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Originally written in December, 2008.

by Christopher Brinckerhoff

searssnapshots

The Village of Palatine has its sights set on the retail space at the corner of Hicks Road and Baldwin Road for a new police station. They could decide to build a new village hall there too. Sears is suing the Village for breaking a contract which gives them tax incentives to fix up the property. Photos by Christopher Brinckerhoff.

If the Village of Palatine has its druthers, a large strip mall will be the site of a new police station and “other municipality purposes,” according to court documents filed by the Village.

But before the bulldozers chug and spit their way over the condemned property, the Village is going to have to resolve litigation brought to them by the largest tenant of the mall, Sears, Roebuck.

The retail giant is suing the Village for condemning their leased property. The Village evoked eminent domain in a complaint filed in 2007, about two and a half years after the Village and Sears signed an Economic Development Agreement together.

Sears also sued for breach of contract of the Economic Development Agreement. In the contract, Sears agreed to remodel the former K-Mart store space, and, if they did this, the Village would give the company sales tax rebates for 10 years.

The purpose of the Economic Development Agreement, according to Mayor Rita Mullins, was to avoid closing the store. The upside was to have the building converted into a Sears Essentials instead of closing the retail space.

At the time, K-Mart was shutting down some stores. They had just purchased Sears, Roebuck. Mullins said the hope was that the new store would increase sales tax revenue from what it was as a K-Mart store.

“We were very optimistic,” Mullins said. “We thought it might even double. But in the meantime, they did nothing to fix the parking lot, do a facade improvement, do anything there.”

Some residents are not in favor of the proposed changes to use the property for municipalities.

“One thing I’m not interested in having in my backyard is a police station,” said Bill Marley, a resident who lives behind the condemned property. “I just think in terms of number one, the activity. And number two, the people that they’ll be dragging in there, it doesn’t appeal to me at all.”

Resident Judie Baird lives adjacent to the property, and said she’s not opposed to the development plans being tied up in a possibly lengthy legal process.

“Tie it up,” Baird said. “I don’t want a police station there because of noise. They’re going to bring prisoners and stuff in there. Uh-uh.”

The police department currently shares a building with the Village’s offices, and is next to the Park District. The present space was the location of Palatine High School until the school moved in the late 1970s.

A new landowner purchased the strip mall with Sears in 2005. The original owners they bought it from, Palatine Associates, LLC, had owned it since the 1960s.

One expert on eminent domain cases said the condemnation would likely go through unimpeded.

Casey Piper, an attorney in Alabama who has worked on cases involving eminent domain, but who is not intimately familiar with this case, said “because the municipality played some role in encouraging the owner into making this investment, they’re going to look bad when they pull the rug out from under their feet. I don’t know that it’s an outright defense to the taking, though.”

The reason why is because the decision to condemn property is a governmental power, according to Piper.

“And the council cannot bind themselves, or certainly not any future administration to not exercise that legislative power,” Piper said. “It’s sort of like saying we won’t raise taxes. That just means that they didn’t raise taxes with that breath, but they still might raise taxes because it’s a legislative decision.”

Eminent domain basically says that the Village can take whatever property they want as long as they can prove it’s necessary.

The courts tend to broadly define what factors make an action necessary in these cases, according to Piper. That makes it extremely difficult to prove the action is not necessary. But that’s just what Sears’ attorneys are trying to do.

One of Sears’ attorneys representing their 537 North Hicks Road store, Natalie Spears, declined an interview, but emailed this statement.

“Sears has invested millions in that location and has loyal associates and customers who count on that store,” the statement reads. “We are working to prevent the village from condemning the site because we believe it’s unwarranted under the law and unnecessary for the public improvement.”

The Supreme Court case Kelo v. City of New London was significant for the legal use of eminent domain. Before Kelo eight states stopped eminent domain for economic development unless it was to eliminate blight. But the meaning of blight has been stretched to mean almost anything the governing bodies have decided it does.

While the condemnation action is difficult to stop, Piper said sometimes people are defrauded. If Sears proves the Village defrauded them by breaching their Economic Development Agreement, they may be awarded additional damages.

“There could be some recovery to the landowner,” Piper said.

Sears leases their part of the plaza. They do not own it.

“But their remedy wouldn’t be the outright defeat of the condemnation action,” Piper said. “The condemnation action will go forward, and that will cause some damages that might be actionable above and beyond what the normal damages that would be rewarded in an condemnation case.”

Baird said she would rather have them keep the renovated retail store, especially in these tough economic times.

“Mullins keeps saying the parking lot and everything looks terrible,” Baird said. “It doesn’t look any worse than any of the other places. She keeps saying the store looks run down, and it’s dirty. I think they’ve done a lot to improve it over there.”

Copyright 2008

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