He has a domain (land) that the startup (property developer) wants but refuses to sell. He's trying to use domain squatting laws (eminent domain laws) to force an ownership transfer.
Yes, but local governments are regularly in bed with big money interests which would include land developers. So, the land developer gets the local government in his pocket and convinces them to use eminent domain to make a project happen that will bring lots of tax revenue to the government.