City Panel Votes to Approve $128 Million FreshDirect Payoff (liveblog)


Last Tuesday, the city Industrial Development Agency announced that it and several other city and state bodies planned to hand over $128 million in grants, tax credits, and assorted vouchers to FreshDirect, which would use the cash to move its headquarters to the Bronx waterfront … all the way from Queens, where it’s been rolling out half-baked bread since its founding in 2002. This morning at 9 am, following a single raucous hearing last Thursday and yesterday’s plea by a Bronx councilmember to slow its headlong rush to subsidize, the IDA is set to vote on final approval of the FreshDirect deal. Liveblog of the proceedings below the jump; for those who want to follow along at home, here’s the webcast link.

9:05 am: The New York City Industrial Development Agency’s mission in life is to supply city-funded grants and tax breaks to encourage businesses to build in the city — it handed out a total of $1.3 billion last year, according to its own figures — but they don’t all rise to the level of notoriety that the FreshDirect deal has garnered. Part of this is the scale of the plan: Giving out $128 million (about $84 million from the IDA, $10 million from other city agencies, and $34 million from the state) for a company to build a $112 million headquarters is inevitably going to raise eyebrows.

In this case, though, the main objections have come from local Bronx residents upset at what they’d be getting as part of the package: namely, low-wage jobs at best (40 percent of FreshDirect employees earn less than $25,000 a year, according to the subsidy-watch group Good Jobs New York) and fleets of diesel-spewing trucks lining up in a Mott Haven neighborhood already dubbed Asthma Alley. Plus, no actual fresh-delivered groceries: The only Bronx neighborhoods serviced by the company at the moment are the wealthier northern enclaves of Riverdale and Kingsbridge.

FreshDirect has promised to start delivering to other parts of the borough if the deal is approved, while replacing its diesel trucks with electric ones (to be paid for with $1 million in city state money) and hiring an additional 964 workers by the year 2021.

That’s only a goal, though, not a promise, and the city hasn’t extracted any commitments for how much workers will be paid or how many jobs will go to Bronx residents. (While the IDA includes so-called “clawbacks” for commercial projects that require subsidies to be repaid if hiring targets aren’t met, that’s not the case for industrial projects like this one.) And the new electric trucks, A. Mychal Johnson of Bronx Community Board 1 tells Runnin’ Scared, “would represent less than 10 percent of their fleet. It will not have an impact on the pollution issue.”

And the meeting has begun!

9:22 am: That didn’t take long: Deal opponents are now talking over NYC Economic Development Corporation president Seth Pinsky, who threatened to have them removed if they don’t clam up.

After a final unsolicited comment from the audience member, Bronx activist Harry Bubbins — “People are outraged, and we are going to stop the project” — he departed and the proceedings are again underway.

9:36 am: The official presenting the FreshDirect proposal says that it was developed in response to “a credible threat that FreshDirect could relocate its operations to New Jersey.” That’s been the city’s line all along, and the IDA says it determined that FreshDirect would save enough on land costs — and, presumably, the $100 million subsidy package it was offered by New Jersey Gov. Chris Christie — to make up for the increased costs of shlepping all that food across the Hudson to its customers. The city’s source? “Information from FreshDirect.”

FreshDirect is now being lauded for offering “starting salaries that exceed the minimum wage.”

More sporadic shouting amidst the official business up on the podium. A reading of the summary of last Thursday’s comment session draws this from an audience member: “You’ve ignored 90% of our comments!”

9:45 am: Controller John Liu’s representative Carol Kostik says she’ll be voting no, citing “concerns about the level of subsidies” that are “more than twice the second-highest subsidy amount” from the IDA in the last two years, as well as questions about the fast-tracked process and “whether FreshDirect is creating new jobs, or merely shifting spending from brick and mortar stores.” Wild applause.

Pinsky immediately rebuts the criticism, calling Liu’s figures “deceptive” for comparing ongoing operating subsidies with construction costs, and saying, “The reason this is one of the largest packages that the IDA has proposed to the board is because this is one of the largest projects” that it has considered.

First mention of South Bronx as “poorest Congressional district in the United States” (by Pinsky)! Drink.

9:52 am: Asked what will happen to FreshDirect’s old Queens site, Pinsky says they “haven’t decided exactly what to do with the site” but that the city will be “working with them” to ensure it becomes “a viable location for employment in the future.”

Board member Andrea Feirstein opines that the “optics” of announcing the deal one week and voting on it the next may not have been the best, but says that the benefits are too great to pass up. “I don’t think FreshDirect really competes with brick and mortar,” she adds.

9:53 am: And that’s it. The board members having spoken, Pinsky calls the roll, and the city’s FreshDirect deal is approved. More shouting from the audience, but the deed is done.

10:25 am: Final vote was unanimous except for the comptroller’s “nay.”

This concludes the official authorization of the FreshDirect deal — the city council has no say over economic development subsidies that don’t involve land use matters like zoning — but the public controversy is likely to go on. Bubbins, tracked down on his cellphone walking around lower Manhattan while waiting for the meeting to end, says it was necessary to speak out of turn so that community objections could be heard: “Three-quarters of the people who voted on this item skipped the public hearing last week, including the chair, Mr. Pinsky.”

The next step, he says, will be to try to convince the state attorney general to investigate the 99-year lease that Gov. Mario Cuomo gave to the private Galesi Group in 1991 on the state-owned rail yards where the FreshDirect facility is slated to be built. Subsidies and crappy jobs aside, “the larger, sadder story is the immense waste of this 100-acre property on the waterfront,” he insists. “Could you imagine them doing this on the Hudson River waterfromt or the East River waterfront in Manhattan? I don’t think so.”

Bettina Damiani of Good Jobs New York, which has assailed the FreshDirect deal from the start as a bad investment of city economic development dollars, summed up the morning’s proceedings: “This stinks all around, I can’t even tell you.” Citing the rushed public process and the cursory memorandum of understanding presented this morning, she says, it’s just another example of the IDA’s poor treatment of the Bronx: “This is Yankees 2.0.”