Future of NYC Industrial Business Zones Looks Bleak

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The Bloomberg administration established the Industrial Business Zone (IBZ) program in 2006 in an effort to protect existing manufacturing districts and encourage industrial growth citywide. But budget cuts have decreased funding for the program from approximately $4 million to $1 million in the past seven years. Less funding means less resources for service providers in these IBZs to assist existing industrial firms, attract new ones to the zones, preserve jobs and advocate to protect these districts from non-industrial use.

As Community Board 5 waits for the final say on its proposal from the Industrial Business Zone Boundary Commission, pressures to designate the area for residential use may thwart the board’s plans.
“There has been, over the past couple of years, a lot of redevelopment in New York City,” says Jean Tanler, coordinator of the IBZ in Maspeth, Queens. “The focus has been on trying to spur economic growth through real estate-type investments and not so much on nurturing industrial manufacturing businesses.”

Manufacturing jobs in New York City continued to decline in spite of the presence of IBZs in each borough. According to Stats and the City from Crain’s New York Business, industrial jobs dropped from 106,000 in 2006 to 75,000 in 2013. The number of manufacturing firms has also dropped. The New York Economic Development Corporation cited a decrease from 7,210 firms in 2005 to 5,938 firms in 2012.

The disappearing act of manufacturing jobs continues to fuel competing interests. In Ridgewood, opponents of the revised IBZ are mostly property owners that prefer a rezoned district for residential development to possibly secure higher rental incomes. Gary Giardano, district manager of Community Board 5, is more interested in retaining the middle class jobs the sector creates such as steel fabricators and wood makers.
“There is still an industrial base left and we are looking to preserve that area for manufacturing,” says Giardano. “We are not so inclined to turn that area into residential.”

Adam Friedman, director of the Pratt Center for Community Development, testified before the New York City Council Committee on Small Business last month that land use policy must go hand in hand with the city’s efforts to promote manufacturing. The dwindling strength of IBZs result in bars, restaurants, retail chains, and hotels increasingly encroaching on manufacturing zones, forcing some industrial firms to close and sell once the cost of doing business becomes less and less affordable.

“The City has still not taken the critically important step of codifying the IBZs in zoning to discourage non-industrial uses,” says Friedman. “The big take away from this analysis is the policy articulated by the Mayor is not working.”

But it is working for city-owned industrial properties. A preliminary analysis of the city’s budget from the Independent Budget Office (IBO) shows that between 2002 and 2012, the city spent approximately $700 million in capital funding to develop and revitalize industrial properties throughout the five boroughs. Almost all of the funding was used on city-owned sites, including $200 million on the renowned Brooklyn Navy Yard. In contrast, the budget for the IBZs has not only declined, but has become less of a priority.

According to the IBO’s analysis, IBZ funding has been subject to annual re-approval as other programs with reduced budgets compete for funding.

“The IBZ doesn’t really have any teeth to it. It’s really a designation, but there’s no enforcement or legal component to the IBZ,” says Tanler. “And because of that a budget can just go up and down and really take the funding out of the program.”

Tanler also claims that strong lobbying from real estate interests may overshadow the proposal from Community Board 5, forcing Ridgewood to leave its manufacturing zone open for residential use. The Boundary Commission is expected to vote on the proposal before the end of the year.

About Candace Sheppard