Opinion: Stop Echoing Industry City’s Bogus Math on Jobs

Industry City’s ‘Plan for 20,000 Jobs’ included jobs that already exist, jobs that it expected tenant companies to generate, and jobs that murky projections said would be spurred off site.

After the proposed rezoning of the Industry City complex in Sunset Park was withdrawn, some framed it as a blow to employment. “Progressives Defeat Brooklyn Project That Promised 20,000 Jobs,” proclaimed a New York Times headline, distorted into “the prospect of 20,000 new jobs” in a Times newsletter.

Sure, “20,000 jobs” sounds appealing, especially in these parlous economic times. But that claim deserves scrutiny, not deference.

That calculation—based on pre-COVID estimates, of course—was dubious for two big reasons, only one of which was aired at the recent City Council hearing on the proposed rezoning. First, it referred to cumulative jobs, not new ones. Second, it stretched to include purportedly related jobs off-site.

“A Plan for 20,000 Jobs”

For the marathon City Council Subcommittee hearing Sept. 15, Industry City CEO Andrew Kimball narrated a 51-page slideshow, titled “A Plan for 20,000 Jobs.” (Go to 45:35 of the hearing video.)

“Your approval will generate real benefits for Sunset Park and the City of New York,” Kimball stated, including “more than 20,000 jobs.”

Similarly, Industry City’s “Sunset Park Opportunity” website, aimed to marshal public support, touted “The plan to create up to 20,000 new jobs.” (That “up to” left much wiggle room, of course.)

Project backers have emphasized that nice round number. A New York Daily News op-ed by Council Members Donovan Richards and Ritchie Torres said “the city we love is in danger of sacrificing 20,000 jobs.” A New York Post editorial warned about sacrificing “20,000 new jobs,” likening it to “Amazon 2.”

7,000 new jobs on site

Early in the hearing, however, it became clear that Industry City’s plan concerned a projected cumulative total, not 20,000 new jobs.

Once Kimball clarified that Industry City currently houses about 8,000 jobs, Council Member Francisco Moya, Chair of the Zoning and Franchises Subcommittee, asked about the future. (Go to 1:28:32 of the video.)

“We’re projecting a little over 15,000 on-site”—7,000 more—“and then another 8,000 off-site, because of all the economic activity that is generated here,” Kimball responded, suggesting that the rezoning could, in those two buckets, ultimately deliver 15,000 new jobs. (Based on that logic, of course, Industry City should have touted 23,000 jobs, not a mere 20,000.)

Even the on-site jobs estimate involves an element of faith: Nearly all those hires would be made by tenant businesses, not Industry City itself.

Responding to Moya, Kimball said the projection was based on the complex’s track record, keyed to the buildout of new space, and calculated as part of the EIS, or environmental impact statement. Still, he acknowledged that, as a landlord, “I don’t know if anybody can make that guarantee.”

Job creation based on “economic activity”

More dubious is the source of the off-site “economic activity” calculation.

Councilmember Robert Cornegy, whose Brooklyn Eagle op-ed had claimed Industry City “will create 20,000 jobs,” at the hearing asserted, “I was never naive. I understood the numbers were upwards of 7 or 8,000 on campus, but I’m also aware of the ancillary impact of the job creation on the immediate community.”

Councilmember Antonio Reynoso expressed skepticism. “I think it’s misleading,” he said. “We’re talking about 7,000 jobs.” While “it’s a serious number,” he said, the claim of 20,000 jobs is “just not true.”

Responding, Kimball said, “As it relates to jobs, the fact of the matter is that an EIS requires you to give a ten-year projection.”

However, the EIS, prepared by the applicant for the Department of City Planning, didn’t replicate Industry City’s full math. The Executive Summary states that the rezoning, based on increased space devoted to various sectors, would “generat[e] more than 15,000 total on-site jobs.”

While the syntax is slippery—it’s not producing 15,000 jobs, but rather bringing IC to 15,000 total jobs—the EIS notably omitted off-site jobs.

Where does the number come from?

In an NY1 “Inside City Hall” segment last month, host Errol Louis tried to drill down: “When you say 20,000 jobs.… sometimes what they really mean is 2,000 jobs over a 10-year period…. When you say 20,000, what are we talking about?”

“Those are 20,000 real jobs,” Kimball responded. “We’ve gone from 1,900 to 8,000 in the last seven years. On-site, we think we can grow that to 15,000 and then the economic activity based on the work here will lead to jobs elsewhere in the community and elsewhere in New York City, which will take the job total well over 20,000 jobs.” Speaking quickly to stave off a follow-up, he segued to talk about job placement for locals.

Indeed, Industry City has said little about where the estimate of 8,000 off-site jobs comes from, and did not respond to requests for more detail. Its public presentations leave doubts.

In presentations in October 2018 and February 2019, Industry City stated—here’s the page—that adding 1.3 million square feet of new commercial/industrial space would bring “total on-site employment to 15,000, with 8,250 more jobs located off site.”

In small print appears this text, “*Source: IMPLAN,” though the asterisk is not keyed to a specific statistic. IMPLAN, an economic modeling application, plugs in money spent–including direct expenditures, indirect effects like business to business purchases, and induced effects generated by employee spending—to estimate impact on employment. IMPLAN counts employment in job-years—just as Louis indicated. It states: “In other words, if a worker holds one position in a company for three years, then IMPLAN counts that as three jobs over the course of a 3-year impact analysis.” It is unclear how much the Industry City job estimates rely on IMPLAN.

Major projects have ripple effects, but such indirect job-creation calculations inflate a project’s impact. Even the scuttled Amazon deal focused on on-site headcount, requiring, for example, that “Recipient… employ 25,000 Net New Full-time Permanent Employees at the Project Location by June 30, 2028” to gain certain tax credits.

Hiring locally?

Industry City’s presentation was also fuzzy when it comes to the project’s impact on local hiring.

Kimball said that “35 percent of the 8,000 jobs… are held by people from the surrounding neighborhoods and nearly 70 percent by people who live in Brooklyn.”

But does “surrounding” mean “adjacent”? Responding to Moya, Kimball said the “35 percent came from the surrounding zip codes. Now that’s South Brooklyn, that includes Red Hook, it includes Sunset Park, it includes the other zips surrounding Sunset Park.”

Actually, Slide 19 of an October 2017 Industry City presentation, which references the 2017 survey Kimball cited, defines “surrounding communities” as ranging as far as Fort Greene and Flatbush. That’s a very wide zone, with demographic profiles quite different from Sunset Park itself.

So when Kimball expressed a willingness to sign a Community Benefits Agreement, including “not fully unlocking our ability to add new retail and new buildings until we have demonstrated that jobs are going to local residents,” the definition of “local” would have become very important.

After all, others had already been misled. In a Gotham Gazette essay supporting the Industry City plan, Carol Kellerman, former president of the Citizens Budget Commission, wrote that 37 percent of workers at Industry City came “from the immediate neighborhood.”

The COVID adjustment

Given the pandemic, many people are working from home, raising questions about job estimates made under different assumptions.

“While NYC can certainly use 7,000 new jobs, even those numbers seem to bely current economic reports,” urban planner Eve Baron stated in her submitted testimony. Similarly, argued the Sunset Park community group UPROSE, “Industry City is claiming to create 7,000 new jobs based on outdated and pre-COVID analyses.”

Asked at the hearing by Council Member Carlina Rivera how many workers had returned to the campus, Kimball said it was 40 percent, and “we expect we will get back up there.” He cited the sprawling complex’s “wide open staircases” and large courtyards as draws.

Still, he acknowledged, “There is no doubt we are going to lose some businesses.”

Getting the story right

The story of Industry City’s withdrawn rezoning has already become part of New York City development discourse, but it shouldn’t mislead.

The Real Estate Board of New York tweeted that the withdrawal “robb[ed] NYC of nearly 20,000 good-paying jobs.” A Daily News editorial lamented the loss of “up to 20,000 new jobs for job-starved New York.” City & State said the rezoning “promised to create 20,000 new jobs.”

That’s ridiculous. And even citations of “15,000 new jobs” deserve skepticism. As Reynoso wisely observed, “I think it would be naive for a Council Member to think that a number that’s thrown out… by the applicant, is something that we should trust, solely in itself.”

Norman Oder writes the watchdog blog Atlantic Yards Report. Some of this critique draws on the valuable work, in Sunset Park Reports, of John V. Santore, a former reporter and current Sunset Park resident, who submitted extensive public comments to City Council.