(CNN) — A New York City nonprofit representing hundreds of small supermarkets, bodegas and grocery store owners is suing Mayor Zohran Mamdani and the city in an effort to stop his plan to open five government-owned grocery stores.
The Multicultural Business Coalition, a group representing small business owners, filed a class-action lawsuit in New York County Supreme Court Monday, alleging Mamdani’s plan violates the civil rights of smaller, minority-owned grocery stores as they cannot afford to match the discounts offered by the city-run stores.
“You cannot expect hard-working small business owners to compete with a supermarket that isn’t going to pay rent, won’t have to pay an electric bill and won’t have to buy their products at full price,” Mark Jaffe, the group’s general counsel and president of the Greater New York Chamber of Commerce, told CNN. “They cannot possibly compete because no one will be subsidizing them.”
The city’s law department referred CNN to Mamdani’s office for comment about the lawsuit.
When asked about the lawsuit at a news conference Monday announcing a city parks initiative, Mamdani said he was confident in the legality and importance of his plan.
“We’re talking about delivering five city-run grocery stores in a city of eight and a half million people that has more than 1,000 grocery stores,” Mamdani said, adding two markets in Manhattan and Brooklyn operating on a similar model have not had a negative effect on the bodegas around them.
The markets referenced by Mamdani have been operating for years, managed by the city’s Economic Development Corporation, which rents city-owned properties to private vendors at below-market rates and covers other operational costs.
The lawsuit marks at least the third time a signature affordability proposal by Mamdani’s administration faces a legal challenge. Earlier this month, a group of homeowners filed suit to stop the rollout of Mamdani’s pied-à-terre tax as applied to their properties, and it has been temporarily blocked by a Staten Island judge. And landlords have sued to challenge a rent freeze covering one-year and two-year leases for people living in about 1 million rent-stabilized apartments.
City-run stores plan to offer food staples at 30% below market rates
Mamdani’s grocery plan, a major plank in his affordability agenda, aims to offer cheap healthy foods to New Yorkers struggling with increasing food prices, although the stores would be open to anyone.
The plan also focuses on increasing access to fresh produce and staple pantry items in a city where in some neighborhoods, more than 30% of people are food insecure.
When Mamdani announced details of his plan last month, he said the stores would offer “a collection of essential staples” at 30% off market rates. The plan is estimated to cut New Yorkers’ average grocery bill by 15% or approximately $90 a month, according to the mayor’s office.
The lawsuit filed on behalf of the small business owners suggests the threat faced by Mamdani’s grocery plan is the same as if Walmart were allowed to operate in New York City – something local officials have long fought against.
The plaintiffs also argue the city has not conducted a proper analysis of how the city-run stores will affect local businesses, alleging city officials selected sites arbitrarily and failed to study neighborhood needs.
The first of the five stores is slated to open next year at Hunts Point in the Bronx. The rest of the stores are expected to open by 2030, according to the city.
Jaffe, who is representing the plaintiffs, said the store owners are hoping the city will listen and try to reach an agreement with them.
“There is a better way to feed the struggling people of New York City,” Jaffe said. “We have seen no business plan, this is just a marquee store that will allow the mayor to say he kept a campaign promise, so we are asking the judge to stop this.”
Mamdani’s administration has already set aside $70 million to open the stores, and city officials are requesting proposals from external operators to run the stores.
Mamdani’s grocery plan is not entirely unheard of. It draws on government-owned and subsidized models that already exist in the United States, including the Defense Department’s commissaries for military personnel, public retail markets that lease space to farmers and chefs, and city-owned stores in rural areas like St. Paul, Kansas.
In Atlanta, the city has launched a public-private partnership to fund a municipal grocery downtown and a second location designed to bring fresh food to low-income neighborhoods is in the works. Other cities like Madison, Wisconsin, and Venice, Illinois, also plan to open municipally owned stores.
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