What’s $41 Million Dollars Between Friends?

Part of the sweetheart deal to redevelop the Bronx Terminal includes swapping the City-owned Bronx House of Detention (HOD) for a parcel now being leased by the Related Companies. The original intent of this agreement was that Related would build an Olympic Velodrome on its land, transfer it to the city and be compensated with the 288,000 gross sq. ft. on which sits the now defunct jail.

During the City Council’s hearing on the fate of the Terminal Market merchants, EDC President Alper stated that no appraisal of the HOD was needed because he assumed the city was getting a better if not comparable deal. His exchange with Council Member Monseratte is very elucidating:

Mr. Alper: So no appraisal is necessary, Councilman.

COUNCIL MEMBER MONSERRATE: No appraisal, so you don't know what the property is worth?

Mr. Alper: I know it's worth the same or less than the property they're giving up. Do you understand that?

COUNCIL MEMBER MONSERRATE: And how much is that property worth?

MR. ALPER: It doesn't matter. It's in-kind –

There are two problems with Alper’s testimony. The first is that New York City’s Economic Development Corporation should not be “assuming” a property’s value especially when it is transferring that property, sole-sourced, to a private entity. This is not only unprofessional, but it smacks of favoritism especially considering the political connections of the Related Companies.

The second issue is, with the Olympic bid dead, what and how much land is the City getting in return for the HOD and how will it be used? The only thing we do know, according to a government appraisal (block 2357, lot 1), is that the City-owned land is worth 41,000,000 dollars. Why is EDC handing over this valuable property to Related without an upfront payment and without the public knowing what it’s getting in return?

The HOD lease transfer (registration may be required) occurred on May 14th, 2004 barely a month after Related bought out the old landlord, Buntzmann. So, before the ink is even dry on the “private” Terminal Market transfer, the City is compensating Related with land equal to the amount the developer paid to buy out the lease. But wait, Related used only $10 million its own money for the buyout; the rest was a loan from the Bank of America guaranteed by the City of New York! This is why, if the approvals for Gateway are not obtained, the City is obligated to buy back the site for $40 million.

How sweet it is to be a friend of the Deputy Mayor.