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Limits on downtown chain stores in Jersey City under attack

On Behalf of | Apr 19, 2019 | Business Litigation

Most residents of New Jersey associate chain stores with large shopping centers or roadside strip malls. Four years ago, Jersey City passed an ordinance that is intended to prevent chain store outlets from locating in the downtown business area. Now the owner of a downtown building has filed a federal lawsuit alleging that the Jersey City ordinance is unconstitutional and nothing more than a “publicity stunt” intended to help Jersey City’s mayor Steve Fulop succeed in his run for governor.

The ordinance limits chain stores to 30% of ground floor commercial space in buildings located in the city’s redevelopment zones. The restrictions apply only to portions of downtown Jersey City and do not affect large portions of the city’s Hudson River waterfront. The business lawsuit alleges that the restrictions violate both the commerce and equal protection clauses of the United States Constitution and also violate the state’s zoning laws.

In 2012, the plaintiff was chosen by the city to redevelop a building near the Grove Street PATH Station. The plaintiff claims that he ended up investing almost $9 million in the project. The building opened for occupancy in 2015, and shortly afterward, the city council enacted the limits on chain stores. The plaintiff does not own or operate any chain stores in an affected area, but he views the ordinance as hindrance on his ability to attract tenants. The complaint alleges that the limitations on chain stores were enacted solely to benefit Mayor Fulop and for no other purpose.

One curious aspect of the anti-chain ordinance has come to light: Krispy Kreme opened a store in a building in one of the restricted zones. The city, however, allowed Krispy Kreme to exceed the 30 percent space limitation because the store identified itself as a “factory” and therefore is not subject to the limitation.

Business litigation issues such as this can be very complicated. The development of commerce in New Jersey is important, so those who believe their ability to do business is being interfered with unlawfully will want to seek the professional guidance they need to determine what their rights are.


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