In June 2013, Governor Andrew Cuomo unveiled his START-UP NY program which aims to foster entrepreneurialism and job creation through the introduction of tax-free zones throughout the state. These zones are created through partnerships with New York colleges and universities and upstate NY is specifically targeted by Governor Cuomo’s plan.
By creating these zones, Governor Cuomo will be expanding the connections to industry that are already strong within some of the colleges, universities, and surrounding towns of this state. R&D focused companies locating to these tax-free zones may also be eligible for Federal research and development tax credits.
The Research & Development Tax Credit
Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
- New or improved products, processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On January 2, 2013, President Obama signed the bill extending the R&D Tax Credit for 2012 and 2013 tax years.
Incentives for Businesses and Individuals
Governor Cuomo proposed 3 million square feet of tax-free zones where businesses will be free from state tax for a period of ten years. Employees will be tax free for the first five years and for the second five years, individuals will be taxed on income over $200,000 for individuals, $250,000 for head of households, and $300,000 for taxpayers filing joint returns.
In order to take advantage of START-UP NY, businesses need to correlate with the academic mission of the sponsoring colleges and universities as well as maintain new jobs. For New York City, Nassau, Suffolk, and Westchester counties, businesses participating in START-UP NY must be high-tech in nature or new start-ups.
The START-UP NY program paves the way for the already robust university research and development field to expand and materialize in industries such as nanotechnology, software and information technology, solar energy, and lighting technologies.
The tax-free zones proposed by Governor Cuomo include land and building space within college/university campuses as well as surrounding business areas with strong affiliations to the campus.
University R&D Activity
SUNY Albany College of Nanoscale Science and Engineering
SUNY Albany's College of Nanoscale Science and Engineering, set to split from UAlbany in 2014-2015, has recently had a number of large firms partner with the college. In July of 2013, Nikon announced a $350 million investment and partnership with the college to develop next generation lithography technology. An estimated 100 new high-tech jobs will be created. Nikon is just the latest of industry partnerships that include firms such as IBM, AMD, GLOBALFOUNDRIES, SEMATECH, Toshiba, and many others. The College of Nanoscale Science and Engineering and its $5 billion, 800,000 square-foot complex, is the place to be for nanotechnology and its various disciplines. Nanotechnology is making big strides the fields of energy, information technology, medicine, homeland security, and environmental science.
Binghamton University Center for Advanced MicroelectronicsManufacturing (CAMM)
Similar to nanotechnology in that it works on an extremely small dimension, the field of microelectronics could lead to a transformation of consumer electronics. SUNY Binghamton’s Center for Advanced Microelectronics Manufacturing (CAMM) is part of the school’s NYS Center of Excellence in Small Scale Systems Integration Packaging. Binghamton University partnered with Endicott Interconnect Technologies, Cornell University, and Flex Tech Alliance to create the first R&D facility for flexible microelectronics.
Once START-UP NY is fully implemented, nanotech and microelectronic firms will be able to take full advantage of the program and further expand their activities in the Albany and Binghamton areas.
Rensselaer Polytechnic Institute's Lighting Research Center
Renssalaer Polytechnic Institute (RPI) has one of the leading university-based lighting research organizations in its Lighting Research Center. RPI’s LED research is currently relevant as long-life, low-wattage LED's become more widely used for their energy efficiency. Some of the Lighting Research Center's research aims to make LED's more economically feasible for installation in facilities.
The Lighting Research Center has partnered with corporations such as Philips, creator of the famed L-Prize 60w LED replacement, GE Lighting, Sylvania, among many others. By participating in the START-UP NY program and receive tax-free zoning, RPI’s could see further partnerships with companies in the lighting industry for research and development.
Stony Brook University's Research and Development Park
Stony Brook University, one of the SUNY network's four University Centers, has a three building, 246 acre, LEED Research and Development Park on its campus. Inside the R&D park is the Center for Excellence in Wireless and Information Technology (CEWIT) and Stony Brook's Advanced Energy and Technology Center (AERTC). Both centers feature incubator space and services. Industry partners of CEWIT include IBM and Cisco Systems, and partners of AERTC include CA Technologies, LIPA, and GE Energy.
SUNY Farmingdale's Solar Energy Center
SUNY Farmingdale plans to focus heavily on solar energy through its Solar Energy Center. SUNY Farmingdale is the site of the first utility scale photovoltaic demonstration project in the northeast. The school is planning to research solar energy internally as well as with institutions such as Brookhaven National Laboratory through strategic partnerships. On a practical front, the college plans to provide training in the installation and maintenance of PV panels. Through the START-UP NY program, SUNY Farmingdale can take advantage of tax-free zones by teaming up with leaders in the solar field, such as First Solar, to develop both new technology and the college's solar research program.
University at Buffalo's Bio-incubator
SUNY Buffalo has operated its UB Technology Incubator program since 1988. The program offers office as well as lab space in a 40,000 square foot, FDA compliant facility at Baird Research Park. UB also has a 4,000 square foot incubator space in downtown Buffalo. These facilities are focusing on alternative energy technologies, biotechnology, and nanotechnology devices, among other subjects, and are prime territory for START-UP NY tax-free zones.
Additional university research and development activities include:
- SUNY Alfred’s $12.5 million College of Ceramics which spans over six laboratory buildings. Alfred University is one of two universities in the U.S. offering a B.S. in Ceramic Engineering, which if improved upon, could significantly advance the electronics, transportation, military, and healthcare fields.
- SUNY College of Environmental Science and Forestry’s Center for Sustainable & Renewable Energy (CSRE) which leads as a premier institution for natural resource and sustainability education. SUNY ESF’s partnerships include SUNY Delhi, NYPA, and Bristol-Myers Squibb, among others, in an effort to further improve and implement alternative energy practices.
- SUNY ESF is building an $86 million, 120,000 square foot academic research building that will utilize state of the art rainwater recovery systems, thermal pre-heat walls, and chemical filtering fume hoods.
University research and development continues to make great strides in industries such as nanotechnology, software and information technology, solar energy, and ceramics. The START-UP NY program offers a tax-free opportunity for U.S. companies to locate to related college communities. In addition to the benefits of START-UP NY, companies engaging in related research and development activities can also qualify for Federal R&D tax incentives.
Charles R. Goulding, Attorney/CPA, is the President of R & D Tax Savers, an interdisciplinary tax and engineering firm that specializes in R & D tax credits.
Jonathan Saltzman is an Analyst with R&D Tax Savers.
Andrea Albanese is an Analyst with R&D Tax Savers.