Fresh Direct granted generous tax exemption package

IDA approved $81 million in incentives to assist Fresh Direct relocation to the Bronx. On February 14, 2012, the City’s Industrial Development Agency approved financial incentives of approximately $81 million to assist Fresh Direct in relocating its headquarters and operations center from Long Island City to the Mott Haven section of the Bronx. Fresh Direct, an Internet grocery delivery service, sought assistance to build a 500,000 sq.ft. distribution facility and separate parking and maintenance facilities. The sixteen-acre project site is located between East 132nd Street and the Harlem River beneath the Willis Avenue Bridge approach. Fresh Direct will receive nearly $128 million from the City, the State, the Bronx Borough President’s Office, and the Bronx Overall Economic Development Corporation. Fresh Direct will invest $112.6 million in theproject.

The IDA will provide Fresh Direct with approximately $71 million in sales tax exemptions, mortgage recording tax deferrals, and real estate tax exemptions, and up to $10.5 million to acquire assets to be used at the new facilities. The Economic Development Corporation will provide Fresh Direct with a $1 million loan, and $4.9 million in energy benefits. The Bronx Borough President’s Office will provide Fresh Direct with a $1 million capital grant, and the Bronx Overall Economic Development Corporation will add a $3 million loan and a $500,000 capital grant. The State will provide nearly $34 million in tax credits, capital grants, energy incentives, and vouchers to buy electric vehicles. Fresh Direct expects that the project will create approximately 684 construction jobs. IDA estimated that the direct and indirect City taxes generated by Fresh Direct would approach $255 million. The company currently employs 1,963 people and expects to add 344 employees by June 2015, and 620 more employees by June 2021.

Fresh Direct agreed in a memorandum of understanding with Bronx Borough President Ruben Diaz Jr. to make its best efforts to ensure that at least 30 percent of new hires reside in the Bronx, consider expanding Bronx delivery service, and continue to seek State approval to accept food stamps. Fresh Direct also stated that it intended to purchase ten electric delivery trucks as part of its goal to have a 100 percent green transportation fleet within five years.

Elected officials, labor unions, and community groups opposed the subsidies. Local Council Member Melissa Mark-Viverito by letter asked the IDA’s board of directors to delay its vote on the financial assistance package. Mark-Viverito expressed concerns about whether the IDA had adequately considered community concerns. Labor unions opposed Fresh Direct’s labor practices and alleged that the company had been hostile to employee unionization attempts. Community groups opposed to Fresh Direct’s relocation cited concerns about the increased delivery truck emissions in the area, and complained that the company did not provide service to the South Bronx community.

The IDA board of directors approved the incentives package by a 14-1 vote. Carol S. Kostik, City Comptroller John C. Liu’s representative, voted no. In a press release, Liu said the IDA’s approval process was badly flawed, and that the City had not clearly justified the subsidies.

New York City Industrial Development Agency, Board of Directors Meeting (Feb. 14, 2012).

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