Governmental and quasi-governmental agencies offer economic development incentives to attract business activity, retain employment, encourage investment and revitalize distressed districts or regions. Harris Beach PLLC can help private sector companies, not-for-profit organizations, industrial development agencies (IDAs), local development corporations (LDCs) and municipalities employ leading economic development incentive programs. Our attorneys and non-legal economic development professionals leverage their government experience to help facilitate identifying, securing and managing the following economic development incentive programs for our clients doing business in New York state:

LOCAL INCENTIVES

Industrial Development Agencies are public benefit corporations that are empowered to provide financial assistance to private entities through tax incentives in order to promote the economic welfare of a municipality. IDAs offer the following financial assistance programs:

• Issuance of Tax-Exempt and Taxable Bonds and Notes
  This incentive can be used to fund all, or substantially all, of the costs of prequalifying projects (excluding certain costs of issuance in excess of 2% of the total amount of the bond issue).
• Mortgage Recording Tax Exemptions
  By obtaining and then mortgaging their interest in a property at the time of recording, IDAs provide an exemption from the mortgage recording tax.
• Real Property Tax Abatement
  IDAs have the authority to negotiate any Payment In Lieu of Tax (PILOT) Agreement they deem reasonable and necessary to incentivize a project.
• Sales and Use Tax Exemption
  This incentive is usually limited to the construction or installation period and
  cannot cover ongoing operational costs.

Local Development Corporations are unique not-for-profit corporations authorized to undertake economic development activities in furtherance of public objectives. LDCs can issue tax-exempt and taxable bonds and provide an exemption from the mortgage recording tax.

Local Loan Funds are funds available to businesses usually at reduced interest rates and flexible terms.

Municipal Services
Harris Beach organizes and supports local economic development efforts by municipalities and related not-for-profit entities. The firm assists municipalities in organizing and identifying local economic development programs, including advising with the hiring of economic development professionals, identifying investors and identifying resources to support economic development programs.

PILOT Increment Financing (PIF) is a creative way to finance infrastructure improvements and related improvements through an IDA. The affected jurisdictions agree to a PILOT payment equal to the full taxes that would normally be paid. The difference, or “increment,” between the full taxes and an otherwise negotiated amount is then used to repay debt service related to infrastructure improvements.

Tax Increment Financing (TIF), while subject to a rigid statutory process in New York state, is an alternative method to financing projects.

Harris Beach Services Offered for Local Incentives:

• Application access, assistance and preparation
• Client representation through closing
• Community outreach and assessment
• Financial structuring assistance
• Initial qualification
• LDC, not-for-profit and related quasi-public organization establishment
• Organizational development, management and training support
• Public meeting representation
• Public presentation
• Strategic and comprehensive economic development planning
• Visual/graphic material preparation for review by lenders and involved parties
• Public Authorities Accountability Act and Public Accountability Reform Act compliance assistance

NEW YORK STATE INCENTIVES

Empire State Development (ESD) can provide direct loans, capital grants and interest rate subsidy grants that result in low-cost financing for acquisition, construction, renovation, or improvement of real estate, including both land and buildings.

• Centers of Excellence
  These “Centers” support high-tech ventures through a collaborative approach of the state, academic institutions and venture capitalists.
• Financial Assistance
  Direct loans are provided at below-market rates and interest rate subsidy grants that reduce the costs of borrowing are also available.
• Industrial Effectiveness Program
  This program encourages manufacturing firms to undertake productivity and operational improvements.
• Infrastructure Loans and Grants
  These loans and grants include, but are not limited to, projects involving water, sewer lines, access roads, power lines.
• International Investment
  International trade specialists help businesses relocate and establish a strong presence in New York state.
• Linked Deposit Program
  This program provides businesses with affordable capital based on bank loans, which are subsidized by corresponding “linked” state deposits, at reduced interest rates.
• Semiconductor Manufacturing Initiative
  This incentive facilitates the pre-permitting of industrial sites for silicon chip fabrication.
• Small Business Technology Investment Fund
  This fund may be used as a source of venture capital.
• State and Local Tax Credits
  New York state offers credits to promote new capital investment, employment, research and development, and air pollution abatement.
• Training Assistance
  Grants and financial assistance are available to help pay for training costs.
• Other Areas of Assistance
  Additional assistance is available for recycling programs, government procurement, minority and women-owned businesses, the film industry and ownership transitions.

Environmental Facilities Corporation (EFC) was created to administer and finance Clean Water and Drinking Water State Revolving Funds (SRFs), and to finance state contributions to the SRFs, the Pipeline for Jobs Fund and environmental infrastructure projects. Under the Industrial Finance Program, the EFC also finances pollution control projects.

Harris Beach Services Offered for ESD and EFC Incentives:

• Application assistance and preparation
• Client representation through closing
• Financial structuring assistance
• Program eligibility qualification
• Project benefits and incentives negotiation
• Public meeting representation
• Public presentation
• Qualification evaluation
• Ongoing program assistance
• Compliance assistance

Historic Rehabilitation Tax Credits for rehabilitated certified historic buildings placed in service on or after January 1, 2007, are available to owners who may receive a state tax credit equal to 30% of the allowable federal tax credit with a cap of $100,000 for commercial projects and a cap of $25,000 for residential projects. Because the federal tax credit is 20% of qualified rehabilitation expenditures, this effectively results in a state tax credit of 6% of qualified rehabilitation expenditures. The state imposes limits on the amount of credit that may be taken which are: $5,000,000 for commercial projects (including nonresidential projects and residential rental projects) and $50,000 for residential projects (such as owners’ residences). These state tax credits are often partnered with federal Historical Rehabilitation Tax Credits.

Harris Beach Services Offered for Historic Rehabilitation Tax Credits:

• Application assistance and preparation
• Client representation through closing
• Incentives negotiation
• Qualification evaluation

New York State Energy Research and Development Authority (NYSERDA) provides incentives to help businesses, municipalities and individuals lower their energy bills, increase their productivity and reduce their environmental impact. The following programs help NYSERDA customers meet their financial and environmental objectives:

• NYSERDA Commercial/Industrial Programs provide energy efficiency services for existing buildings, new construction, industrial facilities and vehicle fleets.
• NYSERDA’s Renewable Portfolio Standard is designed to increase the proportion of renewable electricity used by New York retail customers to 30% by 2015.
• NYSERDA Tax Incentives promote energy efficiency within municipalities across New York state. NYSERDA tax incentives include various elements, from street lights to water treatment, updating municipal housing for greater energy efficiency, converting vehicle fleets to alternative fuels, or beginning new construction projects.
• Regional Greenhouse Gas Initiative (RGGI) is an agreement among ten Northeastern and Mid-Atlantic states to reduce greenhouse gas emissions from power plants. Through a regional cap-and-trade program, participating states limit their carbon dioxide emissions and may sell unused carbon credit allowances through NYSERDA- administered quarterly emissions permit auctions.

Harris Beach Services Offered for NYSERDA Incentives:

• Develop strategies: initial and ongoing recommendations relating to the procurement of natural gas and electricity supplies
• Draft agreements with the prevailing bidder(s) memorializing the terms and conditions of the bid specifications
• Ensure compliance with evolving state and federal energy regulations
• Financial structuring assistance
• Manage risk associated with natural gas and electricity prices through sophisticated financial hedging solutions; monitor the status of any risk management positions that are entered into by the client
• Prepare documents necessary to implement a competitive bid process
• Provide counsel on alternative energy providers to manage costs
• Provide strategic advice related to public affairs, federal and state regulatory matters, general compliance counseling, competitive markets and trading, securing regulatory approvals, negotiating contracts and environmental permitting
• Review and update strategies, as necessary and feasible, based on changing market conditions, revised information provided by the client pertaining to its electric requirements or any related developments that warrant a revision to the strategies
• Secure project funding
• Grant writing

New York State’s Brownfield Cleanup Program can provide significant refundable New York state tax credits for the cleanup of contaminated sites. Benefits include:

• Brownfield Redevelopment Tax Credits
  This fully-refundable investment incentive tax credit is available to taxpayers who have been issued a Certificate of Completion (COC) for satisfactorily cleaning up a brownfield site. The credits may be applied against a taxpayer’s income/franchise tax and are based on both clean-up and hard/soft redevelopment costs.
• Environmental Remediation Insurance Credit
  This credit is based upon environmental remediation insurance premiums.
• Remediated Brownfield Credit for Real Property Taxes
  This tax credit can eliminate some or all of the brownfield site’s real property taxes.

Brownfield Opportunity Areas (BOA) Program was created to provide financial and technical assistance to municipalities and community-based organizations through the New York State Department of State (DOS). Funding can be used to complete revitalization plans and implementation strategies for areas affected by the presence of brownfield sites, as well as site assessments for strategic sites. The Department of Environmental Conservation provides relevant technical assistance and advice to the DOS and BOA grantees, particularly regarding site assessments on strategic brownfield sites in BOA study areas.

New York State’s Environmental Restoration Program provides grants to municipalities to reimburse brownfield site investigation and remediation costs.

Harris Beach Services Offered for Brownfield and BOA Programs:

• Application assistance and preparation
• Client representation through closing
• Program requirement consultation
• Reimbursement negotiation
• Sale or acquisition structuring for maximum program benefits
• Secure project funding
• Work with consultants on appropriate remedial measures

Qualified Emerging Technology Companies (QETCs) may be eligible for the following incentive credits:

• QETC Capital Tax Credits
  Two different QETC Capital Tax Credits are available to the owner-taxpayer at the start of an emerging technology business.
• QETC Employment Credits
  A refundable credit of $1,000 per new full-time employee for three consecutive years to eligible taxpayers, provided that eligibility requirements continue to be met.
• QETC Facilities, Operations, and Training Credits
  A refundable credit for eligible qualified emerging technology companies based on qualifying expenditures in research and development, and training.

Harris Beach Services Offered for QETC Incentives:

• Application assistance and preparation
• Client representation through closing
• Incentives negotiation
• Qualification evaluation
• Tax credit analysis

FEDERAL INCENTIVES

Empowerment Zones, enterprise communities and renewal communities were designed to combat high crime rates and poverty by allowing certain areas to be designated as enterprise zones. Taxpayers located in enterprise communities are eligible for tax-exempt private activity bonds, while taxpayers in Empowerment Zones are eligible for those bonds, as well as an expensing allowance and a tax credit. Federal incentives include:

• Historic Rehabilitation Tax Credits
  Currently available to developers or owners of certain certified historic buildings at a rate of up to 20% of qualified rehabilitation expenditures made for the certified rehabilitation of such buildings. These federal tax credits are often partnered with New York State Historical Rehabilitation Tax Credits.
• Welfare to Work Credit
  A tax credit available to employers to hire long-term family assistance recipients.
• Work Opportunity Credit
  A tax credit available to employers as an incentive to hire certain groups of employees and applicable only to individuals who began work before September 1, 2011.

Harris Beach Services Offered for Federal Incentives:

• Application assistance and preparation
• Client representation through closing
• Incentives negotiation
• Qualification evaluation
• Tax credit analysis

EB-5 Immigrant Investor Visa and Regional Center (RC) Programs are designed to attract direct foreign investment to New York state economic development projects. Foreign nationals who invest in new or existing domestic business, create or save jobs, and make a substantial investment, are eligible to receive US permanent resident status for themselves and their immediate family provided certain conditions are met. If the foreign investor makes the investment through a designated Regional Center, the RC matches businesses with investors and monitors the technical requirements of the program.

Harris Beach Services Offered for EB-5 Programs:

• Business acquisition/creation assistance
• Immigration law services
• Qualification evaluation
• RC application preparation

New Markets Tax Credits (NMTC) are designed to foster investment in targeted areas. Investors in business and development projects located within a New Markets Zone are provided a federal income tax credit of up to 39% over a seven year period. The NMTC program allocates its tax credits to Community Development Entities (CDEs) based on a competitive application process. CDEs act as the conduit between investors and the development projects their investments will support.

Harris Beach Services Offered for NMTC Incentives:

• Allocation agreement compliance and other recapture risk management
• Allocation agreement negotiation
• CDE certification
• Close transactions enhanced by NMTC program
• Develop specialized programs in use of the NMTC
• Help CDEs innovatively apply their NMTC allocations
• Provide in-house NMTC training
• Negotiate allocation agreements
• Perform audit/compliance reviews
• Provide counsel in all aspects of NMTC transactional and compliance work
• Review and prepare CDE application
• Review and prepare NMTC allocation application
• Review considerations in forming a CDE
• Structure the CDE organization
• Structure transactions to be eligible for the NMTC

Opportunity Zones are low-income census tracts that offer tax incentives to groups who invest and hold their capital gains in assets or property in one of the more 8,760 designated zones across the country. Opportunity Zones are designed to drive long-term capital into low-income communities across the nation, using tax incentives to encourage private investment into designated census tracts through privately or publicly managed Qualified Opportunity Funds. By investing in Opportunity Zones, taxpayers will be able to defer, and in some cases permanently exclude, certain gains. Tiered tax benefits are tied to investments at five, seven, and ten year terms. Benefits range from a temporary deferral and small reduction of tax liability to a full exemption on earnings.