BRONX CHEER 2004-08-02 (2)

JON SPRINGER

NEW YORK -- When the newest Pathmark store opened in the Crotona Park section of the Bronx last month, Monserrate Rivera made sure she was the first customer in the door.

"I'm so happy today," said Rivera, who was born in Puerto Rico but has lived in the Bronx for 51 of her 54 years, most recently in a garden co-op at 172nd Street, a few blocks south of the new Pathmark. "It's like a dream. We've been waiting for a store like this for a long time. It's a good thing for the neighborhood and for the Bronx."

As Rivera munched on a complimentary muffin from the bakery department in the gleaming new 49,000-square-foot store, it was difficult to believe she stood at around the same place Howard Cosell observed when he famously told America: "The Bronx is burning."

Cosell's remarks came while describing the scenes outside Yankee Stadium, which was hosting the 1977 World Series in a borough ravaged by drugs, poverty and crime -- the aftereffects of years of job loss, disinvestment and flight. Crotona Park East, a mid-Bronx neighborhood named for the nearby park, was as tormented as they came: Arson-for-profit had reduced blocks of tenement apartments to piles of rubble. President Carter toured nearby Charlotte Street in a visit he described as "sobering." The neighborhood despair was depicted in the Paul Newman movie, "Fort Apache the Bronx."

How Pathmark came to locate in what was once considered the most blighted inner-city neighborhood in the United States is a story of grass-roots community development, partnerships, and a lot of perseverance. While most supermarket retailers tend to fear such a difficult development atmosphere, succeeding where others won't dare to go has become something of a specialty for Pathmark, Carteret, N.J.

"It seems that Pathmark has a degree of patience other companies don't have when it comes to doing large, urban stores," Jonathan Ziegler, principal at PUPS Investment Management, Santa Barbara, Calif., told SN. "But it pays off in getting them a priceless site, completely cut off from competition, all to themselves."

Crotona Park's resurgence -- and Pathmark's arrival here -- each date back to the 1970s and a community development group with a name worthy of a motorcycle gang. The Mid-Bronx Desperadoes (MBD) chose their peculiar moniker because, members said, they were desperate to take back their neighborhood. The group began in 1974 as a coalition of volunteers working with police to create community self-help and safety programs. Its efforts would expand over the years into developing housing, social services and jobs. MBD is perhaps best-known for the Charlotte Gardens neighborhood of single-family homes that it developed during the 1980s at the site of President Carter's visit and today sell in the range of $250,000 to $300,000. The group also oversaw the conversion of four abandoned tenements to senior-citizen housing: In all, MBD has sponsored, constructed and/or renovated 41 buildings and 2,500 units of housing in the Crotona Park neighborhood.

As retail traditionally follows rooftops, commercial development was the next step. With the help of the city, MBD in the early 1990s began assembling land -- mainly the site of abandoned buildings -- at 174th Street and Vyse Avenue for a shopping center. It approached Rich Savner, then a site-selection specialist for Pathmark, to gauge interest. "I did the original feasibility study and saw an area devoid of a state-of-the-art supermarket and with a lot of population density," said Savner, who today is Pathmark's director of public affairs. "Those are two traits that are very appealing to us about a potential site."

That the area had a higher crime rate and lower income than a typical suburban location was not a deterrent, Savner explained, since Pathmark had experience in similar neighborhoods, including nearby Harlem, N.Y., and Newark, N.J. Addressing concerns about crime was one area where Pathmark and MBD were able to cooperate. For instance, Pathmark was able to find job applicants screened through MBD's neighborhood jobs center. Of 200 store employees, around 75% live within walking distance, said Cicero Wilson, executive director of MBD.

Likewise, Pathmark helped MBD obtain its objectives for a neighborhood-focused store. "They were able to recruit a Spanish-speaking pharmacist, which is tough because they're in high demand. But it's something important to this area, which is 50% Hispanic and has a lot seniors," said Wilson.

The development was not without complications. Construction of the 124,000-square-foot shopping center began in the spring of 2001 with an eye on opening in 2002. Those plans were scrapped that fall when plumbers doing underground trench work noticed fragments of unsuitable materials (foundation rubble from previous buildings at the site) had not been properly removed. The discovery led to a prolonged dispute between the developer and the original contractor, who eventually parted ways. According to Jim Schattschneider, chief engineer for Long Island City, N.Y.-based construction lender Citibank, cranes had to enter the partially constructed building to do soil work as workers shored up the site column by column. The construction delays caused cost overruns of 50% to 80% above initial projections, he said.

"The only thing that spared the project was the interest rate environment," said Schattschneider. "All the lenders increased their original loan amounts, but because of the historically low interest rates, some of the money earmarked for interest could be reallocated."

In addition to Citibank (which inherited the project when it acquired European-American Bank), Bank of New York and the Local Initiatives Support Corporation (LISC), New York, were lenders on the project. "Pathmark had the confidence this would be a great market for them, and they hung in there," said Wilson. "All of the lenders were willing to put additional money on the table in order to finish the project when they all had a chance to walk away."

On opening morning last month, area shoppers poured in by car, bus and foot to find a store decorated in Pathmark's newest design scheme and featuring bi-lingual signs and wide aisles showcasing Hispanic products and produce. Rivera said it was a welcome change from her previous shopping trips to Western Beef, a New York-based independent chain that operates a small store nearby. "Everything is fresh and clean here," she said. "And I love the 'buy one, get one free."' Employees helped shoppers sign up for store loyalty cards and informed them of food stamp programs: Pathmark discovered that many area residents did not know they were eligible for federal food assistance, Savner said.

"We think we're going to do very well here," he said, noting the success of Pathmark stores in other urban locations. According to Ziegler's research, Pathmark averages $538,000 in weekly sales per store, but its urban locations exceed the average. He estimated the Crotona Park store could do around $800,000 weekly as it draws from a population base of around 400,000 in Crotona Park and its surrounding neighborhoods.

"Today we're seeing a major retail chain coming into a neighborhood that 25 years ago was ground zero of the worst urban blight in America," said Richard Manson, vice president of LISC, the nonprofit community lender he described as a social investment bank. "They said people would never come back here. It shows that with the right restoration and the right leadership, you can turn a city around."