Chase’s Savvy Foils Foes of Its Branching Campaign

Big national chains have been trying in vain for years to open stores along the artsy San Francisco strip known as the Western Addition. Activists rejected Burger King, Domino's Pizza and Blockbuster.

Then JPMorgan Chase & Co. came to town. Last week the city of San Francisco rebuffed a third attempt this year to derail the bank's bid to open a 4,000-square-foot branch a few blocks east of the city's famous Haight-Ashbury district.

The victory was the latest in a string of loud, expensive battles that have bolstered Chase's reputation as one of the country's most effective commercial developers. The New York banking giant has proven itself willing to fight for real estate as hard as it does for customers, in the rare instances when its branch-building plans have been challenged.

"I've lived in the neighborhood since the mid-1990s, and no new chains have opened," said Dean Preston, a community activist who opposed JPMorgan Chase's entry into the neighborhood. "They have sidestepped the [approval] process with the permission of the planning department. They haven't had the hearings that would be normally required."

People outside Greenwich, Conn., and near Sacramento, Calif., have similar laments. Locals there also fell short in efforts to stop Chase from building new blue-and-white branches that double as permanent billboards.

Its tenacity threatens rival banks in California, Florida, Ohio and other key markets where JPMorgan Chase is growing fast. At a time when most banks are either closing branches or investing modestly in new ones, the company intends to open as many as 2,000 over the next five years. It added more than 150 branches to its 5,300-outlet network in 2010.

"They have a lot of people, internally, that are looking at sites continuously," said an architect who helped build eight Chase branches in the last two years and requested to speak anonymously to avoid antagonizing his client. "Some of the smaller guys [banks] can't continuously fight" when a project is stalled by opposition.

What harm does a bank branch do to a neighborhood? Foes often fear traffic tie-ups, commercialization or harbor less tangible concerns.

"Nobody really likes banks," said Mark Brennan, a principal with the company that owns the San Francisco lot JPMorgan Chase is leasing for its new branch. "We put a Wells Fargo in the Haight-Ashbury district five years ago. There was some opposition, but it wasn't as virulent as the opposition we faced with Chase."

In navigating such squabbles, JPMorgan Chase may be benefitting from a more comprehensive infrastructure to handle them, compared with those of Bank of America Corp., PNC Financial Services Group Inc., U.S. Bancorp and others.

Peter Berg, head of the Greenwich, Conn., Legislature's land-use committee, was awed by the resources JPMorgan Chase put into outmaneuvering opposition in his town.

"I know how costly these efforts are on the part of the applicants," Berg said. "At every meeting, there would be four or five people there representing Chase. And they're all getting paid. They sit there for hours. It's gotta be a huge expense."

The Connecticut branch is slated to replace a restaurant in the enclave of Cos Cob, where JPMorgan Chase is leasing space. In September the town planning and zoning commission denied the branch proposal, citing traffic and safety issues after residents complained that the area had too many banks. The zoning commission reversed that decision in February, under threat of a lawsuit from the developer.

Berg said he was impressed by JPMorgan Chase's resolve and sophistication throughout the process.

During one early hearing, Berg said he "challenged" the company to explain why it needed a branch in the area by asking how many local customers it had.

"They came back with a map with … little, colored dots for every household with a Chase account," he said.

The bank also agreed to eliminate drive-through lanes in response to the traffic worries.

The nine-month fight over the San Francisco branch was primarily about the neighborhood's aversion to nonlocal businesses.

The thrust of Preston's objection — and the two failed challenges that followed his — was that JPMorgan Chase should be classified as the kind of retailer that is subject to a lengthier building approval process.

The local planning department had decided it should not when it first issued a building permit in January. The city's appeals board ultimately sided with that decision. A spokeswoman for JPMorgan Chase said that was the last hurdle to that location. Building should begin shortly, she said.

Brennan, the site's landlord, said JPMorgan Chase was at times slow to make decisions but also assigned its own legal counsel to handling the appeals, rather than leaving them to the landowner, as some other developers do.

"They're not very arrogant in terms of 'We're coming in and this is how it's going to be,' " Brennan said.

Mark Deven, manager of the City of Woodland, gave a similar assessment.

"They know what they're doing," he said. "They had a challenging situation in our community not of their making and they still handled it."

The company is nearly ready to start work on a 4,100-square-foot branch downtown that a local development group tried to block. The project, in the works for nearly two years now, was well under way when a group applied for public money to refurbish a historic theater that was located next door. The theater project would have required use of the vacant lot to which JPMorgan Chase had sought to gain rights.

Activists stirred up resentment against Chase when the theater project failed, Deven said. A community group asked the company to consider switching locations and urged supporters to send letters and email messages to Jamie Dimon, the banking company's chairman and chief executive officer.

"I really believed it was not feasible. They listened, they looked at it," Deven said "Their general approach was to listen and understand what was going on."

Though the company decided not to move, it agreed to add a facade to screen the parking lot from view. It also made some modifications to the building itself. In January the city council rejected an appeal that had been filed in a bid to deny the project on architectural grounds.

"There hadn't been a new development by the private sector in quite a few years and here are these guys trying to build a nice branch on a dilapidated, weed-choked vacant parcel," Deven said. "They just got caught in the middle of a screwball process."