Walmart officials are working with the City of Auburn on a deal that would avert the closure of their new superstore over what the City claims is a breach of contract.

City leaders are optimistic that things won’t come to that pass.

“Walmart officials have flown out from Arkansas and met with us, and we’re working with their staff right now to have an acceptable agreement in place prior to the next Council meeting (April 18),” Auburn Mayor Pete Lewis said Tuesday.

Walmart has not responded to requests for comment.

The City filed a breach of contract lawsuit last week against Walmart Stores, Inc. in King County Superior Court. The suit claims Walmart broke a 2006 development agreement that would save 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 intended to vacate.

The City’s trump card is that it holds the superstore’s occupancy permit and business license, and could revoke them should the Arkansas-based retail giant fail to follow through.

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. It opened Oct. 27.

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 discusses 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, GCD 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 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.

That extension expired at 5 p.m. March 25. 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.

The City has since posted the property for non compliance on a daily basis.

“Our goal is not to close them down. It’s exactly the opposite. What we’re trying do, first of all, is we don’t want that old building owned by Walmart left standing for decades, vacant,” Lewis said. “We kept our part of the contract, now we expect them to keep theirs.”