Years after rezoning error, Village supermarket drama comes to head

For all its faults, the city’s rezoning process has one thing going for it: predictability.

A developer gets advisory opinions from the community board and borough president, sails through the City Planning Commission and then tries to hammer out a deal with the local City Council member. Each step has a deadline, and when an agreement is reached, that’s the end of the politics.

This, however, was not the case with NYU’s 2012 rezoning. A major flaw surfaced years later, and this month, the matter will come to a head.

The story traces back to the promises the university made to gain approval. One concession NYU made was to carve out space for a supermarket in the $1.2 billion building it would develop at 181 Mercer Street, now called the Paulson Center.

This was necessary because local politicians demanded NYU give the city free land to build a school. They settled on 130 Bleecker Street, where a Morton Williams was operating. But the politicians didn’t want the community to lose the supermarket. Hence the Mercer Street relocation plan.

The School Construction Authority was given two years to decide if it wanted 130 Bleecker. At the 2014 deadline, SCA asked for an extension, and NYU gave it until the end of 2021. While waiting for a decision, in 2016 NYU began building the Paulson Center without setting aside a big retail space for a supermarket that might never come.

Near the end of 2021, SCA said it wanted to put a school at 130 Bleecker, where Morton Williams had just signed a 20-year lease extension. But SCA wasn’t sure, and with the de Blasio administration headed out the door, NYU gave the city agency two more years to decide. That’s the deadline coming up on Dec. 31.

You can see the problem: If SCA takes 130 Bleecker and levels the site to build its public school, Morton Williams will have nowhere to go. The supermarket’s lease can be terminated if the building is demolished.

A single clause in a lease can have huge consequences. So can an omission from a rezoning document. In the case of the “restrictive declaration” defining the 2012 rezoning deal, the provision guaranteeing space for a supermarket was mysteriously left out.

Nobody realized this until it was too late. The Paulson Center opened in January, without a supermarket, and SCA will decide this month on 130 Bleecker Street. If it takes the site, all hell could break loose. No commercial tenant is more treasured by New Yorkers than a supermarket, because closure often leaves them with only expensive grocery options or none at all.

Every elected official representing Greenwich Village signed a letter in late 2021 reminding NYU of its supermarket promise nine years earlier. One of the signatories, Margaret Chin, was the Council member across the table from NYU in 2012. Her office and the City Council’s land use division had failed to ensure that a supermarket clause was in the restrictive dec.

It’s a rare and perhaps unique case of a rezoning deal being undermined by an oversight.

Morton Williams still has some leverage. Aside from NYU’s public commitments in 2011 and 2012 to creating grocery space at 181 Mercer, the university wrote in its 2018 application to the state Dormitory Authority for nearly $800 million in bonds that 181 Mercer would include “29,000 [square feet of] retail uses, including a replacement grocery store for the existing Morton Williams supermarket.”

Whether that confers any legal obligation is questionable, but on the public relations side, the supermarket’s lobbyist, Richard Lipsky, and former Council member Alan Gerson have been keeping the pressure on NYU and the Adams administration. Community members held a rally Sunday outside the grocery store.

Colleges and universities are in the spotlight these days over Gaza, and state lawmakers just introduced a bill to revoke NYU’s property tax exemption. The last thing NYU wants to do is evict a supermarket because of a decision by a city agency.

“We’re working really closely with the city and with Morton Williams to find a solution that works,” said Kyle Kimball, NYU’s head of government relations and community engagement.

A School Construction Authority spokesperson would only say SCA will decide by the deadline. Most likely it will again ask for more time. It could also turn down the site. As hard as it would be to pass up free land in the Village, the agency doesn’t really need a school there, and could only build about 96,000 square feet anyway. In addition, construction would take about three years and wreak havoc on an adjacent community garden.

Another possibility is to build a supermarket-school combination, but no one thinks that’s a great idea, and it would mean no store during the construction. A co-located market would probably go underground, like the Target on Broadway.

Regardless of the outcome, the controversy never should have happened.

“A restrictive declaration is seen as pro-city because it can force the landlord to do things,” Lipsky said. “But in this case, the landlord wrote the RD and no one noticed the lack of guaranteed space for the supermarket. There’s something wrong with the process.”

Read more

New York

Do-gooders shot affordable housing in the foot. Now, a solution

New York

Why landlords kept unpaid rent plan secret from tenant groups

New York

In search of the perfect foreclosure victim