N.Y. UDA Law § 16-V — New York Code / Act UDA / Section 16-V
New York state business incubator and innovation hot spot support act
Status: in_force

§ 16-v. New York state business incubator and innovation hot spot\nsupport act. 1. (a) The corporation is authorized, within available\nappropriations, to issue requests for proposals once per fiscal year to\nprovide grants pursuant to subdivisions five and six of this section for\nthe purposes established under this act. The corporation may designate\nentities, which upon application meet the requirements of subdivision\ntwo of this section as New York state incubators, and may provide grants\nand assistance as provided under subdivisions five and six of this\nsection to such designated entities. "New York state incubator" shall\nmean a business incubation program which also provides physical space or\nwhich is a virtual incubation program that has been designated upon\napplication by the corporation as a New York state incubator pursuant to\nsubdivisions two and three of this section and which thereby becomes\neligible for benefits, support, services, and programs available\npursuant to such designation. Provided however, that virtual incubators\nwhich provide assistance to eligible businesses not in residence in one\nphysical location, shall submit a plan of operation which sets forth the\nmaximum number of eligible businesses to be served and their geographic\ndistribution.\n  (b) From among the qualified "New York state incubators", the\ncorporation is further authorized, within available appropriations, to\ndesignate applicants as "New York state innovation hot spots." An\nincubator receiving a "New York state innovation hot spot" designation\nshall be eligible for the benefits under section thirty-eight of the tax\nlaw, subparagraph eighteen of paragraph (a) of subdivision nine of\nsection two hundred eight of the tax law, subdivision eleven of section\ntwo hundred nine of the tax law, paragraph thirty-nine of subsection (c)\nof section six hundred twelve of the tax law, paragraph one of\nsubdivision (d) of section one thousand one hundred nineteen of the tax\nlaw, and paragraph thirty-five of subdivision (c) of section 11-1712 of\nthe administrative code of the city of New York.\n  2. Requirements for designation. (a) An entity wishing to be\ndesignated as a New York state innovation hot spot or as a New York\nstate incubator pursuant to this section shall be located in New York\nstate and shall have been in existence or otherwise in operation for a\nperiod of at least three fiscal years prior to the current fiscal year,\nor demonstrate continuity of staffing, program, and purpose showing\ncontinuation through another auspice or governing entity, and shall have\ndemonstrated a connection to regional sources of innovation and\nexpertise, and that it meets the goals of creating jobs and incubating\nbusinesses with survival rates in excess of average startups, and that\nthe program has a strategic plan to continue to meet such goals for the\nthree years succeeding designation and that commits the program to\nimplementing best practices. Such demonstration shall include a\ncommitment by the sponsor to continue to maintain the program for at\nleast three years after such designation, and to provide any reporting\ninformation that the corporation shall require.\n  (b) In determining whether an entity shall be designated as a New York\nstate innovation hot spot or New York state incubator, the corporation\nshall require that the entity meet the requirements of subparagraphs (i)\nand (ii) of this paragraph and may consider whether the entity has\ndeveloped the programs, services, and attributes in subparagraphs (iii)\nthrough (xvi) of this paragraph:\n  (i) institutional stability and long term viability, indicated by: the\nsponsor's commitment to financially and programmatically maintaining the\nincubator for at least two years in addition to the current fiscal year;\nreceipt of non-state public and private grant and/or other revenue\nsources including property rentals and program fees that are or have\nproven to be predictable and reliable; and manageable debt service;\n  (ii) a strategic plan that describes the impact on the regional\nentrepreneurial environment that the incubator is intended to have and\ncommits the incubator to best incubation practices and describes a\ndefined process that accelerates commercialization and development for a\nclient company or entity through provision of technical assistance,\ndirect mentorship, entrepreneurial education, and business development\nservices, including development of a business plan and markets, aid in\ndevelopment of the management team, product, customers, and local or\nregional supply chain partners, access to investment, and launching of a\nsuccessful business which will employ New Yorkers;\n  (iii) an integrated array of services which includes management\nguidance, technical assistance, consulting, mentoring, business plan\ndevelopment, aid in creation of the business entity, and ongoing\ncounseling;\n  (iv) opportunities for clients to network, collaborate with other\nbusiness programs, and gain access to services, including through such\nprograms as the small business development center, the local or area\nchamber of commerce or other business association, programs of the small\nbusiness administration, and/or other similar business organizations,\nassociations, and programs;\n  (v) access to capital via referral or other arrangements with\nfinancial institutions, venture capitalists, angel investors, investment\nfunds managed or financed by private entities or state or local economic\ndevelopment organizations, or other similar or equivalent capital\nsources, evidenced by written agreements, memorandums of understanding,\nletters of intent, or other endorsements acceptable to the corporation,\nand including readying clients for financial meetings and interviews;\n  (vi) aid in accessing markets, via bid assistance or access programs\nthat may include but are not limited to literature review, establishment\nof a resource documents room (physical or virtual), opportunity\nnotification of local, state, and federal governmental and private\nopportunities, and identification of and introductions to potential\nfirst customers;\n  (vii) physical office space and/or laboratory space and/or\nmanufacturing space under a written agreement for a period not to exceed\nfive years for any individual incubator client;\n  (viii) policies requiring participation by clients in the incubator\nprogram, including disqualification or suspension from the program for\nfailure to participate;\n  (ix) criteria for acceptance and graduation from the program or\nphysical space, and terms and conditions for ongoing relationships, if\nany, between the incubator and the client;\n  (x) at least fifty percent of the total incubator budget provided from\nsources other than tenant rents and fees and in-kind support from the\nsponsoring entity, and must be from sources other than New York state\ngovernment agencies;\n  (xi) an independent advisory council or similar body that includes one\nor more executive officers of firms that have graduated from the\nincubator, local economic development professionals, and individuals\nwith business and technology expertise in areas appropriate to the\nsector or concentration of clients, and the mission and goal of the\nincubator;\n  (xii) a professional management and service delivery team with\nexperience, expertise, or credentials in management, entrepreneurship,\nbusiness development, or other equivalent areas;\n  (xiii) access by clients to mentoring, advisory, or educational\nservices, including classroom teaching, from individuals who have\nsuccessfully created, grown or managed businesses or are lawyers,\nprofessional accountants, or individuals who have been in business at an\nexecutive level for at least five years;\n  (xiv) evidence that the incubator is a center of entrepreneurial\nactivities of a city, region, or distressed portion thereof, as\ndocumented by programs and activities coordinated with county or local\neconomic development organizations, investor and financial clubs or\ninstitutions, or student or youth-oriented entrepreneurial activities;\n  (xv) a partnership with other incubators in the region to offer\nservices and opportunities for entrepreneurs and leverage regional\neconomic development assets; and\n  (xvi) a plan to recruit minority- and women-owned businesses for\nlocation and participation with the incubator program.\n  (c) The corporation, subject to appropriations provided for this\npurpose, may approve and designate ten New York state incubator hot\nspots. Such designees will be required to demonstrate an affiliation\nwith and the application support of at least one college, university or\nindependent research institution, and that its programs and purposes are\nconsistent with regional economic development strategies.\n  3. Designation. (a) The corporation may designate applicants that meet\nthe requirements of subdivision two of this section as New York state\ninnovation hot spots or as New York state incubators.\n  (b) As a condition of maintaining designation, each incubator shall\nannually submit to the corporation in a manner and according to a\nschedule established by the corporation:\n  (i) updated information requested by the corporation pursuant to\nsubparagraph (iii) of paragraph (a) of subdivision two of this section;\n  (ii) its strategic plan, as updated along with a brief description of\nits success in meeting the goals of its strategic plan;\n  (iii) a statement that the items listed in paragraph (b) of\nsubdivision two of this section and, in the case of New York state\ninnovation hot spots, paragraph (c) of subdivision two of this section\nare still applicable to the operations of the incubator, or any change\nin applicability;\n  (iv) a list of business enterprises served by the incubator, and in\nthe case of New York state innovation hot spots, those clients certified\nas a "qualified entity" eligible for tax incentives under section\nthirty-eight of the tax law; and\n  (v) such additional information as the corporation may require.\n  (c) The corporation shall design simplified forms to aid in the\nsubmission of the data required in this subdivision, which may be\nsubmitted electronically. Such forms shall state the purposes of the\nrequired data submissions.\n  (d) The corporation shall evaluate the operations of the New York\nstate innovation hot spot or the New York state incubator using methods\nincluding but not limited to site visits, reports pursuant to specified\ninformation, and review evaluations. If the corporation is unsatisfied\nwith the progress of a New York state innovation hot spot or a New York\nstate incubator, the corporation shall notify such incubator of the\nresults of its evaluations and the findings of deficiencies in the\nincubator's operations and shall allow such incubator to remedy such\nfindings in a timely manner. For New York state innovation hot spots or\nNew York state incubators that receive operating grants pursuant to\nparagraph (a) of subdivision five of this section, such evaluations\nshall include independent peer review and shall take place no less than\nonce every three years or more frequently at the discretion of the\ncorporation. Such independent peer review shall result in a written\nreport that includes programmatic and fiscal evaluation of the\nincubation program and recommendations for improvement.\n  (e) Notwithstanding any other provision of law to the contrary, a\nqualified entity that has previously been designated as a New York state\nincubator and has not fully disbursed any grants awarded pursuant to\nthis section, shall continue being designated as such by the corporation\nfor an additional three years.\n  4. Audit. The corporation shall have the authority to audit New York\ninnovation hot spots, New York state incubators and clients designated\nby such hot spots as qualified entities.\n  5. Grants. (a) Operating grants. A program designated as a New York\nstate innovation hot spot or as a New York state incubator shall be\neligible for an operating grant in an amount to be determined by the\ncorporation from funds appropriated to the corporation for such purpose,\nprovided however that:\n  (i) Any such grant shall be matched on a two-to-one basis by the\ninstitution receiving the funds and collaborative partners in the form\nof cash or in-kind personnel, equipment, material donations, and other\nfacility and operations expenditures, provided that no more than fifty\npercent of such match shall be in-kind;\n  (ii) A program applying for a grant shall demonstrate financial\nstability and long term viability, as provided in subparagraph (i) of\nparagraph (b) of subdivision two of this section;\n  (iii) A grant recipient shall agree to provide data as required to the\ncorporation and shall agree to conform to best practices as outlined by\nstate and/or national business incubator associations;\n  (iv) Failure to abide by the requirements of this subdivision or to\ncure a default after review and agreement with the corporation shall\nresult in loss of the grant and disqualification of the designee as a\nNew York state innovation hot spot or as a New York state incubator; and\n  (v) Provided that a portion of the grants shall be awarded to the New\nYork state innovation hot spots and the New York state incubators.\n  (b) The corporation shall make entities designated as New York state\ninnovation hot spots or as New York state incubators aware of\nopportunities for funding or grants by or through the corporation or the\ndepartment of economic development.\n  (c) No deduction. In addition to the foregoing requirements, an\nincubator sponsor shall agree to dedicate all funds from any grants or\nsupport received pursuant to this subdivision to the operations of the\nincubator without deductions for indirect costs of such sponsor. In no\ncase shall an incubator sponsor agree to provide less than eighty-five\npercent of all funds received pursuant to this subdivision to the\noperations of the incubator without exception.\n  6. Other assistance. The corporation may make such other aid,\nassistance, and resources available to New York state innovation hot\nspots and New York state incubators and their clients as it shall deem\nuseful and appropriate for the furtherance of the purposes of this act,\nincluding without limitation technical assistance, aid in marketing, aid\nin reaching and providing entrepreneurship training opportunities to\nsuch marginalized groups as those composed of individuals who are\nminority, female, disabled, or poor, and others, curriculum development,\nand other services and resources. The corporation shall also seek\nassistance from other state agencies in the development of procurement\nand marketing resources and training opportunities for New York state\ninnovation hot spots and New York state incubators and their clients.\n  7. Association of incubators. The corporation may consult with a\nstatewide entity which is a membership association of incubators and\nothers and which has expertise in providing services to incubators for\nthe purpose of providing services to entities designated as New York\nstate innovation hot spots and New York state incubators and to entities\nseeking to apply or applying to become New York state innovation hot\nspots and New York state incubators or which otherwise are included as\nrecipients of services pursuant to this section. Such services shall\ninclude advising concerning best practices of incubation and development\nof plans to incorporate and integrate such practices, development of\ndata concerning incubation in this state and recommendations for\nimprovement, aid in marketing and event sponsorship, and such other\nservices as the corporation shall deem necessary and appropriate to the\nstrengthening of business incubation in this state.\n  8. New York state innovation hot spots may certify clients which meet\nthe requirements of subdivision nine of this section as qualified\nentities eligible for New York state innovation hot spot program tax\nbenefits pursuant to section thirty-eight of the tax law. Business\nenterprises of incubators designated as New York state incubators under\nparagraph (a) of subdivision one of this section may be certified by the\nNew York state innovation hot spot if the incubator has entered into a\nmemorandum of understanding with such hot spot establishing a process\nand threshold for the provision of innovation hot spot benefits to\nqualified enterprises or the hot spot is providing demonstrable services\nor assistance to the business enterprise in addition to those provided\nby the incubator.\n  9. "Qualified entity" shall mean a business enterprise that is:\n  (i) in the formative stage of development;\n  (ii) located in New York state;\n  (iii) either: (A) any corporation, except a corporation which:\n  (1) over fifty percent of the number of shares of stock entitling the\nholders thereof to vote for the election of directors or trustees is\nowned or controlled, either directly or indirectly, by a taxpayer\nsubject to tax under the following provisions of the tax law: article\nnine-A; section one hundred eighty-three or one hundred eighty-four\nformer section of article nine; or article thirty-three; or\n  (2) is substantially similar in operation and in ownership to a\nbusiness entity (or entities) taxable or previously taxable under the\nfollowing provisions of the tax law: article nine-A; section one hundred\neighty-three, one hundred eighty-four, former section one hundred\neighty-five or former section one hundred eighty-six of article nine;\nformer article thirty-two; article thirty-three; article twenty-three,\nor would have been subject to tax under such article twenty-three (as\nsuch article was in effect on January first, nineteen hundred eighty) or\nthe income (or losses) of which is (or was) includable under article\ntwenty-two; or\n  (B) a sole proprietorship, partnership, limited partnership, limited\nliability company, or New York subchapter S corporation that is not\nsubstantially similar in operation and in ownership to a business entity\n(or entities) taxable, or previously taxable, under article nine-A of\nthe tax law, section one hundred eighty-three, one hundred eighty-four,\nformer section one hundred eighty-five or former section one hundred\neighty-six of article nine of the tax law, former article thirty-two or\narticle thirty-three of the tax law, article twenty-three of the tax law\nor which would have been subject to tax under such article twenty-three\n(as such article was in effect on January first, nineteen hundred\neighty) or the income (or losses) of which is (or was) includable under\narticle twenty-two of the tax law; and\n  (iv) is certified by a New York state innovation hot spot as being\napproved to locate in, or be part of a virtual incubation program\noperated by, such New York innovation hot spot.\n  10. The corporation may establish guidelines concerning this program\nto implement the purposes of this act.\n