LANCASTER — The 99 Cents Only chain filed suit in U.S. District Court on Monday to block this city from ousting one of its retail stores from leased space to make way for the expansion of a rival Costco store.
The suit claims the Lancaster Redevelopment Agency violated federal law by voting June 27 to spend $3.8 million to acquire the 18,878-square-foot building that the 99 Cents chain leases at the Valley Central Shopping Center without due process or a proper public purpose.
The company also charged that Lancaster relied on a staff report that was "willfully inaccurate, biased and obsolete," while the condemnation decision "was predetermined . . . and improper."
"We had an 18-year lease on this property and come to find out that Costco and Lancaster have been secretly meeting about evicting us from our own land," Russell Wolpert, general counsel for 99 Cents Only stores, said. "That's not due process, and making a very successful corporation richer is not a public purpose."
But Lancaster City Attorney Dave McEwen disputed the accusations by 99 Cents Only.
They are "without any substance and there is no basis for any allegations in the complaint," McEwen said. "There were no threats made, and Lancaster has complied with the law in using its eminent domain power."
Lancaster Redevelopment Director Stafford Parker said last month that the city explored all possible alternatives before considering condemnation.
But when Costco, the city's third-largest retailer, threatened to leave for neighboring Palmdale, Parker said it left the city no choice but to accommodate the retailing giant.
Wolpert said the 99 Cents Only location--squeezed between a HomeBase and the Costco--is a particularly good one that the company refuses to relinquish.
99 Cents Only signed a three-year lease in 1998 with the shopping center landlord, Burnham Pacific Properties Inc. As part of the deal, the store has three renewable options of five years.
An official for the California Redevelopment Assn., a nonprofit group representing 325 local redevelopment agencies including Lancaster's, said relocating one business while allowing for the expansion of another is within the scope of a municipal redevelopment agency's powers but is rarely used.
Others contend such decisions abuse the process because the beneficiaries are almost always large corporate retailers playing cities against each other, for what amounts to corporate welfare.