The City Council has begun asking questions about a deal the Bloomberg administration struck with a major developer that is evicting 23 vendors from the Bronx Terminal Market. The deal also provides for the possible exchange of the site of a vacant jail for a parcel at the market that could become an Olympic cycling venue.

Speaker Gifford Miller and some council colleagues are drafting a letter to Mayor Bloomberg about the eviction. The council also plans to hold hearings next month to examine the deal with the market’s new leaseholder, the Related Companies.

Under the deal, the real estate company – which is headed by Stephen Ross and was one of six developers to join the Jets’ bid for air rights at the Hudson rail yards – will receive as much as $80 million in Liberty Bonds and tax breaks. Related plans a “suburban-style” shopping mall and esplanade at the site, which is near Yankee Stadium.

A council member from Queens, Hiram Monserrate, is a signatory of the letter, with Council Member Robert Jackson of Manhattan, who is chairman of the contract committee and is convening the hearings next month along with the subcommittee on small businesses. Two Bronx council members, Helen Foster and Annabel Palma, are also signatories.

The vendors, whom Related ordered to vacate the market at the end of this month, are suing Related and the city. They have organized a rally at City Hall this morning to bring attention to their situation.

“We need to look into how the Related Companies are getting Liberty Bonds, tax abatements, and the Bronx House of Detention as part of this sweetheart deal while the merchants are treated very badly,” Mr. Monserrate told The New York Sun.

The city’s Economic Development Corporation has two years to decide whether to hand the Bronx House of Detention over to the developers.

According to a lawyer for Related, Jesse Masyr, that property was offered to the developer in exchange for a piece of the 31-acre Bronx market, where the city would build a velodrome if it is chosen as host of the 2012 Summer Games.

“Since when has the EDC been in the habit of exchanging properties? I think some oversight is needed here,” Mr. Monserrate said.

Another issue is that the city’s memorandum of agreement with Related, signed last April, designates a monthly rent for the market of $20,000, while according to a lawyer for the vendors, Adrian Zuckerman, they currently pay a total rent of more than $250,000 a month.

Also, the 63-month lease promises Related that the city will repay the developer’s $32.5 million loan for the market project should the deal fall through, and will exempt Related from paying the cost of an environmental impact statement.

The vendors were offered an $8 million relocation package as part of Related’s lease, but only one of the 23 is known to have taken the deal. The offer would give vendors $10 a square foot for their property and provide them with access, on a first-come, first-served basis, to interest-free loans of up to $500,000.They would also receive a six-month rent abatement.

“The city’s deal would mean closing my store within a year,” the owner of A&C Refrigeration, Alex Savinon, said. Mr. Savinon, a vendor to restaurants and supermarkets, said he finds most of his clients through customers of ethnic vendors at the Terminal Market.

The relocation plan would spread the vendors throughout the Bronx, an untenable arrangement, those vendors say.

The city’s deal with Related was hailed a year ago by the Bronx borough president, Adolfo Carrion Jr., who said it would generate more than 4,000 jobs. Mr. Carrion, like the council members critical of the deal, is a Democrat.