Tuesday, August 09, 2005

Terminal Diagnosis

We’ve been taking a look at the EIS that was submitted on behalf of the Related Companies for its Gateway Mall at the Bronx Terminal Market. Just a cursory analysis of its purported socioeconomic impact section gives us a very good idea just why they are trying to bum rush the ULURP process. To put it kindly, the analysis is unadulterated crap and, if the traffic study is in any way like this section then God help the South Bronx.

Let’s take a peak:

1) According to the EIS, small neighborhood food stores won’t be impacted because these stores are “patronized by neighborhood residents who value the convenience … the high quality of goods and personal service…” (3-78).

This is nothing more than conventional wisdom and should be treated as a testable hypothesis, something which isn’t even considered by the consultants. In addition, while the assertion may be partially true it doesn’t necessarily follow that it is true in its entirety. What this means is that a large club store or supermarket may have impacts and those impacts need to be analyzed, a process that the EIS doesn’t feel is necessary.

It is also important to point out that many of the smaller specialty stores depend on the synergy created by the independent supermarkets who anchor local commercial strips. This brings us to the next assertion:

2) Larger supermarkets needn’t worry even though these stores “are likely to experience competitive pressure from a wholesale club or large chain supermarket…” There are a number of alleged reasons for this:

a. Sales will be diverted from other club stores in the areas surrounding the Bronx: “Therefore, some portion of sales at the Proposed Project’s wholesale club would represent sales that have been diverted from other wholesale clubs, not from local supermarkets” (3-80).

b. Local grocery stores are more convenient because the selection of goods would be greater and more varied than at a warehouse club: “Shoppers who prefer to have a wide assortment of items to choose from will continue to shop at area supermarkets” (3-82).

c. Local supermarkets are not critical to neighborhood shopping strips. In apparent response to the Alliance’s advocacy on this issue the consultants make two points:

i. Local supermarkets will not lose business from the food store(s) in the project

ii. Even if they do they’re not essential to neighborhood character

Consultants Provide no Empirical Data

In response to this section of the EIS we need to emphasize a number of points. First of all, the consultants simply make a number of untested statements without providing hard date as evidence. For instance, they do not survey store owners or their customers. They also fail to interview wholesale suppliers to determine whether certain stores within the trade area may be more vulnerable to the pressure of competition.

In addition, at no time do the consultants highlight the aggregate potential sales volume of its club store. For instance, our estimates in our analysis of the Brush Avenue BJ’s that went down to defeat this year predicted, based on industry estimates, that the store would do $60 million a year in food sales. In an attempt to finesse this issue, using neighborhood character, the consultants try to show that the larger stores are not generally anchors to local shopping strips.

To the extent to which this is true, however, this merely points out the weakness of the CEQR and the need to widen the scope of economic impact analysis that we’ve highlighted in our discussion of accountable development. How much of the $60 million will come from these unionized supermarkets? What will be the overall industry and employment impacts of the replacement of these unionized workers with a largely uninsured, non-union workforce. What will be the impact on the taxpayer when these workers must come to rely on the public health care system?

There’s Enough Business for those Stores

The other unsupported argument advanced in this section is that the areas where those other markets are located have enough local demand to withstand the competitive pressures of a box store at Gateway.

Once again we refer back to the original argument in this section that smaller local markets, appealing to neighborhood needs, will not be negatively impacted. Have the consultants looked the impact that larger supermarkets have had in other shopping center projects around the city? Are they aware that, in some cases, as many as five stores have closed when a regional chain store has opened?

The consultants also adopt a breezy, cavalier attitude towards the potential of indirect displacement. At not time do they bother to even speculate on a worst case scenario and the absence of any larger economic impact analysis that focused on the quality of the employment transfer leaves us with little confidence that an honest evaluation has even taken place. The big unanswered question is where will the $60 million in sales come from?

Traffic Issue Irony

One of the major defenses of Gateway on the traffic issue, made by Council member Arroyo, is that car and truck traffic will be less intrusive because the Gateway Mall is located near public transportation. Well, if that’s true someone should have told the consultants since a main argument they make is that local stores won’t be hurt too drastically “because the project site is not immediately proximate to public transit and that approximately 76% of household members in the 3 mile trade area do not have a vehicle available to them…” (3-80).

If this is true than then Gateway Mall will be attracting the bulk of its customers from outside the local neighborhoods and whatever the shopping values that will exist at the will not be easily available to local residents who will, nevertheless, have to accommodate the intense increase of vehicle and truck traffic through their already overburdened streets.

Our feeling is mixed on this. We believe that enough business will leak out from the neighborhood, especially the bulk weekend business that is so vital to neighborhood supermarkets to lead to the closing of a number of local stores. At the same time, and especially when we consider the food stamp and membership policies of BJ’s and Costco, we believe that the Gateway Mall will primarily exist as a destination for thousands of out-of-the-neighborhood shoppers so that, for the local community, the costs will greatly outweigh the benefits.