September 11 Recovery Resources

Client Advisory

July 2002
Following the tragedy of September 11, 2001, numerous resources have been created, modified and renewed to aid the recovery of affected persons and businesses in and around lower Manhattan. The forms and sources of aid are varied. The purpose of this memorandum is to advise friends and clients of major sources of 9/11-related aid available to businesses and, to a lesser extent, individuals. The many programs designed specifically for uniformed officers and those killed in the attack and their families are, however important, outside the scope of this memorandum. Rather, the following discusses aid available generally to businesses and individuals in the affected area.

This aid is divisible into four categories: grants, loans, tax relief and miscellaneous aid. The aid in these categories is addressed below, first as it pertains to business entities, and next as it relates to individuals.

Aid for Businesses


There are several major grant programs available to businesses affected by September 11th. These are funded in part by a $2.7 billion Community Development Block Grant from the U.S. Department of Housing and Urban Development (“HUD”). The programs are also funded by the State of New York, by New York City, and by private individuals and organizations devoted to helping lower Manhattan redevelop. The programs have varying administrative agencies or organizations, depending in part on their funding sources. Each program has a unique set of restrictions and eligibility criteria.

WTC Business Recovery Grant Program – Businesses with fewer than 500 employees are eligible for a generous as-of-right grant called the WTC Business Recovery Grant Program (the “Business Recovery Grant”). This program, administered jointly by the Empire State Development Corporation (“ESDC”) and the New York City Economic Development Corporation (“EDC”), is available to all for-profit and non-profit businesses that were located within a defined Eligible Area on September 11 and that will remain or resume business in the area. However, entities engaged in religious or political activities are ineligible.

The application deadline for the Business Recovery Grant is December 31, 2002 (subject possibly to an extension). The grant has a ceiling of between $50,000 and $300,000, depending on the location of the eligible business. The formula for determining the size of a grant takes into account proximity to ground zero and the business’s annual gross revenues. Since the grant is as-of-right, meaning all eligible businesses that apply will receive funds as long as they are available, all such businesses are encouraged to apply. In order to complete the application, the following are required: (i) the business’s most recent federal tax return; (ii) a lease, deed or permit for the business premises as of September 11, 2001; (iii) a current lease, deed or permit for the business premises; (iv) completed Form 8821 (which authorizes the agencies to access the business’s tax returns); (v) cancelled rent checks for July, August and September of 2001; (vi) a copy of a utility bill for one of these months; and (vii) a voided check from the business’s bank account.

Program guidelines, frequently asked questions, and application form are available on-line at, and questions can be answered at the business recovery centers at 140 William Street and 2 Rector Street or by calling 1-800-ILOVENY.

Small Firm Attraction and Retention Grants – The Small Firm Attraction and Retention Grant (the “Small Firm Grant”), also administered by the ESDC and EDC, is currently available to firms with up to 200 employees.[1] The applicant must not be engaged in either religious or political activities.

The Small Firm Grant provides two payments to qualifying businesses, in amounts of either $2,500 or $1,750 per eligible employee. Each qualifying business will receive one such payment soon after submitting the application and another in 18 months. Alternatively, certain businesses are eligible for one-time grants of either $3,500 or $5,000 per employee. In all cases, the amount granted depends on the business’s location. In order to be eligible, all businesses must either commit to a new lease for at least a five year term or purchase a new facility. In order to satisfy the lease requirement, a business previously located in the eligible zone must have a lease that expires by September 11, 2004, and the new lease (for at least five years) must be signed between September 11, 2001 and December 31, 2004. For businesses new to the eligible zone, there is only the requirement of a new five-year lease.

For businesses that were located in the defined Restricted Zone (the area closest to and including ground zero) on 9/11, the grant is in the amount of $2,500 per employee if the business commits to staying in the Eligible Zone, or $1,750 per employee if it commits to staying in New York City (outside the Eligible Zone). If the business was located in the Eligible Zone (but not the Restricted Zone) on 9/11, then it is eligible for a Small Firm Grant only if it commits to staying in the Eligible Zone. Such businesses are eligible for a grant consisting of two payments of $1,750 per eligible employee.

Finally, eligible zone businesses with three employees or fewer are eligible for a one-time payment of $3,500 per employee. For Restricted Zone businesses with three or fewer employees, this figure is raised to $5,000 per employee.

Small Firm Grant guidelines, frequently asked questions, and application form are available on-line at, and questions can be answered at the business recovery centers at 140 William Street and 2 Rector Street or by calling 1-800-ILOVENY.

Job Creation and Retention Program – The Job Creation and Retention Program is an entirely discretionary program, administered by the EDC and ESDC, which is available to businesses with 200 or more employees. The amounts awarded under the program can be substantial but applicants are given no formal indication of the potential size of their grants prior to submitting an application. Firms assisted by these grants are required to relocate to (or agree to remain in) lower Manhattan for at least seven years. As the grants are designed to entice businesses to come to or remain in lower Manhattan, the awards are based on, among other factors, the degree to which the business is deemed to be a flight risk, the number of jobs it can commit to maintaining, and its expected growth over the next several years.

Published details on the Job Creation and Retention Program are few. Questions can be directed to the EDC’s Business Retention and Attraction Department, at (212) 312-3551, or the ESDC’s Strategic Business Division, at (212) 803-3128.

Seedco Grants
– Seedco is a national nonprofit organization that is administering three programs offering grants, loans, wage subsidies and technical assistance to lower Manhattan businesses. These programs are The Lower Manhattan Small Grocers Initiative, The Lower Manhattan Small Business and Workforce Retention Project, and The Small Business Service Firm Initiative. All three programs are made possible by private donations and assistance from other organizations, such as the Downtown Alliance. The programs offer loan assistance of up to $100,000 at annual interest rates of 3% (with a 1% reduction, if all payments are made on time).

The Lower Manhattan Small Grocers Initiative is directed at aiding more than small grocers. Each of the following types of business is potentially eligible for assistance under this program: convenience stores, newsstands, candy stands, delis, quick service restaurants, bodegas, corner stores, hot dog stands, and pizza parlors. In order to be eligible, the business in question must employ 50 or fewer employees, must be located on or below Houston Street, and must intend to stay in place. In addition, applicants must demonstrate adverse impact from 9/11 and must be at risk for having to lay off some employees. For employers seeking wage subsidies, the employees in question must have been making $12.00 or less prior to 9/11. Finally, the business must demonstrate that it was viable before 9/11 and will be viable going forward.

The Lower Manhattan Small Business and Workforce Retention Project is directed at aiding small manufacturing and retail businesses located on or below Canal Street. Applicants must intend to stay in their current location, must employ 50 employees or fewer, and must demonstrate adverse impact from 9/11. As is the case with The Lower Manhattan Small Grocers Initiative, applicants to this program must demonstrate viability both before 9/11 and going forward.

Finally, the Small Business Service Firm Initiative is limited to service-providing firms such as law and accounting firms, medical offices, travel agents, architecture and design firms, staffing agencies and the like that employ up to 10 people. Firms applying for aid must be occupying commercial space in lower Manhattan, operated outside the home, not covered by other grant programs, and affected by 9/11.

All three of the foregoing programs provide grants, loans and wage subsidies. In addition, The Lower Manhattan Small Business and Workforce Retention Project provides no-fee technical assistance covering subjects such as legal assistance, business planning, and financial counseling. The Lower Manhattan Small Grocers Initiative and The Small Business Service Firm Initiative advertise assistance via unspecified business consulting and services. Information on all of Seedco’s programs can be found at

Mellon Foundation Grant – The Mellon Foundation Grant is available exclusively to cultural and performing arts organizations (no individuals). The grants range from $250,000 to $2 million, and the organization can be located anywhere in New York City in order to be eligible. To apply, the organization must submit a proposal documenting the financial and other effects of 9/11 upon the organization. Questions can be directed to T. Dennis Sullivan, Financial Vice President of the Mellon Foundation, at (212) 838-8400 or

New York City Lower Manhattan Business Retention Grants
– Businesses with 50 employees or fewer may apply for this grant, despite the fact that the March 31, 2001 deadline has already passed. There has been no formal extension of the New York City Lower Manhattan Business Retention Grant (the “Business Retention Grant”), but the EDC has confirmed that one may still submit an application accompanied by a letter setting forth “legitimate reason(s)” for having missed the deadline.

The Business Retention Grant is available only to non-retail businesses (including professional services, manufacturing and distribution businesses) that were located within the defined Eligible Area on September 11 and that will remain or resume business in the area. The grants are for up to $10,000. Applicants must also have applied for a loan from the U.S. Small Business Administration or from a participating lender under the World Trade Center Disaster Recovery Bridge Loan Program (see below). This last requirement is waived for businesses that were located in any of the World Trade Center buildings on September 11. Additional information is available at or 1(866) 227-0458.


Small Business Administration Loans
– The United States Small Business Administration (“SBA”) has expanded its regular lending program and partnered with the Federal Emergency Management Agency (“FEMA”) to aid New York City businesses affected by 9/11. Together, SBA and FEMA have created two loan programs for such businesses: the Business Physical Disaster Loans program and the Economic Injury Disaster Loans for Small Businesses program.

The Business Physical Disaster Loans (“BPDL”) program provides loans to large and small businesses that have suffered physical damage as the result of a disaster. BPDL loans are available only to businesses located in a declared disaster area, and are for amounts up to $1.5 million. BPDL loans may be used to replace real property, equipment, machinery, inventory, fixtures and leasehold improvements damaged by the disaster. The interest rates and terms of BPDL loans are determined by the business’s ability to obtain credit from non-federal sources. The maximum rate is 4% annually for terms of up to 30 years in cases where the SBA determines that the business would not be able to obtain other credit. Businesses that the SBA determines can obtain credit elsewhere may be charged no more than 8% with terms of up to 3 years. The term can be longer for non-profit entities able to obtain credit elsewhere.

The Economic Injury Disaster Loans for Small Businesses (“EIDL”) program makes loans to small businesses that have suffered physical damage as the result of a disaster. EIDL loans, like BPDL loans, are available in amounts up to $1.5 million and only to businesses located in a declared disaster area. Unlike BPDL loans, EIDL loans may be used for general operating funds. In order to be eligible, a business must demonstrate “substantial economic injury,” defined as the inability to meet obligations as they mature and at the same time to pay necessary and ordinary operating expenses. EIDL assistance is available only to businesses unable to obtain loans elsewhere. The loans have maximum interest rates of 4% and maximum terms of 30 years.

In order to apply for either the BPDL or the EIDL, one must first register by calling FEMA at 1-800-462-9029. Both programs have a September 30, 2002 application deadline. The SBA’s website,, gives detailed information about these programs.

Financial Recovery Fund – The Financial Recovery Fund styles itself as a New York Partnership Grant – an interest free “recoverable grant.” Because businesses with the ability to repay this grant are asked to do so, it has been classified here as a loan. The program is scarce on details about what constitutes ability to repay the grant and about the leverage the fund is prepared to use to secure repayment. The loans range from $25,000 to $250,000, with an average loan amount of approximately $100,000.

This program is administered by the Civic Capital Corporation, the charitable arm of the New York City Investment Fund. In addition to the interest-free loan, the Financial Recovery Fund provides strategic assistance in the form of business and financial mentors. To be eligible, a business must have been located on Chambers Street or below on 9/11 and must have been in business for at least six months as of that date. In addition, the business must employ between 4 and 100 employees (except restaurants, which must employ 50-100), must be current on all taxes, must have majority U.S. ownership, and must be incorporated in the U.S. Finally, eligible businesses must have been viable before 9/11 and must be viable going forward. To apply, one may call (212) 493-7760 or go to

Seedco Loans – See description under Seedco Grants, above.

World Trade Center Disaster Recovery Bridge Loan Program – Businesses that have an SBA loan application pending may also apply to a number of participating banks for a bridge loan. Loans under the Disaster Recovery Bridge Loan Program are low-interest loans of up to $100,000, usually available within days of application. In addition to the benefits of low interest and speedy processing, this program often waives standard loan fees and may offer deferred interest for up to 1 year. The loans may ultimately be restructured from a bridge loan to a term loan, if the SBA loan is denied.

Details of each loan granted under the program will vary, and are left to the discretion of the participating banks. Participating banks include: The Bank of New York, Chase Bank, Citibank, Community Capital Bank, Fleet Bank, and HSBC Bank USA. The program is funded by a $50 million grant from New York City and the State of New York.

In addition to this program, the following banks are offering their own, separate loan programs tailored to the needs of small businesses affected by 9/11: HSBC Bank USA, Community Capital Bank, Citibank, and J.P. Morgan Chase. These programs vary in their terms and other details, and each has its own application deadline. For information on the program generally, see

Tax Relief

On March 9, 2002, President Bush signed into law the Job Creation and Worker Assistance Act of 2002 (the “Act”). Article III of the Act provides for New York Liberty Zone benefits. The “New York Liberty Zone” is defined as “the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway).” Other than certain provisions relating to tax-exempt bond financings, Article III of the Act contains five provisions relevant to New York businesses.

Liberty Zone Employment Benefit Credit – The Liberty Zone Employment Benefit Credit (the “Credit”) is an expansion of the already-existing Work Opportunity Tax Credit (“WOTC”) program. The WOTC was designed to encourage employers to hire employees from eight targeted groups, including (i) high-risk youth, (ii) qualified ex-felons, (iii) individuals from families eligible for benefits under the Temporary Assistance for Needy Families Program, (iv) employees referred from vocational rehabilitation programs, (v) qualified veterans, (vi) qualified summer youth employees, (vii) individuals from families receiving food stamps, and (viii) persons receiving certain SSI benefits. For employees in the foregoing categories (except qualified summer youth, for whom a smaller credit is allowed), the WOTC allows the employer to take a tax credit of up to 40% of the first $6,000 of qualified wages (for a maximum credit of $2,400).

The Credit adds a ninth group of eligible employees: individuals who perform substantially all their services either (i) within the “New York Liberty Zone” or (ii), subject to certain limitations, within New York City for a business that relocated from the New York Liberty Zone due to physical damage or destruction of their workplace on 9/11. The Credit is available with respect to wages paid or incurred to qualified individuals for work performed in 2002 or 2003. In order to be eligible, employers must have employed, on average, 200 or fewer employees during the tax year for which the Credit is claimed.

The employer’s deduction for wages is reduced by the amount of the Credit. Other generally applicable WOTC rules, such as minimum employment periods, apply.

Special Depreciation Allowance for Leasehold Improvements
– The Act alters the depreciation rules pertaining to leasehold improvements for property located in the New York Liberty Zone. The Act allows accelerated depreciation on a straight-line basis over 5 years[2] for “qualified” leasehold improvement property (as defined in the Act) placed in service after September 10, 2001 and before January 1, 2007 (and not subject to a binding contract on September 10, 2001).

Special Depreciation Allowance for Other Liberty Zone Property – In addition to the foregoing depreciation allowance, the Act creates another depreciation allowance for Liberty Zone business property. This provision allows for an extra 30% depreciation of the adjusted basis of qualifying property in the first year. This 30% depreciation allowance is over and above the depreciation to which the property would typically be subject. Thus, assume that in March 2002 a business owner placed in service in the Liberty Zone a $1 million piece of tangible personal property ordinarily subject to 15-year depreciation using the 150 percent declining balance method. The provision allows the taxpayer to take 30%, or $300,000, depreciation of the property in the current tax year. Moreover, the taxpayer may apply the 15-year 150 percent declining balance depreciation method (including the appropriate amount in this first year) with respect to the remaining $700,000. The allowance applies to taxpayers paying either regular income tax or the alternative minimum tax.

In order to be eligible for this special depreciation allowance, property must fall into one of the following categories: (a) property with a recovery period of 20 years or less, (b) water utility property, (c) certain nonresidential real property and residential rental property, or (d) certain computer software. If the property in question is “qualified New York Liberty Zone leasehold improvement property,” then it is eligible only for the leasehold improvement depreciation allowance described in the preceding section and is not eligible for the added 30% allowance. The property must have been acquired after September 10, 2001. Finally, the property must be placed in service no later than December 31, 2006 (or December 31, 2009, for nonresidential real property and residential rental property). The allowance for real property is available only to the extent that such property replaces real property destroyed or rehabilitates real property damaged on 9/11.

Replacement of Property Involuntarily Converted – Another provision of the Act relates strictly to insurance payments received in compensation for property lost or destroyed on 9/11. Ordinarily, property “involuntarily converted” by a casualty (i.e. destroyed, with the loss compensated by insurance payments) is subject to a two-year replacement period (three years for real property used in a business). This means that, if the taxpayer so elects, and if the property is replaced within the time limit by property similarly used, then no gain is recognized. These rules are modified for property involuntarily converted in a Presidentially declared disaster. Where a principal residence and its contents are destroyed, the tax laws allow one to recognize no gain on insurance proceeds. Moreover, the replacement period for the home itself is extended to four years in these circumstances. With respect to investment or business property involuntarily converted under these circumstances, any tangible property subsequently acquired and held for productive use is treated as being replacement property.

The Act further modifies the law for property involuntarily converted on 9/11 by extending the replacement period to five years. This extension is available only where the destroyed property was in the Liberty Zone and where the replacement property is used almost entirely in New York City.

Enhanced Expensing of Business Property – Section 179 of the Internal Revenue Code allows a business owner with under $200,000 invested in the 2001 tax year in business property to expense (i.e., deduct as a business expense) up to $24,000 of the cost of such property. This special expensing allowance is phased out for every dollar above the $200,000 limit. Thus, a business that invests over $224,000 in this tax year does not gain any benefit from a § 179 election, and is better off using the depreciation rules described above. Generally speaking, § 179 applies only to tangible personal property used in a trade or business. The $24,000 limit is increased to $25,000 for tax years beginning in 2003 and later. In no event may the amount expensed in a taxable year exceed the amount of taxable income produced by the business in that year.

The Act increases the amount that can be expensed under § 179 in the Liberty Zone by the lesser of $35,000 or the cost of the qualifying property placed in service during the year. This enhanced expensing amount is in addition to the amount of § 179 expensing already allowed to the business. Moreover, the phase-out that takes place over $200,000 in expenses under ordinary § 179 is changed for the Liberty Zone such that only 50% of the cost of qualifying property counts towards the limit. This effectively raises the beginning of the phase-out range from $200,000 to $400,000. In order to qualify, the property in question must meet the ordinary § 179 criteria and must have been placed in service after September 10, 2001 and before January 1, 2007. In addition, “substantially all” of the use of such property must be in the Liberty Zone in the active conduct of a trade or business, and the taxpayer must be the first to use the property in the Liberty Zone.


Low-Cost Power – The New York Power Authority (“NYPA”) is making low-cost electricity available to former tenants of the World Trade Center, other businesses that have relocated, and businesses that move their operations to Manhattan under the World Trade Center Economic Recovery Power program. The program makes use of the 80 megawatts formerly supplied at low cost to the World Trade Center. This electricity, which is priced up to 25% lower than standard commercial rates, has been designated for resale in lower Manhattan. To get a portion of the power available under this program, a business must complete an application and must be located in (or relocating to) either the Liberty Zone (defined above) or the Resurgence Zone (roughly, the area south of Houston to Canal). Priority under the program is to be given to former WTC tenants and other displaced businesses.

In order to be eligible, a business must have an annual peak demand of at least 20 kilowatts. An application form and more information can be had from NYPA’s website,, or by calling NYPA at 1(800) 622-NYPA.

Aid for Individuals


Housing Assistance Program
– Of the $2.7 billion Community Development Block Grant from HUD, mentioned above, the Lower Manhattan Development Corporation has set aside up to $280.5 million for the Housing Assistance Program. This program has been approved by HUD, but applications are not yet available. Once they are available, applications will be accepted through May 31, 2003.

The Housing Assistance Program is divided into three zones of eligibility. Zone 1 is defined as the area south of Chambers Street and west of Nassau and Broad Streets, including all buildings which face those streets and all of Battery Park City. Zone 2 is defined as the area outside of Zone 1 but south of Canal Street and southwest of Rutgers Street, including all buildings which face those streets. Zone 3 is defined as the area north of Canal Street and Rutgers Street, south of Delancey or Kenmare Streets, and east of Lafayette Street, including all buildings which face Delancey and Kenmare Streets. Within these three zones, the program offers three types of grants, each of which is available to residents of both rental and owner-occupied premises.

First, occupants of housing units in Zone 1 and 2 (but not Zone 3) may be eligible for a two-year commitment-based grant. Zone 1 residents may be eligible for a grant of up to 30% of the monthly rent (or combined monthly mortgage payments, maintenance costs, and real estate and related taxes) up to $12,000 over two years. For individuals living in assisted housing, the minimum benefit is $4,000 over two years (so long as this is not in excess of the rent actually paid by such resident). Zone 2 residents are eligible for the same 30% grants, but with a cap of $6,000 over two years. The minimum grant in Zone 2 for assisted housing residents is $2,000 over two years (again, this must not be in excess of the rent actually paid by such resident). In order to be eligible for this grant, a two year commitment is required. For renters, the applicant’s lease must be for at least two years and must either (a) commence prior to June 1, 2002 and end on or after May 31, 2003, or (b) commence between July 1, 2002 and May 31, 2003. For owners, eligibility depends upon an agreement to remain for at least two years after July 1, 2002.

Second, occupants of all three zones may be eligible for a one-time grant of $1,000 per housing unit. To be eligible, applicants must have resided in the unit prior to September 11, 2001 and must have continued to reside there through the date of the award. Residents who moved from one housing unit to another, but remained within the three eligible zones, are still eligible.

Third, a one-time grant is available to families living in any of the three zones. Eligible residents must have at least one child under age 18 living at home on the date of the application. In addition, a commitment to remain in the eligible zone is required. This requirement can be satisfied in one of the following ways: (a) the applicant must have entered into a lease for at least two years commencing prior to June 1, 2002 and ending on or after May 31, 2003, (b) the applicant must have entered into a lease for at least one year commencing between June 1, 2002 and May 31, 2003, (c) existing owners must agree to remain for at least one year after June 1, 2002, or (d) new owners who purchase between June 1, 2002 and May 31, 2003 must agree to remain for at least one year. If the foregoing requirements are met, the applying family will be eligible for a grant of either $1,500 (for Zone 1 households) or $750 (for Zones 2 and 3).


SBA & FEMA Disaster Assistance Loans – The SBA and FEMA, in addition to partnering to establish the loan programs described above for businesses, have jointly created a loan program for affected individuals as well. This loan program has two components: a personal property loan, and a real property loan. Both are available only to individuals who are located in a declared disaster area and have suffered loss as a result of the disaster. Both loans have maximum maturities of 30 years. In addition, both loans have a two-tiered interest rate structure. For applicants unable to obtain credit elsewhere, the interest rate cannot exceed 4% annually. For applicants who have other sources of credit, the maximum rate is 8%. In both cases, actual rates will depend on the government’s own cost of funds.

The personal property loan is available to renters and homeowners to help repair or replace damaged or destroyed personal property other than extraordinarily expensive or irreplaceable items. The loan is for up to $40,000, and eligibility is reduced by the amount of forthcoming insurance proceeds.

The real property loan is available only to homeowners and only to repair or restore their primary residence to its pre-disaster state. Thus, the loan may not be used for home improvements or additions, with a limited exception for required structural improvements to prevent similar damage in the future. The maximum amount of the real property loan is $200,000. Eligibility is reduced by the amount of expected insurance proceeds. Information is available at or by calling 1(800) U-ASK-SBA.

Tax Breaks

Replacement of Property Involuntarily Converted
– Please see discussion above, in the section on tax breaks for businesses.


[1] This represents a modification to the original plan, under which eligible businesses were required to employ at least 10 people.

[2] A 9-year period is allowed under the alternative system.

Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2020 Carter Ledyard & Milburn LLP.
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