In 2009, the owners of Gailer Stamping and Die Cutting were confronted with a harsh reality that many small businesses in Manhattan increasingly face: Skyrocketing rents had made doing business in the borough untenable. Suddenly, rather than focusing on their product, they were trying to figure out how to survive, cutting their own pay and figuring out how to avoid staff cuts.
Today, thanks to an often-overlooked state program, this company has relocated to Long Island City and is thriving. Gailer is just one of thousands of businesses in New York City that have been able to operate within the five boroughs thanks to the Relocation Employment Assistance Program, which has also helped lift revamped and emerging business districts and create thousands of middle-class jobs.
But all this progress would be halted in its tracks if REAP expires on June 30.
REAP is so effective because it provides significant financial incentives for companies priced out of Manhattan below 96th Street by relocating them to other areas of the city. The program provides a 12-year credit up to $3,000 per employee per year. In many cases, without REAP these companies would be forced to leave the city—or go out of business entirely. According to real estate management company Jones Lang LaSalle, REAP has a $15-per-square-foot impact on rents. Gailer’s company alone is saving about $55,000 per year.
REAP has significantly changed the commercial landscape of places like Downtown Brooklyn and Long Island City, where we hear REAP success stories nearly every day.
In Downtown Brooklyn, REAP has helped spark the growth of the borough’s innovation economy, drawing large tenants like Uniworld Group and Art Partner. In the Brooklyn Navy Yard, Crye Precision utilized REAP to relocate its first batch of employees and plans to hire as many as 1,500 people in the next few years. And in DUMBO, 40 to 50 innovation firms are benefiting from the program, with two more deals expected to bring 1,000 employees to the neighborhood—only if REAP is reauthorized.
The program has brought similar positive commercial sector and job growth to Queens, especially in industrialized and emerging creative commercial areas like Long Island City. Companies in the area ranging in size from six to 200 employees, in varying industries from baking to elevator solutions, have leveraged REAP to stay in NYC and, oftentimes, in existence. With these newfound extra funds, many expanded. A great example is women’s apparel manufacturer Liquid Knits. In 2010, facing an uphill financial climb, the company utilized REAP to move from Manhattan to Long Island City. Today, it’s not just on solid footing—it’s thriving, and has expanded from 17 to 29 employees.
But REAP’s value isn’t just about the outer boroughs—it’s about the entire city, which is one of the most expensive places to do business in the country. As other states, from New Jersey to Texas, offer New York-based businesses tempting relocation incentives, REAP provides one of the only tools we have for retaining so many of the small businesses that hire middle-class workers and help keep our economy diverse and humming. As they’re priced out of Manhattan, REAP is the safety net that keeps them here. And some even use the program to move to the city from other states, from as far away as the Southwest.
Of course, when businesses weigh decisions about whether they can remain in New York City, and whether to relocate, they make them years in advance. That’s why simply extending REAP for a year won’t cut it.
Now is the time for the state's elected officials to extend REAP for at least three years so that the thousands of businesses that have found a home in the outer boroughs, and the many more feeling the financial pinch in Manhattan, can rest assured that the city and state want to keep them, and the jobs they create, right here.
We’ve heard it firsthand: Without REAP, those businesses, and those jobs, go elsewhere.
Nothing less is at stake.
Tucker Reed is the president of the Downtown Brooklyn Partnership and Elizabeth Lusskin is the president of the Long Island City Partnership.