Carlos Menchaca

NYC Council

Sunset Park Councilmember Carlos Menchaca has demanded and received changes to Industry City’s plans, but his critics believe he did not push far enough.

After an outcry from Sunset Park community members against the proposed Industry City rezoning, Brooklyn Community Board 7 has scheduled for Thursday a public comment session for residents to share their concerns.

Community Board 7’s Committee on Landmarks and Land Use will hold the public meeting on Thursday, October 3rd from 6:30 to 8:30 p.m. at P.S. 24 on 38th Street between 4th and 5th avenues.

The meeting will allow community members to share their thoughts about Industry City’s private rezoning application that seeks an expansion of over 1.4 million square feet to include two hotels, department stores, and educational buildings.

The clamor comes after Industry City CEO Andrew Kimball agreed to delay the application to start the public land review process and meet the terms set by local Councilmember Carlos Menchaca.

The community board, which serves the Windsor Terrace and Sunset Park neighborhoods, is reviewing the terms that were recently agreed upon by Menchaca and Industry City before making any official comments on the matter, according to district manager Jeremy Laufer. But some community advocates have indicated they do not think Menchaca pushed hard enough.

A key sticking point in the debate over the proposal is the proposed new treatment of land that had been zoned for heavy industrial uses. That’s a concern in other development hubs around the city as well.

The proposed rezoning

The Industry City rezoning application is seeking to increase its manufacturing and retail campus to 1.45 million square feet to include two hotels, department stores, and educational buildings—a $1 billion expansion over the next 12 years. The current M3-1 zoning—which is for areas with heavy industries such as solid waste transfer facilities and recycling plants, which create noise or traffic, usually are located near the waterfront buffered from residential areas—does not permit some of the proposed projects. The rezoning application is seeking an M2-4 designation, where the maximum base height can reach up to 85 feet.

According to the environmental impact statement for the proposed rezoning, the applicants also want to create a “Special Sunset Park Innovation District” where research, development, design to engineering and manufacturing of a product could happen all under one roof, in line with the de Blasio administration’s 2015 Industrial Action Plan, which intended to preserve and expand the industrial sector. The rezoning space would have 1.78 million square feet of manufacturing use with more traditional manufacturing uses ranging from wholesale manufacturing to cement factories. There also will be 893,445 square feet reserved for artisanal manufacturing, art/design studio and for office space.

The proposed actions would rezone 30 acres and create the special district for three new buildings as well as what IC promises will be a pedestrian-friendly environment for ground use. It would also demap 40th Street between 1st and 2nd avenues.

A councilman’s demands

Menchaca pushed back with a list of demands: no special district for hotels, space restricted for industrial uses within the proposed rezoning site, downsizing the space and uses for retail and financial support for tenant protection programs.

“My main finding is that the current rezoning application before the City Planning Commission is a non-starter. It will exacerbate gentrification, displacement, and rising rents; leave the community unprepared for climate change; and fail to preserve or strengthen the manufacturing and industrial character of the waterfront,” wrote Menchaca in a letter to Kimball. “My second finding, which is equally important, is that allowing you to pursue your as-of-right business model will also exacerbate these trends.”

After rushing out of the Sept.16th town hall held at Sunset Park High School to a booing crowd, Menchaca revealed two other conditions that IC had to meet in order to get his full support for the application. First, he asked the De Blasio administration to make commitments in writing to “address our workforce, education and housing challenges, such as investments for a public technical high school, affordable housing, and tenant support through organizers and legal services.” And the final condition was for a community-based oversight group: “There must be an identifiable partner in such an agreement and proof that a legal team is present to negotiate and make legally binding commitments from Industry City to the rest of the Sunset Park community.”

In a letter to Menchaca last week, Kimball more or less agreed to his terms. “Today, more than half of the Industry City workforce lives in Brooklyn and one in every five of [the workforce] lives in Sunset Park. While I am proud of those achievements and appreciative you and a number of other area stakeholders have played in creating these results, I am confident that the regulatory changes sought through a rezoning create an opportunity to achieve significantly greater results working together that are more sustainable in the long-term,” wrote Kimball. “That is why Industry City has agreed to adjust our vision to more fully align with the one you articulated in your letter.”

Kimball told City Limits that Industry City was dedicated to working with the community and was willing to sit at the table to make sure they could meet Sunset Park’s terms.

But it’s not clear that Menchaca’s demands mirror those of other community stakeholders.

Community groups at the town hall and those who could not attend said there was a real sense of disappointment with the Councilmember, who had delayed the application’s certification in March.

“I think that’s probably why people reacted so strongly when he unveiled the plan, and for the general public, we were under the impression these six months would be used to elicit feedback about the rezoning proposal and as stakeholders, our feedback would be important. And we saw on [Sept.16th] that it really didn’t matter,” said Jei Fong, member of community advocacy group Protect Sunset Park.

Protect Sunset Park, a community group that represents residents and businesses that have been impacted by Industry City in the community, contends that the Menchaca and Industry City agreement doesn’t stray far from Industry City’s original rezoning plan, which included zoning for the expansion of Industry City’s Innovation Lab and a technical school.

Manufacturing in today’s NYC

Elected officials with industrial business zones or significant manufacturing presence in their districts are keeping a close eye on the Sunset Park discussion as they watch changes to zoning for heavy industrial use.

Under the mayoral administrations of Rudolph Giuliani and Michael Bloomberg, the city pushed residential and commercial rezoning in industrial areas to stimulate economic growth. Bloomberg rezoned large swaths of M land; the city lost about 4,050 acres of M land between 2002 and 2015, reducing the total percentage of land in the city that is zoned M from about 21 percent to 14 percent, according to a Pratt Center report.

The profit motive is what tends to drive manufacturing out of areas where residential development is permitted, says Pratt Center for Community Development executive director Adam Friedman.

“You cannot create a stable situation where some of the tenants are paying a very high rent and some of the tenants are paying a very low rent,” says Friedman. “Owners are going to try and push their property towards the higher rent uses. And that’s the fundamental dilemma in mixed use neighborhoods, such as when its an area being promoted as an innovation district, how can you have both designers and relatively high-end, business services in proximity to manufacturing, which just pays less in rent?”

In an attempt to offer some protection for manufacturing, Bloomberg created Industrial Business Zones (IBZs) — currently 21 exist across the city. IBZs are areas where industrial businesses receive special tax credits among other services, and the former mayor promised not to rezone them away from manufacturing. Promises aside, the Pratt report said those areas have seen competition from hotels, office buildings, self-storage facilities and entertainment venues—all of which are also allowed in M zones.

In 2015, the De Blasio administration released a comprehensive 10-point plan to address innovation and advances in the manufacturing industry. The plan included $442 million dollars over 10 years for city-owned industrial properties such as the Brooklyn Army Terminal and another $150 million dollars to the NYC Economic Development Corporation which would offer low-interest loans and grants to industrial businesses coupled with additional funding for a workforce training program. Before the bill reached the City Council, the city amended the plan to allow permits to develop hotels. The bill passed the City Council with the hotel permit amendment. And in 2017 the city administration also added permits for self-storage facilities within light-manufacturing use areas.

Industrial advocacy groups say they have not seen any significant improvements since the passage of the de Blasio plan. Separate efforts are underway around the city to bolster industrial enclaves. Gowanus Alliance, for one, says they are in the middle of negotiating with local elected officials and the city to get broadband and improve infrastructure in the nearby South Brooklyn industrial zone as part of the Gowanus rezoning package.

Zoning and manufacturing

Economically, New York is doing well, much better than the rest of the country. The city’s economy grew 3.4 percent in the second quarter of 2019, after 3.1 percent growth in first quarter of the same year, according to the city’s quarterly economic report. But the manufacturing industry saw a slight decrease of 2.7 percent and 500 jobs, the report says. An estimated 72,000 jobs are in the city’s manufacturing sector, according to a report in August by the state Department of Labor.

According to the state Department of Labor the average salary in manufacturing is $62,082 in 2019. Average manufacturing salaries have shown steady growth since 2000 even after the 2007 Great Recession. Elected officials who have manufacturing and industrial zones in their districts say those good-paying jobs are often accessible to people with lower levels of education and come with more pay than the retail sector.

There are three types of manufacturing zoning designations in New York City: M1, M2 and M3. They cover different kinds of industry. They differ in what amount of noise, vibration, smoke, odor and other effects they permitted industrial uses produce.

The M1 zoning designation is typically used for light manufacturing operations such as allows for woodworking shops, repair shops, and wholesale service and storage facilities such as the Garment District in Manhattan to parts of Red Hook or College Point with one- or two-story warehouses characterized by loading bays. M1 districts behave like buffer zones between manufacturing and residential or commercial districts. Offices, hotels, some community facilities and hospitals are allowed in M1 districts but only by special permit.

In the M2 districts, a middle ground between light and heavy industrial areas, there are four different designations based on the floor area ratio. M2 is seen in older industrial areas along much of Brooklyn’s Red Hook and Sunset Park waterfronts. The M2 districts can border a residential district while allowing for higher levels of noise and vibration. Smoke is permitted and industrial activities do not have to be enclosed.

The M3 districts permit heavy industrial use which generates generate noise, traffic or pollutants—like power plants, solid waste transfer facilities, recycling plants and fuel supply depots. Similar to M2 districts, the M3 district are typically located near the waterfront and buffered away from residential areas such as in Arthur Kill in Staten Island or the Gowanus Canal in Brooklyn neighborhoods.

Under the current administration, several city-initiated rezonings have involved some loss of industrial space in favor of creating affordable housing on vacant land or creating mixed-use commercial and residential development.

The city’s environmental impact statements project the reasonable worse case development scenario for each rezoning. In the 2015 East New York rezoning, manufacturing was projected to lose 27,035 square feet; the Far Rockaway rezoning risked 43,822 square feet. In the Staten Island rezoning of the Bay Street and Canal Street corridors an estimated 134,628 square feet could be impacted by the plan.

Other upcoming city-initiated rezonings near industrial business zones such as Bushwick, Gowanus and the Southern Boulevard plans may also have some impact on manufacturing.

The North Brooklyn plan

A separate de Blasio administration proposal, the city’s North Brooklyn Industry and Innovation plan, would span over 1,066 acres of the North Brooklyn IBZ as well as neighboring manufacturing-zoned blocks of Greenpoint, East Williamsburg, and Bushwick and bordering Newtown Creek neighborhoods. It aims to protect some traditional industry but also to identify “industrial areas where zoning can be modified to encourage creation of office space for the city’s fastest growing sectors.”

Under the plan, there’d be a “Core Industrial Area” of heavy industrial businesses that would have limitations on non-industrial uses such as large scale entertainment. It would allow for multiple floors for industrial space, and would adjust parking and loading requirements for business growth and modern industrial businesses. The “Core Industrial Area” would make up 69 percent of the plan.

In a second area known as the “Growth District,” the plan would allow for creative and tech-driven jobs in areas closest to transit. It would “encourage loft-style buildings that meet the needs of today’s businesses” and makes up 13 percent of the proposed plan, according to the city.

A third area, known as the “Transition Area,” would serve as a buffer zone, between the Core Industrial Area and other areas, allowing for greater floor area for lighter industrial uses and also “encourage loft-style buildings that meet the needs of today’s businesses.” It makes up 11 percent of the plan.

Councilmember Antonio Reynoso rejected the plan, saying it completely ignored his community’s recommendations after five years of planning with former Deputy Mayor Alicia Glen.

“The city has no intention of assisting the development or the protection of manufacturing jobs in the city of New York. All their policies that they’ve pushed forward so far have been exclusively so remove manufacturing from M3 for M2 and 1 or from M3 to M2-1 to residential. You’ll be hard pressed to find any development of manufacturing place that isn’t negotiated via community or that is leveraged through housing by the city of New York,” said Reynoso.

Reynoso says every single city-initiated rezoning where manufacturing districts were involved such as the Domino Sugar Factory rezoning and the entire 2005 Williamsburg rezoning had the effect of shrinking available industrial land. Additionally, he says the Board of Standards and Appeals allows for individual manufacturing buildings to become residential. “So they’re attacking both ways. They’re allowing the Board of Standards to pretty much rubber-stamp any conversion from manufacturing to residential in the end.”

“Unintentionally or intentionally, [the city] is proactively destroying the manufacturing community here in the city of New York,” he says.

Reynoso is not alone in his concerns for the manufacturing industry. They run deep in the North Brooklyn IBZ, according to Evergreen Exchange executive director Leah Archibald, who says plans like the North Bushwick Industry and Innovation proposal “would totally disembowel the most job-rich areas of the industrial zone.”

A changing industry

Rezoning or no, industry is evolving in New York City.

“We do still have a lot of our large manufacturers,” Archibald says. “There are new businesses – they are by and large much smaller businesses, employing fewer people. Even in custom metalworking, you still need laborers. They continue to be a source of employment opportunities for people who face barriers to other [types of] employment.”

Archibald said many of these new businesses don’t have a set product line and products are custom made such as railings for a buildings or cabinets for an apartment. And small food manufacturers that do have a product line face the struggle of finding space to grow in place.

Friedman says legacy manufacturing may incorporate advanced technology into their traditional methods of creating a product, like using very efficient, sophisticated, 3-D printing to make molds, which then are used in traditional ways such as molds for jewelry. Another is the shift in market preferences​ such as consumers who may want ​higher quality design and valued products. This often means a “little greater profit margin​ and​ a little greater ability to be close to the consumer​, a​little greater ability to stay in New York​ ​and be responsive to market,” he says.

“The model for distribution of products is changing,” says Friedman. “There is this dramatic transformation in how products get to you and resulting transformation of how space is used.”

The intrusion of warehouses and other non-manufacturing business onto industrial land is a major concern of manufacturing advocates.

“Let me put it this way, when you cross the lines on the zoning guidelines, you affect broad sectors,” says Paul Basile, president and founder of the Gowanus Alliance. “So Industry City, which is M3 and was set aside for heavier manufacturing and storage and warehousing now has a Petco, what gets affected is the commercial corridors and the malls in the area, where they are asking for higher rents. But stores like Petco went into an M3 area and they’re paying probably a quarter of the rent that they will be paying in the corridors.”

“So what will happen to the Smith Street, Fifth Avenue or Carroll Gardens commercial corridors?” Basile asks. “I think that the broadness in uses affects the full spectrum of zoning which needs to be evaluated.The manufacturer can’t compete with Petco, which might be willing to pay $35 a square foot whereas manufacturer can only pay $22 square foot.”

But other manufacturing groups are not completely against the developments like Industry City. Southwest Brooklyn Industrial Development Corporation (SBIDC) executive director Ben Margolis says that manufacturing spaces in Industry City could cater to some types of manufacturing and industrial businesses.

Margolis says the main concerns of the area’s industrial employers are the loss of heavy industrial spaces, lack of training for future employees and lack of capital investment in industrial business zones. (SBIDC, along with other nonprofits, provides workforce services—job placement and a small-business training program—in Industry City’s Innovation Lab employment center. Kimball of Industry City is currently an SBIDC board member who is recused from meetings when any aspect of the proposed Industry City rezoning is to be discussed.)

SBIDC is developing a hard-skills training programs aimed at getting residents, especially youth, up an industrial career pathway.

Margolis says there have been some good city policies such as the special permit requirements for hotels and self-storage development in manufacturing zones – uses which lead to low-job density and low-job quality while driving up rent, limiting sites for more job-intensive businesses, and changing the character of an industrial community.

But the lack of capital investment in the infrastructure of the IBZ has also slowed down the opportunities for growth in the sector. “You can drive around big portions of our IBZ in Southwest Brooklyn and you will see the lack of investment and neglect over many, many years. Infrastructure, streets, sidewalks, broadband, utility—all in really, really, really challenging, bad shape. And we do our part as a service provider but there can be and should be a real look at a coordinated package of investment and associated policies if we really truly care about this sector and these areas.”

Kimball says Industry City is reacting to the market which has changed radically over the last several years.

Industry City says in 2013 there were 1,900 employees on the site and now there an estimated 8,000 employees; businesses have grown from 150 to 550. Industry City’s Innovation Lab provides training and creates a pathway to industrial career opportunities. Other investments include replacing all the windows with energy-efficient windows, and moving the electrical grid to the roof from the basement to prepare for future storms and solar energy.

“We consulted with the community for a few years and heard them carefully,” said Kimball. “We’re working on it. All of those things get facilitated in part by the [proposed] zoning.”

Kimball says he understands the anxiety many Sunset Park residents feel about rising rents and gentrification, and that has been why he stressed, “Industry City does not want to move forward without engaging the community and doing our part.”

The community and the Councilmember

Sunset Park residents are indeed worried. In 2017, 32.9 percent of renter households in the neighborhood were severely rent burdened, meaning a household spends more than 50 percent of their household income on rent. Sales prices for all residential property increased by seven percent between 2017 and 2018, compared to an increase of four percent in Brooklyn and an increase of 2.5 percent citywide.

In the primarily Asian and Latino neighborhood, the average household income was $57,870, seven percent less than citywide and the poverty rate was 22 percent in 2017 compared to 17.9 percent citywide.

Against that backdrop, Protect Sunset Park along with Sunset Park for a Liberated Future, Art Against Displacement, Youth Against Displacement and BAD Barcode called for a complete rejection of the Industry City application in an open letter to Menchaca.

“We ask that you, our City Council representative, carry out decisions in the interests of the majority low-income people of color and immigrant working families and publicly state ‘No’ to the Industry City rezoning. Delay in process is not enough, we need to end it now,” said the open letter.

Now, those community groups are discouraged by the Councilmember’s actions.

“He had an opportunity to set precedent to send a message across the bow that developers can’t continue to engage in this way in the face of climate change and certainly not in an industrial sector. He had all the opportunities in the world,” said Uprose executive director Elizabeth Yeampierre. Uprose is a nonprofit focuses on promoting sustainability and resiliency in citywide policy for Sunset Park.

Uprose held a protest inside Industry City on Friday where hundreds of protesters showed up with a small marching band, signs and shouts of “No Se Rinde Sunset Park” (Do not give up Sunset Park).

Yeampierre said in July the group released an 88-page report calling for the creation of a Green Resilient Industrial District (GRID). She says that’s in step with a 197-A community plan, which was adopted in 2009 by the city, and set forth a comprehensive,revitalization framework for an environmentally sustainable and economically viable waterfront district.

The GRID plan articulated four goals: to preserve the maritime and industrial character of the waterfront, retain and create well-paying working class jobs with supportive training, support green industrial innovation which “capitalizes on unique synergies of the port, green transport, construction, automotive, food and other local business,” and promote climate resiliency.

Yeampierre argues that Menchaca missed a chance to argue for the GRID plan in his dealings with Industry City. “He has taken risks [in the past] and we don’t understand right now why he’s not, when he has an opportunity to really sort of change the playbook on how companies come into communities and what that should look like,” she says.

Menchaca’s spokesperson said the Councilmember feels his ideas are true to the principles of 197-A and reflect what the community has expressed through his working group. Menchaca argues that not approving the rezoning application continue to exascerbate rising costs of rent and businesses while having a set of terms that Industry City must commit to will allow for the community to benefit from the approval process.