FreshDirect is getting a tax break and
billionaire competitors local businessmen say it's not fair. Everyone's favorite grocery delivery service has been planning a controversial move from its LIC headquarters to the South Bronx, and today business coalitions joined activists and City Council members on the steps of City Hall to rally against the company's proposed relocation.
FreshDirect is slated to receive $127 million in tax breaks—$80M from the City, $47M from Albany—if their proposal to relocate to the Harlem River Yard in the South Bronx passes. FreshDirect is being considered a wholesaler and not a retailer, and is thus eligible for tax breaks which local groceries and bodegas are not. And the New York Association of Grocery Stores and the Bodega Association aren't having it.
"It is unfair to do this and it creates an unfair, competitive advantage for the rest of the retail food stores on our beloved City," said John Catsimatidis, the billionaire CEO of Gristedes, in a statement read by an aide at today's rally. Councilwoman Latisha James added that "It's an issue of quality, of fundamental fairness," and that "tax dollars should be used in a more fair and competitive fashion."
In addition to its tax maneuvering, FreshDirect was maligned for the threat its move poses to South Bronx residents. The company would bring 3000 additional vehicle trips to the South Bronx every day, which Mychal Johnson of South Bronx Unite says poses a significant medical threat for "a community that has asthma rates eight times the national average."
Of course, automobile transportation is FreshDirect's bread and butter, and will be an issue no matter their location. "There's no middle ground other than a fundamental alteration of their business model," said lawyer Gavin Kearney, who is helping sue the company for failure to produce an environmental report. Kearney says FreshDirect "systematically understated their environmental impact" when applying for the space.
Meanwhile, FreshDirect has (sort of) already moved into the neighborhood: After Sandy, the company dumped over 60 of its damaged trucks on the proposed waterfront site. "The Bronx has to stop being a dumping ground for New York City," said Johnson. Monxo Lopez, a South Bronx Unite member told the Daily News that "They feel our waterfront is a junkyard."
The company is no stranger to controversy, but faced with criticisms of both conservative and liberal council members (Dan Halloran was also on hand at today's rally), this may be the delivery giant's biggest challenge yet. Whatever FreshDirect's future holds, we're just crossing our fingers they'll be able to get turkeys for Thanksgiving.
Update: Fresh Direct has issued this statement in response to today's rally:
It is unfortunate that a small but vocal group of FreshDirect critics wishes to stand in the way of new economic development and employment opportunities in the South Bronx.
Our partnership with the city and state will play a crucial role in stimulating the local economy and creating jobs in an area that desperatelyneeds them. We are investing $112 million in the Bronx and creating 1,000 new jobs, many of which we hope will go to local residents.
And over the next 25 years, our Bronx facility will generate over $250 million in total economic benefits for the city - a significant return on its investment.
· More than half (58 percent) of our total incentives package comes through real estate tax abatements. This is not cash out of current government budgets, which means there is no additional cost to taxpayers. If we were not making this move, this land would in all likelihood continue to be idle.
· $18.9 million in benefits are tied to the creation of up to 1,000 jobs over the next decade. FreshDirect will not receive a single dollar from these credits until we meet certain benchmarks over that time period.
· $25 million in incentives will go directly into funding the construction of the new facility. Construction jobs will be partly paid for with these incentives, further helping stimulate the Bronx economy. The state will be able to recoup most or part of its portion of the benefits if we fail to retain 1,949 full-time permanent employees from our current workforce.
· FreshDirect is covering over half of the total construction costs.