Programs that offer tax credits to firms that meet certain
criteria are scrutinized
By Jimmy Vielkind and Katie Honan
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 14, 2020).
A year after Amazon.com Inc. abandoned its plans to build a
campus in Queens, state lawmakers who opposed the project are
looking to rein in the subsidy programs that New York City
officials used to lure the company.
Senate Deputy Majority Leader Michael Gianaris, a Democrat whose
Queens district included the project site, said he is drafting
legislation to restructure two city programs that offer companies
tax credits for relocating jobs or undertaking construction in
neighborhoods outside the core of Manhattan.
The deal with Amazon would have directed up to $1.3 billion in
city tax incentives to the company over the course of 15 years to
develop a campus in Queens's Long Island City that would employ up
to 40,000 people.
"These programs are broken and represent a lot of what's bad
about economic development policy," the senator said in a recent
His prime target is the city's Relocation and Employment
Assistance Program (REAP), which is set to expire on June 30 unless
it is reauthorized by state lawmakers.
The program offers companies up to a $3,000 annual tax credit
for each employee hired in designated neighborhoods outside the
core of Manhattan.
Nearly 200 firms received a total of $33 million through the
program in 2019, city budget documents show.
Under the program, Amazon was promised nearly $900 million of
credits over 20 years for creating up to 25,000 jobs. According to
the Citizens Budget Commission, a nonpartisan fiscal watchdog, this
would have been the largest award ever given through the program,
which is available to any company that meets its criteria.
Amazon abruptly canceled its plans for the Long Island City
campus on Feb. 14 last year, blaming opposition from some state and
local lawmakers, as well as progressive groups.
Mr. Gianaris said incentives for a single project should be
capped so that benefits can be spread. The Amazon proposal showed
one company can "completely raid the system," the senator said.
Mr. Gianaris said he also hoped to make changes to the city's
Industrial and Commercial Abatement Program (ICAP). It reimburses
firms for part of the costs of major construction and renovation
outside the core of Manhattan.
The city's Economic Development Corp. said in a statement that
in 2016, companies receiving REAP credits supported 10,407
employees. Queens had the biggest boost from the program, with 106
companies -- most with 100 employees or less -- receiving a total
of $17.8 million in credits, data for that year show.
Some small-business owners said REAP has helped them grow.
Liz Neumark founded Great Performances, a catering company, in
Manhattan in 1980. After being priced out of the borough, she began
a move to a larger facility in the South Bronx last summer, with
the pending approval of a REAP benefit that could bring an annual
tax credit of more than $500,000, she said.
She currently employs more than 1,000 people, and the benefit
could grow as she expands her business.
"The REAP program has played an enormous part in our strategic
and financial planning for the move," Ms. Neumark said.
Senate Majority Leader Andrea Stewart-Cousins, a Democrat, said
she was open to re-evaluating the programs. A spokesman for
Assembly Speaker Carl Heastie, a Democrat, didn't respond to
requests for comment.
A spokesman for Gov. Andrew Cuomo, a Democrat, didn't return an
email seeking comment. The governor's economic development czar,
Empire State Development President Eric Gertler, said REAP and ICAP
are important tools to support job growth.
New York City Mayor Bill de Blasio, a Democrat who championed
the Amazon deal but later soured on the company when it announced
its exit, said on Monday he was open to changing the programs.
"I think every incentive program deserves that constant
reassessment for changing conditions," Mr. de Blasio said.
(END) Dow Jones Newswires
February 14, 2020 02:47 ET (07:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.