It was slated to be one of the biggest real estate projects in New York City in years, a major expansion of the Industry City complex on the Brooklyn waterfront that could have created as many as 20,000 jobs at a time when local unemployment has soared because of the pandemic.
But on Tuesday night, the project’s owner canceled the expansion in the face of fierce opposition from left-leaning Democrats, ending the biggest clash over development in the city since the collapse of the Amazon deal in Queens last year, and highlighting the growing influence of the left in local politics.
The project, which required the city’s approval to rezone the area, had been cast as a way to bring jobs to an underdeveloped industrial section of Sunset Park, and supporters argued that the city’s massive job losses in recent months gave them an even more compelling reason to move forward with plans to create a shopping and office behemoth there. New York City’s unemployment rate last month was 16 percent, nearly twice the national average.
But the area’s councilman and some community groups opposed the rezoning, saying that it would be a “luxury mall” that would worsen gentrification, and contending that job estimates were inflated. The proposal divided Democratic officials, and left some leaders — including Mayor Bill de Blasio and the City Council speaker, Corey Johnson — on the fence, effectively allowing local officials to kill it.
“If a project like this can’t succeed, it concerns me very much about the future of New York City — a place I’ve spent my whole life,” the chief executive of Industry City, Andrew Kimball, said in an interview on Wednesday.
Business leaders also expressed dismay over the defeat of the rezoning. Kathryn Wylde, the president of the Partnership for New York City, an influential business group, questioned how elected officials could forsake thousands of jobs when nearly one million New Yorkers were facing unemployment.
“The opponents of Industry City have further damaged the prospects for economic recovery from COVID-19,” she said in a statement.
But the progressive wing of the Democratic Party saw the proposal as a favor to big business, one that could lead to displacement in Sunset Park, a diverse, working-class neighborhood on the Brooklyn waterfront.
“People power has triumphed,” Carlos Menchaca, the councilman who opposed the deal, wrote on Twitter. “Our work continues as community voice drives the growth and future of our neighborhood.”
Mr. Menchaca’s opposition would have normally been enough to kill the plan: City Council members are unofficially afforded the power to essentially veto any rezoning in their districts. But the Council had been considering the rezoning despite Mr. Menchaca’s opposition, and held a hearing on the proposal this month. The city’s planning commission had voted to approve the rezoning last month.
The developers decided to withdraw the application on Tuesday night after more elected officials came out against the plan. The decision was first reported by Politico.
Mr. de Blasio, a Democrat who will leave office in 2021, had supported the Amazon deal, but declined to take a position on Industry City. He said on Wednesday that other rezoning proposals were moving forward and he would back ones that benefit the public.
Previous mayoral administrations had approved “sweetheart deals” for developers that he said made New Yorkers skeptical of new projects.
“That kind of development really soured people,” Mr. de Blasio said.
Industry City, an industrial complex built in the 1890s, has been rebranded as a 21st-century hub for small businesses and artists, and its owners have wanted to expand the site with new office and commercial space.
In 2013, Jamestown, the developer that owns Chelsea Market, and its partners — the investment firms Belvedere Capital and Angelo Gordon — bought a nearly 50 percent stake in the 16-building complex. Jamestown renovated the buildings, which were flooded during Hurricane Sandy.
The proposal to rezone the area was stridently opposed by a handful of community groups, most notably Uprose, an environmental justice group, and Protect Sunset Park. The grass-roots opposition helped win over local elected officials, including Representatives Nydia M. Velázquez, Jerrold Nadler, Yvette D. Clarke and Hakeem Jeffries, who sent a letter to the City Council on Tuesday opposing the rezoning and urging council members to listen to residents.
“What the Sunset Park community has made clear is rezoning such a large portion of the waterfront for a single private actor is not in the best interests of the residents,” the letter said.
Mr. Menchaca said that standing up to the developers took “immense courage,” adding that he felt at times like David in a biblical battle against Goliath. He said he hoped the waterfront would remain an industrial area by attracting companies that could provide green jobs.
“This is a victory for communities who have been sidelined by developers and want to drive their own vision of growth in their neighborhoods,” Mr. Menchaca said in an interview.
Mr. Kimball, the leader of Industry City, said he had worked to address the same concerns that had killed the Amazon deal and had abided by the city’s complex land review process. Still, there was resistance to “a project that any reasonable person would say is an extraordinary project.”
Two factors contributed to the decision to withdraw the application, he said: the lack of political leadership and fears that a contentious battle could harm the developers’ reputation. The developers have leased 300,000 feet of commercial space at Industry City since the pandemic hit.
“We can’t have that be damaged by a continued political food fight that lacks very little substance,” Mr. Kimball said.
Critics of the project have questioned the 20,000 jobs figure. Mr. Kimball said there were currently 8,000 jobs at the complex, and the rezoning would allow for 7,000 more at the site. Another 8,000 were expected in the surrounding community.
Business leaders have already expressed their frustration with Mr. de Blasio’s response to the pandemic and are pushing him to address concerns about crime, homelessness and trash. They have also been searching for a way to shape the race in 2021 to replace Mr. de Blasio.
Eric Ulrich, a Republican councilman from Queens, said he had the same pit in his stomach upon hearing of Industry City’s defeat that he did when Amazon abandoned its plans in Queens. The tech company has since continued its investment in the city, expanding its offices in Manhattan, buying the iconic Lord & Taylor building on Fifth Avenue and opening warehouses in the other boroughs.
Nonetheless, Mr. Ulrich said that the city was suffering because Democrats were “marching to the beat of the Socialist drum.”
“We are sending such a terrible message to the rest of the country that we’re not open for business,” he said, “and we’re not open to economic development and new jobs.”