Life Sciences Initiative Program
NY-ADR
8/16/17 N.Y. St. Reg. UDC-33-17-00010-E
NEW YORK STATE REGISTER
VOLUME XXXIX, ISSUE 33
August 16, 2017
RULE MAKING ACTIVITIES
URBAN DEVELOPMENT CORPORATION
EMERGENCY RULE MAKING
I.D No. UDC-33-17-00010-E
Filing No. 582
Filing Date. Jul. 31, 2017
Effective Date. Jul. 31, 2017
Life Sciences Initiative Program
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Addition of Part 4255 to Title 21 NYCRR.
Statutory authority:
Urban Development Corporation Act, sections 5(4), 9-c and 16-aa; L. 2017, ch. 58, part TT
Finding of necessity for emergency rule:
Preservation of general welfare.
Specific reasons underlying the finding of necessity:
Regulatory action is needed immediately to implement the statutory changes contained in Part TT of Chapter 58 of the Laws of 2017. The emergency rule implements the Capital Assistance component of the Life Sciences Initiative Program. The Capital Assistance component is designed to attract new life sciences technologies to New York State, promote critical public and private sector investment in emerging life sciences fields in New York State and create and expand life sciences related businesses and employment. The rule creates the administrative procedures of the program. It is critical to implement this program immediately because life science companies interested in locating or expanding their activities in New York state are approaching UDC in an effort to access funding for their proposed projects. By waiting for the standard rulemaking process to unfold, the State risks losing important economic development opportunities to states with competing life sciences incentive programs.
Subject:
Life Sciences Initiative Program.
Purpose:
Allow the Urban Development Corporation to implement the Capital Assistance component of the Life Sciences Initiatives program.
Text of emergency rule:
Part 4255 Life Sciences Initiative Program
Section 4255.1 Purpose and General Description.
The Life Sciences Initiatives Program (the “Program”) is established for the purpose of nurturing, growing and retaining new life sciences companies in New York State, attracting existing companies from outside New York State, promoting critical public and private sector investment in emerging life sciences fields in the State, and creating and expanding life sciences related businesses and employment. It is intended to operate in areas identified by the New York State Urban Development Corporation (“the Corporation”) as having significant potential for economic growth in New York, or in which the application of new life sciences technologies could significantly enhance the productivity and stability of New York businesses.
The first component of this Program, Capital Assistance, is a critical component to this Initiative as it endeavors to attract new life sciences technologies to the State, promote critical public and private sector investment in emerging life sciences fields in the State and create and expand life sciences related businesses and employment throughout the State. The Corporation anticipates the other elements of the program to include support for venture investments as well as the support of research labs and medical centers. The Corporation may allocate funds from the Program to cover the Corporation’s administrative costs associated with the Program.
If the proposal satisfies the applicable requirements and Program funding is available, the proposal may be presented to the Corporation’s Directors or President/Chief Executive Officer for consideration and approval in accordance with applicable law and regulations. The Directors normally meet once a month. If the project is approved for funding and if it involves the acquisition, construction, reconstruction, rehabilitation, alteration or improvement of any property, the Corporation will schedule a public hearing in accordance with the Act and will take such further action as may be required by the Act and applicable law and regulations. After approval by the Corporation and a public hearing, if required, the project may then be reviewed by the State Public Authorities Control Board (“PACB”), which also generally meets once a month, in accordance with PACB requirements and policies. Following Directors’ approval, and PACB approval, if required, documentation will be prepared by the Corporation. Notwithstanding the foregoing, no Program project shall be funded if sufficient Program monies are not received by the Corporation for such project.
Section 4255.2. Capital Assistance Program.
(a) Definitions. For the purposes of this section, the terms below shall have the following meaning:
(1) “Life Sciences” shall mean advanced and applied sciences that expand the understanding of human physiology and have the potential to lead to medical advances or therapeutic applications including, but not limited to, academic medical centers, agricultural biotechnology, biogenerics, bioinformatics, biomedical engineering, biopharmaceuticals, biotechnology, chemical synthesis, chemistry technology, diagnostics, genomics, image analysis, marine biology, marine technology, medical devices, nanotechnology, natural product pharmaceuticals, proteomics, regenerative medicine, RNA interference, stem cell research, clinical trials, including, but not limited to, neurological clinical trials and veterinary science.
(2) “Life Sciences Entity” shall mean a non-retail business corporation, partnership, firm, or any other non-retail business entity, not for profit organization or academic medical center, unincorporated association, or other entity engaged in life sciences research, development, manufacturing or commercialization.
(3) “Corporation” shall mean the New York State Urban Development Corporation doing business as Empire State Development.
(4) “Life Sciences Economic Development Benefits” means the creation, expansion, enhancement or acceleration of life sciences programs throughout the State that leads to:
i. the commercialization of life sciences in New York State;
ii. the creation or retention of jobs in the life sciences industry employing full time permanent employees;
iii. the promotion of the life science ecosystem within a region of the State;
iv. new patents in life science;
v. additional commercial laboratory space; or
vi. additional venture capital money for Life Sciences Entities in New York State.
(5) “Evaluation Criteria” shall mean the criteria set forth in paragraph d of this Section 4255.2 to be applied by the Corporation in evaluating applications for Capital Assistance Program funding.
(6) “Full Time Permanent Employee” shall mean (i) a full-time, permanent, private-sector employee on a Life Sciences Entity’s payroll, who has worked at the Project Location for a minimum of 35 hours per week for not less than four consecutive weeks and who is entitled to receive the usual and customary fringe benefits extended by the entity to other employees with comparable rank and duties; or (ii) two part-time, permanent, private-sector employees on the Life Sciences Entity’s payroll, who have worked at the project location for a combined minimum of 35 hours per week for not less than four consecutive weeks and who are entitled to receive the usual and customary fringe benefits extended by the entity to other employees with comparable rank and duties.
(b) Available Capital Assistance.
The Capital Assistance Program makes available financial assistance in the form of grants or loans (secured or unsecured), or a combination of such assistance, in the Corporation’s discretion, for use by Life Sciences Entities for Eligible Uses as set forth in paragraph e of this Section 4255.2.
(c) Application Process.
(1) Applications from Life Sciences Entities will be accepted on a rolling basis throughout the year. Life Sciences Entities requesting Capital Assistance shall provide the following information about the project and the applicant, as applicable, in a form provided by, or otherwise acceptable to, the Corporation:
i. a description of the project or activity, including information indicating how the proposed project or activity will create, expand, enhance or accelerate the commercial life science industry through programs, research, job creation and retention within New York state and will result in the other Life Sciences Economic Development Benefits as defined in paragraph A (4) of this Section 4255.2;
ii. 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;
iii. the number of jobs in the life sciences industry employing Full Time Permanent Employees to be created or retained as a result of the proposed project or activity, the titles or classifications of such jobs and the average annual salaries associated with each;
iv. information about the applicant, including but not limited to, its history, ownership, size, primary products offered or services rendered, major customers, its market and marketing strategy;
v. information about the proposed project financing 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;
vi. a description of how the project will be implemented, including a project schedule, and the current status of the project;
vii. anticipated project results; and
viii. information with respect to the site of the project and the impact, if any, on the environment and any landmark or historic properties.
(2) Depending on the nature of the project or activity (such as acquisition of machinery and equipment; acquisition, construction or renovation of property, etc.) and the type of assistance requested, Life Science Entities may be required to provide other information about the project, including some or all of the following, as may be appropriate:
i. a complete set of financial statements for at least the three preceding fiscal years, operating pro formas going forward three years, and current financial statements for any proposed guarantors;
ii. a list of proposed collateral, with any available appraisals;
iii. resumes of principal officers and a list of owners, shareholders, or partners;
iv. a copy of any related real estate purchase option or contract for sale;
v. a legal description and survey of the property;
vi. a construction-to-occupancy schedule; and
vii. copies of any preliminary architectural drawings, scope of work, cost estimates and schematics.
(3) Applications may include a request for funding for single or multiple Life Sciences projects or activities.
(4) Upon receipt of the application, the Corporation shall review the application for eligibility, completeness, and conformance with the applicable requirements of these guidelines. Applications shall be processed in full compliance with the applicable provisions of section 16-aa of the Urban Development Corporation Act.
(d) Evaluation Criteria.
The Corporation shall evaluate applications for Capital Assistance in accordance with the following criteria as applicable:
(1) the financial condition of the entity undertaking the project, including its profitability or potential to generate profits; liquidity; ability to service debt and its leverage ratio;
(2) management experience, ability and relevant knowledge and the relevant entity’s general ability to carry out the project;
(3) satisfactory credit references;
(4) the absence of state or local tax judgments; provided however, in the case of a tax certiorari proceeding a life sciences entity would not be considered in arrears until a final decision is made with respect to such proceeding;
(5) whether the applicant clearly demonstrates how the proposal will result in Life Sciences Economic Development Benefits and the likelihood that the project will result in Life Sciences Economic Development Benefits to the State;
(6) the availability of other sources of funding, including offers of assistance from locations outside of the State, including the federal government, and the amount of private financing leveraged by Program funds; and
(7) The Corporation may consider the terms of any economic development assistance available as an incentive for the location of the proposed project outside the State.
(e) Eligible Uses.
Capital Assistance Program funds may be used for:
(1) new construction, renovation or leasehold improvements;
(2) the acquisition or leasing of land, buildings, machinery and equipment;
(3) working capital, including, without limitation, workforce development; and
(4) feasibility or planning studies.
(f) Ineligible Uses.
Institutions that are exclusively health care providers and/or requests for the purchase of equipment associated with standard healthcare delivery are not eligible for Capital Assistance Program funding.
(g) Reporting Requirements.
Applicants shall submit an annual report satisfactory to the Corporation on the operation and accomplishments of the project including, without limitation, a description of the activities undertaken, the economic impact of the project, the number and amount of other sources of funding for the project including federal funds, jobs employing Full Time Permanent Employees created and retained, and the average salary of such jobs.
This notice is intended
to serve only as a notice of emergency adoption. This agency intends to adopt this emergency rule as a permanent rule and will publish a notice of proposed rule making in the State Register at some future date. The emergency rule will expire October 28, 2017.
Text of rule and any required statements and analyses may be obtained from:
Thomas P. Regan, New York State Urban Development Corporation, 625 Broadway, Albany, NY 12245, (518) 292-5123, email: [email protected]
Regulatory Impact Statement
STATUTORY AUTHORITY:
Part TT of Chapter 58 of the Laws of 2017 requires the New York State Urban Development Corporation (“UDC”) to establish criteria for the Life Sciences Initiatives Program via rulemaking.
LEGISLATIVE OBJECTIVES:
The rulemaking accords with the public policy objectives the Legislature sought to advance since it creates the administrative framework for the Capital Assistance component of the Life Sciences Initiatives program. The Capital Assistance component of this program is designed to create and expand life sciences businesses and employment throughout New York State.
NEEDS AND BENEFITS:
The emergency rule is required in order to implement the program in a timely manner as New York State currently has eligible companies seeking program funding that could be lost to states with competing programs if such companies were required to wait for the standard rulemaking process to unfold.
COSTS:
A. Costs to private regulated parties: None. There are no regulated parties in the Capital Assistance component of the Life Sciences Initiative Program, only voluntary participants.
B. Costs to the agency, the state, and local governments: UDC does not anticipate substantial extra costs associated with running the program outlined in this rulemaking. The program appropriation makes funding available for the Corporation’s administrative costs. There is no additional cost to local governments.
C. Costs to the State government: None. There will be no additional costs to New York State as a result of the emergency rule making. The program appropriation makes funding available for the Corporation’s administrative costs.
LOCAL GOVERNMENT MANDATES:
None. Local governments are not eligible to participate in the Capital Assistance component of the Life Sciences Initiative Program.
PAPERWORK:
The emergency rule imposes no new record-keeping requirements on businesses choosing to participate in the Capital Assistance component of the Life Sciences Initiative program.
DUPLICATION:
The emergency rule conforms to provisions of section 16-aa of the New York State Urban Development Corporation Act and does not otherwise duplicate any state or federal statutes or regulations.
ALTERNATIVES:
No alternatives were considered with regard to implementing this rulemaking.
FEDERAL STANDARDS:
There are no federal standards with regard to the Capital Assistance component of the Life Sciences Initiative Program. Therefore, the emergency rule does not exceed any Federal standard.
COMPLIANCE SCHEDULE:
The period of time the state needs to assure compliance is negligible.
Regulatory Flexibility Analysis
1. Effect of rule
The emergency rule does not impose record-keeping requirements on businesses (small, medium and large) that choose to participate in the Capital Assistance component of the Life Sciences Initiative Program. Local governments are unaffected by this rule.
2. Compliance requirements
Each business choosing to participate in the Capital Assistance component of the Life Sciences Initiative Program must provide certain financial information that they keep to the Corporation during the application process Local governments are unaffected by this rule.
3. Professional services
The information that businesses choosing to participate in the Capital Assistance component of the Life Sciences Initiative Program would be required to keep would be information such businesses already must establish and maintain in order to operate, i.e. wage reporting, financial records, tax information, etc. No additional professional services would be needed by businesses in order to establish and maintain the required records. Local governments are unaffected by this rule.
4. Compliance costs
Businesses (small, medium or large) that choose to participate in the Capital Assistance component of the Life Sciences Initiative Program must create new jobs in order to receive any tax incentives under the Program. If businesses choosing to participate in the Program do not fulfill their job creation, such businesses would not receive financial assistance. There are no other initial capital costs that would be incurred by businesses choosing to participate in the Program. Annual compliance costs are estimated to be negligible for businesses because the information they must provide to demonstrate their compliance with their commitments is information that is already established and maintained as part of their normal operations. Local governments are unaffected by this rule.
5. Economic and technological feasibility
The New York State Urban Development Corporation (“UDC”) estimates that complying with this record-keeping is both economically and technologically feasible. Local governments are unaffected by this rule.
6. Minimizing adverse impact
UDC finds no adverse economic impact on small or large businesses with respect to this rule. Local governments are unaffected by this rule.
7. Small business and local government participation
UDC is in compliance with SAPA Section 202-b(6), which ensures that small businesses and local governments have an opportunity to participate in the rule-making process. UDC has conducted outreach within the small and large business communities and maintains continuous contact with small and large businesses with regard to their participation in this program. Local governments are unaffected by this rule.
Rural Area Flexibility Analysis
The Capital Assistance component of the Life Sciences Initiative Program is a statewide program. Although there are businesses in rural areas of New York State that are eligible to participate in the program, participation by the businesses is entirely at their discretion. The emergency rule imposes no additional reporting, record keeping or other compliance requirements on public or private entities in rural areas. Therefore, the emergency rule will not have a substantial adverse economic impact on rural areas or reporting, record keeping or other compliance requirements on public or private entities in such rural areas. Accordingly, a rural area flexibility analysis is not required and one has not been prepared.
Job Impact Statement
The proposed rule relates to the Capital Assistance component of the Life Sciences Initiative Program. This Program will enable New York State to provide financial assistance to life sciences companies that commit to create or retain jobs and/or to make significant capital investment in the State. This Program, given its design and purpose, will have a substantial positive impact on job retention and creation, and employment opportunities. Because this rule will authorize the Corporation to immediately begin offering financial incentives to life sciences businesses that commit to creating or retaining jobs, it will only have a positive impact on job and employment opportunities. Accordingly, a job impact statement is not required and one has not been prepared.
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