Officials say city should reinstitute REAP to compete with NJ

Real Estate Weekly, July 9, 2003 by Elaine Misonzhnik

It seems New York City just can't get a break. Last week, as the city's Relocation and Employment Assistance Program expired, New Jersey Governor James McGreevey announced reinstitution of the state's own incentive plan. With New York still suffering from the economic downturn and Lower Manhattan construction projects up in the air, the situation could turn into one fierce battle for corporate tenants.

"With the Business Employment Incentive Program, New Jersey can give back to a company that relocates there up to 80% of the income taxes paid by all of the employees that were moved," said Steven Spinola, president of the Real Estate Board of New York. "I think it is critical that we reinstitute our program, without which we cannot continue to be competitive."

In fact, Mayor Bloomberg was set on reviving the REAP, when a disagreement with the Assembly Speaker Sheldon Silver sidetracked the process. While Bloomberg would like to offer incentives to any company that moves into one of the designated economic development areas, Silver is against giving money to businesses that want to leave Downtown Manhattan.

"The speaker believes that now is not the time to give businesses in the Ground Zero area incentives to leave," said a spokesperson for the Speaker, Eileen Larrabee. "There are still active negotiations, however, and the speaker is hopeful that this issue c an be resolved and the REAP program re-instituted."

Spinola hopes that this will be the outcome as well, though he admits that it is better to inadvertently reward businesses that leave Lower Manhattan for Brooklyn or Queens than lose them altogether. Already, several large New York companies are looking at space in Jersey City because of the financial benefits.

"I am confident that the Speaker and the Mayor will work out their differences and pass a bill retroactively," Spinola said. "I am convinced this administration is committed to being very, very competitive. But I believe that if a company is moving to the outer boroughs, they've already made a decision that they are not prepared to pay for Manhattan. And then the choice becomes outer boroughs versus New Jersey and without the incentive program we lose them."

Meanwhile, the folks at the Economic Development Corporation insist that REAP will be coming back as early as the fall.

"We are working with the legislature right now and are confident that REAP will be re-instituted," said a spokesperson for the agency. "It's very important for the health of the city."

The REAP program offered businesses that moved into the outer boroughs or north of 96th Street in Manhattan $3,000 in tax credits per employee annually for 12 years.