Excelsior Program

The Excelsior Program was created to replace the Empire Zones program, which expired on June 30, 2010. However, for those who are used to dealing with Empire Zones, you’ll likely recognize several provisions in the Excelsior Program. The program was specifically designed to encourage the expansion in and location to New York of businesses in growth industries such as clean tech, broadband, information systems, renewable energy, and biotechnology. The program essentially contains four components:

1. The Excelsior Jobs Tax Credit; 6.85 % x the salary or wage of each net new employee
2. The Excelsior Investment Tax Credit; 2 percent refunable for eligible investment
3. The Excelsior Research and Development Tax Credit; 50 percent of businesses’ federal R & D credit and capped at 3 percent of total eligible R&D investment in NYS.
4. The Excelsior Real Property Tax Credit; The RPTC is a 10 year credit that is based on the improved value of real property due to the project. Value of credit is: 1st year > 50 percent; 2nd year > 45 percent; 3rd year > 40 percent; 4th year > 35 percent; 5th year > 30 percent; etc.
5. Utilities may offer a discounted Excelsior Jobs Program rate.

Criteria for Eligibility

In order to be eligible to participate in the Excelsior Program, a business must operate in New York State predominantly:

1. As a financial services data center or a financial services back office operation;
2. In manufacturing;
3. In software development and new media;
4. In scientific research and development;
5. In agriculture;
6. In the creation or expansion of back office operations; or
7. In a distribution center.

Each category listed above is defined by statute. The statute also contains a “catchall” provision that would allow a business to participate in the program if it operates “in an industry with significant potential for private-sector economic growth.” Such industries are to be designated by the Commissioner of Economic Development in regulations.

Each potential participant must then satisfy at least one of three separate requirements. The first requirement is a job-creation threshold. The job-creation threshold varies depending on the participant’s industry. For example:

• Manufacturing – 25 net new jobs
• Agriculture – 10 net new jobs
• Financial services data center or a financial services back office operation – 100 net new jobs
• Scientific research and development – 10 net new jobs
• Software development – 10 net new jobs
• Back office operations – 150 net new jobs
• Distribution center – 150 net new jobs
• Existing ag co-ops are eligible.

In lieu of satisfying the job-creation requirement, a potential participant can seek to be deemed a “regionally significant project.” This requires even more jobs to be created and the participant must make a “significant capital investment” in the state. However, regionally significant projects do not appear to be limited to specific industries.

The third and final test for eligibility is essentially a cost-benefit analysis. A potential participant operating predominantly in one of the seven industries listed above, but which does not satisfy the job-creation requirement, must have at least 50 full-time job equivalents and must demonstrate that its benefit-cost ratio is 10 to one (i.e., the investment in the state in jobs or capital must be 10 times greater than the benefits received from the program).