Fresh Direct feasts on tax deal

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A sweet tax subsidy deal for an online grocer is leaving some with a bitter taste in their mouths.

After an announcement that seemed to imply an agreement was in the bag, the city is taking some heat for its deal with online food retailer Fresh Direct – which will receive more than $100 million in tax subsidies to move from its Long Island City facility to new digs in the Bronx.

Critics argue that the deal announced by Mayor Michael Bloomberg and Governor Andrew Cuomo on February 7 should never have happened without public input. And after a hearing on February 9 and a vote on February 14 – which many feel is inconsequential – the deal seems to be a foregone conclusion.

“Today’s $100 million subsidy to Fresh Direct was already a done deal from the moment it was announced last week and the reality is that my vote today does not change the outcome,” said City Comptroller John Liu, referring to the vote to approve the pact. “Nonetheless, I cannot vote for this subsidy in good conscience. There may be more ways to ensure a better return on this investment.”

To convince the company to stay in the city and not move to a proposed site in New Jersey, a package of state and city incentives valued at over $100 million is being provided to augment the company’s private investment of $112.6 million. Fresh Direct said it will retain nearly 2,000 existing jobs and create almost 1,000 new jobs when it moves to the location at Harlem River Yards.

Liu said that for the cost of this tax subsidy, the city could give 4,385 students full, four-year scholarships to CUNY or hire 1,458 new teachers.

“The EDC (Economic Development Corporation) has not clearly justified why this much money should be used to subsidize this company,” he said. “This subsidy seems to give away too much in exchange for the jobs and economic development it promises, despite the rosy numbers provided by the EDC.”

The EDC contends that the approval process was not expedited and that the details of the deal have been available on the corporation’s web site for weeks.

Fresh Direct did not return requests for comment as of press time.