or equivalent to a full-time wage-paying job requiring at least 35 hours per week;

(4) are filled for more than six months in a taxable year;

(5) are not general executive officers of the participant; and

(6) may not be filled with individuals having the familial relationship defined in section 267(c)(4) of the Internal Revenue Code with any owner of the participant.

(d) Notice of removal means the notification given by the commissioner to a participant that has failed to meet any of the requirements set forth in section 201.1(b) of this Title, or failed to meet the eligibility criteria set forth in section 201.2 of this Title.

(e) Department shall mean the Department of Economic Development.

(f) Participant means a business entity that:

(1) is a new business as defined in subdivision (k) of this section;

(2) has completed an application prescribed by the department to be admitted into the program;

(3) has demonstrated how it plans to meet the eligibility criteria in section 201.2 of this Title and section 401 of the Economic Development Law; and

(4) has been issued a certificate of eligibility by the department.

(g) Preliminary schedule of benefits means the estimated aggregate amount of the tax credits that a participant in the Economic Transformation and Facility Redevelopment Program is eligible to receive pursuant to section 35 of the Tax Law. The preliminary schedule of benefits shall indicate the annual amount of each credit a participant expects to claim in each of its five years of eligibility.

(h) Qualified investment means an investment in tangible property (including a building or a structural component of a building) owned by a business entity that:

(1) is depreciable pursuant to section 167 of the Internal Revenue Code;

(2) has a useful life of four years or more;

(3) is acquired by purchase as defined in section 179(d) of the Internal Revenue Code;

(4) has a situs in an economic transformation area in this State in which it is certified; and

(5) is placed in service in an economic transformation area in the State on or after the date the certificate of eligibility is issued to the business entity.

(i) Related person means a related person pursuant to section 465(b)(3)(c) of the Internal Revenue Code.

(j) Remuneration means wages paid to and benefits received by an employee of a participant in the Economic Transformation and Facility Redevelopment Program.

(k) New business means a business entity that satisfies all of the following tests:

(1) the business entity must not be currently operating or located within the economic transformation area in which it is applying for certification;

(2) the business entity must not be moving existing jobs into the economic transformation area in which it is applying for certification from another area of the State;

(3) the business entity must not be substantially similar in ownership and operation to another taxpayer taxable or previously taxable under section 183, 184 or 185 of article 9, former section 186 or article 9-A, 22, 32 or 33 of the Tax Law or the income or losses of which is or was includable under article 22 of the Tax Law;

(4) the business entity must not have caused individuals to transfer from existing employment with a related person and located in New York State to similar employment with the business entity;

(5) the business entity must not have acquired, purchased, leased, or had transferred to it real property located in the economic transformation area in which it is applying for certification if that real property was previously owned by an entity with similar ownership, regardless of form of incorporation or organization; and

(6) the business entity must not be substantially similar in operation to a business entity from which it has acquired real or tangible personal property that is located in the economic transformation area in which it is applying for certification.

(l) Economic transformation area means:

(1) an area within a five mile radius of the following facilities: Buffalo Correctional Facility in Alden, New York; Allen Residential Center in South Kortright, New York, Mid-Orange Correctional Facility in Warwick, New York, and Harriet Tubman Residential Center in Auburn, New York;

(2) an area within a 10 mile radius of the following facilities: Camp Georgetown, Georgetown, New York and Industry Secure Facility in Rush, New York;

(3) an area within a 15 mile radius of the following facilities: Oneida Correctional Facility in Rome, New York, Summit Shock Facility in Summit, New York, and Tryon Girls Center in Johnstown, New York;

(4) an area limited to the site of the following facilities: Fulton Correctional Facility in Bronx, New York and Arthur Kill Correctional Facility in Staten Island, New York.

(m) Closed facility means:

(1) the following correctional facilities, as defined in section 2(4)(a) of the Correction Law, that were selected by the Governor of the State of New York for closure after April 1, 2011 but no later than March 31, 2012, Arthur Kill Correctional in Staten Island, New York, Buffalo Correctional in Alden, New York, Camp Georgetown in Georgetown, New York, Fulton Correctional in Bronx, New York, Mid-Orange Correctional in Warwick, New York, Oneida Correctional in Rome, New York and Summit Shock Incarceration Correctional in Summit, New York; or

(2) the following facilities operated by the Office of Children and Family Services under article 19-G of the Executive Law that is closed pursuant to authority granted to such office in a chapter of the Laws of 2011, Allen Residential Center in South Kortright, New York, Harriet Tubman Residential Center in Auburn, New York, Industry Secure Facility in Rush, New York and Tryon Girls Center in Johnstown, New York; and

(3) which has been closed provided that the Commissioner of Correctional Services or the Commissioner of the Office of Children and Family Services has notified the commissioner of such closure.

Part 201 APPLICATION AND REVIEW PROCESS

5 CRR-NY 201.1 Application and review process {#sec-5-crr-ny-201.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 201.1}

(a) A business entity must submit a completed application as prescribed by the commissioner by the later of:

(1) the date that is three years after the date of the closure of the closed facility located in the economic transformation area in which the business entity would operate; or

(2) January 1, 2015.

(b) As part of such application, each business entity must:

(1) Agree to allow the Department of Taxation and Finance to share its tax information with the department. However, any information shared as a result of this agreement shall not be available for disclosure or inspection under the State Freedom of Information Law.

(2) Agree to allow the Department of Labor to share its tax and employer information with the department. However, any information shared as a result of this agreement shall not be available for disclosure or inspection under the State Freedom of Information Law.

(3) Agree to not participate in the Excelsior Jobs Program, the New York State Empire Zones Program, or claim any tax credits under the Brownfield Cleanup Program if admitted into the Economic Transformation and Facility Redevelopment Program with regard to the facility (or facilities) located in the economic transformation area.

(4) Provide the following information to the department upon request:

(i) a plan outlining the schedule for meeting the job and investment requirements set forth in section 401 of the Economic Development Law, including details on job titles and expected salaries;

(ii) the prior three years of Federal and State income or franchise tax returns, unemployment insurance quarterly returns, real property tax bills and audited financial statements;

(iii) the amount and description of projected qualified investments for which it plans to claim the economic transformation and facility redevelopment investment tax credit;

(iv) the employer identification numbers or social security numbers for all related persons to the applicant, including those of any members of a limited liability company or partners in a partnership.

(5) Provide a clear and detailed presentation of all related persons to the applicant to assure the department that jobs are not being shifted within the State.

(6) Certify, under penalty of perjury, that it is in substantial compliance with all environmental, worker protection, and local, State, and Federal tax laws.

(7) Agree, to the extent practicable, to consider for employment persons displaced by a facility closure.

(c) After reviewing a business entity's completed application and determining that the business entity satisfies the requirements in section 400(4) of the Economic Development Law and will meet eligibility requirements set forth in section 401 of the Economic Development Law and section 201.2 of this Part, the department may, at the discretion of the commissioner, admit the applicant into the program and provide the applicant with a certificate of eligibility. When considering an application, the commissioner shall consider whether the project is consistent with the intent of the program, the overall cost and effectiveness of the project, and other factors including, but not limited to the total amount of investment tax credit allowed for all eligible participants at each closed facility pursuant to section 35(h) of the Tax Law. The commissioner shall consult with the Department of Taxation and Finance to determine whether the maximum investment tax credit at a closed facility has been reached or would be exceeded if an applicant were to be certified. An applicant will only be eligible to be certified if the applicant agrees to claim the amount of the investment tax credit indicated by the department in the preliminary schedule of benefits provided with the certificate of eligibility. If a participant does not start construction on or acquire a qualified investment or create at least one net new job within one year of the issuance of its certificate of eligibility, the participant will not be eligible for any of the Economic Transformation and Facility Redevelopment Program tax credits.

(d) A participant may claim tax credits pursuant to section 35 of the Tax Law commencing in the first taxable year in which the participant creates five net new jobs. A participant may claim such benefits for the next four consecutive taxable years, provided that the participant demonstrates to the Commissioner of Taxation and Finance that it continues to maintain five net new jobs. However, in no event may that benefit period start later than two years after the certificate of eligibility is issued. The participant may also be eligible for the economic transformation and facility redevelopment sales tax refund pursuant to section 35(a)(2) of the Tax Law and the real property tax exemption pursuant to section 485-p of the Real Property Tax Law.

5 CRR-NY 201.2 Eligibility criteria {#sec-5-crr-ny-201.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 201.2}

(a) In order to be eligible for benefits in the Economic Transformation and Facility Redevelopment Program, a participant must satisfy the following criteria:

(1) must create and maintain at least five net new jobs in an economic transformation area, and must demonstrate that its benefit-cost ratio is at least 10 to 1; and

(2) must be in compliance with all worker protection and environmental laws and regulations; and

(3) must not owe past due Federal or State taxes or local property taxes, unless those taxes are being paid pursuant to an executed payment plan; and

(4) the location of the participant's operations for which it seeks tax benefits must be wholly located within the economic transformation area.

(b) A business entity that is primarily operated as a retail business is not eligible to participate in the Economic Transformation and Facility Redevelopment Program if their application is for any facility or business location that will be primarily used in making retail sales to customers who personally visit such facilities. A business entity that is engaged in offering professional services licensed by the State or by the courts of this State is not eligible to participate in the Economic Transformation and Facility Redevelopment Program. In addition, a business entity that is or will be principally operated as a real estate holding company or landlord for retail businesses shall not be eligible to participate in the Economic Transformation and Facility Redevelopment Program. For purposes of this paragraph, professional services licensed by the courts of this State shall include lawyers registered with the NYS Office of Court Administration. Provided however that the commissioner may determine that such a business entity described in the preceding three sentences may be eligible to participate at the site of a closed facility if it is pursuant to an adaptive reuse plan for a substantial portion of such facility and that the adaptive reuse plan is consistent with the strategic plan of the Regional Economic Development Council and has been recommended by the Regional Economic Development Council to the commissioner.

(c) A business entity must continue to satisfy the employment requirements in paragraph (a)(1) of this section in each year in which it claims the economic transformation and facility redevelopment tax credits. Prior to claiming the economic transformation and facility redevelopment tax credits in the final year of its five year benefit period, a business entity must demonstrate to the commissioner that it has created the jobs and made the qualified investments necessary to meet a benefit-cost ratio of at least 10 to 1.

(d) A business entity seeking certification at the site of a closed facility must agree to limit its claim for the economic transformation and facility redevelopment investment tax credit to the amount indicated in the preliminary schedule of benefits.

5 CRR-NY 201.3 Evaluation standards {#sec-5-crr-ny-201.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 201.3}

(a) The evaluation standards which may be used by the commissioner to determine whether to admit an applicant to the program include:

(1) the number of net new jobs to be created in New York State; or

(2) the amount of capital investment to be made; or

(3) whether the applicant is proposing to substantially renovate and reuse closed facilities; or

(4) whether the applicant will use energy-efficient measures, including, but not limited to, the reduction of greenhouse gas and emissions and the Leadership in Energy and Environmental Design (LEED) green building rating system for the project identified in its application; or

(5) whether the application has been recommended by the Regional Economic Development Council representing the region where the project will be located;

(6) the degree to which the project is consistent with the Regional Economic Development Council strategic plan and priorities for the region; or

(7) the degree of economic distress in the area where the applicant will locate the project identified in its application; or

(8) the degree of applicant's financial viability, strength of financials, readiness and likelihood of completion of the project identified in the application; or

(9) the degree to which the project identified in the application supports New York State's minority and women business enterprises; or

(10) the degree to which the project identified in the application supports the principles of Smart Growth; or

(11) the estimated return on investment that the project identified in the application will provide to the State; or

(12) the overall economic impact that the project identified in the application will have on a region, including, but not limited to, the impact of any direct and indirect jobs that will be created; or

(13) the degree to which other State or local incentive programs are available to the applicant; or

(14) the likelihood that the project identified in the application would be located outside of New York State or would not occur but for the availability of State or local incentives.

Part 202 REPORTING REQUIREMENTS

5 CRR-NY 202.1 Reporting {#sec-5-crr-ny-202.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 202.1}

(a) The commissioner shall prepare on a quarterly basis a program report for posting on the department's website. The first report will be due June 30, 2012, and every three months thereafter. Such report shall include, but not be limited to, the following: number of applicants; number of participants approved; names of participants; total amount of projected benefits certified by type of benefit; total number of projected new jobs to be created; number of projected net new jobs created per participant; aggregate projected new investment in the State; projected new investment per participant; and such other information as the commissioner determines.

Part 203 REMOVAL FROM PROGRAM

5 CRR-NY 203.1 Removal from program {#sec-5-crr-ny-203.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 203.1}

(a) The commissioner may remove any participant from the program for failing to meet any of the requirements set forth in section 201.1(b) of this Title, or for failing to meet the eligibility criteria set forth in section 201.2 of this Title.

(b) If the commissioner has removed the participant from the program pursuant to subdivision (a) of this section, the commissioner shall notify the participant of such removal in writing. Such notice of removal shall explain the reason or reasons for the removal from the program. The notice of removal shall state the effective date of removal, and advise the participant that it may appeal the removal in accordance with Part 204 of this Title. Such notice may be served by the department on the participant by certified, registered or overnight mail sent to the participant at the address last provided to the department by the participant.

Part 204 APPEAL PROCEDURES

5 CRR-NY 204.1 Applicability {#sec-5-crr-ny-204.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 204.1}

This Part shall apply to all appeals taken as a result of a participant being removed from the program pursuant to Part 203 of this Title.

5 CRR-NY 204.2 Designation of appeal officers {#sec-5-crr-ny-204.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 204.2}

The commissioner may designate any impartial person or persons to act as an appeal officer.

5 CRR-NY 204.3 Notice of appeal {#sec-5-crr-ny-204.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 204.3}

(a) A participant that received a notice of removal pursuant to section 203.1(b) of this Title may send a written notice (notice of appeal) to the commissioner appealing the removal postmarked by no later than 30 days from the date of the mailing of the notice. Failure by a participant to appeal the commissioner's denial or removal of certification within the aforementioned 30 day period will be deemed a waiver of the participant's right to an appeal.

(b) The notice of appeal must contain specific factual information, (along with documentation establishing that information), and all legal arguments that are the basis for the participant's challenge to the removal.

(d) Counsel to the department may file a response to the notice of appeal with the appeal officer. Any response should address the factual and legal allegations contained in the notice of appeal. A copy of the response should be sent to the participant, or to the attorney representing the participant.

5 CRR-NY 204.4 Authority of appeal officer {#sec-5-crr-ny-204.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 204.4}

(b) Nothing herein shall preclude the appeal officer from obtaining information from any outside source, as he or she deems appropriate.

(c) The appeal officer shall determine whether he or she deems it necessary to conduct a fact-finding hearing, and the level of formality of any hearing conducted.

5 CRR-NY 204.5 Appeal officer's report {#sec-5-crr-ny-204.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 204.5}

The appeal officer shall prepare a report and make recommendations to the commissioner. The recommendations may be in the form of a proposed decision which will contain findings of fact and conclusions of law. This report, along with the entire record, shall be transmitted to the commissioner, the counsel to the department, and the business entity that filed the appeal.

5 CRR-NY 204.6 Appeal decision {#sec-5-crr-ny-204.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 204.6}

After receipt of the appeal officer's report, the commissioner will issue a final decision and serve a copy on the participant or its representative. If the commissioner issues a final decision that includes findings of fact or conclusions of law that conflict with the recommendations of the appeal officer, the decision shall set forth the reasons therefor.

Chapter XXI EMPIRE STATE JOBS RETENTION PROGRAM

Part 210 PURPOSE AND DEFINITIONS

5 CRR-NY 210.1 Purpose and general description {#sec-5-crr-ny-210.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 210.1}

(a) The purpose of these regulations is to set forth the administrative process governing the Empire State Jobs Retention Program (program) and specifically to establish an application process, standards for application evaluation and procedures for businesses claiming the tax credit under this program. Chapter 56 of the Laws of 2011 establishes the program and grants the commissioner of the Department of Economic Development the authority to promulgate regulations to establish procedures for the allocation of the Empire State Jobs Retention Program tax credit.

5 CRR-NY 210.2 Definitions {#sec-5-crr-ny-210.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 210.2}

As used in this regulation, the following terms shall have the following meanings:

(b) Back office operations means a business function that may include one or more of the following activities: customer service, information technology and data processing, human resources, accounting and related administrative functions.

(c) Certificate of eligibility means the document issued by the department to an applicant that has completed an application to be admitted into the Empire State Jobs Retention Program and has been accepted into the program by the department. Possession of a certificate of eligibility does not by itself guarantee the eligibility to claim the tax credit.

(d) Certificate of tax credit means the document issued to a participant by the department, after the department has verified that the participant has met all applicable eligibility criteria in this article. The certificate shall be issued annually if such criteria are satisfied and shall specify the exact amount of the tax credit under this article that a participant may claim, pursuant to section 213.1 of this Title, and shall specify the taxable year in which such credit may be claimed.

(e) Distribution center means a large scale facility involving processing, repackaging and/or movement of finished or semi-finished goods to retail locations across a multi-state area.

(f) Financial services data centers or financial services customer back office operations means operations that manage the data or accounts of existing customers or provide product or service information and support to customers of financial services companies, including banks, other lenders, securities and commodities brokers and dealers, investment banks, portfolio managers, trust offices, and insurance companies.

(g) Full-time equivalent jobs means any combination of two or more part-time jobs that, when combined together, constitute the equivalent of a job of at least 35 hours per week.

(h) Impacted jobs means jobs existing at a business enterprise at a location or locations within the county declared an emergency by the governor on the day immediately preceding the day on which the event leading to the emergency declaration by the governor occurred.

(i) Manufacturing means the process of working raw materials into products suitable for use or which gives new shapes, new quality or new combinations to matter which has already gone through some artificial process by the use of machinery, tools, appliances, or other similar equipment. Manufacturing does not include an operation that involves only the assembly of components, provided, however, the assembly of motor vehicles or other high value-added products shall be considered manufacturing.

(j) Participant means a business entity that:

(1) has completed an application prescribed by the department to be admitted into the program;

(2) has been issued a certificate of eligibility by the department;

(3) has demonstrated that it meets the eligibility criteria in section 211.2 of this Title and the requirements in section 211.1(c) of this Title; and

(4) has been certified as a participant by the commissioner.

(k) Preliminary schedule of benefits means the maximum aggregate amount of the tax credit that a participant in the Empire State Jobs Retention Program is eligible to receive pursuant to this Title. The schedule shall indicate the annual amount of the credit a participant may claim in each of its 10 years of eligibility. The preliminary schedule of benefits shall be issued by the department when the department approves the application for admission into the program. The commissioner may amend that schedule, provided that the commissioner complies with the credit caps in section 359 of the Economic Development Law.

(l) Related person means a related person pursuant to subparagraph (c) of paragraph 3 of subsection (b) of section 465 of the Internal Revenue Code.

(m) Scientific research and development means conducting research and experimental development in the physical, engineering, and life sciences, including but not limited to agriculture, electronics, environmental, biology, botany, biotechnology, computers, chemistry, food, fisheries, forests, geology, health, mathematics, medicine, oceanography, pharmacy, physics, veterinary, and other allied subjects. For the purposes of this article, scientific research and development does not include medical or veterinary laboratory testing facilities.

(n) Significant capital investment means generally the costs relating to extensive renovations to an existing facility and/or the purchase of a substantial amount of new machinery and equipment, or purchase or construction of a new facility. Evidence of a significant capital investment may be:

(1) a new capital investment with a basis for Federal income tax purposes at the time of completion that exceeds the sum of the applicant's total New York State capital investments over the past three tax years; or

(2) a major expansion or upgrade of an existing facility resulting in additional production capacity or increased energy or production efficiency increasing the applicant's profitability, long-term viability, and commitment to operations in New York State. Land acquisition, site development and moving and relocation costs may be taken into account in determining whether an investment in a new facility is a significant capital investment. Only costs in excess of any insurance proceeds received as a result of the losses will be considered for determining whether a significant capital investment has been made.

(o) Software development means the creation of coded computer instructions and includes new media as defined by the commissioner in regulations.

(p) Substantial physical damage and economic harm means the loss of ability to continue operations at the location(s) within the county in which an emergency was declared by the governor after January 1, 2011 without incurring significant capital investment to repair an existing building or buildings, machinery or equipment or to purchase a new building or buildings, machinery or equipment, or to construct a new facility.

(q) Smart growth means the sensible, planned, efficient growth that integrates economic development and job creation with community quality-of-life by preserving and enhancing the built and natural environments. Smart growth encourages growth in developed areas with existing infrastructure to sustain it, particularly municipal centers, downtowns, urban cores, historic districts and older first-tier suburbs.

Part 211 APPLICATION AND REVIEW PROCESS

5 CRR-NY 211.1 Application and review process {#sec-5-crr-ny-211.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 211.1}

(a) An applicant must submit a complete application as prescribed by the commissioner.

(b) Such completed application must be submitted to the commissioner within:

(1) 180 days of the declaration of an emergency by the governor in the county in which the business enterprise is located; or

(2) 180 days of the enactment of chapter 56 of the Laws of 2011, if such date is later than the date specified in subdivision (a) of this section.

(3) allow the department and its agents access to any and all books and records deemed relevant by the department to monitor compliance with the provisions of article 20 of the Economic Development Law; and

(4) agree to be permanently disqualified for empire zone benefits at any location or locations that qualify for empire state jobs retention benefits if admitted into the Empire State Jobs Retention Program for such location or locations; and

(5) provide, upon request by the department, all of the following information:

(i) a plan outlining the schedule for meeting the jobs retention requirements as set forth in section 211.2(c) of this Part (such plan must include details on job titles and expected salaries);

(ii) the prior three years of Federal and State income or franchise tax returns, unemployment insurance quarterly returns, real property tax bills and audited financial statements; and

(iii) the employer identification or social security numbers for all related persons to the applicant, including those of any members of a limited liability company or partners in a partnership.

(6) provide a clear and detailed presentation of all related persons to the applicant to assure the department that jobs are not being shifted within the State; and

(7) certify, under penalty of perjury, that it is in substantial compliance with all environmental, worker protection, and local, State, and Federal tax laws.

(d) The commissioner, upon receipt of a complete application from an applicant, shall determine whether the applicant meets the eligibility criteria set forth in section 211.2 of this Part. An applicant that does not meet the eligibility criteria set forth in section 211.2 of this Part shall not be accepted into the program.

(e) Having determined that an application is complete and that the applicant meets the eligibility criteria set forth in section 211.2 of this Part, the department may admit the applicant into the program and issue a certificate of eligibility as defined in section 210.2(c) of this Title and a preliminary schedule of benefits as defined in section 210.2(k) of this Title by year based on the applicant's projections as set forth in its application. This preliminary schedule of benefits delineates the maximum possible benefits an applicant may receive under this program but the commissioner may amend a preliminary schedule of benefits provided that the commissioner complies with the credit caps in section 359 of the Economic Development Law.

5 CRR-NY 211.2 Eligibility criteria {#sec-5-crr-ny-211.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 211.2}

(a) To be a participant in the Empire State Jobs Retention Program, an applicant must be operating predominantly in a strategic industry as defined in subdivision (b) of this section and meet the job retention requirements for strategic industries as outlined in subdivision (c) of this section. When determining whether an applicant is operating predominantly in a strategic industry the commissioner will examine the nature of the business activity at the location for the proposed project and will make eligibility determinations based on such activity.

(b) Strategic industries shall consist of the following:

(1) financial services data center or a financial services back office operation;

(2) manufacturing;

(3) software development and new media;

(4) scientific research and development;

(5) agriculture;

(6) the creation or expansion of back office operations in the State; or

(7) distribution center.

(c) In order to participate in the Empire State Jobs Retention Program, a business entity operating in one of the strategic industries listed in subdivision (b) of this section:

(1) must be located in a county in which an emergency has been declared by the governor on or after January 1, 2011;

(2) must demonstrate substantial physical damage and economic harm resulting from the event leading to the emergency declaration by the governor; and

(3) must have had at least 100 full-time equivalent jobs in the county in which an emergency has been declared by the governor on the day immediately preceding the day on which the event leading to the emergency declaration by the governor occurred, and must retain or exceed that number of jobs in New York State. Jobs impacted in a county in which an emergency has been declared by the governor on or after January 1, 2011 but not retained by a participant are not eligible for the jobs retention tax credit.

(d) A business entity must be in substantial compliance with all worker protection and environmental laws and regulations. In addition, a business entity may not owe past due State taxes. In addition, a business entity must not owe local property taxes for any year prior to the year in which it applies to participate in the Empire State Jobs Retention Program; provided, however, in the case of a tax certiorari proceeding, a business entity would not be considered in arrears until a final decision is made with respect to such proceeding.

(e) A not-for-profit business entity, a business entity whose primary function is the provision of services including personal services, business services, or the provision of utilities, a business entity engaged predominantly in the retail or entertainment industry, and a business entity engaged in the generation or distribution of electricity, the distribution of natural gas, or the production of steam associated with the generation of electricity are not eligible to participate in the program.

5 CRR-NY 211.3 Evaluation standards {#sec-5-crr-ny-211.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 211.3}

(a) The evaluation standards which may be utilized by the commissioner when determining whether to admit an applicant to the program include the following:

(1) whether the applicant is proposing to substantially renovate contaminated, abandoned or underutilized facilities; or

(3) the degree of economic distress in the area where the applicant will locate the project identified in its application; or

(4) the degree of applicant's financial viability, strength of financials, readiness and likelihood of completion of the project identified in the application; or

(5) the degree to which the project identified in the application supports New York State's minority and women business enterprises; or

(6) the degree to which the project identified in the application supports the principles of smart growth as defined in section 210.2(q) of this Title; or

(7) the estimated return on investment that the project identified in the application will provide to the State; or

(9) the degree to which other state or local incentive programs are available to the applicant; or

(10) the likelihood that the project identified in the application would be located outside of New York State or would not occur but for the availability of State or local incentives; or

Part 212 CLAIMING CREDITS

5 CRR-NY 212.1 Claiming credits {#sec-5-crr-ny-212.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 212.1}

(a) A participant must submit evidence of retaining impacted jobs to the department in order to receive benefits under the program.

(b) Such evidence may include, but not be limited to, submission of the NYS-45 form. This evidence will serve to demonstrate that the participant has satisfied all applicable eligibility requirements and form the basis for the jobs retention tax credit.

(c) If a participant fails to demonstrate that it has satisfied the eligibility requirements set forth in section 211.2 of this Title, the department shall not issue such participant a certificate of tax credit.

(d) After reviewing such evidence and finding it sufficient, the department shall calculate the appropriate amount of tax credit and issue a certificate of tax credit for one taxable year. The certificate shall specify the exact amount of the job retention tax credit that a participant may claim under this program, and shall specify the taxable year in which such credit may be claimed. The tax credit can only be claimed on tax returns for the tax year indicated on the certificate. If the participant is a business entity that passes through the tax credit to its owners (such as partners in a partnership or members in a limited liability company), such owners can only claim their share of the tax credit on the tax return that corresponds to the tax year indicated on the certificate issued to the participant. In order to receive a certificate of tax credit for subsequent taxable years, the participant must submit to the department a performance report demonstrating that the participant continues to satisfy the eligibility criteria specified in section 211.2 of this Title.

Part 213 CALCULATION OF THE TAX CREDITS

5 CRR-NY 213.1 Calculation of the tax credits {#sec-5-crr-ny-213.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 213.1}

(a) The department shall calculate the amount of Empire State Jobs Retention Program credit for which the participant is eligible pursuant to section 211.2 of this Title.

(b) A participant in the program shall be eligible to claim a credit for retention of the impacted jobs. The amount of such credit per job shall be equal to the product of gross wages and 6.85 percent.

5 CRR-NY 213.2 Refundability of credits {#sec-5-crr-ny-213.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 213.2}

(a) The Empire State Jobs Retention Program credit established in this section shall be refundable as provided in the Tax Law. If a participant fails to satisfy the eligibility criteria in any one year, it will lose the ability to claim credit for that year.

(b) The event of such failure shall not extend the original 10-year eligibility period.

(c) The business enterprise shall be allowed to claim the credit as prescribed in section 36 of the Tax Law; provided, however, a business enterprise shall not be allowed to claim the credit prior to tax year 2012.

(d) A participant may be eligible for benefits under this article as well as article 17 of the Economic Development Law, provided the participant can only receive benefits pursuant to subdivision 2 of section 355 of the Economic Development Law for costs in excess of costs recovered by insurance.

Part 214 RECORD RETENTION AND REPORTING REQUIREMENTS

5 CRR-NY 214.1 Record retention {#sec-5-crr-ny-214.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 214.1}

(a) Each participant shall keep all relevant records for their duration of program participation plus three years.

(b) The department shall have the right to inspect all relevant records upon reasonable notice to the participant.

5 CRR-NY 214.2 Reporting {#sec-5-crr-ny-214.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 214.2}

(a) Each participant must submit a performance report annually, in such form as the commissioner may require within 30 days of the end of its taxable year.

(b) The commissioner shall prepare on a quarterly basis a program report for posting on the department's website. The first report will be due June 30, 2013, and every three months thereafter. Such report shall include, but not be limited to, the following information: number of applicants; number of participants approved; names of participants; total amount of benefits certified; benefits received per participant; total number of retained jobs and such other information as the commissioner determines necessary.

Part 215 REMOVAL FROM PROGRAM

5 CRR-NY 215.1 Removal from program {#sec-5-crr-ny-215.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 215.1}

(a) The commissioner shall remove any participant from the program for failing to meet any of the requirements set forth in section 211.1(c) of this Title, or for failing to meet the requirements set forth in section 211.2(c) or (d) of this Title.

(b) If the commissioner has removed the participant from the program pursuant to subdivision (a) of this section, the commissioner shall notify the participant of such removal in writing. Such notice of removal shall explain the reason or reasons for the removal from the program. The notice of removal shall state the effective date of removal, and advise the participant that it may appeal the removal in accordance with Part 216 of this Title. Such notice may be served by the department on the participant by certified, registered or overnight mail sent to the participant at the address last provided to the department by the participant.

Part 216 APPEAL PROCEDURES

5 CRR-NY 216.1 Applicability {#sec-5-crr-ny-216.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 216.1}

(a) This Part shall apply to all appeals taken as a result of a participant being removed from the program pursuant to section 215.1(a) of this Title.

5 CRR-NY 216.2 Designation of appeal officers {#sec-5-crr-ny-216.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 216.2}

The commissioner may designate any impartial person or persons to act as an appeal officer.

5 CRR-NY 216.3 Notice of appeal {#sec-5-crr-ny-216.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 216.3}

(a) A participant that received a notice of removal pursuant to section 215.1(b) of this Title may send a written notice ("Notice of Appeal") to the commissioner appealing the removal by no later than 30 days from the date of the mailing of the notice. Failure by a participant to appeal the commissioner's denial or removal of certification within the aforementioned 30 day period will be deemed a waiver of the participant's right to an appeal.

(b) The Notice of Appeal must contain specific factual information and documentation supporting the basis for the appeal and all legal arguments that are the basis for the participant's challenge to the removal.

(d) Counsel to the department may file a response to the Notice of Appeal with the appeal officer. Any response should address the factual and legal allegations contained in the Notice of Appeal. A copy of the response shall be sent to the participant, or to the attorney representing the participant.

5 CRR-NY 216.4 Authority of appeal officer {#sec-5-crr-ny-216.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 216.4}

(b) Nothing herein shall preclude the appeal officer from obtaining information from any outside source, as he or she deems appropriate.

(c) The appeal officer shall determine whether he or she deems it necessary to conduct a fact-finding hearing, and the level of formality of any hearing conducted.

5 CRR-NY 216.5 Appeal officer's report {#sec-5-crr-ny-216.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 216.5}

5 CRR-NY 216.6 Appeal decision {#sec-5-crr-ny-216.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 216.6}

(a) After receipt of the appeal officer's report, the commissioner will issue a final determination and serve a copy on the participant or its representative and the commissioner of the Department of Taxation and Finance. If the commissioner issues a final determination that includes findings of fact or conclusions of law that conflict with the recommendations of the appeal officer, the determination shall set forth the reasons therefore.

Chapter XXII START-UP NY PROGRAM

Part 220 SUNY TAX-FREE AREAS TO REVITALIZE AND TRANSFORM UPSTATE NEW YORK (START-UP NY) PROGRAM

5 CRR-NY 220.1 Purpose and general description {#sec-5-crr-ny-220.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.1}

(a) The purpose of these regulations is to establish procedures and guidelines for the SUNY tax free areas to revitalize and transform upstate New York Program (“START-UP NY Program”) established by article 21 of the Economic Development Law (EDL). Pursuant to sections 435 and 436 of the EDL, the Commissioner of Economic Development is authorized to promulgate regulations to establish, among other things:

(1) a process for the submission and approval of plans to designate tax-free NY areas;

(2) the eligibility criteria that will be applied in evaluating those plans;

(3) a process for the evaluation and possible rejection of applications by businesses desiring to participate in the START-UP NY Program;

(4) eligibility criteria that will be applied in evaluating those applications;

(5) a process for terminating a business from the START-UP NY Program; and

(6) a process for administrative appeals of such terminations.

(b) The START-UP NY Program is intended to promote entrepreneurialism and job creation by transforming higher education to create tax-free communities across the State, particularly in upstate New York, to attract high-tech and other start-ups, venture capital, new business and investments from across the world. The START-UP NY Program is intended to help companies, especially high-tech and start-up businesses, to start, grow and stay in New York.

5 CRR-NY 220.2 Definitions {#sec-5-crr-ny-220.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.2}

As used in this regulation, the following terms shall have the following meanings:

(a) Academic mission means any official academic mission announced and adopted by any university or college seeking approval as a sponsor of a designated tax-free NY area. Such academic mission may consider, among other things, the institution’s comprehensive undergraduate, graduate education and/or professional education curriculum; research; leadership role in the community; diversity and culture; regional economic development; internship and training opportunities; direct job opportunities for graduates; international outreach; specific area specialization within the university or college; and any other factors which the university or college deems to be appropriate in defining academic mission for purposes of the START-UP NY Program.

(b) Affiliated means connected, related, or associated with.

(d) Bona fide affiliation means a relationship between a New York State incubator or a hot spot sponsored or administered by a university or college, documented by a certificate of incorporation, by-laws, memorandum of understanding or similar document detailing the relationship between the parties and the rights, responsibilities and expectations of the parties, including but not limited to financial commitments, shared use of staff, facilities or resources.

(e) Business in the formative stage means a company in the start-up or early stage of development with a product, service, software, or research that is not yet in the commercial marketplace, but which can show continued and steady maturity towards commercialization and profitability either by product development, external funding or product sales.

(f) Campus means any real property in New York State owned or leased by a university or college, held in trust for a university or college, or owned or leased by an affiliated not-for-profit entity on behalf of a university or college or for the benefit of a university or college, and can include any such additional real property acquired, established, operated or contracted to be operated for or on behalf of the university or college. Real property owned or leased by a not-for-profit entity on behalf of a university or college or for the benefit of a university or college must be utilized by the university or college in furtherance of any stated academic mission of that university or college.

(g) City University or CUNY means the City University of New York as described in section 6202(2) of the Education Law, including each senior college and each community college.

(h) Commissioner means the Commissioner of Economic Development.

(i) Community means the census tract or tracts containing an approved tax-free NY area and the census tracts immediately contiguous to such census tract or tracts.

(j) Community college means a college established pursuant to the provisions of article 126 of the Education Law, and providing two-year or four-year post-secondary programs in general and technical educational subjects and receiving financial assistance from the State other than a community college of CUNY.

(k) Competitor means a business that produces, manufactures, or sells the same or substantially similar product or provides the same services, and competes for the same customers or clients as an applicant for the START-UP NY Program.

(l) College means a not-for-profit educational institution given the power to confer associate, baccalaureate or higher degrees in this State by the Legislature or under the Education Law.

(m) Contract can mean any agreement, including but not limited to a subcontract, lease, grant, bond, or covenant between two or more entities.

(n) Correctional facility shall have the same meaning as defined in section 431 of the EDL, and designation of which shall be provided in accordance with section 435 of the EDL.

(o) Department means the New York State Department of Economic Development.

(p) Directly adjacent means next to, adjoining or sharing a common border or boundary.

(q) Downstate New York means Nassau, Suffolk, and Westchester counties, and the counties of New York City (New York, Queens, Kings, Richmond, and Bronx).

(r) Economically distressed community means a community identified as having such criteria indicative of economic distress, including but not limited to rates of poverty, receipt of public assistance, or unemployment as the commissioner deems appropriate to demonstrate that a community is in need of economic assistance.

(s) EDL means the Economic Development Law.

(t) Eligible land means vacant land or space that is eligible for designation as a tax-free NY area.

(u) High tech business means a business engaged in the design, development, and introduction of new biotechnology, information technology, remanufacturing, advanced materials, processing, engineering or electronic technology products and/or innovative manufacturing processes, and meet such other requirements for a high-tech business as the commissioner shall develop.

(v) Incubator graduate means a business which has been certified as having successfully completed residency in a New York State incubator or innovation hot spot after having met the milestone or benchmark requirements established by the incubator or hot spot management for business growth including such factors as growth in employment, sales, profitability and physical space.

(w) Lease means any contract or agreement that provides terms and conditions for occupancy of land or space.

(x) Local economic development entity means a public agency or affiliated not-for-profit corporation including, but not limited to, an economic development or industrial development agency, local development corporation, local planning or development council, and all other such entities concerned with the economic development of the municipality or county within which the tax-free NY area is designated or is proposed for designation.

(y) Municipality means a city, town or village for all counties excluding those of Bronx, Kings, New York, Queens and Richmond counties. For the counties of Bronx, Kings, New York, Queens and Richmond, municipality means the City of New York.

(z) A net new job means a job created by a business participating in the START-UP NY Program during its period of certification in a tax-free NY area that satisfies all of the following criteria:

(1) is new to the State;

(2) has not been transferred from employment with another business located in this State, through an acquisition, merger, consolidation or other reorganization of businesses or the acquisition of assets of another business, or except as provided in section 431(6)(d) of the EDL and section 220.6(c) of this Part, has not been transferred from employment with a related person in this State;

(3) is not filled by an individual employed within the State within the immediately preceding 60 months by a related person;

(4) is either a full-time wage-paying job or equivalent to a full-time wage-paying job requiring at least 35 hours per week; and

(5) is located in a tax-free NY area and filled for more than six months during each year for which the tax benefits are being granted.

(aa) A new business means a business that satisfies the following conditions:

(1) the business must not be operating or located within the State as of the date it submits its application to participate in the START-UP NY Program;

(2) the business must not be moving existing jobs into the tax-free NY area from another area in the State;

(3) the business is not substantially similar in operation and in ownership to a business entity (or entities) taxable, or previously taxable within the last five taxable years, under section 183, 184, 185 or 186 of the Tax Law; article 9-A, 32 or 33 of the Tax Law; article 23 of the Tax Law or which would have been subject to tax under article 23 of the Tax Law (as such article was in effect on January 1, 1980), or the income or losses of which is or was includable under article 22 of the Tax Law; and

(4) the business must not have caused individuals to transfer from existing employment with a related person located in the State to similar employment with the business, unless such business has received approval for such transfers from the commissioner after demonstrating that the related person has not eliminated those existing positions.

(ab) New York State incubator or incubator means a business incubator program which also provides physical space that has been designated according to the requirements of section 16-v of the Urban Development Corporation Act.

(ac) New York State innovation hot spot or hot spot means an incubator that has been designated as a hot spot according to the requirements of section 16-v of the Urban Development Corporation Act.

(ad) Plan means a submission from eligible colleges or universities for approval of eligible land or vacant space for designation as a tax-free NY area pursuant to section 220.7, 220.8, or 220.9 of this Part.

(ae) Private university or college means a not-for-profit two- or four-year university or college given the power to confer associate, baccalaureate or higher degrees in this State by the Legislature or by the Regents under article 5 of the Education Law.

(af) Program means the START-UP NY Program, unless otherwise indicated.

(ag) A related person means a related person as defined in 26 U.S.C. section 465(b)(3)(C). At the time of this rulemaking, the Internal Revenue Service has interpreted related person to include the following:

(1) members of a family, but only an individual’s brothers and sisters, half-brothers and half-sisters, a spouse, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.);

(2) two corporations that are members of the same controlled group of corporations determined by applying a 10 percent ownership test;

(3) the fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts;

(4) a tax-exempt educational or charitable organization and a person who directly or indirectly controls it (or a member of whose family controls it);

(5) a corporation and an individual who owns directly or indirectly more than 10 percent of the value of the outstanding stock of the corporation;

(6) a trust fiduciary and a corporation of which more than 10 percent in value of the outstanding stock is owned directly or indirectly by or for the trust or by or for the grantor of the trust;

(7) the grantor and fiduciary, or the fiduciary and beneficiary, of any trust;

(8) a corporation and a partnership if the same persons own over 10 percent in value of the outstanding stock of the corporation and more than 10 percent of the capital interest or the profits interest in the partnership;

(9) two S corporations if the same persons own more than 10 percent in value of the outstanding stock of each corporation;

(10) an S corporation and a regular corporation if the same persons own more than 10 percent in value of the outstanding stock of each corporation;

(11) a partnership and a person who owns directly or indirectly more than 10 percent of the capital or profits of the partnership;

(12) two partnerships if the same persons directly or indirectly own more than 10 percent of the capital or profits of each;

(13) two persons who are engaged in business under common control;

(14) an executor of an estate and a beneficiary of that estate.

(ah) A sponsor or sponsoring university or college means a university or college that has received approval to sponsor a tax-free NY area or is affiliated with a strategic State asset as designated by the START-UP NY Approval Board pursuant to section 220.5, 220.7, 220.8, or 220.9 of this Part.

(ai) The START-UP NY Approval Board or board means a board consisting of three members, one each appointed by the Governor, the Speaker of the Assembly and the temporary President of the Senate. Each member of the START-UP NY Approval Board must have significant expertise and experience in academic-based economic development and may not have a personal interest in any project that comes before the board.

(aj) START-UP NY airport facility means vacant land or space owned by the State of New York on the premises of Stewart Airport or Republic Airport.

(ak) State University or SUNY means the State University of New York as described in section 352 of the Education Law.

(al) Strategic State asset means land or a building or group of buildings owned by the State of New York that is closed, vacant, or for which notice of closure has been given pursuant to any statutory notice requirement or which is otherwise authorized to be closed pursuant to any chapter of the laws of New York.

(am) Tax-free NY area means the land or vacant space of a university or college and designated area of a New York State incubator that meets the eligibility criteria specified in article 21 of the EDL and has been approved as a tax-free NY area pursuant to section 220.5, 220.7, 220.8, or 220.9 of this Part. It also means a strategic State asset that has been approved by the START-UP NY Approval Board.

(an) An underutilized property means vacant or abandoned land or space in an existing industrial park, manufacturing facility, a brownfield site as defined in article 27 of the Environmental Conservation Law, or a distressed or abandoned property, which shall be determined by factors including poverty, identified by the county or the town, village or city that contains such distressed or abandoned property, as of June 20, 2013. A university or college shall work with local municipalities or local economic development entities to identify underutilized properties.

(ao) University means a not-for-profit educational institution given the power to confer associate, baccalaureate or higher degrees in this State by the Legislature or under the Education Law.

(ap) Upstate New York means all counties in New York State except Nassau, Suffolk, and Westchester counties, and the counties of New York City (New York, Queens, Kings, Richmond and Bronx).

5 CRR-NY 220.3 Role of the commissioner {#sec-5-crr-ny-220.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.3}

(a) The commissioner reviews and approves all plans for approval of eligible land or vacant space as a tax-free NY area from SUNY, CUNY, and community colleges that wish to become a sponsor, except those required by section 435 of the EDL to be reviewed by the START-UP NY Approval Board. As part of this review and approval process, the commissioner can consider any information available, including all information submitted by the sponsor applicants.

(b) The commissioner reviews all business applications and may reject any applications from businesses that wish to locate onto an approved tax-free NY area and participate in the program. As part of this review process, the commissioner can consider any information available, including all information submitted by the business.

(c) The commissioner monitors land and space designated as tax-free NY areas to ensure compliance with regional limitations on the designation of land and space as tax-free NY areas.

(d) The commissioner monitors the number of employees eligible for the personal income tax benefit and coordinates with the Department of Taxation and Finance to ensure compliance with program requirements.

(e) The commissioner receives, reviews and acts on reports on businesses participating in the program regarding, among other things, new job creation and other eligibility criteria.

(f) The commissioner reviews and may remove any business from the program that fails to meet the eligibility requirement of article 21 of the New York State Economic Development Law or any of the requirements herein.

5 CRR-NY 220.4 START-UP NY Approval Board {#sec-5-crr-ny-220.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.4}

(a) Each member of the START-UP NY Approval Board shall be entitled to designate a representative to attend meetings of the board in his or her place, and to vote or otherwise act on his or her behalf in his or her absence. Notice of such designation shall be furnished in writing to the board by the designating member. A representative shall serve at the pleasure of the designating member. A representative shall not be authorized to delegate any of his or her duties or functions to any other person.

(b) The board is responsible for the review and approval of plans for approval as a tax-free NY area from private universities and colleges that wish to become a sponsor. The board also reviews and approves plans submitted by certain SUNY, CUNY, or community college campuses seeking designation of tax-free NY areas as described in section 220.5 of this Part.

(c) The board, by majority vote, shall also designate as tax-free NY areas up to 20 strategic State assets, in addition to certain START-UP NY airport facilities and correctional facilities, as defined in section 220.2 of this Part. Each strategic State asset, START-UP NY airport facility, and correctional facility shall be affiliated with a SUNY, CUNY, community college, or private university or college and such designation shall require the support of the affiliated university or college. Each strategic State asset and START-UP NY airport facility may not exceed a maximum of 200,000 square feet of vacant land or vacant building space designated as a tax-free NY area.

(d) In addition, the board may approve:

(1) one plan that includes eligible land owned or leased by a CUNY that is directly adjacent to a CUNY campus;

(2) one plan that includes eligible land owned or leased by a SUNY, community college, or private university or college in Nassau County or Suffolk County that is directly adjacent to such college’s or university’s campus; and

(3) one plan that includes eligible land owned or leased by a SUNY, community college, or private university or college in Westchester County that is directly adjacent to such college’s or university’s campus. The board may approve an additional plan, for a SUNY, community college, or private university or college in Nassau or Suffolk County not previously approved, in which case it shall also approve a second plan for eligible land or space not previously approved for a CUNY.

(e) The board shall endeavor to meet not less than quarterly to review, evaluate and vote on plans.

(f) Board members and their designees shall disclose to the board any personal, business, or financial interest in:

(1) a sponsor; or

(2) a business that is participating in the program or has applied to participate in the program. A board member, or designated representative, shall recuse himself or herself from evaluating or voting on any plan where a personal, business, or financial interest might reasonably tend to conflict with the proper discharge of his or her duties or otherwise create the appearance of a conflict of interest. Where practicable, a board member who has recused himself or herself shall designate a representative to attend meetings of the board and vote or otherwise act in his or her place.

5 CRR-NY 220.5 Eligibility criteria for designation as a tax-free NY area {#sec-5-crr-ny-220.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.5}

Only certain land and buildings located on the campuses of a SUNY or CUNY, community colleges, certain properties of private colleges and universities, certain properties outside the campuses of a SUNY or CUNY, community college or private colleges or universities, designated New York State incubators, strategic State assets, START-UP NY airport facilities, and correctional facilities, as defined in section 220.2 of this Part, shall be eligible for designation as a tax-free NY area.

(a) For SUNY and community college campuses in upstate New York, excluding all Empire State College campuses except for the Empire State College campus in Saratoga Springs:

(1) Any vacant space in any building located on campus shall be eligible for designation as a tax-free NY area.

(2) Any vacant land on campus shall be eligible for designation as a tax-free NY area.

(3) Up to a total of 200,000 square feet of vacant land or vacant building space located within one mile of a perimeter of a SUNY or community college campus shall be eligible for designation as a tax-free NY area.

(i) Upon application from such SUNY or community college and in consultation with the chancellor or his or her designee, the commissioner may qualify identified vacant land or identified vacant space in a building that is located more than one mile from its campus as eligible for purposes of this program if the commissioner determines that the SUNY or community college has shown that the use of the land or space will be consistent with the requirements of this program.

(4) A New York State incubator with a bona fide affiliation to the SUNY or community college—which therefore must involve a partnership to provide assistance and physical space to eligible businesses towards the goals of jointly creating jobs and incubating new startup businesses, and which must be aligned with or furthering the academic mission of the SUNY or community college—shall be eligible for designation as a tax-free NY area.

(5) No academic programs, administrative programs, offices, housing facilities, dining facilities, athletic facilities, or any other facility, space or program that actively serves students, faculty or staff may be closed or relocated in order to create vacant land or space to be utilized for the program.

(b) For SUNY and community college campuses in Nassau, Suffolk, or Westchester Counties:

(1) any vacant space in any building located on campus shall be eligible for designation as a tax-free NY area;

(2) any vacant land on campus shall be eligible for designation as a tax-free NY area;

(3) a New York State incubator with a bona fide affiliation to the SUNY or community college shall be eligible for designation as a tax-free NY area;

(4) plans may be submitted to the START-UP Approval Board for designation of eligible lands directly adjacent to the campus as tax-free NY area, described in section 220.4(d) of this Part;

(5) no academic programs, administrative programs, offices, housing facilities, dining facilities, athletic facilities, or any other facility, space or program that actively serves students, faculty or staff may be closed or relocated in order to create vacant land or space to be utilized for this program.

(1) any vacant land or vacant building space on campus property that is located in upstate New York shall be eligible for designation as a tax-free NY area;

(2) any property affiliated with Downstate Medical Center that constitutes a New York State incubator shall be eligible for designation as a tax-free NY area;

(3) for SUNY and community colleges in New York City with campus property in upstate New York, up to 200,000 square feet of vacant land or building space located within one mile of a perimeter of a SUNY or community college campus property that is in upstate New York shall be eligible for designation as a tax-free NY area;

(i) upon application from such SUNY or community college and in consultation with the chancellor or his or her designee, the commissioner may qualify identified vacant land or identified vacant space in a building that is located more than one mile from its campus as eligible for purposes of this program if the commissioner determines that the SUNY or community college has shown that the use of the land or space will be consistent with the requirements of this program.

(4) a New York State incubator with a bona fide affiliation with a New York City-based state university or community college shall be eligible for designation as a tax-free NY area; and

(5) Downstate Medical Center, Fashion Institute of Technology (FIT), Maritime College and College of Optometry are eligible to seek designation of additional tax-free NY space by the START-UP NY Approval Board as described in section 220.4(d) of this Part and subdivision (f) of this section;

(6) no academic programs, administrative programs, offices, housing facilities, dining facilities, athletic facilities, or any other facility, space or program that actively serves students, faculty or staff may be closed or relocated in order to create vacant land or space to be utilized for this program.

(d) For CUNY campuses:

(1) up to five CUNY campuses, one each in the boroughs of Manhattan, Brooklyn, Bronx, Queens and Staten Island, may be designated by the board of trustees of the CUNY in economically distressed communities as defined by the commissioner;

(i) any vacant space in any building located on a designated campus shall be eligible for designation as a tax-free NY area;

(ii) any vacant land on a designated campus shall be eligible for designation;

(2) any vacant land or vacant building space on property of a CUNY campus that is located in upstate New York shall be eligible for designation;

(3) a New York State incubator with a bona fide affiliation to the CUNY shall be eligible for designation as a tax-free NY area;

(4) CUNY campuses not otherwise designated are eligible to seek designation of tax-free NY space by the START-UP NY Approval Board as described in section 220.4(d) of this Part and subdivision (f) of this section;

(5) up to a total of 200,000 square feet of vacant land or vacant building space located within one mile of a perimeter of a CUNY campus in upstate NY shall be eligible for designation as a tax-free NY area;

(i) upon application from such CUNY and in consultation with the chancellor or his or her designee, the commissioner may qualify identified vacant land or identified vacant space in a building that is located more than one mile from its campus as eligible for purposes of this program if the commissioner determines that the SUNY or community college has shown that the use of the land or space will be consistent with the requirements of this program;

(e) For private colleges and universities in upstate New York:

(1) up to 2.4 million square feet of vacant space in any building or vacant land in upstate New York shall be eligible for designation as a tax-free NY area;

(2) a New York State incubator with a bona fide affiliation to the private university or college shall be eligible for designation as a tax-free NY area and are subject to the limitation on eligible square footage in this section.

(f) For private colleges and universities in downstate New York:

(1) private colleges and universities in downstate New York are eligible—along with Downstate Medical Center, Fashion Institute of Technology (FIT), Maritime College, College of Optometry and campuses of CUNY not otherwise designated—to apply to the START-UP NY Approval Board for designation of up to 75,000 square feet of vacant campus land or space as a tax-free NY area in each of the following eight counties: Bronx, Kings, Nassau, New York, Queens, Richmond, Suffolk, and Westchester. In any county where the allocated 75,000 square feet is designated as a tax-free NY area, an additional 75,000 square feet shall be eligible for designation by the START-UP NY Approval Board as a tax-free NY area;

(2) a New York State incubator with a bona fide affiliation to the private university or college shall be eligible for designation as a tax-free NY area;

(3) private colleges or universities located in Nassau, Suffolk or Westchester Counties are eligible to apply for designation by the START-UP NY Approval Board of certain adjacent property as tax-free NY area, described in section 220.4(d) of this Part.

(g) For strategic State assets, START-UP NY airport facilities, and correctional facilities:

(1) the START-UP NY Approval Board may also approve plans that include up to 20 strategic State assets affiliated with a SUNY, CUNY, or community college, or with a private college or university;

(2) each strategic State asset approved by the board may include up to 200,000 square feet of vacant land or vacant building space designated as a tax-free NY area and shall not count against any other square footage limitations in the program;

(3) the START-UP NY Approval Board may also approve plans that include correctional facilities, as defined in section 220.2 of this Part, affiliated with a SUNY, CUNY or community college, or with a private college or university;

(4) the START-UP NY Approval Board may also approve plans that includes START-UP NY airport facilities, as defined in section 220.2 of this Part, affiliated with a SUNY, CUNY or community college, or with a private college or university. Each START-UP NY airport facility included in a plan approved by the START-UP NY Approval Board shall not exceed 200,000 square feet of vacant land or vacant building space.

(h) For a New York State incubator:

(1) for purposes of this Part, only certain land and buildings within certified New York State incubators with a bona fide affiliation with a sponsoring university or college shall be eligible to participate in START-UP NY;

(2) in order for there to be a bona fide affiliation of a New York State incubator with a sponsoring university or college, the incubator and the sponsoring university or college must have a partnership to provide assistance and physical space to eligible businesses, as described in section 16-v of the Urban Development Corporation Act;

(3) in the case of a business incubator or hot spot sponsored or administered by a university or college, the incubator or hot spot shall document the relationship with the university or college by providing the certificate of incorporation, by-laws, memorandum of understanding or similar document detailing the relationship between the parties;

(4) in the case of a business incubator or hot spot that is part of a partnership with another university or college or a not-for-profit entity other than the sponsoring or administering entity, the incubator or hot spot shall provide evidence of such partnership agreement through submission of a memorandum of understanding, certificate of incorporation, by-laws or similar document detailing the rights, responsibilities and expectations of the parties, including but not limited to financial commitments, shared use of staff, facilities or resources;

(5) the incubator and the sponsoring university or college must directly work together towards the goals of jointly creating jobs and incubating new startup businesses;

(6) the mission and activities of the incubator must align with or further the academic mission of the sponsor.

5 CRR-NY 220.6 Eligibility criteria for businesses {#sec-5-crr-ny-220.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.6}

(a) For purposes of this section, only eligible businesses located on eligible land shall be eligible to participate in the START-UP NY Program.

(b) The commissioner may seek and consider any information required to assess a business’s eligibility in the START-UP NY Program.

(1) The following types of businesses are prohibited from participating in the START-UP NY Program:

(i) Retail and wholesale businesses. Retail businesses shall include establishments engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise. Wholesale businesses shall include establishments engaged in wholesaling merchandise, generally without transformation, and rendering services incidental to the sale of merchandise. Merchandise includes the outputs of agriculture, mining, manufacturing, and certain information industries, such as publishing.

(ii) Restaurants. Restaurants shall include establishments that prepare meals, snacks, and beverages to customer order for immediate on-premises and off-premises consumption. This includes establishments that provide food and drink only, or various combinations of seating space, waiter/waitress services and incidental amenities, such as limited entertainment.

(iii) Real estate brokers. Real estate brokers shall include establishments that are engaged in renting or leasing real estate to others; selling, buying, or renting real estate for others; and providing other real estate related services, such as appraisal services.

(iv) Law firms or businesses providing legal services. Law firms or businesses providing legal services shall include establishments or offices of legal practitioners known as lawyers or attorneys (i.e., counselors-at-law) primarily engaged in the practice of law. Establishments in this industry may provide expertise in a range or in specific areas of law, such as criminal law, corporate law, family and estate law, patent law, real estate law, or tax law.

(v) Medical or dental practices. Medical and dental practices shall include establishments that provide health care services, directly or indirectly, to patients.

(vi) Real estate management companies. Real estate management companies shall include establishments that are engaged in managing real estate for others and providing other real estate related services, such as appraisal services.

(vii) Hospitality. Hospitality-related businesses shall include establishments that provide lodging or short-term accommodations for travelers, vacationers, and others. Some provide lodging only; while others provide meals, laundry services, and recreational facilities, as well as lodging.

(viii) Finance and financial services. Finance and financial services businesses shall include establishments that are primarily engaged in financial transactions, that is, transactions involving the creation, liquidation, or change in ownership of financial assets, and/or in facilitating financial transactions.

(ix) Businesses providing personal services. Businesses providing personal services shall include businesses that provide personal and laundry services to individuals, households, and businesses. Services performed include: personal care services; death care services; laundry and dry cleaning services; and a wide range of other personal services, such as pet care services, photofinishing services, temporary parking services, and dating services.

(x) Businesses providing business administrative or support services, unless such business has received permission from the commissioner to apply to participate in the START-UP NY Program upon demonstration that the business would create no fewer than 100 net new jobs in the tax-free NY area. Businesses providing business administrative or support services shall include businesses that are engaged in activities that support the day-to-day operations of other organizations. These activities include general management, personnel administration, clerical activities, or cleaning activities.

(xi) Accounting firms or businesses providing accounting services. Accounting firms or businesses providing accounting services shall include establishments primarily engaged in providing services, such as auditing of accounting records, designing accounting systems, preparing financial statements, developing budgets, preparing tax returns, processing payrolls, bookkeeping, and billing.

(xii) Businesses providing utilities. Businesses that provide utilities shall include businesses that provide electric power, natural gas, steam supply, water supply, and sewage removal through a permanent infrastructure of lines, mains, and pipes.

(xiii) Businesses engaged in the generation or distribution of electricity, the distribution of natural gas, or the production of steam associated with the generation of electricity. Businesses engaged in the generation or distribution of electricity, the distribution of natural gas, or the production of steam associated with the generation of electricity shall include businesses that generate or distribute electric power, natural gas, or steam supply through a permanent infrastructure of lines, mains, and pipes.

(1) A business must be a new business to the State at the time it submits its application to participate in START-UP NY, except where:

(i) the business successfully graduated from a New York State incubator;

(ii) the business once operated in New York but moved its operations out of New York State on or before June 1, 2013, and the commissioner determines the business has demonstrated it will substantially restore jobs in New York that it previously had moved out of the State; or

(iii) the commissioner determined that the business has demonstrated it will create net new jobs in the tax-free NY area and that it or any related persons has not eliminated any jobs in the State in connection with this expansion;

(2) the business may be organized as a corporation, a partnership, a limited liability company or a sole proprietorship;

(3) a business must be in compliance with all worker protection and environmental laws and regulations. In addition, a business may not owe past due Federal or State taxes or local property taxes;

(4) the mission and activities of the business must align with or further the academic mission of the university or college sponsoring the tax-free NY area in which it seeks to locate, and the business's participation in the START-UP NY Program must have positive community and economic benefits, including but not limited to employment; opportunities for internship, vocational training and learning experiences for undergraduate and graduate study; diversification of local economy; environmental sustainability; entrepreneurship; positive, non-competitive and/or synergistic links to existing businesses; effect on the local economy; and opportunities as a magnet for economic and social growth. Business involvement with sponsors can include, but is not limited to:

(i) funding scholarships, facilities, or other academic services or amenities;

(ii) offering internships, experiential learning opportunities, or full-time jobs to school graduates;

(iii) teaching a course, offering seminars, or providing student mentoring;

(iv) using company resources, intellectual property or expertise to support the academic mission;

(5) the business must demonstrate that it will, in its first year of operation, create net new jobs;

(6) the business must not be engaged in a line of business that is currently or was previously conducted by the business or a related person in the last five years in New York State, unless:

(i) the business once operated in New York but moved its operations out of New York on or before June 1, 2013, and the commissioner determines the business has demonstrated it will substantially restore jobs in New York that it previously had moved out of the State; or

(ii) the commissioner determined that the business has demonstrated it will create net new jobs in the tax-free NY area and that it or any related persons has not eliminated any jobs in the State in connection with this expansion;

(7) the business must agree to submit an annual report, as described in section 220.16 of this Part, in such form as shall be required by the commissioner.

(d) To remain eligible for the program, a business must satisfy the following criteria:

(1) the business must maintain, at a minimum, net new jobs created and during any year of operation, the average number of employees of the business and its related persons in the State during the year must equal or exceed the sum of:

(i) the average number of employees of the business and its related persons in the State during the year immediately preceding the year in which the business submits its application to locate in a tax-free NY area; and

(ii) net new jobs of the business in the tax-free NY area during the year.

The average number of employees of the business and its related persons in the State in a year is determined by taking the average number of total employees of the business and its related persons in the State on March 31st, June 30th, September 30th and December 31st of that year;

(2) a business must submit an annual report to the commissioner as described in section 220.16 of this Part.

(e) In addition to the other requirements of this section, in order to be eligible to participate in the START-UP NY Program in downstate New York, a business must be:

(1) in the formative stage of development; or

(2) engaged in the design, development, and introduction of new biotechnology, information technology, remanufacturing, advanced materials, processing, engineering or electronic technology products and/or innovative manufacturing processes, and meet such other requirements for a high-tech business as the commissioner shall develop.

(f) In addition to the other requirements of this section, in order to be eligible to participate in the START-UP NY Program, any business that has successfully completed residency in a New York State incubator pursuant to section 16-v of the Urban Development Corporation Act may apply to participate in the START-UP NY Program provided that such business locates in a tax-free NY area, even where that business is not a new business. A business that has successfully completed residency in a New York State incubator pursuant to section 16-v of the Urban Development Corporation Act and resides in an approved tax-free NY area may apply to participate in the START-UP NY Program if the business demonstrates it will create net new jobs in that tax-free NY area.

5 CRR-NY 220.7 Application process for eligible State university campuses, community colleges and city university campuses for approval as a tax-free NY area {#sec-5-crr-ny-220.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.7}

(a) In order to become a sponsor, an eligible SUNY, CUNY or community college must submit a plan for approval to the commissioner containing, among other things:

(1) specification or identification of space or land proposed for designation as a tax-free NY area identifying the following:

(i) name and address of the SUNY, CUNY or community college seeking approval as a sponsor, the address of the space or land proposed for designation as a tax-free NY area, and a written description of the physical characteristics of the area for designation;

(ii) digital files containing data, such as a polygon shapefile or other format approved by the commissioner, that delineates the area proposed for designation;

(iii) digital files containing data, such as a point shapefile or other format approved by the commissioner, that provides locations of the area proposed for designation. Such files must include a unique identifier for each feature;

(iv) digital files containing a chart that includes name of city, town or village where the area proposed for designation is located; street address; zip code; name of property owner; type of property; parcel identification number (if applicable and available); vacant building name/number; type of vacant space; total square footage of area for designation; unique identifier; and any geographic information system (GIS) maps or other format approved by the commissioner, as indicated on the application form, of the area comprising the proposed tax-free NY area, showing existing streets, highways, waterways, natural boundaries and other physical features;

(2) the total square footage of the space or acreage of land proposed for designation as a tax-free NY area;

(3) description of the type of business or businesses that may locate on the area to be designated;

(4) description of the academic mission of the sponsor and how the anticipated businesses will align or further the academic mission of the university or college;

(5) description of how participation by those types of businesses in the program would generate positive community and economic benefits, including but not limited to:

(i) increased employment opportunities;

(ii) increased opportunities for internships, vocational training and experiential learning for undergraduate and graduate study;

(iii) diversification of the local economy;

(iv) environmental sustainability;

(v) increased entrepreneurship opportunities;

(vi) positive, non-competitive and/or synergistic links to existing businesses;

(vii) effect on the local economy;

(viii) opportunities as a magnet for economic and social growth;

(6) description of the process the sponsor will follow to select participating businesses;

(7) copy of the university or college conflict of interest guidelines, as required by section 220.20 of this Part;

(8) attestation that the proposed tax-free NY area has not been financed with any tax-exempt bonds, or where the proposed tax-free NY area has been financed with any tax-exempt bonds, a formal opinion from counsel with expertise and experience in bond tax matters, or other documentation deemed acceptable by the commissioner, that designation of the tax-free NY area will not jeopardize or conflict with any existing tax-exempt bonds used to finance any property of the sponsor;

(9) certification that the sponsor has not relocated or eliminated any academic programs, any administrative programs, offices, housing facilities, dining facilities, athletic facilities, or any other facility, space or program that actively serves students, faculty or staff in order to create vacant land or space to be designated as a tax-free NY area; and

(10) certification that the information contained in such plan is accurate and complete.

(b) At least 30 days before submitting the plan to the commissioner, a SUNY, CUNY or community college must provide a copy of the plan to the chief executive officer of the municipality or municipalities in which the proposed tax-free NY area is located, a local economic development entity representing the area in which the proposed tax-free NY area is located, the applicable university or college faculty senate, union representatives and the campus student government. The SUNY, CUNY or community college shall include in the plan to the commissioner certification of such notification, as well as a copy of any written responses, received prior to submission of the plan to the commissioner, from the parties to which the plan was submitted.

(c) If the plan includes land or space located outside of the campus, the SUNY, CUNY or community college must consult with the chief executive officer of the municipality or municipalities in which such land or space is located prior to including such space or land in its proposed tax-free NY area and shall give preference to underutilized properties. The SUNY, CUNY or community college shall include in the plan to the commissioner certification of such consultation, as well as a copy of any written responses or comments received from the municipality or municipalities that were consulted.

(d) As part of the evaluation, the commissioner will consult with the chancellor of the applicable SUNY, CUNY or community college, or his or her designee, regarding the plan. The consultation can occur in writing or in person, in a form and manner to be determined by the commissioner. The commissioner shall have the right to reject, in his or her sole discretion, any application that he or she determines is incomplete, without making any determination to approve or disapprove the application. In such circumstances, the commissioner shall advise the chancellor of the applicable SUNY, CUNY or community college, or his or her designee, that the application has been rejected as incomplete.

(e) For all plans where the land or vacant space sought for approval as a tax-free NY area is submitted pursuant to the eligibility requirements of section 432(1) of the EDL, the commissioner, upon receipt of a complete application from an eligible SUNY, CUNY or community college, shall determine whether that university or college meets the eligibility criteria set forth in section 220.5 of this Part. A university or college that does not meet the criteria set forth in section 220.5 of this Part shall not be accepted into the program. Having determined that an application is complete and that the SUNY, CUNY or community college meets the eligibility criteria set forth in section 220.5 of this Part, the commissioner may accept the SUNY, CUNY or community college as a sponsor.

(f) For all plans where the land or vacant space sought for approval as a tax-free NY area is submitted pursuant to the eligibility requirements of section 432(2) of the EDL, the commissioner, upon receipt of a complete application from an eligible SUNY, CUNY or community college, shall determine whether that university or college meets the eligibility criteria set forth in section 220.5 of this Part. A university or college that does not meet the criteria set forth in section 220.5 of this Part shall not be accepted into the program. Having determined that an application is complete and that the university or college meets the eligibility criteria set forth in section 220.5 of this Part, the commissioner will forward the plan to the START-UP NY Approval Board. The board will examine the merits of each proposal, including but not limited to, compliance with the eligibility criteria set forth in section 220.5 of this Part, reasonableness of the economic and fiscal assumptions contained in the application and in any supporting documentation and the potential of the proposed plan to create new jobs. The board will also give preference to plans that include underutilized properties within their proposed tax-free NY areas. The board will prioritize for acceptance plans for tax-free NY areas in counties that contain a city with a population of 100,000 or more without a university center as of June 20, 2013, and shall approve applications in a manner that ensures regional balance and balance among eligible rural, urban and suburban areas in the State. The board by a majority vote shall approve or reject each plan forwarded to it by the commissioner.

(g) The sponsor will be notified in writing that the proposed available land or vacant space has been approved as a tax-free NY area and will be advised that the sponsor may solicit businesses immediately to locate into the approved tax-free NY area and apply to participate in the program. The commissioner will also publicly post information about approved tax-free NY areas on the department’s website and encourage eligible businesses to locate into the approved tax-free NY area and apply to participate in the program.

(h) The commissioner shall have authorization to enter onto any land or space identified on any plan for approval as a tax-free NY area, as well as to have access to any information, documents, or records submitted in support of any plan, for the purposes of inspection, auditing and copying. Nothing herein shall diminish, or in any way adversely affect, New York State’s right to discovery in any pending or future litigation, or the ability of the Department of Taxation and Finance or the Department of Labor to conduct any independent audit or review.

5 CRR-NY 220.8 Application process for eligible private university or college campuses for approval as a tax-free NY area {#sec-5-crr-ny-220.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.8}

(a) In order to become a sponsor, an eligible private university or college campus must submit a plan for approval to the commissioner containing, among other things:

(1) specification or identification of the space or land proposed for designation as a tax-free NY area identifying the following:

(i) name and address of the university or college campus seeking approval as a sponsor, the address of the space or land proposed for designation, and a written description of the physical characteristics of the area for designation;

(ii) digital files containing data, such as a polygon shapefile or other format approved by the commissioner, that delineates the area proposed for designation;

(2) the total square footage of the space or land proposed for designation as a tax-free NY area;

(3) description of the type of business or businesses that may locate on that space or land;

(4) description of the academic mission of the sponsor and how the anticipated businesses will align or further the academic mission of the university or college;

(5) description of how participation by those types of businesses in the program would generate positive community and economic benefits, including but not limited to:

(i) increased employment opportunities;

(ii) increased opportunities for internships, vocational training and experiential learning for undergraduate and graduate study;

(iii) diversification of the local economy;

(iv) environmental sustainability;

(v) increased entrepreneurship opportunities;

(vi) positive, non-competitive and/or synergistic links to existing businesses;

(vii) effect on the local economy;

(viii) opportunities as a magnet for economic and social growth;

(6) description of the process the sponsor will follow to solicit businesses to locate in tax-free NY area and apply to participate in the START-UP NY program;

(7) copy of the university or college conflict of interest guidelines, as required by section 220.20 of this Part;

(8) attestation that the proposed tax-free NY area has not been financed with any tax-exempt bonds, or where any portion of the proposed tax-free NY area has been financed with any tax-exempt bonds, a formal opinion from counsel with expertise and experience in bond tax matters, or other documentation deemed acceptable by the commissioner, that designation of the tax-free NY area will not jeopardize or conflict with any existing tax-exempt bonds used to finance any property of the sponsor;

(9) certification that the information contained in such plan is accurate and complete.

(b) If the plan includes any land or space located outside of the university or college campus, the university or college must consult with the chief executive officer of the municipality or municipalities and notify a local economic development entity representing the area in which the proposed tax-free NY area is located prior to including such space or land in its proposed tax-free NY area at least 30 days prior to submitting the plan to the commissioner. The university or college shall include in the plan to the commissioner certification of such consultation and notification, as well as a copy of any written responses or comments, received prior to submission of the plan to the commissioner, from the parties with which the university or college consulted or to which the plan was submitted.

(c) The commissioner shall have the right to reject, in his or her sole discretion, any application that he or she determines is incomplete, without making any determination to approve or disapprove the application. In such circumstances, the commissioner shall advise the university or college that the application has been rejected as incomplete.

(d) Having determined that an application is complete and that the university or college meets the eligibility criteria set forth in section 220.5 of this Part, the commissioner will forward the plan to the START-UP NY Approval Board. The board will examine the merits of each proposal, including but not limited to, compliance with the eligibility criteria set forth in section 220.5 of this Part, reasonableness of the economic and fiscal assumptions contained in the application and in any supporting documentation and the potential of the proposed plan to create new jobs. The board will also give preference to plans that include underutilized properties within their proposed tax-free NY areas. The board will prioritize for acceptance plans for tax-free NY areas in counties that contain a city with a population of 100,000 or more without a university center as of June 20, 2013, and shall approve applications in a manner that ensures regional balance and balance among eligible rural, urban and suburban areas in the State. The board by a majority vote shall approve or reject each plan forwarded to it by the commissioner.

(e) The sponsor will be notified in writing that the proposed available land or vacant space has been approved as a tax-free NY area and will be advised that the sponsor may solicit businesses immediately to locate into the approved tax-free NY area and apply to participate in the START-UP NY Program. The commissioner will also publicly post information about approved tax-free NY areas on the department’s website and encourage eligible businesses to locate into the approved tax-free NY area and apply to participate in the START-UP NY Program.

(f) Plans shall be accepted by the START-UP NY Approval Board throughout the year and shall be due at least 21 days before any board meetings for consideration at that meeting. Notwithstanding the provisions in this section, the START-UP NY Approval Board shall, in its discretion, review completed plans submitted pursuant to this section on a rolling basis.

(g) The commissioner shall have authorization to enter onto any land or space identified on any plan for approval as a tax-free NY area, as well as to have access to any information, documents, or records submitted in support of any plan, for the purposes of inspection, auditing and copying. Nothing herein shall diminish, or in any way adversely affect, New York State’s right to discovery in any pending or future litigation, or the ability of the Department of Taxation and Finance or the Department of Labor to conduct any independent audit or review.

5 CRR-NY 220.9 Procedures for amending approved plans seeking designation of tax-free NY areas {#sec-5-crr-ny-220.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.9}

This section applies to any amendments to plans seeking designation of tax-free NY areas that have been approved by the commissioner or the START-UP NY Approval Board.

(a) A sponsor may seek to amend or modify the approved plan at any time. Amendments or modifications shall be submitted in the same manner as the original plan. The amendment must be submitted for approval pursuant to the procedures and requirements set forth in section 220.7 or 220.8 of this Part, whichever is applicable.

(b) Where a business has located and been approved to participate in the START-UP NY Program, amendments or modifications to the sponsor’s plan may not violate the terms of any lease with such business in the approved tax-free NY area.

(c) Where a business that has located and been approved to participate in the START-UP NY Program is terminated from the program because it no longer meets the eligibility requirements of the program, and the business chooses not to relocate from the approved tax-free NY area, and the business does not have a lease with the sponsor, the sponsor may seek to amend or modify the plan to allocate an amount of vacant land or space equal to the amount of space occupied by the terminated business.

(d) Any amendments or modifications must be approved pursuant to the procedures and requirements set forth in section 220.7 or 220.8 of this Part, whichever is applicable.

5 CRR-NY 220.10 Businesses locating in tax-free NY areas {#sec-5-crr-ny-220.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.10}

(a) To participate in START-UP NY, an eligible business must submit a complete application, as prescribed by the commissioner, on or before December 31, 2020.

(b) For purposes of encouraging eligible businesses to locate in a tax-free NY area and participate in the program, sponsors are permitted to solicit and accept application from eligible businesses pursuant to the provisions of this Part and article 21 of the EDL.

(c) A sponsor shall not accept any application to locate in a tax-free NY area from a business that would compete with other businesses in the same community but outside the tax-free NY area.

(d) As part of such application, a business applicant must:

(1) agree to allow the Department of Taxation and Finance to share its tax information with the department. The form created by the department to effectuate this information transfer shall be executed only by a person with authority to act on the business entity’s behalf in this regard. Any tax information shared as a result of this agreement shall be exempt from disclosure or inspection in accordance with the Freedom of Information Law, article 6 of the Public Officers Law;

(2) agree to allow the Department of Labor to share its tax and employer information with the department. The form created by the department to effectuate this information transfer shall be executed only by a person with authority to act on the business entity’s behalf in this regard. Any tax and employment information shared as a result of this agreement shall be exempt from disclosure or inspection in accordance with the Freedom of Information Law, article 6 of the Public Officers Law;

(3) allow the department and its agents access to any and all books and records deemed relevant by the department to monitor compliance with the requirements of the program;

(4) provide, upon request by the department, all of the following information:

(i) the name, address, and employer identification number of the business;

(ii) identification of any parent, subsidiary and affiliated businesses, if any;

(iii) a description of the nature of the business, i.e., identification of any goods produced or manufactured, or services to be rendered;

(iv) a description of the land or space the business will use, the terms of the lease agreement, if applicable, between the sponsor and the business, and whether or not the land or space being used by the business is being transferred or sublet to the business from some other business;

(v) description of any investment to be made in the tax-free NY area including, but not limited to, any plans for construction, rehabilitation or renovation; purchase or lease of equipment; estimated costs of investments; estimated schedule for the completion of any investment;

(vi) description of how the business plans to recruit employees from the local workforce;

(vii) certification by the business that it meets the eligibility criteria pursuant to this Part and article 21 of the EDL and will align with or further the academic mission of the sponsor;

(viii) certification of efforts to ascertain that, at the time of application, the business would not compete with any other business in the same community but outside the tax-free NY area, which certification shall include:

(a) an attestation by the sponsor that a review of 6-digit NAICS codes of businesses in the same community identifies no businesses in the same community with the same NAICS code;

(b) an affidavit of publication obtained by the sponsor from a daily print or online newspaper in the county where the applicable tax-free NY area is located that affirms that a notice regarding the application was published in such newspaper for no less than five consecutive days and an attestation by the sponsor that the published notice yielded no responses from businesses identifying themselves as competitors in the same community. Such notice shall include a detailed description of the applicant’s proposed products or services and shall also include appropriate contact information for the university or college representative responsible for receiving START-UP NY business applications and all other information as determined by the commissioner;

(c) an attestation by the applicant that it does not compete with other businesses in the same community but outside the tax-free NY area;

(d) in the event that a potential competitor is identified, the sponsor must seek a letter from the commissioner determining whether the applicant business would compete with other businesses in the same community but outside the tax-free NY area. In such case, the commissioner shall conduct a review of available information and make a final determination as to whether the applicant has a competitor in the same community. Such review shall include, but not be limited to, a comparison of the products and/or services proposed to be provided by the business applicant and the products and/or services provided by the potential competitor or competitors. The commissioner will make the final determination about whether the business applicant will compete with other existing businesses in the same community but outside the tax-free NY area.

(ix) certification that the business's participation in the START-UP NY Program will have positive community and economic benefits;

(x) the prior three years of Federal and State income or franchise tax returns, unemployment insurance quarterly returns, real property tax bills and audited financial statements;

(xi) the employer identification or social security numbers for all related persons to the business, including those of any members of a limited liability company or partners in a partnership;

(xii) a list and description of all related persons to the business and certification that jobs are not being shifted within the State;

(xiii) certification, under penalty of perjury, that the applicant is in substantial compliance with all environmental, worker protection, and local, State and Federal tax laws;

(xiv) whether the business has previously applied for acceptance to locate into a tax-free NY area and the status of that application;

(5) include a statement of performance benchmarks, identifying the number of net new jobs that must be created, the schedule forecasting a five-year plan or projection for creating those jobs, and details on job titles and expected salaries. This statement of performance benchmarks must also indicate the maximum number of net new jobs eligible for the personal income tax benefit described in section 39(e) of the Tax Law to be created;

(6) include a statement of consequences for the failure to meet performance benchmarks, as determined by the business applicant and the sponsor, which shall include one or more of the following:

(i) suspension of such business’s participation in the START-UP NY Program for one or more tax years as specified in such application;

(ii) termination of such business’s participation in the START-UP NY Program; or

(iii) proportional recovery of tax benefits awarded under the START-UP NY Program as specified in section 39 of the Tax Law.

(a) In the event that the business chooses proportional recovery of tax benefits as a consequence of realizing job creation less than the estimated amount, and the number of net new jobs created is at least 75 percent of the number of net new jobs promised, then the tax benefits shall be reduced by the percentage by which the business failed to meet its performance benchmark, calculated as the ratio of the difference between new net jobs promised and actual net new jobs created divided by the net new jobs promised. For purposes of example, if the business promised to create 100 net new jobs but created only 90 net new jobs, the difference is 10 net new jobs. Dividing those 10 jobs not created by the 100 jobs promised shows that the number of jobs created is 10 percent less than the number of jobs promised. The business’s tax benefits would therefore be reduced by 10 percent.

(b) In the event that the business chooses proportional recovery of tax benefits as a consequence of realizing job creation less than the estimated amount, and the number of net new jobs created is less than 75 percent of the number of net new jobs promised in any three years during the 10-year job creation schedule, then:

(1) in the first year that the business does not meet the 75 percent threshold, there shall be a proportional recovery of tax benefits;

(2) in the second year that the business does not meet the 75 percent threshold, such business's participation in the START-UP NY Program will be suspended; and

(3) in the third year that the business does not meet the 75 percent threshold, such business's participation in the START-UP NY Program may be terminated;

(7) in accordance with section 89(5) of the Public Officers Law, identify with specificity any information in the application that the applicant deems to be a trade secret or otherwise exempt from disclosure under the Freedom of Information Law, article 6 of the Public Officers Law.

(e) The sponsor, upon receipt of a complete application from a business applicant, shall determine whether the business applicant meets the eligibility criteria set forth in section 220.6 of this Part. An application that meets the eligibility criteria set forth in section 220.6 of this Part may then be forwarded by the sponsor to the commissioner for further review to determine whether the business meets all of the requirements, as well as the intended purpose, of article 21 of the EDL.

(1) Where the sponsor is a SUNY college or university and proposes to enter into a lease with a term greater than 40 years (including any options to renew) with the business applicant for eligible land in a tax-free NY area or for eligible land in a tax-free NY area of one million or more square feet, the sponsor must also submit a copy of the proposed lease to the START-UP NY Approval Board at the same time the application is provided to the commissioner. If the board disapproves of the lease, it must provide to the sponsor a statement of reason for disapproval and suggestions for modifications within 30 days of receipt. The sponsor may then submit a modified lease in accordance with the board’s suggestions to the commissioner for review as part of the business application. If the board does not disapprove of the lease within 30 days of receipt, it shall be deemed approved by the board and the application shall be deemed ready for review by the commissioner.

(f) When forwarding a completed business application to the commissioner, the sponsor must include a certification that it will adhere to any and all applicable requirements under article 21 of the EDL, article 8 of the Labor Law and article 15-A of the Executive Law.

(g) An applicant that does not meet the criteria set forth in section 220.6 of this Part shall not be approved to locate to a tax-free NY area or be accepted into the program.

(h) The commissioner, upon receipt of a complete application from a sponsor, shall conduct a further review to determine whether the business meets all of the requirements, as well as the intended purpose, of article 21 of the EDL. The commissioner shall consider, among other things, whether the applicant:

(1) meets all of the eligibility criteria set forth in section 220.6 of this Part;

(2) has submitted a complete application;

(3) has complied with the application requirements of this section; and

(4) demonstrated that the business's participation in the START-UP NY Program will have positive community and economic benefits.

(i) The commissioner may reject the application upon a determination that the applicant does not meet the eligibility criteria set forth in section 220.6 of this Part or any other requirement, as well as the intended purpose, of article 21 of the EDL.

(j) If the commissioner rejects the application, he or she shall provide written notice of such rejection to the sponsor.

(k) The commissioner may approve the application anytime after receipt; if the commissioner approves the application, the business applicant is deemed accepted into the START-UP NY Program and can locate to the sponsor’s tax-free NY area. If the commissioner does not reject the application within 60 days of receipt, the business applicant is deemed accepted into the START-UP NY Program and can locate to the sponsor’s tax-free NY area. The commissioner's 60-day review period is suspended pending any review or modification of any proposed lease, if any, between a SUNY sponsor and an applicant. The application of the business shall constitute the contract between the business and sponsor. The sponsor must provide an accepted business with documentation of its acceptance in such form as prescribed by the Commissioner of Taxation and Finance, which will be used to demonstrate such business's eligibility for the tax benefits specified in section 39 of the Tax Law.

(l) Where the commissioner determines that the number of net new jobs eligible for the personal income tax benefit under section 39(e) of the Tax Law will exceed the allowable total aggregate net new jobs in the year in which the application is accepted, the business will be given priority in the subsequent year and all net new jobs identified in the business application’s performance benchmarks will be eligible for the personal income tax benefit the following year.

(m) At the conclusion of the lease term between the sponsor and the business for land or space in a tax-free NY area owned by the sponsor, if applicable, the leased land or space and any improvements thereon shall revert to the sponsor, unless the lease is renewed.

5 CRR-NY 220.11 Amendments to a business’s application for acceptance into the program {#sec-5-crr-ny-220.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.11}

This section applies to any amendments made to the original application following approval of the business applicant into the program pursuant to section 220.10 of this Part.

(a) Following approval and acceptance into the program, a business may amend any part of its application at any time to reflect any changes, so long as the amendments are made in the same manner as the application for participation in the program. A business may amend its schedule of job creation in the same manner that it applied for participation in the program, and any increase in eligibility for personal income tax benefits on behalf of additional net new jobs shall be subject to the limitations of section 220.6 of this Part.

(b) If the original application included a lease between the business applicant and a SUNY college or university, any amendments to the application may not violate the terms of such lease or provide for any contradictory terms.

5 CRR-NY 220.12 Re-application process for businesses rejected from the program {#sec-5-crr-ny-220.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.12}

This section applies to re-applications made as a result of an applicant being rejected from the program for failing to meet the requirements of section 220.6 of this Part or any other requirement, as well as the intended purpose, of article 21 of the EDL, pursuant to section 220.10 of this Part.

(a) With sponsor approval, an applicant that has been rejected from the program may choose to locate into a tax-free NY area but will not be eligible for any of the benefits associated with the program.

(b) An applicant that has been disapproved or rejected from the START-UP NY Program may submit a re-application to the commissioner by submitting, in writing within 60 days of receipt of written rejection, a request for re-application. The request must identify the basis for the disapproval or rejection, as well as specific factual information (along with documentation establishing that information) and any arguments in support of the re-application. Failure by a business to request re-application within the aforementioned 60-day period will be deemed a waiver of the applicant’s ability to submit a re-application.

(c) The commissioner may review all arguments contained in the re-application, all information in the original submissions, as well as any information independently obtained. Nothing herein precludes the commissioner from obtaining information from any outside source, as deemed appropriate. The commissioner may request additional information from the applicant in support of the re-application. At the commissioner’s sole discretion, the commissioner may conduct an in-person interview with any person who has information regarding the application. The level of formality of any interview shall be at the discretion of the commissioner.

(d) The commissioner shall notify the sponsor, within 60 days of receipt of an applicant’s complete re-application, of the commissioner’s approval or disapproval of the re-application. A disapproval of a re-application will be deemed final and non-appealable.

5 CRR-NY 220.13 Auditing process {#sec-5-crr-ny-220.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.13}

The department, the Department of Taxation and Finance, and the Department of Labor shall have access to all information, records, and documents of a business located in a tax-free NY area and participating in the START-UP NY Program. Such access shall be provided during normal business hours at an office of the business within the State of New York for the purposes of inspection, auditing and copying. The aforementioned agencies shall take reasonable steps to protect from public disclosure any records that are exempt from disclosure under section 87 of the Public Officers Law, provided that the business, in accordance with section 89(5) of the Public Officers Law, identifies the records or portions of records that should be excepted from disclosure and states the reasons for such exception. Nothing herein shall diminish an agency’s rights or obligations under the Freedom of Information Law, or in any way adversely affect New York State’s right to discovery in any pending or future litigation.

5 CRR-NY 220.14 Removal of business from the program {#sec-5-crr-ny-220.14 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.14}

(a) A business that violates any New York State laws, including but not limited to tax, labor and civil rights laws, or is found to have materially misrepresented facts in its application for participation in the program, or moves out of a tax-free NY area will be subject to immediate termination from the program.

(b) If the sponsor determines that a business no longer satisfies any of the eligibility criteria set forth in section 220.6 of this Part or any other requirement, as well as the intended purpose, of article 21 of the EDL, the sponsor may recommend to the commissioner that the business be immediately removed from participation in the program.

(c) The commissioner shall remove any business from the program for failing to meet any of the eligibility criteria set forth in section 220.6 of this Part or any other requirement, as well as the intended purpose, of article 21 of the EDL.

(d) If the commissioner has removed the business from the program, the commissioner shall notify the sponsor and the business of such removal in writing. Such notice of removal shall explain the reason or reasons for the removal from the program. The notice of removal shall state the effective date of removal, and advise the business that it may appeal the removal in accordance with section 220.15 of this Part. Such notice may be served by the department on the business by certified, registered or overnight mail sent to the business at the address last provided to the department by the business and shall be deemed served three business days after being sent.

(e) A copy of the notice of removal shall be sent to the Commissioner of Taxation and Finance within 30 days following a final appeal determination or waiver of appeal.

(f) Upon such removal, such business shall not be eligible for the tax benefits described under section 39 of the Tax Law for that or any future taxable year, calendar quarter or sales tax quarter, although an employee of such business may continue to claim the tax benefit for their wages during the remainder of that employee’s taxable year.

(g) Any lease or contract between a sponsor and a business removed from the program shall be rescinded, effective on the 30th day after the commissioner serves a removal notice on such business, and the land or space and any improvements thereon shall revert to the sponsor.

5 CRR-NY 220.15 Appeal procedures for businesses upon removal from the program {#sec-5-crr-ny-220.15 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.15}

This section applies to appeals taken as a result of a business being removed from the program pursuant to section 220.14 of this Part.

(a) The commissioner may designate any impartial person or persons to act as an appeal officer. Such persons may not include a member of the START-UP Approval Board or anyone with a real or perceived conflict of interest.

(b) Notice of appeal.

(1) A business that received a removal notice pursuant to section 220.14 of this Part may send a written notice of appeal to the commissioner appealing the removal by no later than 30 days from the date of service of the removal notice. Failure by a business to appeal the commissioner’s denial or removal of certification within the 30-day period will be deemed a waiver of the business’s right to an appeal.

(2) The notice of appeal must contain specific factual information (along with documentation establishing that information), and all legal arguments that are the basis for the business’s challenge to the removal.

(3) A notice of appeal must be sent to the commissioner at the address indicated in the removal notice.

(4) Counsel to the department may file a response to the notice of appeal with the appeal officer. Any response should address the factual and legal allegations contained in the notice of appeal. A copy of the response shall be sent to the business, or to the attorney representing the business.

(1) The appeal officer shall evaluate the merits of the appeal and any response from counsel to the department. Where the appeal officer deems it appropriate, the appeal officer may require the business or counsel to the department to address additional issues or submit additional information regarding the appeal.

(2) Nothing herein shall preclude the appeal officer from obtaining information from any outside source, as he or she deems appropriate.

(3) The appeal officer shall determine whether he or she deems it necessary to conduct a fact-finding hearing, and the level of formality of any hearing conducted.

(d) Appeal officer’s report.

The appeal officer shall prepare a report and make recommendations to the commissioner. The recommendations may be in the form of a proposed decision which will contain findings of fact and conclusions of law. This report, along with the entire record, shall be transmitted to the commissioner, counsel to the department, and the business entity that filed the appeal.

(e) Appeal decision.

After receipt of the appeal officer’s report, the commissioner shall issue a final decision and serve a copy on the business or its representative. If the commissioner issues a final decision that includes findings of fact or conclusions of law that conflict with the recommendations of the appeal officer, the decision shall set forth the reasons therefor.

5 CRR-NY 220.16 Disclosure authorization, annual verification and required reporting {#sec-5-crr-ny-220.16 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.16}

(a) By submitting an application for participation in the program, the business authorizes the commissioner to disclose publicly the name and address of the business to be located within a tax-free NY area, as well as any other information contained in such business' application, including the projected number of net new jobs to be created.

(b) Each business must submit an annual performance and verification report, in such form as the commissioner may require, on or before March 15th of each year or, for years in which March 15th is not a New York State business day, the New York State business day immediately following March 15th. The annual report shall include, among other things:

(1) certification of continued eligibility in the program;

(2) the number of net new jobs created;

(3) the number of net new jobs maintained from the previous calendar year;

(4) wages paid during the year to its employees employed in the net new jobs created in the tax-free NY area.

(c) The commissioner may disclose the annual performance and verification reports publicly and include it in any the reports required of the commissioner by the EDL.

(d) On or before December 31, 2020, the commissioner shall prepare an evaluation of the effectiveness of the program and deliver it to the Governor and the Legislature to determine continued eligibility for application submissions.

5 CRR-NY 220.17 Freedom of Information Law and disclosure {#sec-5-crr-ny-220.17 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.17}

(a) The commissioner, to the extent practicable and legally permissible, may disclose publicly the names and addresses of the businesses receiving any of the tax benefits specified in this section. In addition, the commissioner may disclose publicly the amounts of such benefits allowed to each such business, and whether or not a business created or maintained net new jobs during the taxable year.

(b) The commissioner, to the extent practicable and legally permissible, may publicly disclose the aggregate amounts of such tax exemption allowed to employees. In addition, the commissioner may publicly disclose the number of net new jobs any business reports on its tax return or report or any other information necessary for the commissioner or the sponsor to monitor and enforce compliance with the law, rules and regulations governing the program.

(c) Notwithstanding any provision to the contrary, the Commissioner of Taxation and Finance, in determining whether a business or any of its owners is entitled to the tax benefits under the program, may utilize and if necessary, disclose to the commissioner, information derived from the tax returns of such business or related persons of such business and wage reporting information relating to any employees of such business or its related persons.

(d) Freedom of Information Law disclosure waiver.

(1) Except to the extent required by any law, regulation, judicial or administrative process, including, but not limited to the Freedom of Information Law, article 6 of the Public Officers Law, proprietary information or supporting documentation submitted by a business to a sponsor shall be utilized only for the purpose of evaluating such business's application or compliance with the provisions of article 21 of the EDL and shall not be otherwise disclosed.

(2) Any person who willfully discloses such information to a third party for any other purpose whatsoever shall be guilty of a misdemeanor except if:

(i) such person is required or authorized to disclose such information pursuant to any law, regulation, judicial or administrative process including the Freedom of Information Law;

(ii) such information otherwise becomes publicly available through no fault of such person;

(iii) such information becomes available on a non-confidential basis from a source other than the business;

(iv) such information is known prior to its receipt from the business or without any obligations of confidentiality with respect thereto; or

(v) such information is developed independently of any disclosure made by the business of any proprietary information.

5 CRR-NY 220.18 Record retention {#sec-5-crr-ny-220.18 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.18}

(a) Each business located in a tax-free NY area and receiving tax benefits through the program shall keep all relevant records for the duration of program participation plus three years.

(b) The department shall have the right to inspect all relevant records upon reasonable notice to the sponsor or business.

5 CRR-NY 220.19 Penalties for fraud in the program {#sec-5-crr-ny-220.19 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.19}

If the commissioner determines that any business located in a tax-free NY area and participating in the program has acted fraudulently in connection with its participation in such program, such business:

(a) shall be immediately terminated from the program;

(b) shall be subject to applicable criminal penalties, including but not limited to the felony crime of offering a false instrument for filing in the first degree pursuant to section 175.35 of the Penal Law; and

(c) shall be required in that year to add back to tax the total value of the tax benefits described in section 39 of the Tax Law that such business has received and that the employees of such business have received up to the date of such finding. The amount required to be added back shall be reported on such business's corporate franchise report if such business is taxed as a corporation or on the corporate franchise tax reports or personal income tax returns of the owners of such business if such business is taxed as a sole proprietorship, partnership or New York S corporation.

5 CRR-NY 220.20 Conflict of interest guidelines {#sec-5-crr-ny-220.20 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 220.20}

(a) Each university or college participating in the START-UP NY Program shall adopt a conflict of interest policy. Such conflict of interest policy shall provide, as it relates to the program:

(1) as a general principle, that service as an official of the university or college shall not be used as a means for private benefit or inurement for the official, a relative thereof, or any entity in which the official, or relative thereof, has a business interest;

(2) no official who is a vendor or employee of a vendor of goods or services to the university or college, or who has a business interest in such vendor, or whose relative has a business interest in such vendor, shall vote on, or participate in the administration by the university or college, as the case may be, of any transaction with such vendor; and

(3) upon becoming aware of an actual or potential conflict of interest, an official shall advise the president or chief executive officer of the university or college, as the case may be, of his or her or a relative's business interest in any such existing or proposed vendor with the university or college.

(b) Each university or college shall maintain a written record of all disclosures of actual or potential conflicts of interest made pursuant to this section, and shall report such disclosures, on a calendar year basis, by January 31st of each year, to the auditor for such university or college. The auditor shall forward such reports to the commissioner, who shall make public such reports.

(1) an official of a university or college has a “business interest” in an entity if the individual:

(i) owns or controls 10 percent or more of the stock of the entity (or one percent in the case of an entity the stock of which is regularly traded on an established securities exchange); or

(ii) serves as an officer, director or partner of the entity;

(2) a relative of an official of a university or college shall mean any person living in the same household as the individual and any person who is a direct descendant of that individual's grandparents or the spouse of such descendant; and

(3) an official of a university or college shall mean an employee at the level of dean and above as well as any other employee with decision-making authority over the START-UP NY Program.

Chapter XXIII EMPIRE STATE POST PRODUCTION TAX CREDIT PROGRAM

Part 230 EMPIRE STATE POST PRODUCTION TAX CREDIT PROGRAM

5 CRR-NY 230.1 Purpose and general description {#sec-5-crr-ny-230.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.1}

(a) The purpose of this Part is to set forth the application process for the Empire State Post Production Tax Credit Program established by chapter 57 of the Laws of 2010 and amended by chapter 59 of the Laws of 2013. These regulations establish procedures for the allocation of such credits, including, but not limited to, the application process, standards for evaluation of applications, and other provisions deemed necessary and appropriate. The Department of Economic Development shall administer the program, including the issuance of tax credit certificates.

(b) A taxpayer which is a qualified film production company, and which is subject to tax under article 9-A or 22 of the Tax Law, unless eligible for the film production credit under section 24 of the Tax Law with respect to the qualified film, shall be allowed a credit against such tax, pursuant to the provisions referenced in subdivision (c) of section 31 of the Tax Law.

5 CRR-NY 230.2 Definitions {#sec-5-crr-ny-230.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.2}

As used in this Part, the following terms shall have the following meanings:

(a) Authorized applicant means a qualified film production company that is scheduled to begin post production on a qualified film no more than 180 days after submitting an initial application to the department.

(b) Certificate of conditional eligibility means a certificate issued by the department which states that the authorized applicant has met the criteria set forth in section 230.6(a) of this Part and is being considered for the Empire State Post Production Tax Credit, pending successful completion and approval of the final application. Such certificate shall include, but not be limited to, the following information: name and address of the authorized applicant, effective date, taxpayer identification number, a statement that the initial application meets the criteria for conditional eligibility under section 230.6(a)(1)-(9) of this Part and a disclaimer stating that actual receipt of the tax credit is subject to completion and approval of the final application.

(c) Certificate of tax credit means a certificate issued by the department which states the amount of the Empire State Post Production Tax Credit that an approved applicant has qualified for based on the department’s analysis under section 31 of the Tax Law and the provisions of this Part. Such certificate shall include, but not be limited to, the following information: name and address of the approved applicant, name of the qualified film to which the credit applies, the amount of the tax credit to be received by the approved applicant, allocation year of the tax credit earned, a disclaimer stating that the tax credit shall not be claimed before the later of either the taxable year the production of the qualified film is complete or the taxable year immediately following the allocation year for which the film has been allocated a credit and a disclaimer stating that actual receipt of the tax credit is subject to the statutory maximum amount of credits that are allocated for the program.

(d) Commissioner means the Commissioner of the New York State Department of Economic Development.

(e) Completeness of the application means that all questions on the application itself are fully addressed by the applicant and that any additional substantiating documents that are requested by the department are provided.

(g) Department means the New York State Department of Economic Development.

(h) End credit requirements means that a qualified film production company that has applied for credit under the provisions of this Part agrees, as a condition for the granting of the credit, either to include in the end credits of each qualified film the phrase “This Production Participated in the New York State Governor’s Office for Motion Picture & Television Development’s Post Production Credit Program” and a logo provided by the Governor's Office of Motion Picture and Television Development or to include in each qualified film distributed by dvd, or other media for the secondary market, a New York promotional video approved by the Governor's Office of Motion Picture and Television Development.

(i) Feature-length film means a production intended for commercial distribution to a motion picture theater or directly to the consumer viewing market that has a running time of at least 75 minutes in length.

(j) Final application means a document created by the department and submitted by an applicant after it has completed post production of a qualified film which contains information concerning actual post production expenditures regarding a qualified film that could make it eligible for the Empire State Post Production Tax Credit under section 31 of the Tax Law and the provisions of this Part. Such application shall include, but not be limited to: actual data with regard to the qualified film’s total post production budget, the total post production costs at post production facilities in and outside of New York and any other information the department determines is necessary.

(k) Initial application means a document created by the department and submitted by an authorized applicant which contains information concerning projected post production expenditures regarding a qualified film that could make it eligible for the Empire State Post Production Tax Credit under section 31 of the Tax Law and the provisions of this Part. Such application shall include, but is not limited to, the following information: the estimated total post production budget for the qualified film, estimates of post production expenditures at qualifying post production facilities, estimates of post production expenditures in New York State and outside of New York State and any other information the department determines is necessary.

(l) Principally engaged in the production and post production of a qualified film and controls the qualified film during production and post production means that the legal entity is responsible for payment of the direct production expenses (including pre- and post-production) and is a signatory to the qualified film’s contracts with its payroll company, post production facility operators and all vendors.

(m) Post production costs means costs for production of original content for a qualified film employing traditional, emerging and new workflow techniques used in post-production for picture, sound and music editorial, rerecording and mixing, visual effects, graphic design, original scoring, animation, and musical composition; but shall not include the editing of previously produced content for a qualified film or the salary of music composers. Post production costs shall not include:

(1) costs for a story, script or scenario to be used for a qualified film;

(2) licensing or rights associated with the production of a qualified film; and

(3) wages or salaries or other compensation for writers, directors, including music directors, producers and performers (other than background actors with no scripted lines).

(n) Post production facility means a building and/or complex of buildings and their improvements on which films are intended to be post produced.

(o) Premature application means an initial application in which the department reasonably determines that the applicant cannot commence post production within 180 days of the date the initial application was submitted. Such determination shall be based on, among other things, vagueness of the applicant’s answers on the initial application and during the initial interview and lack of documentation supporting an applicant’s initial application.

(p) Program means the Empire State Post Production Tax Credit Program.

(q) Qualified film means a feature-length film, television film, relocated television production, television pilot and/or each episode of a television series, regardless of the medium by means of which the film, pilot or episode is created or conveyed. Qualified film shall not include:

(1) a documentary film, news or current affairs program, interview or talk program (unless such talk program is a relocated television production pursuant to paragraph [8] of subdivision [b] of section 24 of the Tax Law), how-to (i.e., instructional) film or program, film or program consisting primarily of stock footage, sporting event or sporting program, game show, award ceremony, film or program intended primarily for industrial, corporate or institutional end-users, fund-raising film or program, daytime drama (i.e., daytime soap opera), commercials, music videos or “reality” program;

(3) a compilation of short films or webisodes aggregated to meet either the definition of television film or television series under these regulations. Title 18, United States Code, is available for public inspection and copying at the following address: New York State Department of Economic Development, 625 Broadway, 8th Floor, Albany, NY 12245.

(r) Qualified film production company means a corporation, partnership, limited partnership, or other entity or individual which or who is principally engaged in the production of a qualified film and controls the qualified film during production.

(s) Qualified post production costs means post production costs only to the extent such costs are attributable to the use of tangible property or the performance of services within New York State directly and predominantly in the post production of a qualified film. For the purpose of this definition, “attributable to the use of tangible property or the performance of services within New York State” shall only include costs and their pro rata portions which are incurred directly in New York State.

(t) Qualified post production facility means a post production facility located in New York State, engaged in finishing a qualified film.

(u) Television pilot means the initial episode produced for a proposed television series. This category will include shorter formats which are known as television presentation, a production of at least 15 minutes in length, produced for the purposes of selling a proposed television series, but not intended for broadcast.

(v) Television series means a regularly occurring production intended to run in its initial broadcast, regardless of the medium or mode of its distribution, in a series of narrative and/or thematically related episodes that have a running time of at least 30 minutes in length each (inclusive of commercial advertisement and interstitial programming if any).

(w) Third party inspection means an inspection conducted by a qualified certified public accountant of an applicant’s final application using agreed upon procedures as prescribed by the department to verify that all criteria pursuant to section 230.6(b) of this Part have been met. Such agreed upon procedures shall be posted online.

5 CRR-NY 230.3 Eligibility {#sec-5-crr-ny-230.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.3}

For the purposes of this Part, only an authorized applicant shall be eligible to apply for the Empire State Post Production Tax Credit.

5 CRR-NY 230.4 Application process {#sec-5-crr-ny-230.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.4}

(a) Initial application.

(1) An authorized applicant shall submit an initial application to the department prior to the completion of principal photography. In the case of a TV series an authorized applicant shall submit such application prior to completion of principal photography of the first episode of the series. The department, in its sole discretion, may waive the above rule upon an authorized applicant’s showing of exigent circumstances so long as that authorized applicant has not yet incurred qualified post production costs in New York State.

(2) After submission of the initial application, the department may, in its sole discretion, require the authorized applicant to have an interview with the department to discuss the details of the initial application. A post production supervisor and post production accountant or their designee, approved by the department, shall attend such interview if requested by the department.

(3) The department shall approve or disapprove the initial application based upon criteria set forth in section 230.6(a) of this Part.

(4) After review of the initial application, the department shall notify the authorized applicant of its eligibility and may issue a certificate of conditional eligibility to the authorized applicant.

(b) Final application.

(1) An applicant may submit a final application to the department after the completion of a qualified film.

(2) Upon receipt of the final application, the department may request additional documentation, including copies of receipts of qualified post production costs, to determine if the qualified film qualifies for the Empire State Post Production Tax Credit. The department shall approve or disapprove the final application based upon criteria set forth in section 230.6(b)(1)-(5) of this Part. If the final application is approved, the department shall issue a certificate of tax credit to the approved applicant. The department shall provide a copy of such certificate of tax credit to the Department of Taxation and Finance. If the final application is disapproved, the department shall provide the applicant with a notice of disapproval which shall state the reasons therefor. Such disapproval shall be a rejection of the applicant’s final application. A disapproved applicant may appeal such decision pursuant to section 230.9 of this Part, or reapply pursuant to the provisions of this section.

5 CRR-NY 230.5 Allocation of Empire State Post Production Tax Credit {#sec-5-crr-ny-230.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.5}

The department shall allocate the amount of the credits given for each calendar year in order of priority based upon the date of the approval of an applicant’s final application. In the event that an approved applicant’s Empire State Post Production Tax Credit would exceed the maximum amount of credits allowed for that given year, the approved applicant’s credit will be allocated on a priority basis in the immediately succeeding calendar year. A maximum of $7 million of credits may be allocated in calendar years 2013 and 2014 and $25 million may be allocated in calendar years 2015 through 2019.

5 CRR-NY 230.6 Criteria for evaluation of applications {#sec-5-crr-ny-230.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.6}

(a) Initial application.

An initial application shall be reviewed by the department to determine, in its discretion, that all of the following criteria are met:

(1) the application is complete;

(2) the application is not premature;

(3) the application has been submitted prior to the end of principal photography;

(4) the authorized applicant is a qualified film production company;

(5) the authorized applicant is planning to complete a qualified film;

(6) the authorized applicant’s projected qualified post production costs, excluding costs for visual effects and animation, paid or incurred which are attributable to the use of tangible property or the performance of services at a qualified post production facility in the production of a qualified film is projected to equal or exceed 75 percent of the projected total post production costs, excluding costs for visual effects and animation, paid or incurred in the post production of a qualified film at any post production facility; or the authorized applicant’s projected qualified post production costs for visual effects or animation at a qualified post production facility meet or exceed $3 million or 20 percent of the total post production costs for visual effects or animation paid or incurred in the post production of a qualified film at any post production facility, whichever is less;

(7) the authorized applicant did not knowingly submit false or misleading information to the department;

(8) the authorized applicant certifies that it will purchase taxable tangible property and services, defined as qualified post production costs, only from companies registered to collect and remit New York State and local sales and use taxes;

(9) the authorized applicant intends to comply with the end credit requirements set forth in section 230.2(h) of this Part.

(b) Final application.

A final application shall not be approved by the department unless the department determines, in its discretion, that the following criteria are met:

(1) the application is complete;

(2) a qualified film was produced and completed;

(3) the applicant’s qualified post production costs, excluding costs for visual effects and animation, paid or incurred which are attributable to the use of tangible property or the performance of services at a qualified post production facility in the production of a qualified film equaled or exceeded 75 percent of the total post production costs, excluding costs for visual effects and animation, paid or incurred in the post production of a qualified film at any post production facility; or the authorized applicant’s qualified post production costs for visual effects or animation at a qualified post production facility met or exceeded $3 million or 20 percent of the total post production costs for visual effects or animation paid or incurred in the post production of a qualified film at any post production facility, whichever was less;

(4) the applicant did not knowingly submit false or misleading information to the department;

(5) the applicant supplied documentation (e.g., still shot, frame grab, finished DVD or such other documentation such as the department may require) that the end credit requirements set forth in section 230.2(h) of this Part have been met.

5 CRR-NY 230.7 Third party inspection {#sec-5-crr-ny-230.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.7}

The department may accept from an applicant a third party inspection as part of an applicant’s final application. Submission of a third party inspection shall be voluntary and shall be subject to review and approval by the department pursuant to section 230.6(b) of this Part. The voluntary submission of a third party inspection by an approved applicant as part of its final application shall in no way or manner affect the review and approval by the department of a final application submitted by an approved applicant that elects not to submit a third party inspection. Such final application shall be subject to review and approval by the department pursuant to section 230.6(b) of this Part.

5 CRR-NY 230.8 Record retention {#sec-5-crr-ny-230.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.8}

All authorized and approved applicants must maintain records, in paper or electronic form, of any qualified post production costs used to calculate their potential or actual benefit(s) under this program for a minimum of three years from the date the applicant claims the tax credit. The department shall have access to the records during normal business hours at an office of the applicant within the State or, if no such office is available, at a mutually agreeable and reasonable venue within the State, for the term specified above for the purposes of inspection, auditing and copying.

5 CRR-NY 230.9 Appeal process {#sec-5-crr-ny-230.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.9}

(a) If an applicant’s final application is disapproved by the department, or if an applicant disagrees with the amount of the tax credit granted by the department, the applicant shall have a right to appeal. In the case of an appeal from a disapproval of a final application, such appeal shall be made by sending a letter to the New York State Department of Economic Development, Attn: Counsel’s Office, 625 Broadway, 8th Floor, Albany NY 12245, within 30 days from the date of the denial letter issued by the department. In the case of an appeal from a disagreement of the amount of the tax credit issued, such appeal shall be made by sending a letter to the same address as listed above within 30 days from the date of issuance of the certificate of tax credit. Failure to request an appeal within 30 days shall be deemed a waiver of an applicant’s right to appeal.

(b) Upon receipt of a timely letter of appeal, an independent hearing officer will be appointed by the commissioner to handle the appeal. The independent hearing officer shall render a recommended order on the appeal to the commissioner. The commissioner or his designee shall issue a final order within 60 days of the report. A copy of the final order will be issued to the appellant within 10 days after the date the commissioner or his designee renders the final order.

5 CRR-NY 230.10 Exchange of information with Department of Taxation and Finance {#sec-5-crr-ny-230.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.10}

Notwithstanding any provision of this Chapter, employees and officers of the department and the Department of Taxation and Finance shall be allowed and are directed to share and exchange information regarding the credits applied for, allowed, or claimed pursuant to this section and taxpayers who are applying for credits or who are claiming credits, including information contained in or derived from credit claim forms submitted to the department and application for credit submitted to the department.

5 CRR-NY 230.11 Quarterly report {#sec-5-crr-ny-230.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.11}

(a) The department shall file a report on a quarterly basis with the director of the Division of the Budget and the chairmen of the Assembly Ways and Means Committee and Senate Finance Committee. The report shall be filed within 15 days after the close of the calendar quarter. The report must contain the following information for the calendar quarter:

(1) the total dollar amount of certificates of tax credits issued during each month of the calendar quarter, broken down by month;

(2) the number of film projects which have been issued certificates of tax credits of less than $1 million per project and the total dollar amount of credits issued to those projects;

(3) the number of film projects which have been issued certificates of tax credits of $1 million or more but less than $5 million per project and the total dollar amount of credits issued to those projects;

(4) the number of film projects which have been issued certificates of tax credits of $5 million or more per project and the total dollar amount of credits issued to those projects;

(5) a list of each film project which has been issued a certificate of tax credit and for each of those projects:

(i) the number of employees associated with the post production project;

(ii) the qualified costs for the post production project;

(iii) the total expenditures on goods and services in New York State for the post production on the project;

(iv) the credit-eligible man hours for post production on each project; and

(v) the total wages for such credit-eligible man hours for post production on each project;

(6) (i) the name of each taxpayer issued a certificate of tax credit for each project and the county of residence or incorporation of such taxpayer; or if the taxpayer does not reside or is not incorporated in New York, then the state of residence or incorporation; provided however, if the taxpayer claims a tax credit because the taxpayer is a member of a limited liability company, a partner in a partnership or a shareholder in a subchapter S corporation, the name of each limited liability company, partnership or subchapter S earning any of those tax credits must be included in the report instead of information about the taxpayer claiming the tax credit;

(ii) the amount of tax credit issued to each taxpayer; provided however, if the taxpayer claims a tax credit because the taxpayer is a member of a limited liability company, a partner in a partnership or a shareholder in a subchapter S corporation, the amount of tax credit earned by each entity must be included in the report instead of information about the taxpayer claiming the tax credit; and

(iii) information identifying the project associated with each taxpayer for which a tax credit was claimed under section 24 or section 31, as added by chapter 57 of the Laws of 2010, of the Tax Law, including the name of the film and county in which the project is located.

5 CRR-NY 230.12 Biennial report {#sec-5-crr-ny-230.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 230.12}

The department shall file a report on a biennial basis with the director of the Division of the Budget and the chairmen of the Assembly Ways and Means Committee and Senate Finance Committee. The report shall be filed within 15 days after the close of the calendar year. The first report shall cover a two-year period that begins on January 1, 2013. The report must be prepared by an independent third party auditor and include:

(a) information regarding the Empire State Film Production Credit and Post Production Credit Programs including the efficiency of operations, reliability of financial reporting, compliance with laws and regulations and distribution of assets and funds;

(b) an economic impact study prepared by an independent third party of the film credit programs; and

(c) any other information and/or other statistical information that the commissioner deems to be useful in analyzing the effects of the program.

Chapter XXIV MUSICAL AND THEATRICAL PRODUCTION TAX CREDIT PROGRAM

Part 240 EMPIRE STATE MUSICAL AND THEATRICAL PRODUCTION TAX CREDIT PROGRAM

5 CRR-NY 240.1 Purpose and general description {#sec-5-crr-ny-240.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.1}

The purpose of these regulations is to set forth the application process by which a qualified musical and theatrical production company may apply for benefits under the Empire State Musical and Theatrical Production Tax Credit Program established by chapter 59 of the Laws of 2014. These regulations establish procedures for the allocation of such credits, including, but not limited to, the application process, standards for evaluating applications, and such other provisions deemed necessary and appropriate. The New York State department of Economic Development shall administer the program, including the issuance of tax credit certificates.

5 CRR-NY 240.2 Definitions {#sec-5-crr-ny-240.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.2}

As used in this regulation, the following terms shall have the following meanings:

(a) Authorized applicant means a qualified musical and theatrical production company that is scheduled to begin the technical period for a qualified musical and theatrical production after submitting an initial application to the department.

(b) Certificate of conditional eligibility means a notification by the department to the authorized applicant indicating that the applicant appears to be a qualified musical and theatrical production company scheduled to complete a qualified touring production. Such notification may include, but is not limited to, the following information: name and address of the authorized applicant, taxpayer identification number, a statement that the authorized applicant appears to be scheduled to complete a qualified touring production, and a disclaimer stating that actual receipt of the tax credit is subject to completion and approval of the final application.

(c) Certificate of tax credit means a certificate issued by the department which states the amount of the Empire State Musical and Theatrical Production Tax Credit that the approved applicant has qualified for based on the department’s analysis under section 24-a of the Tax Law and the provisions of this Part. Such certificate shall include, but not be limited to, the following information: name and address of the approved applicant, name of the qualified musical or theatrical production to which the credit applies, the amount of the tax credit to be received by the approved applicant, the allocation year of the tax credit, a disclaimer stating that the tax credit shall not be claimed before the later of either the taxable year the production of the qualified musical or theatrical production is complete or the taxable year immediately following the allocation year for which the musical or theatrical production has been allocated credit, and a disclaimer stating that actual receipt of the tax credit is subject to the statutory maximum amount of credits that are allocated for the program.

(d) Commissioner means the Commissioner of the New York State Department of Economic Development.

(e) Completeness of the application means that all questions on the application itself were fully addressed by the applicant and that any additional substantiating documents that were requested by the department were provided.

(f) Completion of a qualified touring production means that a qualified musical or theatrical production company has completed a qualified touring production, consisting of at least eight shows in three or more localities.

(g) Department means the New York State Department of Economic Development.

(h) Final application means a document created by the department and submitted by an approved applicant which contains information concerning actual production expenditures regarding a qualified musical or theatrical production that could make it eligible for the Empire State Musical and Theatrical Production Tax Credit under section 24-a of the Tax Law and the provisions of this Part. Such application shall include, but not be limited to: actual data with regard to the qualified musical or theatrical production’s total production budget, the total musical and theatrical production costs at musical and theatrical production facilities in and outside of New York, and any other information the department determines is necessary.

(i) Initial application means a document created by the department and submitted by an authorized applicant which contains information concerning projected musical and theatrical production expenditures regarding a qualified musical or theatrical production that could make it eligible for the Empire State Musical and Theatrical Production Tax Credit under section 24-a of the Tax Law and the provisions of this Part. Such application shall include, but is not limited to, the following information: the number of shows scheduled to be performed and the venues in which these shows will be performed, the estimated total production budget for the qualified musical or theatrical production, estimates of musical and theatrical production expenditures at qualifying musical and theatrical production facilities, estimates of musical and theatrical production expenditures in New York State and outside of New York State, and any other information the department determines is necessary.

(j) Program means the Empire State Musical and Theatrical Production Tax Credit Program.

(k) Qualified musical and theatrical production means a for-profit live, dramatic stage presentation in a qualified production facility, certified pursuant to this Part, as a qualified touring production.

(l) Qualified musical and theatrical production company means a corporation, partnership, limited partnership, or other entity or individual which or who is principally engaged in the production of a qualified musical or theatrical production and performs in a qualified production facility.

(m) Qualified production expenditure means any costs for tangible property used and services performed directly and predominantly in the production of a qualified musical and theatrical production within the state including:

(1) expenditures for design, construction and operation, including sets, special and visual effects, costumes, wardrobes, make-up, accessories and costs associated with sound, lighting, and staging;

(2) all salaries, wages, fees, per diems, payroll tax expenditures, fees for workers’ compensation insurance, and other compensation including related benefits for services performed of which the total allowable expense shall not exceed $200,000 per week; and

(3) technical and crew production costs, such as expenditures for qualified production facilities, or any part thereof, props, make-up, wardrobe, costumes, equipment used for special and visual effects, sound recording, set construction, and lighting.

Production expenditures for certain assets not destroyed during the production of a qualified musical and theatrical production are to be discounted when applied towards a tax credit under this Part in accordance with guidance to be provided by the department. Expenditures associated with the performance of a show before a paying audience shall be deemed to be directly and predominantly in the production of a qualified musical and theatrical production only when the show is performed in a qualified production facility and the show has not been performed in any facility, other than a qualified production facility, subsequent to the completion of the technical period in a qualified production facility. Expenditures not directly and predominantly in the production of a qualified musical and theatrical production include, but are not limited to, expenditures for advertising, marketing, and publicity, and any expenditures for the technical period of the musical and theatrical production incurred at a location other than a qualified production facility.

(n) Qualified production facility means a facility located in the State but outside the City of New York:

(1) in which live theatrical productions are or are intended to be primarily presented;

(2) that contains at least one stage, a seating capacity of 1,000 or more seats, and dressing rooms, storage areas, and other ancillary amenities necessary for the qualified musical and theatrical production;

(3) for which receipts attributable to ticket sales constitute 75 percent or more of gross receipts of the facility; and

(4) which is not a licensee, or affiliated with a licensee, of the New York State Gaming Commission under the Racing, Pari-Mutuel Wagering and Breeding Law.

(o) Qualified touring production means a live, dramatic stage production that, in its original or adaptive version, is performed in a qualified production facility, and has begun or will begin a tour, consisting of eight or more shows in three or more localities. A production is performed in a qualified production facility when the activities comprising the technical period for the production are conducted therein prior to the commencement of a tour.

(p) Show means a live performance of a dramatic musical or theatrical presentation.

(q) Technical period means those activities, as determined by the department, performed by technical personnel of a qualified touring production prior to the commencement of a qualified touring production, including, but not limited to, those personnel responsible for lighting, sound, wardrobe, and props.

(r) Transportation expenditures means transportation expenditures incurred and paid directly and predominantly in the production of a qualified musical and theatrical production. Such expenditures shall include the packaging, crating, and transportation within the State for use in a qualified musical and theatrical production of sets, costumes, or other tangible property constructed or manufactured in and out of State, and the transportation of the cast and crew within the State, including hotel costs for the cast and crew. Such term shall include the packaging, crating, and transporting within the State of property and equipment used for special and visual effects, sound, lighting and staging, costumes, wardrobes, make-up and related accessories and materials, as well as any other performance or production-related property and equipment. Transportation expenditures shall not include any costs to transport property and equipment to be used only for filming and not in a qualified theater production, any indirect costs, and expenditures that are later reimbursed by a third party, or any amounts that are paid to persons or entities as a result of their participation in profits from the exploitation of the production.

5 CRR-NY 240.3 Eligibility {#sec-5-crr-ny-240.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.3}

For the purposes of this Part, only an authorized applicant shall be eligible to apply for the Empire State Musical and Theatrical Production Tax Credit.

5 CRR-NY 240.4 Application Process {#sec-5-crr-ny-240.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.4}

(a) Initial application—notice of intent.

(1) An authorized applicant shall submit an initial application to the department prior to commencement of the technical period of a qualified musical and theatrical production for which it seeks a tax credit under this article. The purpose of the initial application is to notify the department of its intent to produce a qualified musical and theatrical production in a qualified production facility and submit a final application for the Empire State Musical and Theatrical Production Tax Credit.

(2) The department shall evaluate the initial application based upon the completeness of the application and whether it was submitted in accordance with paragraph (1) of this subdivision.

(3) After review of the initial application, the department shall notify the authorized applicant of its eligibility and may issue a certificate of conditional eligibility to the authorized applicant.

(b) Final application.

(1) An applicant may submit a final application to the department following the completion of a qualified touring production.

(2) Upon receipt of a final application, the department may request additional documentation, including copies of receipts of qualified musical and theatrical production expenditures, to determine if the production qualifies for the Empire State Musical and Theatrical Production Tax Credit. The department shall approve or disapprove the final application based upon criteria set forth in section 240.6 of this Part. If the final application is approved, the department shall issue a certificate of tax credit to the approved applicant. The department shall provide a copy of such certificate of tax credit to the Department of Taxation and Finance. If the final application is disapproved, the department shall provide the applicant with a notice of disapproval which shall state the reasons therefor. Such disapproval shall be a rejection of the applicant’s final application. A disapproved applicant may appeal such decision pursuant to section 240.8 of this Part, or reapply pursuant to the provisions of this Part.

5 CRR-NY 240.5 Allocation of Empire State Musical and Theatrical Production Tax Credit {#sec-5-crr-ny-240.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.5}

(a) Amount of credit.

(b) Aggregate amount of tax credits.

The aggregate amount of tax credits allowed under this Program in any calendar year shall be $4,000,000. Such aggregate amount of credits shall be allocated by the department among taxpayers in order of priority based upon the date of filing a final application for allocation of a Musical and Theatrical Production Tax Credit with the department. If the total amount of allocated credits applied for in any particular year exceeds the aggregate amount of tax credits allowed for such year, such excess shall be treated as having been applied for on the first day of the subsequent year.

5 CRR-NY 240.6 Criteria for evaluation of final applications {#sec-5-crr-ny-240.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.6}

A final application shall not be approved by the department unless the department determines, in its discretion, that the following criteria are met:

(a) the application is complete;

(b) the applicant completed a qualified touring production;

5 CRR-NY 240.7 Record retention {#sec-5-crr-ny-240.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.7}

All applicants must maintain records, in paper or electronic form, of any qualified musical and theatrical production costs used to calculate their potential or actual benefit(s) under the program for a minimum of three years from the date the applicant claims an Empire State Musical and Theatrical Production Tax Credit. The department shall have access to the records during normal business hours at an office of the applicant within the State or, if no such office is available, at a mutually agreeable and reasonable venue within the State, for the term specified above for the purposes of inspection, auditing and copying.

5 CRR-NY 240.8 Appeal process {#sec-5-crr-ny-240.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.8}

(a) If an applicant’s final application is disapproved by the department, or if an approved applicant disagrees with the amount of an Empire State Musical and Theatrical Production Tax Credit granted by the department, the applicant shall have a right to appeal. In the case of an appeal from a disapproval of a final application, such appeal shall be made by sending a letter to the New York State Department of Economic Development, Attn: Counsel’s Office, 625 Broadway, 8th Floor, Albany NY 12245, within 30 days from the date of the denial letter issued by the department. In the case of an appeal from a disagreement of the amount of the tax credit issued, such appeal shall be made by sending a letter to the same address as listed above within 30 days from the date of issuance of the certificate of tax credit. Failure to request an appeal within 30 days shall be deemed a waiver of an applicant’s right to appeal.

(b) Upon receipt of a timely letter of appeal, an independent hearing officer will be appointed by the commissioner to handle the appeal.

(d) The independent hearing officer shall render a recommended order on the appeal to the commissioner within 60 days of the conclusion of a hearing or receipt of the written submission of both parties. The commissioner or his designee shall issue a final order within 60 days of receipt of the report of the independent hearing officer. A copy of the final order will be issued to the appellant within 10 days after the date the commissioner or his designee renders the final order.

5 CRR-NY 240.9 Exchange of Information with Department of Taxation and Finance {#sec-5-crr-ny-240.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.9}

(a) Employees and officers of the department and the Department of Taxation and Finance shall be allowed and are directed to share and exchange information regarding the credits applied for, allowed, or claimed under the program, as well as information regarding taxpayers who are applying for credits or who are claiming credits, including information contained in or derived from credit claim forms submitted to the Department of Taxation and Finance and applications for certification submitted to the department.

(b) The commissioner and the commissioner of the Department of Taxation and Finance may release the names and addresses of any taxpayer claiming a credit under the program and the amount of the credit issued to the taxpayer. Provided, however, if a taxpayer claims this credit because it is a member of a limited liability company or a partner in a partnership, only the amount of credit earned by the entity and not the amount of credit claimed by the taxpayer may be released.

5 CRR-NY 240.10 Annual report {#sec-5-crr-ny-240.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 240.10}

The department shall submit to the Governor, the Temporary President of the Senate, and the Speaker of the Assembly, an annual report on February 1st of each year evaluating the effectiveness of the program in stimulating the growth of the musical and theatrical industry in the State. Such report shall include, but need not be limited to, in total and by qualified musical and theatrical production, the number of qualified musical and theatrical productions which received a musical and theatrical production credit, the qualified production expenditures, the transportation expenditures, the qualified production facilities, and the credit amounts claimed by each qualified musical and theatrical production, as well as the impact on employment and the economy of the state. Such report shall include:

(a) the credit-eligible man hours for each project and the total wages for such credit-eligible man hours for each project as well as the name of each taxpayer allocated a tax credit for each project and the county of residence or incorporation of such taxpayer or, if the taxpayer does not reside or is not incorporated in New York, then the state of residence or incorporation; provided however, if the taxpayer claims a tax credit because the taxpayer is a member of a limited liability company, a partner in a partnership or a shareholder in a subchapter S corporation, the name of each limited liability company, partnership or subchapter S corporation earning any of those tax credits must be included in the report instead of information about the taxpayer claiming the tax credit; and

(b) the amount of tax credit allocated to each taxpayer; provided, however, if the taxpayer claims a tax credit because the taxpayer is a member of a limited liability company, a partner in a partnership or a shareholder in a subchapter S corporation, the amount of tax credit earned by each entity must be included in the report instead of information about the taxpayer claiming the tax credit, and information identifying the project associated with each taxpayer for which a tax credit was claimed under this section, including the name of the musical and theatrical production and county in which the production is performed must be included in such report. Such report shall be based on data available from the final application filed with the department. Notwithstanding any provision of law to the contrary, the information contained in the report shall be public information. The report may also include any recommendations of changes in the calculation or administration of the credit, and any other recommendation of the commissioner regarding modification or repeal of the Program, and such other information regarding the Program as the commissioner determines useful and appropriate.

Chapter XXV EMPIRE TRAINING INCENTIVE PROGRAM

Part 250 EMPIRE TRAINING INCENTIVE PROGRAM

5 CRR-NY 250.1 Purpose and general description {#sec-5-crr-ny-250.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 250.1}

The purpose of these regulations is to set forth the application process for the Employee Training Incentive Program. Pursuant to section 444 of the Economic Development Law, the Department of Economic Development has been granted the authority to promulgate regulations, in consultation with the Department of Labor, to establish eligibility criteria for business entities desiring to participate in the program, procedures for the receipt and evaluation of applications from business entities to participate in the program, and such other provisions as the commissioner deems to be appropriate. The Department of Economic Development shall administer the program, including the issuance of tax credit certificates.

5 CRR-NY 250.2 Definitions {#sec-5-crr-ny-250.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 250.2}

(a) Advanced technology means the research, development, and manufacturing of goods and their applications in the areas of advanced materials and processing technologies, integrated electronics, optics, biotechnology, information and communication technologies, automation and robotics, electronics packaging, imaging technology, remanufacturing, and such other areas as the commissioner shall determine.

(b) Approved provider of eligible training means an entity that provides training in methods, processes, or the use of equipment which meets the following criteria to the satisfaction of the commissioner:

(1) business activity providing training for at least one year;

(2) a written curriculum describing the skills and knowledge to be gained by individuals completing training with the approved provider;

(3) employment of individuals with the necessary knowledge and credentials to provide eligible training; and

(4) accreditation or certification, where applicable, in the subject matter of training provided by the approved provider.

(c) Approved provider of an eligible internship program means a business entity providing internship training in advanced technology or life sciences, or an entity providing internship training in advanced technology pursuant to a contract with a business entity employing the intern receiving training in advanced technology or life sciences, which meets the following criteria to the satisfaction of the commissioner:

(1) a written curriculum describing, at least, the duration of the internship, the activities to be engaged in by the intern participating in the internship, and skills and knowledge to be gained by the intern as a result of participating in the internship training; and

(2) employees qualified, with accreditation or certification where applicable, to provide the internship training.

(d) Business need means the absence of a method, a process, or equipment related to the revenue-generating activities of a business entity.

(e) Capital investment means an investment in tangible property (including, a building or a structural component of a building) owned by a business entity that is depreciable pursuant to section 167 of title 26 of the United States Code; is acquired by purchase as defined in section 179(d) of title 26 of the United States Code; and has a situs in this State. Capital investments do not include operating expenses such as office supplies, training expenses, utilities, rent, and other recurring expenses. Section 167 and section 179(d) of title 26 of the United States Code are available for public inspection and copying at the following address: New York State Department of Economic Development, 625 Broadway, 8th Floor, Albany, NY 12245.

(f) Certificate of tax credit means a certificate issued by the department which states the amount of the employee training incentive program tax credit that a business entity has qualified for, based upon the department’s analysis under section 443 of the Economic Development Law and the provisions of this Part. Such certificate may include, but is not limited to, the following information: name and address of the business entity, the amount of the tax credit to be received by the business entity, and a disclaimer stating that actual receipt of the tax credit is subject to the statutory maximum amount of credits that are allocated for the program.

(g) Commissioner means the Commissioner of Economic Development.

(h) Culturally focused training means training intended to provide knowledge about, or skills in interacting with, persons identifying with demographic characteristics including, but not limited to, race, nationality, gender, age, gender identity, or sexual orientation.

(i) Current student means a person enrolled, at the time of the commencement of such person’s participation in an eligible internship program, on a full-time basis at a university or college in the State of New York in a course of study leading to a bachelor’s degree or post-graduate degree in advanced technology.

(j) Department means the New York State Department of Economic Development.

(k) Eligible internship program means an internship program providing internship training in advanced technology, or providing internship training in life sciences at a life sciences company, that is approved by the commissioner and provided by an approved provider of internship training on or after August 1, 2015.

(l) Eligible training means training provided by an approved provider that is:

(1) to upgrade, retrain or improve the productivity of employees;

(2) provided, in New York State, to employees in connection with a significant capital investment by a participating business entity;

(3) determined by the commissioner to satisfy a business need on the part of a participating business entity;

(4) not designed to train or upgrade skills as required by a Federal or State entity;

(5) not training the completion of which may result in the awarding of a license or certificate required by law in order to perform a job function; and

(6) not culturally focused training.

(m) Internship training means work-based learning opportunities in advanced technology or life sciences that:

(1) are provided by an approved provider of an eligible internship program;

(2) do not exceed 12 months in duration;

(3) are provided, in New York State, to current students, recent graduates, and recent members of the armed forces; and

(4) are provided to interns who have not previously participated in an eligible internship program and who are not current or former employees of the business entity submitting the application to provide the eligible internship program.

(n) Life sciences means agricultural biotechnology, biogenerics, bioinformatics, biomedical engineering, biopharmaceuticals, academic medical centers, biotechnology, chemical synthesis, chemistry technology, medical diagnostics, genomics, medical image analysis, marine biology, medical devices, medical nanotechnology, natural product pharmaceuticals, proteomics, regenerative medicine, RNA interference, stem cell research, medical and neurological clinical trials, health robotics, and veterinary science.

(o) Life sciences company is a business entity or an organization or institution that devotes the majority of its efforts in the various stages of research, development, technology transfer, and commercialization related to any life sciences field.

(p) Program means the employee training incentive program.

(q) Recent graduate means a person who has earned a bachelor’s degree or post-graduate degree in advanced technology from a university or college no more than 12 months prior to the date such person commences participation in an eligible internship program.

(r) Recent member of the Armed Forces means a person who has received honorable or general discharge from the army, navy, air force, marines, coast guard or reserves of the United States no more than 12 months prior to the date such person commences participation in an eligible internship program.

(s) Related person means a “related person” as such term is defined in section 465(b)(3)(C) of title 26 of the United States Code as of November 17, 2015. Section 465(b)(3)(C) of title 26 of the United States Code is available for public inspection and copying at the following address: New York State Department of Economic Development, 625 Broadway, 8th Floor, Albany, NY 12245.

(t) Significant capital investment means a capital investment in new business processes or equipment, the cost of which is equal to or exceeds $10 for every $1 of tax credit allowed to an eligible business entity under this program pursuant to subdivision 50 of section 210-B or subsection (ddd) of section 606 of the Tax Law.

(u) Stipend means monetary compensation paid to an intern for his or her participation in an eligible internship program. Stipend shall not include deferred compensation or any non-monetary benefit or form of remuneration.

(v) Strategic industry means an industry approved by the commissioner to participate in the program, based upon the following criteria as demonstrated by business entities applying to the program:

(1) shortages of workers trained to work within the applicant’s industry;

(2) technological disruption in the applicant’s industry, requiring significant capital investment for existing businesses to remain competitive;

(3) the ability and need of the applicant to relocate outside of the State in order to attract talent;

(4) the potential of the applicant to recruit minorities and women to be trained to work in an industry in which they are traditionally underrepresented; or

(5) the potential of the applicant to create jobs in economically distressed areas, which shall be based on criteria indicative of economic distress, as defined by the commissioner, including poverty rates, proportion of households receiving public assistance and unemployment rates.

Provided further that the following types of business are prohibited from participating in the program without a waiver from the commissioner:

(i) retail and wholesale businesses;

(ii) restaurants;

(iii) real estate brokers;

(iv) law firms or businesses providing legal services;

(v) medical or dental practices;

(vi) real estate management companies;

(vii) hospitality;

(viii) finance and financial services;

(ix) businesses providing personal services;

(x) businesses providing business administrative or support services;

(xi) accounting firms or businesses providing accounting services;

(xii) businesses providing utilities;

(xiii) businesses engaged in the generation or distribution of electricity, the distribution of natural gas, or the production of steam associated with the generation of electricity.

5 CRR-NY 250.3 Eligibility criteria {#sec-5-crr-ny-250.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 250.3}

In order to participate in the program, a business entity must satisfy the following criteria:

(a) A business entity applying to participate in the program in connection with providing eligible training to employees must:

(1) operate in the State predominantly in a strategic industry;

(2) demonstrate that it is obtaining eligible training from an approved provider;

(3) create at least 10 net new jobs or make a significant capital investment in connection with the eligible training; and

(4) be in compliance with all worker protection and environmental laws and regulations. In addition, the business entity may not owe past due State taxes or local property taxes.

(b) A business entity applying to participate in the program in connection with providing an eligible internship program must:

(1) demonstrate that it will be providing an eligible internship program, not to exceed 12 months in duration, to one or more interns;

(2) be located in the State;

(3) be in compliance with all worker protection and environmental laws and regulations. In addition, the business entity may not owe past due State taxes or local property taxes;

(4) certify that the eligible internship program will not displace employees of the business entity; and

(5) employ fewer than 100 employees.

5 CRR-NY 250.4 Application process {#sec-5-crr-ny-250.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 250.4}

(a) Initial application.

(1) A business entity must submit an initial application, in such form and at such time as the commissioner shall determine, to the department prior to procuring eligible training from an approved provider or retaining interns to participate in an eligible internship program.

(2) Upon receipt of a complete initial application the department may, at its sole discretion, approve such application based upon the criteria set forth in section 250.6(a) of this Part.

(3) After review of an initial application, the department will notify a business entity of its eligibility and may issue a certificate of conditional eligibility to the business entity.

(b) Final application.

(1) A business entity must submit a final application no later than 24 months from the date the department issues the business entity a certificate of conditional eligibility.

(2) The department shall approve or disapprove the final application based upon the criteria set forth in section 250.6(b) of this Part. If the final application is approved, the department shall issue a certificate of tax credit to the business entity. The department shall provide a copy of such certificate of tax credit to the Department of Taxation and Finance. If the final application is disapproved, the department shall provide the business entity with a notice of disapproval which shall state the reasons therefor.

5 CRR-NY 250.5 Allocation of the Employee Training Incentive Program credit {#sec-5-crr-ny-250.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 250.5}

(a) The total amount of tax credits listed on certificates of tax credit issued by the commissioner for any taxable year shall not exceed $5,000,000, and, of that $5,000,000, the amount of tax credits allocated for business entities providing eligible internship programs shall be at least $250,000 and no more than $1,000,000.

(b) In the event that the capital investment costs incurred by a participating business entity, as determined by the department pursuant to section 250.6(b) of this Part, do not equal at least 10 times the amount of the credit to which the business entity is entitled based upon its eligible training costs, then the department shall issue a pro-rated certificate of tax credit in an amount equal to no more than 1/10 of the capital investment costs incurred by the participating business entity.

5 CRR-NY 250.6 Criteria for evaluation of applications {#sec-5-crr-ny-250.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 250.6}

(a) Initial application.

An initial application may be approved by the department, at its sole discretion, provided that such application satisfies the following criteria:

(1) In the case of a business entity applying to participate in the program in connection with providing eligible training to employees, such application must:

(i) be complete;

(ii) be submitted prior to procuring eligible training from an approved provider;

(iii) be made by a business entity operating in the State predominantly in a strategic industry;

(iv) identify the approved provider from which the business entity proposes to procure eligible training;

(v) demonstrate, by providing a written curriculum and such other documentation as the commissioner may require, that the training to be provided by an approved provider is eligible training;

(vi) estimate the total costs attributable to providing the eligible training;

(vii) certify that such business entity is in compliance with all worker protection and environmental laws and regulations, and that such business entity does not owe past due State taxes or local property taxes;

(viii) agree to allow the Department of Taxation and Finance to share the tax information of the business entity with the department;

(ix) agree to allow the Department of Labor to share its tax and employer information with the department;

(x) agree to allow the department and its agents access to any and all books and records the department may require to monitor compliance; and

(xi) include one of the following:

(a) at least three bids solicited from entities proposing to provide the eligible training; or

(b) an attestation that the business entity could not obtain at least three bids from entities proposing to provide the eligible training, and a written explanation for its inability to obtain such bids.

(2) In the case of a business entity applying to participate in the program in connection with providing an eligible internship program, such application must:

(i) be complete;

(ii) be submitted prior to the business entity retaining interns to participate in the eligible internship program;

(iii) identify the approved provider that will provide the eligible internship program and the employees of such entity who will be responsible for managing and training interns retained by the business entity;

(iv) demonstrate, by providing a written curriculum and such other documentation as the commissioner may require, that the internship program to be provided is an eligible internship program;

(v) estimate the total costs for stipends to be paid to interns participating in the eligible internship program;

(vi) certify that such business entity is in compliance with all worker protection and environmental laws and regulations, and that such business entity does not owe past due State taxes or local property taxes;

(vii) agree to allow the Department of Taxation and Finance to share the tax information of the business entity with the department;

(viii) agree to allow the Department of Labor to share its tax and employer information with the department;

(ix) agree to allow the department and its agents access to any and all books and records the department may require to monitor compliance;

(x) certify that the eligible internship program will not displace employees of the business entity;

(xi) identify the number of full-time equivalent employees of the business entity; and

(xii) demonstrate that interns participating in the eligible internship program will comprise less than 50 percent of the workforce of the business entity.

(b) Final application.

A final application shall not be approved until a business entity demonstrates satisfaction of the following criteria to the satisfaction of the commissioner:

(1) In the case of a business entity submitting a final application in connection with providing eligible training to employees, such application must:

(i) be complete;

(ii) demonstrate that the eligible training described in such business entity’s initial application is complete;

(iii) not contain material misrepresentations;

(iv) be submitted no more than 24 months from the date of the department’s issuance of a certificate of conditional eligibility to the business entity; and

(v) demonstrate that such business entity made a significant capital investment in connection with the eligible training.

(2) In the case of a business entity submitting a final application in connection with providing an eligible internship program, such application must:

(i) be complete;

(ii) demonstrate that the eligible internship program described in such business entity’s initial application is complete;

(iii) demonstrate that any interns participating in the eligible internship program were current students, recent graduates, or recent members of the Armed Forces;

(iv) not contain material misrepresentations; and

(v) demonstrate that no employees have been displaced as a result of the eligible internship program.

5 CRR-NY 250.7 Record retention {#sec-5-crr-ny-250.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 250.7}

Each business entity participating in the program shall maintain all relevant records for the duration of its program participation plus three years, and make such records available to the department and its agents upon seven days’ notice.

Chapter XXVI LIFE SCIENCES RESEARCH AND DEVELOPMENT

Part 260 LIFE SCIENCES RESEARCH AND DEVELOPMENT TAX CREDIT PROGRAM

5 CRR-NY 260.1 Purpose and general description {#sec-5-crr-ny-260.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.1}

The purpose of these regulations is to set forth the administrative process governing the life sciences research and development tax credit program (the program) and specifically to establish an application process, due dates for such applications, eligibility standards for qualified life sciences companies, standards for application evaluation and the documentation that will be provided to taxpayers to substantiate to the Department of Taxation and Finance the amount of credits allocated to such taxpayers. Chapter 59 of the Laws of 2017 establishes the program and grants the Commissioner of the Department of Economic Development the authority to promulgate regulations to establish procedures for the allocation of tax credits under the program.

5 CRR-NY 260.2 Definitions {#sec-5-crr-ny-260.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.2}

As used in this regulation, the following terms shall have the following meanings:

(a) Certificate of tax credit means the document issued to a qualified life sciences company by the Department of Economic Development, after the Department of Economic Development has verified that such life sciences company has met all applicable criteria in this Part to be eligible for the life sciences research and development tax credit, including but not limited to verifying that the life sciences company is a new business. The certificate shall be issued annually if such criteria are satisfied and shall specify the exact amount of the life sciences research and development tax credit that may be claimed by such qualified life sciences company, pursuant to section 43 of the Tax Law, and shall specify the taxable year in which such credit may be claimed and the allocation year from which such credit has been awarded.

(b) Life sciences means agricultural biotechnology, biogenerics, bioinformatics, biomedical engineering, biopharmaceuticals, academic medical centers, biotechnology, chemical synthesis, chemistry technology, medical diagnostics, genomics, medical image analysis, marine biology, medical devices, medical nanotechnology, natural product pharmaceuticals proteomics, regenerative medicine, RNA interference, stem cell research, medical and neurological clinical trials, health robotics and veterinary science.

(c) Life sciences company means a business entity or an organization or institution that devotes the majority of its efforts in the various stages of research, development, technology transfer and commercialization related to any life sciences field.

(d) New business means any business that qualifies as a new business under either paragraph (f) of subdivision 1 of section 210-B or paragraph 10 of subsection 1 of section 606 of the Tax Law.

(e) Qualified life sciences company means a life sciences company, as defined in subdivision (c) of this section, that has been certified by the Department of Economic Development as a life sciences company and is a new business. Provided however, for purposes of the credit authorized under section 43 of the Tax Law, the Department of Economic Development shall not certify as a life sciences company any corporation, partnership, limited partnership, or other entity that has been within the immediately preceding 60 months a related person to an entity that is a life sciences company or an entity that is engaged in scientific research and development as defined in subdivision 22 of section 352 of the Economic Development Law.

(f) Research and development expenditures means qualified research expenses as defined in subsection (b) of section 41 of the Internal Revenue Code, provided, however, that such qualified research expenses shall not include amounts under subparagraph (B) of paragraph 1 of subsection (b) of section 41 of the Internal Revenue Code and as further described in paragraph 3 of subsection (b) of section 41 of the Internal Revenue Code. If section 41 of the Internal Revenue Code has expired, then the research and development expenses shall be calculated as if the Federal research and development credit structure and definition in effect in section 41 in Federal tax year 2009 were still in effect. Section 41 of title 26 of the United States Code is available for public inspection and copying at the following address: New York State Department of Economic Development, 625 Broadway, 8th Floor, Albany, NY 12245.

(g) Related person means a related person as defined in subparagraph (c) of paragraph 3 of subsection (b) of section 465 of the Internal Revenue Code. For this purpose, a related person shall include an entity that would have qualified as a related person if it had not been dissolved, liquidated, merged with another entity or otherwise ceased to exist or operate. Section 465 of title 26 of the United States Code is available for public inspection and copying at the following address: New York State Department of Economic Development, 625 Broadway, 8th Floor, Albany, NY 12245.

5 CRR-NY 260.3 Eligibility criteria {#sec-5-crr-ny-260.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.3}

(a) To be eligible for this program, an applicant must be:

(1) a qualified life sciences company as defined in section 260.2(e) of this Part; and

(2) a new business as defined in section 260.2(d) of this Part.

(b) An applicant must be in substantial compliance with all worker protection and environmental laws and regulations.

(c) An applicant may not owe past due State or local taxes; provided, however, in the case of a tax certiorari proceeding, a business entity would not be considered in arrears until a final decision is made with respect to such proceeding.

5 CRR-NY 260.4 Application process {#sec-5-crr-ny-260.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.4}

(a) An applicant must submit a complete application as prescribed by the commissioner.

(b) The commissioner, upon receipt of a complete application from an applicant, shall determine whether the applicant meets the eligibility criteria set forth in section 260.3 of this Part based upon the application review procedure set forth in section 260.5 of this Part. An applicant that does not meet the eligibility criteria set forth in section 260.3 of this Part shall not be accepted into the program.

(c) Having determined that an application is complete and that the applicant meets the eligibility criteria set forth in section 260.3 of this Part, the department shall admit the applicant to the program and issue a certificate of tax credit as defined in section 260.2(a) of this Part in an amount as determined based upon the review and calculation of the credit set forth in sections 260.5 and 260.6 of this Part.

5 CRR-NY 260.5 Application review {#sec-5-crr-ny-260.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.5}

(a) A life sciences research and development company must submit evidence that it meets the eligibility requirements stated herein and has made research and development expenditures in New York in order to receive benefits under the program.

(b) The Department of Economic Development may require evidence that includes, but is not necessarily limited to, the articles of incorporation of the company, relevant tax returns, financial statements, job descriptions and salaries of employees, quarterly combined withholding, wage reporting, and unemployment insurance returns filed with the NYS Department of Taxation and Finance, and any other information the commissioner deems necessary to determine eligibility of the company.

(c) If a life sciences research and development company fails to demonstrate that it has satisfied the eligibility requirements set forth in section 260.3 of this Part, the Department of Economic Development shall deny its application by issuing a notice of denial stating the reasons therefor and not issue such life sciences research and development company a certificate of tax credit. Such company may appeal this denial pursuant to section 260.11 of this Part.

(d) After reviewing such evidence and finding it sufficient, the department shall calculate the appropriate amount of tax credit and issue a certificate of tax credit for one taxable year. The certificate shall specify the exact amount of the tax credit that a life sciences research and development company may claim and shall specify the allocation year and taxable year in which such credit may be claimed. If the life sciences research and development company is a business entity that passes through the tax credit components to its owners (such as partners in a partnership or members in a limited liability company), such owners can only claim their share of the credit components on the tax return that corresponds to the tax year and allocation year indicated on the certificate issued to the life sciences research and development company. In order to receive a certificate of tax credit for subsequent taxable years, the life sciences research and development company must reapply to the program and meet the eligibility criteria set forth in this Part.

5 CRR-NY 260.6 Calculation of the tax credit {#sec-5-crr-ny-260.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.6}

(a) A taxpayer that is a qualified life sciences company, or that is a sole proprietor of or a partner in a partnership that is a qualified life sciences company or a shareholder of a New York S corporation that is a qualified life sciences company, and is subject to tax under article 9-A or 22 of the Tax Law shall be allowed a credit against such tax, pursuant to the provisions referred to in subdivision 52 of section 210-B and subsection (hhh) of section 606 of the Tax Law, for a period of 3 years, as provided in subparagraph (ii) of paragraph 2 of subsection (a) of section 43 of the Tax Law, to be computed as provided in this section, provided that no credit shall be allowed for taxable years beginning on or after January 1, 2028. Such credit may be claimed in the taxable year that corresponds to the allocation year specified on the certificate of tax credit issued to the qualified life sciences company.

(b)

(1) For a qualified life sciences company that employs 10 or more persons during the taxable year, the amount of the credit shall be equal to 15 percent of such qualified life sciences company's research and development expenditures in this State for the taxable year. For a qualified life sciences company that employs less than 10 persons during the taxable year, the amount of the credit shall be equal to 20 percent of such qualified life sciences company's research and development expenditures in this State for the taxable year.

(2) The credit shall be allowed only with respect to the first taxable year during which the criteria set forth in subdivision (a) of section 43 of the Tax Law are satisfied, and with respect to each of the two taxable years next following (but only, with respect to each of such years, if such criteria are satisfied). Subsequent certifications of the life sciences company by the Department of Economic Development pursuant to this section shall not extend the three taxable year time limitation on the allowance of the credit set forth in the preceding sentence.

(c) For purposes of the credit allowed under this section, the number of persons employed by a qualified life sciences company during the taxable year shall be determined by ascertaining the number of such individuals employed full-time by such company, excluding general executive officers, on the 31st day of March, the 30th day of June, the 30th day of September and the 31st day of December during each taxable year, by adding together the number of such individuals ascertained on each of such dates and dividing the sum so obtained by the number of such dates occurring within such taxable year. An individual employed full-time means an employee in a job consisting of at least 35 hours per week, or 2 or more employees who are in jobs that together constitute the equivalent of a job of at least 35 hours per week (full-time equivalent).

(d) The total amount of credit allowable to a qualified life sciences company, or, if the life sciences company is properly included or required to be included in a combined report, to the combined group, taken in the aggregate, shall not exceed $500,000 in any taxable year. If the life sciences company is a partner in a partnership or shareholder of a New York S corporation, then the total amount of credit allowable shall be applied at the entity level, so that the total amount of credit allowable to all the partners or shareholders of each such entity, taken in the aggregate, does not exceed $500,000 in any taxable year.

(e) No research and development expenditures made by the life sciences company and used either as the basis for the allowance of the credit provided for pursuant to section 43 of the Tax Law or used in the calculation of the credit provided pursuant to section 43 of the Tax Law shall be used to claim any other credit allowed pursuant to the Tax Law or be used in the calculation of any other credit allowed pursuant to the Tax Law.

5 CRR-NY 260.7 Maximum amount of credits {#sec-5-crr-ny-260.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.7}

Maximum amount of credits.The aggregate amount of tax credits allowed under section 43 of the Tax Law to taxpayers subject to tax under articles 9-A and 22 of the Tax Law in any taxable year shall be $10,000,000, and shall be allotted from the funds available for tax credits under article 17 of the Economic Development Law.

5 CRR-NY 260.8 Allocation of the credit {#sec-5-crr-ny-260.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.8}

The aggregate amount of credits shall be allocated by the Department of Economic Development among taxpayers in order of priority based upon the date of filing a complete application for allocation of life sciences research and development tax credit with such department. If the total amount of allocated credits applied for in any particular year exceeds the aggregate amount of tax credits allowed for such year under this section, such excess shall be treated as having been applied for on the first day of the subsequent year. In such instances, the credit may not be claimed until the return is filed for the taxpayer’s tax year that begins in the same year from which the credit allocation was issued.

5 CRR-NY 260.9 Refundability of credits {#sec-5-crr-ny-260.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.9}

The tax credit established in this Part shall be refundable as provided in article 9-A or 22 of the Tax Law. If a life sciences research and development company fails to satisfy the eligibility criteria it will lose the ability to claim credit for that year.

5 CRR-NY 260.10 Record retention {#sec-5-crr-ny-260.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.10}

(a) Each life sciences research and development company shall keep all relevant records for their duration of program participation plus three years.

(b) The department shall have the right to inspect all relevant records upon reasonable notice to the life sciences research and development company.

5 CRR-NY 260.11 Appeal process {#sec-5-crr-ny-260.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 260.11}

(a) This section shall apply to all appeals taken as a result of a life sciences research and development company’s application being denied by the department pursuant to section 260.5(c) of this Title.

(b) A life sciences research and development company that received a denial of their application pursuant to section 260.5(c) of this Title may send a written notice (notice of appeal) to the commissioner appealing the denial by no later than 30 days from the date of the mailing of the notice. Failure by a company to appeal the commissioner’s denial of certification within the aforementioned 30 day period will be deemed a waiver of the life sciences research and development company’s right to an appeal.

(c) The notice of appeal must contain specific factual information and documentation supporting the basis for the appeal and all legal arguments that are the basis for the life sciences research and development company’s challenge to the denial.

(d) Counsel to the department may file a response to the notice of appeal with the appeal officer. Any response should address the factual and legal allegations contained in the notice of appeal. A copy of the response shall be sent to the life sciences research and development company, or to the attorney representing the life sciences research and development company.

(e) The commissioner may designate any impartial person or persons to act as an appeal officer. The appeal officer shall evaluate the merits of the appeal and any response from counsel to the department. Where the appeal officer deems it appropriate, the appeal officer may require the life sciences research and development company or counsel to the department to address additional issues and/or submit additional information regarding the appeal. If the appeal officer requires submission of additional documents by either life sciences research and development company or counsel to the department, both parties shall receive copies of all submissions. Nothing herein shall preclude the appeal officer from obtaining information from any outside source, as he or she deems appropriate. The appeal officer shall determine whether he or she deems it necessary to conduct a fact-finding hearing, and the level of formality of any hearing conducted.

(f) The appeal officer shall prepare a report and make recommendations to the commissioner. The recommendations may be in the form of a proposed decision which will contain findings of fact and conclusions of law. This report, along with the entire record, shall be transmitted to the commissioner, the counsel to the department, and the business entity that filed the appeal.

(g) After receipt of the appeal officer's report, the commissioner will issue a final determination within 60 days and serve a copy on the life sciences research and development company or its representative. If the commissioner issues a final determination that includes findings of fact or conclusions of law that conflict with the recommendations of the appeal officer, the determination shall set forth the reasons therefore.

Notwithstanding any provision of the Tax Law:

(a) employees and officers of the Department of Economic Development and the Department of Taxation and Finance shall be allowed and are directed to share and exchange information regarding the credits applied for, allowed, or claimed pursuant to this section and taxpayers who are applying for credits or who are claiming credits, including information contained in or derived from credit claim forms submitted to the department and applications for certification submitted to the Department of Economic Development; and

(b) the Commissioner of the Department of Taxation and Finance and the Commissioner of the Department of Economic Development may release the names and addresses of any taxpayer claiming the credit allowed under this section and the amount of the credit earned by the taxpayer. Provided, however, if a taxpayer claims such credit because it is a member of a limited liability company or a partner in a partnership, only the amount of credit earned by the entity and not the amount of credit claimed by the taxpayer may be released.

Part 270 NEW YORK CITY MUSICAL AND THEATRICAL PRODUCTION TAX CREDIT PROGRAM

5 CRR-NY 270.1 Purpose and general description {#sec-5-crr-ny-270.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.1}

The purpose of these regulations is to set forth the application process by which a qualified musical and theatrical production company may apply for benefits under the New York City musical and theatrical production tax credit program established by chapter 59 of the Laws of 2021. These regulations include provisions describing the application process, the timing of such applications, the standards that will be used to evaluate the applications, the documentation that will be provided by applicants to substantiate the amount of qualified production expenditures of such applicants, and such other provisions as deemed necessary and appropriate. The New York State Department of Economic Development shall administer the program.

5 CRR-NY 270.2 Definitions {#sec-5-crr-ny-270.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.2}

As used in this regulation, the following terms shall have the following meanings:

(a) Applicant means a taxpayer that is a qualified New York City musical and theatrical production company that is engaged in the production of a qualified musical and theatrical production. For the purposes of this definition, only one qualified New York City musical and theatrical company may receive this credit per production.

(b) Certificate of conditional eligibility means a notification by the department to the applicant indicating that the applicant appears to be a qualified New York City musical and theatrical production company scheduled to produce a qualified musical and theatrical production. Such notification may include, but need not be limited to, the following information: name and address of the applicant, taxpayer identification number, a statement that the applicant appears to be scheduled to produce a qualified musical and theatrical production, and a disclaimer stating that actual receipt of the tax credit is subject to completion and approval of the final application and the availability of State funds.

(c) Certificate of tax credit means a certificate issued by the department which states the amount of the New York City musical and theatrical production tax credit that the applicant has qualified for based on the department’s analysis under section 24-c of the Tax Law and the provisions of this Part. Such certificate shall include, but need not be limited to, the following information: name and address of the applicant, name of the qualified musical or theatrical production to which the credit applies, the amount of the tax credit to be received by the applicant, the allocation year of the tax credit, and a disclaimer stating that actual receipt of the tax credit is subject to the statutory maximum amount of credits that are allocated for the program and the availability of State funds.

(d) Commissioner means the Commissioner or Acting Commissioner of the New York State Department of Economic Development.

(e) Completeness of the application means that all questions on the application were fully addressed by the applicant and that any additional substantiating documents that were requested by the department were provided.

(f) Credit period of a qualified New York City musical and theatrical production company is the period starting on the production start date and ending on:

(1) the date the production has expended sufficient qualified production expenditures to reach its credit cap;

(2) March 31, 2023; or

(3) the date the qualified musical and theatrical production closes, whichever comes first.

(g) Date the qualified musical and theatrical production closes is the date after the production’s final public performance on which the move of all physical production assets (i.e. sets, costumes, lighting and audio equipment) from the qualified New York City production facility to their subsequent facilities (such as lessor vendor facilities and storage facilities) is complete.

(h) Department means the New York State Department of Economic Development.

(i) Diversity and arts job training program plan means a description of the programmatic, operational and/or financial ways applicants will participate in New York State diversity and arts job training programs in the theater industry. A list of options, as well as criteria for additional opportunities to satisfy this requirement, shall be outlined in the initial application and its instructions.

(j) Final application means a document created by the department and submitted by an applicant which contains information concerning actual production expenditures regarding a New York City qualified musical or theatrical production that could make it eligible for the New York City musical and theatrical production tax credit under the provisions of this Part. Such application shall include, but need not be limited to: actual data with regard to the qualified musical or theatrical production’s total production budget, its production schedule, and any other information the department determines is necessary.

(k) First performance means the first public performance of a qualified musical and theatrical production after April 19, 2021 at which tickets are available to the public for purchase, including a preview or opening performance but not a dress rehearsal.

(l) Initial application means a document created by the department which an applicant must complete in order to prove its eligibility for the program and contains information concerning estimated production expenditures regarding a New York City qualified musical or theatrical production. Such application shall include, but need not be limited to: the qualified musical or theatrical production’s total production budget, schedule and their diversity and arts job training program plan, their public access and availability plan, their New York State Council on the Arts contribution attestation, and any other information the department determines is necessary.

(m) Net operating profits shall be defined, for the purposes of section 270.3(3) of this Part, as all ongoing revenue minus all ongoing production costs including marketing and advertising costs and shall be calculated on a quarterly basis.

(n) New York State Council on the Arts contribution attestation is a document an applicant shall complete as part of their initial application affirming they shall make the necessary contributions required under section 24-c(g)(3) of the Tax Law.

(o) Ongoing production costs shall be defined, for the purposes of section 270.3(3) of this Part as weekly operating expenses associated with the production after the end of the credit period, not including marketing and advertising as reflected on a quarterly basis.

(p) Ongoing revenue prospectively after the end of the credit period shall be defined, for the purposes of section 270.3(3) of this Part, as all gross weekly box office revenues after the end of the credit period as reflected on a quarterly basis.

(q) Production start date is the date that is up to 12 weeks prior to the first performance of the qualified musical and theatrical production.

(r) Program means the New York City musical and theatrical production tax credit program.

(s) Public access and availability plan means a plan as part of the applicant’s initial application for how the production will be available for low or no-cost to low income New Yorkers. The department in its initial application and instructions shall outline criteria and minimum standards for this plan.

(t) Qualified musical and theatrical production means a for-profit, live, scripted, dramatic performance by one or more performers of a narrative presentation with or without musical performances and/or accompaniment that, in its original or adaptive version, is performed in a qualified New York City production facility. A qualified musical and theatrical production shall not include ballet, opera, musical solo, group, band, or orchestra performance; solo, duo or several performers’ standup comedy performance. For the purposes of this program, the department shall make final determinations on which productions meet these criteria. Whether or not such production was first performed in a qualified New York City production facility prior to the State disaster emergency pursuant to executive order 202 of 2020 as amended, it shall still be treated as a qualified musical and theatrical production.

(u) Qualified New York City musical and theatrical production company is a corporation, partnership, limited partnership, or other entity or individual which or who is principally engaged in the production of a qualified musical or theatrical production that is to be performed in a qualified New York City production facility.

(v) Qualified production expenditure means any costs paid by the applicant for tangible property used and services performed directly and predominantly in the production of a qualified musical and theatrical production within the State including:

(1) expenditures for design, construction and operation, including sets, special and visual effects, costumes, wardrobes, make-up, accessories and costs associated with sound, lighting, and staging;

(4) up to 50 percent of marketing and advertising costs as calculated on a monthly basis.

For the purposes of this definition, expenses may only be counted once on a single qualified production.

(w) Qualified New York City production facility means a facility located within the city of New York:

(1) in which live theatrical productions are or are intended to be primarily presented;

(2) that contains at least 1 stage with a seating capacity of 500 or more seats, and dressing rooms, storage areas, and other ancillary amenities necessary for the qualified musical and theatrical production; and

(3) for which receipts attributable to ticket sales constitute 75 percent or more of gross receipts of the facility.

(x) Qualified certified public accountant means a New York State certified public accountant approved by the department to conduct a third party verification.

(y) Third party verification means an evaluation conducted by a qualified certified public accountant of an applicant’s application using agreed upon procedures as prescribed by the department to verify that all criteria pursuant to section 270.5 of this Part have been met. Such agreed upon procedures shall be posted online.

5 CRR-NY 270.3 Eligibility requirements {#sec-5-crr-ny-270.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.3}

An applicant whose qualified musical and theatrical production is held in a qualified New York City production facility and applies to receive a credit under this section shall be required to complete an initial application, which shall include:

(a) an attestation that they will participate in a New York State diversity and arts job training program and complete a diversity and arts training program plan outlining their proposed methods of execution of such plan;

(b) an attestation that they will ensure that their production is available and accessible for low-or no-cost to low income New Yorkers and outline their proposed methods of doing so in a public accessibility and availability plan; and

(c) an attestation that they intend to comply with the legal requirement to contribute to the New York State council on the arts cultural program fund an amount up to 50 percent of the total credits received if its production earns ongoing revenue prospectively after the end of the credit period that is at least equal to 200 percent of its ongoing production costs, with such amount payable from 25 percent of net operating profits, such amounts payable on a monthly basis, up until such 50 percent of the total credit amount is reached;

(d) in addition, an applicant who has filed an initial application for this program shall be required to file a final application within 90 days of the end of the credit period of a qualified New York City musical and theatrical production company to claim the tax credit. As part of their final application, applicants shall submit proof of the execution of their plans listed in subdivisions (a) and (b) of this section. In order to receive the tax credit under this Part, an applicant must actually carry out and implement all of the requirements they have attested to pursuant to subdivisions (a), (b) and (c) of this section. For the purposes of this Part, an applicant who: meets the requirements as set forth in this Part; completes both an initial and final application as required in section 270.4 of this part; and meets the evaluation requirements of section 270.5 of this Part shall be eligible to receive the New York City musical and theatrical production tax credit.

5 CRR-NY 270.4 Application process {#sec-5-crr-ny-270.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.4}

(a) Initial application.

(1) An applicant shall submit an initial application to the department prior to the scheduled first performance of the production for which it seeks a tax credit under this article. The purpose of the initial application is to notify the department of its intent to produce a qualified New York City musical and theatrical production in a qualified New York City production facility and to submit a final application for the New York City musical and theatrical production tax credit program.

(2) The department shall evaluate the initial application based upon the completeness of the application and whether it complies with section 270.3 of this Part and is submitted in accordance with paragraph (1) of this subdivision.

(3) After review of the initial application, the department shall notify the applicant of its eligibility and, if deemed eligible, shall issue a certificate of conditional eligibility to the applicant.

(4) In no event may a qualified New York City musical and theatrical production submit an initial application for this program after December 31, 2022.

(b) Final application.

(1) An applicant shall submit a final application to the department within 90 days of the end of the credit period of a qualified New York City musical and theatrical production company.

(2) Upon receipt of a final application, the department may request additional documentation, including copies of receipts of qualified musical and theatrical production expenditures, to determine if the production qualifies for the New York City musical and theatrical production tax credit. The department shall approve or disapprove the final application based upon criteria set forth in section 270.5 of this Part. If the final application is approved, the department shall issue a certificate of tax credit to the approved applicant. The department shall provide a copy of such certificate of tax credit to the Department of Taxation and Finance. If the final application is disapproved, the department shall provide the applicant with a notice of disapproval which shall state the reasons therefor. Such disapproval shall be a rejection of the applicant’s final application. A disapproved applicant may appeal such decision pursuant to section 270.9 of this Part or reapply pursuant to the provisions of this Part.

5 CRR-NY 270.5 Criteria for evaluation of final applications {#sec-5-crr-ny-270.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.5}

A final application shall not be approved by the department unless the department determines, in its discretion, that the following criteria are met:

(a) the application is complete;

(b) the applicant did not knowingly provide false or misleading information to the department;

(c) the applicant produced a qualified New York City musical and theatrical production that was performed in a qualified New York City production facility;

(d) the applicant met the specific requirements of section 270.3 of this Part.

5 CRR-NY 270.6 Allocation of New York City musical and theatrical production tax credit {#sec-5-crr-ny-270.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.6}

(a) Amount of credit.

The amount of the credit shall be the product (or pro rata share of the product, in the case of a member of a partnership) of 25 percent and the sum of the qualified production expenditures paid for during the qualified New York City musical and theatrical production's credit period. The amount of the credit shall not exceed $3,000,000 per qualified New York City musical and theatrical production for productions whose first performance is during the first year in which applications are accepted. For productions who first performance is during the second year in which applications are accepted, such per production cap shall decrease to $1.5 million per qualified New York City musical and theatrical production unless the department, in consultation with the Division of the Budget, determines that the New York City tourism economy has not sufficiently recovered based on analysis of key New York City economic indicators which shall include, but not be limited to, hotel occupancy rates, leisure and hospitality job rates, Metropolitan Transit Authority travel data, aviation data and other economic and travel metrics. Such analysis shall be informed by the status of any COVID-19 regulations affecting New York City musical and theatrical productions. In no event may a New York City musical and theatrical production be eligible for more than one credit under this program. In no event may expenses claimed under this credit program also be claimed under the musical and theatrical production tax credit program pursuant to section 24-a of the Tax Law.

(b) Maximum amount of tax credits.

The aggregate amount of tax credits allowed under this program shall be $100,000,000. Such aggregate amount of credits shall be allocated by the department among taxpayers based on the date of first performance of the qualified New York City musical and theatrical production. The credit shall be allowed for the taxable year beginning on or after January 1, 2021 but before January 1, 2024.

5 CRR-NY 270.7 Third party verifications {#sec-5-crr-ny-270.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.7}

The department may accept from an applicant a third party verification as part of an applicant’s final application. Submission of a third party verification shall be voluntary and shall be subject to review and approval by the department. The voluntary submission of a third party verification by an applicant as part of its final application shall in no way or manner affect the review and approval by the department of a final application submitted by an applicant that elects not to submit a third party verification. Such final application shall be subject to review and approval by the department pursuant to section 270.4(b)(2) of this Part.

5 CRR-NY 270.8 Record retention/cultural fund reporting {#sec-5-crr-ny-270.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.8}

(a) All applicants must maintain records, in paper or electronic form, of any qualified musical and theatrical production costs used to calculate their potential or actual benefit(s) under the program for a minimum of three years from the date the applicant claims a New York City musical and theatrical production tax credit. The department shall have access to the records during normal business hours at an office of the applicant within the State or, if no such office is available, at a mutually agreeable and reasonable venue within the State, for the term specified above for the purposes of inspection, auditing and copying.

(b) With respect to the contribution requirement set forth in section 270.3(3) of this Part, an applicant that claims and receives a tax credit under this program shall complete its contributions no later than Dec 31, 2025 and shall submit an annual report to the department detailing their contributions, as applicable, to the New York State council on the arts cultural program fund. Such requirement shall expire on the earlier of: December 31, 2025; or upon repayment of 50 percent of the total credit received by the applicant; provided, however, if a production closes and the applicant demonstrates that the production is not subject to the requirements of section 270.3(3) of this Part, then the applicant no longer needs to submit an annual report.

5 CRR-NY 270.9 Appeal process {#sec-5-crr-ny-270.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.9}

(a) If an applicant’s final application is disapproved by the department, or if an applicant disagrees with the amount of a New York City musical and theatrical production tax credit granted by the department, the applicant shall have a right to appeal. In the case of an appeal from a disapproval of a final application, such appeal shall be made by sending a letter to the New York State Department of Economic Development, Attn: Counsel’s Office, 625 Broadway, 8th Floor, Albany NY 12245, within 30 days from the date of the denial letter issued by the department. In the case of an appeal from a disagreement of the amount of the tax credit issued, such appeal shall be made by sending a letter to the same address as listed above within 30 days from the date of issuance of the certificate of tax credit. Failure to request an appeal within 30 days shall be deemed a waiver of an applicant’s right to appeal.

(b) Upon receipt of a timely letter of appeal, an independent hearing officer will be appointed by the commissioner to handle the appeal.

(c) An appeal may be conducted via written submission, or, with the approval of both parties, via administrative hearing.

(d) The independent hearing officer shall render a recommended order on the appeal to the commissioner within 60 days of the conclusion of a hearing or receipt of the written submission of both parties. The commissioner or his or her designee shall issue a final order within 60 days of receipt of the report of the independent hearing officer. A copy of the final order will be issued to the appellant within 10 days after the date the commissioner or his or her designee renders the final order.

5 CRR-NY 270.10 Exchange of information with Department of Taxation and Finance {#sec-5-crr-ny-270.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 270.10}

(b) The commissioner and the Commissioner of the Department of Taxation and Finance may release the names and addresses of any taxpayer claiming a credit under the program and the amount of the credit issued to the taxpayer. Provided, however, if a taxpayer claims this credit because it is a member of a limited liability company or a partner in a partnership, only the amount of credit earned by the entity and not the amount of credit claimed by the taxpayer may be released.

Part 280 RESTAURANT RETURN-TO-WORK TAX CREDIT PROGRAM

5 CRR-NY 280.1 Purpose and general description {#sec-5-crr-ny-280.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 280.1}

The purpose of these regulations is to set forth the administrative process governing the restaurant return-to-work tax credit program (the program) and specifically to establish an application process, standards for application evaluation and procedures for restaurants claiming the tax credit under this program. Chapter 59 of the Laws of 2021 establishes the program and grants the Commissioner of the Department of Economic Development the authority to promulgate regulations to establish procedures for the allocation of the restaurant return-to-work tax credit.

5 CRR-NY 280.2 Definitions {#sec-5-crr-ny-280.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 280.2}

For the purposes of this article:

(a) Applicant means a business entity that is operating in New York State and has applied for benefits under this program.

(b) Average ending full-time employment shall be calculated as the average number of full-time equivalent positions employed by a business entity in an eligible industry between April 1, 2021, and August 31, 2021 or April 1, 2021 and December 31, 2021, whichever of these two periods the business entity selects.

(c) Average full-time employment shall mean the average number of fulltime equivalent positions employed by a business entity in an eligible industry during a given period.

(d) Average starting full-time employment shall be calculated as the average number of full-time equivalent positions employed by a business entity in an eligible industry between January 1, 2021, and March 31, 2021.

(e) Business entity shall mean a sole proprietor, partnership, limited liability company, or a corporation (C-Corp or S-Corp) with its own Federal employer identification number (FEIN), or in the case of a sole proprietor, a social security number.

(f) Certificate of tax credit means the document issued to a business entity by the department after the department has verified that the business entity has met all applicable eligibility criteria in Part 182 of this Title. The certificate shall specify the exact amount of the tax credit that a business entity may claim under this program.

(g) Commissioner shall mean the commissioner or acting commissioner of the Department of Economic Development.

(h) COVID-19 impacted food services sector means:

(1) independently owned establishments that are located inside New York City and have therefore been subjected to additional restrictions on on-premises dining pursuant to guidance from the New York State Department of Health, under Executive Order 202, as amended, and are primarily organized to prepare and provide meals, and/or beverages to customers for consumption, including for immediate indoor on-premises consumption; and

(2) independently owned establishments that are located outside of New York City in an area which was designated by the New York State Department of Health as either an orange zone or red zone pursuant to Executive Order 202.68 as amended, and for which such designation was in effect and resulted in additional restrictions on on-premises dining for at least 30 consecutive days, and are primarily organized to prepare and provide meals, and/or beverages to customers for consumption, including for immediate indoor on-premises consumption.

(i) Department shall mean the Department of Economic Development.

(j) Eligible industry means a business entity operating predominantly in the COVID-19 impacted food services sector as defined in subdivision (h) of this section.

(k) Independently owned means a business entity that is not:

(1) a publicly traded entity or no more than five percent of the beneficial ownership of which is owned, directly or indirectly by a publicly traded entity;

(2) operated under a franchise or similar agreement which independently manages and controls the day-to-day operations of its own business through its ownership and management, without substantial influence by an outside entity that may have an ownership and/or financial interest in the management responsibilities of the small business.

(l) Independently owned establishments means, for the purposes of this part, full-service and limited service food and/or beverage establishments in the food services sector that are primarily organized to prepare and provide meals and/or beverages to customers for consumption and operate predominantly as and make significant accommodations for in-person dining, such as:

(1) bars, taverns, nightclubs, or drinking places primarily engaged in preparing and serving alcoholic beverages for immediate on-premises consumption;

(2) full-service restaurants primarily engaged in providing food services to patrons who order and are served while seated (i.e. waiter/waitress service) and paying after eating;

(3) limited-service restaurants engaged in providing food services (except snack and non-alcoholic beverage bars) where patrons generally order or select items and pay before eating; and

(4) breweries/wineries/cideries/distilleries/meaderies with a tasting room and for which on-premise sales represent at least 33 percent of gross receipts.

(m) Net employee increase means an increase of at least one full-time equivalent employee between the average starting full-time employment and the average ending full-time employment of a business entity; provided, however, that for purposes of calculating the tax credits in section 283.1 of this Part, net employee increase means an increase of at least one full-time equivalent employee between the average starting full-time employment and the average ending full-time employment at an independently owned and operated establishment or establishments in a COVID-19 impacted food services sector. Provided further that if an eligible business entity has two or more locations, the net employee increase for purposes of calculating the tax credit shall be the lesser of the net employee increase for the business entity overall and the net employee increase at an independently owned and operated establishment or establishments in a COVID-19 impacted food services sector.

(n) Participant means an applicant that has submitted a complete application and been approved by the department to participate in the program.

5 CRR-NY 280.3-280.9 [Repealed] {#sec-5-crr-ny-280.3-280.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 280.3-280.9}

Part 281 APPLICATION AND REVIEW PROCESS

5 CRR-NY 281.1 Application and approval process {#sec-5-crr-ny-281.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 281.1}

(a) An applicant must submit a complete application as prescribed by the commissioner. An application shall not be approved by the department unless the department determines, in its discretion, that the following criteria are met:

(1) the application is complete;

(2) the applicant provided evidence of their business eligibility in a form and manner prescribed by the commissioner;

(3) the applicant agreed to allow the Department of Taxation and Finance to share the applicant’s tax information with the department. However, any information shared as a result of this program shall not be available for disclosure or inspection under the State Freedom of Information Law;

(4) the applicant agreed to allow the Department of Labor to share its tax and employer information with the department. However, any information shared as a result of this program shall not be available for disclosure or inspection under the State Freedom of Information Law;

(5) the applicant agreed to allow the department and its agents access to any and all books and records the department may require to monitor compliance;

(6) the applicant certified, under penalty of perjury, that it is in substantial compliance with all emergency orders or public health regulations currently required of such entity and local, and State tax laws; and

(7) the applicant agreed to provide any additional information required by the department relevant to this program.

(b) After reviewing an applicant’s completed application and determining that the applicant meets the eligibility criteria as set forth in section 282.1 of this Part, the department may admit the applicant into the program and issue them a certificate of tax credit. An applicant that does not meet the eligibility criteria set forth in section 282.1 of this Part shall not be accepted into the program.

For applicants that are accepted into the program, credits will be allocated based upon the date an application is submitted provided it is also deemed complete by the department. Applicants will be notified if an application is incomplete and will be provided five business days to submit additional information or documentation. If an applicant provides the requested additional information or documentation within five business days such that the application is complete, the date the applicant originally submitted its application shall be used for allocating credits. If an applicant does not provide a complete application within five business days of being notified, the date that the remainder of the requested information or documentation is submitted, such that the application is complete, will be used for allocating credits. The department will notify the person identified in the application as the contact and such notification will be via email.

Part 282 ELIGIBILITY CRITERIA

5 CRR-NY 282.1 Eligibility criteria {#sec-5-crr-ny-282.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 282.1}

(a) To be eligible for a tax credit under the restaurant return-to-work tax credit program, an applicant must:

(1) be a small business as defined in section 131 of the Economic Development Law and have fewer than one hundred full-time job equivalents in New York State as of April 1, 2021;

(2) operate an independently owned establishment or establishments as defined in section 280.2(12) of this Title;

(3) have experienced economic harm as a result of the COVID-19 emergency as evidenced by a year-to-year decrease of at least 40 percent in New York State between the second quarter of 2019 and the second quarter of 2020 or the third quarter of 2019 and the third quarter of 2020 for one or both of:

(i) gross receipts; or

(ii) average full-time employment; and

(4) have demonstrated a net employee increase as defined in this Part for the business entity and for purposes of calculating the tax credit.

(b) A business entity must be in substantial compliance with all emergency orders or public health regulations currently required of such entity and local, and State tax laws. In addition, a business entity may not owe past due State taxes or local property taxes unless the business entity is making payments and complying with an approved binding payment agreement entered into with the taxing authority.

Part 283 CALCULATION OF RESTAURANT RETURN-TO-WORK TAX CREDIT

5 CRR-NY 283.1 Restaurant return-to-work tax credit {#sec-5-crr-ny-283.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 283.1}

(a) An applicant in the restaurant return-to-work tax credit program that meets the eligibility requirements of section 282.1 of this Title may be eligible to claim a credit equal to $5,000 per each full-time equivalent net employee increase as defined in section 280.2(13) of this Title.

(b) An applicant may not receive in excess of $50,000 in tax credits under this program.

Part 284 RETENTION AND REPORTING REQUIREMENTS

5 CRR-NY 284.1 Retention of records {#sec-5-crr-ny-284.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 284.1}

Each participant in the program shall keep all relevant records for their duration of program participation for at least three years.

5 CRR-NY 284.2 Reporting {#sec-5-crr-ny-284.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 284.2}

Each participant in this program must submit a performance report to the department by February 4, 2022.

5 CRR-NY 284.3 Commissioner’s report {#sec-5-crr-ny-284.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 284.3}

The commissioner shall on or before April 1, 2022 and every quarter thereafter until program funds are fully expended, submit a report to the governor, the temporary president of the senate, the speaker of the assembly, the chair of the senate finance committee and the chair of the assembly ways and means committee setting forth the activities undertaken by the program. Such report shall include, but need not be limited to, the following in each reporting period: total number of participants approved and the economic development region in which the business is located, total amount of advance payments disbursed and tax credits claimed, and average amount of advance payment disbursed and tax credit claimed; names of advance payment recipients and tax credit claimed; total number of rehired jobs created; and such other information as the commissioner determines necessary and appropriate to effectuate the purposes of this part. Such reports shall, at the same time, be included on the department’s website and any other publicly accessible database that lists economic development programs.

Part 285 REMOVAL FROM PROGRAM

5 CRR-NY 285.1 Removal from program {#sec-5-crr-ny-285.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 285.1}

(a) The commissioner shall remove a participant in the program for failing to meet any of the requirements set forth in section 281.1(1) of this Title, or for failing to meet the requirements set forth in section 282.1(1) of this Title.

(b) If the commissioner has removed a participant in the program pursuant to subdivision (a) of this section, the commissioner shall notify such participant of such removal in writing. Such notice of removal shall explain the reason or reasons for the removal from the program.

Part 286 ADVANCE TAX CREDIT PAYMENT OPTION

5 CRR-NY 286.1 Advance payment {#sec-5-crr-ny-286.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 286.1}

(a) Taxpayers who choose to use August 31, 2021 as the last date to calculate their average ending full-time employment and have received their certificate of tax credit by November 15, 2021, will have the option to request an advance payment of the amount of tax credit they are allowed under this program. A taxpayer must submit such request to the Department of Taxation and Finance in the manner prescribed by the commissioner after it has been issued a certificate of tax credit by the Department of Economic Development pursuant to subdivision (2) of section 474 of the Economic Development Law (or such certificate has been issued to a partnership, limited liability company or subchapter S corporation in which it is a partner, member or shareholder, respectively), but such request must be submitted no later than November 15, 2021.

(b) For those taxpayers who have requested an advance payment and for whom the Commissioner of Taxation and Finance has determined eligible for this credit, the Commissioner of Taxation and Finance shall advance a payment of the tax credit allowed to the taxpayer. However, in the case of a taxpayer subject to article 9-a of the Tax Law, such payment shall be equal to the amount of credit allowed to the taxpayer less $25. Such $25 shall represent a partial payment of tax owed by the taxpayer under article 9-a, including any fixed dollar minimum owed under paragraph (d) of subdivision one of section 210 of the Tax Law. When a taxpayer files its return for the taxable year, such taxpayer shall properly reconcile the advance payment and any partial payment of fixed dollar minimum tax, if applicable, on the taxpayer’s return.

Part 287 CAP ON THE TAX CREDIT

5 CRR-NY 287.1 Cap on tax credit {#sec-5-crr-ny-287.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 287.1}

The total amount of tax credits listed on certificates of tax credit issued by the commissioner pursuant to this article may not exceed $35,000,000 dollars.

5 NYCRR — Department of Economic Development

Chapter I GENERAL REGULATIONS

Part 1 PUBLIC ACCESS TO RECORDS

5 CRR-NY 1.1 Purpose {#sec-5-crr-ny-1.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.1}

5 CRR-NY 1.2 Definitions {#sec-5-crr-ny-1.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.2}

5 CRR-NY 1.3 Designation of records access officer {#sec-5-crr-ny-1.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.3}

5 CRR-NY 1.4 Hours for public inspection {#sec-5-crr-ny-1.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.4}

5 CRR-NY 1.5 Subject matter list {#sec-5-crr-ny-1.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.5}

5 CRR-NY 1.6 Requests for public access to records {#sec-5-crr-ny-1.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.6}

5 CRR-NY 1.7 Protection of certain records {#sec-5-crr-ny-1.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.7}

5 CRR-NY 1.8 Grant or denial of access to records {#sec-5-crr-ny-1.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.8}

5 CRR-NY 1.9 Appeals {#sec-5-crr-ny-1.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.9}

5 CRR-NY 1.10 Fees {#sec-5-crr-ny-1.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.10}

5 CRR-NY 1.11 Public notice {#sec-5-crr-ny-1.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.11}

5 CRR-NY 1.12 Severability {#sec-5-crr-ny-1.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 1.12}

Part 2 ACCESS TO PERSONAL INFORMATION

5 CRR-NY 2.1 Purpose {#sec-5-crr-ny-2.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.1}

5 CRR-NY 2.2 Definitions {#sec-5-crr-ny-2.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.2}

5 CRR-NY 2.3 Personal privacy compliance officer {#sec-5-crr-ny-2.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.3}

5 CRR-NY 2.4 Collection of information to be included in records {#sec-5-crr-ny-2.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.4}

5 CRR-NY 2.5 Proof of identity {#sec-5-crr-ny-2.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.5}

5 CRR-NY 2.6 Location and hours {#sec-5-crr-ny-2.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.6}

5 CRR-NY 2.7 Requests for records {#sec-5-crr-ny-2.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.7}

5 CRR-NY 2.8 Access to records {#sec-5-crr-ny-2.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.8}

5 CRR-NY 2.9 Appeal of denial {#sec-5-crr-ny-2.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.9}

5 CRR-NY 2.10 Statement of disagreement by data subject {#sec-5-crr-ny-2.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.10}

5 CRR-NY 2.11 Disclosures {#sec-5-crr-ny-2.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.11}

5 CRR-NY 2.12 Fees {#sec-5-crr-ny-2.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.12}

5 CRR-NY 2.13 Severability {#sec-5-crr-ny-2.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 2.13}

Part 3 DECLARATORY RULINGS

5 CRR-NY 3.1 Declaratory rulings {#sec-5-crr-ny-3.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 3.1}

5 CRR-NY 3.2 Procedures {#sec-5-crr-ny-3.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 3.2}

Part 4 FEE FOR THE PROCUREMENT OPPORTUNITIES NEWSLETTER

5 CRR-NY 4.1 Fee for the procurement opportunities newsletter {#sec-5-crr-ny-4.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 4.1}

5 CRR-NY 4.2 Exemptions {#sec-5-crr-ny-4.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 4.2}

Chapter II ECONOMIC DEVELOPMENT ZONES

Part 10 DEFINITIONS AND ZONE DESIGNATION APPLICATION PROCESS

5 CRR-NY 10.1 Purpose and general description {#sec-5-crr-ny-10.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.1}

5 CRR-NY 10.2 Definitions {#sec-5-crr-ny-10.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.2}

5 CRR-NY 10.3 Authorized applicants {#sec-5-crr-ny-10.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.3}

5 CRR-NY 10.4 Eligibility {#sec-5-crr-ny-10.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.4}

5 CRR-NY 10.5 Nearby or contiguous lands {#sec-5-crr-ny-10.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.5}

5 CRR-NY 10.6 Size and boundaries {#sec-5-crr-ny-10.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.6}

5 CRR-NY 10.7 Competition criteria {#sec-5-crr-ny-10.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.7}

5 CRR-NY 10.8 Applications {#sec-5-crr-ny-10.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.8}

5 CRR-NY 10.9 Commissioner's review of applications; recommendation {#sec-5-crr-ny-10.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.9}

5 CRR-NY 10.10 Boundary revisions {#sec-5-crr-ny-10.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.10}

5 CRR-NY 10.11 [Renumbered] {#sec-5-crr-ny-10.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 10.11}

Part 11 CERTIFICATION OF BUSINESS ENTERPRISES

5 CRR-NY 11.1 Purpose and general description {#sec-5-crr-ny-11.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.1}

5 CRR-NY 11.2 Authorized applicants {#sec-5-crr-ny-11.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.2}

5 CRR-NY 11.3 Contents of application {#sec-5-crr-ny-11.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.3}

5 CRR-NY 11.4 Criteria and determinations for certification {#sec-5-crr-ny-11.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.4}

5 CRR-NY 11.5 Evaluation of application {#sec-5-crr-ny-11.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.5}

5 CRR-NY 11.6 Form of certification {#sec-5-crr-ny-11.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.6}

5 CRR-NY 11.7 Annual report of certified businesses {#sec-5-crr-ny-11.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.7}

5 CRR-NY 11.8 Denial of certification {#sec-5-crr-ny-11.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.8}

5 CRR-NY 11.9 Revocation of certification {#sec-5-crr-ny-11.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.9}

5 CRR-NY 11.10 Certification after revocation {#sec-5-crr-ny-11.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 11.10}

Part 12 RECORDKEEPING, INSPECTION AND AUDIT

5 CRR-NY 12.1 Recordkeeping {#sec-5-crr-ny-12.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 12.1}

5 CRR-NY 12.2 Inspection and audit {#sec-5-crr-ny-12.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 12.2}

5 CRR-NY 12.3-12.15 [Repealed] {#sec-5-crr-ny-12.3-12.15 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 12.3-12.15}

Part 13 PROCEDURES FOR APPEALING A DENIAL OF CERTIFICATION PURSUANT TO SECTIONS 11.5 AND 11.8 OF THIS TITLE AND REVOCATION OF CERTIFICATION PURSUANT TO SECTIONS 11.9(A) AND (B) OF THIS TITLE

5 CRR-NY 13.1 Applicability {#sec-5-crr-ny-13.1 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.1}

5 CRR-NY 13.2 Definitions {#sec-5-crr-ny-13.2 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.2}

5 CRR-NY 13.3 Designation of hearing officer {#sec-5-crr-ny-13.3 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.3}

5 CRR-NY 13.4 Notice of hearing {#sec-5-crr-ny-13.4 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.4}

5 CRR-NY 13.5 Adjournment {#sec-5-crr-ny-13.5 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.5}

5 CRR-NY 13.6 Responsive pleadings {#sec-5-crr-ny-13.6 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.6}

5 CRR-NY 13.7 Amendment of pleadings {#sec-5-crr-ny-13.7 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.7}

5 CRR-NY 13.8 Service of papers {#sec-5-crr-ny-13.8 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.8}

5 CRR-NY 13.9 Disclosure {#sec-5-crr-ny-13.9 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.9}

5 CRR-NY 13.10 The hearing officer {#sec-5-crr-ny-13.10 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.10}

5 CRR-NY 13.11 Stipulation and consent orders {#sec-5-crr-ny-13.11 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.11}

5 CRR-NY 13.12 The hearing {#sec-5-crr-ny-13.12 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.12}

5 CRR-NY 13.13 Hearing officer's report {#sec-5-crr-ny-13.13 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.13}

5 CRR-NY 13.14 Final determination and order {#sec-5-crr-ny-13.14 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.14}

5 CRR-NY 13.15 Waiver of rules {#sec-5-crr-ny-13.15 omnilex-key=us-ny-regs-official--title-5--5 CRR-NY 13.15}

Part 14 PROCEDURES FOR APPEALING A REVOCATION OF CERTIFICATION PURSUANT TO SECTION 11.9(C) OF THIS TITLE