Archive for the ‘New York’ Category

Report Documents Proof of Low-wage Employment at NYC Subsidized Projects

March 11, 2011

This week, Good Jobs New York, along with the Fiscal Policy Institute and the National Employment Law Project, released a report highlighting how New York City economic development policies often support low-wage jobs. The policy brief An Overview of Job Quality and Discretionary Economic Development Subsidies in New York City, describes the variety of subsidies and jobs at three well-known projects: Yankee Stadium, Gateway Mall in the Bronx and the Queens warehouse of Fresh Direct, an on-line grocery store.

Yesterday, the findings of the report were discussed at a forum at the City University of New York’s Graduate Center for Worker Education.

Data to estimate the wages at firms came from various sources including public records, government wage data and field interviews.

Together, the projects analyzed in the brief won tens of millions of dollars in benefits from the City, but because there are no job quality standards attached to employment at the projects, many jobs pay remarkably low wages.  Of the 4,909 jobs studied (concession food and beverage workers, warehouse workers, retail salespersons, security guards, and cashiers) the estimated annual median pay ranged from $17,534 to $26,395 for a full-time worker. Ironically this is only 58 percent to 87 percent, respectively, of the Bloomberg administration’s own 2008 poverty threshold for a four-person family in New York City. Security guards, representing about 563 of the jobs nearly 5,000 jobs studied, earned the highest wages at $12.69 an hour.

Cashiers working full-time in the retail industry (a rarity as a business that depends on part-timers) earn approximately $17,500 a year. The prevalence of low wage employment continues at the controversial, heavily subsidized new Yankee Stadium where seasonal jobs are the norm; starting wages there are estimated to be $9.19 an hour. Of the over 1,200 employees working in a Queens warehouse for Fresh Direct, the starting wage was typically the legal minimum.

Obtaining the data for the report (originally released last May and updated with new data) was a daunting task. Transparency about how discretionary subsidies are allocated has improved greatly over the years. But as the report states, the city falls flat on providing data enabling New Yorkers to determine the quality of jobs at subsidized projects.

Pfizer Pays Up

December 8, 2010

Yesterday, Bloomberg News reported pharmaceutical giant Pfizer paid New York City $24.7 million for subsidies it used along with a penalty, for failing to live up to promises made in a $46 million corporate retention package awarded by the Industrial Development Agency in 2003.

While this is indeed welcomed news, it’s diminished by the fact that the subsidy package should never have happened in the first place.

As GJNY testified at a hearing before the subsidy was awarded, Pfizer is a mainstay of Manhattan’s East Side and didn’t need taxpayer’s money to expand its offices. Others, angry at Pfizer’s drug policies concerning distribution of drugs to poor people and those with HIV and AIDS, were offended that public money would go to the pharma giant’s real estate pursuits. To top it off, in June of 2003, an executive was quoted in Crain’s New York saying the firm never planned to leave the city.

While details are sketchy, we assume the company fell out of favor with the city after closing its Brooklyn plant in 2007 where it’s been since the mid 1800’s and when word got out about reductions in its workforce and Manhattan office space. The Pfizer deal, while egregious, shows that the Bloomberg Administration allows for strong recapture (compared to his predecessor Rudy Giuliani) especially in the very early years of a deal; the city can demand 100% repayment and penalties for job losses before June 2011. Though the city’s handling of the MetLife deal shows recapture provisions aren’t always equally enforced.

The city, as of yet, hasn’t put out a press release detailing where the Pfizer deal went array, but it shouldn’t be shy about holding companies accountable.

Finally, Subsidies are Sexy in New York City

November 17, 2010

National retailers get it. Commercial office towers in Midtown Manhattan get it. But nothing seems to have grabbed the attention of New Yorkers like subsidies for strip clubs. Last week, Juan Gonzalez of the Daily News revealed – in true tabloid form on the paper’s front page – that a handful of strip clubs benefit from the Industrial and Commercial Incentive Program.

The Industrial and Commercial Incentive Program (ICIP) program provides property tax breaks to companies that construct or renovate property in most areas of New York City. For years GJNY has urged officials to rethink this program. Then, thanks mostly to a 2008 report by Manhattan Borough President Scott Stringer’s office, ICIP was reauthorized as the Industrial and Commercial Abatement Program or ICAP in 2008. Now utilities are exempt and benefits for some retailers and property owners in parts of Midtown and Lower Manhattan are have been reduced for future applicants.

But even with these reforms the program has moved far from its 1970’s original intent to help manufacturers expand in the outer boroughs, the Bronx, Brooklyn, Queens and Staten Island. “This is one of the weirdest exemption programs ever devised,” Borough President Stringer told the Daily News after learning about the strip club subsidies.

Additional proof that the program has been watered down, beneficiaries not only include Penthouse Executive Club west of Times Square and Starlets Gentleman’s Club in Queens but also office buildings on Park and Fifth Avenues and several luxury hotels.

ICAP is up for renewal by the New York State legislature next year. These revelations will most assuredly mean a new set of eyes on this subsidy program and hopefully lead to more substantial reforms.

A Financial Debacle for Yankee Stadium’s Subsidized Garages

September 28, 2010

by Dan Steinberg

That Good Jobs New York accurately predicted that the parking garages at the new Yankee Stadium would be a financial debacle is of little consolation to the residents of the surrounding Bronx neighborhood, who forfeited heavily used park land so that those structures could be built with over $100 million in subsidies.

Recently, New York Daily News columnist Juan Gonzalez reported that the garage developer is on the verge of defaulting on $237 million in tax-exempt bonds issued by the city’s Industrial Development Agency (IDA).  This comes several months after Gonzalez revealed that the developers were being permitted to defer approximately $9 million in rent payments to the city.

In March 2006, Good Jobs New York joined a coalition of environmental and planning organizations in calling on legislators to eliminate the new parking garages and redirect the public funds toward construction of the new Metro-North station.  The groups criticized the city for encouraging fans to drive to the transit-accessible stadium despite the potential impacts of additional traffic congestion and pollution on the surrounding South Bronx neighborhood, which already suffers from one of the highest asthma rates in the country.

In testimony before the IDA in April 2007, Good Jobs New York also argued that the garages were a risky investment due to their high costs and the likelihood that demand for stadium parking would diminish.  Aside from the fact that the new stadium would seat 4,000 fewer fans than the “House that Ruth Built,” we contended that the new Metro-North station adjacent to the stadium would cause more fans to arrive by train rather than car.

As it turns out, about 5,000 fans per game are riding Metro-North, and many who do drive are spurning the $23 garage parking fee in favor of on-street parking or cheaper options nearby.  When you tack on the 600 free parking spaces the Yankees insisted on receiving, this all adds up to major revenue problems for the garages. In our report Insider Baseball, GJNY also exposed the garage developer, Bronx Parking, as the subsidiary of a politically connected firm with a spotty track record when it comes to publicly financed projects. The fact that it had already defaulted on two previous bonds for projects in Syracuse and Monroe County should have raised red flags among IDA board members.

At every step of the way city officials capitulated to the demands of the Yankee organization.  In doing so they set the stage for the biggest default of an IDA bond in recent memory, potentially making it more expensive to finance worthwhile projects in the future.  The garages will forever stand as a monument to the Bloomberg administration’s failure to stand up to one of the biggest bullies in town, my beloved Yankees.

Dan Steinberg, a PhD candidate in urban planning at Columbia University, formerly worked as a research analyst at Good Jobs New York.

New York City Industrial Development Agency Establishes Landmark Transparency Reforms

September 25, 2010

This week New York City leapt to the front of the transparency pack with reforms to its Industrial Development Agency (IDA) that will improve taxpayer awareness of and participation in proposed economic development deals.

New Yorkers have spent years advocating for a more inclusive and transparent process around high profile proposals like Yankee Stadium, Kingsbridge Armory, Albee Square, Reuters America, Recovery Zone Facility Bonds (via IDA’s sister entity the Capital Resource Corporation), and post 9/11 Liberty Bonds.

The reforms are key to helping New Yorkers engage in a process that has been difficult terrain for those wanting to offer suggests that would improve, support or opposed IDA proposals, which grants discretionary tax-breaks and tax-free financing to companies that pledge to remain in New York City. 

Of the more than 100 IDAs across the state, which have come under fire over the few years and most recently from the State Comptroller and New York Jobs with Justice, the NYC IDA is now clearly the most transparent.

These improvements, while certainly a step in the right direction, do not solve every problem. For example: The public should have online access to applications and cost/benefit materials of proposed deals 30 days in advance of public hearings, not 12 days. We also recommend that webcasts of hearings and meetings remain on the agency’s website longer than three days. That said there’s plenty of good news:

  • The value of other non-IDA discretionary and as-of-right benefits will be included in the project materials. This isn’t the same as a citywide unified economic development budget, but for the first time it creates a more comprehensive picture of the multiple subsidies going to a particular project;
  • Applications and the IDA’s cost/benefit application will be available 12 business days in advance of public hearings; and
  • Meetings between applicants and staff at the IDA’s compliance division will happen in advance of approval to ensure a firm understands what its commitments are in exchange for the subsidies.

The New York City Industrial Development Agency is becoming an example of how other economic development agencies around New York State – indeed the Nation – can and should engage the public.

Right questions, wrong decisions on subsidies for big firms in NYC

August 5, 2010

Deloitte has an office in the city's municipal building on the same floor as the City Comptroller

At the New York City Industrial Development Agency’s public hearing last week, two proposals generated notable controversy: one to bestow millions in tax breaks on Big Four accounting firm Deloitte LLP, and another to revive a subsidy agreement from 1998, still worth millions in unused credits, for information services giant Thomson Reuters. This past Tuesday, the IDA board approved both projects, but not before a handful of board members engaged in a robust dialogue with IDA staffers, especially on the Thomson Reuters proposal.

The Deloitte proposal could have benefited from an even more vigorous discussion. For one thing, it smells like the same old game in which companies pit states and regions against each other in bidding wars for investment. As an IDA staffer explained, the agency “took seriously” a “threat” that Deloitte would leave the city for “other opportunities,” namely New Jersey. (Deloitte LLP plans to use the subsidy to help pay for moving its headquarters from one highly prized Manhattan office location—midtown—to another—Lower Manhattan.) And yet IDA staff also reassured the board that the proposal wasn’t about retention, but about growth. As EDC President Seth Pinsky stated, Deloitte will get no benefits until it increases its employment numbers within NYC. (more…)

NYC Considers Big Subsidy Packages for Thriving Firms While Cutting Vital Services for Poorest Residents

July 16, 2010

Later this month, the New York City Industrial Development Agency will consider lucrative subsidy packages for two of the world’s largest corporations: “big four” accounting firm Deloitte, LLP, and Thomson Reuters, a multimedia news and information provider. Meanwhile, despite recent reports of an improving unemployment rate, 385,000 New Yorkers are still jobless—twice as many as there were two years ago—and in the name of budget crisis, the city is slashing critical services for its poorest residents, from seniors and children to those with HIV/AIDS.

Why are these profitable firms up for tax breaks when everyone else is forced to sacrifice and there’s no guarantee these subsidies will create jobs for those who need them most?

Even in good times, there would be ample reason to question the wisdom of these deals. Let’s begin with Deloitte: The firm wants taxpayers to finance what amounts to a reshuffling of space in Lower Manhattan—a move from 2 World Financial Center, where it currently subleases space from Merrill Lynch, to 4 World Financial Center. (Bank of America acquired Merrill in 2008, and both firms have received hefty subsidies from the city and state.) Deloitte has allegedly been considering leaving the Financial Center in favor of other locations within the city. The company already received a $14 million cash grant under a program the state created to retain large businesses in Lower Manhattan after 9/11, not to mention millions in BEIP subsidies in 2008 from neighboring New Jersey. It is also likely that Deloitte received—or will receive as a result of its impending move—generous benefits from the Lower Manhattan Relocation and Employment Assistance Program, though the city withholds the names of participating businesses under a “tax secrecy” provision.

It’s also worth noting that Deloitte benefits from contracts worth tens of millions of dollars with New York City and state (not an unusual arrangement), and even has an office on the 6th floor of the city’s Municipal Building. The issue of double dipping aside, the potential for corruption should be of concern. Last fall, Pennsylvania’s Auditor General found that Deloitte was being awarded subsidies from the very entities it was auditing. While there’s no evidence that this is the case in NYC, Deloitte’s business practices in other contexts should be taken into account.

IDA is also considering a proposal to allow media giant Thomson Reuters to steer unused subsidies from a 1998 agreement toward seven new locations in Manhattan. This might not sound so bad, except that the only information the public has to evaluate this proposal, an IDA Annual Report from 2005, shows that Reuters failed to meet job targets. It also shows that the company only used $2.4 million out of $26 million in subsidies. The public deserves the latest data on the true value of the remaining subsidy, Reuters’ employment record in the city since 2005, and the impact of its 2009 merger with Thomson Media on its job figures. IDA will release project details a week prior to the July 29th public hearing, but whether these and other critical questions will be answered remains to be seen.

Adding to the issues with the Thomson Reuters deal, the Newspaper Guild of New York has filed a complaint with the National Labor Relations Board charging that the company plans to cut wages of reporters and other employees by an average of 10 percent this year without the union’s consent. Reuters denies this claim, but at the very least no subsidies should be considered until this dispute is resolved.

Both the Deloitte and Thomson Reuters deals are rife with transparency and accountability issues—not to mention Deloitte’s deep connection to the Wall Street crowd that got us into the economic crisis in the first place. This would be unacceptable even in good times. But with our most vulnerable residents set to suffer even more as the city and state retrench, New Yorkers should be especially outraged.

NYC “Wins” JetBlue Headquarters

March 29, 2010

Last week the airline JetBlue declared New York City the winner in a relocation contest against Orlando, Florida. The airline said it will move 880 employees from its current headquarters in Forest Hills, Queens to Long Island City, also in the borough.

The announcement however, seems premature as a public hearing – a necessary step in securing some of the subsidies – hasn’t been scheduled. This makes us wonder, how rock solid is this deal? And remarkably absent from the Mayor’s press release is any mention of the total value of the subsidies the airline anticipates; Good Jobs New York has learned it is approximately $30 million. In addition to retaining its current jobs, JetBlue is expected to transfer 70 jobs from Connecticut and expand its staff by 130 at its new location, the Brewster Building (the location of an ill-fated subsidy deal). Included in the subsidy deal is the right for JetBlue planes to bear the iconic I (heart) NY logo.

This proposal conjures up ghosts of corporate retention deals past:

  • No public hearing announcement.
  • Minimal details: No Memorandum of Understanding between the airline and the city detailing the proposal has been made public. Did the city conduct a cost/benefit analysis showing that these incentives are a wise investment?   If so, how will the city ensure that the company creates and retains the jobs it promised? JetBlue officials report it conducted an “exhaustive” study that led the company to make its location decision, will the airline make that study public?
  • Previous tax-payer investment: The airline already benefits from tax-free bonds that helped build its impressive new terminal at JFK airport and is one of the busiest carriers there.  JetBlue is also benefiting from the upgrade to one of JFK runways (financed by the Port Authority, Federal Aviation Administration and funds from the American Recovery and Reinvestment Act) and is expected ease its notorious delays and improving service for the airline.

If there’s an upshot, it is that the Bloomberg Administration changed the game, albeit slightly from the days of Mayor Giuliani, by incorporating job creation rather than just retention into subsidy deals. Yet, it has been less than stellar in holding large companies accountable – Pfizer and Metropolitan Life Insurance, for example – and in leveraging subsidies for new jobs at the new Yankee Stadium.  

The ability to make this deal transparent and accountable is up to the Mayor. There’s still time, and it seems even some of those on Wall Street are looking for some answers.

Led by Community Groups, Newly Elected Officials Put Accountable Development in NYC on Front Burner

February 22, 2010

The rotten political culture in New York has forced ordinary New Yorkers to become increasingly savvy at making their voices heard, particularly when it comes to big development projects. And it’s making a difference. Advocates in the Northwest Bronx, for example, led by the Kingsbridge Armory Redevelopment Alliance (KARA), spent years organizing for a plan for the Armory that would bring good, permanent jobs to neighborhood residents. In a dramatic climax at the end of 2009 to their dogged efforts, they managed to defeat a proposal that fell short of these basic standards.

Blocking the city’s determination to take the low road represents remarkable progress, but what New York desperately needs is development policies that guarantee concrete benefits for local residents. Could a brand new crop of elected officials who are talking tough on accountable development provide a critical moment for advocates to finally accomplish just that?

Early signs are promising. Take the city’s new Comptroller John Liu, who spiced up February’s board meeting of the New York City Industrial Development Agency by voting ‘no’ on tax breaks for several projects, including a Western Beef grocery store proposed for the Bronx that, according to its application for benefits, would pay employees an average wage of about $19,000 a year with no benefits. Stating his concern that the current system lacks “clear processes and standards for project development and approval,” Liu pledged to “examine how scarce public resources are used to advance our City’s economic development.”

The proposed Western Beef would fulfill an urgent need for grocery retailers in this part of New York City, but Liu’s call to examine IDA’s way of doing things more closely could lead to more analysis of the consequences of subsidizing companies that pay poverty wages in order to address other legitimate problems such as food deserts.

Just over a week after his debut at the board meeting, Liu was at it again, suggesting in a bold op-ed in the Daily News that New York is behind other cities like Los Angeles and Milwaukee in embracing equitable economic development policies, a point neighborhood advocates have also fought hard to convey. He called for city developers to stop “stifling” neighborhood voices, and for remarkably high standards of transparency, accountability, and inclusiveness in Community Benefits Agreements, a promising tool that has thus far proven little more than a sham in New York City.

Other public officials appear to be hopping on the accountable development train, too. In another recent Daily News op-ed, the city’s newly-elected Public Advocate Bill de Blasio toughly proposed a citywide code of conduct for businesses that receive public subsidies, and called for requiring firms to pay a prevailing wage, and to stay neutral when workers try to form a union. These are all positive signs that some of the city’s newly elected officials may have gotten the message that voters have long been pushing. Now is a critical time for advocates to stay on alert and keep these officials on the right track.

Not to deny the handful of veteran public officials who have been pressing for policy reform, like Manhattan Borough President Scott Stringer, who has been advocating for stronger accountability at the New York City Industrial Development Agency for some time now. Stringer’s appointee to the IDA board, Kevin Doyle, stands out as one of the few board members willing to ask challenging questions about IDA’s decision-making processes.

In addition to ensuring that large development projects are a boon to local residents, creating more equitable development policies will also help exorcise the larger culture of corruption that bedevils the city and state. This was most recently played out in the indictment of Bronx City Councilman Larry B. Seabrook on charges that he stole cash from the city through a series of money laundering schemes, including one connected with the new Yankee Stadium. It’s all too easy to view such scandals as the bad behavior of stray individuals, and stop there. But by condoning a process that excludes community input and encourages wheeling and dealing behind closed doors over transparent, democratic means, our current approach to development reinforces the very culture that incubates such tainted public officials.

Ordinary New Yorkers are clearly prepared to keep fighting for a different way. Hopefully Liu and de Blasio will do them justice by continuing to show real leadership on these issues, creating momentum for other elected officials to fall in line.



Report Deciphers Bond Provisions of the Recovery Act, Focusing on Accountability Issues

January 20, 2010

Perhaps the most obscure aspect of the $787 billion American Recovery and Reinvestment Act is how it seeks to expand bond programs for public infrastructure and private economic development projects.  A report released today by Good Jobs New York explains how the Recovery Act’s new and expanded bond programs are facilitating economic recovery and where opportunities exist for public input. The report is available at www.goodjobsny.org.

The impacts of Recovery Act bonds are potentially enormous with billions of dollars in new lending authorized nationwide. Yet, there is little public discussion about how they work or if the projects they finance will create good jobs, concludes the study, Bonds and the Recovery Act: A Guide to Municipal Bonds Enabled Under the 2009 American Recovery and Reinvestment Act and Their Potential Impacts on New York Communities.

“We hope this report will become a useful organizing and educational tool for many groups of New Yorkers,” said Bettina Damiani, Project Director of Good Jobs New York. “The report documents what the goals of specific bond programs are and if there are leverage points to make sure projects are accountable and create good jobs.”

The report reviews new and modified bond programs (private activity and governmental) through the lens of community needs and increased transparency and accountability: Are there public hearings? Are there prevailing wage requirements? Is priority given to low-income communities? What projects have already received such financing?

“Thanks to the Recovery Act, there are new and expanded municipal bond programs,” said Allison Lirish Dean, GJNY’s Research Analyst and lead author of the report. “But the process for issuing these bonds hasn’t changed despite the Recovery Act’s emphasis on transparency and accountability.”

The report includes commentary on approximately $74 million in approvals for Recovery Zone Facility Bond projects in New York City such as a parking facility at St. Barnabas Hospital in the Bronx, and a retail center known as “City Point” in Brooklyn.  Both projects were controversial because of the small number or low quality of jobs expected to be created. Also, the City Point project was widely opposed by Brooklyn residents and small business owners because in 2007 the City displaced numerous small, mostly locally owned stores for the development.

Bonds and the Recovery Act, while primarily a resource guide, does include policy recommendations:

  • Where possible, the Bloomberg Administration should include jobs created by Recovery Bond projects in the New York City Stimulus Tracker.
  • Any amendments to the private activity bond programs associated with the Recovery Act should increase the requirements for public input and include mechanisms that would guarantee low-income New Yorkers directly benefit from projects. Current language in the Recovery Act and additional guidelines put in place by the City last summer are too weak to guarantee that projects benefit New Yorkers who most need jobs or that they create good permanent jobs.

Bonds and the Recovery Act is online at: www.goodjobsny.org.


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