Employers facing new rules for Empire Zone tax breaks

Businesses will need to meet job creation goals in three years instead of five years to maintain tax

Businesses will need to meet job creation goals in three years instead of five years to maintain tax breaks under new Empire Zone rules published Wednesday.

The rules for employers of at least 50 workers, outlined in the latest edition of the New York State Register, took effect Jan. 16. The changes don’t effect Empire Zone businesses that were certified or applied prior to Jan. 16, according to the Empire State Development Corp.

Changes to the state’s program, which provides tax breaks to businesses in exchange for a promise to create jobs, are being implemented “to protect the integrity of the program, enhance its strategic focus, improve its cost-effectiveness, increase accountability and mitigate the impact on the General Fund,” according to the notice.

Another provision in the new rules applies to all businesses certified for Empire Zone benefits after Jan. 16 and calls for more economic development benefits than prior requirements — such as wages or capital improvements — as a requirement to be certified.

Prior to these new rules, the Empire Zone arrangement required that businesses provide $15 worth of benefits — such as new wages and capital improvements — for every $1 in tax breaks received.

The new rule boosts that cost-benefit ratio to $20 for every $1 in tax breaks.

Large businesses situated outside of the boundaries of an Empire Zone, called “regionally significant” projects, will be subject to the tightened time frame for job creation.

Fred Quist, administrator of the Amsterdam-Florida-Glen Empire Zone in Montgomery County, said he believes regionally significant projects should be able to accommodate the new request.

“I think three years is realistic,” Quist said.

Quist said zone administrators have been briefed on the new rules, which he said are being tightened in order to provide more of an impact economically.

“For the most part, they’re trying to make the program more beneficial to everybody in New York,” Quist said.

Since businesses that are already in the pipeline for certification won’t be impacted by the new rules, the changes may have more of an impact on businesses considering zone certification.

For example, in Schoharie County, which hadn’t received an Empire Zone designation until late 2006, county Planning and Development Director Alicia Terry said the cost-benefit ratio change could influence the decision of smaller businesses and those in rural areas to apply for zone benefits.

“My concern is we struggle enough in rural areas of upstate New York on job creation,” Terry said. “We all learn lessons, when large employers leave communities, about diversifying the economy.”

Meeting the $20 for every $1 in tax breaks is more difficult on smaller businesses, Terry said, as will the shorter time frame for creating jobs.

“Going from five years to three certainly can make a difference to some benefits and, definitely, the cost-benefit ratio could also have a greater proportional effect on upstate rural communities,” Terry said.

Empire State Development spokesman Warner Johnston said Wednesday the new rules follow last week’s correspondence from the state to 180 certified businesses that aren’t meeting job creation goals.

Those businesses have to contact the Empire State Development Corp. within 10 days or risk decertification.

The state expects the new rules will reduce the number of new businesses that qualify for benefits by about 30 percent.

The new regulation changes should save the state money, Johnston said.

“We believe it’s going to save upwards of $50 million this year,” he said.

More information on the changes can be found in the Feb. 6 issue of the state Register on the Web site of the New York Department of State at http://www.dos.state.ny.us/.

Categories: Schenectady County

Leave a Reply