1) The regulation adds in certain definitions relevant to the Excelsior Jobs Program (the “Program”) and currently in statute. Key definitions added include, but are not limited to, “entertainment company”, “life sciences”, “life sciences company”, and “music production.” The regulation updates the definitions of the terms -- “net new jobs”, “regionally significant project”, significant capital project” and “software development” -- to conform to recent statutory changes.

2) The regulation next adds in life sciences, entertainment and music production as strategic industries eligible to be incentivized by the program. It then updates the minimum job requirements for strategic industries by decreasing the minimum thresholds to conform with statute.

3) Next, the regulation clarifies that businesses operating as entertainment companies and businesses engaged in music production are eligible for the program.

4) The regulation clarifies that no costs used by an entertainment company as the basis for the Excelsior tax credit may be used by the company to claim any other tax credits under New York’s Tax Law.

5) The regulation clarifies that the Excelsior Research and Development Tax Credit is now calculated at 6% of the qualified research and development expenditures attributable to activities conducted in New York State. Previously, it was 3%.

The full text of the rule is available at the Department’s website at www.esd.ny.gov/excelsior-jobs-program.

STATUTORY AUTHORITY:

Section 356 of the Economic Development Law authorizes the Commissioner of Economic Development to promulgate regulations to implement the Excelsior Jobs Program. This rulemaking seeks to update the regulations to conform with recent statutory amendments to the program. For example, Part K of Chapter 59 of the Laws of 2015 inserts new strategic industries for inclusion in the program -- entertainment company and music production – and further defines the term “software development.” Part K of Chapter 59 of the Laws of 2017 adds life sciences to the list of eligible industries for the program. Part ZZ of Chapter 59 of the Laws of 2017 makes several other changes to the program, including reducing the specific job thresholds for eligibility as a regionally significant project, defining the term “significant capital investment” and also reducing certain job thresholds to participate in the program generally. In addition, Part YY of Chapter 59 of the Laws of 2017 increases the excelsior research and development tax credit from 3% to 6%.

LEGISLATIVE OBJECTIVES:

The rulemaking accords with the public policy objectives the Legislature sought to advance in creating competitive financial incentives for businesses to create jobs and invest in the new economy. The Excelsior Jobs Program is created to support the growth of the State’s traditional economic pillars, including the manufacturing and financial industries, and to ensure that New York emerges as the leader in the knowledge, technology and innovation based economy. The Program encourages the expansion in and relocation to New York of businesses in growth industries such as clean-tech, broadband, information systems, renewable energy and biotechnology. This rulemaking updates the regulations to conform with statutory changes over the past several years aimed at making the program a more effective economic development tool.

NEEDS AND BENEFITS:

The rule updates the Excelsior Jobs Program regulations to bring them into conformity with the statute. Section 365 of the Economic Development Law directs the Commissioner of Economic Development to promulgate regulations with respect to an application process and eligibility criteria.

This rule making updates the regulations for the continued administration of the Excelsior Jobs Program, which is one of the State’s key economic development tools for ensuring that businesses in the new economy choose to expand or locate in New York State. It is imperative that the administration of this Program continues so that New York remains competitive with other States, regions, and even countries as businesses make their investment and location decisions.

Specifically, the rulemaking adds in certain definitions relevant to the Excelsior Jobs Program (the “Program”) and currently in statute. Key definitions added include, but are not limited to, “entertainment company”, “life sciences”, “life sciences company”, and “music production.” The regulation updates the definitions of the terms -- “net new jobs”, “regionally significant project”, significant capital project” and “software development” -- to conform to recent statutory changes. In addition, the regulation next adds in life sciences, entertainment and music production as strategic industries eligible to be incentivized by the program. It then updates the minimum job requirements for strategic industries by decreasing the minimum thresholds to conform with statute. It also clarifies that businesses operating as entertainment companies and businesses engaged in music production are eligible for the program but that no costs used by an entertainment company as the basis for the Excelsior tax credit may be used by the company to claim any other tax credits under New York’s Tax Law. The regulation also clarifies that the Excelsior Research and Development Tax Credit is now calculated at 6% of the qualified research and development expenditures attributable to activities conducted in New York State. Previously, it was 3% of qualified research and development expenditures.

COSTS:

A. Costs to private regulated parties: None. There are no regulated parties in the Excelsior Jobs Program, only voluntary participants.

B. Costs to the agency, the state, and local governments: The Department of Economic Development does not anticipate any significant costs with respect to implementation of this program. 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 rule making.

LOCAL GOVERNMENT MANDATES:

None. There are no mandates on local governments with respect to the Excelsior Jobs Program. This rule does not impose any costs to local governments for administration of the Excelsior Jobs Program.

PAPERWORK:

The rule requires businesses choosing to participate in the Excelsior Jobs Program to establish and maintain complete and accurate books relating to their participation in the Excelsior Jobs Program for a period of three years beyond their participation in the Program. However, this requirement does not impose significant additional paperwork burdens on businesses choosing to participate in the Program but instead simply requires that information currently established and maintained be shared with the Department in order to verify that the business has met its job creation and investment commitments.

DUPLICATION:

The rule does not duplicate any state or federal statutes or regulations.

ALTERNATIVES:

No alternatives were considered with regard to amending the regulations in response to statutory revisions.

FEDERAL STANDARDS:

There are no federal standards in regard to the Excelsior Jobs Program. Therefore, the rule does not exceed any federal standard.

COMPLIANCE SCHEDULE:

The period of time the state needs to assure compliance is negligible, and the Department of Economic Development expects to be compliant upon publication of the Notice of Adoption.

The Excelsior Jobs Program is a statewide business assistance program. Although there are small businesses in New York State that are eligible to participate in the program, participation by the businesses is entirely at their discretion. The proposed rule will not have a substantial adverse economic impact on small businesses and local governments. On the contrary, because the rule updates a tax credit program designed to attract business and jobs to New York State, it will have a positive economic impact on the State. Accordingly, a regulatory flexibility analysis for small business and local governments is not required and one has not been prepared.

The Excelsior Jobs Program is a statewide business assistance program. Strategic businesses in rural areas of New York State are eligible to apply to participate in the program entirely at their discretion. Municipalities are not eligible to participate in the Program. The proposed rule does not impose any special reporting, record keeping or other compliance requirements on private entities in rural areas. Therefore, the proposed rule will not have a substantial adverse economic impact on rural areas nor on the 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.

The proposed rule relates to the Excelsior Jobs Program. The Excelsior Jobs Program necessarily enables New York State to provide financial incentives to businesses in strategic industries that commit to create new jobs and/or to make significant capital investment. This Program, given its design and purpose, will have a substantial positive impact on job creation and employment opportunities. Accordingly, a job impact statement is not required and one has not been prepared.