Big Box Bulletin
Eminent Domain Becomes
a Threat to Small Retailers
The May 13, 2002, issue of Fortune published an article, “Fighting City Hall,” which discusses how many city politicians are using eminent domain—“which is the right of the government to claim private property for public use as it pays the owner a fair price”—to secure land for big retail chain developments, said the article.
According to the article, one small company that is fighting back is Minic Custom Woodwork, located in Harlem, owned by William Minnich and started by his father in 1927 in Manhattan. A developer wants to use the land to build a Home Depot and a Costco, said the article.
What is the advantage to city politicians? According to the article, it means “bringing in big national chains, which offer a town the advantage of more tax revenue and a larger pool of local jobs.” However, as the article said, this is at the cost of smaller businesses.
When small businesses are faced with the eminent domain threat, to whom do they have to turn? Minnich has turned to The Institute of Justice, a public-interest law firm in Washington, D.C., which “provides a much needed resource for business owners threatened with eviction.”
So far, Minnich has spent more than $100,000 to save his business, and he has filed lawsuits in both state and federal court. He’s also called on many politicians, such as Governor George Pataki, Mayor Michael Bloomberg and former Mayor Rudolph Giuliani.
Since fighting back, Minnich has held the developers at bay, but he hasn’t gotten a legal decision that would keep his shop in Harlem.
Minnich’s case has “drawn the attention of some state legislators, who have introduced a bill that would require that state government give businesses direct notice that they may be threatened,” said the article.
But this isn’t just happening in Harlem, it is happening all over the country.
According to an article recently published in the Indianapolis Star, “Dannemiller True Value Hardware is about to be hemmed in by competitors.”
Not a mile from the Indianapolis hardware store, construction is being finished on an Atlanta-based Home Depot. Plus Wisconsin-based Menards is constructing a store so close to the hardware store that “it literally could cast a shadow on Dannemiller by Christmas-time,” said the article.
So how does the Dannemiller family feel about its big-box competition building so close to its store?
The article quoted Martin Dannemiller, one of three brothers who owns the store, who said, “Concerned, certainly. But also optimistic about the increased traffic.”
But it should be noted that the Dannemiller store isn’t directly in danger of eminent domain, so the family might not be as concerned as Minnich.
“We’re happier that they’re opening up next door [rather] than five miles away,” Dannemiller says.
The Dannemiller hardware store was founded in 1972 by the brother’s father, David, and it was one of the first businesses on the highway where it is located.
“Dannemiller True Value is a classic hardware store,” said the article. “Its shelves are crammed with 20,000 items such as nuts and bolts, light bulbs and tools. It also handles lawnmowers, weed trimmers and other power equipment, and repairs the equipment in a shop out back.”
The Dannemiller family expects sales to drop, like it did when Meijer, with its garden and hardware sections, opened up the road in 1994.
However, Dannemiller said “Longer term, people will shop the big stores for sinks, cabinets and other major renovation items. But when they need more parts or advice, they will go to Dannemiller True Value.”
The article quoted Jim Lowry, a marketing professor at Ball State University, on whether Home Depot would be shutting down small hardware stores, similar to what has happened to many small drug stores when Wal-Mart has built stores in towns.
“While studies document Wal-Mart suffocating small businesses, Lowry knows of none showing the effects of home centers. However, anecdotal evidence suggests True Values fare well because of the cooperative ties and because the stores offer services including glass cutting and mower repair,” said the article.
“Survival-wise, it’s pretty respectable,” said Lowry.
|Illinois Town Looks at Previous High-Court Ruling
According to a recent article published in the Belleville News-Democrat, the Village of Swansea, Ill., is “trying to determine what effect a recent high-court ruling will have on its efforts to take property from the Moose Lodge and build a Home Depot.”
John Kurowski, the village attorney, is looking into the recent Illinois Supreme Court ruling, which rejected Southwestern Illinois Development Authority’s (SWIDA) taking of land from National City for use as a parking lot by Gateway International Raceway, said the article.
The article quoted Kurowski who said, “[The Illinois Supreme Court ruling] requires us to revisit all issues, and we’re slowly and deliberately going through it.”
But why are they looking so closely at this ruling? “The court determined SWIDA had not acted properly in awarding quick-take of the property because it was not a public use,” said the article.
Mayor Michael Buehlhorn wants to be certain the agreement between Swansea and Home Depot developer DMC Management meets the criteria set by the court.
“…Revenue expansion alone does not justify an improper and unacceptable expansion of the eminent domain power of the government…” stated the previous court ruling. “The initial, legitimate development of a public project does not justify condemnation for any and all related business expansions.”
“This Supreme Court thing is actually a tangled thing as far as I’m concerned,” Buehlhorn said. “There [are] agreements and things that have to be honored.”
According to the article, city offices are arguing that taking the property from the Moose Lodge to develop a Home Depot is a legitimate public use because of a later proposed community-centered phase of the development dubbed Village Center, reported the article.
“To me the whole thing is the town center,” DMC management president Alan Skop said. “My understanding of the redevelopment agreement is to redevelop the ground there and to create a town center.”
|Home Depot Profits Climb 35 Percent
The Home Depot Inc., based in Atlanta, recently reported a 35-percent jump in first-quarter earnings. The results beat Wall Street expectations and came the day after its number-one competitor, Lowe’s, reported its earnings.
Home Depot said it earned $856 million, or 36 cents a share, in its first quarter which ended on May 2. That compares to $632 million, or 27 cents per share, in fiscal 2001.
J. Lo at Home Depot
Maybe Jennifer Lopez really isn’t a diva all the time. A source reports seeing J. Lo loading up a shopping cart at Home Depot in a not-so-chic area of Los Angeles. J. Lo at Home Depot?
The Bronx-born singer/actress is known to be among the most difficult, high-maintenance performers in the business, reportedly refusing to sleep on sheets with a thread count of less than 300, demanding her dressing rooms be decked out in white curtains, white furniture, and white flowers and requesting that a pricey perfume be sprayed in her path.
“I [was at Home Depot] when I see this sexy Latina in a red velour, hip-hugging, bell-bottomed, midriff-exposing sweat suit, blonde hair in a ponytail on the top of her head, no make-up, no sunglasses,” a source told the Scoop on MSNBC.com. “[This woman] is standing next to me looking at the same plants and I’m thinking ... wow ... [she] is really workin’ it at the Home Depot in that outfit considering it’s a Sunday afternoon ... but she looks kinda sexy! Then I recognized her ... J. Lo!”
The source says that a store manager guided Lopez and her family out of the checkout aisle.
“The crowd of people grew, and she waved to her fans,” says the source. “One checkout clerk shouted, ‘J. Lo, girl, you look fine…You Go!’”
Lopez’s spokesman didn’t return calls, but when called for a comment, a representative for Home Depot proudly declared, “Even if you’re famous, you can still be a do-it-yourselfer.”
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