State and Local Policy Initiatives Supporting Worker Cooperatives and Employee Ownership
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Administrative SupportCityNew York CityUnder this bill, the city chief procurement officer is required to submit to the speaker of the city council and publish on the mayor’s office of contract services website a report detailing the city’s procurement of goods and services from worker cooperatives during the prior fiscal year. The commissioner of the department of small business services, in consultation with the city chief procurement officer, is required to analyze worker cooperatives and the participation of worker cooperatives in city procurement and shall, by October 1, 2016, and determine the need for a citywide program to promote opportunities in city procurement for worker cooperatives.Click HerePassedProcurement Policy
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Budget InitiativeCityMadisonIn November of 2014, the City of Madison approved a budget initiative allocating $5 million to cooperative development, where $1 million would be available each year for five years starting in 2016. Since the budget approval, the amount has been reduced to $600,000 per year. City staffers are currently working with cooperative developers and other partners to figure out how to best allocate the funds. City's Website - Click HereIn Process
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City's RFP - Click Here
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Budget InitiativeCityNew York CityIn 2015, New York City Council passed $1.2 Million in funding to support the creation of jobs in worker cooperatives businesses by coordinating education and training resources and by providing technical, legal and financial assistance. The initiative will fund a comprehensive citywide effort to reach cooperative entrepreneurs, provide for the start-up of new worker cooperative small businesses and assists existing cooperatives. (2015)Click HerePassed
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Budget InitiativeCityNew York CityCity Council passed $2.1 Million in funding for the Worker Cooperative Business Development initiative to support the creation of jobs in worker cooperatives by coordinating education and training resources and by providing technical, legal, and financial assistance. The initiative will fund a comprehensive citywide effort to reach cooperative entrepreneurs, provide for the start-up of new worker cooperative small businesses, and assist existing cooperatives. The initiative will offer workforce development and concrete skills for unemployed, underemployed and discouraged workers in high-needs neighborhoods. (2016)Click HerePassed and Currently In Effect
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Budget InitiativeStateIowaIn 2012, the Iowa Economic Development Authority received an appropriation of $500,000 to establish a program to encourage the formation of ESOPs in Iowa. The money was to be used to help businesses interested in ESOPs defray the upfront costs of feasibility studies. The program provides financial assistance to businesses interested in establishing an ESOP. An applicant to the program may be approved for financial assistance in an amount equal to 50 percent of the cost incurred for obtaining a feasibility study conducted by an independent financial professional. The total amount of financial assistance provided to an applicant could not exceed $25,000. Click HerePassed
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OtherCityMinneapolis, MNProvision of services and information about worker cooperatives through the The City of Minneapolis Economic Development Department.Click HerePassed and Currently In Effect
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PolicyStateMassachusetsThe employees of any business corporation whose president, chief executive officer, or principal owners have signaled an intent to sell or transfer ownership of said business corporation or plant within the domain of said business corporation shall have the right of first refusal in bidding to purchase said business corporation through a cooperative or employee stock ownership program.Click HereIn ProcessIntroduced in 2013. In 2014 it was amended and sent to the committee on House Steering, Policy and Scheduling where it stalled and was not revisited in 2015.
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PolicyStateConnecticut Establishment of Employee Ownership Program to promote business retention and growth.Click HereIn ProcessIntroduced in 2014. The Senate passed the bill, but the House of Representatives failed to move the bill forward. Reintroduced in 2015 as H.1740. Currently in the committee on Labor and Workforce Development.
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PolicyStateCalifornia Under the California Worker Cooperative Act, California legislature officially acknowledges the benefits of the model, finding that “worker cooperatives have the purpose of creating and maintaining sustainable jobs and generating wealth in order to improve the quality of life of its worker-members, dignify human work, allow workers’ democratic self-management, and promote community and local development in this state.” Second, it allows companies to incorporate as a worker cooperative using an election under the Consumer Cooperative Corporation Law, creating a worker cooperative legal form in California.Click HerePassedWill come into effect in 2016.
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PolicyStateIowaAs part of an initiative spurred by the Governor of Iowa, Iowa offers a 50% deduction from state income taxes for the net gain from the sale of stock to an ESOP. Click HerePassed and Currently In Effect
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PolicyStateNew JerseyIn 2014, New Jersey legislature passed a bill allowing the exclusion of state capital gains tax for businesses with 500 or fewer employees if the ESOP ends up owning at least 30% of the company's shares. To qualify for the bill’s exclusion, the employer must be a NJ-based business that is non-publicly traded and has less than 500 employees. The employer’s sale of securities must be to an employee stock ownership plan, a New Jersey S corporation owned by an employee stock ownership plan, or an eligible worker-owned cooperative. Upon completion of the sale, the plan must own at least thirty percent of all the employer’s outstanding securities.Click HerePassedThe bill passed in September of 2015 and will come into effect in January of 2016.
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ResolutionCityAustin, TXAustin passed a resolution to support the development and growth of cooperative businesses including $60,000 in funding for research and education and a provision to convene stakeholders to identify ways the city can support the development of new and existing cooperative businesses.Click HerePassedThe city issued an RFP for the research and education work and has not yet issued the funding yet.
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ResolutionCityBuffalo, NYIn support of United Nations International Year of the Cooperatives(2012) Click HerePassedOne-year resolution
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ResolutionCityOaklandOakland passed a resolution in support of worker cooperatives including a provision requiring the city to provide technical assistance, information, and education on forming worker cooperatives to the broader community through its Business Assistance Center.Click HerePassed and Currently In Effect
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ResolutionCityRichmondThe former Mayor of Richmond, Gayle McLaughlin worked with City Council to allocate $50,000 in 2012 for a one-year pilot project to test strategies for worker cooperative enterprise development in the city. While the city funding was not renewed after the pilot year, two non-government projects were. Private citizens established the Richmond Worker Cooperative Revolving Loan Fund and a local foundation provided seed funding to write a business plan for a local cooperative enterprise incubator.Click HereInactive
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ResolutionCityEl Paso, TXIn support of United Nations International Year of the Cooperatives(2012) Click HerePassedOne-year resolution
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ResolutionCountyWeshtenaw County, MIIn support of United Nations International Year of the Cooperatives(2012) Click HerePassedOne-year resolution
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ResolutionCityGreenbelt, MDIn support of United Nations International Year of the Cooperatives(2012) Click HerePassedOne-year resolution
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ResolutionCityAnn Arbor, MIIn support of United Nations International Year of the Cooperatives(2012) , PassedOne-year resolution
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ResolutionStatePennsylvania Employee Ownership Month in Pennsylvania.Click HerePassed
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ResolutionStateWisconsin Employee Ownership Month in Wisconsin.Click HerePassed and Currently In Effect
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ResolutionCityMinneapolis, MNResolution establishing a Cooperatives week.Click HerePassed and Currently In Effect
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ResolutionCityBerkeley, CAResolution proposing policy recommendations to support worker cooperative developmentClick HerePassed and Currently In EffectResolution calling for City Manager to develop a worker coop ordinance to support worker coop development in distinct ways: preferential procurement, education materials, business tax and land use incentives, and changing the business permit application to allow registration as a worker coop
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PolicyStateNew YorkThe New York State Worker Cooperative Business Association (NYCWCBA) Policy RecommendationsClick HereIn ProcessRetained Earnings Tax Exemption, NYS Center for Democratic Employee Ownership – NY COM § 104, General Municipal Law § 103, “Employee Ownership Assistance” loan program – NY PBA § 1836, Employer specific skill training grant program NY EDN Law § 3032(4)(a), Charitable Bequests, Partial Interest Income Deduction
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PolicyStateMaineLD 1300, An Act To Create and Sustain Jobs through Cooperative and Employee Owned Business DevelopmentClick HereInactive1. Make employee- and cooperatively-owned enterprises (i.e. all forms of co-ops as well as ESOPs) eligible for a number of existing state loan and grant programs, assuming they meet all other criteria.
2. Establish and fund (out of existing SBDC funds) a Maine Employee Ownership Program to provide education, promotion and technical assistance for Maine business owners and employees interested in conversion to employee ownership.
3. Establish a program of matching grants of up to $5000 for business owners and employees to explore feasibility of conversion. If the conversion goes forward the state converts the grant to a loan and gets repaid.
4. Defer ME capital gains tax (which is taxed as ordinary income) for up to 10 years for any business owner who sells to employees and provides junior financing for the deal. Currently, federal tax law defers capital gains tax for closely held C-Corps that are sold to employees through either ESOP or worker co-op, and Maine conforms to this. This legislation would expand the concept, on the state level, to all business owners regardless of the current ownership structure (S-Corp, sole proprietorship, LLC).
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