Big box retailers like Wal-Mart would have to put their economics where their mouth is if a plan by city councilors in Los Angeles, California becomes law. Two Council committees this week approved a proposal that would require all large retailers to pay for an economic analysis to show the impact of their store on jobs, wages, and other businesses in the area. City officials would weigh the study’s findings as part of their decision to permit a superstore. “We seek to be involved here with the impact on neighborhoods and the avoidance of blight,” Councilman Eric Garcetti was quoted as saying in the Los Angeles Times. Union members responded favorably to the new proposal. “Do we want to live in a city where cheap goods are valued over vibrant neighborhoods?” asked Rick Icaza, president of the United Food and Commercial Workers. “The people of Los Angeles deserve better.” The full City Council could take up final action on this economic impact proposal by next week.
The newspaper report said city officials presumed that Wal-Mart might fight such an ordinance legally, but in fact, such economic impact studies are commonplace now in zoning codes, and since the provision affects all big box retailers, not just Wal-Mart, fear of litigation is groundless, because the courts would be likely to uphold the economic impacts as relevant to the need to protect the welfare of local residents. Vermont, for example, has had such a law for three decades. However, unless the economic impact studies done are performed by independent contractors, the results will be meaningless. The City of Los Angeles needs to have total control over the hiring of the consultant, while the retailer pays the bill. Impact studies produced by developers are notoriously self-serving.
