A legal challenge has officially been brought against Jersey City’s nearly four-year-old ordinance limiting chain stores in Downtown neighborhoods, as a local developer is claiming the rules infringe on his civil rights.
Earlier this month, the company behind TelCo Lofts, known legally as 8 Erie St LLC, filed suit in Federal court naming Jersey City, their council, their planning board, and the Jersey City Redevelopment Agency (JCRA) as defendants. The entity is responsible for renovating an old deteriorating police station into apartments with large retail spaces on the ground floor.
In the filing, the developers say they initially entered into an agreement with the JCRCA back in 2012 to rehabilitate the property, eventually spending nearly $10 million to do so. When they struck the deal, both a Redevelopment Plan for the area and a Redevelopment Agreement did not place any restrictions on the company’s ability to rent the retail space to a commercial formula business tenant or chain store.
That all changed in 2015 when, according to the lawsuit, Jersey City Mayor Steve Fulop “concluded from campaign data that his political base was hostile to large out-of-state corporations and wanted protectionist measures to shield local ‘mom and pop’ business from competition.” The case says that while 8 Erie Street was still under renovation, “the Council, a majority of which was filled with Fulop-loyalists, hastily drafted and adopted the protectionist ordinance to use as a political prop in Fulop’s [possible gubernatorial] campaign.”
The ordinance, which defines chain stores as those having “multiple locations within the region that exhibit standardized characteristics such as logos, menus, or store décor,” limits those businesses to a maximum of 30 percent of ground-floor commercial space in Downtown redevelopment zones (grocery stores over 15,000 square feet are exempt). At the time, the move garnered national press from outlets like Huffington Post, but the lawsuit claims the ordinance didn’t create a level playing field for all of Downtown’s property owners.
“Notably absent from the restrictions are the Newport, Harborside, and Holland Tunnel areas — all of which contain numerous formula businesses,” the lawsuit says. To make matters worse, the developer says that the chain store restrictions were added to 41 of the city’s 100+ redevelopment plans, including the one that regulates 8 Erie Street.
“The City’s after-the-fact injection of a new condition into the Redevelopment Agreement, precluding Plaintiff from entering into leases with national corporate business, has deprived Plaintiff of the benefit of its bargain with the City,” the lawsuit claims. “This ordinance, which even its sponsors now acknowledge to be illegal, remains on the books today.”
Additionally, the lawsuit claims the city has “selectively enforced the formula business restriction for their own benefit and to plaintiff’s detriment.” A notable example cited in the complaint is a Krispy Kreme that opened at 95 Columbus Drive in 2017 after the ordinance was passed. Jersey City officials stated at the time the store’s classification as a “factory” made it allowable under the rules.
Not cited in the complaint are two recent moves by corporate giant CVS, who appears to have found ways around the ordinance. They opened a location at 65 Bay Street last year just a block outside of the zone than bans chains, and another CVS in Exchange Place that was initially blocked under the chain store ban quietly opened its doors at 70 Hudson Street earlier this year without any explanation from officials.
Late last week, an effort to get rid of the chain store ban emerged. A new ordinance will be voted on at the City Council’s April 24 meeting that seeks to repeal the chain ban in its entirety. Whether it passes is anyone’s guess; Jersey City’s council previously discussed an ordinance repealing the chain store ban back in 2017 before rejecting it by a vote of 8-1.
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