Prior to Monday's passage of A10241/S7135, office and retailtenants would have had until this Wednesday to commence leases thatwould qualify for the tax abatements. The legislation extends thateligibility period to March 31, 2014, and the benefit period fromMarch 31, 2016 to March 31, 2020. Additionally, the time period inwhich tenant improvements to eligible premises must be made hasbeen extended from Sept. 30, 2010 to Sept. 30, 2014. Thelegislation also extends the benefit period for the commercial renttax reduction from March 31, 2015 to March 31, 2020.

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In a statement, Elizabeth Berger, president of the Alliance forDowntown New York, says that passage of the tax abatement extensionis "a significant mechanism for business attraction and retentionin Lower Manhattan. As our region continues to weather thelingering recession, it is particularly critical to provide toolsfor growth and vitality in commercial areas, and today's actiondoes just that." Berger had advocated for passage of themeasure.

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According to the city's Department of Finance, CRP wasimplemented in 1995 to increase tenant occupancy in office andretail space Downtown, and to reduce building obsolescence "byencouraging investment in older commercial space or conversion toresidential use." Under CRP, the Department of Finance offers areal estate tax abatement of $2.50 per square foot for commercialtenants moving into pre-1975 properties. The abatement is availablefor up to five years; subleases and relocations from the outerboroughs are not eligible.

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CRP is one of a number of incentives programs available tocommercial tenants and/or property owners, according to theDowntown Alliance. For tenants relocating Downtown from outside thecity, the Lower Manhattan Relocation Employment Assistance Programprovides a $3,000 tax credit per employee, per year. In a separateprogram, there's also a sales tax exemption on the purchase ofgoods for office build-outs.

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The Industrial & Commercial Abatement Program, which tookeffect in 2008, provides owners and developers a partial exemptionfrom or abatement of property taxes for up to 25 years for eligibleindustrial and commercial buildings south of Murray Street. Unlessrenewed, the program will expire in June 2013.

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Through ICAP, commercial property owners and their tenants maybe eligible for benefits through the Lower Manhattan EnergyProgram, which is intended to reduce regulated electricity costs upto 45%. Benefits last for eight years, followed by a four-yearphase-out, according to the New York City Department of SmallBusiness Services.

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For tenants taking space at Downtown commercial properties yetto be built—i.e. the World Trade Center towers—the Empire StateDevelopment Corp. offers a rent reduction of $5 per square foot.The break is only available for the first 750,000 square feetleased at the WTC, and leases must be at least five years.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.