Authorizes N.Y. city to provide a biotechnology credit to be taken against the general corporation, unincorporated business and banking taxes

While this credit is substantially identical to the New York State's Qualified Emerging Technologies, Facilities, Operations and Training State credit, this credit differs from the State's credit in several ways.

Paragraph 2 establishes a two-tiered credit. In the first tier, eligible firms will receive 100% of the credit available, up to $250,000 per calendar year. Firms will be eligible for this tier of the credit if firms increase their employment level by 5% more than their employment level in their base year. Firms that are newly established, newly relo- cated, or did not have any employees in the year prior to which the credit is claimed are not subject to the base year employment increase, are eligible this tier of the credit. In the second tier, firms who increase their employment level by less than 5% of their base year employment, the maximum amount of the credit will be 50% of the maximum amount of the credit, not to exceed $125,000. Firms in academic incuba- tors are not eligible for the 50 percent credit. Base year employment is defined as the average number of individuals employed full-time by the taxpayer in the city in the year preceding the first calendar year in which the credit is claimed.

Paragraph 3 provides that the maximum amount of tax credits in any year is $3 million, to be allocated among tax payers on a pro rata basis by the New York City Department of Finance.

Paragraph 4 provides that the New York City Department of Finance shall establish rules related to the application process and due dates.

Paragraph 5 provides that such a local law may provide a credit for up to three consecutive years, but may not apply to taxable years starting before January 1,2010 or after January 1,2013.

Section 2 of the bill provides that the act would take effect immediate- ly.

Statement in support

9 world class research institutions, 26 medical centers, 175 hospitals, and an unparalleled talent pool, New York City has a natural advantage in the bioscience industry, yet it lags behind other cities, such as Boston and San Diego, in the commercialization of new technologies.

The New York City Biotechnology credit is modeled after, and designed to work with, New York State's Qualified Emerging Technologies Facilities, Operations and Training Credit. Firms will be provided with a refundable credit, for three types of expenses: qualifying expenses related to acquiring research and development property, certain expenses related to training employees, and other research and development expenses. The credit is limited to small firms engaged in research and development that meet New York State standards as qualified emerging technology companies. Such qualified emerging technology companies will be eligible for the credit for up to 3 years 1. The credit will help a young firm equip a lab, train technicians, and fund access to high tech equipment that they do not own.

The credit will differ from New York State's in that it will be focused on growing firms. The allowable expenses and the credit based on those expenses will be the same as for the New York State credit for firms that increase their employment by at least 5 percent, compared to a base year. Those that do not grow will still be eligible for the credit, but at half the rate. Growing firms will have their credit capped at a maximum of $250,000 per year and those that do not make the 5 percent threshold will have a maximum credit of 125,000.

Under this legislation, the total credits for a given year are capped at $3 million. If credits in a given year exceed the cap they will be allo- cated on a prorated basis by the New York City Department of Finance. The credit would be for three consecutive years starting in January 2010 and ending in December 2012.

The credit is part of a policy to create an industry with sufficient size and density that it becomes a good place to make a career in biotech and to locate the kind of ancillary services that the industry needs. This credit works in conjunction with the development of labora- tory space at the East River Science Park and in BioBAT at the Brooklyn Army Terminal. These spaces, along with existing facilities, will provide approximately 2 million square feet of laboratory space in the City.

1 Firms that are located in academic incubators and relocate outside the incubator will be eligible for an additional year of the credit.

Prior legislative history

New Bill.

Fiscal implications

The credit is capped at $3 million per year. New York City Council Finance Division estimates that without a cap on total credits, the credit would cost approximately $2 million in City fiscal year 2011 and rise to approximately $3 million by City fiscal year 2013.

Effective date

This act shall take effect immediately.