Friday, July 26, 2013

Never Hedging with Friends: Bloomberg Rewards Yet another Crony at Fresh Direct

For Mike Bloomberg it never gets old to reward his friends and billionaire cronies-and the award of huge subsidies to FreshDirect is justthe latest example:
The city has delivered a sweet deal to FreshDirect. The Industrial Development Agency voted Tuesday in favor of the online grocer's controversial plans to relocate from Long Island City to the Bronx — thanks to $127 million in public subsidies.
The company has promised to use the money to build its new facility in the South Bronx, convert its truck fleet to green energy, and to hire local workers. A spokesman for FreshDirect told residents the move to Port Morris would create 1,000 new jobs over 10 years, a third of which were promised to go to borough residents.
FreshDirect is run by a young man named Jason Ackerman, whose uncle, hedge fund guy Peter Ackerman, is a partner in some of the mayor’s political action ventures. Peter, a former associate of Mike Milken, is naturally a financier like the mayor and the subsidies for his nephew’s company is emblematic of what passes for economic development under the billionaire mayor. [Crains]

For his part, the mayor doesn’t shy away from the associations-and the $80 million dollars he gave to Ackerman’s PAC is just part of the patricianage that permeates his administration: “Well, I’ve always been a big supporter of Peter Ackerman and I’ve known him forever, and I put his wife on the board of Johns Hopkins, which she may still be on, as a matter of fact," he said during the question-and-answer portion of a press conference this morning at the Brooklyn Public Library's central branch at Grand Army Plaza.” [Capital New York]

As it turns out, Jason may be the head of FreshDirect in name only:
Peter Ackerman is a co-founder, Director and the majority shareholder in New York City grocery distributor  FreshDirect. Jason Ackerman, co-founder and CEO of FreshDirect, is Peter Ackerman’s nephew. FreshDirect pays its warehouse and delivery drivers less than $9 an hour.When workers tried to unionize, FreshDirect fought against it.”
All of these subsidies will go to a company that is directly competing with brick and mortar grocery stores in neighborhoods all over the city. Making a bad idea even worse, is the fact that the company’s target markets are all upper income neighborhoods-so in essence the tax payers are subsidizing a company to deliver groceries to upper income New Yorkers-a fabulous idea in the rarefied world of the city’s richest man.

Which brings us to Willets Point where the city is handing over property to two billionaire real estate operators for a symbolic $1. The tax payers forked over $200 million for the land bought at the point of an eminent domain gun. $130 million for Fresh Direct, $200 million for Related and Sterling Equities. Are we able to see any patterns here?

As some shrewd urban planners have noticed, these development plans have done little to uplift the average New Yorker-but have done a lot for the mayor’s coterie of rich friends:
These proposals are classic examples of the most troubling legacy of the Bloomberg administration’s approach to economic development. The city has approved dozens of real estate mega-projects on city- or state-owned land, or on property where the city has changed zoning rules to suit developers. They all promised “economic development,” but haven’t increased employment or reduced poverty."