Lembrich Proposes Ordinance to Limit Chain Stores in Maplewood Village

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Over the last few months, Maplewood Township Committeeman Greg Lembrich has been investigating legal options for the town to potentially limit chain stores in Maplewood Village to maintain its retail character, something he calls a “top priority” for him.

One such option is a “formula business ordinance,” which “find[s] legal ways to define what businesses will not be allowed in those districts that largely excludes franchises or chain stores,” according to Lembrich. While not an outright ban on chains, such ordinances prohibit chain, franchises, and other retail stores and restaurants with “standardized services, décor, methods of operation” and requires that a chain make its store distinct — in name, operations, and appearance — from its other outlets.

At the same time, Lembrich cautioned that the township would need to carefully consider if such an ordinance would be in the best interest of residents and businesses. “Will there be unforeseen and unintended consequences? Will a formula business ordinance pose a hurdle to economic growth in Maplewood? Will it adversely impact other business districts in our town or help them? Might there be other ways to achieve our purposes besides a formula business ordinance?”

He gave a presentation at the October 4 Maplewood Township Committee meeting detailing what such an ordinance would look like in Maplewood. (The presentation is attached below.)

Although the impetus was the development of the Clarus, the mixed-use residential and retail building rising in the heart of the Village — which will have a Starbucks as one of its tenants — Lembrich told Village Green two weeks ago that the ordinance “would not and could not apply to the initial tenants at the Clarus.”  Because the property’s developer, JMF, has an approved site plan, as long as they complete the development within the statutory time frame of three years, the property would not be subject to any new formula business ordinance.

“While the Clarus/Starbucks situation was the motivating factor behind my research, my goal is not to ‘beat the clock’ on JMF,” said Lembrich. “Any change we make will not apply to that site, at least for the initial tenants, though it would apply to any future vacancies in the building. My proposal is that we consider a formula business ordinance that would be prospective, not change the playing field for landlords/developers that already have signed leases or letters of intent.”

Here is Lembrich’s Oct. 4 presentation in full:

Back in April, Mayor DeLuca, Deputy Mayor Adams, and I met with a large group of Maplewood residents and merchants at The Woodland to discuss the potential retail tenants for the Clarus development being constructed at the old post office site. That meeting became a spirited and useful community dialogue that more broadly explored the issue of how best to maintain the character of all of Maplewood Village while not unduly restricting the rights of property owners or potentially limiting the success of local business owners. That exchange of thoughts and ideas led me to start examining the tools that Maplewood may have to accomplish those objectives.

As I reported at the Township Committee meeting held soon after that community forum, one intriguing possibility that I discovered in my research was formula business ordinances. Such ordinances prohibit chain, franchises, and other retail stores and restaurants that have standardized services, décor, methods of operation, and other features that make them virtually identical to businesses elsewhere. At that time, I made a commitment that I would do further research into this possibility and come back to this Committee, and the community, with more information. I have done that legwork, and am ready to report on what I have found and share my thoughts about how such a formula business ordinance might be used to maintain the character of Maplewood Village.

This issue is a top priority for me because of my passion to preserve the distinctive character and neighborhood feeling that makes our downtown the best in New Jersey and helps make our town such a desirable destination in which to live, dine, and shop. There is no doubt that the popularity of the Village is one of the leading factors that leads families and individuals to want to move to Maplewood, and helps maintain and increase our residential property values. Many who visit the Village remark that it seems like something out of the past, that places like it just don’t exist anymore. But far from being a forgotten relic of some bygone era, our Village is a thriving town center that brings residents together and fosters innovation, entrepreneurship, and community pride. We don’t choose to live in Maplewood to cling to the past, we live here because this is the kind of community we want for the future. As both a resident and elected official, I feel a sense of responsibility to do all that I can and consider all options to preserve the magic of Maplewood Village for the generations to come.

The potential move of Starbucks and other chains to Maplewood is part of a broader national trend. Having long focused on malls, highways, and shopping plazas, many chain retailers and restaurants are increasingly locating in downtowns and neighborhood business districts. In fact, it’s not uncommon for formula businesses to arrive in a particular area en masse, squeezing out independent businesses and causing a change in the rental market that can result in the wholesale transformation of a business district almost overnight. As the Institute for Local Self-Reliance has noted, “This can have long-term economic consequences as the downtown or neighborhood business district loses its distinctive appeal and no longer offers opportunities for independent entrepreneurs.”

To address this issue and try to preserve the charm and commercial character of their communities, several cities and towns all across the country have adopted ordinances that prohibit formula businesses. Locales as diverse as big cities and small seaside towns, from Washington to Maine and Florida to California have passed such laws prohibiting or limiting formula businesses. To name but a few: San Francisco, California; Nantucket, Massachusetts; Sanibel, Florida; Ogunquit, Maine; Fredericksburg, Texas; McCall, Idaho; Fairfield, Connectciut; Pacific Grove, California; Bristol, Rhode Island; Bainbridge Island, Washington; Port Jefferson, New York; Calistoga, California; and Chesapeake City, Maryland.

More locally, Jersey City, our state’s second largest city, passed an ordinance last year that restricts “formula businesses” in certain neighborhoods. The Jersey City ordinance defines a “formula business” as one which is “contractually obligated” to maintain certain “standardized characteristics” such as merchandise, menu items, design, signage, and trademarks. This ordinance effectively limits chain restaurants and stores from opening in certain designated neighborhoods in Jersey City.

According to Mayor Steve Fulop, without the ordinance Jersey City would risk becoming “an environment that doesn’t necessarily foster the creative class and foster an interesting place for people to want to live in.” This formula business ordinance is the first of its kind in New Jersey, according to the New Jersey Chamber of Commerce, which opposed the ordinance. However, Jersey City’s ordinance otherwise received broad support from local community groups and neighborhood activists, as well as professional urban planners and coalitions of small retailers.

With respect to the legality and constitutionality of such laws, courts have generally found formula business ordinances to be a valid exercise of municipal authority so long as they are intended to further a legitimate interest, such as preserving the unique character of the community. In fact, while formula business ordinances have been passed all over the country, my research has revealed only one case in which such an ordinance was successfully challenged in court, and the circumstances in that case differ significantly from the situation here in Maplewood. In 2002, Islamorada, a village in the Florida Keys, enacted a formula business ordinance. A local business owner subsequently entered into a contract to sell his property to a developer that planned to build a Walgreens drug store. After the town rejected the developer’s application, the seller of the property sued the town and won. While the court held that “preserving a small town community is a legitimate purpose,” it found the Village had not “demonstrated that it has any small town character to preserve.” Instead, the court said, “the ordinance appears tailored to serve local business interests by preventing competition from national chains.” Unlike Maplewood, Islamorada has no downtown or other historic commercial district and consists mainly of strip development along U.S. Highway 1, and the town had taken no other steps to develop or protect its character. Thus, I am confident that Maplewood could write and adopt an ordinance that could withstand legal scrutiny. I also note that, despite having been adopted more than a year ago, I am aware of no legal challenges brought against Jersey City’s ordinance.

It is important to note that even a ban on formula businesses would not prevent a chain such as Starbucks from coming in, but it would require that Starbucks open a coffee shop that is distinct — in name, operations, and appearance — from its other outlets. Although there are a few examples of a chain complying with a formula business ordinance by opening a unique store, reports confirm that in most cases chain stores and restaurants have refused to veer from their cookie-cutter formula and opted not to open in communities with formula business ordinances.

While some of us on this Committee have not always agreed on development issues, I think we do all agree on the approach of proactively steering and managing development in Maplewood rather than allowing development to steer and control us. The adoption of a formula business ordinance, if done properly and thoughtfully, can be not only consistent with that philosophy, but provide us with another resource to retain and exercise our authority in this regard. In the course of my research and thinking on this topic, I have identified Four Key Issues in considering a Formula Business Ordinance for Maplewood that I hope will help to guide our discussion.

  1. Will the ordinance apply only to certain zones or be townwide? The most effective and legally defensible formula business ordinances are written to apply only to a specific area or areas within the municipality where the community wishes to protect and retain the existing historic charm, commercial character, or neighborhood feel.   For example, various smaller towns prohibit formula businesses from locating in their downtowns, while San Francisco restricts formula businesses in all of its neighborhood business districts, but not in its downtown core and tourist areas.   Other communities limit formula businesses to particular commercial zones, such as along a highway. Location is an important consideration in Maplewood as well. While many of us would like to preserve the character of Maplewood Village and prevent chain stores from moving in along Maplewood Avenue or Baker Street, for example, we do not want to unduly restrict development in other business districts in the township, such as Springfield Avenue and Irvington Avenue. So I would favor a formula business ordinance that specifically covers Maplewood Village, perhaps overlapping with the current Maplewood Village Special Improvement District. Further, such an ordinance would be a fitting and logical complement to the potential designation of Maplewood Village as a historic district, a measure that is currently being considered by the Maplewood Historic Preservation Commission with the assistance of Mrs. Larrier and which I wholeheartedly support.
  1. What types of formula businesses should be regulated? Some communities prohibit only formula restaurants, while others have placed restrictions on both formula restaurants and retail stores. Jersey City, for example, does not include grocery stores in its definition of formula businesses. In Maplewood, out of practical necessity, we might likewise want to exclude grocery stores, along with banks, and perhaps certain other commercial institutions that are commonly formula businesses, that currently exist in the Village but do not detract from the its character. 
  1. What is the Purpose of the Ordinance? When enacting a formula business ordinance, a municipality should articulate within the ordinance the public purposes the ordinance is intended to serve and specify how the restrictions will fulfill those purposes. While courts have found that preserving a certain “feel” or “character” of an area can be a valid public purpose, economic protectionism for local businesses is definitely not. The constitutionality of a formula business ordinance therefore turns on whether (a) the municipality develops an adequate record as to the preservation goals it is seeking to achieve, and (b) there are other alternatives available to achieve those goals that might be less discriminatory. A formula business ordinance, therefore, should reference the community’s comprehensive plan for zoning and development and identify any goals within the plan that the formula business restriction will help to fulfill. In Maplewood, such purposes might include: Maintaining the unique character of the Village and its appeal as a central social, transportation, and commercial district; and protecting the Village’s economic vitality by ensuring a diversity of businesses with sufficient opportunities for independent entrepreneurs and employment of local residents. Thus, in my view, the goal of a formula business ordinance in Maplewood would not be to protect specific existing businesses from competition or to restrict landlords from renting their properties, but rather to preserve our downtown’s distinctive sense of place and its unique neighborhood character, as well as to promote local entrepreneurship and create and preserve business and employment opportunities for our residents. 

And finally, and perhaps most important: 

  1. Will such an ordinance be in Maplewood’s best interests? Even if we have legal options to create a formula business ordinance or to amend existing ordinances to achieve this purpose, we need to carefully consider whether such action will be in best long-term interests of our residents and businesses. Will there be unforeseen and unintended consequences? Will a formula business ordinance pose a hurdle to economic growth in Maplewood? Will it adversely impact other business districts in our town or help them? Might there be other ways to achieve our purposes besides a formula business ordinance?

I cannot necessarily answer all of these questions as I sit here tonight, nor do I presume to have the wisdom to answer them without the benefit of input from my colleagues and the rest of our community, including the Maplewood Village Alliance, Springfield Avenue Partnership, local merchants, and of course our residents. But these and other questions will need to be considered and debated before we can move forward with a formula business ordinance. And I am hopeful that this presentation tonight can provide the pathway to a dialogue both here at the Township Committee and in Maplewood more broadly about our goals for the future of Maplewood Village and how best to achieve them.

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