Tuesday, January 24, 2006

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 What this ruling said, however, was that the mayor’s (Commissioner of Small Business Services’s) power superseded Section 384 of the City Charter, the section that mandates public bidding on leases and requires land use review.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.