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Whole Foods Got $12.9M Tax Credit For Building in Polluted Gowanus: Data

February 7, 2017 4:37pm | Updated February 7, 2017 4:37pm
The 56,000 square foot Whole Foods in Gowanus. The company received $12.9 million in tax credits for building on contaminated land in Gowanus, state records show.
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DNAinfo/Nikhita Venugopal

GOWANUS —  Gourmet grocer Whole Foods earned $12.9 million in publicly funded tax credits for building a store on contaminated land it cleaned up next to the Gowanus Canal, according to recently released data.

The high-end store's first foray into Brooklyn helped gentrify Gowanus and also helped the company's bottom line through its participation in the state's Brownfield Cleanup Program, which gives developers taxpayer-funded financial incentives for cleaning up and then building on toxic sites.

Data released Jan. 31 by the state Department of Environmental Conservation, which runs the Brownfield Cleanup Program, show that in 2016 Whole Foods received two tax credits totaling $12,743,942 for building the Gowanus store. The credits are based on the value of the developed property. Whole Foods spent $63,719,710 to construct the store, according to DEC records.

Whole Foods also received a $206,748 taxpayer-funded credit based on how much it cost to clean up the contaminated land where the store was built, according to state data. The cost of the cleanup wasn't listed in state records.

The 2.1-acre site at Third Avenue and Third Street where the store now sits — complete with a rooftop farm and energy-efficient features — once housed a coal yard, junk yard, oil company and auto repair business, according to state data. The soil was laced with toxins such as xylene, cadmium, benzo(a)pyrene, mercury, benzene, lead and phenol, according to the DEC.

Whole Foods cleaned up the land under the Brownfield program and state inspectors declared the site safe for humans in 2012. The store opened in 2013.

A Whole Foods spokesman did not respond to requests for comment Tuesday.

The Brownfield Cleanup Program was created in 2005 to spur the cleanup of severely contaminated properties that were off state tax rolls. Though well-intentioned, the program was "grossly broken" and often did more to line developers' pockets than to improve the environment, said Travis Proulx, a spokesman for Environmental Advocates for New York, one of the groups that pushed for reforms to the program.

Prior to the reforms — Whole Food entered the program in 2010 — the program was structured so that developers could easily build in hot real estate markets where they would get a sizeable tax credit, because the credits were tied to the value of the developed property. Under the old rules, neighborhoods with severe contamination — often low-income areas — didn't get as much attention from developers, Proulx said.

In 2015, the state legislature passed reforms to rein in the tax breaks developers can receive.

Proulx called the reforms a "great start," but added, "it's going to be really important that the state and public watchdogs keep an eye on it so it doesn't revert to old bad habits."

He noted that there are many developments still in the pipeline that entered the Brownfield program before the reforms and won't be subject to the changes. A 2013 analysis by state comptroller Thomas DiNapoli found that taxpayers could be on the hook for an additional $3.1 billion in tax credits to developers in coming years.

Several properties in Gowanus have been cleaned up under the Brownfield program, or are in the process of being cleaned. They include the 365 Bond luxury rental apartments, the land surrounding the Green Building, and the property where Lavender Lake bar is.

Those cleanups are separate from the massive Superfund cleanup of the canal itself, which is being led by the U.S Environmental Protection Agency. That cleanup started late last year with the removal of debris from the canal and is expected to take several years to complete.

Gowanus is well-known for its pollution, but the list of developments that have received tax credits under the Brownfield Cleanup Program includes several projects in areas generally not thought of as contaminated.

In 2016, the list included:

► The developer of the 42-story luxury rentals in Downtown Brooklyn at 66 Rockwell Place, previously known as 29 Flatbush Ave., got a $2 million credit. The project cost $20.3 million to build, according to DEC records.

► The developer of the rentals on the Williamsburg waterfront at 149 Kent Ave. received a $4.7 million credit. The development cost $16.8 million to build, according to DEC records.

► The developer of the condo tower at 23-01 42nd Rd. in Long Island City, Queens, got a $2.6 million credit. The project cost $9.5 million to build, according to DEC records.

► The developer of the The Sky, a 71-story building on the far West Side of Manhattan got at $6.5 million credit. The project cost $54.9 to build, according to the DEC.