A new “Gateway Center” is coming to the Bronx, New York — but all Wal-Mart got is the gate. The New York City Council voted to approve a $400 million redevelopment plan for the Bronx Terminal Market. But the developer also terminated Wal-Mart from the 1 million s.f. project. The developer, Related Cos, tried to sweeten the deal for local families by offering to buy them off with 50% of the annual membership fee for 2,000 families for 5 years at BJs Wholesale Club, if the neighbors allowed the membership warehouse club in. The agreement with Related includes a job-referral and job-training program to help Bronx residents get jobs at the Gateway Center. The project received approval only after the developer agreed to a “Community Benefits Agreement” that cut local contractors in for at least one-third of the work, and earmarked 18,000 s.f. of retail space for local businesses. Most remarkable of all, the developer agreed not to permit a Wal-Mart store at the mall.
Developer’s Agreements are not unusual. They exist totally apart from any zoning permitting that took place for the project. A group of citizens can sit down with a developer and negotiate an agreement on their own that specifies what kind of stores will go into the project, what size they will be, etc. Wal-Mart has apparently threatened to sue the New York City Council over this case, but it appears Wal-Mart would have to sue the developer, not the city. A developer is free to specify which retailers he will seek for tenants, and which he will not. The developer signed this agreement, and Wal-Mart is free to sue the developer. In a case from Snohomish County, Washington, the Mayor told me directly that she had a developer’s agreement that prevented a Wal-Mart store from being part of the mix of her project. In a number of other cases from New York City , Leominster, Massachusetts, and elsewhere, developers have removed Wal-Mart from a plan based on pressure from area residents. For earlier stories on this topic, search Newsflash by “developer’s agreement.”