John Petro
Setting the Record Straight: The Kingsbridge Armory, Living Wages, and Economic Development
On Wednesday, December 9th the New York City Council will vote on whether to approve the proposed redevelopment of the historic Kingsbridge Armory in the Bronx into a retail shopping mall. But unless the project's developer agrees to guarantee living wages for all future employees at the Armory, the deal will be a wasteful use of public tax dollars and will be an economic drain for the city and state.
DMI released a new fact sheet today that synthesizes the latest data and evidence on the Armory deal. The findings: New York City is diverting scarce public funds to subsidize the developer of the Kingsbridge Armory; offering local residents insufficient benefits to justify the subsidy; and ignoring the fact that creating more low-wage retail jobs in which workers require public assistance to make ends meet will only continue to fuel the city and state tax burden at a time of crippling budget crises in New York City and Albany.
Read the details below:
- New York City is diverting scarce public funds to subsidize the developer of the Kingsbridge Armory, Related Companies.
- The New York City Industrial Development Agency granted Related Companies preliminary approval of $18 million in city and state tax breaks.
- City subsidies will equa $13.8 million.
- $3.7 million Mortgage Recording Tax Referral,
- $3.2 million Sales Tax Exemption,
- $6.8 million Real Estate Tax Exemption.
- The developer will receive a steep discount on the purchase of the city-owned property. While the property has an appraised value of $20 million, Related will pay the city only $5 million for the property and the historic building.
- Additionally, the city completed $30 million in capital improvements to the building in 2003.
- The property will also be eligible for $43 million in federal historic tax credit equity.
- New York City residents will not receive sufficient benefits to justify the high level of public subsidy. Retail jobs created by the project will be primarily low-wage jobs that will do nothing to end the cycle of poverty in the Bronx.
- Job creation is cited by the developer and the EDC as the primary justification for using public subsidy. However, the retail jobs created at the Armory will not allow families to survive without public assistance.
- Retail sector jobs are primarily low-wage jobs. In 2008, the average annual wage for a worker in clothing and clothing accessories stores in the Bronx was $17,313. The average annual wage for workers in general merchandise stores in the Bronx was $16,740.
- By comparison, the average wage for all workers in all industries in the Bronx was $42,076.
- The city and the state spend significant sums of money to provide assistance to low-wage workers, a large percentage of which are retail workers.
- One study of New York State costs for public support programs found that the state spends at least $5.2 billion a year to provide assistance to working families.
- A disproportionate number of families with a wage earner employed in the retail sector are enrolled in public assistance programs. While retail workers make up ten percent of the state's workforce, 14 percent of all working families that are enrolled in public assistance programs earn their wages in the retail sector.
- When it comes to using economic development funds to create good-paying jobs for community residents, New York City lags behind other cities across the U.S. that require projects that receive public subsidies create living-wage jobs.
- Minneapolis, MN requires recipients of public subsidies to create one living wage jobs for every $25,000 in assistance. In Minneapolis, a living wage is considered to be $11.21 an hour with health benefits, and $13.25 without.
- In Los Angeles, any recipient public subsidies from the city's Community Redevelopment Agency (similar to New York City's EDC) must pay a living wage to those employed on the project site. This includes those working for contractors, subcontractors, or licensees on the property. Los Angeles' living wage is $9.64 an hour with health benefits or $11.84 without health benefits.
- Contrary to statements by the developer that the project will fail to attract any retail tenants if they are required to pay their employees a living wage, other U.S. cities require employers to pay wages similar to those being requested for future Armory employees--$10 an hour with health benefits or $11.50 an hour without.
- San Francisco has requires employers to pay a minimum wage of $11.02 an hour (minimum wage plus health benefits). Despite these wage requirements, San Francisco has attracted many national retailers to the city.
- Santa Fe, NM also has a living wage law of $9.85 an hour that applies to all employees in the city, including those working for the dozens of national retail chains in the city.
John Petro: Author Bio | Other Posts
Posted at 10:18 AM, Dec 08, 2009 in Urban Affairs
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Comments
You make a great case for requiring living-wage jobs at the Kingsbridge Armory. I'm convinced. Why then, do you think that the Bloomberg Administration and its lack of planning commission approved the plan without a living wage requirement? Workers at very low paying jobs cannot house themselves or their families; they cannot feed themselves. It seems to me that a goal of this administration has been to drive good jobs out of NYC (at Willets Point, example) and to lower wages of the rest of us as much as possible (Do you recall when rookie police officers were paid so badly, they were food stamp eligible?).
Posted by: Daniel Millstone | December 8, 2009 12:36 PM
Daniel, do you really think that driving away jobs is the "goal" of the Administration? Far more plausible: Bloomberg wants to subsidize and encourage business development. As a businessman himself, he's sympathetic to developers' and retailers' desire keep costs low. And he's disregarding the public cost of low-wage jobs that DMI illuminates here. The result is the same: NYC gets fewer good jobs than we otherwise could. But these motives make a lot more sense to me.
Posted by: Upper Manhattanite | December 9, 2009 10:18 AM
Dear upper -- it is of course impossible to read Mayor Mike's mind but we can listen to what he says. At the DMI book event at Trinity Church, last week Mayor Bloomberg was eloquent: under his lead, NYC will concentrate on jobs for smart, talented and highly trained people. What follows from that is that the rich banks, the bio-tech, the media get subsidies but none of that for you and me, Two billion in bonds for the Yankees, but replacement parks for Bronx residents ha!. So the Stella D'Oro strikers get nothing from NYC to keep union baking jobs in the Bronx. Wealthy people don't need spare parts for their cars (they'll go to the dealer) so the junk yards and repair guys in Willet's Point are not needed.
Posted by: Daniel Millstone | December 15, 2009 01:25 PM
Poor people don't own cars, so they don't need the junkyards and repair guys, either.
Posted by: Alon Levy | December 15, 2009 02:40 PM
Further evidence, if any were needed, of the Bloomberg administration's commitment to reducing job opportunities for ordinary New Yorkers appears in Jim Dwyer's NY Times column on Wed., Dec 16. NYC is financing construction of a parking garage (using stimulus money) for Bronx Lebanon Hospital. The project will reduce jobs there from 25 to 6: http://www.nytimes.com/2009/12/16/nyregion/16about.html?ref=nyregion
Lots of New Yorkers are auto-owners, as I understand it, and, from what I've seen of the auto-repair and used parts businesses both in Willet's Point and in Hunt's Point, they thrive on the patronage of lower income people.
Posted by: Daniel Millstone | December 16, 2009 08:02 AM
A little less than half the households in the city have one or more cars - and those households on average have twice the income of the households that have no cars.
Posted by: Alon Levy | December 17, 2009 06:56 PM
do you really think that driving away jobs is the "goal" of the Administration?
Posted by: Labor Law Poster | December 22, 2009 01:53 AM