INCENTIVES
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The COVID-19 crisis continues to create systemic and pronounced challenges for our society, and its impacts on the private sector are unprecedented. However, some of the economic disruption may create opportunities for companies in particular sectors, including technology, manufacturing, e-commerce and more.
Policy makers recognize the importance of supporting the growth of these sectors domestically – whether via onshoring/reshoring or through the support of home-grown companies. This support can take the form of tax incentives and other forms of public sector support.
New York State Empire State Development Corporation (ESD) has several high-impact programs, including a new grant program to assist companies transitioning to PPE manufacturing, as well as their existing Excelsior Jobs Program. Across New York State, Industrial Development Agencies (IDAs) can be a local source of high-impact discretionary financial assistance. For businesses considering New York City locations, the recent legislative renewal of key as-of-right incentive programs such as REAP and ICAP will be pivotal for assisting the private sector in growing its way out of the COVID-19 recession.
Companies which are smart about using resources wisely – operating more efficiently, marketing and branding more effectively – will want to consider incentives as a sound component of a recession-era business plan, one which positions them for near-term growth.
NEW YORK CITY
BUSINESS INCENTIVE PROGRAMS
Business Incentive Rate (BIR)
Reduction of the delivery components of electricity bills by 30-35% for commercial tenants and industrial users. Benefits can last between five and fifteen years; duration is determined based on customer’s usage. Companies must also be applying for or receiving another city or state benefit of equal or greater value than the BIR benefit, such as IDA incentives, ICAP, ECSP, or Excelsior Jobs Program.
Commercial Expansion Program (CEP)
Property tax abatement up to $2.50/sf for physical improvements for commercial and industrial tenants with new, renewal, and expansion leases. Commercial businesses and not-for-profit organizations are eligible for benefits up to 5 years; manufacturers are eligible for benefits up to 10 years. The abatement is available in Upper Manhattan and the outer boroughs. Longer leases are required for larger companies.
Commercial Rent Tax Reduction (CRT)
Five-year reduction in commercial rent tax for qualified tenants located in Lower Manhattan. The reduction is available as-of-right for all World Trade Center site leases and Lower Manhattan retail leases.
Commercial Revitalization Program (CRP)
Real estate tax abatement up to $2.50/sf for commercial tenants in eligible buildings in Lower Manhattan. Benefits last between three and five years, depending on the lease duration. Buildings must have been built before 1975 and be used as office or retail space. Program participants qualify as-of-right for CRT reduction benefits.
Excelsior Jobs Program
Provides job creation, investment, and R&D financial incentives to companies in strategic sectors. Companies can qualify for four fully refundable tax credits over a benefit period of up to 10 years. The program is available to companies that will create or retain jobs and make significant capital investments. Companies receiving benefits must meet and maintain established job and investment thresholds throughout the program term. Eligible industries and activities include Scientific R&D, Software Development, and Life Sciences
IDA Industrial Program
Tax incentives to mitigate costs of constructing, renovating, and owning industrial facilities. Eligible companies include industrial businesses or developers seeking to purchase equipment and/or acquire, construct, or renovate facilities for industrial uses. Benefits include real estate tax reduction, mortgage recording tax deferral, and sales tax exemption. Benefits may be more substantial for projects in Industrial Business Zones (IBZs).
IDA Commercial Program
Tax incentives for commercial office developers seeking to develop projects in transit-rich locations outside of Manhattan. Benefits include real estate tax reduction, mortgage recording tax deferral, and sales tax exemption. Minimum investment requirements apply. Projects which have identified anchor tenants may be prioritized.
Industrial & Commercial Abatement Program (ICAP)
Abatement of property tax increases resulting from renovation or construction worth at least 30% of a property’s value. Benefits are available for renovation or construction anywhere in NYC except certain parts of Manhattan. Full abatement for renovations can last up to eight years with a gradual four-year phase-out; full abatement for new construction can last up to four years with a gradual four-year phase-out. Longer-term benefits may be available in special areas (primarily in Upper Manhattan and in boroughs outside Manhattan).
NYC Biotech Tax Credit
Refundable tax credit for facilities, operations, and training for small biotech companies. Funding targets expanding firms with up to $250,000 per year to eligible firms. Qualified emerging technology companies (QETCs) anywhere in NYC are eligible for up to three consecutive years. The Department of Finance determines the size of the credit against a company’s General Corporation Tax and Unincorporated Business Tax.
Energy Cost Savings Program (ECSP)
Energy cost rebate for businesses that (a) relocate to, (b) make improvements to property in, or (c) lease space in previously improved buildings in Upper Manhattan or the outer boroughs. ECSP can reduce the costs of the delivery component of electricity bills by 45% and the delivery component of natural gas bills by 35%. Full benefits last eight years, followed by a four-year gradual phase out.
The Lower Manhattan Energy Program (LMEP) is very similar to the ECSP program, and offers a rebate of up to 45% of electricity delivery costs. The program is available to commercial tenants in buildings with recent renovations worth at least 30% of the property value or 20% for a city- or state-owned building. Benefit duration is the same as that of the ECSP program.
Relocation and Employment Assistance Program (REAP)
Tax credit of up to $3,000 per relocated or created job for up to 12 years. An eligible business must relocate from outside NYC or from below 96th St. in Manhattan to a location in Upper Manhattan or in boroughs outside Manhattan. Certain minimum improvement requirements of the relocation premises apply.
The Lower Manhattan Relocation and Employment Assistance Program (LMREAP) is available to certain eligible businesses relocating from outside of NYC to Lower Manhattan. Tax credit benefits are the same as the standard REAP program. Eligible premises must be nonresidential and must have been improved by construction or renovation. Minimum requirements apply to lease expenditures and relocation workforce.