State Lawmakers Approve Tax-Free Zones Around SUNY Campuses

With the passage of Gov. Andrew Cuomo's "START-UP NY" bill in June, New York State is set to enact tax-free commerce zones on and immediately surrounding SUNY campuses.

The governor's "Tax-Free NY" initiative, introduced a few weeks ago, has been incorporated into START-UP NY, a package of legislation intended to jump-start the upstate New York economy, and is meant to stimulate economic growth and job growth around SUNY and CUNY campuses across the state.

Both local state legislators, Sen. John Flanagan, R-East Northport, and Assemb. Steve Englebright, D-Setauket, voted in favor of the START-UP NY measure.

The new law facilitates tax breaks – such as no corporate taxes, income taxes, or property taxes – for new businesses, or businesses from out-of-state that move to New York, that start up on SUNY campuses or within one mile of the campuses, taking up to 200,000 square feet of commercial space. The benefit would be for 10 years; employees of those new businesses would pay no income taxes for five years. Businesses would apply for the benefits through the regional economic development council, and would still be subject to local municipalities' zoning laws.

Businesses that would directly compete with any previously existing local business would not be permitted to receive the benefits. Because the law stipulates that any businesses taking advantage of this new law would have to be in line with the mission of the local colleges and universities, the schools' faculty would have a role in determining whether their applications are accepted. Some types of businesses, including retail, wholesale and food service, are not eligible.

While it does not include any provision for PILOTs (payments in lieu of taxes) for local taxing authorities such as school districts and fire districts, Englebright said he believes the job creation mechanism will trickle down to benefit the community as a whole.

"The creation of the jobs will be the benefit that will reinforce the value of home equities," he said. "[It will] emphasize, through the presence of those jobs, how important it is to have these people new people moving into the community who themselves will be subjected to making committements and contributions to the community. Through the spinoff effect of those jobs and sales of everything from homes to refrigerators, that will generate new income – new taxable income."

Englebright said the new legislation reinforces the good that is already coming out of the Long Island High Technology Incubator at Stony Brook, which houses start-up companies until they can get to a stable point on their own and "graduate" from the LIHTI into new facilities.

"We've been doing it at Stony Brook for years, one way or another, with our incubator and then with the acquisition of the Gyrodyne property," he said. "We really already have pioneered the concept that is now being reinforced in the language of this new law."

Stony Brook's president, Dr. Samuel L. Stanley Jr., applauded the legislation's passage.

"It is the most important university-based economic development initiative undertaken," he said in a statement. "...START-UP NY not only opens the door, it essentially removes the barriers for start-ups and existing companies to succeed in New York State. This is exactly what our business incubators have needed; it will undoubtedly help launch hundreds of new businesses on Long Island."