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City Approves $87 Million in Subsidies for Hotly Debated FreshDirect Plan

By Patrick Wall | July 24, 2013 9:16am
 The company has promised to create about 1,000 new jobs in its planned move to the South Bronx, in exchange for about $87 million in city subsidies.
City Approves FreshDirect Subsidies
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MANHATTAN — The city approved roughly $87 million in public subsidies Tuesday for FreshDirect’s planned move from Queens to the South Bronx waterfront, which has drawn the ire of some local residents since it was announced last year.

The benefits are part of a larger package of tax breaks, grants and loans that could total nearly $128 million if the state approves its portion.

The city Industrial Development Agency’s vote in favor of the subsidies follows a decision by the City Planning Commission on Monday to recommend a lease modification required for the company to build its new headquarters on a state-owned but privately controlled site.

In return, the online grocer would relocate its existing workforce to The Bronx and has promised to eventually hire nearly 1,000 new employees — with about one-third of those new non-union positions reserved for Bronx residents.

“With each approval, we are getting closer and closer to achieving our goal of bringing thousands of good jobs to an area of the city that needs them most,” FreshDirect CEO Jason Ackerman said in a statement.

Almost since the deal was announced in February 2012, critics have called the subsidies a lavish corporate giveaway offered in exchange for jobs that may never materialize.

“New York City needs jobs, particularly in The Bronx, but this is a wasteful way to do business that picks taxpayers’ pockets in order to reward fat cats,” Comptroller John Liu, who is running for mayor, said in a statement Tuesday. His appointee was the only IDA board member to vote against the project.

Last year, Liu’s office released a report that found that more than half of the audited tax breaks that the IDA offered in fiscal year 2009 went to companies that failed to meet their job retention and creation requirements. (The IDA called parts of the report “erroneous,” saying it terminates non-compliant projects and recaptures their benefits.)

In defense of the FreshDirect deal, the city says the company qualified for about $53 million of the benefits “as-of-right,” that is, simply by meeting program requirements.

The company notes that it made a hiring commitment to the Bronx borough president and that some of the state benefits are tied to job-creation targets.

The planning commission’s recommendation Monday — which will now be forwarded to the mayor for final approval — would allow FreshDirect to build a parking lot in a part of the Port Morris waterfront site, called the Harlem River Yards, which had been reserved for a rail hub.

The commission’s approval follows a vote by the local Bronx community board to support the lease change. FreshDirect opponents insist that the board members were not properly informed about the plans and that the vote was botched.

Besides the subsidies, critics take issue with the project itself, which would house the company’s large truck fleet at a sprawling new 500,000-square-foot facility on the waterfront site.

Local residents, businesses and others who oppose the project say the added truck traffic would drive up already-high asthma rates and reduce the area's quality of life, while the facility would block public access to the water and create a flood hazard.

FreshDirect has promised to create a fully “green” truck fleet within five years of opening the facility.

The project still requires certain approvals, such as a zoning override for its planned construction site.

The state’s Empire State Development agency must also approve its share of the subsidy package.

An agency official said a public hearing and board of directors vote on the benefits would occur after FreshDirect begins construction on the new facility.

Christina Giorgio, an attorney with New York Lawyers for the Public Interest, which represented FreshDirect’s opponents in a lawsuit against the project, said the coming hearings will provide the opponents with another chance to make their case.

“Advocates will explain the impact that this will have on their community and that they clearly don’t want it,” she said.