ST. CLOUD, Minn. - Costco Wholesale is asking permission to be added to the lawsuit a group filed against the city of St. Cloud.
The group, Citizens for Government Accountability, filed a complaint in August claiming the city's sale of Heritage Park land to Costco was a violation of Minnesota's subsidy law because the land was sold for less than fair market value. The complaint contends amount of the subsidy is at least $6 million.
On Monday, Stearns County Judge Shan Wang heard arguments on Costco's motion to intervene. He has 90 days to rule on the motion.
The city responded to the lawsuit by denying it sold part of Heritage Park to Costco for less than market value and asked the court to dismiss a complaint against the city. Costco Wholesale purchased about 19 acres of Heritage Park for $3.53 million. The city and Costco closed on the deal on July 27.
In court documents, Costco states it is necessary to join the lawsuit because Citizens for Government Accountability "strategically" filed its action only against St. Cloud even though it knew Costco and the city signed a purchase agreement in February and closed on the property in July, and Costco has visibly begun to develop the property for its retail store. Representing Costco is Minneapolis-based Briggs and Morgan.
The firm representing the city, Bloomington-based Iverson Reuvers Condon, submitted a letter supporting Costco's motion to intervene.
"Costco has standing to intervene because the requested equitable relief will likely involve or affect Costco's property interests," the letter states.
"While CGA is now arguing they are not seeking a rescission of such sale; they have requested unspecified equitable relief from the court which may entail rescission," the letter continues.
"It could adversely affect Costco so they should be able to represent themselves in the lawsuit," Jason Kuboushek of Iverson Reuvers Condon said Monday.
Attorneys for Citizens for Government Accountability filed a document opposing Costco's application for intervention stating Costco's attempt to intervene "goes far outside the bounds of the statute." Representing Citizens for Government Accountability is Boston-based Foley & Lardner.
"The harm that Costco necessarily seeks to avoid in its quest for intervention is paying fair market value for the property. However, Costco has already agreed in a written amendment to the purchase agreement to pay the city the amount of any subsidy determined by the court. As such, if this court determines that a subsidy was provided to Costco, Costco will simply have to pay the city the difference. This cannot be considered a harm," the document states.
"Moreover," the opposition document continues, "intervention by Costco would prejudice the plaintiff by allowing an improper 'double-teaming' on the same issues and exposing plaintiff to two sets of duplicative attorney fees as punishment for daring to challenge the transaction."
In the complaint, the group describes itself as a nonprofit unincorporated association organized "for the purpose of monitoring government actions and pursuing appropriate remedies under law where the government has acted improperly."
Group spokesperson Jon Austin, a Twin Cities-based communication consultant, would not say who the members are or how many members are in the group. The complaint states the group is made up of citizens who "reside in or own taxable property in the city of St. Cloud."
Austin responded to request for comment by email Monday.
He said Citizens for Government Accountability is concerned the city, "in its zeal to do a deal with Costco, sold off public parkland for millions of dollars less than its value.
"This constitutes a subsidy to Costco and while there's nothing wrong with the city providing a subsidy, Minnesota law requires the city to obtain written guarantees of job creation, wages, etc. to be reported quarterly for a period of five years," Austin stated. "If the guarantees are not met, the subsidy has to be paid back to the city. The CGA brought this requirement to the city’s attention. It then commissioned an independent appraisal which confirmed the land had been sold for millions less than fair market value. Our lawsuit simply seeks to confirm the amount of the subsidy."
