The Cost of Doing Business in New York City

According to a recent report sponsored by the Citizens Budget Commission and the Federal Reserve Bank of New York, small businesses in New York City are most concerned about the high costs of doing business here. While generally pleased with their access to skilled labor and markets for their goods, mom and pop companies uniformly point to the current business climate as a major obstacle to success. In various charts, the report shows how City taxes and regulations hamper business, making the prospect of relocation to places like Las Angeles or Miami much more appetizing.

All of this demonstrates the Bloomberg Administration’s policy failure when it comes to small business. The Mayor’s reelection commercials are incessantly touting the wonders of his 5 borough economic plan but the CBC report clearly shows the emptiness of these claims. Higher property taxes, the promotion of mega developments, more aggressive fining and prohibitive regulations all contribute to an anti-small business atmosphere, the worst we’ve seen in over 20 years.

According to the report:

Because of their importance in creating jobs, small businesses merit close attention in the formulation of economic development policies.

But for the Billionaire Mayor all these small entrepreneurs merit is lip service, and election year rhetoric that is mockingly insincere and insulting to hard working store owners.

Velodrome or Bust?

The New York Sun’s David Lombino is reporting today that the City and the Related Companies have not yet decided what to do with the now open velodrome site at the Bronx Terminal Market. Market merchants, looking to form a co-op to purchase a new market site, have eyed the velodrome location as a potential for the new facility.

According to the Sun article, Lee Silberstein, a spokesman for Related, said that “the City and the Developer are still considering options” for the velodrome site. After making that statement, however, Silberstein noted that the merchants:

have to think about and understand that there is not going to be a place where they will be able to locate where they can pay rents they are paying now.

Talk about arrogance! Silberstein, whose own company is the beneficiary of countless favors and sweetheart arrangements, is now counseling the merchants about the cold realities of the real estate market – and doing so, as the Sun points out, while using the merchant’s own rent money to evict them. This has to be the classic example of adding insult to injury.

Transportation Money and Mayoral Doubletalk

Mayor Bloomberg, posing as a faux environmentalist, held a press conference yesterday to announce plans to spend $71 million to mitigate City traffic woes. As the Daily News reports, the Mayor cited the effort to improve traffic as an aid to asthma sufferers.

What the Mayor left out, however, was that his championing of box stores and his purposeful ignoring of their attendant contribution to the City’s traffic congestion is a much greater threat to the quality of the City’s air than he is willing to admit. Real courage would involve standing up to his developer friends and supporting a box store moratorium. It would also involve supporting the skepticism of his own planning commissioners who are concerned that the proposed Gateway Mall will impossibly gridlock the Major Deegan and force traffic through local streets.

Neighborhood Shopping Ignored

Of course, the City’s hundreds of commercial shopping areas promote walk-to-shop options while also providing the City with considerable tax revenue and employment opportunities. A genuine concern with traffic, then, would include a comprehensive program to promote neighborhood stores. We’re waiting for this light bulb to go on in the Mayoral head.

Amboy Road

One of the most interesting side pieces to the traffic story is one of the areas that the City is planning to “study.” That area, one would guess chose for reasons of both traffic and politics, is Amboy Road between Arden and Clarke Avenues on Staten Island. It is also an area near the proposed Wal-Mart in Richmond Valley.

We’re guessing that this already overburdened local road will be literally crushed if it has to accommodate the over 100,000 additional vehicle trips generated by the retail giant. We’re also guessing that the City’s “study” will not be analyzing this new threat to Amboy Road’s passability.

Saving Newsstands

Crain’s Insider is reporting today that the City has delayed, at the request of Judge Michael Stallman, the awarding of its street furniture bid so that the Judge can have time to release his decision on the lawsuit brought by newsstand operators. A decision is expected later this month.

The judge’s request has led to speculation that his decision would offer some relief to the newsstands whose suit argues that the street furniture contract will potentially force up to 75 newsstands to close and will leave operators with no equity in their stands. In essence, three hundred small businesses will be turned into tenant farmers for one major telecom plantation owner.

Immaculate Deception

The City’s EDC is still twisting, turning and spinning in its effort to explain the supposedly autonomous manner in which the Related Companies managed to, all on its own, wedge itself into a lucrative no-bid deal to develop the Bronx Terminal Market. In a press statement the City asserted the following. Our responses are listed under each item:

1) The City could not have a bidding process because it didn’t control the site

The City could have quite easily and legally issued a Request for Expressions of Interests (REI) for the BTM site. By doing so it could have gauged what the level of interest was for the site, what kind of diverse visions existed for the site and, most importantly, the potential value of the site when bid for on an open market.

2) The City “engaged a mediator” who recommended that Buntzman (the old landlord) bring in a developer to “increase the property’s value”

If the City engaged a mediator then there was a level of public involvement that clearly disproves that this was a private deal. In addition, the charge to see if and how the property’s value could be enhanced also suggests that the City, far from speculating, already had a decent idea of how this could be done.

3) Buntzman met with “several developers” (including Related)

Who besides Related did Buntzman meet with? Can we ask these folks to step forward in order to discuss their views about “enhancing the property’s value?” Also, are they at all miffed at not being included in the development? If they could speak without fear of reprisal would they characterize the City’s role as neutral?

4) The City asked Related to assess this site’s potential

How did Related get picked to “assess the site’s value?” (It seems to us that some steps are missing here).

5) Related thought the site had potential for retail and began discussions with Buntzman that resulted in the following “private actions:” a) Related buys Buntzman’s lease and b) Buntzman drops legal action against the City

So the “private action” only became private after Related somehow got exclusivity and after some failrly public interventions by the City. The dropping of all legal actions could not have occurred without the acquiescence of the landlord and NYC and it is likely that Buntzman was made aware that Related’s offer would be the one sanctioned by the City. The question then becomes: Would Bunzman have taken $42 million from another developer?

6)The City cannot “speak to” the discrepancy between the value of the velodrome and property and the House of Detention (HOD)

Here’s the one honest statement in the release. The City can’t speak to the discrepancy because, having foregone all standard real estate due diligence (like appraisals) they simply and cavalierly swap parcels using an unacknowledged or nonexistent standard of comparison.

7) Related paid Buntzman $42 million for its lease

Once again the negotiations leading to Buntzman agreeing to be bought out, as well as the City’s role in that process, remain shrouded in mystery

8) Related will be paying ground lease rent to the City when the development lease is signed and base rate plus a percentage of the revenue when the retail development opens

Ah the lease. The press release doesn’t mention just how favorable this is and avoids pointing out that in year 99 of the final lease the Related Companies will be paying less money on 2,500,000 sq. ft (around $2,000,000 a year) than the market tenants are currently paying on 403,000 sq. ft (around $3,360,000 a year)

9) The House of Detention is not now part of the current development plan nor is the velodrome site but the City has until April 2006 to decide on the House of Detention and Related can exercise an option on the veledrome site at which time rent will be negotiated

As to the “uncertainty” involving the HOD and the velodrome this is pure hogwash. The city will transfer the jail and Related will exercise its option because all of this is contained in the Memorandum of Understanding (MOU) between Related and the City. All parties simply want to keep the more controversial aspects of the deal out of the current land use application.

One last observation about how private this BTM deal is: In the documents gathered by the merchants’ lawyers a 2002 rendering was found that depicted the Olympic velodrome on the BTM site. This was a full year before the Related deal was finalized! Clearly, Deputy Dan and the City were involved from the very beginning in the effort to advance an Olympic venue and to do so with a developer who happened to be Dan’s former business partner and a stakeholder in NYC 2012.

The Conscience of a Conservative

Absolute props go to Alicia Colon, a principled conservative with whom we have disagreed on box store issues. In yesterday’s NY Sun Colon goes after the Mayor’s campaign literature and righteously deconstructs the false message.

In the first place she ridicules the Mayor’s one-time $400 tax rebate pointing out that she is now paying an extra $250/month – you do the math. She then points out that the Mayor’s questionable economic development policies, particularly those involving the Olympics and area sports teams:

It's all about making billions. Meanwhile, developers who are not cozy with the mayor - the actor Danny Aiello and the principals of Stapleton Studios - had their Staten Island project quashed by the city's Economic Development Corporation in spite of tremendous community support for it.

When are the Mayor’s opponents going to wise up? The incumbent is running on a platform on “no special interests,” touting his wealth as a positive. Yet, in practice, his administration has run a set-aside program that benefits his peers. As a caller to Colon remarked:

Much is made about Mr. Bloomberg's philanthropy when in actuality he's divvying up the most valuable parcels of city land to make billions for his friends.

Renting Gateway

Crain’s Insider is reporting today that the BTM merchants will be in court on August 30th to argue that their rents should be reduced. The argument is that the merchants are paying Related $285,000/month while Related in turn is paying the city only $22,000/month.

In a demonstration of maximum hubris, a spokesman for Related defends the rent disparities by pointing to the fact that Related paid $40 million to buy out Bunztmann lease. To us that is more of an indictment than a defense since the $40 million is not only risk-averse (The City guarantees the money and will reimburse Related if the deal folds), but is also way below the value that the lease and the development rights would have fetched in an open bidding process.

On top of that, as Juan Gonzalez underscores today, the House of Detention has apparently been gifted to Related. This $40 million property makes this entire deal a wash. When you put things in this perspective the unfairness of the rent disparities becomes glaring.

So, the City seems OK with the “ghetto merchants” paying Related’s development costs but feels it has no obligation to assist the BTM merchants in their relocation efforts.

In fact, if there is no viable site available it is not clear why EDC and Related cant develop the now available Velodrome site for a new wholesale-retail BTM. This is would not only be the right thing to do, it is exactly the kind of mitigation that the CEQR technical manual advocates when businesses are threatened with displacement:

Similarly, for actions that would result in significant impacts because of direct displacement of businesses, alternative sites should be considered that would not displace any businesses. If those businesses occupy only a portion of the project site, a smaller project or an alternative configuration that avoided them could also be considered.

Bloomdoggle at the Bronx Terminal Market

Juan Gonzalez hits the bulls-eye today in his column on the “Bloomdoggle” at the Bronx Terminal Market. Building on the research of the Alliance’s Communications Director Matt Lipsky, Gonzalez exposes the favoritism and cronyism involved in the cavalier swap of the Bronx House of Detention for land earmarked to build a Velodrome for the now defunct Olympic bid:

The now-dead West Side stadium project wasn't the only sweetheart land deal City Hall cooked up the past few years in the name of our failed 2012 Olympic bid.

The proposed Olympic Velodrome in the South Bronx is another of Mayor Bloomberg's boondoggles for billionaires.

As Gonzalez points out, however, even though the assumptions underlying the swap are no longer valid, the handover is still going forward. The author, referencing the City Hall hearing on June 27th, also questions how Andrew Alper can arrogantly assert that no appraisal is necessary when sole-sourcing City-owned land:

So the head of Bloomberg's economic development arm believes property appraisals are unnecessary when the city is selling your land to billionaires. And how dare anybody ask him about it?

But people are asking and according to appraisals that do exist (from ‘04-‘05) the value of House of Detention is over $38 million while the Velodrome land is worth at most $11.6.

However, the most interesting aspect of Gonzalez’s piece comes at the end:

But wait, it gets better.

Now that the Olympics are history, I asked EDC officials and a Related spokesman yesterday about their plans for the Velodrome site.

"The city is working with Related to determine the best use of the site," an EDC spokeswoman said. The Related spokesman had the same response.

The city's sole-source deal, it turns out, gave Related development rights for the Velodrome site in the event the Olympic bid failed.

Smart businessmen, these Bloomberg people.

In other words, all the addition and subtraction we performed over the last few days was irrelevant because Related is going to get both parcels, bid free and at an unknown lease rate!

Considering all that the City is doing for Related, it is unconscionable that it feels no obligation to take care of the merchants who are still occupying the space.

Caveat Vendor

The Gotham Gazette has a little vignette this week, redolent with compassion, about the City’s recently passed legislation allowing undocumented immigrants to receive vending licenses. What disturbs us, and the author graciously records our comments, is the perspective of some of the immigrant groups who prefer not to make any distinction between legal and illegal immigration. Flor Bermudez of Esperanza Del Barrio, captures this spirit:

“We’re all very happy. The city will no longer discriminate against immigrants in the licensing process.”

Well pardon us for pointing out that this City has never discriminated against immigrants in any licensing process if they had managed to arrive here legally. One of the requisites of many city licenses is the absence of a criminal record. For instance, if you break the law you can be denied the right to haul garbage. The law of the land, vis-à-vis immigration, is that you can’t just sneak into the country. That is why such immigrants, undocumented though they may be, have been characterized more appropriately as illegal.

All of which leaves out Ms. Bermudez’s larger objective: the promiscuous expansion of the number of vending licenses. The Gotham Gazette does tackle the issue obliquely but does so in such a way as to minimize the potential danger. When Richard Lipsky of the Alliance points out the danger to small stores the Gazette quotes DCA spokesperson Dena Improta, saying that the number of licenses are fixed and:

“allowing undocumented immigrants to apply for licenses would not threaten small business with more competition while the license limits are still intact.”

To its credit, the Gazette goes on to mention that there is another bill, also sponsored by Charles Barron, that would increase the number of licenses. It is precisely at this point that the compassionate slippery slope takes over at the expense of small neighborhood store owners, a great proportion of whom are also struggling immigrants.

Justice for Justice Souter

Today’s NY Post runs a snippet from the National Review on the effort of Logan Darrow Clements to get the property of Judge David Souter in Weare, New Hampshire condemned so he can build the “Lost Liberty Hotel.” Souter advanced to the Court as a conservative but has often disappointed that sector with his siding with the more liberal members of the Supreme Court, something he did on the Kelo case on eminent domain.

Clements is obviously trying to turn the tables on Souter by getting Weare officials to condemn the judge’s property. According to the National review, however, this venture is not likely to succeed because, as one town officials said, “In New Hampshire, we really kind of consider our land a sacred thing, and no one can really fiddle with it.”

So Souter is protected because his own community holds property rights more sacred than the good judge does. In this case it would be appropriate for the town of Weare to make an exception so that Judge Souter could more fully understand the consequences of his turning his back on the values he was brought up with.

Arizona: Wal-Mart Employees #1 on State Health Care Rolls

According to Arizona Daily Star: "Close to one of every 10 Wal-Mart employees is getting health insurance paid for by Arizona taxpayers." You can read more about this at Jr Monsterfodder.

We'd love to see the health care numbers for New York State which we assume would be similar to the Arizona situation.

Sunday Parking: Expire Thinking

Most of the press covered the Speaker’s press conference urging the Mayor not to veto the Council’s Sunday parking meter moratorium. Only the Times, however, focused on one of the most important aspects of the issue: the impact of the bill on neighborhood merchants.

In his piece, Kareem Fahim cited the concerns of Jackson Heights businesses that the absence of metered parking would make it more difficult for customers to find parking and, therefore, sales would suffer. This is undoubtedly a real concern.

Unfortunately, the only real beef we’ve heard from the Transportation Commissioner is a concern for traffic flow and safety. Apparently, she’s worried that more people will park in bus stops and at hydrants. Come on, Commissioner. For decades there was no metered parking on Sunday and some how the City survived.

The crux of the complaint here should be that the City has, over the years, done precious little to provide adequate municipal parking for neighborhood shopping areas. This problem, highlighted by Kings County Boards of Trade leaders Lou Powsner and Howard Strauss, has caused considerable business leakage to city and suburban malls, almost as much a factor in hurting small business as city tax and regulatory policies.

With Sugar On Top

In a previous post, we detailed how the Bronx House of Detention land swap, questionable from the beginning, became a bit more interesting after we learned that the HOD land is worth $41,000,000. Well things have become even more intriguing after doing further research on the City’s own property value website.

Plugging in the block/lot numbers gleaned from this document – one that details the land Related would have given up for the Olympic Velodrome – we get some interesting numbers. According to the Department of Finance, the land being given to the city is worth:

Block 2356, Lot 2: $1.9 Million
Block 2539, Lot 2: $9.7 Million

That total of $11.6 million falls way short of the $41 million land the City is generously bequeathing. But wait, according to that Velodrome planning document the cycling facility would have only used a part of the $9.7 million lot so, in reality, the value of what Related is giving up is even lower (note: A small part of E. 150th street was also part of the deal though we're not currently able to determine its value, if any).

It’s at this juncture that the testimony of EDC President Alper needs replaying:

COUNCIL MEMBER MONSERRATE: No appraisal, so you don't know what the property is worth?

Mr. Alper: I know it's [The House of Detention] worth the same or less than the property they're giving up. Do you understand that?

COUNCIL MEMBER MONSERRATE: And how much is that property worth?

MR. ALPER: It doesn't matter. It's in-kind

So by Mr. Alper’s definition “in-kind” has a range of + or - $30 million.

One could argue that with the Velodrome deal, even though swapping the process was questionable, at least the City was getting something of relatively equal value for the House of Detention. However, now with the 2012 Olympics and a Velodrome belonging to London, the glaring question is: why is the City moving ahead with this transfer and thus creating a deal so sweet as to induce a diabetic coma?

It is bad enough that Related was able to obtain the Terminal Market without a competitive bidding process and is currently paying $4 million less in annual rent than the 20 small wholesalers that it and EDC so eagerly want to uproot. But, on top of all this, now the friends of the Deputy Mayor are being given additional valuable City land for what reason exactly?

Garbage, Grassroots and Draining the SWMP

The furor over the Mayor’s transfer station siting plan has temporarily abated but will undoubtedly heat up in the fall once the state sets a date for the implementation of the city’s Solid Waste Management Plan (SWMP). When it does, the Mayor’s temporary victory over the Speaker on transfer station siting will be quickly forgotten as a contentious battle over the inadequacies of the SWMP, glossed over in the land use site fight, begins in earnest.

In particular, many of the mayor’s temporary allies on the Council will begin to blast away at the most egregious flaw in the City’s plan: the total failure to come to grips with the collection and disposal of commercial waste. Much of this fight traces back to the commercial waste study commissioned pursuant to Local Law 74.

This study had two basic mandates. The first was to examine the environmental and public health impacts of the clustering of privately-owned waste transfer stations in certain communities. This aspect of the study was effectively blistered by the Organization of Waterfront Neighborhoods (OWN) and the Lawyers for the Public Interest.

Without going into too much detail, the critique tore apart the Department of Sanitation (DSNY)-sponsored report and clearly underscored its failure to even minimally follow the guidelines mandated for such studies under CEQR. The commercial waste study, according to this analysis, totally whitewashed the environmental and public health impacts of transfer stations.

Since the study was supposed to help inform the new DSNY transfer station siting regulations and “provide a foundation for the Department’s efforts to develop a new Comprehensive Solid Waste Management Plan (SWMP) for the next 20 years,” its clear that the glaring inadequacies outlined by OWN raise serious questions about the legitimacy of the Mayor’s draft SWMP.

Managing Commercial Waste

The second objective of the commercial waste study under Local Law 74 was to “assist the city in managing the commercial waste stream in the most efficient and environmentally sound manner.” As we have outlined more fully in our memo to the City Council, the City’s study never did what it was mandated to do and, because of the Department’s bias, left out even analyzing significant waste reduction-recycling methodologies that would have begun to address private sector disposal issues.

The most salient gap, of course, was its refusal to analyze commercial waste disposers. As we have remarked, one could possible disagree about the efficacy of this methodology but to leave it out of its scope of work makes the entire study worthless. But efficacious it is. It's clear that commercial waste disposers do help city businesses to manage their garbage “in the most efficient and environmentally sound manner.” (Local Law 74).

Transfer Station Siting: Inextricably Connected

On top of the efficacy of commercial waste disposers, particularly for the city’s food businesses that generate the heaviest and most noxious putrescible waste, it is also true that the extensive use of the technology will inevitably (and dramatically) reduce the amount of garbage that is trucked to transfer stations and eventually sent to out-of-state landfills. Therefore, the commercial transfer station siting issue, as well as the aggregate number of such facilities that are needed, is inextricably linked to the implementation of an effective waste reduction methodology in the private sector.

Fair Share is an important concept but it need not be based on the faulty assumption, built on the malfeasance of the DSNY, that being fair is insuring everyone suffers equally. Instead of pitting communities against each other, policy makers need to find ways to reduce the necessity and number of noxious transfer stations in the first place. In the fall, the failure of the city to do this will keynote the policy debate and hopefully link communities in a common effort to craft a sensible, and waste reducing, SWMP.

Eminent Domain Nationwide

As we have predicted, the Supreme Court’s Kelo decision is setting off a firestorm all over the country. Saturday’s front page story in the New York Times looks at the phenomenon and rightly points out just how ideologically diverse the coalitions against eminent domain are shaping up to be. Underscoring this strange bedfellows’ alliance is the fact that Maxine Waters and Tom Delay have both criticized the Court’s ruling.

What is particularly interesting is how the Court’s ruling, by more or less removing the judicial barrier to public taking, has “set up a summer of scrutiny over a power that has been regularly used but little discussed for decades.”

As one observer remarks, “The intense reaction – this backlash – has caught a lot of people off guard.”

Even though we disagree with the rationale of the majority opinion in the case, we believe strongly that the issue belongs at the state and local level and that public hearings on the issue should be a prerequisite to developing public policy.

What is also fascinating in this regard is the depth of the public reactions. Connecticut’s Governor Rell, likening it to the Boston Tea Party, has called for a moratorium until the legislature can make some changes in stae law. In addition, the Wall Street Journal/NC News poll this month has placed property rights as the legal issue that most concerns Americans.

Pointedly, however, once the initial furor dies down, it’s hard to believe that most state governments, being governments, will eagerly move to take away a strong prerogative that most have exercised, for years, without much scrutiny. That is why it is so important for opponents of liberal taking statutes to organize and educate potential stakeholders in the eminent domain fight. We need to have clear ideas of our own – some bottom line positions that are non-negotiable – in order to ground legislation that symbolically seems to address our concerns but actually leave so many caveats in place that the final law has few tangible obstacles to public taking.

The New Republic and Judge Roberts on Eminent Domain

We have already expressed disappointment at the New Republic’s take on eminent domain and, since they have editorially supported the Supreme Court decision, it might make sense if they gave some thought to how state law could be better crafted in order to address the concerns of small business and property owners.

In discussing Judge John Robert’s student opinion on the Taking Clause, Jeffery Rosen offers some intriguing thoughts that might be a first step in this direction. Rosen writes that Roberts felt that the phrase “just compensation” means that the literal interpretation of public use might give way somewhat to “changing norms of justice.”

In that youthful opinion Roberts, building on the work of Frank Michaelman, endorsed a “constrained utility model.” We definitely invite comments from anyone who has further insight into this concept but our sense is that it might be a useful point of discussion in the effort to balance equities. The devil, as always, is in the details.

Wal-Mart and Neighborhoods

As you all know, we are firm believers in the value of the neighborhood commercial strip and see Wal-Mart as a major threat to this crucial aspect of New York City’s economy. The good folks at No Cleveland Wal-Mart posted some excellent commentary on this very point:

The business plan of Steelyard Commons is to pull lots of the local customers away from neighborhood retail nodes, effectively wiping them out. That’s not scare talk… it’s a simple statement of obvious fact. SYC’s big anchor is Wal-Mart, and Wal-Mart wouldn’t play unless it could sell food. The principal market area for a SuperCenter is generally described as two miles around for food, and five miles around for other goods (that’s why so many small cities are seeing one built at each end of town).

…

By supporting — pushing, celebrating — this SYC/Wal-Mart business plan, the Campbell Administration is abandoning the City’s twenty-year commitment to food-anchored neighborhood shopping districts in these and (eventually) other neighborhoods.

The below-mentioned Mary Gallagher also has a interesting piece on the economics of box stores and whether it makes financial sense to lure big boxes at the expense of neighborhood retail.

Wal-Mart, Traffic and Developer Dishonesty

Mary Gallagher, a longtime opponent of box stores and proponent of neighborhood vitality, references our Wal-Mart traffic post on her website Big Cities, Big Boxes:

One of BCBB's chief reasons for urging the people of New York City to hold a serious debate on the conditions we want to impose on the big box stores is the fact that big boxes usually demand the use of automobiles. New York is a transit-oriented city, but the big boxes are suburban, automobile-dependent stores. The big boxes cause substantial increases in traffic. Traffic is objectionable in itself, of course, but more important, it will quickly affect our urban way of life. More traffic means demands for more parking. More parking means more sprawl. More sprawl means less urban density. Less urban density means a decline in walkable neighborhood shopping streets.

Gallagher also mentions the dishonesty of developer EIS reports vis-à-vis traffic, specifically citing the Ikea case in Redhook:

The New York City Planning Commission has allowed developers to submit Environmental Impact Statements that grossly misrepresent the traffic congestion these stores cause. In the Ikea application for a zoning change on the Red Hook waterfront, the City Planning Commission tolerated an EIS with obvious gaps in the disclosure of traffic impacts. The EIS didn't even nod to the increase in congestion that the largest Ikea store in the world, at 346,000 square feet, would cause on the already-jammed Gowanus Expressway, the only highway shoppers could use to get to the store.

What’s $41 Million Dollars Between Friends?

Part of the sweetheart deal to redevelop the Bronx Terminal includes swapping the City-owned Bronx House of Detention (HOD) for a parcel now being leased by the Related Companies. The original intent of this agreement was that Related would build an Olympic Velodrome on its land, transfer it to the city and be compensated with the 288,000 gross sq. ft. on which sits the now defunct jail.

During the City Council’s hearing on the fate of the Terminal Market merchants, EDC President Alper stated that no appraisal of the HOD was needed because he assumed the city was getting a better if not comparable deal. His exchange with Council Member Monseratte is very elucidating:

Mr. Alper: So no appraisal is necessary, Councilman.

COUNCIL MEMBER MONSERRATE: No appraisal, so you don't know what the property is worth?

Mr. Alper: I know it's worth the same or less than the property they're giving up. Do you understand that?

COUNCIL MEMBER MONSERRATE: And how much is that property worth?

MR. ALPER: It doesn't matter. It's in-kind –

There are two problems with Alper’s testimony. The first is that New York City’s Economic Development Corporation should not be “assuming” a property’s value especially when it is transferring that property, sole-sourced, to a private entity. This is not only unprofessional, but it smacks of favoritism especially considering the political connections of the Related Companies.

The second issue is, with the Olympic bid dead, what and how much land is the City getting in return for the HOD and how will it be used? The only thing we do know, according to a government appraisal (block 2357, lot 1), is that the City-owned land is worth 41,000,000 dollars. Why is EDC handing over this valuable property to Related without an upfront payment and without the public knowing what it’s getting in return?

The HOD lease transfer (registration may be required) occurred on May 14th, 2004 barely a month after Related bought out the old landlord, Buntzmann. So, before the ink is even dry on the “private” Terminal Market transfer, the City is compensating Related with land equal to the amount the developer paid to buy out the lease. But wait, Related used only $10 million its own money for the buyout; the rest was a loan from the Bank of America guaranteed by the City of New York! This is why, if the approvals for Gateway are not obtained, the City is obligated to buy back the site for $40 million.

How sweet it is to be a friend of the Deputy Mayor.

Malanga Maligning?

Steve Malanga, who we have had disagreements with over Wal-Mart and box store zoning issues, had a very incisive piece in yesterday’s New York Sun concerning the “anti-businesses policies of the Bloomberg administration.” He has a particularly jaundiced view of the mayor’s tax policy, especially vis-à-vis commercial real estate (something we have commented on prior). As Malanga points out:

The rising property taxes have put the squeeze on landlords and homeowners and have channeled billions out of the private economy that would otherwise have been used for reinvestment

Of particular interest to us, given the fact that we are often driven by self-regard, is Malanga’s citing of our comments made before the City Council that:

"This is the worst environment for small business in New York City in 20 years."

Curiously, Malanga attributes to this quote to “head of a neighborhood retail group” while later on in the article he cites the head of the City’s Small Business Congress and refers to Sung Soo Kim by name.

Come on Steve! We’ve had our differences in the past and will continue to disagree in the future but don’t you think that it was kind of petty to disembowel us like that? The fact is that it is precisely the anti-small business in New York City that colors the debate over box stores like Wal-Mart. It is true that stores like this locate in tax-reduced industrial zones and are less affected by the tax and regulatory climate that impacts their competitors on the neighborhood commercial strips.

It is because of the lack of a level playing field that small businesses are so outraged by the Mayor’s cheerleading for mega-developments. It seems to us that only when it comes to the aggrandizement of large real estate developers does the Mayor really find his pro-business, economic growth voice.

Sunday Parking Meters

We finally have found something that the Bloomberg Administration can be passionate about: the City Council’s ban on Sunday parking meters, a measure cosponsored by Councilmen Monserrate and Gentile. The level of vitriol, however, is hard to fathom. We watched yesterday as Commissioner Weinshall got red in the face at an impromptu news conference demonizing the legislation.

Why the emotion? It can’t be the money because, after all, 12 million bucks is pocket money and the mayor has shown himself to be resourceful at creatively finding ways to reach into the tax payer’s pocket. And what’s up with the mayor’s dig about the lack of “adults” over at the Council.

Our take is that John V. Bloomberg can’t stomach any measure that limits his ability to tax already overtaxed New Yorkers. All the folks over there in the tax-and-spend brigade have a concept of paternal, benevolent government, one whose beneficence it is our obligation to unquestionably support. All of the Commissioner’s comments on traffic flow were simply a hilarious attempt to cover up the belief in the government’s inherent and unquestioned right to demand tribute.

Oh yes. If the Commissioner is truly concerned with issues of traffic flow she might find a better use for her time examining the Pulitzer Prize level fiction traffic study submitted by the Related Companies on the Gateway Mall . She might also look for ways to provide more ample parking opportunities for neighborhood shopping areas.