San Diego, CA. Wal-Mart Forcing Taxpayers To Spend Millions To Repeal Big Box Law
To Wal-Mart, Democracy is just another commodity you can buy -- if you have enough money. In San Diego, California, Wal-Mart is attempting to buy public policy, and to overturn a city council vote. Their actions will cost local taxpayers million of dollars.
For several years, anti-big box residents have been trying to keep huge stores out of San Diego. On June 5, 2007, Sprawl-Busters reported that Wal-Mart was threatening a voter referendum on a big box ban in San Diego. Wal-Mart was very displeased with a city ordinance which placed a size cap on retail stores. A series of city council votes, stretching back to November, 2006, had prompted Wal-Mart to threaten city officials that if the size cap ordinance passed, the retailer would gather signatures to try to repeal the measure using the ballot.
In November, 2006, the city council took its first major step towards imposing a cap on the size of retail buildings when it voted 5-3 to ban retail stores of more than 90,000 s.f. that use 10% of their interior space to sell groceries or other merchandise that is not subject to sales tax. This ordinance was modeled on similar ordinances in California -- most notably Turlock -- where Wal-Mart failed repeatedly to challenge the law in the courts.
The Mayor of San Diego, Jerry Sanders, told reporters at the time that he would veto the new cap if it went through its required second vote in January. San Diego's ordinance was seen as a pre-emptive strike, since the city had no Wal-Mart supercenter. But local sources indicated that Wal-Mart was ready to add several supercenters in San Diego.
In early June, 2007, the city council took its final vote to pass the new ordinance on a 5-3 vote. Mayor Sanders made it clear he would veto it, and to further intimidate the city council, Wal-Mart indicated that they would hire people to gather signatures to put the measure on the ballot in the form of a referendum.
Wal-Mart's threat was enough, because holding a special election is very expensive, and city councilors were not prepared to tangle with Wal-Mart. Instead, when Mayor Sanders vetoed the ordinance in July, 2007, one city councilor, Donna Frye, changed her vote and opposed the ban, and voted with the Mayor. The San Diego Union-Tribune called Frye's change of heart a "surprise twist." This made the vote on the override a 4-4 tie, which meant the override did not prevail -- and the Mayor's veto killed the new big box ordinance Frye told the media she wanted to work on a new version of the law that will require big box stores to study their economic impacts on other businesses.
That's exactly what happened. "I heard from many, many people that want to have that choice," Frye told the Union-Tribune, "and I think there's a way to give people that choice, to hopefully put something in place that also protects small businesses by doing an economic impact report and allowing the communities to have a greater oversight of that process."
The head of the United Food and Commercial Workers (UFCW) Local 135, said he was shocked when he heard the rumors that Frye had switching sides. He said union members flooded her office with phone calls in protest. "I think she turned her back on working people," he said. "I think she turned her back on her constituents, and quite frankly I think she proved that she doesn't have the guts to stand up to the mayor or stand up for her constituents."
One of Frye's constituents was quoted by the newspaper as saying, "These things are environmental abominations and you have no idea what you're giving up by not overturning the veto," he said. "They have horrible traffic impacts, horrible noise impacts, horrible air quality impacts. They are energy hogs, and they are not compatible with the neighborhood concept this city wants to have." The head of the San Diego Neighborhood Market Association, which represents 2,000 small businesses in the city, said her group was disappointed by Frye's decision to reverse her vote.
Almost three and a half years later, the city council took up the watered down version of a big box ordinance. Once again, the city council passed an ordinance to require certain superstores over 90,000 s.f. to conduct an economic impact statement.
A 'superstore' is one which dedicates more than 10% of its floor space to groceries, prescription drugs, and other nontaxable items. It would not affect home improvement stores or warehouse clubs like Sam's and Costco.
Such economic impact report ordinances have been adopted in many communities across the country, and are a statutory requirement in states like Maine and Vermont. Most impact ordinances do not distinguish between those carrying groceries, and those which do not.
Repeating history, Mayor Jerry Sanders voted on November 29, 2010, to veto the milder economic impact legislation also. "I do not believe it is the City's role to determine where consumers may shop or to provide a competitive advantage to certain retail businesses," Sanders said in his veto message.
Councilor Todd Gloria, who is the lead sponsor on the economic impact statement, needed to round up five votes for the measure. The councilor who switched her vote, Donna Frye, is leaving the board. But the new councilors coming on in January would tip the balance against the economic impact ordinance, so Gloria moved ahead to an override vote on the Mayor's veto. This time around, the City Council voted to override Mayor Sanders, and the new ordinance is on the books.
Before the override vote, Wal-Mart began threatening a public referendum. The retailer took out full page ads in the Union-Tribune newspaper, saying the City Council was just carrying water for the unions, and urging San Diego voters to "be a voice for choice."
This week, the Union-Tribune reports that Wal-Mart "has launched a furious campaign" to gather at least 31,000 signatures to put the new law to a referendum vote. The giant retailer is buying its place on the ballot by hiring private firms to go out and gather signatures for them -- and where else to gather signatures than in front of another Wal-Mart store? One of the companies Wal-Mart hired told the newspaper that they are standing in front of a nearby Wal-Mart gathering signatures for San Diego residents shopping at the Wal-Mart. A company spokesman for Wal-Mart would not say how many signatures had been gathered to date, and the Union-Tribune did not ask how many thousands of dollars Wal-Mart will have to pay for these signatures.
But the cost of gathering these signatures will be trivial compared to the public cost facing San Diego taxpayers if this referendum has to be held. According to the newspaper, because there are no elections slated in 2011, the city will have to hold a special election for the Wal-Mart referendum, and taxpayers will have to cough up as much as $3.4 million to pay for the election Wal-Mart is provoking.
Because San Diego is already facing a major budget deficit, no one in the city wants to waste taxpayer's dollars, so Wal-Mart's opponents are calling on the company to pay for the election it wants to hold -- since it is the company which stands to gain hundreds of millions in new sales if the big box law is overturned.
The head of the San Diego-Imperial Counties Labor Council, Lorena Gonzalez, told the Union-Tribune that Wal-Mart such pick up the tab for the special vote -- because this is being done at Wal-Mart's instigation. "While $2.5 million is probably a drop in the bucket for a company at the top of the Fortune 500 list," Gonzalez said, "it's sorely needed in a city that is struggling to keep cops on the street, fire stations on alert and libraries open."
But Wal-Mart is not about to offer to pay for anything -- other than the money it has spent to put the issue on the ballot -- a small cost to pay. Just by placing the issue on the ballot, Wal-Mart has already forced some city councilors to begin talk of repealing the ordinance. "The best thing for the council to do is save taxpayer money," said one Councilor who voted against the new law anyway. With two new members coming on in January, the ordinance could be repealed, and Wal-Mart will have paid for a change in public policy.
What you can do: Once Wal-Mart submits its signatures, the registrars have 30 days to validate the names, and then the city council must either repeal the ordinance within 10 days of petition certification -- or put the matter to an election.
One city official, an independent budget analyst, told councilors that the new ordinance could be "overly restrictive" and appear like a ban -- -- but the fact is that asking for an economic impact statement is a common zoning ordinance requirement in many municipalities across the nation, and is a much milder compromise than a firm cap on the size of retailers -- which is even more common than an impact statement. Wal-Mart is complaining that the ordinance will make it too easy for the city to show negative impacts from sprawl.
In his November 29th veto message, Mayor Sanders said, "The Council's action sends the message that San Diego is not business friendly at a time when job creation is critical and a significant amount of unemployed San Diegan's need our economy to grow. This is a message San Diego cannot afford to send. Additionally, this action creates a competitive disadvantage for San Diego in the pursuit of sales tax revenue. Superstores will be built to serve our residents, but they will simply locate outside ofthe city's boundary, causing sales taxes to go to other jurisdictions and increasing traffic as people must travel further in search of lower prices... This ordinance would deprive families of the option to enjoy significant savings when they shop for basic necessities of life, including groceries. It would hit low income families disproportionately hard."
The Mayor says the city already has the ability "to deny proposed large retail development 50,000 square feet or greater in size if there is evidence of potential blight or other adverse impacts in conflict with adopted policies. The City's Economic Prosperity Element adopted in March 2008 specifically requires a fiscal impact and market analysis for proposed large retail establishments greater than 100,000 square feet."
The proposed ordinance actually has nothing to do with shopper choice. What it is really about is scale. In towns and states where such economic impact ordinances exist, they are used as a criteria for granting a special permit for very large projects only.
In Greenfield, Massachusetts, for example, the town adopted in 1993 a Major Development Review ordinance that requires developers to produce a fiscal impact report that shows the project's impact on public revenues. The town can reject a project that does not balance public revenues with public costs.
Zoning is not used to regulate competition, or to keep any project out. It focuses on the financial impact on the town, and allows a community to say No to a negative financial impact.
Wal-Mart argues that such ordinances make it harder for large stores to win approval, thus denying consumers a shopping choice. But big box retailers under 90,000 s.f. would have no economic impact requirement. 90,000 s.f. is one and a half times the size of a football field -- large enough to satisfy anyone's craving for cheap, Chinese merchandise. So the "choice" is actually Wal-Mart's: scale your stores at an appropriate size, or do an impact report.
"This ordinance is not a ban, nor is it intended to be one," Councilor Gloria explained. "Believing that such information and findings would result in a ban demonstrates that even supercenter supporters know of the potentially damaging impacts of such outlets."
Readers are urged to email District 5 City Councilor Carl DeMaio at firstname.lastname@example.org with this message:
"Dear Councilor DeMaio, The economic impact ordinance that Wal-Mart is so afraid of is not about shopper choice. It's about Wal-Mart's choice. They could make their superstores fit San Diego, rather than force San Diego to fit their needs. Wal-Mart could choose to build an 89,000 s.f. superstore. They are proposing superstores at 78,000 s.f. in other parts of the country -- why not in San Diego?
Many cities and towns have adopted an economic impact requirements as part of their zoning ordinance, and in states like New York, Vermont and Maine -- it's standard practice everywhere in the state. If a large retail project is going to have, on balance, a negative net revenue impact on a community, that should be grounds to reject a project. Wal-Mart doesn't want San Diego to talk about the impact of their stores. But that's a 'choice' the city council can make.
If Wal-Mart wants this vote so badly, and has hired firms to gather signatures -- then ask them to pay for the election, rather than have you deny voters the chance to respond because the election is too expensive.
Wal-Mart figures it can intimidate you into backing away from the Council's vote. If you repeal the ordinance at the Council, it will send the message that a rich corporation was able to make public policy in San Diego by just waving some cash around. That's a precedent of far more consequence to Democracy in San Diego than the big box study ordinance.
In standing up to Wal-Mart, you are demonstrating that public policy in San Diego is not for sale."