New York Codes, Rules and Regulations
Title 5 - DEPARTMENT OF ECONOMIC DEVELOPMENT
Chapter XXII - Start-Up NY Program
Part 220 - Suny Tax-free Areas To Revitalize And Transform Upstate New York (start-up Ny) Program
Section 220.6 - Eligibility criteria for businesses

Current through Register Vol. 44, No. 38, September 21, 2022

(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.

(c) A business must satisfy all of the following criteria to apply to and participate in START-UP NY:

(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.

Amended New York State Register November 20, 2019/Volume XLI, Issue 47, eff. 11/20/2019

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