Related Problems for Walmart

As Crain's is reporting, pressure is being brought to bear on Related Companies to convince the real estate giant that partnering with Walmart isn't good for business: "Opponents of Walmart plan to ratchet up the pressure on heavyweight developer The Related Companies this week, in a concerted campaign to show the city's real estate community that there's a potential cost to doing business with the nation's biggest retailer. Related has had contact with Walmart about leasing a site at its 650,000-square-foot Gateway II shopping center in East New York, Brooklyn, that already received the City Council's approval, enraging those unions, small storeowners and council members that oppose the retailer's entry into the city. Opponents hope to persuade Walmart's local partners—with threats of pickets outside their headquarters or homes and other actions—that doing business with the retailer will damage their future council dealings."

The Crain's report underscores our critique of Crain's columnist Greg David's observations that the mayor selection of Related to co-develop the Hunters Point site indicates that, "Let's accept the administration's position that Related and its partners offered the best proposal. It is also clear that this is a message that Related will not be penalized for doing business with Walmart."

But as we pointed out-and as today's Crain's report bolsters-all the Related selection indicates is that the Bloombergistas will still favor the company in any and all circumstances; but the mayor isn't the whole ball of wax by any means:

"Who in their right mind would have ever thought that Mike Bloomberg would act as a Walmart retardant mayor? If there would be any impediment to a developer, it would have to come at the city council-which last we heard still has oversight over the city's land use process.

But the really risible observation from David is that the selection of Related for a city development has any more meaning beyond the fact the the city has dropped its draws for this company ever since Deputy Dan Doctoroff (a good pal of Related CEO Steve Ross) deeded over Bradhurst Avenue development and the Bronx Terminal Market to Related (without any competitive bid in the latter case)."

What we are beginning to see is how other power centers are being engaged to challenge Related's scope of action-and it would do David well to remember that Related has less than a three year run left with Uncle Mike: "The Walmarts of the world may think they can ignore us, but the Relateds of the world can't,” state Sen. Diane Savino, D-Staten Island, told Crain's last month. “These are guys who want to develop in other places in the city. They could find that their relationship with Walmart may permanently damage their relationship with the city.”

Which brings our attention to Willets Point-and, as we have observed, the development could very well become a future Walmart site since the council, just as it did in Gateway II, failed to restrict the kinds of permissible uses at the site: "Opponents believe they have leverage over Related in part because it is one of 29 firms that have expressed interest in redeveloping Willets Point, a run-down section of northeast Queens slated to be remade with retail outlets, housing, a hotel and office space. The city will issue a request for proposals for the redevelopment in April. On Monday, three elected officials who represent the Willets Point area—Councilwoman Julissa Ferreras, state Sen. José Peralta and Assemblyman Francisco Moya—will send a letter to Related Chief Executive Stephen Ross, pressuring him to shun Walmart."

The letter, however, lacks real teeth: "We have a long working relationship together, creating new economic opportunities for New Yorkers and building more vibrant neighborhoods, and we hope to continue that strong partnership moving forward, perhaps at Willets Point,” reads the letter, a copy of which was provided to Crain's by the Walmart Free NYC coalition. “That's why we're urging you not to do business with Walmart at Gateway II or any other New York City location.”

But, as we have pointed out, the area elected officials do have some stronger medicine in regards to the future of Willets Point. As we indicate on the blog this morning, EDC is operating in an extra-legal manner to circumvent city council oversight and appropriate SEQR review on the Iron Triangle site.

Put simply, EDC is developing a 20 acre Phase I at Willets Point without building requisite ramps off of the Van Wyck that would mitigate the traffic generated. In addition, they have not deigned to indicate what will be the uses developed on this initial phase-and it is a short step towards realizing that Walmart or any large box store uses could easily fit in this first phase of development.

EDC's own traffic consultants, however, estimated that the project would generate 80,000 new car trips a day-much of this from the projected retail uses slated for the new development. If the lion's share of these uses are placed in the first phase, EDC has no justification not proceeding with the ramp approval process-before going ahead with condemning 53 small businesses at Willets Point. It told the council specifically that it would not do this-making Willets Point, like Gateway II, a perfect place for the city's (and the developer's) bait and switch.

A forceful collective response to the city on this dishonest attempt to end run proper review procedures-and a resultant restrictive covenant on the Willets Point site, would make the council players in the Gateway debate as well. The council needs to establish the fact that it has a strong hole card in this game of high stakes development poker-and putting the brakes on the mayor's legacy project would do just that.