Bronx Living Wage Battle Moves To City Council

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One of the city’s longest-running real estate sagas finally heads to the City Council this week, putting lawmakers at the center of a battle over living wages and local control of development.

At a hearing on Tuesday, the Council’s zoning subcommittee will take up consideration of The Related Companies proposal to purchase the massive Kingsbridge Armory, a 575,000-square-foot, red-brick castle in the West Bronx that has been empty—and the subject of a wrestling match between community groups and the city—since 1994.

Related has proposed a $310 million mall, complete with cinema, health club, restaurants and shops, to be built within the existing walls of the landmarked Armory. The company estimates the three-year construction project will employ 1,000 union workers and that the resulting retail center will provide 1,200 jobs, space for use by community groups and a publicly accessible outdoor plaza.

The project will give Bronx shoppers better choices, Related says: “For too long, residents of the northwest Bronx have had to travel outside of the area to meet their shopping needs, often having to leave The Bronx completely to go to Westchester and other surrounding communities.”

Under a plan tentatively approved by the city’s Industrial Development Agency (IDA) earlier this year, Related would pay $5 million to purchase the Armory; seven years ago, the city spent at least $25 million to repair the building. Related would also receive $17 million in city, state and federal tax incentives for the project. An analysis by the IDA says the project will generate a net benefit of $85 million in tax revenue to the city over the next 30 years.

But the subsidies—direct and indirect—to Related are fueling efforts by local community groups to secure guarantees that the jobs at the Armory mall pay “living wages,” defined in city law as $10 an hour with benefits or $11.50 an hour if no benefits are provided. The state minimum wage is a significantly lower $7.25 an hour.

“We’re not asking for pie in the sky,” says Desiree Pilgrim-Hunter, a board member of the Northwest Bronx Community Clergy Coalition. “Our asks are very normal and reasonable. This is public land, and taxpayer dollars. What we don’t want is a developer to come in and dictate to us what those changes are and not take into consideration what the damage to this community will be.”

Related has refused to make a commitment to living wages, arguing that it would derail the project. Joanna Rose, Related’s vice president for corporate communications and public affairs, told City Limits: “Demands on the retail community to pay a wage not required anywhere else in New York City or New York State would render the project unleaseable, unbuildable and unfinanceable—not only for Related but for any developer.”

A long road

In 2000, community opposition helped torpedo a Giuliani administration proposal for a retail and sports complex at the Armory. When the Bloomberg administration turned its attention to the site, a coalition of community groups called KARA (Kingsbridge Armory Redevelopment Alliance) won a seat at the table for the drafting of the request for proposals, or RFP, for the Armory project.

That RFP said that the New York City Economic Development Agency would “view favorably development plans that maximize the number of jobs that meet the city’s living wage and health benefits standards.” KARA also secured a commitment from the city’s Department of Education to build schools in buildings next to the Armory that were not part of the commercial redevelopment.

But the Department of Education soon rescinded its commitment, saying that schools in the area have enough seats to accommodate project future class sizes.

And when the EDC took bids, none of the three firms who submitted proposals made a promise of living wage jobs.

Related was named the winning bid in April 2008. Since then, KARA has been fighting to recover what it thought it had won in the RFP drafted three years ago. And they’ve been joined by local supermarket owners, who opposed Related’s plan to include a competing supermarket in the Armory.

Doubts about Related’s proposal have dogged the city’s consideration of the deal. In March, the IDA gave preliminary approval for the offer of $17 million in subsidies to Related, but with two dissenting votes from representatives of Manhattan Borough President Scott Stringer and Comptroller William Thompson. The office of then-Bronx Borough President Adolfo Carrion, however, supported the deal.

Through summer into fall, the Related proposal has been moving through the city’s land use review process, in which the community board, borough president and City Planning Commission each weigh in with advisory opinions on deals that involve sale of city land, remapping streets or zoning changes (the Armory deal involves all three).

Local Community Board 7 approved the project in July by a vote of 24-4, but attached a lengthy list of conditions on its assent, including Related’s agreement to a “legally-binding, enforceable community benefits agreement.”

When Related’s application came to his desk, Ruben Diaz, Jr.—who became borough president in April after Carrion left for a post in the Obama administration—rejected it. In an advisory opinion issued in September, Diaz cited the lack of a living wage commitment, the traffic impact of a new mall and uncertainties about the development’s effect on existing businesses.

Last month, the City Planning Commission concluded that, “the proposed project would bring needed goods and services to the area, provide employment opportunities, include community facilities and public space that would enhance the surrounding neighborhood, and preserve a highly visible landmark.” But in an unusual display of dissent, four of the CPC’s 13 members voted “no,” while one abstained. “My concern is the economic sustainability of the improvements in light of the public benefits that will be utilized,” said Commissioner Karen Phillips, who voted “no.”

Now the matter moves to the City Council, which along with the mayor has final say on the proposal. Related Companies, which has a number of projects besides the Armory that require government approval or assistance, has spent at least $150,000 lobbying city officials and agencies this year and donated $132,000 to municipal campaigns in the 2009 cycle; Land Use Committee chairwoman Melinda Katz, who ran for comptroller this year, was the biggest recipient with $41,650 in Related contributions. Carrion received $29,750, and Queens Councilman Eric Gioia—a member of the zoning subcommittee who ran unsuccessfully for public advocate—garnered $11,050 in Related money.

No vote is expected at Tuesday’s hearing. Council majority leader Joel Rivera, a member of the zoning subcommittee whose district covers the area just to the east of the Armory, is said to be pushing for the Council to take the maximum time allowed under the City Charter to consider the Armory deal. That timeline would require votes by the subcommittee, the full Land Use Committee and the full Council by December 11.

After Council action, the project goes to Mayor Bloomberg, who considers it part of his ‘Five Borough Economic Opportunity Plan.” When the Planning Commission green-lighted the deal last month, Bloomberg hailed it as “a big step towards our plan to bring thousands of jobs to the Bronx” and “an enormous opportunity to revitalize it as a hub of activity and jobs in the West Bronx.”

If the Council should reject the deal and the mayor approves it, Bloomberg’s approval would stand unless two-thirds of the Council voted to override the mayor.

Sticking points

All parties in the dispute say they want to avoid anything that kills the project, and build something in the long-vacant site. The devil is the details, however, and at the heart of talks over the past week involving Related, representatives of the borough president, the Bronx delegation to the City Council and the community board.

“We’ve always said that this project would have significant benefits to the community and those are the discussions that we’re having,” says Related’s Rose.

“We’re moving ahead,” says Borough President Diaz. “[The talks] are going much better than they were, say, a month ago. We are now in a process where the clock is ticking at the City Council.”

Several issues other than wages are on the table. KARA has asked Related to require businesses that lease space in the mall to allow access to union organizers, but the developer has said that would “directly undermine the economic viability of the project.” Related has indicated it would be willing to participate in a program to encourage its tenants to hire local workers, but says participation by mall businesses would be voluntary.

“It’s something that we’ve been very successful with at the Bronx Terminal Market,” says Rose, referring to a recently-completed Related project in the south Bronx where, according to the Bronx Overall Economic Development Corporation (BOEDC), two-thirds of employees were from the Bronx. “We’re certainly open to working with the BOEDC or a similar organization to make sure we hire locally,” Rose says.

The developer has agreed to providing space at cheap rents to community groups, but the community board wants about twice as much square footage as Related has offered. While no schools can be built in the Armory itself, at least some members of KARA want the final deal to include a renewed commitment by the city to build schools in the other buildings on the Armory parcel. (The city Department of Education did not reply to a request for comment.)

The Armory sits in a bustling commercial area, raising concerns about the impact of a taxpayer-subsidized mall competing with existing businesses. In particular, the possible inclusion of a supermarket in the mall has angered owners of existing supermarkets nearby, including one that is unionized. People close to the negotiations indicate that Related is likely to give up the supermarket idea—although there is a separate desire in the community to get access to more fresh, organic produce.

“We don’t want anything in this armory that is going to drive already good jobs out of the community,” says Pilgrim-Hunter, who is a member of KARA.

But even if the supermarket disappears from the drawing board, traffic concerns remain. The environmental impact statement on the Armory project found that at least 13 intersections in the area would have to absorb more traffic once the mall is built. According the EDC, Related and the city Department of Transportation will make some infrastructure upgrades to deal with the additional cars, but Diaz and KARA believe the developer has said too little about how the traffic and demand for parking will be managed.

A private traffic study paid for by KARA and released on Friday contends that the official environmental impact statement low-balls the traffic impact. In that report, engineer Brian Ketcham says his modeling suggests vehicle delays in the West Bronx will increase by 75 percent and fuel consumption by 57 percent once the mall is running, while in the immediate vicinity of the mall, delays could increase by 143 percent. Pilgrim-Hunter says the traffic is a particular concern to people in the area who, like her, suffer from asthma.

Room to negotiate?

But neither local hiring nor schools nor traffic issues are considered deal breakers by most of those at the table. The living wage issue, however, is make or break. And both sides have said they can’t bend.

Related says it would pay its own employees living wages, but cannot force such a policy on its tenants. The developer argues that a requirement that mall tenants pay living wages would make the Armory impossible to lease, and therefore unlikely to get the loans needed to build what is a complicated project: a so-called “building within a building” that will take shape within the shell of the Armory’s landmarked exterior.

Diaz said last week that he is equally firm in wanting a wage commitment.

“It would be very difficult for me to support having this Armory developed if we’re not speaking of living wages at least for some areas of the mall,” he said. “I represent a borough that has the highest poverty rates and highest unemployment rates in the state. To me that is unacceptable. I want to change that.”

As to how Related could accept a living wage given the economic obstacles they claim to face, Diaz refused to go into details, saying only that “there are one or two progressive ideas” in play.

KARA has depicted the Armory fight as the “epicenter of the living wage movement.” At least 29 cities have some form of living wage law. Some of the laws cover only municipal employees, while others cover firms that contract with the city, and still others apply to companies receiving government subsidies. New York’s living wage law, Local Law 38, was signed by Mayor Bloomberg in 2002 and covers city contractors.

The impact of living wage laws is disputed among economists of different political stripes. A 2005 report on by the conservative Employment Policies Institute of Santa Fe’s living wage ordinance of 2004 found that it was a drag on employment and hours worked, especially by less-skilled workers. Liberal economist Robert Pollin of the University of Massachusetts counters that states with minimum wages higher than the federal minimum wage saw faster employment growth in this decade than other states.

The Public Policy Institute of California, in a 2005 review of the impact of 10 years of living wage laws in different cities, found that the laws boosted wages and decreased employment, particularly for the least-skilled, but had a net effect of reducing poverty.

A high-stakes game

Behind the wage issue is a struggle over who holds the power in deciding how public land and money are used to develop under-served city neighborhoods. Pointing to other recent deals where community benefits are in doubt—like Yankee Stadium and Atlantic Yards—Diaz told an October 25th KARA rally that the push for a better deal from Related was part of “our revolution here, our new civil rights movement here, and that is economic development.”

Diaz now says, with a laugh, that the talk of revolution was a case of emotions getting the better of him. But he does see the Armory as a place to make a stand: “We can set a tone—that we can change the way business is done, that we are living at time now when people in our borough and city are seeing development happen where big corporations are receiving public dollars and, while development is happening all around them, people don’t see where neighboring communities are reaping the benefit.”

Reflecting those stakes, KARA has mounted a lobbying effort of its own. They’re meeting with members of the Council’s land use and zoning panels, and pressing residents to call Councilman Oliver Koppell, whose district nearly abuts the Armory. At least one church in the area handed out slips of paper to congregants one recent Sunday with phone numbers for Koppell’s two offices. Koppell did not return a call from City Limits seeking comment.

A spokesman for Councilwoman Katz, who sits on the zoning subcommittee, says she does not take a position on land use items before the hearing. A spokesman for Brooklyn Councilman Simcha Felder, also on the zoning panel, said his office had received letters and phone calls about the deal but would wait until the hearing to take a stance. The panel’s chairman, Tony Avella of Queens, says he has never seen so much organized opposition to a project that has come so far through the land use process. He addressed the October 25th rally, saying, “Nobody knows their block better than the people who live there. It’s time the city paid attention to you.”

Other members of the panel did not return calls. Four of the nine members are leaving office at the end of the year, having lost their races for re-election or higher office.

Keeping the KARA coalition together could prove difficult as negotiations move into the 11th hour. Already, the city’s Construction and Building Trades Council of Greater New York has broken from the coalition to say it supports the deal.

Some community members, meanwhile, seek an altogether different development than the one Related is proposing—one that includes “a family-oriented recreation facility with low-cost membership” and a bookstore, according to KARA’s website. It’s unclear that a mall—even one that pays living wages—will meet those more ambitious expectations.

And the process itself is becoming a sore point, says Pilgrim-Hunter. As the developer, the community board and politicians negotiate, she feels that the community groups who’ve been involved in the battle since the beginning have been left without a seat at the table. “It would be very unfortunate,” says Pilgrim-Hunter, “if at the very last moment the community got sold out.”

[Editor’s Note: A previous version of this story incorrectly stated that the Armory sits in Councilman Koppell’s district. It is in outgoing Councilwoman Maria Baez’s district.]