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Fresh Direct to Receive $84 Million in Subsidies After City Approval

By Patrick Wall | February 15, 2012 7:57am
Rev. Ruben Austria, a Mott Haven resident who runs a nonprofit for local youth, interrupted a board meeting to warn that Fresh Direct's delivery trucks could worsen asthma problems in the South Bronx.
Rev. Ruben Austria, a Mott Haven resident who runs a nonprofit for local youth, interrupted a board meeting to warn that Fresh Direct's delivery trucks could worsen asthma problems in the South Bronx.
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DNAinfo/Patrick Wall

LOWER MANHATTAN — A city agency approved about $84 million in subsidies Tuesday to help Fresh Direct build a new headquarters in the South Bronx, silencing objections with promises of hundreds of jobs and millions of dollars in tax revenue.

The Industrial Development Agency’s board of directors voted 14-1 in favor of a tax break and capital investment package — despite criticism from residents and elected leaders who complained the local community was shut out of a deal they say poses environmental threats and only a promise of future jobs. 

A representative for City Comptroller John Liu cast the lone dissenting vote. Liu said the agency had not justified the size of the subsidy package, which when totaled will be close to $90 million, Liu said, making it the largest the city has offered in recent years.

"This subsidy seems to give away too much in exchange for the jobs and economic development it promises," Liu said.

Liu said that, in effect, the city had agreed to pay $93,000 for each of the 960 or so jobs that the online grocer has promised it will create at its new headquarters by 2021.

The city's subsidies are part of a nearly $130 million benefits package that the state, city and Bronx assembled to entice Fresh Direct to remain in New York, rather than move to New Jersey. In return, the company said it will spend $112.6 million to move its operations from Long Island City, Queens to a larger facility it will build at the Harlem River Yards in Port Morris.

Also on Tuesday, the office of Bronx Borough President Ruben Diaz Jr. released details of an agreement he and the Bronx Overall Economic Development Corporation made with Fresh Direct, which they say addresses many of the community’s concerns about the deal.

According to the agreement, Fresh Direct will "make its best efforts" to hire Bronx residents for at least 30 percent of the non-union jobs it creates. Presently, the company’s only unionized workers are its delivery truck drivers, who account for about one-third of the company’s 1,960 or so workers, Fresh Direct spokeswoman Maria Coder said.

She did not say how many of the approximately 960 jobs the company has promised to eventually add will be non-union.

The company will also continue to push the state to allow it to accept food stamps for online orders and to work toward its goal of establishing within five years a delivery truck fleet that runs completely on “green” energy, such as electric or natural gas, the agreement says.

If the company does not follow through on its end of the bargain, it could lose a $3.5 million loan and grant package from the Bronx Overall Economic Development Corporation. However, before it triggers a default, the agency would consider whether a sluggish economy, for instance, had kept Fresh Direct from meeting the target, BOEDC president Marlene Cintron said.

On its end, the BOEDC will recruit qualified Bronx workers and vendors for jobs and services that Fresh Direct may require, according to the agreement.

The borough president will meet with the company by June 30 to discuss ways Fresh Direct can expand its service to include more areas of the Bronx. It currently only delivers to three zip codes in an affluent section of the northern Bronx.

The agreement with Fresh Direct "will ensure their commitment to the Bronx for decades to come," Diaz said Tuesday.

On Monday, City Councilwoman Melissa Mark-Viverito asked the city to delay the subsidy vote until the public had more time to weigh in on the deal. The councilwoman, whose district includes East Harlem and the southern tip of the Bronx, also raised concerns about Fresh Direct’s labor practices and whether the development would limit public access to the South Bronx waterfront.

At the board meeting Tuesday in Lower Manhattan where the vote was held, several South Bronx residents and activists held up anti-deal banners and yelled out challenges to the panel.

The Rev. Ruben Austria, a Mott Haven resident who runs a nonprofit for local youth, noted the exceptionally high rates of asthma in the area and warned that Fresh Direct’s delivery trucks could further degrade the air quality.

"Please consider the young people who will be sucking these fumes while Fresh Direct doesn’t even serve our community," Austria called out from the audience while panel members spoke.

The chairman of the board, Seth Pinsky, who is also president of the city’s Economic Development Corporation, cut Austria short.

"If people are unwilling to be respectful, then we’re going to ask that they be removed," Pinsky said as a security guard approached Austria, who wore a clerical collar under an anti-Fresh Direct T-shirt. The guard said he could be arrested for trespassing if he was asked to leave and refused.

Members of a South Bronx residents group that formed at the last minute to oppose the deal said they sent messages to state and city officials Monday describing their objections to the plan. They also said they collected about 75 signatures Monday for a petition asking the city to delay the subsidy vote.

Fresh Direct has said it will open its new 500,000 square-foot facility in the Bronx by 2015.