As more and more evidence comes in that Related Companies has cut a deal with Walmart to take 180,000 square feet in the expansion footprint of Gateway Estates, it appears to us that the real estate giant is embarking on a risky venture. Steve Ross, and his slick sidekick Glen Goldstein, apparently feel that getting the Walmoster into the city is worth the opprobrium it will be facing from the entire political establishment-apart, of course, from the Related fan fav at city hall.
Put simply, even if it manages to get past the demonstrations and expected law suits, it will be certain to face a black list for the next three years from the city council-and into the future as far as we can see, since the next mayor and council will likely to be much less inclined to do the Related's bidding. This is a far cry from the past nine years where the incestuous relationship between Deputy Dan Doctoroff and Steve Ross has led to a favored nation status that bore fruit in two mega deals-both appropriately named Gateway; in these cases gateways to no bid riches.
Which gets us to the Gateway Estates corrupt bargain-something that we highlighted in 2007 when the East New York no bid shenanigans was approved by the city council:
"The original 1996 development that was approved, stipulated that 2,385 units of new housing was to be built with the financing to come from proceeds of the huge adjacent retail mall. Subsequently, the Related Companies bought the commercial component, leaving the residential piece totally in limbo. Related, when asked about the residential development, stated that it had nothing to do with any residential development.
Now, over a decade later, and with the Gateway Mall generating millions of dollars in profits for Related, an huge expansion is in land use review. The new project, with a greatly expanded box store component, now pledges that the housing units that were never built as promised, will be included in the expansion; but the financing will be done exclusively with public funds.
This has got to be one of the great bait and switches of all time (Where's DCA when you need it?). Not only that, it also needs to be pointed out that Related, a recognized "favored nation" in this city, was awarded the Gateway expansion without the benefit of any competitive bidding. A reward for the failure to fulfill the original housing pledge perhaps?
Now Related sloughed off the housing to Reverend Youngblood, but the proceeds from the expanded mall will go directly into its pocket. The instigator of the corrupt bargain, Deputy Dan, is now cutting deals as head of Blooberg LLP; but the entire process should be re-opened in order to expose the corrupt underbelly of the current mayoralty-one that laughably claims to be above the special interests. If you remember the lame, the halt, and the blind, over at the Bloomberg controlled Conflicts of Interest Board ruled that the longstanding personal and business friendship between Doctoroff and Related's Ross posed no conflict at all.
Afterwards, Ross laughed his butt off all the way to the no bid contract to develop the Gateway mall on the graveyard of the Bronx Terminal Market-and swiftly got the no bid expansion of the Gateway Estates Mall even while other developers salivated over the property-a bidding war that would have garnered the city millions of dollars more (as would a similar process at the old BTM).
And in both cases, the fruits of the favoritism have meant hardships, not only for evicted minority wholesalers and small businesses, but for the communities that are forced to host the mega developments. Simply put, they are environmental nightmares-and in the case of the Bronx Gateway, the mall generates thousands of truck and car trips a day right along asthma alley (which was way we laughed hysterically when Ross and Related ponied up thousands of dollars fronting for the mayor's congestion pricing plan).
But the prospects of a Walmonster at Gateway Estates makes its Bronx cousin look like small potatoes indeed-and the EIS that paved the way for Related's land grab never contemplated a use of this proportion. As we said three years ago:
"What's even worse is the fact that an analysis of the original traffic study will show that, surprise, surprise, it severely underestimated the number of cars that the mall would generate, a failure that the current DEIS proudly replicates. The current project will double the amount of traffic on the Belt as well as on local roads, the equivalent of approximately seven Wal-Mart super centers.
Which brings us to the mayor's about face on carbon dioxide emissions, and the concomitant need to reduce traffic in the city. The expanded Gateway development will generate approximately 40,000 tons of CO2 emissions annually, violating the mayor's commitment to reduce these emissions by 30% by 2030."
But there's another compelling reason why Related will be in for a public stoning: they simply lied to the face of local council member Charles Barron about the possibility of a Walmart tenant at Gateway II-a falsification that gives the company a used car salesman image that will come back to haunt it when problems arise over on the Far West Side; and when Mikey isn't around to carry the company's water, Related will become a juicy piñata for every city pol.
And the truly egregious nature of this in your face effort, is the fact that, according to our sources, there is a certain supermarket chain-unionized and all-that is willing to take 100,000 sq. ft of the expansion footprint. Related, rather than taking this popular alternative-there is no, build or no build, scenario here-is hell bent on self immolation. And we have a theory about this-it all stems from the bitch slapping the company took at the Kingsbridge Armory. Related is simply hell bent on revenge.
Well, so be it. But the gauntlet is being thrown down-in particular in front of the city council that allowed this application to be approved without any restrictive covenant-like the one that was negotiated at the Bronx Gateway and excluded the Walmonster; ain't like it couldn't be done. In particular, Speaker Quinn is on the hot seat since she stands a straddle of the land use levers in this town. She needs to find a way to derail this exercise in hubris by Related-or go into 2013 as the one person who allowed Walmart in when a simple act of foresight could have prevented it.
Still, this promises to be the mother of all Walmart battles-and when the dust settles, the political road could well be littered by the carcasses of politicians that could-a been contenders.