Yes, it’s true- the New York State Legislature has proposed legislation specifically designed to provide Towns, Villages and Cities with the authority to not only regulate, but to ban, all retail establishments which present a standardized branded marketing concept!
During the 2013-2014 Legislative Session, Legislative Bill S01771/A01216 was introduced for consideration by the New York State Legislature seeking to amend Town Law 261, Village Law 7-703 and General City Law 81 to specifically empower Towns, Villages and Cities to effectively “zone” out what the Legislature terms “Formula Retail Uses” on the basis that such retail establishments threaten communities across the state by eroding resources such as historic character, aesthetics, unique community character and commercial diversity by creating a sameness in design that destroys a communities identity.
“Formula Retail Uses” is defined in the pending legislation as a “retail sales establishment which, along with ten or more other retail sales establishments located in the United States, maintains two or more of the following features: “A standardized array of merchandise, a standardized façade, a standardized décor and color scheme, a uniform apparel, standardized signage, a trademark or a service mark.” Now, that’s comprehensive! As I said, no more Prada, Kohl’s or Wal-Mart for sure. But what about CVS, Walgreens, Stop-n-Shop, Hess Convenience Marts, AT & T stores, Verizon stores and dare I say, Apple stores?
I was immediately intrigued by this proposal because the term “Formula Retail Use” is not a land use term that is easily recognizable in the State of New York. A comprehensive case law analysis of recent New York decisions confirms that the term “Formula Retail Use” is likewise not so popular. Then why you might ask would the New York State Legislature offer this Bill for consideration? Absent insider information, one can only surmise that a fairly recent Eleventh Circuit Florida Court of Appeals case, followed by a very recent 2012 Fourth Department New York State case are the source.
In Cachia v. Islamorada, 542 F.3d 839 consolidated with Island Silver & Spice, Inc. v. Islamorada, 542 F.3d 844 (11th Cir. Fla. 2008 en banc), the parties were engaged in hotly contested litigations arising from Islamorada Village’s adoption of local zoning ordinance 02-02 prohibiting formula restaurant[s] and limiting the size of formula retail establishments. As a result of the Ordinance, plaintiff Cachia was unable to conclude the sale of his property to Starbucks despite a firm letter of intent to purchase and plaintiff Island Silver & Spice, Inc. was unable to conclude the negotiated sale of its property to Walgreens for $2,650,000.
In reversing the trial court, the Eleventh Circuit, en banc, held that not only did a violation of the dormant commerce clause exist, but also, that the Ordinance did not simply raise the costs of operating a formula restaurant or retail establishment in Islamorada, it entirely prohibited such businesses from opening. As a result, a heightened level of scrutiny was applied and the Court concluded that the Ordinance served as an “explicit barrier” to the presence of national chain restaurants and retail establishments. The Court further found that the Ordinance impermissibly prohibited establishments that operated “under the same name, trademark, menu, or style.”
In July 2012, the State of New York Appellate Division, Fourth Department, determined that a Village of Victor, Ontario County, local zoning ordinance prohibiting “formula fast food” restaurants in its Central Business District was constitutional. In Mead Square Commons, LLC v. Village of Victor, 97 A.D.3d 1162 (4th Dept. 2012), the Fourth Department was precise in stating that the Ordinance was limited to a specific zoning district and that “plaintiff failed to preserve for our review any contention that there is no rational basis for distinguishing” between formula fast food restaurants and non-formula fast food restaurants in the Central Business District. Id. at 1164. The implication is clear that the Village of Victor ordinance survived only because the most favorable arguments were not advanced on appeal.
Given the clear pronouncement against severe restrictions or prohibitions against what has been termed “formula” retail establishments, why would the New York State Legislature seek to amend Town, Village and General City Law enabling the outright ban of these establishments? Your guess is as good as mine.
The Bill is presently pending before the Local Government Section of the Legislature and is being advanced by a majority of downstate New York Members, including Senator LaValle and Assembly Members Thiele, Raia and Schimel specifically representing Nassau and Suffolk Counties.