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Despite retail ban, JCIDA granted Penske access to corporate park after company claimed it was “industrial use”

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Though some tenants at Jefferson County Corporate Park are unhappy with the retail nature of the new Penske leasing operation, the company has taken the position that it is a moot point because what it does is not retail trade.

In a letter sent Dec. 11 to developer Michael E. Lundy, owner of the facility Penske moved into in January, the company characterizes its business not as retail, but as light industrial. As a result, It has asserted it is not in violation of any covenants that prevent retail operations at the park off Route 12F in the town of Watertown.

The Jefferson County Industrial Development Agency, which manages the park, adopted the explanation in that letter to grant the company permission to move into the site. The letter can be seen at http://wdt.me/5tMKqy.

Unanimous consent is required by businesses in the industrial park to allow retail operations, according to agency covenants. The intent of those covenants, according to the agency, is to prevent the establishment of retail businesses that would draw an excessive amount of customer traffic.

Penske failed at its attempt to get unanimous consent from business owners this past fall. SWBG Wholesale Inc. and Valentine Stores Inc. both opposed a request from the agency seeking a waiver to allow businesses with limited retail sales, such as Penske.

One of those business owners said he is considering filing a lawsuit that would force the agency to enforce park restrictions and deny Penske’s retail operation. Neil Katzman, president of SWBG Wholesale, is considering a lawsuit against Mr. Lundy and the JCIDA to force Penske to end its operation. He said he believes the agency acquiesced unreasonably to Penske’s argument that it qualifies as an industrial operation, not retail.

“I think they’re talking out of both sides of their mouth, both Penske and Mike Lundy,” Mr. Katzman said Monday. “If I were to sue on this matter, I would have to pay for it initially. But if I win, the agency would have to pay for all of my legal fees and enforce” restrictions.

The Dec. 11 letter from Penske to Mr. Lundy — obtained by the Times through a Freedom of Information request — clearly states that its plan is to operate a “renting and maintenance” business. Though its business includes retail sales, Penske argued it ultimately should be considered an industrial use by the agency.

“This use is commonly considered an industrial use in municipal zoning codes and is typically excluded from zones permitting retail activity,” the letter states.

Mr. Katzman, who fears Penske could generate excess traffic at the park, is dissatisfied with the explanation in Penske’s letter.

“Zoning law and IDA rules are two different things,” he said. “Zoning laws say certain businesses can be in certain areas, but the park has different rules. (Penske) may have to have their storefront in an industrial zone, but they are a retail storefront.”

Agency CEO Donald C. Alexander said the question over whether Penske should be defined as a retail operation came up because agency restrictions at the park created in the 1990s are vague and subject to interpretation.

He said the agency does not have the authority to prevent Penske from moving in, even though its covenants technically ban retail operations.

Mr. Alexander said business owners are responsible to enforce those covenants.

Mr. Alexander said the letter sent from Penske to Mr. Lundy in December eased his doubts about whether the company should be deemed a retail operation.

“When I saw that letter, I was no longer concerned about them violating the park covenants,” he said.

Business owners have the right to challenge the move to allow Penske into the park in court, Mr. Alexander said. But the agency does not have the authority to police matters between business owners.

“We’re not in a position to really even offer an opinion,” he said. “If one of the park owners believe someone else is in violation, it’s incumbent upon them to do something about it. If someone were in violation of something, they would have the responsibility of proving or disapproving that in the court of law.”

Mr. Lundy concurred that park owners, not the JCIDA, are responsible to enforce agency covenants. He said Mr. Katzman would need to directly sue his company, Lunco Development and Property Management of West Carthage, if he decides to legally challenge the matter.

Park “covenants are extremely gray and can be interpreted a lot of ways, and there’s no process for resolving issues,” Mr. Lundy said. “Quite frankly, some of those covenants aren’t being followed by many people in the park today. The intent of the (retail) covenant was that a Walmart, or a very large traffic generator that is a 100 percent retail entity, would not go into the park. There are several facilities that have a minor retail part of their business, and we all felt that Penske is an industrial use.”

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