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Penske breaks corporate park rules by operating retail store with truck rentals

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Penske Truck Leasing broke a covenant that prevents retail sales at Jefferson County Corporate Park in the town of Watertown by operating an on-site store since January.

Meanwhile, a business owner at the park, who opposed a proposal from the Jefferson County Industrial Development Agency last fall that would have permitted businesses with limited retail sales, said he will appeal the agency’s decision to allow Penske’s retail operation. Neil Katzman, president of SWBG Wholesale Inc., was the only business owner at the park who opposed that proposal, which required unanimous consent from owners.

Mr. Katzman has told agency officials that Penske has been violating the covenant since it moved in. He said he fears the truck rental company will create an excessive amount of customer traffic, which the covenant aims to prevent.

Mr. Katzman also said that building owner Michael E. Lundy, who leased the space to Penske, made plans for Penske to offer a snowplowing contract to SWBG Wholesale; Mr. Katzman said he believes that move was made to persuade him to reverse his objection to Penske’s retail plans. At the urging of Mr. Lundy, Penske offered SWBG Wholesale a snowplowing contract in November, according to emails sent to Mr. Katzman.

Penske was granted permission to enter the park after sending the JCIDA a letter in December purportedly stating that it no longer planned to conduct retail sales at the 10,000-square-foot industrial center off outer Coffeen Street. On Thursday, the Times requested a copy of the letter from the agency, and when agency CEO Donald C. Alexander refused, submitted a Freedom of Information request seeking a copy of the letter. The agency has five business days to inform the newspaper if it will respond.

Penske is renting trucks to the general public at the site, where six trucks were parked Thursday. An associate at Penske said any customer can walk in and rent a truck. Renting trucks to the public contradicts Penske’s claim that it would conduct only business-to-business transactions.

In January, the Times reported that Penske decided not to offer retail sales after it was unable to get consent from business owners for its retail plan. That move came after the JCIDA failed to obtain approval from business owners needed for Penske to move in last fall.

Mr. Alexander previously said that in Penske’s December letter, it indicated “it will not do retail out of that facility.”

But during an interview Thursday, Mr. Alexander contradicted that statement. Before Penske moved in, the agency was aware that it would conduct limited on-site retail sales, he said.

“I knew there was going to be a certain aspect that would be retail. I did know that, I must confess,” Mr. Alexander said. “But Penske has said that when you take a larger view about what the business is about, this is a small portion of what they do.”

It is not the agency’s responsibility to enforce rules at the corporate park, Mr. Alexander said. The agency will not investigate Penske’s operation unless it receives feedback from business owners at the park to do so.

“I think what has happened is that people recognize this is not creating any kind of a problem, which that covenant was designed to avoid,” Mr. Alexander said. “That covenant was originally placed to avoid high retail-traffic businesses that had no business in the corporate park. The goal was to keep large retailers distinct from the park itself. And from what I see, Penske is a business that primarily serves other businesses.”

But Mr. Katzman begs to differ. Traffic is already busy at the park during the afternoon, he said, and he believes Penske’s business could create more congestion as more customers do retail business there.

“I think it affects the value of my land and building, because it’s an industrial park and supposed to be for that purpose — not retail sales,” he said. “I’m afraid, due to the retail sales, that it will increase traffic and make getting around that area much harder. I think this is going to open up a whole can of worms. What’s going to stop existing businesses from opening up a retail store?”

Mr. Katzman opposed an agency proposal that would have allowed a business that derives no more than 25 percent of its revenue from retail sales to move into the park without special approval. He said approving that relaxed rule would allow large companies, such as Car-Freshner, to start retail operations and lure more customers into the park.

“If you take a company as big as Car-Freshner, which does millions of sales a year, allowing a quarter of that to be retail would be like allowing Walmart to move in. That’s a lousy way to do it,” he said.

In November, Mr. Lundy contacted Mr. Katzman to see if he’d be interested in establishing a contract with Penske to plow snow at the site. After considering that deal, Mr. Katzman rejected it after concluding it was a conflict of interest.

“He wanted to see if that would calm me down with my objection. But you can’t object to something on the left hand, and on the right hand take their money,” he said, adding that Mr. Lundy has made an “awful lot of good deals at the park” with JCIDA in the past.

Mr. Lundy, in response, said that because he is the owner of the property, Mr. Katzman would have to file a lawsuit against his West Carthage firm, Lundy Development and Property Management. The firm’s attorney believes the arrangement with Penske does not violate corporate park rules, he said.

Mr. Lundy contends that opposition to Penske’s arrangement at the park has been caused mainly by P.J. Simao, an Alexandria Bay developer who previously sought to have Penske move into a building he owns near the park’s entrance, the former SMX repair center.

“We believe this has been impacted by Mr. Simao being jealous of losing Penske as a tenant and continuing to stir the pot,” Mr. Lundy said. “In reality, Penske is a good fit for the park and has no negative impact.”

Mr. Lundy dismissed Mr. Katzman’s concerns about the proposed snowplowing contact as a conflict of interest, calling it “a petty way of handling things.”

“Penske had asked me to give them names of snowplowing companies, and I told them that Mr. Katzman was a few doors down and close by,” he said. “I would think that snowplowing a little driveway wouldn’t be an awful lot of leverage, and I think it’s funny that something like that would be brought up as an issue.”

Last year, Mr. Lundy bought about 22 acres of developable land on Lots 10 and 11 at the corporate park from the JCIDA. At a town of Watertown Planning Board meeting In February, he said he is seeking to bring two undisclosed companies to those lots. They would occupy a 40,000-square-foot warehouse on Lot 11’s 7.5-acre site, and a 22,500-square-foot distribution center on Lot 10’s 4-acre parcel.

Also last year, Mr. Lundy helped develop a 64,000-square-foot FedEx facility with SunCap Property Group, a Charlotte, N.C.-based real estate development firm, on Lot 12 in the corporate park. He bought that property from JCIDA for $124,000 before selling it to the North Carolina developer for $559,000.

Randolph P. Ryerson, Penske spokesman, was not available Friday for comment.

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