Controversial tax credit to save Downtown Manhattan on verge of getting renewed: sources

The fate of a crucial tax credit program that supports job growth and office leasing in Downtown Manhattan was hanging in the balance, but recent developments suggest that it is on track for approval. The Relocation Employment Assistance Program (REAP) and its Lower Manhattan counterpart, LM-REAP, offer tax credits of up to $3,000 per employee to companies relocating to designated areas in the outer boroughs or Downtown Manhattan.

Landlords and business advocates warn that the expiration of these programs on June 30 could put tens of thousands of jobs and the future of Lower Manhattan office buildings at risk. Despite being left out of the state budget plan, there has been progress towards extending the programs, with the Assembly giving key approvals and the Senate expected to follow suit.

State Senate Deputy Majority Leader Michael Gianaris has raised concerns about the cost of REAP in foregone taxes, but supporters argue that the economic benefits outweigh the expenses. The Alliance for Downtown emphasizes the importance of renewing the program for COVID recovery, preserving affordable office space, and promoting job growth in small and medium-sized businesses.

Since its inception in 1987, REAP has helped prevent tenants from leaving for New Jersey, while the LM-REAP launched in 2003 has supported city jobs and office leasing in Lower Manhattan. Renewing the program is seen as crucial to preventing a potential exodus to New Jersey, where incentives for businesses are enticing.

Governor Kathy Hochul supports renewing REAP and creating a new program called the Relocation Assistance Credit for Employees (RACE). Local congressional representatives have also voiced their support for keeping LM-REAP alive, citing high office vacancies in Downtown Manhattan as a reason to maintain the program.

While the REAP programs have also benefited other areas like Dumbo, MetroTech, and Long Island City, the focus remains on Lower Manhattan, where office vacancies are at a record high. Business executives stress the importance of the REAP program in keeping Downtown Manhattan competitive and attracting businesses to the area.

In conclusion, the renewal of the REAP programs is crucial for the economic vitality of Downtown Manhattan and the city as a whole. With key approvals in the Assembly and potential support in the Senate, it seems that the tax credit program will continue to support job growth and office leasing in the heart of New York City.