Wednesday, November 14, 2012

The New York Association of Grocers, the Bodega Association and Gristedes' Owner Join Fight Against FreshDirect

November 14, 2012 | 1:00 | City Hall
The New York Association of Grocery Stores (NYAGS), the Bodega Association and Gristedes’ owner John Catsimatidis have all joined the effort to turn back the city and state’s indefensible proposal to give out $127 million in economic development subsidies to the online grocer FreshDirect.
Press Advisory
          Last February the NYC IDA preliminarily approved a huge multi-million subsidy for the online supermarket FreshDirect. This city subsidy, when added to the proposed state subsidies, amounts to a $127 million handout to a retail grocery delivery service whose proposed relocation to the South Bronx would introduce 2,000 daily vehicle trips, half of which are heavy diesel trucks, into a residential South Bronx neighborhood already suffering from pollution induced asthma rates eight times the national average and appropriately described as “asthma alley”.
          Equally disturbing is the fact that the City and State would give these subsidies to a company that, as its own advertising proclaims, seeks to put local food stores out of business. In its plainest terms, the FreshDirect deal would use taxpayer money to place all neighborhood supermarkets at risk and undermine the city policy-under the Fresh Program-to promote supermarket development and retention. As the city has said;
          “A study (in PDF) conducted for the Mayor's Food Policy Task Force by the New York City Departments of Health and City Planning and the New York City Economic Development Corporation shows that many neighborhoods across the city are underserved by grocery stores. The resulting lack of nutritious, affordable fresh food in these neighborhoods has been linked to higher rates of diet-related diseases, including heart disease, diabetes and obesity.
         In response, the City has established the Food Retail Expansion to Support Health (FRESH) program. FRESH provides zoning and financial incentives to promote the establishment and retention of neighborhood grocery stores in underserved communities throughout the five boroughs. (
          This makes little sense-and the city’s explanation that the subsidies were necessary to keep Fresh Direct from leaving town and going across the river to New Jersey doesn’t pass the laugh test, particularly when Fresh Direct acknowledged that staying in Long Island City was the least disruptive and most economical of its expansion options.         
            FreshDirect is currently unprofitable. Since the majority of its customers live in New York, a move to New Jersey would entail exorbitantly expensive and time-consuming bridge and tunnel crossings that would have been ruinous. City policy makers should have seen and called out Fresh Direct on its empty threat to move. Instead the city blinked and now looks to fork over tens of millions to this transparent extortion scheme-with the state, illegally in our view, following suit. (
         What makes FreshDirect’s extortion tactics and the city’s irresponsible response more outrageous is the fact that the city had already subsidized FreshDirect to locate at its current facility in Long Island City. Taking the city’s subsidy, the grocer was able to get a foothold in the city’s food market and then quickly showed its thanks by making a threat to leave unless it received massive subsidies and got a spot on public land in the South Bronx.  Moreover, as the South Bronx Unite lawsuit has revealed, Fresh Direct applied for and was accepted by the Empire State Development into a subsidy program, worth $19 million, for which it does not qualify – further highlighting the unfair advantage that FreshDirect has come to expect from the city and state.
          The South Bronx Unite lawsuit also draws attention to the fact that the proposed move of Fresh Direct headquarters from Long Island City to the South Bronx would have a devastating impact on the 85,000 residents of the South Bronx neighborhood who already live with massive, polluting waste facilities and truck traffic. Fresh Direct intends to add its truck intensive grocery operations to the long list of polluting facilities already sited at the Harlem River Yard, which includes a 5,000-ton a day Waste Management, Inc. transfer station, a Federal Express distribution hub, the NY Post printing and distribution center, and two fossil fuel power plants.
          In addition to having among the highest asthma rates in the city and the lowest incomes, the South Bronx has the most dense highway network in the city, featuring the Cross-Bronx Expressway, which handles 90% of all truck traffic to the city. The city has also burdened this neighborhood with a Con Edison plant, the city’s largest waste water treatment plant, a sludge processing facility, and the city’s wholesale produce market, each of which generates intense truck traffic and air pollution.  For decades, environmental justice advocates have been pressuring the city to relieve the environmental burdens on South Bronx residents and get other parts of the city to accept their fair share of the city’s noxious infrastructure.
          FreshDirect would make things worse. Despite all this, FreshDirect and the city failed to prepare a full environmental impact study for the proposed project as required by State environmental laws.
           Fueling Fresh Direct with an unfair advantage also jeopardizes our city’s neighborhood supermarkets. In the past ten years  NYC has hemorrhaged supermarkets-losing over 200 stores over the past ten years as taxes rents and regulations have crippled the ability of local markets to stay competitive. (
          Another strong criticism of the deal-leveled by Good Jobs New York-sees the Fresh Direct subsidy as an example of a corporate giveaway:         “No one has examined the sweetness of the FreshDirect deal in more fine-grained detail than Bettina Damiani, project director of the nonprofit group Good Jobs New York. She takes a dim view, and her analysis is here, along with relevant city and state documents.
         “It’s not only an awful lot of money, it’s an awful process,” she says.
          Her disappointment is that much greater because Mr. Bloomberg, despite a profligate slip here or there, has taken a tougher line than his predecessors on corporate welfare. He has refused to toss cash at any corporate chieftain who decides to have lunch with a New Jersey economic development official.” (
          All New Yorkers should support the campaign against FreshDirect’s taxpayer subsidized move to the South Bronx. It is an outrageous misuse of taxpayer money, an environmental threat to an already overburdened South Bronx neighborhood, and a dagger in the heart of the city’s neighborhood grocery retailers - stores that support, through their foot traffic, all of the other retailers in the neighborhoods of New York.

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