N.Y. Comp. Codes R. & Regs. tit. 21 § 4230.11

Current through Register Vol. 46, No. 50, December 11, 2024

Section 4230.11 - Incubator assistance

(a) Eligible incubator projects. Only eligible incubator projects may receive incubator assistance from the corporation. In order to constitute an eligible incubator project, an incubator must satisfy the criteria set forth below, provided that no such incubator shall constitute an eligible incubator project if it shall be owned, controlled or operated by any person, partnership, corporation or other entity, a controlling interest of which is legally or beneficially owned by one or more employees of the State or of any instrumentality of the State, or by any member of the immediate family of any such employee:

(1) It consists of a facility, or a portion of a facility, which is specifically dedicated to assist the establishment and promote the growth of eligible incubator tenants.

(2) It is owned by an eligible incubator sponsor or it is leased by an eligible incubator sponsor on terms and conditions satisfactory to the corporation.

(3) It leases or proposes to lease small units of space to eligible incubator tenants on favorable terms and conditions satisfactory to the corporation. Such terms and conditions shall include, but not be limited to, flexible leasing arrangements and competitive rates for the leased space.

(4) It leases or proposes to lease not more than 25 percent of its net leasable space to nonprofit organizations which provide business development services to eligible incubator tenants of the eligible incubator project on a priority basis. Examples of such organizations include, but are not limited to, entrepreneurship support centers, minority and women business enterprise development centers, small business development centers and technology development organizations. Eligible incubator sponsors and incubator operators may occupy space in the eligible incubator project only to the extent necessary to manage the eligible incubator project and provide services to eligible incubator tenants.

(5) It provides or proposes to provide business development services for the benefit of the eligible incubator tenants free of charge or at a nominal cost.

(6) It operates or proposes to operate pursuant to a management and business plan satisfactory to the corporation.

(7) It possesses all permits, licenses and certificates of occupancy necessary in order to operate as an incubator for the types of businesses to which it proposes to lease space.

(8) It has received financial commitments from public or private sources in an amount sufficient to undertake the eligible incubator project. In order to satisfy the requirements of this paragraph, a commitment to provide financial support to an eligible incubator project must be an unconditional, written commitment, or a written commitment conditioned only upon the grant of incubator assistance.

(b) Business development services. Business development services are support, professional and management counseling services available to eligible incubator tenants of an eligible incubator project. An eligible incubator sponsor may provide eligible incubator tenants with business development services directly or by arrangements with other public and private organizations. In addition, an eligible incubator sponsor may phase-in the delivery of business development services in accordance with a schedule approved by the corporation, which schedule shall cover a period concurrent with the deferral of principal or interest payments granted an eligible incubator sponsor pursuant to clause (e)(2)(i)(b) of this section. In establishing the schedule for the delivery of specific business development services an eligible incubator sponsor may take into consideration the percentage of the net leasable space of the eligible incubator project that is occupied by eligible incubator tenants. Business development services may include, but are not limited to the following:

(1) Physical services: security and protection services, janitorial and maintenance services, use of a conference room, use of photocopy and facsimile machines and use of computers.

(2) Office support services: receptionist services, clerical services and mail collection and delivery services.

(3) Professional and management counselling services: assistance with routine legal problems encountered by eligible incubator tenants, assistance with basic accounting and bookkeeping needs assistance with the development of management and business plans and assistance with the preparation and submission of applications for loans and grants from public and private sources.

(c) Management and business plan. The management and business plan is a plan of operation which sets forth the organization, financing, policies and procedures of an eligible incubator project and satisfies the following criteria:

(1) Local advisory committee. The management and business plan must be developed with the advice and cooperation of the local advisory committee. The management and business plan must include the resumes of each member of the local advisory committee.

(2) Goals and objectives. The management and business plan must define the goals and objectives of the eligible incubator project and identify the types of businesses to which it proposes to lease space.

(3) Organization. The management and business plan must state the form of legal organization of the eligible incubator sponsor, the incubator operator and the owner of the incubator and identify the legal and beneficial owners of any interest in each of those entities. In addition, the management and business plan must provide resumes of the executive officers of the eligible incubator sponsor and the incubator operator stating their qualifications to own and operate the incubator.

(4) Budget. The management and business plan must include a budget for the operation of the eligible incubator project including, without limitation, a projection of income and operating expenses for the five-year period following the estimated closing date of the incubator assistance loan, except that in the event the eligible incubator project is granted a deferral of principal or interest by the corporation pursuant to clause (e)(2)(i)(b) of this section or by any other lender the budget shall include a projection of income and operating expenses for the period of any such deferral plus the five-year period immediately following the end of such deferral. The budget must identify the anticipated sources of income, support and expenses.

(5) Operation. The management and business plan must state the rules regarding permissible and prohibited activities to be undertaken by tenants of the eligible incubator project.

(6) Business development services. The management and business plan must describe the business development services to be rendered to eligible incubator tenants of the eligible incubator project and state the fee schedule(s) applicable to specific services. The management and business plan must state the criteria to be utilized in selecting persons and entities to render business development services.

(7) Entry procedures. The management and business plan must include guidelines for admission of eligible incubator tenants into the eligible incubator project. At a minimum, the management and business plan must require that prospective tenants certify that they constitute eligible incubator tenants and must set forth, generally, what will be undertaken to verify that eligibility. Such efforts may include, but are not limited to, interviews of the principals of the prospective tenants, review of organizational documents and other appropriate business documents and visits to any location where the prospective tenants operate their businesses. The management and business plan shall state the criteria to be utilized in selecting among competing eligible incubator tenants to be accommodated at the eligible incubator project.

(8) Exit procedures. The management and business plan must include guidelines for the departure of eligible incubator tenants from the eligible incubator project including, without limitation, a description of the assistance to be provided to eligible incubator tenants that leave the eligible incubator project to establish themselves independently in a separate location. The management and business plan must provide that any tenant of an eligible incubator project which ceases to be an eligible incubator tenant shall be required to leave the incubator.

(9) Marketing plan. The management and business plan must include a marketing plan designed to disseminate information about the eligible incubator project and to attract eligible incubator tenants.

(10) Leases. The management and business plan must include a copy of the form of lease agreement to be entered into between the eligible incubator sponsor and eligible incubator tenants of the eligible incubator project.

(11) Eligible incubator tenants. The management and business plan must demonstrate an indication, not the existence, of prospective eligible incubator tenants for the eligible incubator project.

(d) Selection criteria. Requests for incubator assistance shall be evaluated based upon information contained in the incubator application submitted in accordance with subdivision (g) of this section. The corporation shall select recipients of incubator assistance through a competitive process. To receive incubator assistance, an incubator must satisfy the criteria set forth in subdivision (a) of this section and compare favorably with other incubator applications under the criteria set forth below:

(1) The potential impact of the eligible incubator project on the availability of employment and economic conditions of the community in which it is located. In this respect, the corporation may take into consideration the number of eligible incubator tenants that can be housed in the facility and their potential to generate employment opportunities. In addition, the corporation shall give preference to an eligible incubator project proposed to be located in a distressed community.

(2) The extent of the need by eligible incubator tenants in the area for the space and business development services offered by the eligible incubator project.

(3) The qualifications of the eligible incubator sponsor, the incubator operator, and the members of the local advisory committee.

(4) The quality, consistency and completeness of the management and business plan for the eligible incubator project. In this respect, the corporation may take into consideration whether the policies, procedures and goals set forth in the management and business plan constitute a realistic strategy to facilitate the establishment and promote the growth of eligible incubator tenants.

(5) The type of business development services to be rendered to eligible incubator tenants of the eligible incubator project, the charges therefor and the reputation and credentials of service providers.

(6) The degree to which the eligible incubator sponsor has secured the participation of public and private sources of assistance for the delivery of business development services and other such assistance to eligible incubator tenants of the eligible incubator project.

(7) The projected operating costs of the eligible incubator project as set forth in the budget submitted with the incubator application.

(8) The degree of support for the eligible incubator project expressed by the community in which it will be located. In this connection, the corporation may take into consideration the extent of financial support committed to the eligible incubator project by local public and private sources.

(9) The creditworthiness of the eligible incubator sponsor and the ability of the eligible incubator sponsor to meet its obligations to the corporation and other creditors.

(10) The collateral pledged by the eligible incubator sponsor as security for any incubator assistance in the form of a loan. If the facility where the eligible incubator project is located is leased by the eligible incubator sponsor, the corporation may take into consideration whether the leasehold may be mortgaged by the eligible incubator sponsor.

Additionally, the corporation shall consider the availability of incubator assistance funds.

(e) Forms of incubator assistance. Incubator assistance consists of:

(1) construction and permanent loans and construction grants; and

(2) operating grants made by the corporation to eligible incubator sponsors on the terms and conditions set forth below and such other terms and conditions as the corporation shall impose:

(i) Loans.

(a) No loan shall exceed the lesser of:

(1) 75 percent of total eligible incubator project costs; or

(2) $650,000.

(b) Based upon the corporation's analysis of various factors, including, without limitation:

(1) the projected cash flow and market conditions for the proposed eligible incubator project; and

(2) the creditworthiness and financial resources of the eligible incubator sponsor, repayment of principal or interest may be deferred for up to three years.

(ii) Operating grants. A one-time grant, in an amount not to exceed $40,000, may be made to an eligible incubator sponsor that qualifies for an incubator assistance loan or construction grant, to cover operating costs for the first 18 months of operation of an eligible incubator project, starting on the date of the closing of the incubator assistance loan, which costs may include a salary for a resident administrator/advisor to the eligible incubator project. In determining whether to fund a request for such a grant, the corporation shall consider, among other factors:

(a) the availability of incubator assistance funds;

(b) the projected cash flow and market conditions for the proposed eligible incubator project; and

(c) the financial ability of the eligible incubator sponsor to operate the eligible incubator project without the grant.

(f) Eligible and ineligible costs.

(1) Eligible costs. Incubator assistance in the form of a loan may be used to finance only the following costs:

(i) renovation and improvements to existing facilities;

(ii) acquisition of machinery, equipment and furnishings to be used in connection with the services rendered by the eligible incubator project to eligible incubator tenants; and

(iii) construction of new facilities, but only if the eligible incubator sponsor can demonstrate to the corporation that there is no suitable facility in the community where the proposed eligible incubator project will be located.

(2) Ineligible costs.

(i) Incubator assistance in the form of a loan may not be used to finance:

(a) operating costs incurred by the eligible incubator project; or

(b) costs of providing business development services.

(ii) Incubator assistance may not be used to finance the payment of any tax arrearage or penalty or employee benefit arrearage.

(iii) Incubator assistance may not be utilized for any purpose whatsoever in any portion of a facility that is not part of an eligible incubator project.

(g) Incubator application procedure. The corporation shall accept and approve incubator applications for incubator assistance on a periodic basis, in the discretion of the corporation. The corporation shall provide notice of the periods during which it shall accept incubator applications. Requests for incubator assistance shall be made on incubator applications developed by the corporation. The incubator applications shall include the following information and supporting documentation, and such additional information and documents as the corporation may determine are necessary or appropriate:

(1) Information.

(i) Information about the eligible incubator sponsor(s), the incubator operator and the owner of the facility in which the eligible incubator project is located, including their qualifications, credit histories and the names of the owners of any interest in any of the foregoing entities. Information regarding the providers of business development services, including their qualifications and their relationship to the eligible incubator sponsor(s), the incubator operator and the owner of the incubator facility.

(ii) Information about the facility in which the eligible incubator project is located, including a discussion of zoning and building requirements applicable to the operation of the facility, a copy of building plans for the facility, floor plans for the space to be leased to the various tenants and a discussion of the impact of the project on the environment and landmark or historic properties, if any.

(iii) Information demonstrating the demand for incubator space and including a discussion of the types of businesses to which the eligible incubator sponsor intends to lease space, the market demand for the goods produced or services rendered by them, and their potential to create jobs. In addition, the incubator application must provide evidence of the availability of low-cost space and business development services in the community suitable for the business operations of the prospective eligible incubator tenants of the eligible incubator project.

(iv) Discussion of the marketing strategy to be implemented in order to attract eligible incubator tenants to the eligible incubator project.

(v) In the case of new construction, such additional pertinent information as the corporation, in its discretion, may require.

(2) Supporting documentation.

(i) A copy of a management and business plan for the incubator which satisfies the criteria set forth in subdivision (c) of this section.

(ii) A budget for the eligible incubator project including total eligible incubator project costs, incubator assistance requested, proposed use for the assistance requested from the corporation, and anticipated sources of funds necessary in order to undertake the eligible incubator project.

(iii) Copies of any letters of commitment to provide financial support to the eligible incubator project.

(iv) A description of the collateral to be pledged to the corporation as security for any loan received.

(v) If the incubator facility is to be leased by the eligible incubator sponsor, a copy of the form of lease between the eligible incubator sponsor and the owner of the facility.

(vi) The following financial statements of the eligible incubator sponsor:

(a) compiled statements prepared by a certified public accountant for each of the two fiscal years of the eligible incubator sponsor prior to the fiscal year of the eligible incubator sponsor immediately preceding the date of the incubator application (hereinafter, the "immediately preceding fiscal year");

(b) an audited statement for the immediately preceding fiscal year; and

(c) interim financial statements, in the event the last day of the immediately preceding fiscal year shall be more than three months prior to the date of the incubator application.

(vii) Expressions of community support for the eligible incubator project such as letters of support from local groups and organizations and local and State elected officials.

(viii) In the case of new construction, such additional supporting documentation as the corporation, in its discretion, may require.

N.Y. Comp. Codes R. & Regs. Tit. 21 § 4230.11