Tuesday, August 03, 2010

This Little Piggy Went to Market

In today's NY Daily News, Juan Gonzales has an lustrous column about what the Bloomberg regulators are doing to the Hunts Point Market-a major economic engine for, not only the Bronx, but the entire city: "Merchants at the Hunts Point market in the Bronx, the nation's biggest fruit and vegetable mart, are so angry at the city's proposed fee hikes that they're thinking of moving out. The Business and Integrity Commission [BIC], the city agency created during the Giuliani years to eliminate organized crime influence in the carting, fish and wholesale food business, is expected to approve today 65 pages of tough new rules and fees on wholesale markets located on city land."

But, for what? Since we were intimately involved in all of this regulatory/organized crime controversy under the last mayor, we understand better than most how much of the entire regulatory scheme was simply Rudy posturing as an organized crime buster-and we made sure, with the help of then Speaker Vallone, that the workers wouldn't be put into some kind of Orwellian straight jacket.

And make no mistake about it, in the past decade or so, the BIC hasn't found much in the way of organized crime at any of the city's wholesale markets. In fact, a bid rigging scheme a few years ago at the Hunts Point Produce Market wasn't even on BIC's radar when the culprits were busted by the feds. BIC couldn't find Vinny the Chin walking down Mulberry Street in his bathrobe-but it sure can put the squeeze on legitimate small firms.

But, as the song goes, regulators must regulate: "The commission wants to hike to $4,000 its charge for a license application and background check for each wholesale firm. That's an astonishing jump from the current $250 fee. In addition, the roughly 2,000 workers at the market will each have to pay $120 - six times the current fee - for a new mandatory photo ID. And if BIC's investigators determine that a background check is needed for any employee, that person will have to shell out as much $650 more."

So, what is this really, except another way in which this administration gets to manifest its manifestly ant-small business mindset. Do you think that the new deputy mayor-late of Goldman Sachs and Greenwich, Conn.-is going to intervene to protect this city's main wholesale food asset? The city's wholesale markets are a vital cog in New York's food distribution network-a network that sustains thousands of restaurants, green grocers and supermarkets-given this role, you would think that the city would be looking to lower market costs, not raise them. Think twice.

As Gonzales rightly points out: "When it comes to downtown Manhattan businesses, City Hall always manages to devise sophisticated tax breaks and new schemes to lower their costs. For the blue-collar wholesale industry in the Bronx, all the Bloomberg people can think of is higher fees." Or, not think at all-like in the case of Stella D'Oro.

And then there is the companion issue of regulating Borinquen Beer , one of our struggling independent beer wholesalers: "Even firms near the 112-acre Hunts Point market are being snared in BIC's tentacles. Take Brenda and Rolando Lugones. They run Borinquen Wholesale, a soda and beer distributor that is located on private land four blocks away from the market. A few weeks ago, a BIC inspector walked in and insisted they fill out a license application. "I told him we don't belong to the market, Brenda Lugones said. "But he wanted us to write down all this private information, even the color of our underwear." When the couple ignored the deadline for the application, the inspector returned with police and slapped them with a $5,000 fine. "This is just a ripoff the city has in order to make more money," Brenda Lugones said. City Hall spokesman Frank Barry says the Lugoneses and a handful of other wholesalers near the market have always been under BIC jurisdiction but, until now, the commission has not monitored them in the same way."

Well, if they had been, they would have discovered that all of these independents are in severe hurt-but how could they possibly notice this when the city's very own IDA is busy bestowing millions on Manhattan Beer-the same multi-million dollar franchise beer supplier that is making life difficult for the Borinquens of the world.

And why the fee increases? The age old Willie Sutton concept-adapted for today's modern NYC bureaucrat "Barry says the fee hikes are needed because the commission has not been financing its operations through fees as originally envisioned. That could be because Mayor Bloomberg keeps increasing the agency's staff of lawyers and inspectors. City records show BIC's current expenses of $7.1 million are 40% higher than in 2006."

In response to all of this expensive over-regulation, the market is contemplating-gee, just like the hedge fund operators looking to relocate, in of all places, Greenwich-a move out of NYC: "Sid Davidoff, a lobbyist for the market's produce cooperative, says the city's mistreatment of the wholesale firms "has gotten serious enough that we have to see if staying on city land is the only option."The cooperative recently hired a real estate firm to search for other locations in the metropolitan area and it may challenge the new rules in court. "Nobody wants to move, but we have to look for an alternative," Davidoff said."

This whole sad saga is so symbolic of how Mike Bloomberg views small and mid-sized business-simply as a cash cow to be milked to maintain his own personal Leviathan. So, while he is busy grading the city's restaurants, we want to announce that the mayor and his Wall Street deputy are hereby bestowed an "F" for their unflagging efforts to rid the city of its vibrant immigrant-remember Flushing Commons-and small business sector.