Locals, Labor Square Off Over Superstores

Talks aimed at defining the economic impacts

By John Howard, Special Report from Capitol Weekly

New negotiations are under way in the Capitol over a major attempt to require local agencies to perform comprehensive economic impact studies of so-called “superstores” before approving the projects.

The thorny issue, a familiar one in the Capitol, pits big-box, general-service, non-union retailers such as Wal-Mart against small businesses and organized labor, who believe the huge stores unfairly compete and spark downward economic spirals. It is the latest in a series deep-pocket, labor-vs.-business fights emerging in the state Legislature this year.

Joining the fray are strapped local governments, who want the tax revenues and employment bump from the big projects, but who say the reporting requirements of the new bill will choke off financial development and burden the locals with red tape. 

The core of the dispute actually boils down to groceries, a $100 billion business in California in which the competing interests suffer thin profit margins as they battle for market share. Unionized grocers say the non-unionized superstores have a competitive edge.  

Assembly Member Roger Hernandez, a West Covina Democrat, has authored AB 667, which pegs local approval of the superstores — mainly those that include groceries in their inventory — to definitive findings that the project won’t adversely affect the economic well-being of the area most affected by the new store. The finding must reflect public input, publicly scheduled hearings and discussion, and may be accompanied by additional studies targeting economic impacts.

Hernandez’s bill failed to emerge from the Senate Governance and Finance Committee in the first vote, but Senator Lois Wolk, D-Davis, the chair of the committee, said the bill is the subject of new negotiations. 

Wolk said she hoped to make sure “the economic implications” were nailed down, and that she was considering language of another bill, AB 562, for possible inclusion in the Hernandez legislation. The second bill is backed by Wolk and authored by Assembly Member Das Williams, D-Santa Barbara, and tightens the disclosure rules governing public subsidies for local business projects.

“I’d like to see some of that in there,” Wolk noted. Hernandez’s measure is scheduled for another vote before Wolk’s committee. The latest Senate analysis of the bill reflected a series of amendments proposed in the committee and Hernandez planned to present the revised measure on July 3.

“California’s economy continues to recover and we must protect small businesses through the passage of this bill,” Hernandez said in a written statement released by his staff. “My bill is a friend to small businesses against giant retailers who come into a community asking for taxpayers’ monies, also known as subsidies.  Taxpayers need to be assured that the use of their tax dollars will truly yield an economic benefit that creates new jobs, strengthens revenues and will not support the cannibalizing of existing jobs.” His bill is supported by unionized grocery workers and other labor groups, including the California Labor Federation, the Teamsters’ Public Affairs Council and the California Conference of Machinists.

Critics, led by business interests and local governments, believe the measure will hurt local economic growth by burdening the locals with new costs and, ultimately, block new development – which they see as the real goal of the proposal. The new reporting requirements, they add, are onerous.

“This lengthy and proscriptive report must assess at least 15 detailed conditions,” noted Dan Carrigg, legislative director of the League of California Cities, in a letter to Hernandez. He said those include such complex issues as retail space impacts in the target area, employment projections, impacts on low- or moderate-income housing, effect on child care facilities, effect on parks and playgrounds, and the effect on blight, among other issues.

“When California’s economy is barely recovering and millions remain out of work, the bill would subject local development to delay and expense while an exhaustive analysis is prepared…,” he added.

Other critics say local governments do rigorous analyses of superstore projects as a matter of course and don’t need more requirements from the state.

“That’s on top of all the permitting, reporting, environmental analysis and extensive public input that’s already required to open a large retail or grocery store. An additional layer of bureaucracy will make it more difficult, costly and time consuming to open new businesses and create jobs,” according to Sam Olivito, the executive director of the California Contract Cities Association, who opined against the proposal in a commentary.

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