The essential tax credits aimed at revitalizing downtown have been revised. A wire vote by state senators on Wednesday resulted in new incentives designed to attract businesses from outside the state—marking the first instance of such offerings.
Extensions to the state’s relocation and employment assistance program, known as Reap and LM-Reap, drew criticism from some lawmakers who considered them unnecessary gifts from the city.
A recent prediction suggested a positive outcome for the vote, even though initial rejection seemed likely. A real estate executive mentioned, “Downtown might be finished without a fight,” hinting at optimism.
The program, established in the 1980s to stop businesses from leaving New Jersey, initially provided a yearly tax credit of up to $3,000 per employee for companies relocating from the city or specific areas of Manhattan to designated zones in surrounding districts.
LM-Reap, launched in 2003 in response to 9/11, similarly supported businesses moving to downtown Manhattan. It was believed to have safeguarded 16,000 jobs and facilitated leases on hundreds of thousands of square feet in an uncertain market.
When asked about Reap Tenants, the landlord was tight-lipped. Sources indicated its impact was widespread, including areas from the World Trade Center to older building fronts.
Supporters argued that if LM-Reap were to expire on June 30, the livelihoods of tens of thousands and the viability of Manhattan’s older office buildings could be jeopardized.
The measure seemed bleak, particularly after its removal from the state budget earlier in April, with lawmakers set to be out for the summer.
The proposal had an easy passage through Congress, settling at 143-4, but remained pending in the Senate.
Supported by Governor Kathy Hochul, the update was also backed by the downtown Alliance Business Advocacy organization and certain U.S. representatives, who cautioned, “now is not the time to end LM-Reap.” However, Deputy Prime Minister Michael Jayanalis raised concerns over the tax burden, estimating a hit of $33 million in 2033.
Jayanalis reportedly had extensive discussions, as a source noted, “from Mayor Adams, who shared positive exchanges with him this week, from the real estate sector, and from Mayor Adams.”
The Senate ultimately voted 41-18, with Jayanalis casting a supportive vote.
Additionally, lawmakers introduced a new initiative named Employee Relocation and Employment Support, offering an annual tax credit of $10,000 per employee for businesses coming from outside New York to any area within the city.
