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New law aims to lure business to WTC

BY PRADNYA JOSHI | STAFF WRITER

September 1, 2005

Gov. George Pataki yesterday signed into law a host of new tax breaks to lure businesses to the World Trade Center and downtown.

Assembly Speaker Sheldon Silver (D-Manhattan) earlier this year had chided political leaders for allowing downtown development to wallow, noting that too much attention was going to the now-failed West Side stadium for the New York Jets and the 2012 Olympics. Instead, he sponsored a bill and called for a "Marshall Plan" to focus incentives on downtown rather than the far West Side of Manhattan, which is a key growth area for the Bloomberg administration.

Mayor Michael Bloomberg also was behind the lower Manhattan plan, even though the city will be bearing the bulk of the cost.

"We're continuing to make the investments that are attracting new businesses downtown," Bloomberg said. "The result is lower Manhattan is thriving."

The new law spells out five incentives aimed at bringing businesses back to lower Manhattan. All tenants south of Canal Street will no longer have to pay a 3.9 percent commercial rent tax for the next five years, and companies renting space at the World Trade Center site will have that tax permanently eliminated. For example, if a business pays $100,000 a year in base rent, it will save $3,900 a year in commercial tax.

However, the biggest potential savings come from the relocation program, said Parry Gosling, managing director of Cushman & Wakefield Consulting Group, a real-estate brokerage firm.

Under the plan, companies adding jobs south of Houston Street will get $3,000 a year per employee tax credit for the next 12 years. Companies must show they are increasing their job base by at least 25 percent, Gosling said.

The other parts of the law provide a $3.80-a-square-foot incentive for companies leasing space in 7 World Trade Center and $5 a square foot for companies renting elsewhere at the trade center. Developer Larry Silverstein has pledged to match those discounts. Businesses also can get sales-tax exemptions on office furniture and equipment that they buy to put into space at Ground Zero or Battery Park City.

But some watchdog groups say that the incentives are excessive.

"It's been demonstrated that tax incentive programs don't provide enough benefit for [companies] to really alter their investment and location decisions," said Dan Steinberg, research analyst for Good Jobs New York, a nonprofit that monitors economic development plans. "The most effective method of nurturing economic growth in lower Manhattan is to address infrastructure, security and community amenities."

But Gosling and others say that since the bill was passed in June, businesses are expressing a lot of interest in the downtown incentives. Yesterday, political leaders appeared with a public relations and communications firm serving technology companies, the Horn Group, relocating to 55 Broad St. as of Nov. 1.

The San Francisco-based firm opened up an office in midtown Manhattan in November 2002, but is growing and was looking for new space, said Christopher Faust, managing director. The firm plans to triple its New York employment from 15 to about 45 in the next two years.