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FreshDirect to leave LIC

City pays out $100 million to keep grocer in New York

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Posted: Thursday, February 9, 2012 12:00 pm | Updated: 8:30 am, Mon Feb 27, 2012.

FreshDirect, the fast-growing online grocer whose expansion plans sparked a border war between New York and New Jersey, isn’t checking out of New York City, but it will be leaving Long Island City, which it has called home since 1999.

Gov. Cuomo and Mayor Bloomberg announced Tuesday that the grocer, which has outgrown the Queens headquarters, will move into a 500,000-square-foot facility in Harlem River Yards in the Bronx.

To enable FreshDirect’s expansion, state, city and Bronx officials pieced together a $100 million package of tax breaks, grants and loans.

The board of the city’s Industrial Development Agency will vote on its piece of the city’s incentive package — adding up to $74 million in tax exemptions and another $15 million in other benefits — on Feb. 14, and will hold a public hearing on Feb. 9 to discuss the project.

In addition to grants and loans from the Empire State Development Corp. and other state agencies, FreshDirect’s package also includes a $3 million loan and $500,000 capital grant from the Bronx Overall Economic Development Corporation and a $1 million capital grant from the Bronx Borough President.

New Jersey had been trying to woo FreshDirect across the Hudson River with incentives worth about the same amount. In a prepared statement about the company’s decision to stay in New York City, chief executive Jason Ackerman said the relocation will allow FreshDirect to keep doing business with “vendors, local farmers and purveyors and continue our long track record of growth and job creation in New York.”

The company, which employs more than 2,200 people — 1,666 of them full-time — expects to add 1,000 new jobs by 2020, according to its application. When asked whether FreshDirect would take all its employees now working in Queens with it to the Bronx, Maria Coder, a spokeswoman for the company, said, “FreshDirect is looking to grow,” and added that the move is “not a layoff.”

“Beyond that, we’re not going to comment.”

The IDA estimates the Bronx project will generate more than $254 million in economic activity for the city.

Since it received $2 million in city subsidies for its Queens facility a decade ago, FreshDirect’s popularity has steadily grown among New Yorkers. Customers place orders online for groceries and schedule deliveries at their convenience.

FreshDirect’s application to the IDA indicates that it intends to lease an undeveloped piece of land on East 132nd Street from local real estate developer Galesi Group. Through an investment of more than $118 million, it will construct a new building to house its corporate office and manufacturing and production facilities; truck facilities and a parking garage also will be included.

The company estimates that construction will begin in the fall and should be finished within two years. It intends to increase employment by an average of 190 new full-time employees each year over the next five years.

A history of friction between the company and some of its workers has union-affiliated groups demanding more specifics about FreshDirect’s employment obligations under the deal. The company has rebuffed efforts to unionize many of its workers; only truck drivers are unionized, through United Food and Commercial Workers Local 348S. The drivers, who represent about a third of its workforce, make between $11 to $16 an hour depending on seniority and experience level, said Eduardo Cordero, a union representative.

“What are the wages and benefits?” asked Bettina Damiani, director of Good Jobs New York, a watchdog group. “If we are first subsidizing jobs but people then have to rely on things like food stamps or subsidized housing and child care, then that affects that quarter of a billion dollars that the city expects to get back.”

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