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Assembly Passes Comprehensive Empire Zone Reform Legislation

NYS Assembly Speaker Sheldon Silver today announced Assembly passage of legislation to further improve the accountability and efficiency of New York state’s Empire Zone economic development program, which provides tax relief for businesses that meet certain job creation and economic stimulus criteria within designated areas in New York State.

The Silver bill (A.9125), authorizes the Empire State Development Corporation (ESDC) to conduct a review of businesses to determine whether any are receiving a disproportionately large amount of tax benefit, and if so, require the application of the cost-benefit test.

“At a time when the entire nation faces significant economic challenges, we have to ensure that precious resources are used in the most effective means possible. The new reforms that we are advancing today will help New York State root out the businesses that are in the program under false pretenses, and more effectively prevent other businesses that don’t qualify for the program from entering,” said Silver, who originated the Empire Zone program and sponsored the establishing legislation.

Established in 2000, the Empire Zone program was an innovative economic development initiative designed to boost investment and job creation in distressed communities by transforming existing Economic Development Zones into potentially tax-free zones. Qualified companies may receive complete tax relief for locating or expanding operations in regions of the state determined to meet one of several means tests.

Noting that the program has been praised by the business community and state and local government leaders, Silver pointed out that misuse and mismanagement of the Empire Zone program diverted the vital economic development tool from its original intent.

Provisions of the bill would further reform the program by:

*Authorizing ESDC to review businesses receiving zone benefits to determine whether any of these businesses should be subject to more scrutiny and to a cost/benefit test;
*Authorizing the Department of Taxation and Finance to investigate businesses to determine whether they have met requirements of the program;
*Restricting certification of retail businesses and professional services in the program to struggling neighborhoods; and,
*Restructuring local Empire Zone boards.

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