Proposed Ordinance in San Diego Takes Aim at Wal-Mart Supercenters

San Diego lawmakers are considering an ordinance that aims to stop the Wal-Mart Stores retail juggernaut from rolling its discount Supercenters into the city.

The proposed measure, similar in tone to bans imposed or considered by numerous communities in California and other states, reflects a growing flurry of anti-Wal-Mart feeling that has plagued the world’s largest retailer in recent years.

Even the national magazine Business Week weighed in last month with a cover story — “Is Wal-Mart Too Powerful?” — that examined how suppliers, workers and communities are growing increasingly wary about how the corporation’s retail dominance is shaping America.

In San Diego, Wal-Mart has become a magnet for a disparate coalition of critics who are pushing hard for restrictions on so- called “big box” retail stores: Stores that fear the Wal-Mart Supercenters could put them out of business. Community activists concerned about the preservation of neighborhoods. Smart-growth advocates who want to curb traffic congestion and retail sprawl. And labor unions and social justice organizations that contend Wal- Mart’s cheap prices come at the expense of decent wages and benefits for workers.

Though Wal-Mart has not announced plans to build its Supercenters in the city of San Diego, retail analysts say the region is a prime target and it will only be a matter of time. Meanwhile, Wal-Mart critics are trying to head off the gigantic stores before they take root.

“These low Wal-Mart prices are coming at the expense of your neighbor’s livelihood,” said Danny Feingold, a spokesman for the Los Angeles Alliance for a New Economy, an opponent of a proposed Wal- Mart development in Inglewood, near Los Angeles. “It is a choice we will have to make as individuals and as a society — do we want to race to the bottom and have corporations like Wal-Mart dictate our standard of living?”

In January, the San Diego City Council’s Committee on Land Use & Housing is expected to consider a ban on discount retail stores that exceed 130,000 square feet, stock over 30,000 items and generate more than 10 percent of gross sales from groceries or other non- taxable items. If the committee passes the ordinance, it could move to a full City Council vote early next year.

Though the proposed ordinance doesn’t name Wal-Mart, it takes direct aim at the mammoth Wal-Mart Supercenters the company has opened in more than 40 states in recent years. Most Wal-Mart Supercenters are 180,000 to 225,000 square feet, about twice the size of the typical Wal-Mart store, and offer full-service supermarkets.

Existing so-called “big box” discount grocery or retail stores in San Diego, such as Costco or Home Depot, wouldn’t be affected by the ban.

Peter Kanelos, a spokesman for Bentonville, Ark.-based Wal-Mart, said the company will fight the proposed ordinance. If it is approved by the City Council, the company would consider suing the city or sponsoring a voter referendum to overturn the measure, he said.

“Are there design criteria and guidelines that cities have the right to impose? Yes, as long as they are imposed fairly on everybody and not singling out one business,” Kanelos said. “This restriction is solely targeted at preventing consumers from benefiting from lower grocery prices and protecting the market share of our competitors.”

Unions an issue

Wal-Mart’s announced plans to enter the state’s food industry with 40 centers that sell discount groceries and retail merchandise has already cast a long shadow over the union contract dispute between Southern California grocery workers and three major supermarket chains.

The Vons, Albertsons and Ralphs chains argue that they need more union concessions on worker wages and benefits if they are to compete when Wal-Mart enters the market. The United Food and Commercial Workers union counters that it must protect its members from wage erosion sparked by Wal-Mart, which pays most workers less than union stores.

Yet the specter of Wal-Mart has put the scare into more than the grocery industry, and San Diego isn’t alone in considering a ban on its new hybrid Supercenters.

The proposed local ban is similar to one passed in Northern California’s Contra Costa County, where a fierce battle is being waged by Wal-Mart to overturn the measure.

There, the county passed an ordinance banning the construction of stores larger than 90,000 square feet in unincorporated areas. Wal- Mart countered with a petition drive that collected enough signatures to force a referendum. Voters will decide March 4 whether to uphold the ban or overturn it.

Last month, Oakland passed an ordinance to ban stores of more than 100,000 square feet. And in the city of Inglewood, Wal-Mart is trying to bypass the City Council by sponsoring a voter referendum to approve a new Wal-Mart that could be expanded into a Supercenter.

If Wal-Mart collects enough signatures to put the initiative on the March ballot, the company could build its store without a public hearing or environmental impact study. The Inglewood City Council has already voiced its opposition to the Wal-Mart project and earlier passed an ordinance to block it, but the ban was later reversed on procedural grounds after Wal-Mart threatened a lawsuit.

Closer to home, a deadlock vote Tuesday by the San Marcos City Council means that a referendum that aims to block construction of a second Wal-Mart in San Marcos will be placed on a voter ballot in March.

Voters to decide

Despite the no-action vote, state law automatically requires that the certified referendum go to the voters.

The San Marcos City Council had earlier approved the store in southwest San Marcos, but a coalition of union and community activists collected enough voter signatures to force the council to either rescind its August approval of the store or send the issue to voters.

Wal-Mart sued to stop the referendum, but a Superior Court judge has issued a tentative ruling against the company.

San Diego City Councilman Michael Zucchet, who supports the proposed city big-box ordinance, said he expects Wal-Mart to go to the mat here.

“We’re ready for that fight. And I’d expect that to the extent that this went to voters, the voters would agree with these sort of restrictions,” said Zucchet. “Massive-superstore-big-box-sea-of- parking-lots stores have proven themselves to be detrimental to existing small businesses and to neighborhood character.”

Spearheading the local ban drive is a group called the Joint Labor Management Committee, which submitted a sample ordinance in July to the Committee on Land Use & Housing. At that time, the land use committee voted 4-1 to have the city attorney draft an ordinance that would use the Joint Labor Management Committee ordinance as a guide.

Art Castanares, president of Cornerstone Strategies, a consulting firm working with the Joint Labor Management Committee, said the committee is a statewide consortium of unions, grocery stores and other businesses.

Castanares and other Wal-Mart critics claim their concerns are bolstered by studies that indicate “big box” stores provide limited benefits to cities in terms of increased sales and property taxes. Instead, such stores tend to cannibalize revenue from existing retailers, while offering lower-paying jobs, critics argue.

One report, released this week by the Center on Policy Initiatives, questioned the benefits derived from public subsidies given to a 1998 retail redevelopment project in College Grove, which was anchored by a Wal-Mart. The project, the Marketplace at the Grove, received $13.4 million in public money and assistance, $9.5 million of which went to Wal-Mart, according to the study.

In return, the city receives an annual return of about $242,535 in sales tax revenues. But the real figure may be much less because the sales were likely shifted from existing retailers, and some small businesses may have gone out of business because of the competition, the report said.

`Not very good jobs’

Of the jobs created by the project, 75 percent are part-time and 84 percent pay wages below the $11.38 per hour “self-sufficiency” wage necessary to meet basic needs in San Diego, according to the report.

“We invested $14 million to revitalize an area, and we got a lot of not very good jobs, limited improvements to affordable housing, and very unsmart growth,” said Donald Cohen, director of the Center on Policy Initiatives, a local public policy think tank. “The message here is that before we hand anyone public money, we should consider more than one bottom line, and we ought to be sure we know what we are getting when we make major land-use decisions.”

Another study in 2000 by the San Diego County Taxpayers Association projected that retail/grocery “big box” stores will cost the county millions in lost wages and benefits while adding little to government coffers in the form of sales and property taxes.

The study estimated that discount retail stores pay workers $9.22 an hour less in wages and benefits than grocery store workers earn. If Supercenter-type stores enter the market, wages and benefits could be expected to decline in San Diego County by $105 million to $221 million annually; pension and retirement benefits would fall by up to $170 million; and more underinsured workers would rely on the public health system for medical care, according to the report.

Nor are financial benefits, in the form of sales and property taxes, likely to cover the costs of traffic, police, fire protection and other public services, the report concluded. Ultimately, the cost of the increased use of public services for stores like Supercenters could exceed $700,000 per year.

Fear of competition

Kanelos, who declined to disclose Wal-Mart’s wage and benefit package for local employees, dismissed such studies as biased, incomplete or outdated. He said Wal-Mart pays a competitive hourly wage and provides opportunities for promotion; two-thirds of Wal- Mart’s management rise from the ranks of hourly employees, he said.

Analysts say Wal-Mart pays $10 or so an hour to its checkers, compared with $17.90 an hour that senior checkers earn at Albertsons, Ralphs and Vons.

Kanelos said the proposed San Diego ordinance, along with similar bans in other communities, are driven by unions and grocery stores that fear competition.

“These studies never say anything about the positive aspects of a Supercenter — and lowering grocery prices by 20 percent in San Diego would be a tremendous boon to a lot of families,” Kanelos said. “The public motive isn’t always 100 percent the legitimate motive behind someone’s desire to bash Wal-Mart.

“The reality is we have 100 million customers each week coming through our stores,” Kanelos said. “So when I hear the criticisms I remind myself that the vast majority of America loves Wal-Mart.”

A Wal-Mart Supercenter offers prices 14 percent cheaper than its rivals, and the savings can multiply as competitors are forced to bring down their grocery prices, according to a study by UBS Warburg.

Councilman Charles Lewis, who opposed the proposed ordinance in the July City Council committee vote, said Wal-Mart has been a “good neighbor” that brings jobs and merchandise to poorer areas long neglected by other grocery chains and retailers.

“When I go into a (Wal-Mart) store I see people (employees) that look like me,” said Lewis. “Yes, I want them to have full benefits. Yes, I’d like them to have that nice salary that they have in those union stores, but would you rather have half a salary or no salary?”

Copyright Union-Tribune Publishing Co