Insurance giant Aetna is looking to beef up the economic incentives the company’s getting in order to relocate its headquarters to the Meatpacking District from Connecticut.
In addition to the $24 million in tax credits the state pledged to lure Aetna across state lines and into Aurora Capital Associates and Vornado Realty Trust’s 61 Ninth Avenue, the insurer is also asking for a break on its city property-tax bill.
Aetna filed an application with the New York City Industrial Development agency under its payments in lieu of taxes (or PILOT) program, which would allow the company to make a fixed payment each year instead of paying property taxes.
The IDA projects that the tax abatement will cost the city $3.6 million. Additional sales tax exemptions and credits are projected to push the full cost to the city of the incentive package up to $6.17 million. The IDA expects the benefits from the building’s operation and new jobs to total $79.83 million.
A spokesperson for Vornado declined to comment, and representatives for Aetna said the company does not comment “on workplace-related incentives.”
The PILOT program is often used when private developers build on government-owned land because the city doesn’t levy property taxes on real estate owned by the city or state. In those instances, though, the PILOT payment can often be equal to what an owner would pay in property taxes.
But PILOT payments on privately owned property are often offered at a discount to taxes as an economic incentive tool.
“Historically, when companies are relocating from outside New York City, the IDA offers financial assistance to encourage the move and the growth of the company,” said Ross Moskowitz, co-chair of the real estate group at the law firm Stroock & Stroock & Lavan and a former executive director of the IDA.
Since the benefit is a property tax abatement, landlords like Vornado in these instances will either structure their deals with tenants as triple-net leases or leasehold condos, so the companies can apply directly for the benefits.
The National Association of Securities Dealers, for example, has trimmed more than a third off its tax bill at One Liberty Plaza on a 16-year PILOT agreement it’s on running through 2020. The self-regulatory organization has saved $9.7 million on a $35.27 million tax bill since 2004, according to records with the New York City Economic Development Corporation.