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Big Box Regulations Sweep Across The State

Paul Shigley on
Jan 1, 2004

Cities and counties of all sizes are adopting regulations to limit development of big box stores. Jurisdictions as different as the City of Los Angeles and sparsely populated Tuolumne County are considering or have adopted new regulations.

Wal-Mart’s widespread expansion of its "supercenters" — which are at least 50% larger than the typical Wal-Mart and carry groceries — appears to be driving much of the regulatory activity. Recently adopted or proposed ordinances in Los Angeles, Oakland, Alameda County, Contra Costa County, Turlock and elsewhere specifically limit stores of a certain size, usually about 100,000 square-feet, to no more than 5% to 10% of floor area devoted to non-taxable goods. A Wal-Mart supercenter is usually 180,000 to 230,000 square feet, and groceries fill more than one-third of the stores. The restrictions could also hit some Costco and Target stores.

Other jurisdictions are placing caps on the size of all big boxes, whether or not they sell groceries.

The giant retailers, however, are fighting back. On the ballot in March will be two Wal-Mart sponsored measures — a referendum of a big-box ordinance approved last June by Contra Costa County supervisors, and an initiative in Inglewood that commands the city to approve a proposed Wal-Mart supercenter. Meanwhile, Wal-Mart opponents in San Marcos have forced a referendum on a Wal-Mart that the City Council approved.

Wal-Mart has about 1,300 supercenters in 43 states, but none in California. The company plans to open 40 supercenters in California in four years.
Wherever ordinances appear to specifically target Wal-Mart, labor unions often have been involved because none of Wal-Mart’s 1.2 million workers in the U.S. is a union member. In California, Wal-Mart’s $8- and $9-an-hour jobs pay about half of what many unionized grocery store clerks make. And Wal-Mart’s health benefits reportedly do not compare to health insurance received by unionized workers — a central point in the Southern California supermarket clerk strike that began last fall.

Despite the social issues, Wal-Mart and other big box retailers are being regulated as land uses. And the biggest land use concern is that a Wal-Mart supercenter will force other grocery stores in town to close, leading to the downfall of entire shopping centers. In some places, traffic generated by the huge stores is a concern.

The Los Angeles City Council is expected to vote this month on an ordinance that would prevent any store of at least 100,000 square feet from devoting more than 10% of its floor space to nontaxable items. The ordinance would apply inside and near any of the city’s economic assistance zones, including redevelopment project areas and enterprise zones. Most of the city would be affected.

"The intent is to protect the areas of Los Angeles where we need to revitalize the economy," said Josh Kamensky, spokesman for Councilman Eric Garcetti, who is pushing the regulation. Studies of Wal-Mart supercenters show that they cause other stores in the vicinity to empty out, creating blight, Kamensky said.

In Los Angeles, which is still something of a union stronghold, the labor issues are in the open, too. Kamensky conceded poor neighborhoods might benefit from Wal-Mart’s discount prices. But he contended those prices do not mitigate Wal-Mart’s low wages and part-time jobs.

"There’s always a short-term burst of activity [when Wal-Mart opens.] They exert a downward pressure on prices. But they don’t exert downward pressure on rents or on healthcare costs," Kamensky said.

But during a hearing in December, Councilman Bernard Parks, who represents the poor South Central and Crenshaw districts, told Garcetti, "It’s 30 years too late. They [the stores] already left."

A Wal-Mart supercenter is preferable to empty stores, argued Parks, the city’s former police chief. And he disputed the contention that a Wal-Mart would suppress local economic development, "because there’s nothing to suppress." The proposed regulation "looks like one more hindrance to depressed areas. It looks like one more reason for developers not to come," Parks said.

Councilman Alex Padilla, who represents poor areas of eastern San Fernando Valley, countered that Wal-Mart’s low wages and poor benefits would only contribute to a downward economic spiral in some neighborhoods. Padilla said the ordinance would protect the city’s economic development investments.

The arguments were similar in Oakland, which in October adopted an ordinance prohibiting big box grocery stores in most commercial zones and requiring a conditional use permit in a limited number of commercial and manufacturing zones.

"Where a grocery store serves as an anchor to a local commercial district, the presence of a big box grocer in the city can threaten the viability of the entire commercial district," states a staff report by Oakland Community and Economic Development Agency Planner Heather Coleman. The new ordinance "can serve as a means for protecting Oakland’s local shopping districts."

But Wal-Mart representatives say the stated land use concerns are disingenuous. "So-called land use arguments are nothing more than a way to try to divert the real issues, which is that this is being driven by unions," Wal-Mart’s Amy Hill told the San Francisco Chronicle. "Unions are very frustrated by their inability to unionize Wal-Mart associates, so they’re trying to stop Wal-Mart stores."

When it considered a big box regulation in December, the Turlock City Council heard testimony from union members. But, said Turlock Planning Manager Michael Cooke, it was the potential loss of existing grocery stores that drove the regulation.

"We’re very much a blue-collar town, so cheap prices and cheap groceries do resonate with a lot of people," said Cooke, who noted that the city already has a 130,000-square-foot Wal-Mart without groceries and similar sized Home Depot and Target stores. Additionally, unions have little presence in Turlock. But councilmembers have seen the impact of supercenters that opened elsewhere in the country and feared that at least two or three existing grocery stores — plus the shopping centers they anchor — would go under if a supercenter came to town, Cooke said.

Turlock’s new law bans stores of more than 100,000 square feet that devote more than 5% of floor area to retail sales. Turlock officials basically copied the thresholds used by other cities. However, those common thresholds actually derive from noncompetition clauses contained in some development agreements, Cooke noted.

The issues are different in Tuolumne County, where supervisors are scheduled to vote on a big-box ordinance this month. The law would prohibit any retail store larger than 60,000 square feet and would require a conditional use permit for any store larger than 25,000 square feet — the sort of restrictions that slow-growth cities such as Davis have had for years. In Tuolumne County, a 120,000-square foot Home Depot proposed for a prominent hillside outside Sonora drove the debate, explained Tuolumne County Community Development Director Bev Shane. Essentially, the store would have been an unwanted entrance feature for the community.

"Visual quality is the primary issue," said Shane. Gold Country visitors do not want to be confronted with the same type of development they see at home. "Tourism is a lot bigger business than our retail sales are. We have a $230 million tourism industry," Shane said.

Of course, big boxes and even Wal-Mart supercenters are not meeting resistance everywhere in the state. Wal-Mart’s first California supercenters are scheduled to open this spring in LaQuinta and Palm Springs. During the last six months, supercenters won fairly easy City Council approval in the far northern cities of Redding, Anderson and Red Bluff. Labor union-backed groups have since filed CEQA lawsuits over the Redding and Anderson projects.

Wal-Mart is not shy about presenting its case directly to voters. Wal-Mart backed organizers have forced the March 2 referendum on a Contra Costa County ordinance that prohibits stores larger than 90,000 square feet from devoting more than 5% of space to nontaxable items. Wal-Mart has already said it is willing to spend $1 million on the campaign.

In Inglewood, voters this March will face conflicting ballot measures — one that would bar supercenters and one that directs city officials to approve a proposed supercenter without environmental review.