State college and university leaders can’t help but consider the possibilities that would come with making their campuses tax-free zones for startup companies, as Gov. Andrew M. Cuomo proposed last week.
Is this the game-changer the University at Buffalo needs to produce more high-tech business near its research facilities on the Buffalo Niagara Medical Campus?
Could it mean further build-out of the sprawling North Campus in Amherst?
What would this do for Erie Community College, which has strong corporate ties and three campuses on prime real estate?
And might this help revitalize the Grant Street business strip near SUNY Buffalo State, or the City of Dunkirk near SUNY Fredonia State, or even downtown Niagara Falls, where Niagara County Community College now has a stake? “The potential opportunities are limitless,” said Michael F. Levine, vice president for finance and management at Buffalo State, “but the devil is in the details.”
For sure, specifics of the proposal are still vague, but all of these questions and more have crossed the minds of campus leaders since last week, when Cuomo unveiled his “Tax-Free NY” initiative.
Under the Cuomo proposal, startup companies, out-of-state firms or area businesses that are to expand would be eligible to pay no sales, property, business or corporate taxes – for up to 10 years – if they open a facility on or within a one-mile radius of a college campus.
Employees of the companies could avoid paying state income tax for up to a decade.
“This really is heading us in the right direction,” said UB President Satish K. Tripathi, who serves as co-chairman of the Regional Economic Development Council for Western New York. “This is consistent with the whole Regional Economic Development Council in terms of job creation and job retention.”
While the mission of higher ed may be to educate students, more and more these places of higher learning are being relied upon to produce scientific research that can be transferred to others who can further develop the technology into products.
In fact, Cuomo laid the base for his tax-free plan two years ago, when he said New York would use its vast higher education sector to help revitalize the economy.
Tripathi hasn’t specifically thought about what UB space or land could be used as tax-free zones for companies, but believes all three campuses – North, South and downtown – are good potential sites for startups in a wide range of fields. All three locations already have space for business incubators.
Clearly, that makes UB – the largest public university in the state with more than $353 million in research dollars – among those most suited to take advantage of the governor’s plan.
But others see possibilities, as well.
Fredonia believes the tax-free initiative could help revitalize the area around its business incubator, located near the campus in downtown Dunkirk.
“There are buildings there that could be used for business, but also manufacturing space,” said Fredonia President Virginia Schaefer Horvath. “It’s great for us to be part of incentivizing businesses to come. We want them to stay in New York, and we’d love for them to stay right in this region.”
Buffalo State has the same idea.
“One of our problems is being a landlocked campus” Levine said, “but we do have areas where buildings we own could be renovated.
“You think about if we put an incubator on campus and right down the street is where these small companies are looking to build their business,” Levine said.
There still are a lot of questions, as details of the plan are being negotiated with legislators.
The Cuomo administration, for example, said it is looking to build in “anti-pirating" provisions, so that campuses don’t end up doing what some industrial development agencies have been accused of: stealing jobs from one nearby community to give to another.
“I’m not fazed in the least that we don’t have all the answers,” said ECC President Jack F. Quinn Jr. “I’m thrilled with the whole concept. To talk about a big concept like taxes in a place like New York State and tie it to higher education is just perfect for us.”
But what’s really in it for the colleges and universities?
Quinn wonders if this arrangement could lead to much-needed building improvements for his college, particularly on the 120-acre campus on Main Street in Amherst.
The public institutions for years have wanted more freedom from state regulations to further develop public-private partnerships, which may help fund research, construction or faculty positions.
Institutions also receive revenue on patents filed by faculty or research licensed by the university. That equates to roughly $23 million a year across the SUNY system and an average of $1 million a year over the past five years at UB, according to state and university figures.
Focus on research
Furthermore, developing closer relationships with private industry can attract students focused on research, internships or entrepreneurship. It’s certainly a way to lure top faculty interested in spinning off their research into a startup company.
“That’s what I’ve been thinking about,” Tripathi said of the governor’s tax-free proposal. “This really gives us a chance to tell them how good an environment we have here.”
Critics, however, caution about lofty expectations.
While the governor’s proposal is enough to entice some firms, it’s not the game-changer Cuomo thinks it is, said Edmund J. McMahon, a senior fellow at the Manhattan Institute for Policy Research and its Empire Center for New York State Policy.
“I don’t see how it ignites a whole lot of broad scale economic growth,” McMahon said. “I just don’t see that happening.”
One of the problems is most of the SUNY schools – outside UB, University at Albany and Stony Brook University – aren’t geared toward the kind of research to spin off some of these high-tech startups, McMahon said.
The community colleges do have programs they run in conjunction with the private sector, but will that mean companies are interested in creating job-producing facilities on campus? McMahon said.
“There aren’t many places where you’re going to see some whiz-bang-techy thingy spring up,” McMahon said. “In fact, I can more readily see things happening at a few private colleges.”
A piece for privates?
That’s another issue.
Private colleges – which generate an estimated $1.3 billion in annual economic activity in Western New York – will be eligible, though it is uncertain how many or how they will qualify, said Laura L. Anglin, president of the Albany-based Commission on Independent Colleges and Universities.
Daemen College, for one, is confident it has programs that could use the tax-free incentive to bring new jobs to Western New York, said President Gary A. Olson.
“I think this will have a substantial impact on economic development in Western New York,” Olson said, “and I’m pleased the private colleges have been included as well, because we are also major players.”