The push by real estate dealmakers for Albany to renew a controversial tax-credit critical to saving Downtown Manhattan turned into a real “cliffhanger” – but appears poised for approval, The Post has learned.
The citywide Relocation Employment Assistance Program and a similar one specifically for Lower Manhattan, known as LM-REAP, provide tax credits of up to $3,000 per employee to companies that relocate from out of the city or from parts of Manhattan to designated areas in the outer boroughs or to Downtown Manhattan.
Tens of thousands of jobs and the future of scores of Lower Manhattan office buildings would be at risk if the little-known REAP programs were not renewed when they expire on June 30, according to landlords and business advocates.
The measures were left out of the state’s budget plan announced in April and appeared doomed as lawmakers in the state Senate and Assembly were set to escape for their summer break.
But there was movement on an extension over the weekend, a knowledgeable Albany source told The Post on Monday.
“It finally got key approvals in the Assembly, and it’s looking good tomorrow in the Senate, which was where the hangup was,” the source said.
Michael Gianaris, the State Senate Deputy Majority Leader from Queens, among others, had argued that REAP cost the city too much in foregone taxes — up to $33 million by 2033, according to the Department of Finance — to justify the economic benefits the additional jobs would bring.
But renewing the program “is critical to COVID recovery, preserving affordable office space and promoting job growth in small and medium-size businesses,” argued a rep for the Alliance for Downtown.
Supporters say LM-REAP costs the city a negligible $5 million a year — a pittance weighed against the tax benefits it helps generate in property and incomes taxes, although those figures are harder to quantify.
REAP began in 1987 to stem an exodus of tenants to New Jersey. The Lower Manhattan plan, launched in 2003, is credited with supporting 16,000 city jobs and helping to lease hundreds of thousands of square feet of office space in a market that’s had more downs than ups since 9/11.
One source predicted a fresh wave of flight to New Jersey if REAP is allowed to die.
“They’re actively recruiting New York businesses with programs offering up to $8,000 per job and $250,000 relocation grants. It’s clear that if New York steps back, New Jersey will step in,” the source said.
The REAP renewals, as well as creation of a new program called the Relocation Assistance Credit for Employees (RACE), are backed by Gov. Kathy Hochul.
But fearing that the measures would be allowed to die, local congressional representatives threw their voices into the fray.
Gregory Meeks, Grace Meng, Ritchie Torres, Thomas Suozzi and Adriano Espaillat wrote to State Senate Majority Leader Andrea Stweart-Cousins and Assembly Speaker Carl Heastie that with “record high office vacancies downtown, “Now is not the time to end LM-REAP.”
The REAP programs have also brought jobs to Dumbo, MetroTech and the Navy Yard in Brooklyn and to Long Island City in Queens.
But the heat’s mostly on Lower Manhattan, where more than 20% of nearly 90 million square feet of offices in the nation’s second-largest commercial district stand vacant — and it might get worse.
“I believe the numbers being cited for current and future vacancies are too low, especially on Water Street,” said one Downtown executive who asked for anonymity told The Post. “The REAP program is essential to keeping downtown competitive.”
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