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A seemingly small squabble over store space in a California shopping mall could frame a national legal debate over the proper use of eminent domain. The dispute centers on Lancaster, Calif. — Los Angeles County’s northern-most city, on the edge of Edwards Air Force Base. The municipal government there is using eminent domain to evict a smaller retailer from a prime shopping location and is giving that spot to a bigger, more powerful chain. The smaller store alleges that the larger chain threatened to leave the area unless it got what it wanted. Cast as the Goliath in this tale is Costco Wholesale Corporation. The supposed David — the 99� Only Stores — has filed a federal suit against both the city and its redevelopment agency, claiming that its constitutional rights are being violated. The issue is no less than, “What limit is there to eminent domain?” according to Pasadena sole practitioner Christopher Sutton, 99�’s lawyer in the case. Gideon Kanner, a professor emeritus at Loyola Law School whom 99� has hired to assist in the matter, notes that in recent years local and state governments nationwide have been using eminent domain to condemn small businesses in order to make way for bigger ones. Such transactions, he says, are done in the name of redevelopment, which is considered to be a public use and the traditional basis for eminent domain. But, claims Kanner, “making money is hardly a public use.” However the battle is characterized, these facts are undisputed: Lancaster’s Redevelopment Agency made a deal to buy from the mall’s landlord the remaining 17 years on 99�’s 20-year lease for $3.8 million and then sell the land and the building to Costco for $1. Quips 99�’s vice president and general counsel, Russell Wolpert: “We thought we had the best prices in town until we found out about this.” As the redevelopment agency sees it, this move is necessitated by its ongoing effort to keep the area healthy. Valley Central was officially declared blighted back in 1983 — not because of decay, but because it lacked such basic infrastructure as flood control channels, streets, and storm drainpipes. Sutton claims that the area has since been so built up that by 1995 it could no longer be called “blighted” and was therefore no longer in need of redevelopment. Critics of this use of eminent domain complain about a loss of private property owners’ rights. But proponents say that its use is justified by the economic benefits such actions can bring to struggling communities. Injecting more money into the tax base, they say, is clearly for the public good. Costco has not been named by the suit and declined to comment on it. According to 99�’s complaint, Costco threatened to leave Lancaster unless it could expand its roughly 127,000-square-foot store into the 19,000 square feet that its competitor 99� occupies next door. The city offered 99� other locations, but 99�’s lawyers say that its current spot is ideal. Located in the Valley Central Shopping Center, a 75-acre spread with much of the best local shopping, it has easy access to the local major highway. 99� GC Wolpert says that when he asked city officials why Costco needs his store’s space, despite Costco’s being surrounded by vast parking areas into which it might expand, they effectively told him, “[Costco is] the 800-pound gorilla. We don’t want to piss them off.” The city’s lawyer, David McEwen of Newport Beach, California’s Stradling Yocca Carlson & Rauth, scoffs at the notion. The redevelopment plan is still officially in effect — and will be until about the year 2023, he says. And Costco cannot effectively expand anywhere but into the 99� space, says McEwen, due to a number of considerations, including traffic flow. McEwen notes that when redevelopment plans are drawn up, they are set for a period of time, and then automatically expire. And, he says, “under California law, all we have to show is that [an action] is part of redevelopment” to prove that it is a public use — eminent domain’s justification.

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