Wednesday, December 16, 2009

Dance of the Dunces

Council Rejects Stores

At Kingsbridge Armory,

Losing $310M Investment,

Three Thousand New Jobs

Over Demands on Wages.

By Henry J. Stern
December 15, 2009

With two weeks to go before its members' terms expire, the City Council bolted from its tracks and turned down a major economic development proposal in the Bronx.

The political decision was made in part in deference to the relatively new Bronx Borough President, Ruben Diaz, Jr., who was elected this year to succeed Adolfo Carrion, Jr., who resigned to join the Obama administration as director of the new White House office of urban affairs policy. We wonder whether President Obama's urban affairs policy includes rejecting massive infusions of private capital into economic development projects where the wages paid by future tenants to their own employees do not conform to an ad hoc standard which far exceeds state and federal minimum wage requirements.

Actually, the City Council may have done Related Companies a favor, although that would be an unintended consequence of their failure to approve a project which would have created 2200 construction jobs and over a thousand permanent retail jobs, which are lower paid than construction jobs even in nationally-recognized stores. In today's economic climate, building a huge shopping mall in the Bronx carries a substantial risk of commercial failure. However, it will probably take so long to get all necessary approvals, and to renovate the enormous 90-year-old structure, that we may be in the midst of the next economic cycle before the mall opens to customers.

Meanwhile, it will be interesting to see if there are any other developers around who are willing to spend $310 million to turn the armory on Kingsbridge Road and Jerome Avenue in the Bronx, into a shopping mall. If so, they must they also be willing to require its prospective tenants to pay all future employees a minimum of $10 per hour with benefits, or $11.50 without benefits? The line for such developers will form at the right. Please do not jostle each other, the City Council will see you all.

If the mall plan fails, there are other possibilities for use of the Armory site. In Brooklyn, at Bedford and Atlantic Avenues, a similar large brick armory, no longer required for military purposes, is used as a 300-bed homeless shelter. A bus garage, taking advantage of the large floor plate, would serve several converging routes, while an automobile garage would enable Westchesterites to park on the site and transfer to the 4 train to reach their jobs in Manhattan. Any number of welfare programs, rehabilitation centers for addicts and alcoholics, and outpatient mental health facilities could share space in the cavernous building, whose relative absence of windows would make escape into the neighborhood particularly challenging.

A retail shopping mall is scarcely the most disturbing possible use for the white elephant that the enormous building has become in the years since it had military value. As a federal, state and city landmark, the structure is protected from demolition. Creative re-use, with economic value, would be the wisest course to follow.

We came to several political, as well as economic, conclusions after yesterdays Council meeting.

First, the 51 members will be less responsive to Mayor Bloomberg in his third term than they were during his second term. We may revert to the skirmishing of the first term, when Speaker Gifford Miller, himself a mayoral candidate, did what he could to keep the mayor at bay, even when the two were in basic agreement.

Second, the Working Families Party will use its considerable influence to impose its ideology on the Council's decision making process. They have a right to do so. Members who are terrified of the new partys muscle in primaries will be responsive to WFP diktats. The Democratic county leaders are the people whose powers are principally threatened by new political influences, because historically they were the ones who gave instructions to and enforced discipline on councilmembers when required. They were the primary figures in the selection of a Speaker, which since term limits has been a quadrennial rite. Before that, Speaker Peter F. Vallone, Sr., served sixteen years, from 1986 through 2001. Vallone succeeded Thomas J. Cuite, vice chairman and majority leader (de facto Speaker) from 1969 to 1985.

Third, our Mayor, presumably serving his last term (although, as we have seen, he can never be counted out of anything), will deal more with the state legislature and its leaders, where he has influence among Assemblymembers and Senate Republicans. It is ironic that he saved most of the Councilmembers' political careers by making them eligible for a third term, the City Charter notwithstanding. Of course, he only did that because it coincided with his personal imperative, and they know it. The Mayor should nonetheless treat councilmembers seriously and respectfully, and try to reach agreement with them where possible. He should not yield to the temptation of letting them know what he thinks of them, which is basically what most people think of them, which is not much, and for good reason.

The City Council does look responsible and relatively honest, however, when it is compared with the state legislature, particularly the senate. In part that is because the Council is a unicameral body and therefore not perennially at odds with itself. When the Board of Estimate was around (until 1990), the Council was a much less significant body than it is today. The Council also has strong leadership because of the power of the Speaker over the minutiae of its operations. In that regard, the Council is comparable to the State Assembly, except for term limits which the local body faces. The problem this year in the state Senate is that this year it is so closely divided between political parties that shameless adventurers hold the balance of power, which they have not hesitated to use for personal, familial and political preference.

Albany also affords greater opportunities for corruption than the Council, where fraud and self-dealing is largely limited to the member items that they add to the budget as an annual payoff for approving it. The management of their own offices (who they rent from, what they pay their staffs) also presents an opportunity for theft. Most members are honest, others are not in varying degrees. This year Miguel Martinez went to jail. Was he the only crook on the Council? Not likely.

The 2008 scandal involving fictitious organizations as recipients of member-item appropriations has been largely washed away by time. When it broke least year, both the Council and Speaker Quinn lawyered up with private counsel serving at public expense. Appropriating public funds to your friends and supporters is not a crime, as long as there is a sufficient nexus to a charitable purpose, and as long as it cannot be proven that any of the money stuck to you. Charging a charity you support monthly rent to share your office space should be a crime. Hopefully the passive officials who might enforce these laws will do something about situations which reek of impropriety.

We suggest the creation of an Inspector General for the Council, to serve a fixed term. We cannot rely on the pathetic Committee on Standards and Ethics, truly a herd of ostriches. (We relied on National Geographic for the term "herd", if you can think of a more colorful collective term for struthio camelus, please let us know.)

One thing I remember from my days on the City Council (1974-83) is that hardly anyone voted on the merits of an issue, even if they understood them. Members generally voted with the Council leadership, except in rare occasions where there own interest appeared to be adversely affected by a particular position. In such a case, they would ask the leader's permission to go "off the reservation", consent which would not unreasonably be withheld, as long as it was not requested too often.

Negotiations on the Kingsbridge Armory failed (in stark contrast to other land use issues which arose in the past eight years) because one side did not believe the others insistence that it would not go forward if subjected to conditions on wages which had not previously been applied in other EDC projects. Related Companies, although willing to proceed, may have seen the project as speculative, particularly in todays adverse retail climate. If union intransigence kills the proposal, the company may end up better off financially. After all, this is not their only project, even in the Bronx, where they are developing the old Bronx Terminal Market, without rules determining what wages prospective tenants must pay their employees.

Construction unions are rightly furious at the prospective loss of 2200 jobs for their underemployed members. These workers, who now have no jobs or temporary jobs, are the real victims of the defeat of the project. The fact that this negative result was pursued by the Working Families Party, which some construction unions support financially, is certainly something for these unions to consider. We have never before even heard of union dues being used so directly to deprive union members of jobs, but that appears to have happened at Kingsbridge.

The mayor has five days since its passage to sign or veto the bill. The Council's next meeting is Monday, December 21. It would be a shame if this project were lost due to a series of misunderstandings and misjudgments. And who knows what the minimum wage will be, anyway, by the time the Armory opens for business, if it ever does?

This is the sort of situation that requires leadership to reach agreement. For the benefit of the Bronx, we hope it can be achieved. Between the mayors return from Copenhagen and the Council meeting Monday, a limited window of opportunity will be open. We hope the parties will meet and act in time to save the jobs and the plan. The alternative so far is no jobs and no plan. Whom does that help besides competing retailers?

P.S. It is not as if the City is proposing to build a garbage transfer station, or a prison. It is a retail shopping mall, to be paid for overwhelmingly with private funds, at the developers own risk. To throw away this opportunity would be the height of folly, with political conformity and personal pride triumphing over common sense, sound judgment and the public interest. We have no particular interest in Related Companies, which will prosper whether or not this deal is completed. It is, however, a test of the city governments ability to enter into reasonable agreements for public improvements without ideological baggage.

For those of you who want further information, here are a few links to the newspaper coverage.

StarQuest #629 12.15.2009 1747wds

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