With Silver’s Ouster, Downtown Could Lose Its Preferential Treatment

The end of the legislative session in Albany has brought much wrangling over tax breaks for real estate developers. But little attention has been paid to another group of expiring subsidies: tax breaks for businesses that move downtown. Now that former Assembly Speaker Sheldon Silver is no longer a powerful man in Albany, the downtown district he represented could lose its preferential treatment.

For years, the government has sought to draw business to lower Manhattan, through an alphabet soup of subsidy programs: the CRP (Commercial Revitalization Program), the LMEP (Lower Manhattan Energy Program), LM-REAP (the Lower Manhattan Relocation Employment Assistance Program), and more.

These programs are mostly paid for by New York City taxpayers, and are authorized by Albany. The government does not track the total cost of programs that benefit downtown, but Rahul Jain of the Citizens Budget Commission estimates the total could be more than $150 million this year. The commercial office space sales tax exemption for Lower Manhattan alone costs $8 million a year, according to the Office of Management and budget.

The incentives seem to be having an effect: the Downtown Alliance reports that in 2014, companies leased 6.8 million square feet of office space. That includes Saks, Time Inc., and Bank of New York Mellon. Last week, 20^th Century Fox and News Corporation announced they are in talks to take space in a not-yet-built tower at the World Trade Center.

But the fall of Sheldon Silver could stymie efforts to extend the CRP, LMEP, and LM-REAP, which all expire at the end of June.

“Oh, I'm very concerned,” said Ann Kayman, CEO of the New York Grant Company, a subsidy consultant, who called Silver “a go-to resource for the Downtown Alliance and others who knew they had a friend for Lower Manhattan in Albany.”

Asked this week whether he supported continued incentives for businesses to move downtown, Mayor Bill de Blasio was noncommittal. Later, a spokesperson wrote in an email:

“A strong, diverse, and equitable urban economy depends on thriving businesses and quality jobs. Incentives can be powerful tools to spark economic growth and advance this agenda when they efficiently deliver meaningful support to the right businesses and communities—as the lower Manhattan programs did in the years following 9/11 to help rebuild a thriving downtown. We look forward to discussions on a holistic, effective incentive portfolio that can have the greatest economic impact across the five boroughs in our rapidly changing 21st century economy.”