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In the closing days of the Albany legislative session, State Assembly member Grace Lee led a successful charge to renew a tax credit that aims to spur business to relocate to Lower Manhattan from outside the five boroughs.
The Lower Manhattan Relocation Employment Assistance Program (LM-REAP) offers firms other than retail establishments or hotels an annual tax credit of up to $3,000 per employee (capped at 100 staff members) for as long as 12 years, in exchange for moving their operations to the Downtown community. Translating into a possible subsidy of $3.6 million for eligible businesses, this policy was originally implemented in 2005 by the late Sheldon Silver, then Speaker of the State Assembly, as part of what he called “a Marshall Plan for Lower Manhattan,” to aid in the community’s economic recovery from the devastation of the terrorist attacks of September 11, 2001. It has been renewed several times since then, but was scheduled to lapse this year.
On June 10, the Assembly passed a bill renewing the program through 2030, at Ms. Lee’s urging, based in part on the rationale that the crisis in commercial real estate that followed the Covid pandemic makes it essential. In 2024, Lower Manhattan saw its worst leasing year on record, with activity 40 percent below the five-year average, and office vacancies reaching 24 percent, corresponding to more than 20 million square feet currently available for lease. These benchmarks surpass the repercussions of both September 11 and the 2008 financial crisis.
“With office vacancies at record highs and commercial leasing activity at historic lows, Lower Manhattan is at a critical juncture,” Ms. Lee said. “Renewing and expanding LM-REAP is about meeting this moment with real solutions – bringing businesses back, creating jobs, and supporting the small businesses that rely on a vibrant commercial core.” She added that the expected beneficiaries are not just the firms that will be direct recipients of LM-REAP subsidies, but nearby small businesses, such as restaurants, that depend on foot traffic from crowded office towers for their survival.
These sentiments were echoed by Jessica Lappin, president of the Downtown Alliance, who called the legislation “a big victory for Lower Manhattan at a pivotal time” and “a smart investment in the future of our neighborhood.”
On June 11, an identical measure passed the State Senate. This will go to the desk of Governor Kathy Hochul for her signature or veto.
Matthew Fenton
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