EDC lease of Hunts Point Space to Baldor approved

Competitor challenged procedures in EDC’s selection of Baldor for South Bronx lease. The New York City Economic Development Corporation issued a request for proposals for a long-term lease of two parcels across the street from the City Terminal Market at Hunts Point in the Bronx. Baldor Specialty Foods and the Hunts Point Terminal Produce Cooperative Association, among others, submitted proposals. EDC chose Baldor after deciding that it had submitted the most competitive lease package. Baldor, which offered the most rent money, would invest between $5 to $7 million in infrastructure improvements, would retain 510 employees and add another 450 within three years, and offered to sell or lease its existing facility to displaced Bronx Terminal Market wholesalers. In contrast, the Cooperative offered to combine the premises with the existing Terminal Market. This proposal would require significant reconfiguration and cost $400 million, which the Cooperative proposed should be financed by City, state and federal monies.

After EDC announced its decision to award the lease to Baldor, the Hunts Point Cooperative filed an article 78 petition, claiming that EDC conducted a sham bidding process, that its proposal was more beneficial than Baldor’s, that the RFP’s seven-day response period, instead of the usual 60-day period, showed the decision was predetermined, and that Baldor, the City and EDC had entered into a side agreement to quell the controversy over the displaced Bronx Terminal Market wholesalers.

The lower court annulled EDC’s designation of Baldor, ruling that its determination was arbitrary and unfair, and enjoined EDC from entering into a lease of the premises until it implemented a new procedure for awarding the lease.

On appeal, the First Department reversed, lifted the injunction and reinstated EDC’s determination. The court found that the Cooperative did not have standing to challenge EDC’s award to Baldor. The Cooperative’s claim that there was no competitive bidding did not establish standing because EDC was not required by law to conduct any competitive bidding process for Hunts Point. In addition, the court found that a competitive injury alone did not confer standing to challenge an administrative determination. Finally, the court found that the Cooperative could not establish actual injury because it would not have prevailed as the successful responder to the RFP. Even if the Cooperative had standing, the court found that there was ample evidence of Baldor’s superior proposal submission to support EDC’s determination.

The appellate court noted in a footnote that the question of whether EDC was subject to an article 78 proceeding, remained unaddressed by the courts. The record in this case, the court reasoned, was insufficient to determine if the EDC was an “agency” for article 78 purposes.

Hunts Point Term. Produce Coop. Assn. v. EDC, 2006 NY Slip Op 08073, Nov. 9, 2006 (1st Dep’t).

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