Industry City (photo: @IndustryCity)
City Council Member Carlos Menchaca’s July announcement of his intent to vote no on Industry City’s controversial “special innovation zoning district” because Jamestown Properties and investor owners were “ramming through their proposal unchanged,” catalyzed a deluge of appeals to the City Council and Speaker Corey Johnson to break the long-standing tradition of ‘member deference’ on matters pertaining to land use and real estate development.
The New York Daily News followed with three editorials urging Industry City to “build bigger” and “The Council must vote yes” because the stakes for the city are to “build or die.” Members of the City Council - Robert Cornegy (Brooklyn District 36), Ritchie Torres (Bronx District 15), and Donovan Richards (Queens District 31) - penned opinion pieces stating that as a “steward of the public good,” they plan to “do what I believe is right” and vote to approve Industry City’s massive special district and rezoning application. With no direct neighborhood ties or experience, their support is “personally offensive” to Alexa Avilés, Community Board 7 member and candidate in City Council District 38 to replace the term-limited Menchaca.
Amid the ongoing economic toll of the COVID-19 pandemic, the rezoning of Industry City has taken on heightened urgency as an engine of job creation in a city facing “a severe blow” to its local economy and “distressingly high” unemployment rates, particularly among immigrants and communities of color. A Chinese language news article reposted in City Limits reported on a letter to City Council Speaker Johnson from Sunset Park’s Chinese immigrant growth coalition, comprised of Community Board 7 members, business and property owners, and local developers expressing their support for an Industry City expansion. Community Board 7 member Kenny Guan, owner of Guan Realty Corp. located in neighboring Dyker Heights, said, “We need to build up locally and in the city and the entire country with jobs especially with the Coronavirus here in Sunset Park.” Mr. Guan also makes an appearance in an Industry City video touting opportunities for local small businesses.
“There are zero public dollars at stake here”
Supporters of Industry City repeat and perpetuate the false notion that as a “purely private investment,” Industry City, therefore, does not benefit from public subsidy. In a 2015 Crain’s article, Industry City CEO Andrew Kimball noted city and state investments of $115 million for infrastructure upgrades to the sprawling 16 building complex. The city also invested in ferry service and a fiber optic broadband network along Third Avenue to provide high-speed connectivity, and as former Deputy Mayor Alicia Glen noted, “If we were not doing all this other stuff, [Industry City] wouldn’t be as successful as they’re going to be.”
Furthermore, a Partnership for New York City letter signed by 17 organizations including labor unions, local chambers of commerce, and the Real Estate Board of New York, claimed rezoning Industry City “will generate $100 million a year in desperately needed local tax revenue.” Real property taxes are the largest source of city revenues to fund essential public services such as education, housing, transit, and health services. The truth, however, is Industry City has long been a beneficiary of the city’s costliest commercial real estate tax exemption program, the Industrial and Commercial Incentive Program (ICIP), which significantly lowered the amount of tax owed on a commercial property by reducing the property’s assessed value for up to 25 years.
Due to its high cost in foregone commercial property tax revenues, which the Independent Budget Office estimated at $500 million in fiscal year 2008, ICIP was replaced by the Industrial and Commercial Abatement Program in 2008. But, properties with previously approved ICIP tax exemption benefits (such as Industry City) were not affected.
Despite the perception that Industry City does not benefit from public subsidies, three Industry City buildings have been paying significantly reduced property taxes for nearly two decades. In the case of 639 2nd Avenue, which is one of Industry City’s nine city block-long “finger buildings” connected by a public corridor of boutique retailers dubbed Innovation Alley, its current estimated market value is $36,331,000 but the 2020/2021 taxes will be based on an assessed value of a mere $9,446,240. The 25-year ICIP benefit period for 639 2nd Avenue will end on June 30, 2027. For 882 3rd Avenue, a 12-story building with commercial office tenants, Industry City’s 2020/2021 tax bill will be based on an assessed value of $21,827,520, which is significantly less than half the property’s market value at approximately $60 million. Industry City’s commercial property tax exemptions are, in fact, a public subsidy.
“To Bring 20K New Jobs to Sunset Park”
City Council Member Ritchie Torres’ statement in his co-authored New York Daily News opinion piece, “..Industry City’s application is not about skyscrapers that displace people. It is about jobs that employ New Yorkers in a time of depression-level unemployment,” is particularly myopic and disappointing. As Chair of the Oversight and Investigations Committee, Council Member Torres led a March 2019 joint oversight hearing with Council Member Paul Vallone, Chair of the Economic Development Committee, to demand an account of Mayor de Blasio’s New York Works jobs plan. Describing the mayor’s plan to create 100,000 “good-paying” jobs by 2027 as “glorified wishful thinking,” Council Member Torres was a fierce advocate for accountability of the mayor’s “pretty promises.”
Community concerns about Industry City have long centered on the questionable promise of entry-level, good-paying jobs for working class New Yorkers. Despite the fanfare about an Innovation Lab to connect Sunset Park residents to employment at Industry City, the only account of workforce training and placement outcomes showed paltry gains for individuals seeking employment. In a one-year period between May 2018 and May 2019, the Innovation Lab helped place 114 individuals of whom 91 secured employment in Industry City “innovation economy jobs” such as maintenance/building services, security guards, dispatchers, food production, and retail.
One of Council Member Torres’ chief criticisms of New York Works focused on the “uncertain at best and woefully inaccurate” method of tracking job creation. It was during the March 2019 joint oversight meeting that Council Member Torres’ questioning of job projections versus actual numbers of jobs created led to the discovery that in the one year since the New York Works implementation, $300 million was spent to create a mere 300 actual jobs at that point. It is, therefore, especially disappointing that Council Member Torres endorsed Industry City’s rezoning application without studying Industry City’s track record in job creation for working class New Yorkers. Regulating land use and zoning are key tools the city leverages for economic development and job creation, and as tools that should advance public interest and welfare rather than private investor profits, job creation claims based on a rezoning deserve the highest level of scrutiny and accountability.
Acknowledging the lack of Industry City job creation data, Council Member Menchaca appealed to his colleagues in a September 9 letter, writing, “Industry City’s argument boils down to a promise. That they will create thousands of jobs during an economic recession. This argument is also their greatest liability.”
“The Ultimate Cash Cow”
A few months after Jamestown Properties and their investor partners acquired an ownership share of Industry City and hired Andrew Kimball, who transformed the Brooklyn Navy Yard into "an economic engine of craft whiskey distilleries and film studios," working artists were displaced in favor of hosting art and design festivals such as the NYCxDesign. At the May 2014 NYCxDesign, Chilean artist Sebastian Errazuriz created a cash cow piñata stuffed with $1,000 bills. Festival attendees took turns swinging a stick at the piñata in an effort to break it and grab for the dollar bills. Errazuriz stated his cash cow symbolizes “...a golden calf from the Bible, a false idol, the Bull of Wall Street" and years later, the cash cow piñata remains an apt metaphor for the “false idol” of job creation based on a massive private investor and developer-led rezoning.
The COVID-19 pandemic underscored deep and persistent racial inequality but approval of Industry City’s rezoning proposal to establish an innovation district will not generate the jobs desperately needed by working class New Yorkers.
Tarry Hum's family moved to Sunset Park in 1974, and her father continues to reside there. She is Chair of the Urban Studies Department at Queens College, CUNY and author of Making a Global Immigrant Neighborhood. On Twitter @TarryHum.