Bill Text: NY S05685 | 2017-2018 | General Assembly | Amended

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Bill Title: Relates to the establishment of a state university-based center for employee ownership.

Spectrum: Partisan Bill (Democrat 9-0)

Status: (Introduced - Dead) 2018-01-22 - PRINT NUMBER 5685A [S05685 Detail]

Download: New_York-2017-S05685-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                         5685--A
                               2017-2018 Regular Sessions
                    IN SENATE
                                     April 25, 2017
                                       ___________
        Introduced  by  Sen.  BAILEY -- read twice and ordered printed, and when
          printed to be committed to the Committee on Commerce, Economic  Devel-
          opment and Small Business -- recommitted to the Committee on Commerce,
          Economic Development and Small Business in accordance with Senate Rule
          6,  sec. 8 -- committee discharged, bill amended, ordered reprinted as
          amended and recommitted to said committee
        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 Section 104-a of the economic development law  is  REPEALED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;
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11177-04-8
        S. 5685--A                          2
     1    (f) partner with key organizations, such  as  professional  and  trade
     2  associations,   financial  institutions,  unions,  economic  development
     3  organizations, and other non-profit entities, to promote employee owner-
     4  ship successions;
     5    (g)  conduct  investigations,  research,  studies, and analyses on the
     6  subject of employee ownership; and
     7    (h) support the growth of associations of employee-owned companies.
     8    2. The center shall additionally provide support and access in govern-
     9  ment relations, including  providing  access  to  information  regarding
    10  rules  and  regulations  that  relate  to employee ownership and develop
    11  proposals for changes in policies to promote employee ownership.
    12    § 2. Section 1836-a of the public authorities law, as added by chapter
    13  788 of the laws of 1983, is amended to read as follows:
    14    § 1836-a. Legislative  findings.  The  legislature  hereby  finds  and
    15  declares  that  [the health, safety and general welfare of the people of
    16  this state are directly dependent upon the state economy, and  that  one
    17  of  the principal problems of our present economy is the permanent clos-
    18  ing of industrial and manufacturing plants, and their relocation out  of
    19  state, which results in the loss of jobs and increasing unemployment.
    20    It  is  the  purpose  of  this  subtitle to encourage the employees of
    21  plants that are about to be permanently closed, or relocated, to acquire
    22  such plants and to continue to operate  them  as  employee-owned  enter-
    23  prises,  thereby  retaining  the  jobs that would otherwise be lost, and
    24  strengthening the  economic  base  of  this  state]  employee  ownership
    25  program is a mainstream aspect of the United States economy with approx-
    26  imately  thirteen  and a half million workers participating in some form
    27  of employee ownership program at over seven thousand companies. The vast
    28  majority of such programs are the result of a transfer from the business
    29  owners to the employees and in accordance with federal law that seeks to
    30  facilitate such transfers.  Employee  ownership  transfers  are  in  the
    31  interest  of  business  owners,  who  seek  to liquidate their ownership
    32  interest and retire. Such transfers are also  in  the  interest  of  the
    33  employees, who gain the opportunity to ensure the future survival of the
    34  firm and their jobs.
    35    The  legislature  also  finds and declares   that employee-owned busi-
    36  nesses are more productive, enjoy increased sales, lower  turnover  rate
    37  and  greater  longevity,  offer better employment opportunities, and are
    38  more likely to retain jobs in-state and less likely to relocate  out-of-
    39  state.    Employee-owned  businesses  also  sustain  the  state tax base
    40  through employee and corporate income tax, while saving costs  on  unem-
    41  ployment  insurance  and other state benefit programs. It is the purpose
    42  of this subtitle to amplify federal  programs  in  support  of  employee
    43  ownership  at  the  state  level  through loans and loan guarantees that
    44  provide financing for the conversion of existing businesses to  employee
    45  ownership.
    46    §  3. Subdivisions 3, 4, 5, 6, 7 and 8 of section 1836-b of the public
    47  authorities law, subdivisions 3, 6, 7 and 8 as added by chapter  788  of
    48  the  laws of 1983, subdivisions 4 and 5 as amended by chapter 805 of the
    49  laws of 1985, are amended to read as follows:
    50    3. "Eligible project" means the acquisition [or rehabilitation] by  an
    51  employee ownership association of an existing [industrial or manufactur-
    52  ing  plant]  business located in this state for the purpose of operating
    53  it as an employee-owned enterprise.
    54    4. "Employee  ownership  association"  means  a  corporation,  limited
    55  liability company, trust, or other association formed by or on behalf of
    56  the  employees  of  [an  industrial  or  manufacturing plant] a business
        S. 5685--A                          3
     1  located in this state for the purpose of assuming ownership  or  control
     2  of the [plant] business and operating it as an employee-owned enterprise
     3  or as a worker cooperative as defined in section eighty-one of the coop-
     4  erative corporations law.
     5    5. "Employee-owned enterprise" means a business in which the employees
     6  are  represented on the board of directors or managers and the employees
     7  control the majority of the voting stock or member interest, or  if  the
     8  business  is  held  in a trust which controls the majority of the voting
     9  stock or member interest, the trustees are elected by the employees. The
    10  term "employee-owned enterprise" shall also refer to  a  worker  cooper-
    11  ative  as  defined in section eighty-one of the cooperative corporations
    12  law.
    13    6. ["Funding partner" means an entity which singly or  in  combination
    14  with  other entities has agreed to finance a portion of the project cost
    15  of an eligible project, and may include the employee  ownership  associ-
    16  ation undertaking the project as well as any financial entity.
    17    7.  "Plant"  includes  the site, structure, building and equipment and
    18  all real and personal property in connection therewith, whether  or  not
    19  in  existence,  and may include any road, railroad, or utility or equip-
    20  ment appurtenant thereto.
    21    8.] "Project cost" includes all reasonable and necessary costs  to  be
    22  incurred  in  the  course  of an eligible project, including [any antic-
    23  ipated acquisition,] the fair market value of the business  interest  to
    24  be  acquired,  as  well  as  costs for any additional construction, land
    25  acquisition, improvements, equipment, pertinent  rights  and  easements,
    26  and associated technical, engineering, legal and financial services.
    27    § 4. The opening paragraph and paragraphs (a), (b) and (d) of subdivi-
    28  sion  1  and  subdivision  2 of section 1836-c of the public authorities
    29  law, as added by chapter 788 of the laws of 1983, are amended to read as
    30  follows:
    31    Any employee ownership association may apply to [a  local  development
    32  corporation  serving  the  municipality in which the eligible project is
    33  located] the authority for an employee ownership assistance loan  to  be
    34  used  to help finance an eligible project. Such application must include
    35  a written statement from the entity from  which  the  project  is  being
    36  acquired,  stating  that  such  entity  consents to the acquisition. The
    37  application shall include [in detail]:
    38    (a) [the history and membership] a description of the employee  owner-
    39  ship association;
    40    (b)  [the  history  and  circumstances  of the plant to be acquired] a
    41  description of the business;
    42    (d) estimate of the number of jobs [to be  saved  or  created  by  the
    43  project] before and after the transaction; and
    44    2.  The  application shall also include a detailed financial statement
    45  of [funding partner] actual and anticipated financial  participation  in
    46  the project, which shall include:
    47    (a) the identity of all funding [partners] sources; [and]
    48    (b)  the nature of the financial participation, which may include, but
    49  is not limited to, seller notes, senior debt, junior  debt,  and  equity
    50  investment; and
    51    (c)  the terms of the financing agreements with the funding [partners]
    52  sources, including any repayment schedules and  finance  charges  to  be
    53  included in such agreements.
    54    § 5. Subdivision 1 of section 1836-d of the public authorities law, as
    55  added by chapter 788 of the laws of 1983, is amended to read as follows:
        S. 5685--A                          4
     1    1.  have  a higher level of funding from the funding [partners] source
     2  or financial participant;
     3    § 6. The section heading and subdivisions 1 and 3 of section 1836-e of
     4  the public authorities law, as added by chapter 788 of the laws of 1983,
     5  are  amended  and  two  new  subdivisions  5  and 6 are added to read as
     6  follows:
     7    Loan agreements and lending authority.  1. If the  authority  approves
     8  an  application  for  a loan under this subtitle, the [local development
     9  corporation] authority may enter into a loan agreement with the employee
    10  ownership  association  whereby  the  [local  development   corporation]
    11  authority  agrees  to  loan  to  the  employee ownership association the
    12  remaining funds necessary for the eligible project.
    13    3. The [local development corporation] authority may  not  enter  into
    14  any  loan agreement unless the authority determines through an appropri-
    15  ate method that there is reasonable assurance of repayment. The authori-
    16  ty shall establish such requirements or terms as it may  deem  necessary
    17  or  desirable  to  secure  the  repayment of the loan and to protect the
    18  interests of the authority and the holders of its bonds.
    19    5. (a) The authority may  establish  a  trust  fund  account  for  the
    20  purposes  of  providing  a  loan  or  loan  guarantee  pursuant  to  the
    21  provisions of this chapter. The initial deposit of funds  to  the  trust
    22  fund  shall  be in an amount to be determined by the authority but shall
    23  not exceed one hundred million dollars from an amount  otherwise  avail-
    24  able from funds appropriated.
    25    (b)  The authority shall deposit into the trust fund all income earned
    26  from the moneys paid back from loans to be used for additional lending.
    27    6. The authority shall make a loan decision or  loan  guarantee  deci-
    28  sion,  and  inform  the  applicant of the authority's decision, no later
    29  than thirty days after the authority receives the  applicant's  applica-
    30  tion  for  an employee ownership loan or employee ownership loan guaran-
    31  tee. If the authority requests that an applicant supplement its applica-
    32  tion by submitting additional information, the authority shall  have  an
    33  additional  fifteen  days  after receiving the additional information by
    34  which the authority must make a loan decision or a loan guarantee  deci-
    35  sion and inform the applicant of the authority's decision.
    36    § 7. Subsection (c) of section 612 of the tax law is amended by adding
    37  a new paragraph 44 to read as follows:
    38    (44)  One  hundred percent of the capital gains from the sale of stock
    39  or member interest from a New  York  corporation  or  limited  liability
    40  company  to an employee-owned enterprise, as defined in subdivision five
    41  of section eighteen hundred thirty-six-b of the public authorities  law.
    42  In  order  to  qualify  for such modification as described in this para-
    43  graph, such employee-owned enterprise must have its commercial  domicile
    44  in  New  York.  If  the  employee-owned enterprise is an "employee stock
    45  ownership plan," it must comply with federal requirements as  such  plan
    46  is defined in 26 U.S.C. § 4975(e)(7).
    47    §  8.  This act shall take effect immediately; provided, however, that
    48  section one of this act shall take effect on the one  hundred  eightieth
    49  day after it shall have become a law.