Gotham Gazette https://www.gothamgazette.com/component/tags/tag/2665 Thu, 29 Oct 2020 07:33:49 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) What's The [Data] Point? 20,000 - Industry City Rezoning Negotiations Fall Apart, with Industry City CEO Andrew Kimball & City Council Member Carlos Menchaca https://www.gothamgazette.com/city/9779-whats-the-data-point-industry-city-rezoning-proposal-falls-apart-jobs-menchaca https://www.gothamgazette.com/city/9779-whats-the-data-point-industry-city-rezoning-proposal-falls-apart-jobs-menchaca wtdp industry city

Council Member Menchaca and others tour part of Industry City (photo: William Alatriste/City Council)


What's The [Data] Point? Episode 96: 20,000 - The Industry City Rezoning Proposal Falls Apart, with Industry City CEO Andrew Kimball and City Council Member Carlos Menchaca [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

Industry City CEO Andrew Kimball and City Council Member Carlos Menchaca joined the show to discuss the demise of the Industry City rezoning proposal, which Kimball spent years working on and Menchaca opposed. What happened and what's next?

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

What's The [DATA] Point? · WTDP 96 Mixdown 2

***
by Ben Max, Gotham Gazette
     

Read more by this writer.

]]>
What's The [Data] Point? 20,000 - Industry City Rezoning Negotiations Fall Apart, with Industry City CEO Andrew Kimball & City Council Member Carlos Menchaca Thu, 24 Sep 2020 04:00:00 +0000
Busting Industry City Rezoning Myths https://www.gothamgazette.com/130-opinion/9752-busting-industry-city-rezoning-myths-brooklyn-development-menchaca https://www.gothamgazette.com/130-opinion/9752-busting-industry-city-rezoning-myths-brooklyn-development-menchaca industry city hum

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.

creation cash cowjob

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.

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
Busting Industry City Rezoning Myths Mon, 14 Sep 2020 04:00:00 +0000
How Development Should Be Decided in New York City https://www.gothamgazette.com/130-opinion/9679-how-development-should-be-decided-new-york-city-council https://www.gothamgazette.com/130-opinion/9679-how-development-should-be-decided-new-york-city-council vanbramer carlos

City Council (photo: Emil Cohen/City Council)


We are at a critical turning point in New York City’s history. Large-scale development projects, pushed by big real estate interests and the business class after September 11, 2001, did not give New Yorkers the promised security to avoid the Great Recession, or the next crisis, COVID-19. Meanwhile, a lack of investments in social programs shredded the social safety net New Yorkers were told would save them if they lost their jobs or homes.

If there is any time to insist on accountability before approving massive developments, it is now. That is why we oppose Industry City and YourLIC in our respective City Council districts.

We cannot allow for more displacement and suffering to befall our most vulnerable constituents based on empty promises alone. Yet the real estate lobby (REBNY) and the business class are trotting out the same failed talking points and pushing our City Council colleagues to overrule us.

This is unsurprising. The business class loves “member deference” when it aligns with their interests, and rail against it when it does not. But what is remarkable is how some of our colleagues who should know better agree with them. They say the stakes are too high for us to decide alone, despite us having won the confidence of our constituents at the ballot box and knowing our communities intimately.

Our colleagues are right about one thing – the stakes are too high. According to some estimates, 1.4 million New Yorkers are at risk of eviction because of COVID-19. Around 100,000 are already homeless. Half of all immigrant New Yorkers are unemployed, even though they represent half of all essential workers. And while our most vulnerable neighbors lost their lives and livelihoods, billionaires profited off their misery and are doing better than ever.

The dangerous precedent we must undo is not the Council’s tradition of member deference but our deference to developers. Insanity is doing the same thing repeatedly while expecting different results. If we give developers a blank check in Brooklyn and Queens, despite lacking any accountability to their neighbors to deliver on their promises, we will re-create the very conditions that put New Yorkers in harm’s way to begin with.

Many things must change about how we make land use decisions. The city’s process - ULURP - is flawed and Council members are not always right. But member deference creates accountability at the ballot box, where it belongs. Eliminating member deference would disconnect the votes of our constituents from the decision-making process and give power to whoever can lobby and organize the Council best, regardless of the merits of any proposal.

In other words, member deference prevents the rich and powerful from pushing through projects over the objections of local communities. Ending member deference, during the worst economic crisis in a century when New Yorkers are calling for change, would make our city into a playground for the wealthy again and further displace working class New Yorkers, especially our Black, Latino, and immigrant neighbors.

Every year, developers promise New Yorkers jobs in exchange for our support. But proof matters more than promises, especially now. If we are to prevent the next economic crisis, we must insist on accountability, and resist the siren calls of economic collapse from the ones most responsible for it.

***
City Council Members Carlos Menchaca and Jimmy Van Bramer represent parts of Brooklyn and Queens, respectively. On Twitter @CMenchaca & @JimmyVanBramer.

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
How Development Should Be Decided in New York City Thu, 13 Aug 2020 04:00:00 +0000
Now More Than Ever, New York City Needs Leaders to Welcome Jobs https://www.gothamgazette.com/130-opinion/9668-now-more-than-ever-new-york-city-needs-leaders-to-welcome-jobs https://www.gothamgazette.com/130-opinion/9668-now-more-than-ever-new-york-city-needs-leaders-to-welcome-jobs sp cm cm

Council Member Menchaca & Speaker Johnson (photo: John McCarten/City Council)


All of us who care about New York City – and if you are a regular reader of Gotham Gazette that surely includes you – are worried about its future. COVID-19 has shuttered our economy and seriously impaired the lives and livelihoods of millions of our residents. It is clear that things will never go back to the way they were and that we must turn this disaster into an opportunity to bring back a different, better, fairer city. 

But fear of change and the demonizing of ‘development’ risk derailing one of the most important vehicles New York has to generate new jobs and revenue: changes in zoning so that neighborhoods can adjust to new conditions and attract more housing and business. In January I wrote about the risk to the city’s plan to upzone Inwood in Northern Manhattan to provide more housing. Though the plan included a number of community enhancements and had been approved by the area’s City Council member, Ydanis Rodriguez, it was challenged in court by local opposition groups. Fortunately the appellate division correctly reversed the lower court’s decision, but the opposing groups have vowed to appeal. 

Now comes another possible derailment of a proposed zoning change: the rejection by Council Member Carlos Menchaca of the proposal to expand Industry City on the Brooklyn waterfront.  This plan to turn the area around the vibrantly successful and creative Industry City into a light manufacturing zone was first announced in 2015 and has been reviewed and refined in response to community input. The developers have indicated willingness to sign a community benefits agreement including all of the requirements Menchaca had specified, including removal of hotels from the plan, restriction on the amount of retail space, creation of a manufacturing hub managed by a non-profit, expansion of the existing Innovation Hub to connect more local residents to jobs, support for worker cooperatives and training and research around green manufacturing.

In both the Inwood and the Industry City cases, despite years of community engagement and input, whether through ‘member deference’ which enables the local Council member to veto a project or, failing that, through the courts, vocal groups have been able to sidetrack the projects. The chilling effect of the failure to bring an Amazon headquarters to Queens is being exacerbated just at the moment when we need to be encouraging outer-borough centers of innovation and employment. 

Of course every effort should be made to assure that the current residents of the surrounding area benefit from new development, and the Industry City plan adopts this goal. Indeed 57% of the 8,000 jobs already created by Industry City are filled by Brooklyn residents and 37% from the immediate neighborhood. This rezoning would bring an additional $64 million in private investment on top of the $400 million already spent on Industry City revitalization. It would attract new kinds of businesses and pump 15,000 more jobs and $100 million a year in tax revenue into the city’s economy. Projects like this are vital to ensuring a healthy future and the stakes are too high to let a determined minority override the best interests of everyone else. 

A few public officials have come forward to defend the Industry City project and urge its approval despite the local Council member’s objection. Two of them wrote convincingly in the Daily News, but they are from other boroughs and are moving on from the Council to other positions at the end of the year. Closer to home, Brooklyn Council Member Robert Cornegy Jr. courageously wrote to his colleagues in the Brooklyn delegation urging them to join him in supporting the Industry City zoning application notwithstanding their colleague’s objections. In a follow up op-ed in the Brooklyn Eagle he summed up the argument:

“In the pre-pandemic world, this was already a precedent-setting example of responsible development in our borough that would have been an important project for Brooklyn’s economic future. Now, in the face of a financial crisis unlike anything since the Great Depression, it is an absolute necessity."

"We find ourselves at a historically precarious junction and it is not an exaggeration to suggest that the City Council is now faced with a decision that will help to determine which economic path our City ultimately takes…This pandemic has forced us to think anew about what’s best for the greater good of our borough, our city and all of our residents – not just those within a few square blocks of a proposed development – and within that context I believe the choice for the City Council on Industry City’s proposal should be clear.” 

Bravo! Now what is needed is leadership from city-wide officials who are willing to step up and represent the needs and interests of the entire city. So amid mass unemployment in our city, what does Mayor de Blasio have to say? When first asked about it, he said that because it is a private application his administration doesn’t play a “leading role” and that while jobs are welcomed in New York City, it is really between the developer and the City Council.

The zoning process is overseen by the City Planning Commission, a mayoral agency, which plays a leading role in all of these decisions. The fact that no public subsidies are required for the Industry City project is a plus, not an element that makes it a “private application” that is solely between the developer and the Council. For the mayor to take the position that he has no role in this or any large-scale land-use application unless his administration is the main driving force would be quite an abdication of responsibility.

It seems that he (perhaps urged by someone in his administration) thought it might be better to be slightly more engaged, and a few days later the mayor modified his comments when asked about Industry City again. The traditional deference to the impacted area’s Council member is worth respecting, he said, but added:

“But I do think we have to think about some of the overwhelming dynamics we're dealing with right now. We're in the middle of a pandemic and we've got to get people back to work. We've got to find every way to get livelihoods back to people who need them. So, that needs to be taken into account.”

This is not exactly a ringing endorsement of the Industry City plan, but it is an acknowledgement that the covid crisis should cause City Council members and many others to rethink their priorities and approach to growth, especially jobs. Approving this particular rezoning is the right thing to do and would also serve as a symbol that our elected leaders get that special, hard times call for new approaches. With New York City facing an economic abyss, the mayor has to ratchet up his support and work with the City Council to get the Industry City rezoning over the finish line.

That said, Mr. City Council Speaker, the ball is in your court.

***
Carol Kellermann was president of Citizens Budget Commission from 2008 through 2018.

 ***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

 

]]>
Now More Than Ever, New York City Needs Leaders to Welcome Jobs Mon, 10 Aug 2020 04:00:00 +0000
Industry City and the Police Power of Zoning https://www.gothamgazette.com/130-opinion/8438-industry-city-and-the-police-power-of-zoning https://www.gothamgazette.com/130-opinion/8438-industry-city-and-the-police-power-of-zoning city council cmcarlos

Council Member Menchaca and constituents (photo: John McCarten/City Council)


In the past week, the New York Post and New York Daily News published editorials criticizing New York City Council Member Carlos Menchaca’s March 6 request to delay the certification of a consortium of major real estate investors and developers’ application for a special permit to build two hotels and rezone Industry City for retail, office, and academic uses. The accusatory language in both newspaper editorials exhibits a deep contempt for the necessary public review of private development proposals.

This massive rezoning would greatly increase the density of commercial uses and allow three new buildings with 1.27 million square feet of market-rate, destination retail, hotel, and academic office space, and more importantly, will fundamentally and irrevocably alter the industrial working waterfront.

Menchaca and Community Board 7 requested more time for community review because “ULURP has historically failed to address the most urgent concerns voiced by the Sunset Park community.” A spokesperson was quoted in the RealDeal that Industry City “intend(s) to make our case” through the ULURP process but ultimately agreed to a postponement after Congressional Representatives Nydia Velázquez and Jerry Nadler, and State Senator Zellnor Myrie intervened with a letter to City Planning Director and Chair Marisa Lago.

The Post described Menchaca’s request as “holding Industry City hostage” in order to “blackmail” the developers for a “payoff to the activists.” The Daily News demanded that City Council members cease their “corrupting power on land-use matters” by pointing to Amazon’s February announcement of the withdrawal of a plan to build a massive campus in Queens. In concert with the Post, the Daily News similarly admonished Menchaca’s “meddling” and “extortion,” and demanded that he “must relent” and “the Council must end this craziness.”

I teach an introductory urban planning class and we spend weeks on the complicated topic of zoning. One of the first things we learn is that the legitimacy of zoning is based on the legal concept of municipal police power which refers to the right of the community to regulate the activities of private parties to protect the interests of the public. Menchaca requested a postponement in the certification of Industry City’s rezoning application in order to provide more time for a full vetting of public interests and concerns. This is not an unreasonable request especially as Menchaca’s letter notes displacement and gentrification concerns, and specifically requests Industry City to explain “how its rezoning proposal will mitigate displacement, gentrification, rising rents, congestion, and the effects of climate change.”

Despite indisputable evidence of Sunset Park gentrification including a NYU Furman Center study, the Post editorial repeated Industry City’s delusional claim that since its rezoning does not involve residential development, “it’s irrelevant to gentrification.” Industry City CEO Andrew Kimball’s letter stated that in order to have “modern manufacturing and making at Industry City,” the Special Sunset Park Innovation District rezoning must include “a mixture of uses that allow for a higher return.” And as page 6 of the Draft Scope of Work makes clear, Industry City needs the rezoning for “upscale” hotels, expanded destination retail, and new academic uses because without these city actions, it will not be able to raise $638 million in capital investment. Although Kimball argues that Industry City provides an antidote to gentrification through job creation, he has yet to specify the numbers, types, and wages of “high-quality” innovation district jobs that would be available to Sunset Park’s working age adults (of whom nearly one in two lack a high school diploma).

Industry City’s rezoning is essential to “generating the economic returns necessary to finance additional capital investment in the portfolio” in order to enhance and maximize property value and rent revenues (i.e., high-rent tenants).

As currently proposed, this rezoning will diminish one of New York City’s last remaining industrial waterfront neighborhoods, and as UPROSE Executive Director Elizabeth Yeampierre notes, it also represents a lost opportunity for a frontline community to advance innovation, inclusion, and resilience in the face of climate change. For these reasons and the right of Sunset Park’s Latinx-Asian working class to remain in the neighborhood, we must end the craziness of zoning in the service of the private market and enrichment of real estate developers rather than its intended purpose to protect the health, safety, and welfare of the public.

***
Tarry Hum is a professor at The City University of New York (CUNY) and author of Making a Global Immigrant Neighborhood. On Twitter @TarryHum.

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
Industry City and the Police Power of Zoning Tue, 09 Apr 2019 04:00:00 +0000
Supercharging the Gentrification of Sunset Park https://www.gothamgazette.com/130-opinion/8043-supercharging-the-gentrification-of-sunset-park https://www.gothamgazette.com/130-opinion/8043-supercharging-the-gentrification-of-sunset-park industry city bldgs

Industry City (via Industry City)


In anticipation of the Department of City Planning’s certification of Industry City’s rezoning proposal, Community Board 7 has been hosting a series of town halls to inform and engage the public in discussions about Sunset Park’s waterfront. Four town halls have already taken place and on Monday, CEO Andrew Kimball will present Industry City’s rezoning proposal.   

Undoubtedly, we will hear how Industry City’s proposed Special Sunset Park Innovation District, which entails the development of two hotels, academic space, and expanded retail, will create opportunity for neighborhood residents and small business owners. We will hear that Industry City tenants have already created thousands of jobs and that the Innovation Lab is connecting hundreds of Sunset Park residents to these jobs. Despite a community advocate and blogger’s repeated requests for evidence to substantiate these claims, Industry City has not yet shared any supporting data.

Kimball will likely elaborate how Industry City’s rezoning advances Community Board 7’s 197-a plan, “New Connections, New Opportunities,” adopted by the New York City Council in 2011.  He will most likely bring out Industry City tenants, perhaps the same ones who attended my presentation at the October 1 town hall, to testify about Industry City’s positive community impact in cleaning up the waterfront and assisting local small business owners.  

He may also discuss Industry City’s recent tri-lingual mailer publicizing its website. The mailer includes a pre-paid, addressed form [to Atlas Direct Mail] for recipients to simply check boxes and return stating their support for Industry City’s proposed plan. Since the mailer lacks any detail on the rezoning proposal, its emphasis on opportunity feels like a cheap gimmick to win the support of a community in need of meaningful employment with livable wages.  

While substantive, long-term benefits to Sunset Park’s working class and working poor communities are questionable, the scale of real estate speculation and private investment unleashed by Industry City’s reactivation and related public relations hype is not. Kimball notes the rezoning will facilitate a $1 billion investment and add 1.3 million square feet of new development to Industry City by 2026.  

In a July 2017 Progressive City article, I documented Kimball’s affinity for transnational capital in his public and private roles as a steward of Brooklyn’s industrial properties. I detailed Industry City’s recapitalization of its mortgage with a massive loan from the Bank of China [one of China’s “Big Four” state-owned banks] with more capital to be distributed over time as Industry City is renovated and leasing goals are met.

At a September NYC EDC development finance conference, I learned Sunset Park is targeted for more infusion of private capital. A panel titled, “Beyond Bonds: New Investment Tools Catalyzing Growth,” introduced Opportunity Zones – a federal census tract designation created by Trump’s 2017 Tax Cuts and Jobs Act. Trump’s tax cut act provides a historic reduction in the corporate tax rate as well as lowered taxes for high net worth individuals. Through Opportunity Zones, the wealthy can defer capital gains taxes by investing in businesses or property development in “economically distressed” communities defined as census tracts with a 20 percent or higher poverty rate and a median family income no greater than 80 percent of the area median.

Sixty percent of New York State’s 514 designated Opportunity Zone census tracts are located in New York City. The highest concentration of the city’s Opportunity Zones is in Brooklyn [with 125 designated census tracts] and many are clustered in the “key areas” of Sunset Park and the Brooklyn Navy Yard.  

opp zone

Eleven Sunset Park census tracts are designated Opportunity Zones. While the bulk of Industry City’s massive 16-building complex is located in census tract 18 which is not an Opportunity Zone, surrounding waterfront census tracts that include two Industry City block lots - Block 695, Lots 20 and 43 – are designated Opportunity Zones.  

1

Source: NYC Empire State Development, Brooklyn Federal Opportunity Zones

Most notably, census tract 2 is an Opportunity Zone and includes Block 695, Lots 20 and 43, as well as six properties that Industry City intends to acquire and demolish for its proposed 12-story Gateway Building with ground floor retail and 11 stories of hotel space. These six properties – 950, 952, 954, 956, 958 and 960 Third Avenue – are located between 36th and 37th Streets and, according to the city’s building classifications, they are primarily two-family buildings with ground-level retail.

Census tract 2 exemplifies the defining criteria of an Opportunity Zone with a poverty rate of 31% and a median family income of $46,964. Moreover, the census tract’s 1,600 residents are majority Latino (90%), renters (82%), and lack a high school diploma (59%). Opportunity Zone designation, however, will mean opportunity for private investors to benefit from tax breaks by underwriting Industry City’s hotel and retail Gateway development. Sunset Park’s Opportunity Zones will supercharge the gentrification already taking hold in and around Industry City.

In addition to the waterfront, Sunset Park’s census tract 118 includes two proposed mega-developments on 8th Avenue and is also a designated Opportunity Zone. One of the proposed projects is the Eighth Avenue Center adjacent to the N subway station. Community Board 10 and Sunset Park stakeholders have already expressed opposition to this “ginormous” development. Directly across 8th Avenue is another huge development site that involves the sale of MTA air rights. Developers will surely benefit from the Opportunity Zone designations and the potential infusion of financing for their luxury housing, hotels, and commercial real estate projects.

Industry City and Eighth Avenue Center’s rezonings will undoubtedly catalyze transformative neighborhood change. Augmented by Opportunity Zones, Sunset Park is facing a potential financial superstorm that will supercharge gentrification and displace the multi-racial, multi-ethnic working class populations and small businesses including industrial businesses that have long defined this neighborhood.

***
Tarry Hum is a professor at The City University of New York (CUNY) and author of Making a Global Immigrant Neighborhood. On Twitter @TarryHum.

***
Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

]]>
Supercharging the Gentrification of Sunset Park Fri, 02 Nov 2018 04:00:00 +0000