Living Wage and Dishonesty at Willets Point: A Challenge to de Blasio

We have underscored the hypocritical dishonesty of EDC about the question of a living wage at the Willets Point development before, but now that a vote is imminent it is appropriate to return to this field of schemes that the city is trying to foist on Queens. Here’s what we pointed out almost two years ago:

“In the battle over whether the city should adopt a living wage for retail workers when a development project is heavily subsidized the issue of Willets Point has wormed its way into the discussion. 

City Hall News lays out the reasons:

"In June 2008, the president of the Retail, Wholesale and Department Store Union, Stuart Appelbaum, stood on the steps of City Hall to praise the city’s Economic Development Corporation. Along with several other powerful union bosses, Appelbaum touted the EDC plan to jumpstart a long-stalled, $3 billion project at Willets Point in Queens, because he said it would lead to the creation of so-called “living wage” retail jobs for his workers – paying a minimum of $10 an hour.

“It won’t just mean thousands of jobs,” Appelbaum said. “It will mean thousands of construction and permanent jobs that pay prevailing wages and living wages.”

Juan Gonzales in the NY Daily News also weighs in on the correlation:

"And in 2008, when the mayor wanted the City Council to approve a proposed $3 billion Willets Point development project, his deputy mayor then, Robert Lieber, made such a deal with several labor unions.Under that deal, the city would require that all construction, maintenance and security jobs at Willets Point pay “prevailing” wages — far higher than $10 an hour. 

As for retail jobs, Lieber promised to “view favorably” Willets Point proposals that “maximize” the number of “living wage jobs.” He even specified $10 an hour for a living wage. Because of those promises, the unions backed the plan and the City Council approved WilletsPoint."

Only one problem: EDC has-like it has done with so many other things -- reneged on the deal. In doing so EDC and the rest of the gang down at city hall demonstrate that they will say almost anything just to advance their crooked scheme to abscond with the Willets Point property. The key prevaricator in all of this is former Deputy Mayor Lieber -- a stone chump if there ever was one.

As City Hall reports:

"Appelbaum’s contentions that his members could expect living wage jobs at Willets Point were based upon by a letter penned in April 2008 by Robert Lieber, then the city’s deputy mayor for economic development, to the then-head of the city’s umbrella labor organization, Gary LaBarbera.

“NYCEDC will view favorably development plans that maximize the number of jobs that meet the City’s living wage and health benefits standards,” Lieber wrote. “The proposal must explain how the proposed tenanting plan maximizes the number of jobs that meet these criteria.”

That was then, and this is now-just as WPU has already reported: "

Yet this May – when the EDC put out a 125-page request for Willets Point proposals to developers – there was not a single mention of living wage jobs. It did state that developers had to hire construction contractors who would pay prevailing wage and that some building workers would get prevailing wage salaries—but retail workers were left out completely. Earlier this week, far from offering tacit support for a living wage, the EDC released a list of 36 projects around the city, including Willets Point, that it said could be jeopardized by the living wage bill."

In response EDC has started to spin like a top: 

"EDC spokesman David Lombino declined to directly address why living wage language from the 2008 letter never made it into the requests for proposal. “When seeking proposals for development, the city always considers the creation of well-paying jobs in addition to other factors like the feasibility of the project, proposed uses, job density, and cost to taxpayers,” Lombino said."

And so it goes-just like with the purported revenues at Hudson Yards. The city never lives up to its promises, but now we have a new team coming into office and Bill de Blasio has made living wage and affordable housing his signature issues for dealing with income inequality. The WSJ reports today:

“A proposal by Bill de Blasio to guarantee higher wages at city-subsidized projects could set up a battle with business and real-estate interests if he is elected. Real-estate and business leaders and labor experts alike said they were surprised to learn that Mr. de Blasio, the Democratic nominee and front-runner, would demand a so-called living wage of $11.75 an hour in cash and benefits to all workers on most city-subsidized projects—including, most controversially, to retail workers.” (emphasis added) 

Yes, the same workers that Stuart Appelbaum is supposed to represent have been thrown under the speeding bus. That brings us to de Blasio-and his promises on this issue:

“A campaign spokesman said the plan is part of an economic-development vision "that is less about trickle-down, subsidizing a fast-food restaurant, providing subsidies to low-road, low-wage employers."

"We're not saying that's all the Bloomberg administration did, but to the extent that the mega-development projects had a high focus on retail, often low-wage retail, we'll look to invest development dollars and target development dollars into creating good jobs," said the spokesman, Jonathan Rosen, calling it a "very high priority."

Okay, then. This thrusts the Willets Point deal right into center stage, because as we have seen, the promises have not been kept-and the trickle down here is more a trickle up, up to the coffers of the Mets and Related. But we shouldn’t be surprised at the comments from Bloomberg lackey Seth Pinsky:

“The Bloomberg model has proven to be a successful one. If someone is campaigning on the concept of trying something different, I think that person has a high bar they need to achieve in terms of explaining how that something different will work better," Mr. Pinsky said.

Mr. de Blasio's plan would address a critique of the Bloomberg administration: that too many of the jobs created have been low-paid.”

Success, we guess, is really in the eyes of the beholder-and as far as little Seth is concerned his world view, and current paycheck, comes right from Big Real Estate. Yet Pinsky is experiencing some cognitive dissonance-even while lacking any sense of irony:

"Mr. Pinsky said the next mayor will need to tackle inequality—a growing issue nationwide. Of Mr. de Blasio he said: "He's hit upon an issue that is absolutely critical to the future of the city. The income gap could be an existential issue to the future of the city."

The Bloomberg model has aggrandized the Relateds and Vornados of the world at the expense of neighborhoods and small business. In the process, the average New Yorker has been short changed and all of this has been promoted through the generous use of tax subsidies.

Willets Point could be de Blasio’s Rubicon-a river if crossed that will mean his rhetoric is not matched by his real commitment to equality and fairness. How do you come back from this unethical corporate welfare scheme? We’re all waiting to see what Bill will do.

City-owned properties omitted from developers' Brownfield cleanup application

Please see following letter from Willets Point United to entire City Council, which will vote on the Willets Point plan this Wednesday. As the letter notes, a legitimate reason why some of the properties that are within "Phase One" are NOT included in the Brownfield Cleanup Program application, is that they are not owned by the City. It is important to note, however, that even discounting those properties, there are still numerous properties that the City DOES own, that Sterling/Related have excluded from their BCP application and thus from the program. Why don't Sterling/Related want a BCP Certificate of Completion pertaining to those properties? Do they not want NYSDEC looking so closely over their shoulders to scrutinize the remediation (if any) that they perform on those particular properties? How is the pubic interest served by deliberately excluding properties from the BCP -- when remediation is a top selling point of the whole project?

Letter Brownfield Application by unitedtriangle

Wasteland

In an editorial (“Wasteland”) that would have been an accurate description of the intellectual vacuity of its own editorial page, Crain’s unsurprisingly signs on in support of the Willets Point boondoggle:

“As a crucial City Council vote on the massive Willets Point, Queens, redevelopment draws nigh, the opposition has become increasingly desperate, holding rallies and amping up its rhetoric. To hear them tell it, the project is a blatant bait-and-switch that enriches wealthy developers with city subsidies and turns treasured parkland into a parking lot and a mall. If that sounds too bad to be true, it is.”

We say unsurprising because Crain’s would support building a brothel in your backyard as long as it was being built by a connected real estate firm that the so-called paper is in business to shill for. And don’t expect honesty from these toadies: 

“Fortunately, save for a few misguided activists, Queens residents and community leaders see through the propaganda, and there is every reason to believe the council will approve the first phase of the plan as early as this week.”

A few misguided activists? Well, as we said, don’t expect intellectual honesty from an organ of Big Real Estate. We suppose that using eminent domain to take away people’s property and build a mall is what passes for good government in this house organ-and the idea that CB#’s 30-1 vote against the boondoggle is the work of a few misguided cranks when you’re in the business of promoting the 1%.

Here’s how the property owners are characterized:

“Willets Point, an industrial area near Flushing, is a stain on the city that many a politician has attempted to clean up. Mayor Michael Bloomberg is the first to get a plan going to accomplish that, yet he has had to overcome resistance from a few defiant industrial shops that prefer the status quo.”

Isn’t it amazing that there are property owners who prefer the status quo of keeping their property rather than having it turned over to the Mets and Related-for a $1 fee that Crain’s neglects to discuss?

But nothing underscores the ass-kissing inanity of Crain’s than its praise for the brain dead councilmember from Corona:

“Councilwoman Julissa Ferreras is still negotiating for the best package of community goodies she can get from the developers, the Related Cos. and Sterling Equities, but to her credit, she seems driven to get a deal done rather than sabotage a much-needed project that has eluded the city for decades.”

Crain’s goes on to damn the Willets Point business owners with faint praise:

“It is a testament to the pluckiness of these folks that they have carved out profitable operations there, but they must accept that a first-class city cannot tolerate the conditions that characterize the area's infamous Iron Triangle: dirt streets with cavernous potholes, no sewer system and unfathomable contamination.”

There an old saying that there was a German who, while passing a Jewish ghetto set up by the Nazis, turned to his companion and said, “Boy, don’t these Jews smell.” To which his companion replied, “That’s not the Jews that smell, its Nazism.”

The neglect of the Iron Triangle and the deprivation of basic city services is what has characterized city policy for 60 years. That does not mean that you add injury to insult to injury by taking the property away from the victims of this neglect-and then turn it over to friends of the mayor without any real charge.

And what about the promise to relocate the businesses? Thousands of workers and minority entrepreneurs sent packing to the four winds. Can you say anti-immigrant income inequality better than this?

Crain’s goes on the bloviate about the great new neighborhood that it supposes will be created:

“The proposed mixed-use, $3 billion project, which requires at least two phases and will be carried out over several administrations, promises not only to clean up and modernize the polluted site, but also to deliver a new neighborhood in northeast Queens. It's as ambitious as it is complicated, given the high cost of the remediation and of ultimately making 35% of the housing units affordable to satisfy the community.”

The fact is that the remediation-contrary to original assertions from the Deputy Mayor at the time-will be paid for by the tax payers, But Crain’s needs to throw off its wet suit and dive completely into the deception tank with the following howler:

“Various changes to the plan, portrayed by opponents as evidence of a devious plot, were in fact necessary adjustments to make the project economically viable. For example, the mall and parking lot—slated not for green parkland but for what is already a parking lot—will generate revenue to fund decontamination of the land. The residential component was pushed back because housing wouldn't sell in a wasteland.”

No mention of the fact that the developers can buy their way out of the deal, or the fact that there was no mention of any mall in the original approval. We can say without equivocation that there will never be housing at Willets Point if this current development is allowed to stand in the next administration. It is, and will always remain, a mall and a parking lot to aggrandize the bottom line of the billionaires that Crain’s ass kisses for every single day.

Malling Crain's

In this week’s Queens Tribune, Len Maniace, First Vice President, Jackson Heights Beautification Group, deconstructs the Willets West development-just another one of those disgruntled and isolated gadflies who happens, unlike the editorialists at Crain’s, to truly understand what the city is trying to do over at the Iron Triangle:

“A s we approach a City Council vote expected for October, give the developers of a massive shopping mall project called Willets Point West credit for this: together they possess a fabulous imagination. They predict their project will lead to a revitalization reminiscent of 42nd Street. The mall proposed for the Citi Field parking lot will transform Willets Point into a destination, a magnet for shoppers who then will provide spillover benefits when they dine at the restaurants of Corona and Jackson Heights.

But how likely is that vision? Not very on either point. That’s because the scheme presented by the developers is an anti-city plan that would result in more cars, congestion, air pollution, and wasted energy.”

Maniace understands just how grotesque a contradiction this development is to the Bloomberg sustainability vision:

“While Brooklyn, other parts of New York City, and indeed cities around the world look to sustainable, smart, transit-oriented growth, Queens is being served up a leftover dish of 1960s auto-dependent development. If a 1.4 million square foot shopping and entertainment center is going to be successful, it’s going to need a lot of people coming and going. That’s truckers transporting goods to be sold, sales people selling them and shoppers buying them – lots of shoppers.

How do the builders plan to move all these people – along with residents of the already approved 5,500 housing unit, also by Sterling Equities and Related Companies?”

As Clark Gable might have said, “Frankly, they don’t give a damn.” Certainly it will not be by mass transit: 

“The nearby No. 7 train that stops at Citi Field is already overcrowded. At a City Hall public hearing earlier this month, the developers didn’t spend much time on transit improvements. Even minor improvements such as additional exits from the elevated station didn’t seem likely. “The Willets Point station is not a priority for the MTA,” one official told members of the City Council.”

And where will all of these shoppers come? We must by now be running out of those shoppers that EDC always claims are going to be diverted from leaving town to shop: “The developers should know better. Malls suck business out of nearby commercial areas, such as downtown Flushing. And it’s highly unlikely that mall shoppers would bypass the food court, cross over the Grand Central Parkway and search out restaurants in Corona and Jackson Heights. This is nothing like patrons at Lincoln Center strolling across Broadway to dine at Upper West Side eateries.”

In other words-much like everything that this administration has done over the past twelve years-this is a neighborhood small business disaster. A disaster that will bring Queens traffic to a gigantic stop: 

“Instead, the developers are counting on road improvements, including new and hugely expensive highway ramps. That means more cars, congestion, air pollution, and wasted energy, not just in the immediate area, but also along nearby highways, which are also overcrowded.”

But Mr. Maniace is wrong here since there are no plans to build these ramps-and there may never be any. So the congestion he foresees is without any ramp mitigation and will be an unholy mess for local roads and highways.

If, as Crain’s alleges, this mall is a genuine linchpin for the future housing and other amenities, how is this future being monetized and assured? Why hasn’t the city forced the developers to put, let’s say, $200 million in escrow-a sum they will forfeit if the ramps and housing don’t get built. Why are all of the risks being borne by the tax payers? Haven’t we seen what has transpired already over at Hudson Yards?

In short, this development does little more than reward the Wilpons for engaging in an illegal lobbying scheme-a multi-billion dollar reward that should have been obviated by an indictment.

Village Voice on Hudson Yards: Great Minds…

Graham Rayman, a very good reporter, follows up on our Hudson Yards post this morning (Or maybe we were following him):

“The Bloomberg administration is preparing to hand another $328 million in tax breaks to its favored developer, The Related Companies, for ... get this ... a fancy shopping mall and a high-end office skyscraper in the Hudson Yards project on the west side of Manhattan.”

Needless to say, there are critics of this giveaway:

“James Parrott, deputy director and chief economist of the Fiscal Policy Institute sharply criticized the giveaway, "It is the height of fiscal irresponsibility for the NYC IDA to provide massive taxpayer subsidies to a Manhattan luxury mall," he tells the Voice.”

Yah think? And the Voice sees the same bait and switch that we had alluded to in our post this morning:

“To some, it feels a little like a bait and switch. Back in 2006, then IDA chairman declared that the tax breaks would be more than repaid by the new growth. The revenue was then supposed to be used to finance the extension of the 7 subway line into the area. The city would have had to make up the difference with its own funds.”

Isn’t it amazing how so many of these deals don’t turn out the way they were alleged:

"It's bad enough that the City is pouring hundreds of millions of dollars in tax breaks into Hudson Yards office buildings after taxpayers foot the bill for extending the #7 train to this project's doorstep," Parrott adds.

John Fisher, who runs Tenant Net, a bulletin board on development and housing issues, says, "It smacks of cronyism. It's typical of how Bloomberg treats his friends. And if you are taking away tax revenues, you won't have the money to pay for the subway extension, and then that money has to be covered by the city budget."

So a real gauntlet is being thrown down to the new mayor-Fresh Direct, Hudson Yards, and Willets Point, all redolent with the same stink of cronyism for those close to the mayor. When asked to comment on the Hudson Yards deal, the de Blasio campaign said the following:

“A spokesman for democratic mayoral candidate Bill de Blasio would not comment directly on the proposal, but said, "If elected, a de Blasio administration will of course review all projects with any eye to maximizing affordable housing, creating good jobs and protecting taxpayer's interests."

We’ll see if BdB can walk this walk because we have too often allowed cronyism to pass uncritically because of the mayor’s great wealth. Favoritism, however, is still favoritism, even if there isn’t the tawdry quid pro quo that normally accompanies this kind of political shenanigans. 

Hudson Yards Bait and Switch: Taxpayers socked

The IBO has come up with a new report on the massive Hudson Yards development and has discovered-what a shock!-that the projections and estimates offered when the deal was originally struck have changed; and Related (yes, them again) is asking for a large tax abatement for the 1.1 million square foot retail mall they are building:

“When the Industrial Development Agency, which is administered by the quasi-public Economic Development Corporation, announced its plan for making tax incentives available to spur construction at Hudson Yards, the discussion focused on making the construction of new office space more affordable. Residential and retail components of the Hudson Yards plan were ancillary.”

“Providing a property tax abatement for the mall means the city will need to pump more money than previously expected into Hudson Yards to meet the development’s debt service obligations. It also undercuts a shift in city policy away from showering retail projects with tax breaks.

Now, however, we see a new focus:

When the Industrial Development Agency, which is administered by the quasi-public Economic Development Corporation, announced its plan for making tax incentives available to spur construction at Hudson Yards, the discussion focused on making the construction of new office space more affordable. Residential and retail components of the Hudson Yards plan were ancillary."

Let’s not forget that the Bloomberg administration changed its tax abatement policies to downplay subsidizing retail development:

“The Bloomberg Administration sought to lessen the use of property tax breaks for retail projects with the revamping of the city’s Industrial and Commercial Incentive Program in 2008. But the Industrial Development Agency has substantial leeway to provide tax breaks to the mall if the agency sees fit.

Under the tax exemption policy for Hudson Yards approved by the IDA’s Board of Directorrs, the mall can qualify for tax abatements if it’s of sufficient size (at least 1 million square feet) or furthering the commercial purposes of the office tower.” (Emphasis added)

Does this sound familiar? It does to those of us at Willets Point who are forced to listen to EDC claim that they need to build an even bigger mall in order to fund the other-more publicly desirable-aspects of the original Iron Triangle development. But, as always, the tax payers are (and will be) on the hook for more than was assured to us by the gonifs at EDC:

“A tax break for the mall means there will be somewhat less money flowing to the Hudson Yards Infrastructure Corporation from new development within the 26-acre Hudson Yards site. The infrastructure corporation, created by the city, issued $3 billion in bonds to pay for the extension of the 7 subway line and to make other improvements aimed at spurring development in the Hudson Yards area.

Under the financing plan for Hudson Yards, all of the money that would typically flow to the city from property tax on the new developments at the site is instead directed to the infrastructure corporation to help pay debt service on the bonds. Because debt service would begin to come due before there was sufficient new revenue to pay the bondholders, the city was temporarily on the hook to make the payments. As the project proceeded and development picked up, city officials expected that Hudson Yards would increasingly generate the funds needed to make the annual debt payments on the borrowed money.”

So, what has happened instead?

“It hasn’t worked as planned. The pace of new development has been slower than expected, forcing the city to spend more of its own funds. A report by IBO’s Sean Campion found that from 2006 through 2012, Hudson Yards produced only $170 million in tax and fee revenues from development—$113 million less than anticipated by project planners. In the early years, interest earnings from investing the bond proceeds offset some of the shortfall but those have now dried up. Over the seven-year period, the city has provided the infrastructure corporation with $374 million in funding for debt service and other needs. 

Giving up tax revenue that would have come from the shopping mall means the city’s tab will continue to grow.” (Emphasis added)

This is what happens when crony capitalism drives the policy train - and Hudson Yards is the mirror to the Willets Point future if the current crazy give away is approved next week by the city council. This is just another reason why the new mayor should come in and revisit any deal that the lame duck city council approves for a lame duck mayor.

And while he is at it, he might want to take a second look at all of the failed promises at Yankee Stadium and the Gateway Mall (The former Bronx Terminal market). The legacy of cronyism and corporate welfare is a disgrace that has gone unnoticed by most of the main stream media in this city.

Willets Point on the Brink: Vote NO on A Billionaire Land Grab in Queens, NY

Quotation of the clergyman at the end: "Julissa -- We are your people.
This will destroy our neighborhoods; change our lives. Council members,
listen to us: Vote "NO" on October 9."