Bill Text: NY A07731 | 2019-2020 | General Assembly | Introduced
Bill Title: Relates to the establishment of a state university-based center for employee ownership.
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Introduced - Dead) 2020-01-08 - referred to economic development [A07731 Detail]
Download: New_York-2019-A07731-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7731 2019-2020 Regular Sessions IN ASSEMBLY May 17, 2019 ___________ Introduced by M. of A. WRIGHT, COLTON, D'URSO, DICKENS, SIMON -- read once and referred to the Committee on Economic Development AN ACT to amend the economic development law, the public authorities law and the tax law, in relation to the establishment of a state universi- ty-based center for employee ownership; and to repeal certain provisions of the economic development law relating thereto The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 104-a of the economic development law is REPEALED 2 and a new section 104-a is added to read as follows: 3 § 104-a. Establishment of a state university-based center for employee 4 ownership. With respect to employee ownership, the department shall 5 establish a state university-based center for employee ownership "the 6 center". 7 1. The center shall: 8 (a) provide education and outreach to inform business owners about the 9 benefits of employee ownership successions; 10 (b) organize workshops and conferences on employee ownership 11 successions; 12 (c) prepare and distribute materials concerning employee ownership 13 successions; 14 (d) provide initial consultation to business owners exploring the 15 possibility of transferring full or partial ownership to employees; 16 (e) provide a referral service to help business owners find legal, 17 financial, and technical advice in connection with employee ownership 18 successions; 19 (f) partner with key organizations, such as professional and trade 20 associations, financial institutions, unions, economic development 21 organizations, and other non-profit entities, to promote employee owner- 22 ship successions; EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD05608-02-9A. 7731 2 1 (g) conduct investigations, research, studies, and analyses on the 2 subject of employee ownership; and 3 (h) support the growth of associations of employee-owned companies. 4 2. The center shall additionally provide support and access in govern- 5 ment relations, including providing access to information regarding 6 rules and regulations that relate to employee ownership and develop 7 proposals for changes in policies to promote employee ownership. 8 § 2. Section 1836-a of the public authorities law, as added by chapter 9 788 of the laws of 1983, is amended to read as follows: 10 § 1836-a. Legislative findings. The legislature hereby finds and 11 declares that [the health, safety and general welfare of the people of12this state are directly dependent upon the state economy, and that one13of the principal problems of our present economy is the permanent clos-14ing of industrial and manufacturing plants, and their relocation out of15state, which results in the loss of jobs and increasing unemployment.16It is the purpose of this subtitle to encourage the employees of17plants that are about to be permanently closed, or relocated, to acquire18such plants and to continue to operate them as employee-owned enter-19prises, thereby retaining the jobs that would otherwise be lost, and20strengthening the economic base of this state] employee ownership 21 program is a mainstream aspect of the United States economy with approx- 22 imately thirteen and a half million workers participating in some form 23 of employee ownership program at over seven thousand companies. The vast 24 majority of such programs are the result of a transfer from the business 25 owners to the employees and in accordance with federal law that seeks to 26 facilitate such transfers. Employee ownership transfers are in the 27 interest of business owners, who seek to liquidate their ownership 28 interest and retire. Such transfers are also in the interest of the 29 employees, who gain the opportunity to ensure the future survival of the 30 firm and their jobs. 31 The legislature also finds and declares that employee-owned busi- 32 nesses are more productive, enjoy increased sales, lower turnover rate 33 and greater longevity, offer better employment opportunities, and are 34 more likely to retain jobs in-state and less likely to relocate out-of- 35 state. Employee-owned businesses also sustain the state tax base 36 through employee and corporate income tax, while saving costs on unem- 37 ployment insurance and other state benefit programs. It is the purpose 38 of this subtitle to amplify federal programs in support of employee 39 ownership at the state level through loans and loan guarantees that 40 provide financing for the conversion of existing businesses to employee 41 ownership. 42 § 3. Subdivisions 3, 4, 5, 6, 7 and 8 of section 1836-b of the public 43 authorities law, subdivisions 3, 6, 7 and 8 as added by chapter 788 of 44 the laws of 1983, subdivisions 4 and 5 as amended by chapter 805 of the 45 laws of 1985, are amended to read as follows: 46 3. "Eligible project" means the acquisition [or rehabilitation] by an 47 employee ownership association of an existing [industrial or manufactur-48ing plant] business located in this state for the purpose of operating 49 it as an employee-owned enterprise. 50 4. "Employee ownership association" means a corporation, limited 51 liability company, trust, or other association formed by or on behalf of 52 the employees of [an industrial or manufacturing plant] a business 53 located in this state for the purpose of assuming ownership or control 54 of the [plant] business and operating it as an employee-owned enterprise 55 or as a worker cooperative as defined in section eighty-one of the coop- 56 erative corporations law.A. 7731 3 1 5. "Employee-owned enterprise" means a business in which the employees 2 are represented on the board of directors or managers and the employees 3 control the majority of the voting stock or member interest, or if the 4 business is held in a trust which controls the majority of the voting 5 stock or member interest, the trustees are elected by the employees. The 6 term "employee-owned enterprise" shall also refer to a worker cooper- 7 ative as defined in section eighty-one of the cooperative corporations 8 law. 9 6. ["Funding partner" means an entity which singly or in combination10with other entities has agreed to finance a portion of the project cost11of an eligible project, and may include the employee ownership associ-12ation undertaking the project as well as any financial entity.137. "Plant" includes the site, structure, building and equipment and14all real and personal property in connection therewith, whether or not15in existence, and may include any road, railroad, or utility or equip-16ment appurtenant thereto.178.] "Project cost" includes all reasonable and necessary costs to be 18 incurred in the course of an eligible project, including [any antic-19ipated acquisition,] the fair market value of the business interest to 20 be acquired, as well as costs for any additional construction, land 21 acquisition, improvements, equipment, pertinent rights and easements, 22 and associated technical, engineering, legal and financial services. 23 § 4. The opening paragraph and paragraphs (a), (b) and (d) of subdivi- 24 sion 1 and subdivision 2 of section 1836-c of the public authorities 25 law, as added by chapter 788 of the laws of 1983, are amended to read as 26 follows: 27 Any employee ownership association may apply to [a local development28corporation serving the municipality in which the eligible project is29located] the authority for an employee ownership assistance loan to be 30 used to help finance an eligible project. Such application must include 31 a written statement from the entity from which the project is being 32 acquired, stating that such entity consents to the acquisition. The 33 application shall include [in detail]: 34 (a) [the history and membership] a description of the employee owner- 35 ship association; 36 (b) [the history and circumstances of the plant to be acquired] a 37 description of the business; 38 (d) estimate of the number of jobs [to be saved or created by the39project] before and after the transaction; and 40 2. The application shall also include a detailed financial statement 41 of [funding partner] actual and anticipated financial participation in 42 the project, which shall include: 43 (a) the identity of all funding [partners] sources; [and] 44 (b) the nature of the financial participation, which may include, but 45 is not limited to, seller notes, senior debt, junior debt, and equity 46 investment; and 47 (c) the terms of the financing agreements with the funding [partners] 48 sources, including any repayment schedules and finance charges to be 49 included in such agreements. 50 § 5. Subdivision 1 of section 1836-d of the public authorities law, as 51 added by chapter 788 of the laws of 1983, is amended to read as follows: 52 1. have a higher level of funding from the funding [partners] source 53 or financial participant; 54 § 6. The section heading and subdivisions 1 and 3 of section 1836-e of 55 the public authorities law, as added by chapter 788 of the laws of 1983,A. 7731 4 1 are amended and two new subdivisions 5 and 6 are added to read as 2 follows: 3 Loan agreements and lending authority. 1. If the authority approves 4 an application for a loan under this subtitle, the [local development5corporation] authority may enter into a loan agreement with the employee 6 ownership association whereby the [local development corporation] 7 authority agrees to loan to the employee ownership association the 8 remaining funds necessary for the eligible project. 9 3. The [local development corporation] authority may not enter into 10 any loan agreement unless the authority determines through an appropri- 11 ate method that there is reasonable assurance of repayment. The authori- 12 ty shall establish such requirements or terms as it may deem necessary 13 or desirable to secure the repayment of the loan and to protect the 14 interests of the authority and the holders of its bonds. 15 5. (a) The authority may establish a trust fund account for the 16 purposes of providing a loan or loan guarantee pursuant to the 17 provisions of this chapter. The initial deposit of funds to the trust 18 fund shall be in an amount to be determined by the authority but shall 19 not exceed one hundred million dollars from an amount otherwise avail- 20 able from funds appropriated. 21 (b) The authority shall deposit into the trust fund all income earned 22 from the moneys paid back from loans to be used for additional lending. 23 6. The authority shall make a loan decision or loan guarantee deci- 24 sion, and inform the applicant of the authority's decision, no later 25 than thirty days after the authority receives the applicant's applica- 26 tion for an employee ownership loan or employee ownership loan guaran- 27 tee. If the authority requests that an applicant supplement its applica- 28 tion by submitting additional information, the authority shall have an 29 additional fifteen days after receiving the additional information by 30 which the authority must make a loan decision or a loan guarantee deci- 31 sion and inform the applicant of the authority's decision. 32 § 7. Subsection (c) of section 612 of the tax law is amended by adding 33 a new paragraph 44 to read as follows: 34 (44) One hundred percent of the capital gains from the sale of stock 35 or member interest from a New York corporation or limited liability 36 company to an employee-owned enterprise, as defined in subdivision five 37 of section eighteen hundred thirty-six-b of the public authorities law. 38 In order to qualify for such modification as described in this para- 39 graph, such employee-owned enterprise must have its commercial domicile 40 in New York. If the employee-owned enterprise is an "employee stock 41 ownership plan," it must comply with federal requirements as such plan 42 is defined in 26 U.S.C. § 4975(e)(7). 43 § 8. This act shall take effect immediately; provided, however, that 44 section one of this act shall take effect on the one hundred eightieth 45 day after it shall have become a law.
