The Gateway Trojan Horse: Consequences of Unaccountable Development

One of this blog’s main themes is the deficiency of current land use review process (ULURP) and the need for a more community-focused, transparent procedure, also known as accountable development. We have argued that, especially when projects receive public subsidies, it is imperative that they be subjected to detailed, independent oversight. In previous posts, we have also supported the New York State Accountable Development Initiative (ADI), legislation sponsored by Assemblyman Brodsky that would require developments to include:

1) Living and prevailing wages
2) Employment benefits
3) Job training opportunities
4) Mitigation of negative neighborhood impacts
5) Community benefits

The need for such legislation stems from the development reality in New York City and around the country. Often big box stores like Wal-Mart and large shopping centers are rammed through with minimal community input and based on misinformation generated by developer-funded consultants. We comment more on this here and here.

Essentially, without the enforcement of accountable development guidelines communities have no idea what they’re getting and no guarantee that they will actually benefit from a planned project. Nowhere is this more true that with the Related Companies’ proposed Gateway Mall at the Bronx Terminal Market.

As we have documented for the past few months, the Gateway Mall, from its very inception, is the quintessential unaccountable development (no-bid contracts, eviction of small businesses, sole-sourced city land giveaways, guaranteed loans, large subsidies and an unbelievable 99 year lease deal). Unsurprisingly, the result of this secretive, dishonest process was a development that lacks transparency, oversight, and maximum community benefits. To make a very bad situation worse, it is also quite possible that the Gateway Mall will become NYC's first Wal-Mart site.

The Presence of Wal-Mart at Gateway: No Accountable Development Means No Guarantee

For the past 6 months we have been attempting to force Related to reveal its Gateway tenants. Once a project is approved the developer has no constraints on which retailers it will choose to tenant the development site. Related knows this and is hoping that a general support for Gateway, and the concomitant revitalization of the Bronx, will be the rising tide that lifts all the boats, even if a few of those vessels are a BJ’s or a Wal-Mart. Therefore unless the developer assures, in a legally-binding Memorandum of Understanding, that such a predatory non-union store will be excluded from the project, the project will very shortly (once the compelling evidence is made public), generate the same energized community, business and labor opposition that stopped Wal-Mart from entering Rego Park.

Related can promise until its blue in the face that Wal-Mart is not part of its development but, given its past performance, there is little reason to believe its self-serving claims. In the first place the disdainful, secretive, and mendacious way the developer has treated the Terminal Market merchants and the Southwest Bronx community makes it hard for anyone to believe any claims it will now make about possible anchor tenants. Secondly, though elected officials have claimed no BJ’s will be on site we have received word, from a very reliable source, that the company has already signed a lease for the Gateway mall. Thirdly, Related’s own EIS describes a site plan perfect for a store like Wal-Mart and repeatedly references the possibility of a non-union club store on site (including a possible Sam's Club).

More specifically, the EIS says the following:

As currently envisioned, the retail development would house approximately five large-scale retail stores totaling 755,990 gross square feet … While specific tenants have not been identified, for purposes of providing a conservative analysis it is assumed that one of the large-scale stores would be a home improvement store, another large-scale store would be a wholesale club, and a third large-scale store would be a department store, while one of the medium-scale stores would be a supermarket (pg. 3-2).

According to our aforementioned source, the three stores with signed leases for Gateway include BJ’s, Home Depot and Target. Therefore, there are still two, approximately 152,000 sq. ft. retail anchors that still need to be named. One of these stores could easily be a Wal-Mart, especially if the rumored the Target lease is either untrue or falls apart. The main point here is that without either transparency or a binding agreement that specifically precludes the possibility, we are forced to assume that both Wal-Mart and BJ’s are Gateway tenants.

All of this uncertainty would have been obviated if a true accountable development process had been initiated from the beginning. The danger for Related is that the non-union box stores it hoped to sneak through ULURP may now be the seeds of the project’s downfall.

The collapse of the Gateway development would certainly not be a tragedy for NYC taxpayers. The disapproval of the land-use application would cede the BTM property back to the city, opening up the possibility of a fair bidding process that could, while finding a way to preserve the BTM merchants, create a community accountable development that would net the city a more lucrative return for its valuable property.