Bill Text: NY S00339 | 2025-2026 | General Assembly | Introduced

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Bill Title: Relates to the establishment of a state university-based center for employee ownership that provides education and outreach to business owners regarding employee ownership.

Spectrum: Partisan Bill (Democrat 10-0)

Status: (Introduced) 2025-01-08 - REFERRED TO COMMERCE, ECONOMIC DEVELOPMENT AND SMALL BUSINESS [S00339 Detail]

Download: New_York-2025-S00339-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                           339

                               2025-2026 Regular Sessions

                    IN SENATE

                                       (Prefiled)

                                     January 8, 2025
                                       ___________

        Introduced  by  Sens. BAILEY, ADDABBO, COMRIE, GOUNARDES, HOYLMAN-SIGAL,
          MAY, PARKER, PERSAUD, RAMOS, SANDERS -- read twice and ordered  print-
          ed,  and  when  printed  to be committed to the Committee on Commerce,
          Economic Development and Small Business

        AN ACT to amend the economic development law, the public authorities law
          and the tax law, in relation to the establishment of a state universi-
          ty-based  center  for  employee  ownership;  and  to  repeal   certain
          provisions of the economic development law relating thereto

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Section 104-a of the economic development law  is  REPEALED
     2  and a new section 104-a is added to read as follows:
     3    § 104-a. Establishment of a state university-based center for employee
     4  ownership.  With  respect  to  employee  ownership, the department shall
     5  establish a state university-based center for  employee  ownership  "the
     6  center".
     7    1. The center shall:
     8    (a) provide education and outreach to inform business owners about the
     9  benefits of employee ownership successions;
    10    (b)   organize   workshops   and  conferences  on  employee  ownership
    11  successions;
    12    (c) prepare and distribute  materials  concerning  employee  ownership
    13  successions;
    14    (d)  provide  initial  consultation  to  business owners exploring the
    15  possibility of transferring full or partial ownership to employees;
    16    (e) provide a referral service to help  business  owners  find  legal,
    17  financial,  and  technical  advice in connection with employee ownership
    18  successions;
    19    (f) partner with key organizations, such  as  professional  and  trade
    20  associations,   financial  institutions,  unions,  economic  development

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00214-01-5
        S. 339                              2

     1  organizations, and other non-profit entities, to promote employee owner-
     2  ship successions;
     3    (g)  conduct  investigations,  research,  studies, and analyses on the
     4  subject of employee ownership; and
     5    (h) support the growth of associations of employee-owned companies.
     6    2. The center shall additionally provide support and access in govern-
     7  ment relations, including  providing  access  to  information  regarding
     8  rules  and  regulations  that  relate  to employee ownership and develop
     9  proposals for changes in policies to promote employee ownership.
    10    § 2. Section 1836-a of the public authorities law, as added by chapter
    11  788 of the laws of 1983, is amended to read as follows:
    12    § 1836-a. Legislative  findings.  The  legislature  hereby  finds  and
    13  declares  that  [the health, safety and general welfare of the people of
    14  this state are directly dependent upon the state economy, and  that  one
    15  of  the principal problems of our present economy is the permanent clos-
    16  ing of industrial and manufacturing plants, and their relocation out  of
    17  state, which results in the loss of jobs and increasing unemployment.
    18    It  is  the  purpose  of  this  subtitle to encourage the employees of
    19  plants that are about to be permanently closed, or relocated, to acquire
    20  such plants and to continue to operate  them  as  employee-owned  enter-
    21  prises,  thereby  retaining  the  jobs that would otherwise be lost, and
    22  strengthening the  economic  base  of  this  state]  employee  ownership
    23  program is a mainstream aspect of the United States economy with approx-
    24  imately  thirteen  and a half million workers participating in some form
    25  of employee ownership program at over seven thousand companies. The vast
    26  majority of such programs are the result of a transfer from the business
    27  owners to the employees and in accordance with federal law that seeks to
    28  facilitate such transfers.  Employee  ownership  transfers  are  in  the
    29  interest  of  business  owners,  who  seek  to liquidate their ownership
    30  interest and retire. Such transfers are also  in  the  interest  of  the
    31  employees, who gain the opportunity to ensure the future survival of the
    32  firm and their jobs.
    33    The  legislature  also  finds and declares   that employee-owned busi-
    34  nesses are more productive, enjoy increased sales, lower  turnover  rate
    35  and  greater  longevity,  offer better employment opportunities, and are
    36  more likely to retain jobs in-state and less likely to relocate  out-of-
    37  state.    Employee-owned  businesses  also  sustain  the  state tax base
    38  through employee and corporate income tax, while saving costs  on  unem-
    39  ployment  insurance  and other state benefit programs. It is the purpose
    40  of this subtitle to amplify federal  programs  in  support  of  employee
    41  ownership  at  the  state  level  through loans and loan guarantees that
    42  provide financing for the conversion of existing businesses to  employee
    43  ownership.
    44    §  3. Subdivisions 3, 4, 5, 6, 7 and 8 of section 1836-b of the public
    45  authorities law, subdivisions 3, 6, 7 and 8 as added by chapter  788  of
    46  the  laws of 1983, subdivisions 4 and 5 as amended by chapter 805 of the
    47  laws of 1985, are amended to read as follows:
    48    3. "Eligible project" means the acquisition [or rehabilitation] by  an
    49  employee ownership association of an existing [industrial or manufactur-
    50  ing  plant]  business located in this state for the purpose of operating
    51  it as an employee-owned enterprise.
    52    4. "Employee  ownership  association"  means  a  corporation,  limited
    53  liability company, trust, or other association formed by or on behalf of
    54  the  employees  of  [an  industrial  or  manufacturing plant] a business
    55  located in this state for the purpose of assuming ownership  or  control
    56  of the [plant] business and operating it as an employee-owned enterprise
        S. 339                              3

     1  or as a worker cooperative as defined in section eighty-one of the coop-
     2  erative corporations law.
     3    5. "Employee-owned enterprise" means a business in which the employees
     4  are  represented on the board of directors or managers and the employees
     5  control the majority of the voting stock or member interest, or  if  the
     6  business  is  held  in a trust which controls the majority of the voting
     7  stock or member interest, the trustees are elected by the employees. The
     8  term "employee-owned enterprise" shall also refer to  a  worker  cooper-
     9  ative  as  defined in section eighty-one of the cooperative corporations
    10  law.
    11    6. ["Funding partner" means an entity which singly or  in  combination
    12  with  other entities has agreed to finance a portion of the project cost
    13  of an eligible project, and may include the employee  ownership  associ-
    14  ation undertaking the project as well as any financial entity.
    15    7.  "Plant"  includes  the site, structure, building and equipment and
    16  all real and personal property in connection therewith, whether  or  not
    17  in  existence,  and may include any road, railroad, or utility or equip-
    18  ment appurtenant thereto.
    19    8.] "Project cost" includes all reasonable and necessary costs  to  be
    20  incurred  in  the  course  of an eligible project, including [any antic-
    21  ipated acquisition,] the fair market value of the business  interest  to
    22  be  acquired,  as  well  as  costs for any additional construction, land
    23  acquisition, improvements, equipment, pertinent  rights  and  easements,
    24  and associated technical, engineering, legal and financial services.
    25    § 4. The opening paragraph and paragraphs (a), (b) and (d) of subdivi-
    26  sion  1  and  subdivision  2 of section 1836-c of the public authorities
    27  law, as added by chapter 788 of the laws of 1983, are amended to read as
    28  follows:
    29    Any employee ownership association may apply to [a  local  development
    30  corporation  serving  the  municipality in which the eligible project is
    31  located] the authority for an employee ownership assistance loan  to  be
    32  used  to help finance an eligible project. Such application must include
    33  a written statement from the entity from  which  the  project  is  being
    34  acquired,  stating  that  such  entity  consents to the acquisition. The
    35  application shall include [in detail]:
    36    (a) [the history and membership] a description of the employee  owner-
    37  ship association;
    38    (b)  [the  history  and  circumstances  of the plant to be acquired] a
    39  description of the business;
    40    (d) estimate of the number of jobs [to be  saved  or  created  by  the
    41  project] before and after the transaction; and
    42    2.  The  application shall also include a detailed financial statement
    43  of [funding partner] actual and anticipated financial  participation  in
    44  the project, which shall include:
    45    (a) the identity of all funding [partners] sources; [and]
    46    (b)  the nature of the financial participation, which may include, but
    47  is not limited to, seller notes, senior debt, junior  debt,  and  equity
    48  investment; and
    49    (c)  the terms of the financing agreements with the funding [partners]
    50  sources, including any repayment schedules and  finance  charges  to  be
    51  included in such agreements.
    52    § 5. Subdivision 1 of section 1836-d of the public authorities law, as
    53  added by chapter 788 of the laws of 1983, is amended to read as follows:
    54    1.  have  a higher level of funding from the funding [partners] source
    55  or financial participant;
        S. 339                              4

     1    § 6. The section heading and subdivisions 1 and 3 of section 1836-e of
     2  the public authorities law, as added by chapter 788 of the laws of 1983,
     3  are amended and two new subdivisions 5  and  6  are  added  to  read  as
     4  follows:
     5    Loan  agreements  and lending authority.  1. If the authority approves
     6  an application for a loan under this subtitle,  the  [local  development
     7  corporation] authority may enter into a loan agreement with the employee
     8  ownership   association  whereby  the  [local  development  corporation]
     9  authority agrees to loan  to  the  employee  ownership  association  the
    10  remaining funds necessary for the eligible project.
    11    3.  The  [local  development corporation] authority may not enter into
    12  any loan agreement unless the authority determines through an  appropri-
    13  ate method that there is reasonable assurance of repayment. The authori-
    14  ty  shall  establish such requirements or terms as it may deem necessary
    15  or desirable to secure the repayment of the  loan  and  to  protect  the
    16  interests of the authority and the holders of its bonds.
    17    5.  (a)  The  authority  may  establish  a  trust fund account for the
    18  purposes  of  providing  a  loan  or  loan  guarantee  pursuant  to  the
    19  provisions  of  this  chapter. The initial deposit of funds to the trust
    20  fund shall be in an amount to be determined by the authority  but  shall
    21  not  exceed  one hundred million dollars from an amount otherwise avail-
    22  able from funds appropriated.
    23    (b) The authority shall deposit into the trust fund all income  earned
    24  from the moneys paid back from loans to be used for additional lending.
    25    6.  The  authority  shall make a loan decision or loan guarantee deci-
    26  sion, and inform the applicant of the  authority's  decision,  no  later
    27  than  thirty  days after the authority receives the applicant's applica-
    28  tion for an employee ownership loan or employee ownership  loan  guaran-
    29  tee. If the authority requests that an applicant supplement its applica-
    30  tion  by  submitting additional information, the authority shall have an
    31  additional fifteen days after receiving the  additional  information  by
    32  which  the authority must make a loan decision or a loan guarantee deci-
    33  sion and inform the applicant of the authority's decision.
    34    § 7. Subsection (c) of section 612 of the tax law is amended by adding
    35  a new paragraph 48 to read as follows:
    36    (48) One hundred percent of the capital gains from the sale  of  stock
    37  or  member  interest  from  a  New York corporation or limited liability
    38  company to an employee-owned enterprise, as defined in subdivision  five
    39  of  section eighteen hundred thirty-six-b of the public authorities law.
    40  In order to qualify for such modification as  described  in  this  para-
    41  graph,  such employee-owned enterprise must have its commercial domicile
    42  in New York. If the employee-owned  enterprise  is  an  "employee  stock
    43  ownership  plan,"  it must comply with federal requirements as such plan
    44  is defined in 26 U.S.C. § 4975(e)(7).
    45    § 8. This act shall take effect immediately; provided,  however,  that
    46  section  one  of this act shall take effect on the one hundred eightieth
    47  day after it shall have become a law.