“Amazon killer” Gianaris wants to overhaul subsidy programs that could have net billions for HQ2

Changes to ICAP and REAP could both be in store this legislative session

Jan.January 09, 2020 05:30 PM
Sen. Michael Gianaris and Long Island City (NY Senate, Wikipedia)

Sen. Michael Gianaris and Long Island City (NY Senate, Wikipedia)

State lawmakers are looking to drastically scale back a pair of outer borough subsidy programs that became huge points of contention during Amazon’s attempted move to Queens.

New York’s Relocation and Employment Assistance Program – or REAP – and the state’s Industrial & Commercial Abatement Program – ICAP – are scheduled to sunset this summer and in early 2022, respectively.

Both programs were relatively obscure until they became part of the package designed to lure Amazon to New York in the tech giant’s nationwide “HQ2” hunt.

But now Queens state Sen. Michael Gianaris, who emerged as one of the leading opponents of the Amazon deal and has been widely credited (or blamed) for helping to kill it, says he is taking the expirations as an opportunity to reform the programs.

“The things need to be capped so that no one project can avail itself of hundreds of millions, if not over a billion dollars, the way Amazon was doing,” he told The Real Deal on Tuesday, “so I’d like to start there.”

Although ICAP’s sunset date is almost two years later than REAP’s, Gianaris said it made more sense to alter both programs at the same time since many reforms being discussed are similar. He maintained that there was a strong appetite in Albany for changing them and said he does not expect them to be renewed in their current form.

The REAP program offers tax credits for companies that move jobs from outside of New York City or below 96th Street in Manhattan to the outer boroughs or above 96th Street. Companies receive a tax credit of $3,000 for 12 years per employee. Amazon could have received about $900 million in benefits from the program, according to an analysis by TRD.

The ICAP program gives property tax abatements for up to 25 years to companies building or improving industrial and commercial buildings anywhere in the city except south of 96th Street and north of Murray, Frankfort and Dover Streets in Manhattan. The program would have provided a roughly $386 million abatement to Amazon, according to the city.

Greg LeRoy, executive director of the policy center Good Jobs First, echoed Gianaris’ point that capping the programs would make for the most significant reform.

“You just need to say, each project can only get $10 milion, or each corporate parent can only get $25 million, or each job can only get $15,000,” he said.

“If there’s a rational god in Albany,” he continued, “the programs would get capped.”

Maria Doulis, vice president at the nonprofit civic group Citizens Budget Commission, said that if REAP is renewed, it’s important that it gets regularly evaluated in order to determine what benefits it is offering New York and whether it is still necessary.

“At a minimum, if it’s reauthorized, it needs to include a commitment to regularly and routinely evaluate the program,” she said.

The New York City Economic Development Corp. has been a strong supporter of the subsidies in the past. EDC spokesperson Danielle Schlanger released a statement expressing continued support for these types of programs while allowing that changes to them could be on the way.

“Outer borough job growth is a longstanding priority of ours; It lessens commute times, reduces burdens on infrastructure and improves quality of life,” she said. “We should make sure that programs to encourage outer borough commercial growth are efficient and working well, and we look forward to discussing them with the legislature.”

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