Tuesday, January 31, 2006


If a large food selling box store is sited at the Gateway Mall then the folks at the National Supermarket Association, the group that represents independent supermarkets, will have no one but themselves to blame. At no point, in spite of the Alliance's urging, did they deem it important to weigh in on this issue.

Now we'll see just how much of an impact a $60 million a year food/club store and an additional $30 million regional chain supermarket has on the stores in this Bronx corridor. If stores do close, as we are sure some will, then the blame will rest partly on retailers who won't stand up for their own interests. Without the support of these independents in a fight like this the full load is put on the shoulders of the UFCW, and as we've seen over the last few days no one is all-powerful and coalitions are vital in achieving political success.

Cigarette Tax Press Conference

Crain's Insider is reporting on the small business press conference on the cigarette tax increase fiasco that is scheduled for Thursday at 11:00 am. As we have mentioned the event will be keynoted by Council member Koppell who as NYS AG in 1994 argued the legality of taxing Indian retailers and won the case 9-0.

Now we've seen that Speaker Quinn has made some positive noises concerning the Bloomberg 50 cents tax hike proposal but it should behoove her to fully examine the Indian retailer loophole before she signs off on this confiscatory tax. The reality is, as our friends at NYACS underscore, that the state as well as the city could garner hundreds of millions of dollars of additional revenues if this loophole is closed. Otherwise, in NYACS words, we're just chasing customers to the "tax free side of the street."

Monday, January 30, 2006

Integrity in Government?

If the City Council signs off on the Gateway deal than what does this mean for integrity in government? Does the Council reduce the concept to an oxymoron by allowing a lucrative no-bid contract to pass through unimpeded? Does approval mean that Council member McMahon was right to observe that Related is a "fourth branch of government?"

Of even greater concern is the fact that the Council, by approving this deal, will have ratified the superseding of its charter-mandated powers under Section 384. What you can bank on is that the Council will re-visit this usurpation but only after Gateway is pushed forward, making the BTM merchants absolutely right, albeit posthumously.

Another thing you can bank on is that the Alliance will come and testify at the expected "integrity in government" hearings and we will expose the hypocrisy of the entire effort. When the BTM deal was sent to the Council we mused about "pedestrians and motorists", and it is now clear that the activist past is certainly not prelude to the power-holding future when elected officials ascend to lofty political heights. The era of no bid contracts has now begun.

Whither BJ's?

It appears that the Council is about to negotiate a deal with Related where the favored nation developer would agree that any retailer it signs a lease with must already be located in the city and in turn must also agree to accept food stamps and WIC. The question concerning membership fees is still up in the air.

If this is true than it would mean two things: Wal-Mart is still an anathema in the city of New York; and the UFCW and the Alliance will have forced a $20 billion corporation to change a significant aspect of its business model in order to be acceptable in NYC.

Some council members, however, are not fully satisfied. Today at 11:00AM Councilman Monseratte and Jackson, co-chairs of the Black, Latino and Asian Caucus, will hold a press conference that demands that BJ's must adopt this policy in every single one of its NYC stores. If it's unacceptable to not accept food stamps in the South Bronx than it should be equally unacceptable in East New York and Astoria. In addition, anyone on public assistance should have their membership fee waived.

If BJ's does swallow this poison pill what does it all mean? Well, first of all it means that every Bronx elected official who swore up and down that the Gateway Mall had no BJ's must be administered truth serum every time they speak from now on.

The most disappointing elected here is BP Carrion who is looking to build his city wide reputation on non-union retailers and on the carcasses of the BTM merchants. Carrion assured us that there would be no BJ's in the BTM deal and, by doing so, raised disingenuous to a new art form in a business that is characterized by it.

Save the Market

In Today’s Metro, Jasper Goldman of the Municipal Arts Society makes a compelling case for saving the Bronx Terminal Market and against certain aspects of Related’s Gateway Mall project. Goldman specifically mentions the viability and attractiveness of Irwin Cohen’s relocation proposal, one that the city has unequivocally opposed for an unknown reason"

Fortunately, there’s one option on the table that’s beneficial to all parties. Irwin Cohen, the developer behind Chelsea Market, has proposed constructing a new market on a city-owned parcel across from the Major Deegan Expressway and the existing market. The so-called “Velodrome site” — previously part of the 2012 Olympics bid — could hold both a new facility for the merchants and a badly needed waterfront park. Properly designed, the new facility would actually draw people to the waterfront and activate the park. If the City Council wants to give a big win to New Yorkers, they’ll push Mayor Bloomberg to dedicate a piece of land to save Bronx Terminal Market.
NY1, in a story from Friday, emphasizes the same theme: that the merchants should be kept together. This piece also has a quote from the Alliance’s Richard Lipsky who says that at the very least the merchants need sufficient relocation money – about $10 million – so that their businesses and hundreds of employees aren’t destroyed. We have asked the Bronx Delegation to assist with this effort and we hope that the Delegation's favorable response translates into tangible help.

Garbage Grinders and Public Health

Once again a news story underscores the potential public health benefits garnered through the use of food waste disposers. This time it is the NY Sun which focuses on rising asthma rates in Bushwick. The study cited points to poor housing as a major causal factor.

In Bushwick 12%! of the area's residents have been hospitalized for asthma treatment and the community group, Make the Road by Walking, cites poor housing conditions as the cause. The group has proposed a "Healthy Homes Act" which would "reclassify asthma triggers such as mold, mice, and cockroaches as 'immediately hazardous' violations required by law to be fixed within 35 days."

As we have been pointing out all along, the use of disposers will have a dramatic effect on reducing the vector problem that is cited in the asthma report. It is just one of the compelling reasons why the Council should act expeditiously in the passage of the grinder pilot program.

Bloomberg and Butthead

In today's NY Post the paper editorializes against Mayor Bloomberg's efforts to raise the cigarette tax once again. Not content with his 1800% increase in 2002, the mayor wants to add another 50 cents a pack. Of course he uses his health concerns as a premise and cites the "evidence" that higher cig taxes led to less underage smoking.

Maybe its time for the mayor to experience a reality check. He could dress up in undercover garb just like Rudy Giuliani once did and surreptitiously walk the commercial strips of the South Bronx and East New York and simply observe the impunity with which buttleggers are peddling their wares. We think he might also discover that these illegal peddlers are not scrupulous in their observance of the underage smoking laws.

We'd also like to see a non-partisan study of the so-called correlation between taxes and smoking cessation. It has been our view all along that if illegal smokes are available because we have elected officials who simply won't enforce the tax laws against the Indians, or for that matter increase the penalties against smuggling rings, than increasing this tax only serves to penalize store owners who depend on the income.

Of course everyone looks down on these shopkeepers for "profiteering" with a deadly product, while at the same time overlooking the fact the biggest profiteer in these sales is government at all levels. Which is why we will be holding a small business press conference this Thursday, keynoted by Councilman Oliver Koppell, that will announce our united opposition to the mayor's new tax and, at the same time, insist that whatever one’s position on the cigarette tax no increase should be entertained until after the governor enforces the law against Indian retailers.

Close the Gateway

In yesterday's Daily News Albor Ruiz eloquently presents that case against the Gateway Mall. The money quote: "It is ironic that the livelihoods of 23 hardworking wholesale merchants and hundreds of their employees are being sacrificed so that Steve Ross, the head of the Related Companies, can make a few more millions."

The irony, however, doesn't stop there. Related, as the News pointed out yesterday, is a company with over $10 billion worth of assets and in spite of its wealth received a $600,000 ESDC grant that should have been earmarked for small businesses. It would seem that Related makes a habit of self-aggrandizement at the expense of the little guys.

We're back then to the issue of integrity of government and this issue transcends the mayor's concern (and that of the NY Times) about lobbyists buying gifts for elected officials. When a company as well-connected as Related is allowed to gain control of real estate worth billions of dollars without the normal bidding process someone should be concerned enough to examine the integrity of the transaction.

We believe that if Stanley Friedman and Donald Manes did this deal the US Attorney would have investigated long ago and indictments would have already been handed down. Does the fact that the players here are already super-rich alter peoples' outlook?

Isn't it time for the City Council to jettison this deal and open up its own conflict of interest investigation since the city's COIB doesn't have a clue? Where are all the anti-labor folks whose view of what constitutes a conflict is limited to the political influence of the city's unions? We've never seen a bigger bunch of toadies and sycophants and a more transparent "mobilization of bias." Come on Madam Speaker shed some light on this stench and hold the rich boys accountable.

Saturday, January 28, 2006

Merchants' Demise

In a last ditch effort to salvage something of value as their evictions near, the BTM merchants met with the Bronx Council delegation in hopes that the elected officials would be able to garner a more equitable relocation package. With the Velodrome site appearing unattainable because of EDC's willful disregard for the merchants' fate, the members of the association are trying to obtain a fair settlement so they can reconstitute their businesses elsewhere.

Making this a difficult task is the cavalier attitude of the developer who, sensing that it is under no duress, has no compelling reason to be fair. It is up to the delegation to somehow exact a fair deal from parties whose attitudes over the course of this two year ordeal have, up to this very moment, never been characterized by any degree of concern.

No one seems to care that we are talking about real people who have spent most of their entire adult lives working in the Bronx (under less than ideal conditions) and contributing to its economy by employing hundreds of Bronxites. All are sacrificial lambs on the altar of greed and political ambition. All in all, the shame of the Bronx, one that will reverberate four years from today.

Friday, January 27, 2006

Mike's Mantra

Another aspect of the mayor's speech deserves scrutiny: his continual tin ear when it comes to making government less onerous to the city's businesses. There was absolutely nothing said, as the Sun and Post point out, about the need to cut taxes and regulatory burdens that stifle economic growth, particularly for the retailers on the city's over 200 commercial strips.

This is in keeping with an anti-small business mindset that the mayor has demonstrated over the past four years. It is, as the Post points out, part of a big government liberal paternalism that fails to understand that economic growth is something that government needs to facilitate not something that it needs to undertake and engineer on its own.

But this is precisely how Bloomberg misreads the role of the city and the function of the government under his control. His view of economic development is underscored by the promotion of mega-projects that are splashy demonstrations of an active government intervention on behalf of the people.

The fact that in the process hundreds of existing small businesses get whacked out is insignificant to him. He simply fails to get the way in which the struggles of these smaller entrepreneurs is the essence of an organic economic growth that could be accelerated by less government, a real benign neglect. This is precisely what the BTM and Willets Point symbolize. Mike Bloomberg can only conceive economic development in terms of large scale monuments to--well, himself.

Mayor 'Fitty Cent'?

Read the whole mayoral speech and saw no mention of the cigarette tax increase. Is this a welcome reversal? We tend to doubt it, but stay tuned.

Take My Property--Please!

As we have been reporting the city has its sights set on other people's property at Willets Point. The mayor's speech yesterday confirmed this beyond a reasonable doubt: "And just West of there in Willets Point, we'll select a developer to begin turning the Iron Triangle into community jewel-with parks, jobs and housing."

This is not going to go down like the BTM situation, where scores of minority businesses and hundreds of workers were treated as nonentities. The Triangle is not only privately owned it is, as Professor Angotti's study will show, home to hundreds of businesses and thousands of jobs (something that the city is likely, as if they even cared, to have no idea of).

Another major difference is the fact the councilman who represents the area, Hiram Monseratte, is not going to roll over on his constituents. Adding to this mix is the fact that there is a growing consensus at the City Council against the use of eminent domain for purely economic development purposes.

And the "blight" that Andrew Alper has seen at the Point is nothing more than the willful neglect of a New York City that hasn't paved a road in the Triangle in 50 years. In spite of this neglect the Triangle businesses continue, just like tough NYC weeds, to inexorably push through the concrete and create thousands of jobs. What the city needs to do is to recognize this entrepreneurial energy and help the Triangle grow and expand its legitimate companies that are vital employment engines for the borough.

The Mayor's Integrity

As we expected, the mayor in his state of the city speech yesterday hit on certain themes that deserve comment. Let's start with his integrity in government rap: "Improving the long-term health of government means strengthening its integrity. We need only look to the scandals in Washington to see what happens when lobbyists and campaign contributors create a culture of 'pay for play'."

Oh boy, that's a real good one! Is there any evidence that this city's lobbyists are exerting the kind of influence that, let's say, Jack Abromoff did in DC? Well, now that we mention it there is one outstanding example of the kind of payola the mayor is alluding to and it involves the matrix around the whole BTM deal.

As the Daily News has reported, all of the folks involved in this Bronx deal have been distributing a great deal more than simple Bronx cheer. There is ample evidence to infer that support for this project fits comfortably into the mayor's "pay for play" scenario. Will he begin his ethical journey by launching an investigation of the BTM project that he has labeled, "the first major retail and commercial development in the South Bronx in decades"?

Will he begin by examining how this immaculate deception got its questionable start at dinner between Dan Doctoroff and Related's Steve Ross? Will he ask the city's COIB to re-open its by now unsupportable finding that Doctoroff had no ongoing conflict in dealing with Ross once he entered government?

Let's not deal with the hypothetical possibility that some lobbyists may create unethical situations through the cash nexus when we have the proverbial elephant in the middle of the room, you know the one that could pass for the mayor's house pet. After all, any potential ethical problems that might exist pale in comparison to the $4 billion gift the city has given to Steve Ross.

Thursday, January 26, 2006

Terminal Merchants

In our discussions with key council members yesterday it was made clear that the relocation viability of the "velodrome" site was "off the table" because the Bloomberg administration refuses to even consider this alternative site. This recalcitrance, willful refusal is more accurate, fits in with the obdurate posture that has characterized the administration's attitude to the vendors that it has callously moved to evict from the BTM.

In the face of the favoritism shown to its friends at Related this meanspiritedness is as unsurprising as it is outrageous. It certainly doesn't bode well for the small businesses in the Iron Triangle at Willets Point. The Bloombergers have absolutely no concern for the little guys and enact economic policy from a purely big business perspective.

What's particularly ironic here is that the mayor is expected, in his state of the city message today, to unveil policies to control the power of special interest money in city politics. As the Times reports, the mayor will be introducing measures that would "ban lobbyists from giving gifts to city officials, a campaign to reduce the potential for companies to win city business through campaign contributions."

Hurrah! Hypocrisy is now the official policy of the Bloomberg administration. As the BTM deal underscores, it is ok for the city to award a friend of Deputy Dan a $4 billion gift (the value of the non-competitively bid BTM lease over its 99 year term) but, God forbid some smaller company buys a bureaucrat a lunch.

This is exactly what we meant when we quoted the aphorism cited by Lowi in his classic The End Of Liberalism: "The law in all of its majesty punishes the thief who steals the goose from off of the common, but lets the greater felon loose who steals the common from the goose." The mayor is not above the special interests he is their apotheosis.

Kids vs. Cancer

The battle over the cigarette tax fiasco is settling in to the usual Manichean patterns with the mayor's observation in yesterday's Daily News that, "Either your objective is to reduce smoking among our children, or it is to help those who sell cancer."

Now we're not surprised at the mayor's invidious juxtaposition since he once famously remarked, when questioned about his tax increase's impact on local bodegas, "It's a minor economic issue." Quite clearly it is no minor to all of the small store owners who have already lost over 60% of their cigarette sales because of the mayor's original confiscatory levy.

But, economics aside, there's a lot more here that needs to be looked at. The city's cigarette tax has created a huge black market in illegal tobacco sales, a vast smuggling enterprise that has led to death on the streets of New York. As the Times reported yesterday, the $8 a pack price will only further stimulate the brisk street corner business that you'll readily find on 125th Street, Fordham Road or Supthin Boulevard.

And the city's response to all of this illegal activity has been meager at best. Whatever task force that is in place is simply not keeping up with the criminal enterprise. Even worse, however, is that the root cause of the disparity, the failure of the state to enforce the tax law against Indian retailers creates an easily accessible source of supply for the smugglers.

This is the crux of the problem: the state legislature has passed a law mandating that Indian retailers charge taxes on tobacco and gasoline to their non-Indian customers. Governor Pataki, inexplicably, refuses to enforce the law and in doing so conjures up Jack Abromoff images. No one believes, as Tax Commissioner Andrew Eristoff remarked, that the reason behind the reticence is a "fear of Indian violence."

Absent a decent public policy rationale we're forced to attribute the worst motives to this failure. Certainly, a conservative law and order type like GP can't seriously believe that a concern for law breaking is a reason not to enforce a law. Adding to the conundrum is the fact that the State would reap approximately $800 million dollars if the tax was collected.

That is why we are gathering a coalition of groups to come to City Hall next week to protest the governor's continued nonfeasance as well as the mayor's willful disregard for small business and public safety. Make no mistake about it, if the mayor is really concerned with children's access to cigarettes he should join with us and insist that the Indian loophole needs to be closed before any new tax is enacted. Otherwise, unregulated street sales will continue to mushroom and the mayor's laudatory public health goals will, along with the bodegas' bottom line, simply go up in smoke.

Wednesday, January 25, 2006

Redevelopment of Willets Point

In today’s Sun, Dave Lombino reports on the mayor’s quest to redevelop Willets Point. The area, also known as the Iron Triangle, currently houses a thriving small business community mostly dedicated to automobile repair and service. One of the biggest worries is that the city is so enthusiastic about "renewing" the area that it is forgetting about the viable mop and pop shops that current occupy the site.

Willets Point’s Councilman Hiram Monserrate is also quite concerned about the redevelopment plans:
"The administration has a worldview that is pro-big business," he said. "Are they talking about building schools, affordable housing, maintaining some of the businesses there, relocation plans?"
The issue of relocation plans is important, especially in light of the outrageous failure to, so far, offer the Bronx Terminal Market merchants a site where they can maintain their market. Like the BTM, the Iron Triangle businesses are symbiotic and if they are carelessly scattered there’s a good chance their shops will close. Though the city promises to create a "Business Assistance and Workforce Development Program" for the affected parties let’s just say that we are supremely skeptical.

In addition to our experience with the Terminal Market, our skepticism is a product of the fact that these Iron Triangle repair shops – which the wrongly city characterizes as junkyards – have not been contacted. Tom Agnotti, a professor of urban planning at Hunter College who has been writing a report on existing Willets Points businesses concurs:

"Once again, the city's process seems to be evading discussion with the local businesspeople and hanging the threat of eminent domain over them without involving them in the process," Mr. Angotti said.
He also says that the economic activity and employment opportunities at these shops are quite valuable:

These are jobs that are available to people that don't have many other entry options into the job market," he said. "The impression is created that there is nobody there. That it's a junkyard. It's just not true."
As this process moves forward we will definitely keep you all updated.

Municipal Arts Society: Save the Bronx Terminal Market

We think you all should check out the testimony of the Municipal Arts Society on the need to preserve the Bronx Terminal Market. The MAS is very well versed in urban planning issues and their points about the importance of public markets and the viability of Irwin Cohen’s relocation proposal are very well stated.

DMI Waste Policy

On yesterday's DMI blog there is a good commentary on the mayor's comprehensive solid waste plan. The key observation on the plan is that it "is anything but comprehensive..." The reason that's given relates to the issue we've been beating on for over a year: waste reduction. There is nothing in the mayor's plan that addresses this crucial variable.

This is, however, where we part company with the good folks over at the DMI. The reason we do is because their view of waste reduction is modeled after the NYC Zero Waste Campaign that at times offers quixotic and anti-small business solutions to the city's garbage crisis (such as composting).

This is underscored by their position on garbage disposers that rehashes all of the ideologically-driven misinformation on these appliances. To the credit of the campaign they do offer the following caveat on their concern with the experimental use of disposers:
"It is critically important that if the expansion is considered, it not proceed without the thorough study and reporting on all the relevant issues and the costs for the city of handling food waste in the water treatment system, versus in the recycling system."
One other point. If the DMI cohort is truly motivated to greatly increase the city's recycling levels then they need to carefully examine how the comprehensive use of disposers would accomplish this task without resorting to futile Draconian measures that at the same time put the city's neighborhood retailers at a distinct economic disadvantage.

Update: As the Drum Major Institute’s Elena Levin points out, the post referenced above was from a guest blogger and not necessarily representative of the DMI’s viewpoint. We apologize for this incorrect attribution.

Cigarette Tax Attack

Mayor Bloomberg, not to be outdone by Governor Pataki in this area, has called on the state to increase his already confiscatory cigarette tax by an additional 50 cents a pack. This would bring a pack of smokes in the city to a record $8 a pack. The mayor, as usual, frames this as a public health measure and never bothers to address the tax's impact on local stores.

In fact in all of yesterday's coverage of the mayor's initiative there was no mention whatsoever of the economic impact of this tax increase. There was, however, a plea by Bloomberg to eliminate the "job-killing" tax on clothing items costing $110 or less.

It would be nice if the mayor would exhibit just the smallest amount of sympathy for the littlest store owners. But even if he doesn't he definitely should be concerned for public safety, and the huge black market that his tax creates.

The position of the Alliance is that no new tobacco tax should be enacted until the governor enforces the law against Indian retailers. The failure to do so has cost upstate convenience stores tens of millions of dollars every year and has cost the state treasury at least $800 in lost revenue.

Independents Need Not Apply

We have been commenting on the fact that Related has earmarked a space at the Gateway Mall for a supermarket. Unfortunately, the developer never once tried to reach out to any of the 59 independent markets in the three mile trade area around the mall. Instead they entered into negotiations with a regional chain supermarket but that went nowhere when the targeted market didn't see the economic viability of going into this poverty-stricken area at rental of $50 a foot.

This is simply unacceptable. Independent, predominately Hispanic supermarket operators, have played a crucial role in the economic renaissance of the Bronx and Northern Manhattan. The introduction of a BJ's and a suburban supermarket at Gateway would take $85 million a year from existing store owners, and severely compromise the viability of scores of local stores. Wouldn't it make more sense, from an equity standpoint, to see how one of the retail food pioneers could fit into the Gateway matrix?

After all, with Related paying the city only $2 a foot rental, it is not hard to imagine a scenario that would enable one of the independents (with food stamps and WIC of course) to locate at the BTM site at an affordable rate. Let's see if the City Council can step up and create a fairer situation at Gateway that really gives the mall a homegrown flavor.

Tuesday, January 24, 2006

Booty Capitalist in the Bronx

One thing we haven’t mentioned about yesterday’s Bronx Terminal Market hearing was that Ann Lindsey, a consultant for the 161st Merchant’s Association, testified on behalf of the group in favor of Related’s Gateway development. This show of support is suspect for a couple of reasons.

In our 25 years of working with merchant associations, never has one testified in favor of a nearby, mega-development. Sometimes the small business group may not weigh in at all but generally they express considerable concerns with projects that are not only heavily subsidized but will negatively impact on their members. Why then did Ms. Lindsey, a purported representative of the mom and pop shops on 161st street, heap praise on a plan that would displace the small businesses at the Terminal Market, contain big box stores and would, to say it charitably, have little positive affect on her members.

Well after talking to Pat Canale, president of the 161st Merchant’s Association, the answer becomes clear. Lindsey, despite her claims, was not representing the viewpoint of the association but pushing her own personal agenda. According to Canale, he asked his pro-bono consultant not come to yesterday’s hearing because the Association has not voted one way or the other on Related’s proposal. Despite this request, Lindsey not only showed up but misrepresented herself to the council and submitted a letter full of praise for the proposed redevelopment.

According to another source, Lindsey has been in constant contact with the Related Companies and had a meeting with them as recently as this past Friday. It’s obvious that instead of representing the interests of small businesses she’s become the developer’s puppet, making it seem like there is local support for the Gateway proposal. This type of booty capitalism isn’t surprising but the Council should know that Ms. Lindsey speaks only for herself and that her machinations are inspired by the puppetmaster Related.

Crain's Flunks Bronx Mall Test

In this week's Crain's New York Business, the paper editorializes in favor ($) of the Gateway Mall and does so with remarkable disdain for at least attempting to get the other sides' position characterized correctly. You'd think that Greg and the guys would have had the professional decency to invite us in – grill us if they wanted – and explore the opposition's points.

What's particularly disturbing is the failure of Crain's to examine what we have described as the "immaculate deception," the manner in which Related was brought into this deal. In addition, Crain's fails to do any due diligence on the details of this arrangement and the question of whether the city is being, once again, ripped off at the BTM. Apparently sole source deals to friends of Dan Doctoroff and a max $2 a foot rent to the city (while Related collects $40) doesn't offend the paper's ethical sensibilities(sic).

Making matters worse is Crain's mischaracterization of the merchants' plight. In the first place to describe these businesses that have been at the BTM for decades employing hundreds of workers and generating hundreds of millions of dollars in sales, "as part of the underground economy" is simply malicious.

To go on to say that the city's efforts on their behalf were "good faith" is to willfully deny all facts in evidence in this case. This is particularly sad because Editor Greg David has eloquently gone on record against the use of eminent domain, a process that has eerie similarities to the eviction of companies who have done business in a public market for years. Just what does Crain's mean by "fair compensation" offered to the merchants?

For a business publication to be so willfully blind to the emerging new immigrant market that is being served by the BTM wholesalers is unfortunate but not surprising. They lack the cachet of Steve Ross and the boys and, as Lenin once remarked, you can't make an omelet without cracking a few eggs. In Crain's view they are insignificant, not even worthy of a short meeting, and – "Good riddance!"

One last point on Crain's crocodile tears for the "low and moderate income households." In the paper's war against the union opposition to Wal-Mart and BJ's they talk incessantly about the fact that keeping these retailers out will lead to "pricier grocers and even more expensive bodegas and hometown retailers" being given free rein to gyp poor New Yorkers.

With all of that concern for the poor do you think that it might have been appropriate for Crain's to mention in its editorial that this mall's anchor club store tenant would be effectively redlining the poor in the country's poorest Congressional district because BJ's doesn't accept food stamps or WIC and charges a $45 membership fee to get in? No, that would have been fair and balanced, something that this malicious editorial certainly never strove to be.

Council Focuses on Fleasing

In the City Council hearing on the Gateway Mall yesterday two councilmembers, Mike McMahon and Eric Gioia, stood out on the key underlying issue of how Related was able to obtain a no-bid lease to develop the Market. At one point, commenting on the fact that the lease transfer was not competitively bid, McMahon asked, "Is Related another branch of government?"

Gioia for his part focused on the issue of Related's no-risk capital; the fact that if the Council turns down the application the city is obligated to reimburse the company the $42 million it laid out to the Buntzman family. Gioia wanted to know if the city would be better off doing just that and, once done, putting all of the property up for bid. The lame response of EDC president Andy Dollar-a-year-Alper was that the five year delay would deprive the Bronx of all these great jobs.

What a load... If the Council turns down this deal you'd get run over by Related in its haste to beat a fast retreat out of the BTM. In a matter of months EDC could be working with scores of developers to come up with a wide range of proposals for the site. One thing we know for sure: at a public auction this land would be worth much more than the forty million bucks that Related paid to Buntzman.

Which brings us to the Council's oversight responsibility here. In his testimony yesterday Alper gloated over Judge Herman Cahn's "decisive" ruling in the eviction case against the BTM merchants. What this ruling said, however, was that the mayor’s (Commissioner of Small Business Services’s) power superseded Section 384 of the City Charter, the section that mandates public bidding on leases and requires land use review.

This means that, in essence, the council is reviewing the propriety of the lease deal and, concomitantly, whether the mayor's reliance on sole sourcing was in the public interest. The council needs to tackle this issue head-on and determine if the city's tax payers got shortchanged. This is what we have referred to as the "fruit of the poisoned tree," and in many ways it transcends the land use questions.

Press Conference Recap

As we have mentioned, yesterday’s Bronx Terminal Market hearing and press conference went extremely well, especially in terms of the labor issues. New York 1, the New York Post, and Metro NY all picked up on this theme, highlighting that the developer avowed that no Wal-Mart or Wal-Mart subsidiary will be a mall tenant. However, despite the fact that we know BJ’s has a signed lease for Gateway, the Related Companies still will not admit its tenancy.

One thing not reported is that Jesse Masyr, Related’s Land Use lawyer, promised at yesterday’s hearing that the developer would be willing to enter into a binding agreement prior to the February voting deadline to allay Council concerns about potential tenants. Though Masyr’s promise is still a bit vague it could only mean that Related is starting to realize that if BJ’s is a part of its mall then the application will be voted down.

Frank Lombardi and Bill Egbert also have an interesting piece in today’s Daily News. In addition to talking about the Wal-Mart/BJ’s issue – the reporters cite Bronx Councilwoman Palma as the delegation may “hold out for a BJ's ban” – they bring up the mall’s often touted Community Benefits Agreement (CBA) which is still being “negotiated.” According to the News:
“The CBA being worked out by a citizen task force is coming under fire as well. One panel member who asked not to be named complained the process was too rushed and top-down, calling it "Robert Moses-style city planning" - a reference to the infamous builder who bulldozed poor neighborhoods to build highways.”
As we said before, this CBA is an absolute sham and, if accepted, will set a dangerous precedent for Bronx developments.

Also be sure to check out this Bronx 12 story that talks about our case for withdrawing the application as well as this recap by the Observer’s Matthew Schuerman that discusses how some of the larger merchants are examining other deals. To clarify, the merchants still desire to remain together and even the larger wholesalers would like to retain a cash-and-carry presence at a new facility/location ever if they move their distributing operation.

Monday, January 23, 2006

Gateway Hearing and BJ's

The hearing of the Zoning and Franchises Subcommittee on the Gateway Mall was held today and we'll comment more fully on what transpired tomorrow. What was clear, however, was that BJ's was, as Pat Purcell said in today's NY Sun, "The 800-pound gorilla in the room."

Which brings us to the theme of Dave Lombino's story this morning: Does the Council have the authority to block a project based on the tenants in the development? Strictly speaking it does not. This is, though, a strict and narrow construction of the Council's purview.

When our friend Joel Rivera says that, "Hopefully, they will bring in stores that are friendly to the consumers and friendly to the people that work there," he is unnecessarily restricting his and his colleagues review powers. Why, then, does it matter that the Gateway project will bring "5,000" jobs to the Bronx? This has nothing to do with CEQR.

Let's get real. This is an economic development project and it is being sold as one. As such, it deserves to be analyzed in this fashion. The kind of tenants coming in, their labor practices, their impact on other Bronx businesses, are all part of the mix. The fact that one of the mall's anchor tenants may effectively bar, because of its membership and food stamp policies, local poor consumers from its store is germane to the entire project's merit.

And if you just want one CEQR rationale to say no to this fiasco than how about the fact that the liars for hire who did the economic impact analysis want the council to believe that the largest food store in Bronx history will not hurt one supermarket in the three mile trade area. According to this "analysis,"the only people coming to a BJ's are probably those Bronxites who don't shop the local markets because they have been fasting for the past ten years or so.

Hungry for BJ's?

In an editorial in yesterday's NY Times the paper unwittingly made our case as to why this whole Gateway Mall project, with BJ's Wholesale Club as its anchor tenant, needs to be sent back to the drawing board. The editorial, titled, "To Be Hungry in New York," discusses all of the difficulties faced by low-income New Yorkers when it comes to getting the food stamp assistance they are entitled to.

The Times' observation, based on the work of Council members Gioia and DeBlasio as well as a study done by the Urban Justice Center, highlights how "difficult and degrading" it can be for the hungry to get help. Now, imagine that your are someone who has navigated the process and has received food stamps, only to discover that the big new discount food store in your neighborhood doesn't accept them and, on top of this "You're Not Welcome" sign, tells you that you need to also pony up $45 for a membership fee just to be allowed in the store.

The Times editorial, backed up by the ongoing excellent work of Albor Ruiz at the Daily News, points to the paramount need for food stamp access in NY's poor neighborhoods. As we have pointed out, there is no poorer neighborhood in the country than the one that is being asked to host this Gateway Mall.

And there is simply no excuse to site such a store, one that clearly through its policies has contempt for poor New Yorkers, in the country's poorest community. Once again, "Withdraw this application."

Friday, January 20, 2006


In addition to its callous displacement of the Bronx Terminal Market merchants, we have been critical of Related’s Gateway Mall proposal because one of its tenants will be BJ’s Wholesale Club. In terms of labor practices and its position of unions, BJ’s is exactly like Wal-Mart but we have also been critical of the big box for its inaccessibility to the poor. Because the club store has a $45 membership fee, does not take food stamps/WIC and is auto-dependent, very few Bronxites who live in the surrounding area will be able experience the bulk bargains of a BJ’s. They will, however, have full access to the fumes of the thousands of additional cars and trucks coming to their neighborhood, a part of the infamous Asthma Alley.

To fully understand how BJ’s is effectively redlining district 4 – the host community of the Gateway Mall – it’s necessary to examine some statistics. According to the community profile for the district, the 54% Hispanic, 41% African American neighborhood has 80,340 people on public assistance as of 2004. That is a whopping 57.6 percent of the population that requires some form of government aid – food stamps, housing assistance, Medicaid – just to get by. Of those 80,000 or so residents who rely on taxpayer support, approximately 40,000 get food stamps, the second highest number of recipients per district in the entire city. District 4 also has a median income of only $21,275 which contributes to 40% of its population being below the poverty line.

So while certain BJ’s boosters claim that the store will be a boon for the poor mother with 3 children, the reality is quite different. The neediest in the South Bronx will be unable to access the wholesale club and, making matters worse, this indirectly subsidized store (the development is the mother of sweetheart deals) will put other, food stamp-accepting supermarkets at risk. If City Council is truly interested in making sure its poor have access both to food stamps and businesses that accept them, it will not permit Related to shoehorn a BJ’s into its Gateway development.

Bodegas and Broccoli Launched

As we have previously reported the Department of Health, in a desire to promote healthier eating, is looking to utilize the city's bodegas in its campaign. What is strange, however, is the Department's focus on these convenience stores that are typically no bigger than 800 to 1200 sq. ft. There is just not much room in these stores and no one should be surprised that, like their 7-11 cousins in the suburbs, they stock their shelves with the highest mark-up items (such as beer, soda and cigarettes) they can.

Even stranger, as is reported in today's NY Times, is the fact that in doing its surveys DOH did find that in Bed-Stuy, "...only one in three bodegas sold reduced-fat milk, but 9 out of 10 supermarkets in the neighborhood did." Therefore it is quite clear that these low-income communities do have good access to healthier products, just not in the convenience outlets.

Given these findings were not sure why all the attention is being given to the bodegas. It would seem to us that a joint DOH effort with local independent supermarkets makes a great deal more sense if you're looking to promote healthier eating. And this is exactly what we told the agency when we met with them last year.

Thursday, January 19, 2006

A Market with a View

The Daily News’s Bill Egbert follows up yesterday’s Observer story about the possibility of the Bronx Terminal Market merchants being relocated to the Velodrome site. Egbert mentions that Councilwoman Foster, who has been at the forefront calling for the merchants’ relocation, is a bit skeptical about trading in parkland for a new market. While we understand the councilwoman’s concern, we believe that a stand alone park on the Velodrome site would be underutilized – it is relatively far away from the surrounding neighborhoods and across railroad tracks. On the other hand, Irwin Cohen’s plan for the Veldrome site would not only preserve the market, but would open up the waterfront and feature a number of new restaurants. Also, Cohen’s proposal does include additional greenspace. We think that this option is a win-win for both the BTM wholesalers and the city and that the Council should reserve this site for the merchants’ use.

Bronx Terminal Market Hearing / Rally

The City Council will be holding its first hearing on the Bronx Terminal Market redevelopment this Monday the 23rd at 9:30 a.m. The public meeting - being held under the aegis of the Zoning and Franchises subcommittee of Land Use - will be the Council's first examination of Related's Gateway Mall proposal. We encourage you to attend and to contact these subcommittee members with your concerns:

Avella, Dilan, Felder, Gioia, Jackson, Katz, McMahan, Rivera, Seabrook, Sears, Vann

After the hearing at 12:30 p.m. we will be holding a Labor/Merchant/Community press conference that will emphasize the following themes:

1) Labor – Unless there is a written guarantee that the Gateway Development doesn’t include a BJ’s or Wal-Mart the project should be voted down

2) Merchants – Unless there is a viable relocation plan in place for the current Bronx Terminal Market wholesalers the project should be voted down

3) Community – Unless there is a true Community Benefits Agreement negotiated (not one solely crafted by the Borough President) the project should be voted down
A full press release will be posted when ready.

Willets Point and Eminent Domain

As we were saying, the issue of eminent domain is not an academic one, and the plight of the businesses of the so-called Iron Triangle of Willets Point highlights this reality. Willets Point is the focus of an excellent piece in this week's Crain's New York Business. In the article Tommy Fernandez clearly delineates the fact that the area is a thriving mixture of a variety of small businesses, many who have made considerable investments in their companies.

Our main concern here (the Alliance has not been retained to aid these businesses) is that the attempt to label the area as "blighted" overlooks the fact that the city is directly complicit in the area’s underdeveloped state. This is much the same situation as the one at the BTM where the city and its corrupt landlord allowed the market to deteriorate. After deterioration occurs, lo and behold, the city steps in with a development scheme that looks to evict the victims and replace them with a well-connected developer.

Make no mistake about it, the city is mulling thirteen proposals and is planning to designate a developer some time this summer. All the plans, however, involve the displacement of the current occupants. What must be avoided at all costs is any replication of the fiasco at the BTM where EDC basically told the merchants to pound salt.

What is unclear is how the current ED legislation at all levels will affect Willets Point as well as the property owners up against Columbia in West Harlem, a project that promises to be the mother of all ED battles. Certainly if the Alliance is involved it will be epic indeed.

Dog Bites Man: Developers Support Eminent Domain

In today's real estate section of the New York Times our old friend Terry Pristin writes about the concern developers have if the use of eminent domain is restricted. She opens by citing a project that was done by Doug Durst at One Bryant Park. As an exemplar, this development epitomizes the lawyer’s maxim "good cases make bad law."

It appears from this example that property owners fighting public taking can too easily, through their simple intransigence about retaining control over what is rightfully theirs, thwart economic development projects that are clearly in the public interest. And we're sure that from Durst's vantage it is. Obviously, however, there is more than one view on this matter.

Pristin goes on to catalogue the various legislative efforts, both nationally and locally, that have been initiated since the SC's Kelo decision came down last year. She quotes ED opponent Dana Berliner of the Institute for Justice who comments, "We lost the Supreme Court case, but we're ultimately going to win in changing the way that eminent domain is used in this country."

Pristin also reports about the chagrin of real estate developers that the ED issue is "the third rail now...You step on it, you die." Our old buddy Kathy Wylde of the NYC Partnership chimes in with, "When you add restrictions on development, you are never quite sure what the results are going to be."

What is glaring in all of this is the fact that Pristin manages to avoid any mention of the legal struggle that continues to this day over the ED battle involving the construction of the new Times headquarters building. This omission is the crux of Steve Cuozzo's column in today's NY Post. Cuozzo's point is that the Times' Durst example was one that was relatively benign, resulting in no extensive displacement of property owners or lengthy legal challenges.

The Times example, however, is still being fought out in court and if litigants like Gary Barnett of Extell are successful (a $200 million win is possible) it will be the tax payers and not the Times or the developer who will pay. All of this would have been of interest to Times readers, especially since the paper has editorialized strongly in support of ED.

Given the outcry over the ED issue, there is the realization that change is going to happen, and if it does legislators like Richard Brodsky of Westchester (mirroring what we have said) are looking for a middle ground. Issues surrounding the definition of blight and fairer methods of compensating property owners are sure to head any legislative agenda. Of particular concern is the fact that the "blight" rationale invariably targets low income communities.

All of this, of course, is not purely academic. People in Prospect Heights, West Harlem and Willets Point are concerned about their property as development projects go forward in those communities. All of which makes reform an urgent manner.

Wednesday, January 18, 2006

Gateway Application Needs to be Withdrawn

At today’s state City Council meeting committees will be formed and the hearing for Related’s Gateway Mall application will be finally set. Assuming the hearing is early next week, the Council will only have 2 weeks to review the single largest retail development in the Bronx’s history. For this reason alone Chris Quinn and her colleagues should demand that Related withdraw and resubmit its application so that a thorough review can take place.

The timeframe issue is put into sharper relief considering that there are a number of outstanding issues that will not be resolved in the next two weeks. Some of these matters include the status of the merchant relocation, the presence of a big-box store like BJ’s or Wal-Mart, the acceptability of the community benefits agreement and the need for an independent analysis of traffic, environmental and economic impacts of the Gateway development. All of these issues must be addressed prior to a vote.

We outline in more detail the case for withdrawal here.

A New Bronx Terminal Market?

In today’s Observer, Matthew Schuerman talks about Chelsea Market developer Irwin Cohen’s vision for a new Bronx Terminal Market just west of the proposed Gateway Mall. Cohen believes that, unlike his Chelsea project, this new, Bronx-based international will be easier to developer because a number of pieces are already in place:

“I think the Bronx Terminal Market merchants are already exactly what I asked of the Chelsea Market when I walked into this,” he told The Observer in a Jan. 16 interview. “I wanted every tenant to be family-owned, and that is the way it is at Bronx Terminal Market. Looking at the second generation is key to the survival of the Chelsea Market—and at Bronx Terminal Market, the second generation is already there.”
While Mr. Cohen’s participation and vision is important for the success of this plan, nothing will get done unless the city and Related are on board. A quote from Related’s Jesse Masyr is encouraging: “
If you are asking whether I think the two uses are incompatible across the street like that, the answer is no, not at all,” Mr. Masyr told The Observer. “We have an open mind. Irwin’s a creative guy.”
However, keeping an opening mind is quite different from actively supporting the concept. As for the city, a spokesperson is characteristically nebulous about the merchants’ relocation: “We are considering a number of options, and we are not commenting on any of them at this point,” spokeswoman Janel Patterson said. We wonder what the city is waiting for considering that the merchants may be exterminated from the market in as little as a couple of weeks.

As we have mentioned before, our strategy is to pressure the City Council to disapprove the current application for the Velodrome site with the intention of reserving it for the merchants. Considering that the merchants may be evicted within weeks nothing less will work. We are mindful that Councilwomen like Helen Foster, who has been a champion for the merchants, is a bit reluctant at this point to give up parkland (which is currently planned for the Velodrome site) but after educating her about Cohen’s plan we believe that she and other councilmembers will be supportive of this relocation proposal.

Homegrown Weed: The Real Dope at Gateway

In its initial public relations foray, the Related Company proclaimed that their new Gateway Mall on the gravesite of the Bronx Terminal Market would, unlike its sister Gateway Mall in East New York, be more "homegrown." At the time we speculated, half in jest, whether or not that would mean local merchants offering sancocho and goat's head to a public eager to try new things.

More and more, however, it appears that this mall will simply replicate the same dull standards that Related has exhibited in all of their Gateway incarnations. Even worse, there appears to be absolutely no effort on the part of the company to incorporate any of the indigenous merchants that have played such a crucial role in the rebuilding of the Bronx (and, at least according to BJ's 10 Q SEC filing, it also applies to Bronx wholesalers who should not look to supply the store with produce since BJ's proudly announces that they will bypass local sources of produce).

This is certainly the case with the proposed supermarket slated for the Gateway site. There are 59 local markets within the three mile trade radius yet Related didn't lift a finger to see if any of these operators were interested in coming into the mall. In fact, the developer approached one large regional chain store that is not known for its inner-city success and, unsurprisingly, the chain said "no".

Which brings us to the "homegrown" spin. If Related is allowed to grab this deal with a no-bid, low ball lease that pays the city no more than $2 a sq. ft. at maturity why can't it find a minority supermarket operator to tenant the mall? Indeed, why can't the City Council insist that they do just that?

And while they're at it, shouldn't the minority entrepreneur be given the same sweetheart lease arrangements that Related has with the city? (and not the $30 a sq. ft. that was probably offered to the regional chain). After all it's not as if Related has taken any risks in this deal that merit the windfall profits that it stands to make. Unless the Council intervenes the only thing homegrown at Gateway will be greater incidences of asthma.

Pataki Wacks Bodegas and C-Stores

In an expected move (we say expected because the governor has always stopped short when it comes to properly enforcing the law in regards to Native American sales of gasoline and tobacco), Governor Pataki, while proposing a $1 a pack increase in the state's cigarette tax, has once again called for a delay in enforcing the law against the non-taxed sale of tobacco by the state's Indian tribes. It goes without saying that the Alliance deplores the governor's continued pusillanimity.

There's definitely something fishy going on when a supposedly conservative governor decides that he can't enforce the law because of a fear that the law's targets will resort to violence. It seems that the governor, reportedly looking at a run for national office, is more concerned with potential campaign cash than he is in rightfully making sure everyone obeys the law. Jack Abramoff anyone?

To increase the state tax on cigarettes to $2.50 a pack would at the same time increase the city tax to $4.00 and cripple area bodegas, green grocers and newsstands. It would at the same time seriously escalate the already robust black market in tobacco that has led to violent confrontations on the streets of New York City.

We are asking state lawmakers to hold off against any increase until there is an ironclad agreement with the governor to enforce the law against the tribal profiteers. In fact, we would suggest that no tax increase be effective until at least 60 days after the state implements the law vis-à-vis the Indian retailers. For further details on this issue go to the New York Association of Convenience Stores (NYACS) website.

Tuesday, January 17, 2006

The Cost of Membership

We have been busy perusing the 10 Q form that BJ's filed with the SEC and we discovered that the company plans to increase its membership fee for 2006 from $40 to $45. Clearly the store didn't do this with all of the poor folks from the South Bronx in mind. In addition, the membership fee for Rewards Members, those who can access the real good bargains, was increased to an out-of-reach (for poor people at least) $80.

This of course is in addition to the fact that BJ's does not accept food stamps or WIC and reinforces the fact that the company is effectively redlining the neighborhood in the heart of "Asthma Alley" that is being asked to accept tens of thousands of additional mall-driven car and truck trips every week.

All of which is germane to the column written in today's NY Daily News by Errol Louis. Louis, writing on poverty and hunger in NYC, points out that 1.1 million New Yorker use food stamps but an additional 760,000 who are eligible do not because of all of the bureaucratic roadblocks that are put in their way.

As Errol underscores, the easing of these impediments would go along way towards putting "a dent in New York's hunger problem." At the same time, if the hundreds of thousands of eligible New Yorkers were enrolled "more than $650 million in federal funds would be flowing into the city, to be spent at grocery stores and supermarkets."

But not of course at BJ's. It should be unacceptable, at a time when we're trying to increase food stamp access, to promote the siting of a huge club store in a neighborhood that is one of the poorest in the entire city. This is also a store that will put those nearby supermarkets that do accept food stamps and WIC at risk. All to enrich a billionaire developer. How apropos!

Monday, January 16, 2006

A Place to Go

Recently, as we’ve mentioned, discussions have begun concerning whether the “Velodrome” – the parcel that would have housed an Olympic cycling facility – could be the site of a new Bronx Terminal Market. Though this land is a feasible spot for the merchants’ relocation one large obstacle is that the city current wants to see it become parkland.

One possible explanation for this decision is that the contiguous Yankee Stadium proposal would lead to the alienation of the nearby McCombs Dam and Mullaly parks and, according to State and Federal law, if parkland is destroyed it must be replaced with comparable greenspace. Therefore, the reasoning goes, the Velodrome site is needed to balance out the loss of parkland from the Yankee project. However, after speaking with Community Board 4 member and urban planner Lukas Herbert we’ve learned that, according to the Yankee EIS, all the proposed replacement parkland is north of the Gateway Mall.

This means that there is no reason why the BTM merchants cannot be moved to the Velodrome site. We have heard that Related still retains some control over the parcel but, considering the developer’s professed desire to equitably relocate the merchants, doesn’t it make sense to assist these tenants? And as for the argument that the South Bronx needs more parkland/access to its waterfront there are two responses: 1) a standalone park across railroad tracks and right by the Major Deagan isn’t going to attract many neighborhood residents and 2) Irwin Cohn’s vision for a new Terminal Market at the Velodrome does contain a riverfront esplanade as well as other aesthetic improvements.

We are urging all councilmembers who have expressed their support for the merchants’ relocation to support this Velodrome plan. This is a win-win situation for both the city and the minority wholesalers who have dedicated their entire lives to serving the South Bronx.

Wal-Mart: Kiss My Booty Capitalist

As we have been predicting, the Wal-Mart incursion into New York City will be predicated on the company's efforts to woo (co-opt) minority businesses and the usual opportunistic local "power brokers." In today's NY Sun Daniella Gerson underscores just how prescient this observation was.

It seems that our friends at Wal-Mart have been very busy networking with a wide range of diverse and apparently malleable small business groups. Front and center in this effort is one eager fellow named Frank Garcia. Garcia calls himself the president of the New York Statewide Hispanic Chambers of Commerce and in the past few years has managed to alienate a wide range of Hispanic organizations, including the NYS Federation of Hispanic Chambers of Commerce that is headed by Alfred Placeres. The Federation is the longstanding group that has represented the interests of Hispanic businesses.

As far as we know, and we have been working with Hispanic business groups for the better part of two decades, Garcia has just recently injected himself into this field and has all of the legitimacy of any self-appointed spokesman. But Garcia really isn't the issue. There will always be Garcia types looking to benefit, in a parasitic manner, from the largesse of a Wal-Mart.

The real issue is the cynical attempt of Wal-Mart to use some minority businesses to create a beachhead in NYC. And from the looks of things it won't be easy. Gerson cites the vigorous opposition of Councilmember John Liu: "The impact of Wal-Mart would be to not only degrade worker conditions in New York City, but would also drive a dagger into the economic engine of New York City, which is small business."

Our friend Sung Soo Kim of the Small Business Congress also weighs in on this cynical attempt to co-opt the small business community through the age-old divide and conquer tactic. Kim points out concerning his members, "not one is in favor of Wal-Mart coming to New York."

One final word to the struggling suppliers looking for a Wal-Mart lifeline. The retail giant has made a practice of using unique local wholesalers for a period of time only to, once the company has learned all it needs to know about the products in question, replicate the production of the same goods overseas. A word to then wise: cultivate local retailers and create a long term win-win situation.

As for Mr. Garcia, our advice to the Bentonville Bombers is to be very careful of who you ally yourself with. His miraculous conversion on his trip down to Arkansas was no divine revelation but something much more tawdry and transparent.

Institutional Critics Needed

In an intriguing post last Friday, Ben Smith at the Observer made what we feel is one of the most cogent evaluations of the failure of the media and some of the most respected good government groups to provide the public with the kind of "institutional criticism" of the Bloomberg administration that, given the mayor's wealth and concomitant insulation from the normal ebb and flow of politics, is desperately needed.

Smith's point is that there is a danger in this reticence that borders on obeisance. The danger lies in the way in which the silence of these quarters prevents the kind of necessary scrutiny that this mayor, with no real policy expertise or overarching political vision, needs. In its absence the only criticism that emerges will come from the shriller corners of the left side of the political spectrum, leaving the impression that it is purely sectarian and lacks legitimacy.

The case in point for Smith is in the area of education. He sites the critical work of Sol Stern in this field and in doing so echoes what we have already said. The mayor's approach to education has been too top-down and closed off from local input. In addition, he has relied too heavily on the kind of progressive educational strategies (remember the Lam) that we have always seen as dubious.

In this regard it has been Andrew Wolf and the NY Sun that has kept the appropriate light shining on the new Department of Education. The lack of others in this effort is particularly disturbing since the closed nature of the bureaucracy and the mayor's millions left the clear, and probably mistaken notion that Bloomberg was on the verge of great breakthroughs in this critical area.

Ironically the Sun's Julia Levy, who did a good deal of the insightful educational reporting, has been co-opted by Klein over to Tweed. In addition, the DOE miasma and the paucity of public scrutiny will insure, at least in the near term, that all of the educational "debate" will be focused on money and so-called fiscal equity.

More on Institutional Critics

Smith's point on the lack of institutional critics also underscores the fact that, "Newspaper editorial boards are, to varying degrees fan's of Mike's, and invested in his success." This observation is particularly telling in the area of economic development where the city's real political power elite resides.

Nowhere is this better illustrated than in the deafening editorial silence over the Doctoroff-driven shenanigans at the BTM. In fact even after the debacle on the West Side one editorial observation said that Deputy Dan was "highly competent."

We are still hopefully waiting for the NY Times to weigh-in on this issue. It's not that they don't have enough ammunition. Their own Charles Bagli has written an exhaustive expose on the matter and the Daily News has been relentless in raising questions about the story (even while making sure to restrict Bill Egbert's stories to the Metro section).

The one major exception in regards to the BTM deal itself is the estimable Henry Stern. In June Stern raised a series of questions about the BTM, and the probable collusion between Doctoroff and Related's Steve Ross, that have yet to be answered with any degree of satisfaction. Building on the in-depth reporting of Graham Rayman at Newsday and Tom Robbins at the Voice, Stern insightfully remarks:
"It may be that only Ross was interested in this problematic enterprise, but one cannot know that unless others have had a chance to bid. The assertion that Doctoroff recused himself entirely from the transaction is also difficult for thinking people to swallow whole, considering the multiple contacts and protracted negotiations between the two parties. If Doctoroff had nothing to do with it, who then was responsible for working out the agreement? Let Mr. X come forward and explain the deal to the public."
Now on top of all this we have the recently announced court decision that argues that the city has the right to do all of this without an appraisal of the property in question, without open bidding, and without the normal land use review of the City Council . None of this piques the interest of the editorial boards? How does this differ from the West Side?

All of which reminds us of the sociological term coined by Vidich and Bensman, "mobilization of bias." When a city or town is dominated by a certain world view this view permeates to such an extent that its premises are never questioned. The view, in essence, describes reality for all those who are imbued with it. We see this most clearly in the use of "economic development" as a form of incantation. So much so that little evaluation of particular development is forthcoming.

This is what appears to be the case with the BTM and it relates to Ben Smith's original observations on editorial obeisance to the mayor. Certainly though, if Henry Stern can see the obvious problems and inconsistencies, than others can as well if they are made aware of their blinders on this issue. We will continue to push for this.

Saturday, January 14, 2006

Money For Nothin'?

In a inconspicuously placed story in today's NY Times, Jim Rutenberg wraps us (almost) the final details on the mayor's record election splurge. We say almost because there are still some additional expenditures that remain unaccounted for in the $84 million number that was released to the press.

What is now needed is for the Times to do an in-depth analysis of the impact that the mayor's spending on his "landslide" re-election. You know, a story that has the same kind of analytical probing that the press used in their deconstruction of the failures of the Ferrer campaign.

An addition to this needed review should be a comprehensive cataloguing of the mayor's so-called charitable donations, ones that in many cases were thinly disguised campaign expenditures (contrast the press oversight of this with the media furor over the Corzine mess in New Jersey). The Times has already done a campaign piece but we're already hearing noise that Bloomberg isn't really a lame duck because his ability to donate-post his tenure in office-will create a climate of obeisance.

What we should be able to avoid is another Times editorial suggesting that the mayor lead the charge for campaign finance reform. There is still, however, a strong need for someone with cleaner hands to worry about the negative impact of the mayor's store-bought lack of political accountability.

Friday, January 13, 2006

Maryland Overrides Health Care Veto

Via the Associated Press:

Maryland’s legislature voted Thursday to enact a first-in-the-nation requirement that Wal-Mart Stores Inc. spend more on employee health care. The measure, touted as a money-saver for the state-supported Medicaid program, takes effect despite a veto of the bill by the Republican governor.

Labor unions have said they are seeking similar legislation this year in at least 30 other states. Supporters say the retailing giant unfairly takes advantage of taxpayer-funded health care plans because some workers can’t afford Wal-Mart’s health insurance.

“The taxpayers are giving a health-care subsidy to the largest retailer on earth,” argued Democratic Delegate Kumar Havre. The House and Senate, both controlled by Democrats, both notched the three-fifths margins needed to override a veto last May by Republican Gov. Robert Ehrlich.

The bill requires companies with more than 10,000 Maryland employees to spend at least 8 percent of their payroll on employee health care or pay the difference to the state in taxes.

Currently, only Wal-Mart would meet the criteria in Maryland. The company employs about 17,000 Marylanders at more than 40 Wal-Mart and Sam’s Club stores, and about 1.3 million people nationwide…

“We expect that today’s vote with generate important momentum in many other state legislatures,” said Nu Wexler, a spokesman for Wal-Mart Watch, which is funded by a union.

Relocation for the Merchants

As we have already discussed, talks are underway to move the BTM merchants to the "Velodrome" site that abuts the proposed Gateway Mall location on 149th Street. In today's Insider, Crain's is reporting that the merchants are "optimistic about the proposal." EDC admitted that it was in "discussions over the site but declined to comment further."

All of which is promising but as the Related Company says, while the Cohen idea is "an interesting concept" there is no "plan" to respond to yet. This means that the Bronx council delegation needs to galvanize its support for the proposal and help to make sure that it happens. To a person, the council members have all offered their rhetorical support for the market businesses. Now that needs to be translated into tangible help.

In the Crain's story it is suggested that the acceptance of a relocation plan would "pave the way for City Council approval of the Gateway Center shopping complex..." Well we don't know about paving the way, after all the tenancy issues are the project's real third rail, but solving the fate of the BTM vendors would be a big step in the right direction.

CBA and Gateway

In a corollary to the Insider's discussion of the BTM relocation plan Erik Engquist tells us that the Bronx council delegation's approval of Gateway "is contingent on Related ratifying a just-drafted community benefits agreement that includes a reasonable relocation offer for the merchants." That is certainly surprising to us especially because the original draft presented to us had no mention of the Bronx Terminal Market relocation.

In our last discussion with key members of the Bronx BP's CBA taskforce there appeared to be a mutiny brewing over Adolfo's attempt to control the community's autonomous input into the CBA. It doesn't appear likely that all of this was resolved, so we'd be interested to know when this purported CBA was drafted, who signed on to it, and what it says.

As we have said all along a CBA should ideally be negotiated prior to any ULURFP process so that the community benefits are clearly delineated going into the review. In addition, the community should also be independently represented by counsel and the CBA should be negotiated in direct talks with the developer. None of which has happened with Gateway.

ED Roadblock

In yesterday's Insider, Crain's is reporting that a House-passed bill limiting ED could seriously impact "city renewal efforts." According to Crain's, the Feds have already passed a less-restrictive bill that the president has signed into law. This bill, at least in the view of HPD commissioner Shaun Donovan, could jeopardize funding for 12,240 units of housing in Bushwick, East Harlem and Mott Haven.

The already passed ED measure, attached as a rider to a House appropriations bill, will cut funding from federal Transportation, Treasury and Housing departments if a municipality employs the user of ED "for other than public purposes." The key issue here is, of course, how such public purpose is defined.

All of this points out the need for the crafting of statutes that, while protecting private property owners and small businesses, still allow local governments to develop urban renewal plans to benefit poor people. What we have seen in so many cases, however, is that policies ostensibly directed for the uplift of the less fortunate are, once dissected, shown to be little more than aggrandizement for the already exalted.

This discussion is not simply theoretical. NYC has two sites that are on the drawing board and the use of ED figures prominently in both. We are referring, of course, to Columbia's expansion into West Harlem and the mayor's plan to redevelop Willets Point. Given the real world impacts, action is needed on crafting an ED policy that is sensitive to the rights of small business.

Thursday, January 12, 2006

Whither the BTM Merchants?

As the Gateway application becomes the focus at the City Council, it is useful to point out that the application before the body is actually two separate land use actions. One involves the mall but the other involves the so-called "Velodrome site," west of Exterior Street. This application would de-map the streets and pave the way for converting the area into parkland.

The space in question would be ideal for a newly constructed BTM. This is an idea that has been promoted by Congressman Serrano's office, and through its intervention, discussions have occurred between the merchants and Irwin Cohen, the founder of the Chelsea Market. Cohen has also reached out to the city and to Related and talks have ensued between those parties as well.

Cohen's concept is to transform the Velodrome space into a BTM retail and wholesale market that wouldn't exactly mirror what he did at Chelsea but would be based on some similar principles. He believes that the array of exotic ethnic products would generate excitement and turn the new BTM into a destination location.

In this context we are reaching out to the council for support. One possible avenue of that support would be for the council to turn down the Velodrome application and insist to the city that the space be reserved for the BTM merchants. Goodwill alone will not be sufficient and a dose of political power is definitely needed.

Since most of the Bronx council delegation that has supported Gateway has expressed a desire to "save" the merchants (who are facing a potential imminent eviction), this would provide them with just the appropriate opportunity to do the right thing.

Gateway Deadline for City Council

In today's NY Sun Jill Gardiner reports on the looming deadline faced by the City Council with the Gateway Mall application that was sent over from City Planning on December 22nd. As she points out, the project "could be the first litmus test for the newly constituted council." The key public issues of course revolve around the relocation of the BTM merchants and the desire of the developer to put BJ's into the mall.

While the Sun is reporting that the administration is optimistic about the chances for Gateway's approval, an optimism seconded by Councilman Joel Rivera, the issues facing the council are complex and, given the truncated time-frame, not easily resolved before the February 8th ULURP deadline. As we have been reporting, the most serious issue facing the council devolves from the mayor's usurpation of the City Council's Charter-mandated powers, a power grab that was unfortunately ratified by a misguided legal opinion.

The fact that the city made an end-run of the standard procedures for the transfer of public property means that the entire deal before the council lacks legitimacy. The lease transfer, done without appraisals or the benefit of a competitive bid may have, under the proper scrutiny, failed to pass muster from the standpoint of the public interest. That is precisely why those procedures were put in place when the Charter was written.

Some Further Interesting Observations

The Sun piece is not without a certain degree of comic relief – you just need to know where to look. For instance, the developer and the city are arguing that the project has "overwhelming support" from the borough's leaders. Well, this remains to be seen but what we already know is that a great deal of the putative support reflects that old Bronx aphorism, "Not for nothin'."

As the Daily News has highlighted the Related folks have been very busy spreading good cheer throughout the borough. In addition the Bronx BP, the project's biggest cheerleader, has also been treated royally by those very same special interests that the mayor excoriated in his campaign.

Of course if we want to deal in theological terms the special interest original sin, what we have called an "immaculate deception," was Related's miraculous entry into the BTM in the first place. The entire project, hot-wired and greased as it is, reeks of legal short-cuts and egregious special pleading.

One last point here. The Marino Organization, the former neighborhood boys gone uptown, is always good for a laugh. Their spokesman tells the Sun that "the council generally yields to elected officials that represent the area and noted [referring to our effort to excise BJ's from the project] that land-use approvals have nothing to do with the stores that occupy a site."

Is he kidding? This is the same Marino group that has colluded with some members of the Bronx delegation in an attempt to put BJ's back on Brush Avenue after that application was soundly defeated last year-- even though both local council members are opposed. And the character of the potential tenant has always been an issue, a point that was underscored when Wal-Mart ran into a buzzsaw last year in Rego Park, Queens.

The reality is that all of these issues will be played out in the coming weeks and there is nothing that is written in stone about the kind of outcome to expect from the process. We have learned over the years that it is better not to speculate and keep working on behalf of the cause we represent. Talk is really cheap.

Wednesday, January 11, 2006

Nitrogen Discharged

The NY Post is reporting today that the city will pay over $710 million over the next ten years to"upgrade sewage treatment plants that pump too much nitrogen into Long Island Sound and Jamaica Bay..." The city under this ruling plans to cut nitrogen discharge by 59%.

All of which got us to thinking about the issue of food waste disposers. One of the arguments used against these devices is that they exacerbate the nitrogen discharge problem. The scientific evidence tells a completely different story. The reality is that food waste mitigates the discharge problem. As professors Ham and Diggelman report; "Adding food waste to a carbon limited waste water system contributes to the net removal of nutrients (nitrogen and phosphorus) from effluent..."

We're looking forward to having the facts come out and the incompetency of the DEP exposed once our food disposer pilot program is re-introduced next month.

Accountability at the BTM

In reference to our post on yesterday's NY Sun article it is instructive to use the BTM as an example of how a development project needs to be examined using economic development parameters and not just environmental indices. A key aspect of the analysis, especially if a project involves public land, is a proper evaluation of the sale or lease of the property in question.

This is precisely what was avoided in the BTM lease transfer and, notwithstanding the indefensible decision by Judge Cahn, it needs to be a crucial variable in the City Council's evaluation of the Gateway Mall application. This has nothing to do with the employment practices of potential tenants like BJ's, although we feel that these practices can't help but be germane to the economic assessment of the development's worth to the city.

Even if the mayor had the authority that is fantasized by the judge in his decision it doesn't take away from the fact that the city's failure to appraise the BTM properties and put them up for competitive bidding is, in this particular case, a malfeasant act. It is so because even EDC's Andrew Alper has admitted that if the property was bid the city would have "probably" gotten a better price for the land.

Not only that. If the city had followed Section 384 of the Charter it would have initiated an open and transparent process that would have undoubtedly yielded greater community input and accountability, as well as a set of competing visions for the property in question. This, unlike the hot-wired favoritism that characterized the BTM deal from its inception, would have been good public policy. It is precisely what the City Council needs to insure never happens again. The denial of the BTM application is that insurance.

Tuesday, January 10, 2006

Accountable Development Redux

In today's NY Sun Dave Lombino continues to give us in-depth reports on important real estate issues. In the current piece he focuses in on P(ayments) I(n) L(iu) O(f) T(axes). The importance of the story derives from its connection to the issue of accountable development. The City Council to its credit has forced the administration to disclose the companies tyhat are receiving these PILOT benefits. This is, however, only the beginning of what the Council should be doing.

The ULURP process should never be seen as an exclusively environmental policy review but rather as an accountable development review with the evaluation accompanying the land use application focusing, not only on traffic and air quality, but also on the economic impacts of the development.

In addition, the review should look at development from a cost-benefit perspective where an independent consultant, one who is not hired by the developer, reviews things like job growth vs. job loss and the quality of the jobs being created. Of extreme importance to the Alliance is the impact of the project on locally-based businesses because studies have shown that local firms yield a multiplyer effect that has a greater economic boost for the local economy than out-of town companies that are generally not supplied by indigenous wholesalers.

Finally, all tax incentives need to be factored into the overall cost-benefit analysis because it makes little economic sense, nor is it equitable, to subsidize out of towners or politically favored companies, for that matter, when a more comprehensive tax cut would yield a more positive economic result for the city. As Nicole Gelinas points out, "If we can afford to take so many companies in effect off the tax rolls, then why can't the city afford to implement business tax cuts across the board?