Leasing and Financial Incentives | Downtown Alliance

Leasing and Financial Incentives

June 2017 Update:  Governor Cuomo has signed a bill which extends all tax incentive programs affecting properties in Lower Manhattan for three more years.

For an estimate of the value of these benefits, use our business calculator.

Use the link below to download summary of all available incentives.

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Commercial revitalization program-real estate tax abatement and commercial rent tax special reduction

The Commercial Revitalization Program (CRP) was developed with the goal of rehabilitating older building stock in Lower Manhattan. The New York City Department of Finance provides benefits under CRP through two tax incentives: $2.50 real estate tax abatement and a Commercial Rent Tax Special Reduction. These benefits apply to nonresidential or mixed use premises located in designated abatement zones. Applicants are also required to make certain minimum expenditures to improve the eligible premises. For both portions of CRP, the following guidelines apply:

  • Tenants must relocate from within Manhattan to be eligible. Relocations from outer boroughs are ineligible.
  • Tenants can only receive benefits under CRP once, even if they move to a new location. However, the benefit may be continued or increased if additional space is leased.
  • Subleases are not eligible.
  • To access the website for the Commercial Revitalization Program, click here.
  • To access the application for the Commercial Revitalization Program, click here.
  • These benefits taper off in the last two years of the benefit period, and are reduced to 2/3 of the benefit in the second-last year, and 1/3 in the last year. Visit http://www.downtownny.com/why-lower-manhattan/incentives-calculator, or email abaumann@downtownny.com to explore the value of these programs.

Real Estate Tax Abatement

Under CRP, the Department of Finance offers a $2.50 per square foot real estate tax abatement for up to 5 years for commercial tenants that locate in non-residential pre-1975 buildings in Lower Manhattan and make improvements to their space. Leases must commence prior to March 31, 2021.  The premises must be located south of Murray Street and the Brooklyn Bridge, west of South Street and east of West Street.

  • Leases may be 3, 5, or 10 years, depending on the number of employees. Firm with less than 125 employees may have 3 or 5 year leases (or longer) and will receive the benefit for 3 to 5 years, depending on the length of lease. Firms employing over 125 people must have 10 year leases, and will receive the benefit for 5 years.
  • Tenants receive the benefit as a pass-through from their landlord and must jointly apply for the tax abatement with their landlord.
  • Expenditures required are based on the number of employees and length of lease, and must be a minimum of $5, $10, or $35 dollars per square foot of net leasable space.
  • Expenditures must be documented and submitted to the Department of Finance.
  • Tenants must submit their application within 180 days of lease commencement.

For a list of buildings that qualify for the real estate tax abatement portion of CRP, click here.

For a map of buildings that qualify for the real estate tax abatement portion of CRP, click here.

Commercial Rent Tax Special Reduction

The CRT portion of CRP offers an exemption on the commercial rent tax, a tax paid by retailers and commercial businesses with an annual rent of over $200,000 per year.  Non-profit companies are not eligible because they do not pay commercial rent tax. 

The tenant must be located in a non-residential building south of Canal Street, and leases must commence prior to June 30, 2020.  Qualifying businesses stand to receive an exemption for up to five years on the tax, which is 6% of the base rent.

Industrial & commercial abatement program (ICAP)

ICAP, administered through the New York City Department of Finance, is a benefit for developers that provides a partial exemption from or abatement of property taxes for up to 25 years for eligible industrial and commercial buildings south of Murray Street that are built, modernized, rehabilitated, expanded, or otherwise physically improved. Eligibility for ICAP benefits may also allow a participant to receive reduced energy rates through the Lower Manhattan Energy Program (LMEP-see below for more information).

  • Developers of commercial projects must make expenditures of at least 30% of the assessed value of the project in the year the building permit is issued.
  • New commercial construction receives a full exemption on improvements for 11 years, followed by a 4-year exemption period with benefits declining by 20% per year.
  • Commercial renovation projects in Lower Manhattan are eligible and receive a full exemption on the increase in assessed value due to the improvements for 8 years, followed by a 4-year exemption period with benefits declining by 20% per year.
  • For new commercial construction, retail up to 10% of the total property is eligible for the standard 25-year benefit schedule and retail above 10% receives a modified 15-year benefit schedule. For renovation projects, when retail makes up more than 5% of the total property, the retail portion of the building is ineligible for the benefit.
  • Two applications are required--a preliminary application and a final one. The preliminary application must be filed before building permits are issued.
  • Preliminary applications must be filed before building permits are issued and before February 28, 2022.

To access the application for ICAP, click here.

Lower Manhattan Energy Program

The Lower Manhattan Energy Program (LMEP) is administered by the New York City Department of Small Business Services (SBS). The program provides qualified buildings energy at discounts of up to 45% off of standard rates. Benefits, which are available for 12 years, are provided to property owners, who may chose to pass along savings to their tenants (government agencies, personal service providers, public benefit corporations, and retailers are not eligible).

Eligibility:

  • The eligibility area for LMEP is Lower Manhattan south of Murray and Frankfort Streets.
  • To qualify, a building owner must make building improvements under the Industrial & Commercial Incentive Program (ICAP) or get approval from the New York City Industrial Development Agency (IDA). Improvements must meet a minimum investment threshold of 30% of the property's assessed value.
  • City and state-owned buildings that have been improved are also eligible.
  • The building owner or developer must submit an LMEP application to SBS before a building permit is issued for the construction or renovation.
  • Tenants -- tenants in eligible buildings do not need to submit an application to receive LMEP benefits. Instead, tenants can request benefits directly from their landlords. *When negotiating a lease, tenants should confirm the status of the building either with the building manager or the Department of Small Business Services.

The application deadline was extended from June 30, 2017 to June 30, 2020.  

To view a map of participating buildings for the LMEP program, click here.

To find out more information about LMEP on the New York City Business Express website, click here.

Lower Manhattan Relocation Employment Assistance Program (LM-REAP)

The LM-REAP-EB and SEB programs, administered by the New York City Department of Finance, provides a $3,000 tax credit per employee, per year to businesses that relocate to Lower Manhattan from outside of the 5 boroughs. The credit may be taken against the NYC General Corporation Tax, the Banking Corporation Tax, the Unincorporated Business Tax, and / or the Utility Tax.

Companies must have been in business for at least 24 months before relocating or expanding to Lower Manhattan and must move at least one employee to the Lower Manhattan location from offices outside the city. If you are new to NYC, you qualify as an Eligible Business (EB). If you already have a Manhattan presence, but are moving employees from outside NYC to Lower Manhattan, you qualify as a Special Eligible Business (SEB).

  • Companies must relocate to a non-residential building that has been improved by construction or renovation, or must sign a lease of at least three years and spend $25 per square foot on improving their space themselves.
  • Retail businesses and hotels are not eligible.
  • The tax credit is capped at either 100 jobs, or two times the total employment prior to the relocation, whichever is greater.
  • Applications are due by June 30, 2020.  

For information on the LM-REAP for Eligible Businesses (EB), please click here.

For information on the LM-REAP for Special Eligible Businesses (SEB), please click here.

Sales Tax Exemption

This program, administered by the New York State Department of Taxation and Finance, provides an exemption from the sales tax on goods purchased for the build-out of office space in Lower Manhattan (south of Murray Street).

  • Lease terms must be at least 10 years. Leases must commence prior to September 1, 2020 for most tenants in Lower Manhattan south of Frankford and Murray Streets, with benefits expiring December 1, 2021. Leases must commence by September 1, 2022 for tenants in Brookfield Place, World Trade Center or Battery Park City, with benefits expiring December 1, 2023.
  • Businesses that locate in the World Trade Center, 7 World Trade, Brookfield Place, or Battery Park City, can receive an exemption on sales tax for all goods purchased, including personal property such as furniture and equipment.
  • Businesses located in all other areas south of Murray Street can receive an exemption only on those goods purchased for a build-out, which will result in permanent capital improvements to the space. Personal property, furniture, and other non-permanent goods do not qualify.
  • Retail businesses are not eligible.

To download a PDF with more information on the Sales Tax Exemption program, follow this link: http://www.tax.ny.gov/pdf/memos/sales/m14_10s.pdf.