Tax Credits for Rural Investment

Section 1. The tax law is amended by adding a new section 44 to read as follows:

§ 44. New York agriculture and rural jobs credit. (a) Definitions. For the purpose of this section the following terms shall have the following meanings:

(1) "Affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with another person. For the purposes of this subdivision, a person is "controlled by" another person if the controlling person holds, directly or indirectly, the majority voting or ownership interest in the controlled person or has control over the day-to-day operations of the controlled person by contract or by law.

(2) "Closing date" means the date on which a rural business growth fund has collected all of the amounts specified by subparagraphs (A) and (B) of paragraph seven of subdivision (b) of this section.

(3) "Credit-eligible capital contribution" means an investment of cash by a person in a rural business growth fund that equals the amount specified on a tax credit certificate issued by the department under subparagraph (B) of paragraph six of subdivision (b) of this section. The investment shall purchase an equity interest in the rural business growth fund or purchase, at par value or premium, a debt instrument

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

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issued by the rural growth fund that meets all of the following criteria:

(A) The debt instrument has an original maturity date of at least five years after the date of issuance.

(B) The debt instrument has a repayment schedule that is not faster than a level principal amortization over five years.

(C) The debt instrument has no interest, distribution, or payment features dependent on the rural business growth fund's profitability or the success of the rural growth investments.

(4) "Eligible investment authority" means the amount stated on the notice issued under subparagraph (A) of paragraph six of subdivision (b) of this section certifying the rural business growth fund. At least sixty-five percent of a rural business growth fund's eligible investment authority shall be comprised of credit-eligible capital contributions.

(5) "Jobs created" means the number of persons employed by a rural business concern having received a growth investment from a rural business growth fund during the taxable year which shall be determined by ascertaining the number of such individuals employed full-time by such rural business concern on the thirty-first day of March, the thirtieth day of June, the thirtieth day of September and the thirty-first day of December during each taxable year following its initial growth investment, by adding together the number of such individuals ascertained on each of such dates and dividing the sum so obtained by the number of dates occurring within such taxable year in the amount that such number exceeds the jobs retained number. An individual employed full-time means an employee in a job consisting of at least thirty-five hours per week, or two or more employees who are in jobs that together constitute the equivalent of a job of at least thirty-five hours per week.

(6) "Jobs retained" means the number of persons employed by a rural business concern having received a growth investment from a rural business growth fund during the taxable year which shall be determined by ascertaining the number of such individuals employed full-time by such rural business concern on the thirty-first day of March, the thirtieth day of June, the thirtieth day of September and the thirty-first day of December during the year in which the rural business concern received its initial growth investment from a rural business growth fund, by adding together the number of such individuals ascertained on each of such dates and dividing the sum so obtained by the number of dates occurring within such taxable year. An individual employed full-time means an employee in a job consisting of at least thirty-five hours per week, or two or more employees who are in jobs that together constitute the equivalent of a job of at least thirty-five hours per week.

(7) A business's "principal business operations" are in New York state if New York state is its principal place of business and at least eighty percent of the business's employees work in New York state, or the business has agreed to use the proceeds of a rural growth investment to relocate at least eighty percent of its employees to New York state within twelve months of receiving the investment by a rural business growth fund.

(8) "Rural area" shall have the same meaning as defined in subdivision seven of section four hundred eighty-one of the executive law.

(9) "Rural business concern" means an operating company that, at the time of the initial investment in the company by a rural business growth fund employs no more than one hundred fifty full-time equivalent employees or has earned not more than ten million dollars in net income for the preceding taxable year, and meets either of the following criteria:

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(A) The business's principal business operations are located in a rural area in New York state and is an agricultural enterprise or is related to the use of agricultural products or forest products, or is an enterprise in one of the following industries: manufacturing, computer hardware or software, tourism, agribusiness development to stimulate the development and implementation of new and alternative production, processing, storage, distribution and marketing technology and improvements for New York food, agriculture and forest products or if not engaged in any of these industries, the department determines that the investment will be beneficial to the qualified location and the economic growth of New York state; or

(B) The business produces or provides any goods principally used by farmers, ranchers, or producers and harvesters of aquatic products in their business operations, or is involved in the processing and marketing of agricultural products, farm supply, and input suppliers, provided that such business is located in a municipality, as defined in section four hundred eighty-one of the executive law, in New York state with a population of less than fifty thousand. For the purposes of this section, "net income" means federal adjusted gross income as required to be reported under the Internal Revenue Code less federal and state taxes imposed on or measured by income. Any business which is classified as a rural business concern at the time of the initial investment in said business by a rural business growth fund shall remain classified as a rural business concern and may receive follow-on investments from any rural business growth fund, and such follow-on investments shall qualify as a rural growth investment provided it otherwise meets the definition of rural business concern with the exception of the employee limitation and net income limitation in such definition.

(10) "Rural business growth fund" means an entity certified by the department under this section.

(11) "Rural growth investment" means any capital or equity investment in a rural business concern or any loan to a rural business concern with a term of at least one year.

(12) "Tax credit certificate" means the document issued by the department to a person who has made a credit-eligible capital contribution to a rural business growth fund.

(13) "Taxable year" when used in reference to an insurance company means the calendar year ending on the thirty-first day of December next preceding the day the annual report is required to be returned under subdivision (d) of this section.

(14) "Department", as used in this section, means the department of economic development.

(b) Certification. (1) On and after August first, two thousand twenty, an applicant that has developed a business plan to invest in rural business concerns in this state and has successfully solicited private investors to make capital contributions in support of the plan may apply to the department for certification as a rural business growth fund. The application shall include all of the following:

(A) The total eligible investment authority sought by the applicant under the business plan;

(B) Documents and other evidence sufficient to prove that the applicant meets all of the following criteria: (i) The applicant or an affiliate of the applicant is licensed as a rural business investment company under 7 U.S.C. 2009cc, or as a small business investment company under 15 U.S.C. 681.

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(ii) As of the date the application is submitted, the applicant has invested more than one hundred million dollars in operating companies in rural areas located inside or outside of New York state and at least twenty-five million dollars in operating companies located in New York state. In computing investments under this subdivision, the applicant may include investments made by affiliates of the applicant.

(C) An estimate of the number of (i) jobs that will be created in the rural areas of New York state as a result of the applicant's rural growth investments, (ii) jobs that will be retained in the rural areas of New York state as a result of the applicants rural growth investments, and (iii) the anticipated average wage per job.

(D) A revenue impact assessment for the applicant's proposed rural growth investments prepared by a nationally recognized third-party independent economic forecasting firm using a dynamic economic forecasting model. The revenue impact assessment shall analyze the applicant's business plan over the ten years following the date the application is submitted to the department.

(E) A signed affidavit from each investor successfully solicited by the applicant to make a credit eligible capital contribution in support of the business plan. Each affidavit shall include information sufficient for the department to identify the investor and shall state the amount of the investor's credit-eligible capital contribution.

(F) A nonrefundable application fee of five thousand dollars.

(G) A strategy, as part of its business plan, to prioritize efforts to invest in businesses that are environmentally sensitive and utilize resources that promote a clean environment and energy conservation.

(2) The department shall review and make a determination with respect to each application submitted under paragraph one of this subdivision within thirty days of receipt. The department shall make determinations on the applications in the order in which the applications are received by the department. Applications received by the department on the same day shall be deemed to have been received simultaneously. Except as provided in paragraph four of subdivision (c) of this section, the department shall not approve more than one hundred million dollars in eligible investment authority or more than sixty-five million dollars in credit-eligible capital contributions.

(3) The department shall deny an application submitted under this section if any of the following are true: (A) The application is incomplete.

(B) The application fee is not paid in full.

(C) The applicant does not satisfy all the criteria described in subparagraph (B) of paragraph one of this subdivision.

(D) The revenue impact assessment submitted under subparagraph (D) of paragraph one of this subdivision does not demonstrate that the applicant's business plan will result in a positive economic impact on this state over a ten-year period that exceeds the credit eligible capital contributions sought by the applicant.

(E) The credit-eligible capital contributions described in affidavits submitted under subparagraph (E) of paragraph one of this subdivision do not equal sixty-five percent of the total amount of eligible investment authority sought under the applicant's business plan.

(F) The department has already approved the maximum amount of eligible investment authority and credit-eligible capital contributions allowed under paragraph two of this subdivision.

(4) If the department denies an application under paragraph three of this subdivision, the department shall send notice of its determination

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of the applicant. The notice shall include the reasons that the application was denied. If the application was denied for any reason other than the reason specified in subparagraph (F) of paragraph three of this subdivision, the applicant may provide additional information to the department to complete, clarify, or cure defects in the application. The additional information must be submitted within thirty days after the date the notice of denial was sent by the department. If the person or entity submits additional information within thirty days, the department shall reconsider the application within thirty days after receiving such additional information. If after submission of additional information, the application is approved, then the submission date shall be the date of the original submission of the application. If the person or entity does not submit additional information within thirty days after the notice of denial was sent, the applicant may submit a new application with a new submission date at any time.