An explosive new lawsuit claims the city’s decision to award the Kingsbridge Armory redevelopment contract to 8th Regiment Partners LLC was corrupted by political favoritism from the NYC Economic Development Corporation (EDC) and top Bronx officials, including the borough president and her deputy.
The lawsuit, filed March 28 in the New York State Supreme Court by Agallas Equities LLC, takes aim at the EDC as the main decision maker for the project that was backed by $215 million in state, city and federal investments. The EDC is a nonprofit public benefit corporation that has worked with the city on major development projects, including the Willets Point Transformation, Brooklyn Marine Terminal, The Bronx Museum and many more.
The complaint argues that the EDC did not give fair consideration to Agallas’ proposal to transform the 570,000-gross-square-foot, mostly unused armory. The EDC announced 8th Regiment the winner in early January based on its plan for “El Centro Kingsbridge,” which promised to turn the armory into a multi-use building with sports fields, event space, a workforce development center, and retail and community space, plus 450 units of adjacent affordable housing in the project’s later phase.
But Agallas Equities says its proposal was slated to be the winner — with a press conference scheduled and run-of-show emailed out — only for it to be abruptly pulled in favor of 8th Regiment.
The company is seeking to have the contract with 8th Regiment annulled and re-awarded; an injunction to stop the work until the case is resolved; and a judgment stating that EDC violated procurement laws and processes.
The complaint alleges that throughout the bidding process, the EDC was committed to helping 8th Regiment win and allowed them to revise their proposal post-deadline, an opportunity not given to Agallas.
According to the complaint, the EDC said that Agallas did not meet financial requirements, which the company disputed. Agallas also alleges that multiple elements from its own proposal were copied into 8th Regiment’s “inferior” submission and described the decision to award the contract to 8th Regiment as “improper, arbitrary, and unlawful.”
If the Kingsbridge project proceeds as is, Agallas would “suffer irreparable harm … including the loss of its intellectual property rights, the deprivation of its opportunity to compete fairly for the contract, and the erosion of public trust in the procurement process,” the complaint said.
In a statement sent to the Bronx Times, 8th Regiment didn’t directly address the lawsuit. It said that it took pride in its armory proposal, “a plan that includes many community priorities that were laid out during the public visioning process.”
“In line with our long-standing, successful track record executing public-private projects in New York City, we look forward to continuing to work with the Bronx community over the coming months and years to deliver the jobs, housing and economic benefits of this City-supported project.”
Conflict of interest?
The suit alleges that local elected officials had undue influence over the awards process. The lawsuit names Bronx Borough President Vanessa Gibson and Deputy Borough President Janet Peguero, in addition to 8th Regiment Partners LLC, which is comprised of Maddd Equities LLC and Joy Construction Corporation, the NYC Economic Development Corporation (EDC) and its CEO, Andrew Kimball, and the City of New York.
Manny Tavarez with Agallas Equities maintains that Peguero should not have been involved in the Kingsbridge contract because of her work as a lobbyist for Maddd Equities in 2020 and 2021 and her role on the EDC board of directors.
During the procurement process, Peguero’s former firm, Constantinople and Vallone Consulting, continued to lobby the armory decision-makers on behalf of Maddd, Tavarez said in an email to the Bronx Times.
According to the complaint, Peguero recently resigned from the deputy borough presidency and “is set to return in April 2025” to her former lobbying job representing Maddd on the armory project, which the plaintiff said he learned from a former EDC employee. Gibson’s office did not respond to request to confirm the resignation.
Peguero’s inclusion on the armory project was an “extreme conflict of interest,” said Tavarez in an April 1 interview with the Bronx Times. His suit seeks to refer evidence of misconduct by elected officials to local, state and federal law enforcement agencies.
“This case exposes how political connections trump merit in New York City development deals,” said the plaintiff’s attorney, Christopher Carrion, in a statement.
“We’re sending a clear message that no one is above the law, not developers, not agencies, and certainly not elected officials who abuse their power.”
However, Gibson issued a strong statement denying the allegations. She said that while there is always a disappointed losing party in contract bids, there are “no valid claims” involving her office, which was “named merely in an attempt to generate news and attention,” she said in a statement to the Bronx Times.
“The redevelopment of the Kingsbridge Armory is a long-overdue investment in the Bronx, promising thousands of jobs, hundreds of affordable housing units and numerous safe community spaces,” said Gibson. “Attempting to obstruct this development for selfish business and political reasons is nothing short of disgraceful.”
Big money
The process for hearing what Bronxites wanted in the massive armory space, which has sat mostly unused since the 1990s, began in 2022.
After gathering input from over 4,000 community participants, a working group produced the “Together for Kingsbridge Vision Plan,” which bidders used to inform their plans.
Tavarez argued that his company’s proposal met all financial requirements and had a superior plan for programming that aligned with the community’s needs. Agallas was set to be announced the winner on Dec. 3, 2024, but 8th Regiment was chosen instead, with little explanation until he sought it out, Tavarez said.
An EDC spokesperson told the Bronx Times that the agency could not comment on pending litigation, but said, “After a rigorous evaluation of all proposals, NYCEDC selected [8th Regiment’s] El Centro Kingsbridge proposal, which is consistent with the values of the Kingsbridge Vision Plan and the requirements of the RFP.”
In a Jan. 23 email cited in the complaint, EDC CEO Andrew Kimball said Agallas failed to provide key financial requirements outlined in the RFP, including a $2.5 million security deposit, a $250,000 administrative fee, and a $200,000 environmental consultant expense. Despite the merits of its proposal, it was not selected for financial reasons, Tavarez said the EDC told him later.
But Tavarez told the Bronx Times that his company did have major capital partners and big-name supporters — including two added after the EDC selected 8th Regiment and expressed concern about Agallas’ financial standing. A lack of funds was “an excuse” for the EDC not to choose his company, he told the Bronx Times.
Calling the EDC’s decision-making “arbitrary and capricious,” the complaint states that the RFP criteria emphasized programming and alignment with the Vision Plan over “financial considerations alone.” Nevertheless, the EDC told Agallas that the primary reason it was not selected was due to concerns about its financial viability, according to the complaint.
Agallas argued it had both the ideas and the money for a winning proposal, even if some additional financial support came late, and should have prompted the EDC to reconsider.
“Agallas is fully capable of meeting all financial obligations associated with the Kingsbridge Armory project” in the pre-development stage and throughout, the complaint says.
Tavarez told the Bronx Times that his company’s plan would have been provided a greater economic boon for the borough than the current plan.
The 8th Regiment proposal is expected to generate $2.6 billion in economic impact over the next 30 years, including the creation of 360 permanent jobs, according to the EDC. Agallas’ proposal, which Tavarez shared with the Bronx Times, was projected to generate $3.3 billion in economic output and create 1,400 permanent jobs.
‘Concepts of a plan’
When the NYCEDC issued a Request for Proposals (RFP) in Sept. 2023, it encouraged bidders to use the community-created Vision Plan document to inform their ideas.
Several of Agallas Equities’ ideas for the armory were unique, Tavarez said. For instance, as co-founder of the International Salsa Museum, he planned to give it a permanent home within the armory. He also included a retractable sports field that converted to a live entertainment venue.
He now accuses 8th Regiment of stealing both concepts, among others, and claims the EDC facilitated the other company’s access to Agallas’ proprietary information.
A spokesperson for 8th Regiment told the Bronx Times that because bidders were working to comply with the Vision Plan, some overlap of ideas would naturally occur.
But as 8th Regiment proceeds with the work, Tavarez has accused them of “poaching” the architectural and rendering firms that worked on Agallas’ proposal and using those companies to implement several of his ideas.
According to the complaint, Jorge Madruga of Maddd Equities admitted in conversation with Tavarez on Jan. 10 that his company had no programming lined up, even after being announced the winner, and was facing pressure from the EDC.
Tavarez told the Bronx Times that EDC never held a press conference to announce 8th Regiment as the winner “because they have nothing to present.”
He said 8th Regiment’s rendering of how the armory would look once completed is “virtually identical” to that by Agallas, specifically the arrangement of skylights and rooftop solar panels.
Overall, the company claims that plans presented by 8th Regiment “replicate[s] the overall design layout and functionality proposed by Agallas, including sports fields, event venues, and cultural exhibits that are virtually identical to those identified in Agallas’ proposal.”
“He still doesn’t have a plan. He has ‘concepts of a plan,’” Tavarez said.
With the lawsuit, Agallas is seeking to annul the contract with 8th Regiment and for it to be re-awarded. The company is also seeking original proposal records from 8th Regiment and for evidence of misconduct by elected officials to be referred to appropriate agencies.
More legal action may be yet to come. Agallas Equities said in a statement that it is also “considering federal litigation” against Congress Member Adriano Espaillat and may amend the current lawsuit to include Council Member Pierina Sanchez “based on new evidence of her active role in subverting due process.”
Agallas Equities maintains that theirs was “the most meritorious proposal” and that 8th Regiment won only because of favored treatment.
“We’re looking forward to our day in court,” Tavarez said.
Reach Emily Swanson at eswanson@schnepsmedia.com or (646) 717-0015. For more coverage, follow us on Twitter, Facebook and Instagram @bronxtimes
