MONEY AND PROMISES
Big tax breaks for developers, small return on jobs for Sunset Park
NYC gave a $37 million tax incentive to Salmar Properties, a real estate company that bought the Liberty View Plaza building in Sunset Park. In exchange the company was supposed to rent 85% of the building to manufacturers. Eight years later, over half of the building is vacant.
In 2011 Salmar Properties, a real estate company, purchased the Liberty View Industrial Plaza building in Sunset Park. Through a deal with the New York City Economic Development Corporation (NYCEDC) Salmar Properties paid a fraction of what similar properties were selling for and received an estimated $37 million in tax breaks, tax credits, and discounted utility bills. In exchange, Salmar Properties promised that 85% of the building is rented to manufacturing companies.
Eight years after the City closed the deal with Salmar Properties, our analysis of documents obtained from the NYCEDC show that only 22% of the manufacturing part of the building has been filled. In a building with 1.1 million square feet, half of the floors are completely empty. Ian Siegel, Liberty View Industrial Plaza Property Manager, confirmed this figure in an interview with El Deadline.
WHY DID THE CITY MAKE THIS DEAL?
NYCEDC is a hybrid organization that is part non-profit and part city agency. Their mission is to support economic development and vitality for communities like Sunset Park and others in the five boroughs.
Eight years after the City closed the deal with Salmar Properties, our analysis shows that only 22% of the manufacturing part of the building has been filled.
The goal of the deed restriction is to bring well-paying manufacturing jobs back to the blue collar neighborhood of Sunset Park, a predominantly Latino neighborhood. These modern manufacturing jobs include traditional garment industry jobs, but also careers in film, computer technology, biotech, and web design and development.
Good paying jobs are important. While the neighborhood has just a 5% unemployment rate, one in three community members live in poverty. Therefore, a deal such as the one closed by Salmar Properties with the NYCEDC in 2011, to provide manufacturing space in the Liberty View Plaza building, presented itself as a good way to create new job opportunities for community members.
When the deal was signed the Community Board was enthused, as you can read in the copy of a letter sent by its members to the Chair of Standards and Appeals, in which they write that “our Board Members are very eager for the developer to move forward on this project” (as you can read in the copy obtained by El Deadline).
However, little has happened. According to Ian Siegel, the Liberty View Industrial Plaza Property Manager, the reason why Salmar Properties has taken so long to fulfill its commitment with the City is that they want to rent manufacturing spaces in the building, but Salmar has not received applications from “quality tenants.” More recently the company said that competition is the challenge, and that the lack of a first floor access to manufacturers make it difficult to attract tenants.
Others disagree.
Just a few doors down are Industry City and Bush Terminal, two buildings that have similar spaces for rent, have not had these issues. “We see real demand for space here, so we know that it exists and we know that people are paying $14-$30 per square foot,” said Southwest Brooklyn Industrial Development Corporation´s Deputy Director Jesse Tinen Solomon.
The agreement between Salmar Properties and the NYCEDC is one of many that this city agency does on a yearly basis. The NYCEDC is a non profit organization that was created by the City government in 1991. Its mission is to promote economic growth, mainly through real estate development and it has the ability to issue tax incentive deals to encourage companies to do business in New York. NYCEDC has 27 board members and many of them come from the real estate industry. The Mayor appoints the six board members and the Chairperson (who appoints 10 members more). The rest are nominated by the Borough presidents and the Speaker of NYC Council.
TENANT ACCUSATIONS AND PITCH TO AMAZON
Former manufacturing tenant and founder of Manufacture New York, Bob Bland, tried to establish her fashion incubator in Liberty View Plaza. Bland is a fashion designer by trade and she co-chaired the 2017 Women’s March. She has worked for firms such as Tommy Hilfiger and Banana Republic.
Bland claims that Salmar Properties pressured Manufacture New York to leave. She says they employed tactics such as telling potential investors in her business that the lease was unstable, and turning the heat on during summer months.
“I think they are sitting on it to find the right tenant who can pay the premium rent, and it might be worth their while,” said CUNY Professor of Urban Studies Tarry Hum.
Ian Siegel described these accusations as “ridiculous”. He says that Manufacture New York stopped paying their rent and that each tenant controls their own heat, “Even if someone turned on the heat they could have walked in and turned it off.” After El Deadline spoke to him he called back to say that the boiler is turned off from April 15th-October 15th so turning on the heat wouldn’t be possible anyhow.
Bland believes that Salmar Properties is holding onto the top floors to rent space out at a higher price. She is not alone in her concern that the real estate company is not trying to bring manufacturing jobs to Sunset Park.
“I think they are sitting on it to find the right tenant who can pay the premium rent, and it might be worth their while,” said CUNY Professor of Urban Studies Tarry Hum to El Deadline. Hum thinks they are waiting for a company like Google or Amazon, who could pay higher rents.
Documents recently obtained through a Freedom of Information Law request, support Hum’s assertion. In partnership with neighboring Industry City, Salmar Properties, applied, but was not selected, to be the site for Amazon’s HQ2. The document below shows what they pitched to Jeff Bezos company:
However, Salmar Properties has reiterated their commitment to bring manufacturing. “That whole notion that we would want to keep the building empty. It’s just, it’s, it’s preposterous. It’s like it’s people just flat out making stuff up, ” says Siegel.
Salmar Properties say that they have put $140 million in building improvements, including paying for 17 freight elevators that cannot be used for people. In an interview last October, they said want to fill it a “slow pace” to get the “right kind” of tenant. City documents indicate a mortgage of $30 million was taken out on the property.
“FAILED TO COMPLY WITH THE AGREEMENT”
Some politicians have taken notice. New York City Council Member Carlos Menchaca, congresspersons Nydia Velásquez and Jerry Nadler, all democrats, sent a letter in August 2018 to James Patchett, president and CEO of the New York City Economic Development Corporation. In the missive, they expressed their concerns in harsh terms:
“We fully support the original terms of this agreement and Salmar Properties’ promise to tenant the building with at least 85% manufacturing or industrial uses for a period of 30 years. Thus far, Salmar Properties has failed to comply with this agreement, leaving the site to remain mostly vacant, which we find unacceptable. Almost a third of the term of this agreement has expired, and yet the owner has failed to meaningfully activate Liberty View Plaza’s industrial mission”.
In September 2018, the community board had invited Salmar Properties to speak to the Economic Development/Waterfront committee meeting, but they did not attend.
Prices for industrial/office space in Brooklyn are now $491 per square foot. Simple math shows Liberty View Plaza could be worth as much at $540,000,000. That’s 60 times the price they pay when it was purchased for in 2011.
How much longer will the building remain empty? Will there be an consequences for Salmar if it continues to be mostly vacant? NYCEDC did not respond to multiple requests for a response.
TELL US:
Have you worked in Liberty View Plaza, have you tried to rent space there, do you know anything about why Liberty View Plaza is empty? Write to me at maggiethejournalist@gmail.com.
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