The Real Deal New York

Related gets 55 percent discount on Gateway II land; pol suspicious

July 14, 2011 01:36PM

Brooklyn Assemblywoman Inez Barron has asked that state Comptroller Thomas DiNapoli investigate the proposed sale of 21 acres of land, owned by the state and eyed by Walmart for its first store, to the Related Companies. In a letter written to DiNapoli, Barron, a longtime opponent of Walmart, expressed concerns over why the company is paying only $14.5 million for the land for Gateway II, when it had originally agreed to pay $32.5 million.

“I urge you to investigate the deal further before allowing the transfer to go through,” she wrote. “It is imperative that we ensure that taxpayers are getting the best possible deal for this land.”

Related agreed to the higher price in March 2009, the letter said. Shortly after, the land was rezoned to allow for a new 630,000-square-foot retail mall, which should have increased the value of the property. When Related requested that the price be reduced to reflect the downturn in the market, the state office of General Services reduced the price by 55 percent, despite the amount of buildable land decreasing by only 22 percent thanks to the rezoning, according to Barron.

A spokesperson for Related said the letter was “filled with gross inaccuracies and mischaracterizations.”

It said the 2009 numbers cited by Barron were based off a different deal structure. “The current agreement accurately reflects the land-use restrictions and appropriate value,” the spokesperson said.

In February, opponents of Walmart’s big move to the city planned to apply pressure to Gateway II shopping center developer the Related Companies in an effort to persuade the company to find a different tenant for its 650,000-square-foot site in East New York. Related has been in talks to lease the site to Walmart, and has already received the City Council’s go-ahead to do so.

Because the comptroller’s office had yet to receive any documentation on the deal, it refused comment. [Crain’s]

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