Saying "only for public projects" sounds good but in reality it's not that simple. Is a highway interchange put in X spot because traffic demands it, or to benefit the owners of the adjacent land?
This particular instance sounds egregious, but I see shades of grey. First, remember that the CVS guy is still entitled to get "fair compensation" for his property, and he can make all sorts of arguments as to what that should be. Second, it's likely that CVS wouldn't have considered this location were it not for the other developer's activities in the area. And those activities would not have been taken without the assurances that the other developer got up front for taking on the redevelopment of a blighted area.
The courts may view this as an inappropriate transfer of the condemnation authority to the private developer, but, again, I don't think it's as black and white as it first appears.