Lower Manhattan Incentives
Commercial Real Estate News
LOWER MANHATTAN INCENTIVES By Lois Weiss Wednesday, September 07, 2005
The Alliance for Downtown New York has launched a technical assistance program for those businesses seeking to take advantage of the new Lower Manhattan commercial incentives developed by the state and city of New York. The Downtown Alliance has assigned a dedicated team and a help line to help prospective tenants understand and take advantage of these new incentives. Governor George E. Pataki signed legislation into law to provide significant tax incentives to attract new businesses and encourage existing businesses to recommit their operations and employees in Lower Manhattan, promoting economic growth downtown as the area continues to recover from the impact of September 11, 2001. The incentives are already producing tangible results: the Horn Group, an integrated technology communications firm, has committed to lease over 10,000 sf of office space at 55 Broad Street, and expects to triple their number of employees in the next two years. The legislation permanently eliminates the commercial rent tax at the World Trade Center area, and adds a five-year exemption from commercial rent taxes for new and renewed leases for property located in the New York City Liberty Zone but outside the World Trade Center area. Additionally, it permanently eliminates the tax for all retail tenants in the area generally south of Murray Street between South and West Streets. The legislation also provides State and local sales and compensating use tax exemptions for purchases related to the outfitting, furnishing or equipping of commercial office space in leased premises of buildings at the World Trade Center site and in Battery Park City when tenants make at least a ten-year commitment. Other areas in Lower Manhattan will have a similar exemption, with certain restrictions. The legislation also provides for reduced rental rates via PILOT (payment in lieu of taxes) abatements of $3.80 a foot for tenants that occupy the first 750,000 sf of 7 World Trade Center and $5 a foot for the first 750,000 square feet of the Freedom Tower and the World Trade Center site. The legislation also calls for improvements to the Lower Manhattan Relocation Employment Assistance Program, which will offer refundable tax credits up to $3,000 per employee for 12 years to businesses with a presence in Manhattan, that relocate employees to Lower Manhattan from outside of New York City. These tax credits can be used to reduce New York City taxes such as the general corporation tax, banking corporation tax, unincorporated business tax, or the utility tax. The Downtown Alliance has also partnered with the Real Estate Board of New York and the Association for a Better New York to produce and distribute a comprehensive guide that outlines the various incentive programs including the commercial rent tax abatements, sales tax exemptions, World Trade Center and 7 World Trade Incentives, and an expansion of the Lower Manhattan Relocation Employment Assistance Program, or LMREAP. The details are as follows: Commercial Rent Tax Exemption Permanently eliminates the tax for all tenants at the World Trade Center site; permanently eliminates the tax for all retail tenants in the area south of Murray Street; provides a five-year tax exemption for commercial companies in buildings elsewhere south of Canal Street. Exemption from Sales and Use Taxes Provides sales-tax exemptions for office furniture, equipment and build-out costs for businesses that will be leasing space at the World Trade Center site and at 7 World Trade Center; provides sales-tax exemption for site build-out costs to businesses in the area south of Murray Street; exemption for purchases of goods or services from beginning of lease through first year of lease. World Trade Center and 7 World Trade Incentives Provides a $5-per-square-foot incentive and a $3.80-per-square-foot incentive for the first 750,000 square feet of commercial space leased at the World Trade Center site and at 7 World Trade Center, respectively. Lower Manhattan Relocation Employment Assistance Program (LMREAP) Amends the program so that businesses with operations in Manhattan that relocate employees from locations outside of New York City to Lower Manhattan (south of Houston Street) will now be eligible for the 12-year $3,000-per-employee tax credit for those relocated employees. 421g Tax Exemption Tax incentives for converting commercial buildings for residential or mixed use expire June 30, 2006, one year earlier than originally scheduled. The incentives guide is available on www.downtownny.com via PDF and in hard copy.