Monday, October 22, 2012

EDC's Real Restructuring: Part 2

We have been offering a running commentary on the absurdity of increasing the power of EDC to do more harm to New Yorkers-the subject of a city council hearing next week. There are many numerous salient examples of how EDC has operated with impunity-and without good policy judgment. So many, that we could fill an entire book with the agency's missteps in its myriad efforts at helping the city's real estate community.

One example deserves a special shout out for is outrageous misuse of city money-the proposal to grant Fresh Direct hundreds of million dollars in bribe money so that the online grocer doesn't abandon the city that subsidized it into business (with $2 million) a number of years ago. Good Jobs New York lays out the case against this inanity-and the Daily News reports on the growing controversy and legal challenge:

"When Bloomberg first ran for mayor, he vowed to curb the time-honored practice of doling out tax breaks to firms that threaten to skip town. But the subsidy package given to FreshDirect, which was being wooed by the increasingly aggressive Garden State, has led to critical discussion of a practice that remains an important part of the city’s economic development arsenal...
But critics said the deal was structured with no recourse for the city to get the money back because specific job thresholds are not tied to the agreement. “We are always told that these subsidies are going to create jobs,” said Councilwoman Melissa Mark-Viverito, who is calling for a Council probe of the practice. “What happens when the companies don’t produce?”

Even the mayor's budget director has called this into question: "No less an authority than the city’s budget director called the FreshDirect agreement and others like it “nuts.” So, what gives? Why does the city invest tax dollars for a company to establish itself in Long Island City and then reward the very same company for an extortionist threat to move to New Jersey. What a way to say thanks to the tax payers that got you started.

As Good Jobs' Bettina Daminai told the News:

"Detractors of the process claim business executives flirt with New Jersey just to gain leverage in talks with the city’s EDC. “The New Jersey threat has become a matter of routine for companies,” said Bettina Damiani, policy director at Good Jobs New York, who argued that more transparency is needed. “The process is broken. Nobody really knows whether the New Jersey threat is valid. Nobody really knows if the promises to create jobs are valid.”

Well, we have an idea about why this has gone down the way it has. Consider the fact the the Fresh Direct CEO is a young man named Jason Ackerman:

"Ackerman’s appointment fills the top role left vacant when Richard Braddock departed in March, when the British retail chain Wm Morrison Supermarkets made a $50 million investment in FreshDirect. Before founding FreshDirect, Ackerman was an investment banker with Donaldson Lufkin & Jenrette and Crown Capital Group, where he specialized in mergers and acquisitions and corporate financings, primarily for the supermarket and specialty retail space."

An investment banker, now that's familiar indeed-part of the usual cohort of folks who seem to  always have the mayor's ear. It gets even better, however. You see Jason's daddy is Pater Ackerman, the billionaire investor who was last seen politically partnering with a fellow named Mike Bloomberg on a SuperPac on behalf of Maine gubernatorial candidate Angus King:

"What do Wall Street billionaires Michael Bloomberg, Peter Ackerman, and John Burbank III have in common with Eliot R. Cutler (pictured at left), the former Independent candidate for governor in Maine and a current State Chairman for the Maine United States Senate campaign of Independent candidate Angus King (pictured at right)?

During 2012, all four have had an affiliation with Americans Elect, an organization that has spent more than $800,000 in the past three weeks in support of King's campaign, according to recently filed Federal Election Commission reports. The money has been spent on television ad production, television ad placement on Maine television stations, direct mail, and polling services provided by FoxNews contributor Doug Schoen." (another coincidence-Schoen is the mayor's pollster))

All of this-on top of all of the special pleading EDC has done for Steve Ross and Related-is just another indication that EDC stands for Everything Done for Cronies. There was simply zero chance that Fresh Direct was gonna move across the river-and have its trucks pay the bridge tolls a sit in traffic trying to get into the city. This was extortion with a seemingly gullible and willing victim playing along for his billionaire buddy.

So EDC wants to have more power to subsidize friends of the mayor and use the subsidies to take away land from property owner, put competing retailers at risk, and plow a path of destruction through parks and neighborhoods. Yes, an oversight hearing should be very informative and entertaining.