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Fresh Direct exodus gets mixed reactions

Fresh Direct exodus gets mixed reactions
Photo by Christina Santucci
By Rebecca Henely

A representative of a Long Island City business organization said he believed the neighborhood would be able to recover quickly from the move of online grocer Fresh Direct to the Bronx, although a local deli owner said the loss of its 2,000 employees would affect his business.

“There’s not too many companies out there that have that amount of employees,” said Gus Kaloudis, owner of New York Deli, at 21-09 Borden Ave.

Fresh Direct, which was founded in 1999 and is currently at 23-30 Borden Ave., sells groceries through its site at freshdirect.com and delivers to Queens, Manhattan, Brooklyn, Riverdale in the Bronx, Staten Island, Westchester and Nassau counties, southern Fairfield County in Connecticut and parts of New Jersey.

The company, which was planning to expand, had applied for a New Jersey tax credit program but was convinced last week to move to the Bronx’s Harlem River Rail Yards through more than $100 million in incentives offered by the city and state together.

“From Day 1, New York has been our home, and we are grateful for the support of [Gov. Andrew] Cuomo and Mayor [Michael] Bloomberg in making New York a place Fresh Direct wants to stay and grow in,” said Fresh Direct CEO Jason Ackerman in a statement.

The company expects to create 1,000 permanent jobs through the move. Anna Adams-Sarthou, spokeswoman for state Sen. Michael Gianaris (D-Astoria), said the current employees of Fresh Direct will be able to keep their jobs.

The terms of the deal include about $34 million in incentives from the state: $18.9 million in Excelsior tax credits, a $9 million capital grant, $4 million in energy grants and incentives, a $1 million loan and up to $1 million in vouchers to buy electric-powered vehicles.

The city is pitching in with $74 million in sales tax exemptions; a deferral of the mortgage rate recording tax, which is charged on city mortgages; and real estate tax exemptions. It is also offering $9.5 million to acquire assets for the new facility, $4.9 million in energy benefits and a $1 million loan.

Finally, Bronx Borough President Ruben Diaz Jr. is giving Fresh Direct a $1 million capital grant, and the Bronx Overall Economic Development Corp. is giving a $3 million loan and a $500,000 capital grant.

“Of course, we’re disappointed. We certainly hoped they would have stayed here,” said Dan Miner, senior vice president for business services for the business group Long Island City Partnership.

He said despite the loss, the Long Island City business community is thriving, and he expected other food distributors would take an interest in the site.

“Lots of people will know, wow, there’s a big commercial facility really close to midtown Manhattan that just opened up,” he said.

But Kaloudis said he expected the space to stay open for a long time.

“I just feel like the city’s always going against us,” Kaloudis said.

Some in the Bronx were unhappy with the move, especially since the business does not deliver to most addresses in that borough. City Councilwoman Melissa Mark-Viverito (D-Manhattan), whose district includes part of Mott Haven in the Bronx, requested a stay before the subsidies were approved.

City Comptroller John Liu also said the subsidies seemed to give away too much for the economic development promised, averaging $93,000 for each new job.

Reach reporter Rebecca Henely by e-mail at rhenely@cnglocal.com or by phone at 718-260-4564.

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