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Auburn sues Walmart for breaking deal

Auburn leaders might close the new Walmart superstore if the Arkansas-based retail giant fails to follow through with its agreement to redevelop its now vacant store site.

The City filed a breach of contract lawsuit Monday against Walmart Stores, Inc. in King County Superior Court. The suit claims Walmart broke its development agreement that saved the company big money on the new, larger superstore northeast of the SuperMall in exchange for its commitment to do something with the smaller site it vacated.

The new store – located at 762 Supermall Way SW, north of the Regal Cinemas – is 83,700 square feet larger than the old store, formerly at 1425 Supermall Way.

"We did everything we could to help them," Mayor Pete Lewis said. "We made a deal for them that saved them thousands upon thousands of dollars to get the permit. We didn't ask for a great deal. But the ex-banker in me says that if you make a contract, you complete the contract.

"As of right now, we are moving forward with steps that would lead to the revocation of their business license and occupancy permit," he said.

The superstore opened Oct. 27.

Walmart did not respond to requests for comment.

How it began

Walmart, the City of Auburn and Glimcher Development Corporation (GDC), which owns the SuperMall, entered into a development agreement on Aug. 21, 2006. Its purpose was to allow Walmart to acquire property next to the SuperMall and to develop it under the same zoning and development regulations that applied to the original development of the mall years earlier, saving it money.

Section 8 of the agreement talks about the redevelopment of the then-existing store. It says that if GCD should decide not to exercise its option to buy the old store and parcel, it would inform Walmart and the City about that in writing. In that event, within 90 days from the date the new store first opened to the public, Walmart would then have to enter into an agreement with an experienced retail development firm acceptable to the City for the redevelopment of the existing Walmart store building and parcel.

Walmart, or the City-approved developer, would then be obligated to:

• File an application with the City to tear down the existing store and redevelop the site into an open-air retail village containing at least two full service restaurants and other retail; or

• Present a plan to the City for the renovation and upgrading of the existing building for its re-use by a tenant or tenants "no less desirable to the City than the existing SuperMall anchor tenants."

Glimcher chose not to exercise its option to buy. Walmart informed the City that because GDC had waited until the last moment to announce its intention, Walmart would need an extension beyond the original 90 days.

Given more time

During a video conference at Auburn City Hall with Walmart's leadership and City attorneys and staff, Lewis agreed to grant Walmart a 60-day extension. Walmart said that it would redevelop the existing store, although it didn't identify potential tenants.

"I said I would grant the extension, though I didn't have to," Lewis recalled. "I said, 'Look, you signed a contract. We kept our part of the agreement, my expectation is you'll keep your end of the agreement.' They said, 'What are you going to do to us if we don't?' I said, 'Well, this could lead to closing your store — and I'm not kidding.'"

The extension was set to expire 5 p.m. last Friday. At 4 p.m., Walmart informed the City by e-mail that it had granted its unnamed developer an extension to June.

City attorney Dan Heid told Council members Monday that Walmart was in violation of what it had agreed to do, and the City filed its lawsuit.

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