Public Hearing on FreshDirect Subsidies from the State

Hundreds of FreshDirect trucks destroyed by Superstorm Sandy were dumped on the South Bronx Waterfront before the company even had (and still doesn't) an official lease.
Hundreds of FreshDirect trucks destroyed by Superstorm Sandy were dumped on the South Bronx Waterfront before the company even had (and still doesn’t) an official lease.

New York State Empire State Development Corporation and FreshDirect tried to pull a fast one last week and have a meeting which gave FreshDirect weeks notice to gather supporters (only 8) and only gave the majority of residents who oppose the deal less than 24 hour notice to gather residents.  This resulted in MANDATORY PUBLIC HEARING for which we must be given, at minimum, 10 days notice to prepare.  Please read below on how to prepare your testimony and all necessary details regarding this process.  This is a major opportunity to once and for all kill this deal which the vast majority of residents have been against since day 1.

Friends, One of the moments for which we have been preparing for over a year is here – the public hearing on State subsidies for FreshDirect – and we need you to show up and provide testimony!

Last Wednesday, the relevant State agency (Empire State Development Corporation) held a directors meeting in regard to State subsidies for FreshDirect.  South Bronx Unite got less than 24 hours notice.  FreshDirect got weeks of notice and lined up 8 speakers with statements of support – from their CFO to several employees to SOBRO to BOEDC and the Bronx Borough President’s office. While that directors’ meeting was obviously stacked against us, it triggered a future mandatory public hearing for which we must be given at least 10 days notice.  We have confirmed that the public hearing will be announced some time after Labor Day and that it will take place on a weekday evening in September in the Bronx at either Borough Hall or Hostos.

Substantive negative testimony received at the public hearing can cause the board to reject State subsidies for FreshDirect (just as the Empowerment Zone Board did in December 2013). As such, we must organize a very forceful lineup of testimony for the public hearing, and we have little time to do so.  Attached is draft testimony we have prepared for all South Bronx residents, friends and allies with the core issues.

Use some, all or none of the draft, but please:

1)      Prepare testimony against FreshDirect receiving State subsidies

2)      Show up to the public hearing (date, time, location to be announced)

3)      Publically read and submit your and/or your organization’s testimony 

Over the next week, someone from South Bronx Unite will be following up with you to answer any questions you may have, to confirm whether you will be able to attend the public hearing and to collect a copy of your organization’s testimony. (EMAIL to confirm your attendance!)

We are winning, but we need everyone to cross the finish line!

South Bronx Unite

p.s. This has always been a David vs. Goliath struggle, but the facts are on our side, and this movement continues to grow.   Mayor de Blasio and his team have received more than 400 phone calls and emails asking him to stop the deal.  Litigation is ongoing (with appeals to the Court of Appeals and the Appellate Division).  South Bronx Unite’s Mychal Johnson was selected as one of 38 global civil society delegates to the UN Climate Summit, bringing international attention to SBX environmental justice and the issue of FreshDirect, SBU is working with political theater group Papel Machete for a dynamic performance in the South Bronx and organizations from across the Bronx are working together on a unified presence during the historic People’s Climate March on September 21.  Ask us about how you can get involved with any of this! Below is a draft of a sample letter of testimony against the FreshDirect deal which you can either use in its entirety, edit and add your own comments or simply use it as a template to write your own:

DRAFT Statement of [Name] On behalf of [name of org] Before the Empire State Development Corporation Public Hearing on the Proposed Subsidies to FreshDirect and FreshDirect’s Application for a Zoning Override

Thank you for the opportunity to testify today regarding the Empire State Development’s (ESD) proposal to subsidize FreshDirect’s move from Long Island City, Queens to the Harlem River Yard (HRY) in the South Bronx.

[Insert appropriate description (e.g. As a South Bronx organization/resident, City Council Member representing Mott Haven residents]/, [I/we] oppose the subsidy for this project because information made available by this and other agencies reveals that the FreshDirect project: (1) runs counter to the needs, desires and well-established development plans of the local community, (2) will have devastating environmental and health impacts on a community where one in five children has asthma, (3) would pay low wages with no guarantee of jobs to local residents (4) violates the constitutional requirement that HRY, as state-owned property, provide a public benefit and reduce truck traffic, (5) is inconsistent with efforts to protect the South Bronx waterfront flood zone in the wake of Hurricane Sandy, and (6) fails to justify the excessive subsidies being sought by FreshDirect and should be denied as a matter of public policy.

(1) FreshDirect’s Business Model Directly Conflicts with the Needs, Desires and Well-established Development Plans of the Local Community

In considering this project, under Section 16 of the Urban Development Corporation Act, this board must give primary consideration to the needs and desires of the local community and must foster local initiative and participation in connection with its planning and development.

The industrial and heavy manufacturing uses on Harlem River Yard are no longer consistent with the actual and contemplated use of the surrounding area, which has been repeatedly rezoned over the last 15 years to foster residential development, develop community access to the waterfront, and turn the area into a true pedestrian-friendly “Gateway to the Bronx.” FreshDirect’s truck-intensive business seriously conflicts with these local desires and plans and, as such, this board must reject the proposal.

In 1997, for example, a five-block area next to Harlem River Yards was rezoned as a mixed-use, residential district. The new zoning was a catalyst for strengthening the area’s antique businesses, along “Antique Row,” and for revitalizing the residential character of this historically mixed-use neighborhood. As a result of the rezoning, approximately 42 row and houses were rehabilitated, 36 new residential units were created or reactivated on upper floors of buildings, upwards of 100 lofts in a former piano factory were converted and new ground floor retail and exhibit spaces were opened. In 2005, under the Bloomberg Administration, the City rezoned an additional 11 blocks adjoining the Harlem River Yard and a section of the Yard itself from manufacturing to mixed use residential, permitting additional residential development. The zoning changed this area from M3-1 (heavy industry), M2-1 (medium industry) and M1-2 (light industry) to a new area zoned M1-5/R8A, M1-2/R6A and M1-3/R8. Developers and residents have taken advantage of the rezoning and have added at least 559 new residential units within the rezoned area.

Numerous small businesses have opened along Bruckner Blvd., including restaurants, gardening centers and cafes/bars, building on the residential character of the neighborhood. Our community has also dramatically increased its recreational use of the Harlem River and Bronx Kill waterways which run along the banks of the Harlem River Yard, and the community looks forward to the opening of the South Bronx Greenway/Randall’s Island pedestrian/bike connector linking the South Bronx to Randall’s Island – a link that runs directly through the Harlem River Yard.

(2) FreshDirect’s Truck-Intensive Business Will Cause Additional, Irreparable Harm to South Bronx Residents’ Health

There is an asthma crisis in the South Bronx. Dubbed “Asthma Alley,” one in five children in our community has asthma, and asthma hospitalization rates in the South Bronx are 21 times higher than more affluent parts of New York City. These staggering facts were documented by a study entitled “South Bronx Environmental Health and Policy Study,” which was commissioned by Congressman Serrano and conducted by the New York University School of Medicine and the Graduate School of Public Service together with local South Bronx Organizations. The study found that the levels of asthma in the South Bronx were caused by diesel truck emissions from the area’s highway and industrial facility saturation, and that the solution was to reduce the already overburdened rates of truck traffic in the community and to provide for more open space.

FreshDirect is a trucking business. In its own application to the New York City Industrial Development Agency (IDA), the company disclosed that it would bring 938 diesel truck trips every day in and through the Mott Haven/Port Morris neighborhood. This number does not account for the additional car trips or company-expected rates of growth, which would bring the number of additional vehicle trips to upwards of 3,000 per day. Introducing into our neighborhood, and at taxpayer expense, the level of truck and other vehicle traffic that FreshDirect will bring is unconscionable.

To make matters worse, the lead agency for this project, the IDA, declined to fully assess the environmental impacts of the proposed relocation of FreshDirect’s truck-intensive business, instead relying upon a 20-year old environmental impact statement that was incapable of assessing the impacts that this project would have. For example, the 20-year old EIS does not analyze fine particular matter (P.M. 2.5), a leading cause of asthma and a host of other pulmonary and cardiovascular diseases. Twenty years ago, PM 2.5 was not a well-known public health issue; now, however, PM 2.5 must be studied as part of any environmental impact analysis. At nearly every turn, the IDA and FreshDirect underestimated impacts and ignored key changes to the community and the original project plan in order to avoid their obligation to perform a full envioronmental impact analysis. In addition to completely ignoring the rezoning from industrial to mixed-use residential, the IDA failed to conduct the requisite traffic, air quality, noise, zoning, greenhouse gas, NYC Waterfront Revitalization Plan Consistency Assessment analyses mandated by the State Environmental Quality Review Act.

FreshDirect claims that it will develop a “green fleet” at some point in the future, but it fails to explain why, when the company lost more than half its fleet in Hurricane Sandy last year, it chose to replace the damaged trucks with a complete set of new diesel trucks.

Moreover, Congressman Serrano, State Senator Serrano and New York City Council Members Mark-Viverito and Arroyo have asked the New York State Department of Transportation (DOT) for a moratorium on all new development at the Harlem River Yard until DOT audits its lease with Harlem River Yard Ventures and undertakes an investigation of the health and environmental impacts of the current and proposed uses taking place at the Yard, including with respect to FreshDirect.

Citing “deep misgivings about this [FreshDirect] project because of its impact on the health of Bronx residents,” Congressman José E. Serrano went on the stop $3.5 million in additional subsidies being sought by the company from the New York Empowerment Zone Board in December 2013.

(3) Low-Wage Jobs Despite an Enormous Subsidy, an Alarming Record of Discrimination/Unfair Labor Practices and No Enforceable Commitment to Local Hiring

This board has an obligation to ensure that subsidies go to good employers paying decent wages. That clearly is not the case for FreshDirect, a company which spent hundreds of thousands of dollars to be excluded from the living wage requirements of the city and which has a deeply concerning record of discrimination and unfair labor claims.

Last year, New York City Council overwhelmingly passed the Fair Wages for New Yorkers Act, which requires any private development project directly accepting $1 million or more in taxpayer subsidies to pay employees a living wage of $10/hour with supplemental health benefits or $11.50/hour without benefits. FreshDirect, however, angled to receive a pass on this “living wage” requirement despite seeking a subsidy more than 100 times the threshold. FreshDirect spent more than $300,000 lobbying to undermine this monumental legislation. Even Mayor Bloomberg criticized the speaker of city council for delaying the living wage legislation vote to exclude FreshDirect.

Moreover, in the past four years, FreshDirect has faced at least 27 discrimination complaints and has had nine unfair labor claims filed with city, state and federal agencies. As disclosed in its subsidy application, these include claims of unfair labor practices and claims of discrimination on the basis of race, national origin, age, disability, religion, and gender. The company is also currently being sued by current and former employees in a class action for violating federal and state law by withholding more than $23 million in overtime wages and tips per year from drivers.

In addition, FreshDirect signed an MOU with Bronx Borough President Ruben Diaz Jr. in which it merely commits to “make its best efforts” to hire Bronx residents for 30% of all new jobs. This is not a commitment to actually hiring Bronx residents, only an unenforceable commitment to try to hire them. There is no job commitment specifically for residents of the South Bronx.

The South Bronx needs employers who pay living wages and are committed to hiring South Bronx residents. (4) Siting FreshDirect at Harlem River Yard Would Further Frustrate the Lack of Public Benefit that Forms the Basis of DOT’s Lease of the Yard to Harlem River Yard Ventures The New York State Constitution requires that leases of public land first and foremost provide a public benefit. The land on which FreshDirect proposes to build is part of a 90+ acre waterfront lot owned by DOT and leased to a private developer that has been the subject of two prior audits by City and State Comptrollers and has subleased the land in a manner that has been exacerbating the health crisis in the South Bronx.

In 1991, the NYSDOT and Harlem River Yard Ventures entered a lease for the Harlem River Yard whereby Harlem River Yard Ventures agreed to provide the public benefit of an intermodal terminal at the Yard to reduce regional truck traffic through increased rail use. As part of this arranged public benefit, in 1994 ESD approved a $3.5 million loan to Harlem River Yard Ventures to develop the intermodal terminal, yet to-date, not one intermodal lift has occurred at the Yard. Harlem River Yard Ventures has instead, for the last 20 years, subleased the waterfront property to diesel-intensive, heavy industry applications, including a FedEx hub making over 1,400 daily truck trips through the neighborhood, the New York Post printing and distribution center, and a 5,000 ton per day waste transfer station, one of four waste transfer stations located within a 1/8 mile radius.

Harlem River Yard Ventures is now proposing to lease to FreshDirect, which plans to build one of its facilities (as part of its plan for a 500,000 square foot warehouse and truck parking lot and fueling station) directly within the 28 acres reserved for the intermodal terminal – amounting to a complete abandonment of the public benefit required by the lease and previously funded by this agency.

Adding insult to injury, Harlem River Yard Ventures has profited to the tune of $61 million since the lease commenced. It collects approximately $500,000 per month in rent from its subleases, while paying only $43,000 per month in rent to DOT for the entire 94 acres.

(5) Subsidizing FreshDirect’s Relocation to a South Bronx Waterfront Flood Zone is a Misuse of Taxpayer Money, Particularly in the Wake of Superstorm Sandy, Where Exisitng Open Spaces are now being Preserved to Absorb Inevitable Storm Surges

In February, 2012, the IDA contemplated FreshDirect’s application for more than $80 million in subsidies to move to a South Bronx waterfront flood zone. Nine months later, Superstorm Sandy hit, taking the lives of 43 New Yorkers and wreaking unprecedented damage to homes, businesses, and communities along the coast, in the tune of $19 billion worth of damage.

FreshDirect now appears before this agency seeking tens of millions of dollars of taxpayer money to build a 500,000+ square foot warehouse, parking garage and fueling station in a South Bronx flood zone that sustained significant damage during Superstorm Sandy. Upwards of three and half feet of water swelled Harlem River Yards at Lincoln Avenue, leaving a trail of destroyed businesses and a concerning toxic-appearing residue along the streets. The foundation of the former East 132nd Street pier, which abuts the Long Island Sound and is adjacent to a fossil fuel power plant, was forcefully ripped out of the ground from the pressure of the storm. FreshDirect’s proposed site is on the other side of that power plant. In fact, most of the borough’s electrical grid infrastructure is in and around the site on which FreshDirect proposes to build, which lines the Bronx Kill waterway feeding into the Lond Island Sound.

In response to the devastation of the storm, Mayor Bloomberg laid out a high priority plan for “A Stronger, More Resilient New York” to protect New York City from the threat of rising sea levels and powerful storm surges in the future. A central component throughout the plan is to study how natural areas and open space can be used to protect adjacent neighborhoods. Indeed, the plan calls for a study, to be completed by 2014, of waterfront open spaces and natural areas to direct and store excess floodwaters.

Already, the New York City – Region 2 Advisory Committee (RAC) for the New York State Open Space Conservation Plan recommended for priority status a community developed and driven Mott Haven-Port Morris Waterfront Plan that would preserve as open space seven inter-connected waterfront projects lining the South Bronx shoreline, including the site on which FreshDirect proposes to build its warehouse. The recommendation came in May 2013 following a series of meetings led by the New York State Department of Environmental Conservation and the New York State Office of Parks, Recreation, and Historic Preservation together with the New York City Departments of Parks and Recreation, Environmental Protection and City Planning and representatives from all five New York City borough presidents’ offices.

Subsidizing FreshDirect’s plan for the South Bronx waterfront would be a severe misuse of taxpayer money and would thwart city- and state-wide efforts toward coastal protection in light of climate change.

* * *

Finally, and importantly, there has been no analysis as to why FreshDirect is unable to remain in its existing, city-subsidized location. In fact, documents submitted to the New Jersey Economic Development Authority from FreshDirect, show that the company has the ability to expand in its current Long Island City facility. Moreover, there has not been a cost-benefit analysis to consider the impact that this subsidy would have upon existing brick-and-mortar grocery stores – a tremendous oversight. There has also been no analysis on the impact this move would have on FreshDirect’s current employees in Long Island City. Could taxpayers be subsidizing the loss of jobs for Queens residents? Given the needs of the South Bronx, allocating tremendous resources to one company is irresponsible. This is particularly the case when subsidizing FreshDirect so heavily will harm other grocery stores in the city, and in the South Bronx in particular, and when the food offered by FreshDirect is priced at levels beyond the means of most South Bronx residents. For these reasons, as well as the reasons elaborated above, including that the FreshDirect project runs counter to the needs, desires and well-established development plans of the local community, would exacerbate the health crisis in the South Bronx caused by oversaturation of diesel trucks, would reward circumvention of living wage requirements and back track records of unfiar labor claims, would further subvert the public benefit legally required of state land, and is inconsistent with efforts to protect the South Bronx waterfront flood zone in the wake of Hurricane Sandy, we ask that ESD deny FreshDirect’s application for subsidies and for a Zoning Override. Respectfully submitted,



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Ed García Conde

Ed García Conde is a life-long Bronxite who spends his time documenting the people, places, and things that make the borough a special place in the hopes of dispelling the negative stereotypes associated with The Bronx. His writings are often cited by mainstream media and is often consulted for his expertise on the borough's rich history.