"The Company services over 24,000 accounts in fifteen counties in New York State and employ more than 1,400 people during the peak summer months. Manhattan Beer operates out of approximately 1.2 million square feet of warehousing space, with locations strategically located throughout its distribution area. The Company has increased its volume growth by 88% over the past 10 years and is continuing its expansion. Manhattan Beer is seeking a new distribution center to target its ever expanding clientele in Manhattan and the Bronx."
No charity case here. Basically Manhattan Beer holds a monopoly over the distribution of hot beers such as Coors and Corona and, due to the concentration in both production and distribution of malt beverages, it is able to operate with significant profit margins-while, at the same time, its customers, the bodegas and neighborhood supermarkets, are suffering without any hope for relief from the public sector.
So how much are we the public in for? Here's the damage: "Costs to City: New York City taxes to be exempted:
Mortgage Recording Tax: $ 316,388
Sales Tax Exemption 109,000
Building Tax Exemption (NPV, 25 years) 8,125,352
Land Tax Abatement (NPV, 25 years): 831,425
Maximum Total: $ 9,382,165"
But don't go expecting that the price of a six pack of your Corona will be reduced-or even that it will stay at current price levels. That's because these IDA bennies come with virtually no give backs to the tax payers that are forced to pony up; and there's little apparent due diligence investigating whether, absent the public money, a company like Manhattan Beer would refuse to build. To us, this is corporate welfare in its most egregious form.
Which brings us to the situation over at the Kingsbridge Armory, where Related Companies are in line for a sweet IDA boost: "Yet another developer in New York City is asking for millions of dollars in tax exemptions. On March 5, the Related Companies will ask the New York City Industrial Development Agency (IDA) for a huge tax break to redevelop the Kingsbridge Armory. The company is actively refusing to negotiate with the Bronx community and guarantee basic outcomes, such as good, living wage jobs for local residents, vital community space and quality retail shopping opportunities."
Now Related has been the most favored of all NYC developers-having been handed over the development rights to the old Bronx Terminal Market for seemingly less money than Peter Stuyvesant gave the Indians for the island of Manhattan. And when it couldn't live up to its bid on the Bradhurst Development project, the Bloombergistas salted the deal with an additional $5 million subsidy.
But most egregiously, these awards are given with no strings attached; and, as the Norwood News points out, Related got the IDA monies with no requirement that it provide living wages to the employees that will be working at the Armory retailers. As the leaders of KARA, the community coalition fighting for a meaningful CBA from Related, told the Norwood readers: "At the hearing on March 5, members of the IDA will discuss Related Companies’ application for more than $13 million in tax exemptions for the Armory project. We believe that these tax exemptions should be considered only if the Related Companies sits down with our coalition to negotiate community benefits for the Bronx. Our elected officials should also support our call for a Community Benefits Agreement in exchange for any tax breaks."
And this sentiment was echoed by Stuart Appelbaum, the president of the Retail, Wholesale, Department Store Union in his testimony before the IDA board: "Let me be more clear – the coalition that I stand with today wants this development to happen, but it must happen in a way that not only profits the developer, but serves the needs of the Bronx community. Unless we have guarantees that this development will be an economic opportunity for workers and residents in the Bronx, we cannot justify millions of dollars in tax exemptions for the project."
But the pleas of Appelbaum and the community fell on deaf ears-and the IDA benefits were awarded in carte blanche fashion: "When it was time to vote, all but two board members, Comptroller Thompson and Manhattan Borough President Stringer, voted in favor of giving Related $17.8 million in tax breaks."
So, enough is enough. Clearly, we have an IDA process that's badly in need of reform. Which is why a coalition of groups has come together to reform the IDA process. As one of the group's leaders says: "Just as importantly, these programs must require businesses that benefit from IDA tax breaks to pay fair wages to their employees. New York’s families should not be forced to tap already depleted Medicaid or welfare programs, at the expense of taxpayers, when they are working for companies that benefit from these tax breaks."
A bill to do just that has passed a senate committee and deserves to be swiftly passed so that the corporate giveaways can be reformed in favor of rank and file workers that are too often exploited by retailers who are occupying land that has been developed through generous tax subsidies. Here's what the bill's original sponsors have said: "“Companies should not be getting tax breaks to create jobs that pay so little that the people who get the jobs are eligible for public programs like Medicaid or food stamps,” said Senate Labor Committee Chair George D. Maziarz (R-Newfane), sponsor of the legislation in the Senate. “When we give tax breaks, or other subsidies, we should make sure our communities are benefiting from them.”
And when we award a tax subsidy, the awarding agency usually details what it claims are the collateral benefits-jobs, tax revenues, etc.-that the project will generate. There is, however, no requirement for the subsidizers to gauge the project's collateral damages. And in the Armory's case, if Related decides to put a food use into its mall, there will be a considerable negative impact on the contiguous neighborhood supermarket-a store that has been in the community for over fifty years! Does it make any sense, let alone is it equitable, for the city to subsidize uses that will put existing tax paying businesses at risk? The entire process is badly in need of an overhaul.
Now that the Democrats have taken control of the senate, the IDA reforms are thankfully closer to fruition. All we can say is, that it's about time for a change.