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Big Box Battles Heat Up in San Diego

For years, major cities, especially in California, have held their ground in what some consider an unwelcome onslaught by Walmart stores and their like. In the City of San Diego, however, Walmart has been making one of its most significant plays yet in attempting to establish itself in urban California. Its recent announcement of its intention to build up to a dozen stores comes amid a political battle that has raged for a half-decade.

In November, the city council voted in favor of an ordinance requiring that retail superstores such as Walmarts submit extensive economic impact reports detailing the projected effects they would have on neighboring small businesses. The ordinance was directed at stores with over 90,000 square feet of retail space, at least 10% of which is dedicated to items exempt from state sales tax, such as groceries. 

The Ordinance to Protect Small and Neighborhood Businesses, introduced by councilmember Todd Gloria, passed in November. It was vetoed almost immediately by San  Diego Mayor Jerry Sanders. 

"Passage of the superstore ordinance…will cause confusion in the development process," said Sanders in a statement issued following the November veto. "(It adds) an additional layer of regulation that fails to identify objective review criteria or conditions under which superstore development may ever be considered to be appropriate."

While a similar ordinance had been approved and then vetoed in 2007, this time the council overrode the mayor's decision in early December on a 5-3 vote. And yet, the controversy continued. 

In response, Walmart brought about a petition campaign, purportedly spending near a million dollars to promote its message, gathering 54,000 signatures (about 4% of San

Diego's population) in opposition to the bill. Under city law, the council was forced to

vote on the ordinance again, this time with the prospect of a costly special election if the

bill went through.

Leading up to the follow-up vote, Walmart announced, on Jan. 27, that it planned to develop 12 new stores in San Diego, including several supercenters that would be subject to the ordinance. At a Feb. 1 the City Council ultimately voted, 7-1, to repeal the ordinance, reasoning that in the light of a near $50 million budget deficit, securing funds to put the measure on the ballot was not practical.

Walmart did not respond to interview requests. 

According to opponents of the ordinance, that process would be burdensome, unnecessary, and produce results that would be vague at best. They say that it uses the land-use planning process as a way to inappropriately hinder a certain type of development. 

"They still have to go through the discretionary process— that's what the frustrating part of this was—any project of that size still requires discretionary review," said Matt Adams, vice president of the Building Industry Association of San Diego. "They were just piling on all these other finding requirements and economic analysis that when you looked at it, you thought, no one can meet these. But it was like, of course, if they can't meet them, then they can't build it."

While Walmart and its supporters, such as Sanders, reason that supercenters provide jobs and consumer choice to cities, numerous studies have shown the negative aspects of supercenters on communities: the increase in traffic that results in higher pollution levels, the loss of local diversity and color, even the increase in crime. Opponents note that supercenters can generate as many as 10,000 car trips in a weekend, which, they say, places an undue burden on urban streets. 

Walmart supporters find both the state bill and city ordinance simply meddlesome.

 "We believe that the actions of the city and now the actions of the state are counter to providing free markets and free commerce," said Paul Webster, vice president of public policy at the San Diego Regional Chamber of Commerce. "The state does not have any business regulating business expansion, business development and job creation in this way."

Matt Adams, the Vice President of the Building Industry Association of San

Diego, was a public opponent of the anti-superstore ordinance. Among allegations of

manipulating land development code to target a specific company, his main concern was

for the loss of jobs in his industry.

"At the end of the day we're talking about job-creation in a city that has 10

percent unemployment and the potential for construction jobs which this thing would

have prevented and we were strongly opposed to it for those two mains reasons," said

Adams.

Adams estimated that with each Walmart that is not built, 100 possible construction jobs, from both contractors and subcontractors, will not be created. He imagines it will be a couple years at least before construction starts on the 12 newly proposed stores. 

Sanders' veto message notes that if those stores – or ones like them – are not built in the City of San Diego, they will likely crop up elsewhere in the region, thus creating even more traffic congestion than would the more centrally located stores. He contends that such stores would also deprive the city of tax revenue. 

"(The anti-superstore ordinance) action creates a competitive disadvantage for San Diego in the pursuit of sales tax revenue," said Sanders. "Superstores will be built to serve our residents, but they will simply locate outside of the 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 scenario would potentially be addressed by Senate Bill 469, sponsored by Sen. Juan Vargas (D-Chula Vista), which is currently under consideration in Sacramento. The goal of Vargas's bill, according to his chief of staff, Jim Harrison, is to provide a uniform means of assessing the impact of supercenters across the state, while ultimately letting adjacent local planning agencies decide which effects of supercenters are objectionable and which are palatable.

"We don't know what the studies will show; there's a chance they could show positive things in some areas and negative things in others," said Harrison. 

The studies will be paid for by the permit applicants at a cost estimated at somewhere around $30,000 per report. In addition to assessing the economic impact on small businesses, the reports promoted by SB 469 would also investigate the projected effect a superstore might have on a neighborhood's affordable housing, destruction of parks and playgrounds, traffic and other blight. They will also be open to public review.

Like the Councilmember Gloria's failed ordinance, SB 469 defines a superstore as "any business with 90,000 square feet that sells a wide range of consumer goods and that devotes 10% of its sales floor area to the sale of items that are not subject to the state sales tax." Harrison said studies have found that supercenters have a higher rate of visits per week among consumers than either of these types of establishments.

In the meantime, in San Diego, there are certainly alternatives for those seeking low-cost fresh produce according to councilmember Gloria, whose district is one of the poorest in the city.

 "There are ways to improve the availability of affordable fresh groceries without sacrificing neighborhood character," said Gloria.

Contacts: 

Matt Adams, Vice President, Building Industry Association of San Diego, 858.450.1221

Todd Gloria, Councilmember, San Diego 3rd District, 619.595.1481

Sen. Juan Vargas, 40th District, 916.651.4040

Paul Webster, Vice President of Public Policy, San Diego Regional Chamber of Commerce, 619.544.1300 

(CP&DR contributor Kate Wolf is a freelance writer based in Los Angeles.)

 

 

 

 

 

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