INCENTIVE PROGRAMS
The City of New York offers various incentive programs to bolster business activity in select neighborhoods. These incentives programs substantially reduce the cost of commercial real estate acquisitions in Lower Manhattan, Harlem, Queens, Brooklyn and The Bronx.
LOWER MANHATTAN
Commercial Revitalization Program (CRP)
- Cost Savings: Up to ten dollars per SF over five years
- Time Frame: 3 or 5 years
- Advantage: Reduced rent
The CRP incentive is disbursed as a property tax abatement to the landlord and then passed through to the commercial tenant in the form of a reduced rent. The abatement lasts for either three years or five years, depending on the length of the lease. On a five year lease, the CRP incentive is worth $2.50 per square foot for each of the first three years; then $1.67 in the fourth year and $.83 in the final fifth year. On a three year lease, it is worth $2.50 per square foot during each of the three years. For commercial leases extending beyond five years, the tenant receives the CRP benefit during the first five years of the lease. To qualify for CRP, benefit buildings must be located in the Lower Manhattan abatement zone; the property must receive a base level of capital improvement and the landlord must participate in the program.
CRP is set to expire on March 31, 2007. However, negotiations are in progress to renew the program.
Lower Manhattan Energy Program (LMEP)
- Cost Savings: Electricity savings of up to 45%
- Time Frame: Up to 12 years
- Advantage: Subsidized electricity costs
LMEP can save tenants up to $1.00 per rentable square foot "RSF" in electricity costs. Dozens of Lower Manhattan commercial buildings participate in LMEP. Buildings must be renovated or newly built in order to qualify for the program. The incentive takes the form of a rebate issued from the utility to the landlord and then disbursed to the tenant. The program lasts up to twelve years and applies to both direct leases and subleases.
Lower Manhattan Relocation Assistance Program (LMREAP)
- Cost Savings: Tax credit of $3,000 per employee
- Time Frame: Up to 12 years
- Advantage: Reduced net effective rent, the amount of savings is determined by the number of employees relocated to the acquired space.
LMREAP provides a $3,000 tax credit per employee for companies that relocate staff to Lower Manhattan from outside New York City. This tax credit is for each job relocated or added to Lower Manhattan within 5 years of the initial relocation. The duration of the credit is 12 years. To be eligible, companies must be in business for 24 months before relocating, must not have operations in NYC prior to the relocation and must either purchase a property or sign a lease with at least a three year term. The program is applicable to Lower Manhattan South of Houston Street.
Commercial Rent Tax Special Elimination and Reduction
- Cost Savings: Variable
- Time Frame: 5 to 12 years
- Advantage: Rent tax waiver
The New York City Department of finance has eliminated Commercial Rent Tax for all new leases signed at 7 World Trade Center, 130 Liberty Street and the World Trade Center Site. All leases must be direct (no sublease) and have a term of at least five years.
The Commercial Rent Tax exemption also applies to retail leases south of Murray Street and between West and South Streets. All leases must be direct (no sublease) and have a term of at least five years.
NORTHERN MANHATTAN (NORTH OF 96TH STREET), BRONX, QUEENS AND BROOKLYN
Commercial Revitalization Program (CRP)
- Cost Savings: Up to ten dollars per SF over five years
- Time Frame: 3 or 5 years
- Advantage: Reduced rent
See "Commercial Revitalization Program" above that is applicable to Lower Manhattan.
Energy Cost Savings Program (ECSP)
- Cost Savings: Electricity savings of up to 45%
- Time Frame: Up to 12 years
- Advantage: Subsidized electricity costs
Very similar to the Lower Manhattan Energy Program (LMEP). See "LMEP" above..
Relocation and Employment Assistance Program (REAP)
- Cost Savings: Tax credit of $3,000 per employee
- Time Frame: Up to 12 years
- Advantage: Reduced net effective rent, the amount of savings is determined by the number of employees relocated to the acquired space.
REAP is a sister program to LMREAP. REAP provides a $3,000 tax credit per employee for companies that relocate staff to The Bronx, Queens, Brooklyn or Manhattan (North of 96th Street). The relocation must be from Manhattan, South of 96th Street or North of Canal Street or from outside New York City. This tax credit is for each job relocated or added to The Bronx, Queens, Brooklyn or Manhattan within 5 years of the initial relocation. The duration of the credit is 12 years. To be eligible, companies must be in business for 24 months before relocating and must either purchase a property or sign a lease with at least a three year term.
