Market-Rate Giveaway

Produce merchants get the boot for a City Hall favorite and yet another Olympic stadium

In the meantime, the city and the Related Companies, acting as the new landlord, have sent increasingly stern warnings that the merchants had better get moving. Earlier this month they were given a March 31 deadline to agree to accept a relocation package that the city says is worth $8 million—an amount merchants say won't cover the costs of re-establishing their businesses. Those who don't accept the deal face immediate eviction. Everyone, the notice said, must be out of the market a year from now.

"They are putting a gun to our heads," said Omar Duarte, whose Cuba Tropical Inc. employs a staff of 55 in a vast 50,000-square-foot space crowded with papayas and mangoes. "The reason I am here in this market is because we have been successful together," said Duarte. "The customers come for my watermelons, then they go across the street for someone else's bananas."

Three years ago, Cecilia Asiedu began selling African produce at stall number 21 under the Major Deegan Expressway. "This is a community, a United Nations of markets," she said.

Terminal condition: The Bronx market, busy for now
photo: Jay Muhlin
Terminal condition: The Bronx market, busy for now

A block down the cobblestone street, Stanley Mayer, the head of the merchants' association, runs a family-owned produce business with 30 employees that has been in the market since 1967. "I don't understand how the city can just throw away these jobs," he said. "They have the opportunity here to rectify 30 years of mistakes. Instead they're just trying to wipe us out, make us disappear."

Produce: Or get out
photo: Jay Muhlin
The city's brusque treatment of the merchants is in sharp contrast to the care and handling it has given its new tenant. A few months after Bloomberg's announcement, the merchants hired Lowenstein Sandler, which promptly filed Freedom of Information requests with the city.

Those records revealed the city's commitment to provide Related a minimum of $80 million in federal Liberty Bonds, the low-interest financing incentive created by Congress after 9-11. Originally intended to rebuild Lower Manhattan, the city has won approval to use them elsewhere in the city as well, including a separate Related development in the Bronx.

In an April 2, 2004, agreement for the market project, the city also made an "absolute and unconditional" commitment that, should Related fail to win the necessary zoning and other permits, it will repay a $32 million loan that Related got from the Bank of America to buy out Buntzman's interest. The same guarantee also applies should the city fail to deliver on the Liberty Bonds.

There are other protections as well: If Related wins approval for a smaller mall than the 1 million square feet it is seeking, the city will pay Related to make up the difference.

As for the now vacant Men's House of Detention, which looms behind the market, the city agreed that if it fails to convey a lease for the site to Related, it will make a "reimbursement" payment of $10 million to the firm.

There was more. Thanks to what tenants say was Buntzman's failure to maintain the market, oil from ruptured fuel tanks long ago began seeping into the ground. This complicates the project because of environmental concerns, but it also makes it eligible for state cleanup funds. To that end, the city agreed to back Related's application to receive $60 million in tax credits under state "Brownfields" legislation.

And still more. Immediately after the deal was signed, the city gave Related $7.1 million in capital funds to be used to tear down a huge vacant six-story structure known as the "WH1" building that hovered above the Major Deegan Expressway. The WH1 had teemed with merchants until Buntzman allowed roof leaks to go unrepaired and river water to flood the basement.

Related also received $4.5 million in funds that Buntzman had held in escrow from his lease. According to the city, that money represents funds Buntzman was supposed to spend on infrastructure, while the vendors believe it also contains their security deposits. The city authorized Related to spend the money on legal expenses or any other "out-of-pocket costs." The one thing the funds can't be used for, the deal specifies, is to pay for a registered lobbyist.

Not that the Related Companies needs a lobbyist to get its calls answered by City Hall. Almost as soon as it was announced, the sole-source nature of the city's deal with Related to build a new shopping emporium on the Harlem River raised eyebrows. City officials said they were precluded from seeking bids or proposals from other developers as to what to do with the 32-acre site because the deal between Buntzman and Related was a strictly private transaction.

But after being questioned by the Voice ("Terminal Solution," April 14-20, 2004), a Bloomberg spokesperson acknowledged that Related first heard about the market's potential availability in the spring of 2002 when Deputy Mayor Doctoroff called his friend Ross, Related's chairman, to ask his advice as to what could be done with the site.

Ross and Doctoroff have known each other since 1997. The two men both used to own shares in the New York Islanders hockey club, and Ross serves as a board member and top fundraiser for NYC2012, the Olympics group Doctoroff founded.

In late December 2001, just days before Doctoroff took office, Ross agreed to serve as a personal guarantor for a bank loan to NYC2012 that allowed Doctoroff to recover $3.2 million of funds he had advanced the Olympics committee. A City Hall spokesperson said that the loan guarantee was arranged by Jay Kriegel, NYC2012's executive director, and that Ross and Doctoroff never discussed the matter.

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