Enacts the New York state business incubator support act

Summary of provisions

Section 1. Intent

Section 2. Creates a new section 16-v in the Urban Development Corporation Act, "New York State Business Incubator Support Act."

1. Designation. Requires designation of programs which meet the criteria established here.

2. Requirements for Designation A program must have been in existence for three years and meet two levels of criteria:

a. It must meet 12 of the criteria listed, including evidence of financial stability and sponsor commitment, and a strategic plan.

b. annually demonstrate that it incubates businesses with survival rates in excess of average startups, and the strategic plan will continue to meet goals for three years succeeding designation and that the program commits to best practices. In addition, must provide data for three years including 1) Clients served; 2) Graduates; 3) Number of graduate firms still in business; 4) Aggregate data on FTEs, compensation paid, gross revenues of firms, debt and equity financing and grant funds, and supply chain data, 5) Numbers of graduates that stay in the community, State, or regional distressed area, 6) Numbers of individuals counseled, mentored, attended classes, completed business plans, (7) the incubator's entrepreneurial and economic impact on the surrounding region and community, and the two most recent audits.

3. Designation. After designation by ESDC, programs are required to annually submit: updated economic information and updated strategic plan and success in meeting goals, affirm that the program continues to meet designation criteria, and additional information ESDC requires. Requires simplified electronic submission forms. Requires ongoing evaluation of programs by several means, including site visits. For programs receiving grants also requires peer review, and review of all grant recipients within a three year period.

4. Grants. There are three levels of grants, each requiring submission of additional data. a Sustaining operating grants, up to $150,000, available only to programs designated as New York State Incubators. This requires match of 2:1, of which 50% can be in-kind. b Planning Grants, one-time grants of up to $15,000 on submittal of appropriate data showing intent and a program plan. c. Stabilization grants for programs which have received planning grants and otherwise meet the designation requirements (but which are not yet designated), grants of up to $25,000 for up to three successive years. No deductions are

allowed for sponsor indirect costs, overhead. The intent is that all public monies be used for program.

4. Procurement. Makes clients of New York State Incubators eligible for purchase of services, commodities, and technology by the State pursuant to the discretionary buying thresholds for State agencies under the State procurement law (Section 163 of the State Finance Law) without a formal competitive process. Also requires ESDC and the Commissioner of Economic Development to work with OGS and through the state procurement council to develop opportunities for teaming on contracts. Requires that incubator clients receive BidLinx and the State Contract Reporter at the lowest rate available to others or at the marginal cost of providing access.

5. Incubators as educational entities. Makes clear that property used by designated incubators which are or which are owned or sponsored by not for profit organizations, including colleges and universities, are tax exempt for purposes of section 420-a of the real property tax law.

6. Other assistance. Requires the ESDC to provide other aid, assistance, and resources to New York State Incubators and their clients as he or she shall deem useful, and to seek assistance of other agencies for that purpose.

7. Service contract. Contract with a statewide a membership association of incubators to provide technical services to incubators.

Existing law

New bill.

Justification

Business incubators create successful companies which provide jobs, wealth, and assist in giving an entrepreneurial spirit to their communities, making them more attractive as places to do business. They are literally the tide that lifts all boats, and they vastly increase the range of economic opportunities available to the people of this state. Research shows that incubators are successful at this important task despite the condition of the local economy, and according to the National Business Incubator Association (NBIA), 84% of incubator graduates stay in their communities. There are key factors needed for success of incubation programs, including a strong board or advisory council, experienced operators, community relationship, and financial stability. Recognizing the need for stability and operational excellence, some other states have provided support. According to NBIA research, for every $1 of public operating subsidy, clients and graduates of NBIA member incubators generate approximately $30 in local tax revenue The key issue that makes incubators work -and makes them different from stand along programs, office buildings, or office parks - is an integrated comprehensive array of services provided to client firms over an extended period of time, generally three years or less. This bill seeks to provide long term stabilized funding for incubators which meet the output metrics of providing jobs and support to their clients, and which have a positive impact on their communities

Fiscal implications

To be determined.

Effective date

Immediate.