*Translated by Google Translate

Introduction

I run a small bakery in town.

The reason I decided to file a lawsuit was that I heard a rumor that a new hot spring facility was going to be built on top of the park adjacent to the shop I run.

This park has very weak geological conditions and is designated as a special landslide hazard zone and a steep slope collapse risk zone in Fukushima Prefecture. We felt a strong sense of crisis that any new construction or related land development on such land would increase the risk of landslides and threaten our lives.

At the time, I had no idea where or by whom these discussions were taking place, so I started by trying to find a way to participate. When I finally managed to attend a related workshop, I was shocked to find that projects were being planned that disregarded the lives of local residents, and there were some concerning discussions about how the funds were being used and how the projects were being run.

Overwhelmed by this surprise and anxiety, I began by trying to understand how such a project was conceived, starting with contacting voluntary organizations that call themselves community development groups and researching administrative information.

What caught my attention amidst all of this was the outsourcing of work to private organizations, including the issues at play in this lawsuit. There were several unclear discretionary contracts in the outsourcing of public works projects, and in particular, public funds were being disbursed to organizations that were affiliated with the mayor's support groups or members of specific organizations, or the details of the disbursements were unclear. And since many of these were seemingly carried out following proper procedures, it seemed that the fraud was not easily detected.

I believe the transactions discussed in this lawsuit represent only a small fraction of the problematic administrative transactions that may exist.

▲While busy running my bakery, I learned about urban redevelopment issues and filed a lawsuit.

Summary of the case

This lawsuit takes place in the Joban Yumoto district of Iwaki City, Fukushima Prefecture.

The Joban Yumoto area, home to Yumoto Onsen and Spa Resort Hawaiians, is currently undergoing a redevelopment project in front of Yumoto Station by Iwaki City in an effort to revitalize the region.

In connection with this redevelopment project, the mayor of Iwaki City entered into a contract with a newly established corporation just one month prior. The contract, which was a discretionary contract where the administration arbitrarily selected the contractor, included tasks such as investigating the intentions of individuals and businesses with rights related to the redevelopment area, and considering the project schedule and scheme. The fee for this contract exceeded 9 million yen.

The contract at issue in this lawsuit (the service contract in question)

Under the Local Autonomy Act, contracts made by the government are, in principle, to be made through open competitive bidding, and discretionary contracts in which the government selects a specific contractor are permitted only in exceptional cases.

I believe this outsourcing contract is illegal because it does not meet the requirements for a negotiated contract.

The main issues with this contract are the following two:
① The city has arbitrarily selected contractors who lack the capacity to perform the contract and entered into discretionary contracts with them. 
② The city has paid the contractor fees without pointing out that the contractors who received the contract for services from the city have performed inadequate work considering the nature of the work, which is urban development.

This lawsuit seeks to compel the mayor of Iwaki City to return 9,342,300 yen, which was paid to Furayumori Co., Ltd., as a service fee for the "Support Services for the Formation of a Community Exchange Hub Area in the Joban District."

Issues in the trial

The action at the heart of this lawsuit is the mayor's order to pay out outsourcing fees.
The legality of the outsourcing contract (Outsourcing contract for support services for the formation of a community exchange hub area in the Joban district), which forms the basis of the expenditure order, is also being questioned.

History of the outsourcing contract

The main issues in this lawsuit are the following two points:

1. Whether this service contract falls under an exceptional case where it is permissible as a discretionary contract.

The Local Autonomy Act Enforcement Ordinance stipulates that, as a general rule, administrative bodies must use the open competitive bidding method when placing orders, and contracts where the administrative body arbitrarily selects a contractor and concludes a contract (negotiated contract) are permitted only in exceptional circumstances.

The source of funds for payments made by the government through contracts is public money (taxes), so "ensuring fairness," "ensuring economic efficiency," and "equal opportunities for participation" are required.

If this service contract does not fall under the exceptional cases where negotiated contracts are permitted (Article 167-2, Paragraph 1, Item 2 of the Local Government Act Enforcement Ordinance, "those whose nature or purpose is not suitable for competitive bidding"), then the conclusion of this service contract is illegal, and the order to pay the service fee will also be deemed illegal.

In terms of legal interpretation, when entering into a discretionary contract for the reasons stated in item 2, it is generally understood that the other party must be "the only contracting party capable of achieving the purpose of the contract (uniqueness)."

In this case, there are two main problems, and it is considered unacceptable to conclude the contract through a negotiated agreement.

(1) Arbitrary selection of contracting parties <br> The content of this outsourcing contract was to "conduct study sessions with local businesses, investigate their intentions, and consider business schedules and schemes."

However, Furayumori Co., Ltd., the city's contractor, is a corporation that was established only about a month before the contract was signed. It also has no track record in urban development projects.

Despite this lack of ability to perform the job, the city of Iwaki selected Furayumori as the contractor.

Approximately one month after signing the contract, Furayumori subcontracted the work (essentially handing it over entirely) to a company outside the prefecture, paying about two-thirds of the contract fee (6,022,500 yen). This also shows that Furayumori lacked the ability to perform the work. In other words, it is clear that Furayumori was not the "only contracting party," and the contract made by Iwaki City lacked the "fairness" and "equal opportunity to participate" that are expected of an administrative body.

(2) Irrationality of the estimate <br> The service fee of 9,342,300 yen was adopted as is from the estimate submitted by Furayumori.

However, the estimate used a template typically used in civil engineering and construction design, which was unsuitable for the actual work performed, and there was no documentation suggesting that the legality of the unit prices had been reviewed.

The conclusion of a business outsourcing contract in this manner is considered to fall under the category of cases where, according to case law, the contract itself is deemed invalid, "there are special circumstances in which the local government that concluded the prior contract made a significant deviation from or abuse of its discretionary power, and failing to invalidate the prior contract would negate the intent of Article 2, Paragraph 14 of the Local Autonomy Act and Article 4, Paragraph 1 of the Local Finance Act" (see Supreme Court Judgment of January 18, 2008).

2. Is it illegal for the mayor to issue a payment order without proper consideration, despite the insufficient performance of the contracted work?

Even if the contract is not invalid, there is a problem with the mayor issuing the expenditure order without proper consideration despite the insufficient performance of the commissioned work.

The key aspects of this contract included conducting study sessions with existing and new store owners and other stakeholders to facilitate smooth agreement in the redevelopment of the area around Yumoto Station, and to ascertain their intentions.

However, when the plaintiffs actually conducted a survey, it became clear that many of the existing stores in the development area were unaware of the study sessions held by Furayumori and had not participated in them.

The city should have inspected Furayumori's operations and instructed them to hold supplementary training sessions. If the issues were not rectified, they should have considered terminating the contract. Despite this, they simply paid the full amount of the outsourcing fee.

This violates the general accounting principles for government administration, which state that "expenditures must not exceed the necessary and minimum limits" and "the minimum necessary to achieve the greatest effect," and should be considered an illegal financial accounting practice.

Background

For approximately two years, from the time I first became interested in the urban redevelopment issue until filing this lawsuit, I have been pursuing information disclosure requests and investigations with administrative agencies.

In parallel, I consulted relevant books and papers as much as possible, actively attended workshops, briefings, and other meetings related to the redevelopment, inquired about the business plan, offered my opinions, and kept records to the greatest extent possible.

For me, running a small confectionery shop in town, it wasn't easy to take time off work to attend meetings, to read books and papers in fields largely unrelated to my work, and to connect these things and articulate the issues. However, doing so deepened my understanding of the issues and further increased my interest.

However, as our understanding deepens, so does our concern that the issues surrounding redevelopment will directly impact our lives. Imagining a future where we overlook this concern, I couldn't stop thinking about the problem.

Amidst these circumstances, we conducted a signature campaign regarding a land readjustment project within this redevelopment, submitted a written opinion to the prefectural governor by the rights holders, and also presented our opinions orally. However, our desire for a review of the project was rejected.

I consulted with several city council members, regardless of their political affiliation, and also brought the matter to the attention of council members who attended several opportunities to present their opinions.

I have also filed an appeal against the non-disclosure of administrative information. Ultimately, the information I appealed against remained undisclosed, and since I lacked the resources to pursue it further, I abandoned the idea of pursuing any higher-level legal action.

▲Some of the documents that have been requested to be disclosed so far

In the latter half of November, my family's health deteriorated. As I was forced to distance myself from the urban development issue, I was concerned about the approaching deadline for the resident audit request, which is a preliminary step to filing this lawsuit.

I was afraid that this issue would be swept under the rug. And I mustered the courage to proceed with the resident audit request, believing that what I had investigated could only be advanced by me.

Subsequently, the audit request was dismissed, leading to this residents' lawsuit.

Meanwhile, since the redevelopment plan progressed, seven shops located on the ground floor of the municipal housing complex within the redevelopment area have closed down, along with its demolition. A nearby mini-theater has also closed down, anticipating financial difficulties due to noise and vibration from the redevelopment construction. I have heard that several other shops within the project area involved in this lawsuit are also considering closing or relocating due to unfavorable conditions such as soaring rents after the development and uncertain terms. Some shops have been forced to withdraw without any choice due to relevant laws, or it has been difficult for them to relocate and restart their businesses.

My questions only deepen: what is the purpose of this redevelopment, and for whom is it intended?

▲A greengrocer founded in 1953 that closed at the end of February 2026 due to a redevelopment project.

Social Significance

Regarding the vulnerabilities of the system for outsourcing public works projects to private companies.

Currently, there are several systems that plausibly promote "public-private partnerships" in public works projects. However, I have come to realize that these systems for outsourcing public works projects to private companies are prone to corruption.

Through this lawsuit, I hope to share information about these risks with many people.

For example, in 2024, there was a case in Kunimi Town, Fukushima Prefecture, involving allegations of "donation kickbacks" using the "corporate version of hometown tax" system. When I read "Depopulation Business" (by Isao Yokoyama, Shueisha Shinsho, published July 17, 2025), a book written by a reporter from the Kahoku Shimpo newspaper that reported on this case, I realized there were far more similarities to this case than I had imagined, and the sticky notes I placed on the pages that interested me became like a fringe.

I learned that researchers have pointed out that this so-called "corporate version of hometown tax donation" system "prohibits providing financial rewards to donating companies. However, (omitted) this principle is hardly ever followed" (Yuta Kakegai, Associate Professor, Faculty of Humanities and Social Sciences, Ibaraki University, Monthly Journal "Residents and Local Government," May 2025 issue). This helped me better understand the reality that the outsourcing of public works projects to private companies is prone to corruption.

This reminded me of the news about the protests in September 2025 by young people in Nepal against the government that created a disparity in living standards between "Nepo Kids" and ordinary people.

"Nepo Kids" apparently refers to young people who are said to have obtained privileged positions through nepotism. This term is in the same context as political criticisms we hear or use in everyday conversation, such as "unequal society," "privileged politics," and "only thinking about money and oneself for the moment," and it made me realize again that these problems are truly widespread and frequent.

In the Yumoto-machi redevelopment project in Iwaki City, local civil engineering, construction, and innkeeping businesses, whose executives also serve on a voluntary organization that had previously entered into a partnership agreement with Iwaki City, established "Furayumori Co., Ltd." under government leadership. Shortly thereafter, without any prior business experience, they received a public works contract from Iwaki City. Then, "Furayumori" immediately subcontracted the work to a consulting firm in Kanagawa Prefecture that has long had ties with Iwaki City, a situation that inevitably raises suspicions of profiting from specific relationships.

On citizens and democracy

When I started raising concerns about the administration's approach to community development, I began receiving many inquiries not only from people in my own town but also from people in other towns. In most of these conversations, the complaint was that the opinions of the residents themselves were not reaching the administration at all, and that only the voices of people close to the administration and politicians, or those from large organizations, were being heard.

From these observations, I felt that there are some "obstacles" to realizing the kind of community that citizens truly desire, and that unless these obstacles are removed, their voices will not be heard. I also believe that this lawsuit makes one of these "obstacles" visible.

This lawsuit has made me realize just how disconnected many of us are from the tools of meetings, record-keeping, and law.

In other words, I have now painfully realized, belatedly, the terrifying reality that if we do not properly utilize these troublesome democratic techniques, our rights as citizens can be easily eroded—a realization I had never seriously considered before.

Instead of easily jumping on the bandwagon of easy, positive phrases like "someone can take care of it," "it's fun," "it seems like they'll get something done," "it's moving forward," and "it's new," I believe that we cannot create a fair city unless we, though it's incredibly troublesome, search for reliable information, research, learn, and even occasionally monitor the administration, thereby removing the "barriers" that prevent citizens from realizing their true desires.

I hope to share with many people the importance of recognizing the problems revealed by these specific "barriers" as quickly as possible, and speaking out to demand corrections.

▲A photo of the area around JR Yumoto Station as of February 2026.
As redevelopment gradually progresses, privately owned shops and public baths disappear, private parking lots are acquired and cease operations, and the area is deserted with hardly a soul in sight.

Use of Donations

- Fees for expert opinions from administrative law scholars and litigation fees (stamp duty, postage, printing costs, etc.)
- Attorney fees - Transportation costs for the plaintiff and attorney (gasoline and highway tolls from the Iwaki branch to the Fukushima main office)
Other investigation costs

Plaintiff's thoughts

Plaintiff: Yuko Nagaoka

Message from the Legal Team

My first encounter with the plaintiff, Mr. Nagaoka, was at a free legal consultation held at the local community center.

I remember being completely overwhelmed by Mr. Nagaoka's passion as he struggled to explain the problems with the contractual relationships for the redevelopment of Yumoto, presenting a large number of administrative documents along the way.

After that, Mr. Nagaoka's personal request for a resident audit was rejected, so we formally requested his assistance and filed this lawsuit.

The defense team consists of six lawyers, all from the local city of Iwaki.

As a legal professional living in Iwaki City, I intend to dedicate myself to changing the local administrative situation through a judicial approach.

Introduction of the Legal Team

Hirota Tsuguo, Hirota Law Office
Suzuki Nobue, Asano Law Office
Iso Shuichiro, Subaru Law Office
Oki Yuusei, Hirota Law Office
Sawada Tomoyuki, Sugata Law Office
Sugihara Yukiko, Hirota Law Office

In Conclusion

This lawsuit questions the fairness of contracts in local government and, by extension, the way in which government is run.

We believe that if more people become aware of this lawsuit and take an interest in how their local government is run, then the operation of local governments throughout Japan will surely improve.

We are fighting this lawsuit with all our might, hoping that "the administration of our local city of Iwaki will be improved even a little" and "that it will serve as a catalyst for the improvement of local administrations throughout Japan."

We would be grateful for your support.