Businesses that locate on or adjacent to upstate New York’s public institutions of higher learning have been promised a decade of no state or local taxes by Gov. Andrew Cuomo.
The State University of New York campuses and up to 200,000 square feet surrounding each campus will become tax-free communities, as part of a plan laid out Wednesday. New, out-of-state and expanding businesses won’t have to pay sales, property or corporate taxes for a decade if they locate in these zones.
Additionally, employees of these eligible companies wouldn’t have to pay state income tax.
Schenectady Metroplex Development Authority Chairman Ray Gillen said the announcement would have a positive effect on development efforts in the city of Schenectady, which hosts Schenectady County Community College. He predicted the city’s downtown region, with its close proximity to the college, would benefit from this incentive.
Because of the different fields of high-tech study being advanced at SCCC, Gillen said, a wide variety of businesses would want to take advantage of this offering.
State Sen. James Seward, R-Milford, whose district includes SUNY Cobleskill, said the initiative makes campus communities more business friendly.
“Conceptually, the plan has several positive attributes that will help attract employers, create jobs and boost our overall economy — enhancing the value of our existing businesses in the process,” Seward said in a news release. “The proposal also helps bring together developing companies with our SUNY graduates, a perfect marriage.”
Schoharie County Chamber of Commerce Executive Director Georgia Van Dyke was skeptical about the potential impact around SUNY Cobleskill. There aren’t office buildings or shovel-ready projects there, and startup costs are high, she said.
“I’m not sure what sort of an impact [the tax-free zone] would have,” Van Dyke said.
In the Capital Region, the University at Albany, SUNY Adirondack, Fulton-Montgomery Community College, Empire State College, SUNY Cobleskill and Hudson Valley Community College would be tax-free centers. Additionally, 20 strategic sites around the state and some private universities, which have not yet been identified, will become tax-free zones.
According to a news release sent out by the governor, eligible businesses would have to have a “relationship to the academic mission of the [adjacent] university.”
Taking questions in Syracuse, Cuomo said the plan would still need to pass the state Legislature before implementation. Noting the failures of other zones with different tax credits, he said this program wouldn’t have the same type of fraud because it is a straightforward program that only requires the creation of new jobs.
Cuomo said qualifying businesses would have to be “education related” and be approved by SUNY and the state’s Empire State Development Corp.
It’s not clear how much potential tax revenue the state and localities will lose as the result of this program. Gillen noted there would be other “spinoff effects,” like spending in the community by new employees and the possibility of attracting other businesses.
“We wouldn’t have had it anyway,” Cuomo said of the lost tax revenue. “By definition, this is for new jobs”
A major saving for new businesses under the program would be the exemption from property taxes, as upstate New York has some of the highest property taxes in the country.
Cuomo said in a statement that the program could transform localities in upstate New York.
“Under Tax-Free NY, communities across upstate will become a magnet for new businesses, new startups, new venture capital and new jobs, taking our economic development and job creating efforts to a level never seen before,” he said.
E.J. McMahon, a senior fellow at the fiscally conservative Empire Center, wrote on his blog that the tax-free zones were a more attractive offering than some targeted credits of the past and would likely entice some firms into partnerships with colleges and universities.
“But given the reams of red tape that will necessarily apply to projects in one of these relatively small zones, including the requirement that each project be tied to the ‘mission’ of the college or university involved, the initiative is highly unlikely to generate growth on a game-changing scale,” McMahon wrote.
The tax-free zones were announced at the University at Albany’s College of Nanoscale Science and Engineering, which Assembly Speaker Sheldon Silver, D-Manhattan, touted as a center for the types of private-public partnerships these zones would foster.
“We will transform vacant campus space and land into new jobs and all of the related opportunities that spring up around areas of economic activity,” Silver said in a news release. “Using the world-class College of Nanoscale Science and Engineering as a model, this program will enhance the academic missions of our colleges and universities, ensure that local graduates can find rewarding opportunities at home, and promote the advancement of emerging technologies.”
Brian Sampson, executive director of Unshackle Upstate, a coalition of business groups, supported the zones, but stressed that New York must provide more tax relief and regulatory reforms in order to attract and grow businesses. That sentiment was echoed by Seward, who also called for the elimination of burdensome state mandates.