JCPenney withdraws eminent domain challenge at Boulevard Mall (2024)

A month after losing its second court ruling, JCPenney has dropped its legal bid to block Amherst’s use of eminent domain at the Boulevard Mall, paving the way for the redevelopment of the entire site into a town center.

Amherst Town Supervisor Brian Kulpa confirmed that the retail giant has withdrawn its lawsuit against the town to prevent the seizure of the store, and will instead now work with town officials and developers Douglas Jemal and Benderson Development Co. to ensure it remains part of the future project.

“They want to stay on-site,” Kulpa said Friday. “We’re going to now enter into a conversation with them about how to keep them open in their current building as long as possible, and then they’re going to need to talk to the development partners that would be taking on the project about getting into a new site.”

The decision by JCPenney removes a significant legal obstacle to the broader plan by Jemal’s Douglas Development Corp. and Benderson to remake what had been the region’s second-biggest mall into a town center concept, with a combination of residential, retail, restaurants and other users.

Jemal bought most of the 64-acre mall in 2019, and unveiled plans for a $150 million overhaul with backing from the town that would demolish much of the mall, install new roads and infrastructure, and then construct new buildings. Benderson, which also owns part of the property, is working with Jemal to handle the retail component.

But Jemal has been stymied by pre-existing conditions that hinder use of the parking lots and other land. And the JCPenney store, in particular, is a key component, because of its prominent location that stands in the way of demolition and construction. So at Jemal’s request, the town turned to eminent domain to seize the entire mall property as a means to cancel those factors before selling the property back to him once the legal barriers are removed.

However, JCPenney, which has operated at the mall since 1972 as one of the anchor tenants, owns its building, although not the ground underneath. Rather than negotiate, its Penney Property Sub Holdings entity filed suit to stop the town from taking its property.

It lost its first appeal last October, when a panel of appellate court judges in Rochester sided with the town, and then lost again in mid-April when the state Court of Appeals dismissed its case because “no substantial constitutional question is directly involved,” according to the decision.

The town initially thought the company would continue its fight. But Kulpa said the retailer recognized that it was in its own interests to cooperate instead.

“We’re going to work with them. We’d like them to stay,” the supervisor said. “I think they understand, and their building is too big for what they have and how they operate around the country. We would like to see a viable company stay in a viable place. The devil’s going to be in the details on that one. There’s a lot to do there.”

Talks can now proceed between JCPenney and the developers, particularly Benderson. “The Penney’s people, their non-attorney team, have been very positive about working with us and the project moving forward,” Kulpa said. “So we’re happy to have conversations.”

In the meantime, he added, there are still ongoing discussions about the transactions between the town and the developers to set fair acquisition and resale prices.

“My goal is not to have town financing involved in this stuff,” Kulpa explained. “We don’t want to go and dip into a piggy bank or into our reserves. We don’t want to go bonding something and taking on debt for a temporary transaction. So we have some work to do to make the next steps possible. This is a regionally significant project, so we have to get it right.”

Planning is already well underway for off-site infrastructure work that is necessary, especially a $41 million project to correct long-term sewer problems.

The town is planning to reroute the sewer lines up Bailey Avenue instead of Niagara Falls Boulevard, while also expanding the line to increase capacity. Engineers are about 90% done with construction documents, before the work goes out for bid and starts this summer. The town received $31 million from the state to fund the work, leaving the town to cover the remaining $10 million.

“It’s the entire west side of the town of Amherst. It’s been a pinch point for years,” he said. “But it has to happen in order for us to do what we want to do here as well.”

Additional infrastructure work will likely be needed on the mall site, including construction of new roads and utility lines. But those details won’t be known until the redevelopment plans are firmed up, although Kulpa said he expects a special district will be set up for the mall property, with tax-increment financing to help cover the project cost.

For now, though, JCPenney, Macy’s, TGI Fridays and Dick’s Sporting Goods continue to operate at the mall under their current ownership and terms, although the rest of the mall is essentially empty after the remaining month-to-month leases were terminated. Dick’s is moving to a new store being constructed by Benderson on Bailey, but otherwise, “the goal is to try to keep all of those operational until they can get into new homes,” Kulpa said.