Beating the Drum for Retail Equity

Now many of you might already know that the Alliance and the Drum Major Institute rarely see eye to eye on policy matters. But when it comes to the issue of retail development-and the need for worker equity-we're definitely on the same page. Here's DMI's take on the Kingsbridge Armory: "When city tax dollars are used to subsidize a private developer, community residents should benefit from the deal. That is the principle behind the fight to bring living wage jobs to the Kingsbridge Armory in the Bronx. Community leaders are prepared to stop the redevelopment of the historic structure into a mall--unless the developer agrees to require new retail tenants to pay a living wage."

And they go on to quote from the words and wisdom of Jesse James Masyr (via the Norwood News): "I can't ask tenants to have a [higher] wage package than they have just two miles down the road," Masyr said. He added that other people in the industry think Related is "crazy" for even attempting to proceed on this retail-heavy project, given the state of the economy. "Retail is dead," Masyr said."

Our advice to Masyr and Related: If it's too tough to develop this Armory site while paying workers a living wage-after getting millions of tax payer dollars-then simply walk away. Don't do anyone any favors -because you're not. This subsidized retail project-when an even larger Related mall has just opened down the road-will put a serious hurt on the existing retailers in the surrounding neighborhoods; the crowds down at Gateway are coming right out of the neighboring shopping strips, making those strips less viable by the day. Why replicate this phenomenon at Kingsbridge? What's the compelling public policy need?

The need, if it exists at all, is to develop the Armory as a model of pay equity-there is no other purpose when a new mall already has opened and is easily accessible to the folks in the Kingsbridge community. And DMI surmises that Related will still do well, even with higher wage requirements.

But John Petro, DMI's contributor on this topic, underscores our point as well: "My guess is that even with a living wage requirement, retail tenants in the space will do very well, as will the profits of Related Companies. It only takes one trip to the Target at Atlantic Terminal in Brooklyn, rumored to be the busiest in the country, to see that national retailers do very well in the city. Plus, with city subsidies to sweeten the pot, Related Companies is getting a good deal. But the real issue is: should the city be subsidizing projects like this in the first place? Does using city money to create poverty-level jobs make any sense?"

You see, no one has really done any of the necessary cost/benefit analysis on this-and Related's attempt in its EIS is simply risible. With neighborhood retail stores in record foreclosure, why use tax dollars to make their ability to survive that much more problematic? Especially when local retail dollars circulate in much greater degree to the benefit of the municipality.

DMI gets part of this: "Economic development subsidies are intended to create new jobs in the city by helping businesses relocate or expand their operations here. But job quality matters just as much as the number of jobs created. When the city subsidizes poverty-level wages, it pays twice. First, taxpayer dollars are first diverted from schools, infrastructure, and other city needs."

What's missing from the analysis, however, is the importance of local retailers-and the fact that retail subsidies for chain stores shift demand, but don't create it. So, without a living wage component, the Shops at the Mall project creates a double edged deficit for the city. Low wage jobs are, "created," (in reality merely shifted) using scarce tax payer money; while at the same time, struggling entrepreneurs are put in greater jeopardy of failure. Is this part of a "five borough economic plan" that can be defended by anyone?