A New York development agency has approved a request by Metropolitan Life to move many of its home office functions back to Manhattan, just 5 years after it moved most of its headquarters employees across the East River.

On Nov. 14, the city’s Industrial Development Agency agreed to let MetLife back out of a 2001 agreement under which it moved many operations to Long Island City in the borough of Queens. The IDA board effectively excused the company from paying a $24 million penalty it would have incurred by reneging on the agreement, under which it was to keep most of the operations in Long Island City until at least 2021.

Under the amended deal, MetLife would keep at least 85% of its 1,700 employees in Long Island City in place through June 2008. After that, it would keep at least 30% of its employees, or roughly 500, there through December 2014.

The deal calls on MetLife to make a one-time repayment of $5 million to IDA if its occupancy in Long Island City falls below the levels required by the agreement.

The revised agreement also extends MetLife’s commitment to keep its headquarters in New York City to 2026 from 2021. Keeping MetLife in New York was a major objective of the original agreement, according to a 2001 statement by then-Mayor Rudolph Giuliani.

The original deal offered MetLife over $26 million in tax and energy incentives for moving to Queens. In return for the IDA’s approval of the changes, the company now will forfeit around $13.4 million of those incentives.

Although MetLife would not comment on the reasons for its change of mind, published reports suggest executives were unhappy about slow development of the Queens Plaza neighborhood where the company’s offices are located. Employees also reportedly complained about a lack of good restaurants and of convenient public transportation.

“The new agreement with MetLife extends the life of the company’s commitment both to Long Island City and New York City, generally at no additional cost to the city,” said Joshua J. Sirefman, acting IDA chairman.

A spokesman for MetLife acknowledged the company is negotiating a lease for new offices in Manhattan but would not disclose the location of the building.

Published reports, however, said the company is in discussions to move its executive offices into the former Verizon Building at 1095 Avenue of the Americas, near 42nd Street.

“Our Long Island City office will remain a key site for MetLife, and we are committed to a continued presence here,” said the spokesman, John Calegna.

When MetLife struck its original agreement, it had been in Manhattan since 1868. It established its headquarters at One Madison Avenue in 1909.

MetLife decided to relocate most of its workforce to Queens to take advantage of the burgeoning value of its Manhattan real estate, according to a statement at the time by Robert H. Benmosche, who has since retired as MetLife’s chairman and CEO. The company leased much of its former office space to a variety of companies, including Credit Suisse First Boston.