Empire Zones Program

Various geographic areas in New York state are characterized by persistent and pervasive poverty, high unemployment, limited new job creation, dependence on public assistance, dilapidated and abandoned industrial and commercial facilities and a shrinking tax base. To remedy these conditions, the Legislature authorized the formation of up to 72 Empire Zones through a series of eight competitive designation rounds in which applicants identify the economic benefits they will attain through creation of a Zone. The Zones were to be distributed between qualifying urban, suburban and rural areas, where special incentives and assistance would promote private investment, private business development and job creation. The State Legislature enacted the New York State Economic Development Zones Act (Article 18-B of General Municipal Law) as Chapter 686 of the Laws of 1986. This law and subsequent amendments to it, including 2000 legislation substituting the term "Empire Zones" for "Economic Development Zones" throughout the statute, were intended to promote economic development in the state. Counties, cities, towns and other municipal governments apply to the Department of Economic Development (DED) to establish Empire Zones within their jurisdictions. Based on review of those applications and accompanying economic development plans received during a designation round and recommendation by the DED Commissioner, Zones are formally authorized by a Designation Board consisting of the Commissioner of Taxation and Finance, the Director of the Budget, the Commissioner of Labor, two members appointed by the Governor and two members appointed by the Legislature. After approval of such Zones, businesses that relocate or expand in those areas become eligible for significant tax credits and other benefits. These benefits, which are provided on a decreasing basis over a fifteen year period, include exemptions from sales taxes for the purchase of goods and services, refundable credits of business taxes based on real property taxes which are paid, credits for wage taxes, investment tax and employment incentives credits, credits for personal and corporate income taxes, reduced electric and gas utility rates, and eligibility for technical assistance from Empire Zones Program consultants. The DED Commissioner also has authority to terminate a Zone upon finding that the local government has failed to implement the proposed economic development plan, that there has been no substantial business development or job creation within the area, or due to poor Zone management or failure to comply with reporting requirements. Each Zone is limited in size to 2 square miles (several are limited to 1 square mile), so each applicant has had to precisely identify land areas falling within the proposed Zone boundaries as part of the application process. The governments, acting through local Zone administrative boards, can revise Zone boundaries with DED approval, resulting in frequent adjustments to Zone boundaries based on updated planning considerations. Although the greater portion of a Zone must be on contiguous land, some non-contiguous parcels can be made part of a Zone provided that the Zone as a whole meets the various eligibility requirements. In some situations, the use of non-contiguous land has been almost a necessity in order to meet requirements for vacant land, suitable for locating new business, when such land is unavailable within the contiguous area.