By Elizabeth O’Brien
A lawsuit charging the operator of the South Street Seaport mall with deceptive business practices has shaken a community bracing for change when the Fulton Fish Market leaves at the end of this year.
Partners at MacMenamin’s Irish Pub, a longtime tenant of the mall at Pier 17, have filed a lawsuit accusing Seaport management of over-billing for utilities and other shared expenses. MacMenamin’s also claims the mall operator has misappropriated merchants’ association funds, dipping into them to cover operating costs instead of promoting the flagging Seaport property.
The suit says that Rouse has consistently refused to provide documentation supporting its electricity and other billings, even as common charges have skyrocketed over the past several years.
“They act like they have something to hide,” said John O’Kelly, the attorney representing MacMenamin’s.
Many merchants think Seaport management is also concealing its future plans for Pier 17 and the surrounding buildings. The mall operator has first dibs on two fish market buildings, and rumors have swirled about possible future development after the fish market departs for the Bronx, including a hotel and movie theaters.
MacMenamin’s corporate entity, Apple Mac & R, Inc., brought suit in mid-January in New York State Supreme Court against the Maryland-based Rouse Company and its affiliate Seaport Marketplace L.L.C., which operates the Seaport; the Seaport Merchants’ Association, Inc. was also named in the suit.
A few weeks later, Rouse filed eviction proceedings against MacMenamin’s, claiming the restaurant owes more than $200,000 in back rent.
“We don’t mind paying our fair share, but is $150, 000 in extras our fair share?” asked Mike Flanagan, a co-owner of MacMenamin’s, referring to the amount exceeding base rent that he said the restaurant was billed for 2001.
Michael Piazzola, the general manager of the Seaport Marketplace, declined comment on either suit.
“We will let the truth speak for itself, and the truth will be revealed through the judicial process,” Piazzola said.
MacMenamin’s charges recall those brought last year against Rouse in a lawsuit filed by Gerard Nally, the owner of Seaport Watch Company at Pier 17. Nally also accused the company of deceptive billing practices and of siphoning off funds from the merchants’ association.
Nally said that after four months of negotiations, he settled with Rouse last December, although a confidentiality agreement barred him from revealing the terms of his settlement. O’Kelly represented Nally as well, and he counts other Seaport merchants among his clients.
Nally, Flanagan and other Seaport merchants said they wished they knew what was in store for the Seaport after the Fulton Fish Market leaves. The city owns the land occupied by the Seaport, and according to the City Charter it cannot sell its waterfront property, said Janel Patterson, a spokesperson for the city Economic Development Corporation.
But after the fish market leaves, the Rouse Company has right of first refusal on the Tin Building and the Fulton Market Stalls, two spaces currently occupied by the market, Patterson said. Neither the city nor Rouse officials have given much hint of the future direction of the property.
“I feel there are big plans here for Downtown and they’re not letting us in on it,” Flanagan said.
Piazzola confirmed that Rouse is currently creating a master plan that will incorporate the Tin Building, the Fulton Market Stalls and possibly other Seaport buildings. He said the company would like to retain the option of reconfiguring Pier 17 if necessary. But Piazzola added that all merchants would be considered for inclusion in the final plan.
In recent months, Piazzola has said that plans for the pier could include a movie theater. The United Artists movie theater in Battery Park City recently closed some of its screens, and the Tribeca Film Festival is looking for more places to show films this May.
Faith Hope Consolo, vice chairperson of Garrick-Aug Associates Store Leasing, Inc., said the Seaport was close to making a deal with the Cheesecake Factory, a national restaurant chain, for placement in Pier 17.
“That’s what has always done well down there—affordable food, big bar,” Consolo said.
Cheesecake Factory officials did not return a call for comment by press time.
While Rouse has authority over its mall tenants, the city must approve any larger development for the Seaport. Piazzola said Rouse’s proposal would be announced in about six months.
That’s too long for some merchants with a personal and professional stake in the Seaport’s future. Nally said that he and many other shopkeepers signed loans after Sept. 11, 2001 to help keep their businesses afloat. Some put their houses up for collateral, Nally said, and they fear the prospect of lost business if Rouse wants to clear the decks for a new development.
“That’s the unfairness of not knowing,” Nally said.
On a recent Wednesday, at least 10 storefronts stood empty at the 130,000 square-foot Pier 17 mall. Piazzola said Rouse is issuing leases that allow for flexibility in a few years if the company wants to redesign the pier property.
But Piazzola said the company has hired a consultant to help lease the empty space in the interim. Consolo said restaurants like the Cheesecake Factory would probably not balk at a short-term lease if they receive a location in move-in condition.
While some Seaport merchants are dissatisfied with Rouse, not everyone is speaking out against the company. Some said negative publicity could only hurt their businesses. Others, like Adriaan van der Plas, said management was doing its best to support them. Van der Plas runs Art à la Carte, a store featuring the original work of local artists.
He said the Seaport was making a genuine effort to attract more local shoppers by promoting unique stores like his own.
“We’re not waiting for tourists anymore,” said van der Plas, who lives in Independence Plaza North in Tribeca.
As for Flanagan, he said he hopes for a just resolution to his complaint. The partners are seeking no less than $2.1 million in damages to the business, including the amount of the alleged overcharges, and an unspecified amount for the merchants’ association. The suit also requests that the court set the terms for all future dealings between Rouse and MacMenamin’s, and between the company and the merchants’ association.
As a result of a 1983 suit brought against Rouse by tenants of Boston’s Faneuil Hall, another Rouse property, Rouse was required to refund common area overcharges, limit common area charges to a certain amount per square foot of retail space, and to realign the merchants’ association to give shopkeepers more control over the funds, according to the complaint.
Joe MacDonald is one longtime MacMenamin’s customer who hopes the restaurant will stick around. A marine insurance worker with offices in Lower Manhattan since 1976, MacDonald dropped by his usual haunt on St. Patrick’s Day.
MacDonald said he appreciated how MacMenamin’s has weathered the good times and the bad over its nearly 20 years at the pier: “It stayed for guys like me who come in on a Wednesday when no one else is here and have a hamburger and a beer.”
Elizabeth@DowntownExpress.com
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