Lawsuits Over City-Owned Grocery Stores and Paraprofessional Pay

**Brian Lehrer** (0:10)
Brian Lehrer on WNYC, and yeah, now we're going to look at two lawsuits involving the Mamdani administration, one being filed against them over the city owned grocery stores plan, and one they're filing against the City Council over bonuses for school paraprofessionals. First the groceries, on Monday, a coalition of business owners filed two lawsuits in state court to stop the city's plan to open five municipal grocery stores, one in each borough, arguing they would crush the immigrant and minority owned bodegas and supermarkets that can't compete with subsidized prices. Joining us now is Karen Yi, WNYC and Gothamist reporter, covering homelessness and poverty usually, and she's covering this. Hey Karen, thanks for coming on.

**Karen Yi** (0:57)
Hey Brian.

**Brian Lehrer** (0:58)
So this coalition of grocery and bodega owners is asking a judge to stop the mayor's grocery store plan. They may not like it as a matter of policy, but what's the legal argument?

**Karen Yi** (1:11)
So they're making two arguments. So they did file a pair of lawsuits. One of them is a class action complaint, and they're alleging discrimination. They're saying this plan is going to mostly hurt immigrant and minority owned businesses that just can't compete. If you open up a store a couple blocks away, they're going to lose their customers. The thin margins that they operate on are going to evaporate, and they'll have to close. The second lawsuit is in Article 78, and this is like when somebody wants to challenge a city or an agency decision. And this argues that the Mamdani administration actually exceeded its municipal authority by doing this plan, by trying to open these city owned stores. And in that lawsuit, they're saying, look, the city never conducted any serious analysis or study before launching this plan, and even the sites that they selected were picked arbitrarily. We only know so far where the city wants to open two of its stores, which is the one in the Bronx, in Hunts Point, and the one in Manhattan, in East Harlem. We still don't actually know where they're going to open in Queens, on Sand Island, and in Brooklyn.

**Brian Lehrer** (2:15)
Listeners, if you have an opinion about or a question about the City Owned Grocery Store's plan or the legality of it, please call 212-433-WNYC, 212-433-9692, call or text. One of the Coalition's members is supermarket owner, Carlos Collado, or Crayado. Here's a little of what he had to say.

**SPEAKER_3** (2:40)
We're not afraid of competition, Mr. Mayor. We're not afraid of competition.

**SPEAKER_4** (2:44)
We're afraid of unfair competition.

**SPEAKER_3** (2:45)
And the fact that this is going to become a money pit for the taxpayer. The taxpayer should be the ones here very concerned about what this will cost.

**Brian Lehrer** (2:54)
Unfair competition, meaning the city is going to subsidize the competing grocery store?

**Karen Yi** (3:00)
That's right. The model that the city has proposed is they're going to pay for what is often the biggest expenses for a grocer, which is rent and taxes. The city is going to cover that with a $70 million capital investment across its stores, but they're also going to subsidize the actual food products so that these stores can offer what they're calling a core basket of items at 30% cheaper than your average retail price. What that average is and how they're going to get those prices is still to be determined.
A lot of this is still unknown. I think the big missing piece here that will help answer some of these questions is when the city brings on an operator to run these stores. This is going to be a private public partnership. The city is going to cover, like I said, rent and taxes, and then they're going to bring on a private operator or several to actually do the day-to-day running of the store, and leveraging those contracts that they have with manufacturers, distributors to actually bring in the products and then stock the shelves, hire the employees, whatever it takes to actually run a store.

**Brian Lehrer** (4:07)
Who's that guy we heard in the clip? I just haven't identified as a supermarket owner. Does he own a big chain? Does he own one little store? Do you know him?

**Karen Yi** (4:16)
Yes, I met him at this week. There was a press conference that the Multicultural Business Coalition held a couple of days after they filed their lawsuit. And he was one of the people who spoke.
He does own several stores across the city. I think he said two of them are in the Bronx, not in Hunts Point specifically. So he knows the business. He's been in this business for a long time. And the way he explained it is, the way grocery stores run and thrive is they sell in volume. They need to sell a lot of products quickly, and they need to have customers in the door so that they can sort of turn a profit. And the margins are pretty thin. And so if you're opening a store, for some of these stores, just a couple of blocks away, that's kind of siphoning off customers, that margin is going away. And when that margin goes away, maybe you can't afford to keep your doors open.