Will Related Get the Point?

In Friday's Wall Street Journal, the paper reported on the bidding process for the right to develop Hunters Point on the water's edge in Queens-and, wouldn't you know it, the Related Company is one of two finalists: "The Bloomberg administration has zeroed in on three finalists vying to develop a major housing complex on the Queens waterfront envisioned as a bastion of middle-class housing. Narrowed from a field of seven, the short list includes Douglaston Development; a team led by TF Cornerstone; and a joint venture of Related Cos., Phipps Houses and Monadnock Construction, according to people familiar with the bidding process. A spokesman for the city's housing agency declined to comment."

Now this is one massive development: "The 1,000-apartment project, known as Hunters Point South, would sit across the East River from the United Nations on city-owned land near Long Island City. It would be the first phase of a far larger complex totaling more than 5,000 apartments, built alongside new parkland. The current bid is for two towers at the north end of the 30-acre site."

And, as is usual, the city is subsidizing the affordable housing component: "Planned for more than four years, the development has been positioned as something of a Stuyvesant Town of the 21st century. City officials want to restrict at least 60% of the apartments to middle-income tenants making between $63,000 and $130,000 for a family of four. With a city subsidy of as much as $90,000 being offered to the developer for each restricted-income apartment built, the project attracted considerable interest from the development world. The bidders included the Durst Organization, AvalonBay, and the Richman Group, all of which were passed over when the city narrowed the field."

While it always amazes us how Related manages to consistently achieve its Most Deserving label from the Bloombergistas (well, not so amazing, is it?)-the fact that Steve Ross' Little Real Estate Company That Could is in the running here does raise some interesting issues for a little contretemps over Wal-Mart at Related's expanded Gateway Mall in Brooklyn. What the struggle over Hunters Point highlights is that Related will be looking to do a wide range of new developments in the upcoming years, and by promoting Wal-Mart in Brooklyn, it is running a risk.

As we said last month: "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."

The Hunters Point project may or may not require additional city council actions-the original ULURP was six years ago. But we have a hunch that there will be some changes that will require a re-look by the council. If so Related, if it gets designated, might just be cutting off its nose to spite its face. But if not Hunters Point, perhaps it will be the huge development on the Far West Side that is being done by the Bobbsey Twins Ross and Roth (Vornado Realty and Distrust). Or even some new project that is yet to be determined.

The bottom line here is that we believe that the council leadership has considerable leverage with Related-and that, combined with all of the ill will they are generating with their Walmonster project, should give them some second thoughts about their expansion plans at Gateway Estates. The ill will is about to get real serious this week-something to stay tuned for.

One last point on Hunters Point. The city council in approving the rezoning without any development plan may have left itself open to the same problem that was created when the Gateway expansion was approved with no restrictive covenant against Wal-Mart. As the Department of City Planning tells us: "The proposal would create opportunities for about 300 housing units in new buildings that will blend into the established neighborhood scale. While continuing to sustain light manufacturing development in the area, the zoning changes would also allow a broad range of commercial uses, including stores, restaurants, artist studios, small theaters and custom printers more widely throughout the neighborhood."

Ah yes, the devil's in the details, isn't it? Once again, a pig in a poke with no clear development plan. Which is precisely why there needs to be legislative changes that insure an economic review of proposals that go through ULURP sans developer or any development plan. This is one administration-but it should apply to any mayoralty-that should never be given carte blanche on its development schemes. We have seen close hand how disastrous some of the these plans have been-and the council should legislate against this repeat performance.