Freezing of retail licences by Prefects may unleash a wave of litigation

Alexia Robbes is a lawyer at the firm Baker & McKenzie. She specialises in urban planning and real estate law. We asked her to analyse specific provisions concerning retail zoning and real estate in the newly passed ELAN Act.

The ELAN Act restores economic criteria in impact assessments submitted with retail licence applications. What could be the effect?

The French National Commercial Development Commission (CNAC), which reviews numerous applications, already takes a deep interest in the issues addressed by the ELAN Act. City centres are always the focus of attention, especially regarding retail vacancy rates. The commission checks whether the application conflicts with projects funded through the FISAC mechanism to support local crafts and retail. It welcomes proposals to reuse existing brownfields but cracks down on expansion projects that involve a relocation which would generate a brownfield on the original site, even if the applicant is only a tenant and by definition has no power over the building that becomes vacant.

What is new is that the enactment decrees will define specific concepts, especially regarding vacancy rates.

Most of the data is fragmented and unreliable. This issue has prompted intense discussions at the CNAC, whose analysis should soon be made public.

What about the power granted to Prefects, in some cases, to suspend registration and examination of retail licence applications for three years? 

The act waives authorisation for retailers in areas covered by a city centre revitalization project (ORT). The power to suspend licencing concerns the outskirts of these cities and it would be exercised on a project-by-project basis, though the act is ambiguous on this point. This raises two problems. First, the territorial scope extends to the administrative boundaries of the neighbouring EPCI (public establishment for inter-municipal cooperation) for projects “likely to substantially undermine the purpose” of the ORT. It is potentially very wide.

Second, there is lack of visibility because project owners must file an application to learn whether or not it will be examined. In addition, there is lack of transparency about the decisions because a suspension could take place after filing an application, and possibly during review of the application by the prefecture. Given the upstream investments required, or for urban development zones (ZACs) including retail areas subject to licencing, such a precarious situation is unbearable. This point remains to be confirmed but appears likely to give rise to much litigation.

The ELAN Act tackles improper claims: What can we expect for retail projects?

Now, to be eligible to file an appeal, associations must have registered their articles of association at least one year before the building permit is notified. For large projects, made public well in advance, consumer associations opposed to the project have time to form. The law could prevent appeals against smaller, less-known projects, but associations already exist in most counties and they would be able to lodge an appeal. The act should not, therefore, change much in matters of retail real estate.