The Governor of California apparently does not want to see the ordinance passed yesterday by the Los Angeles City Council replicated throughout state. Under the Los Angeles ordinance, retailers wanting to build stores larger than 100,000 s.f. that devote more than 10% of their sales floor to food and other nontaxable items would have to pay for an economic analysis. The report would forecast whether a proposed store would eliminate jobs, depress wages or harm neighborhood businesses in many parts of the city. Although the media “discovered” the ordinance, similar ordinances have existed in other parts of the country for as long as thirty years. Vermont’s Act 250 for example, passed in 1971, requires local officials to weigh the economic impacts of a large project on public revenues. According to the Los Angeles Times, supporters of the new ordinance, which could take effect as soon as September, want the law to become a national model — but some of the existing laws about economic impact may be superior. Wal-Mart’s response to the new plan has observers scratching their head. The company yesterday described the new law as a significant victory, and a spokesman for the retailer said, “Organized labor and other special interests have failed in their objective.” Wal-Mart considered anything short of an outright ban on superstores as a victory. The company has had to submit economic reports in other communities, and as long as the report contractors are hired and paid for by Wal-Mart, the company can control the stated results. Only “independent” economic impact statements are critical of Wal-Mart, but finding independent analysts is not easy. Requiring Wal-Mart to produce such a report on its own, and pay for it, is a minor inconvenience for the company. Instead, cities and towns needs to select the contractor to do the study, and have the retailer simply foot the bill. If independent contractors were used for economic studies, traffic studies, wetland studies, and the rest of site development work, communities would get a much clearer look at how large scale projects really impact the surrounding area. The Los Angeles ordinance also exempts membership stores, and other big box stores, like the home improvement centers, which completely misses the point about economic impacts. According to the Los Angeles Times, state Senator Richard Alarcon, a candidate for mayor of Los Angeles, has introduced a proposal that would make reports similar to those in the city’s ordinance mandatory statewide. But such a move may not please The Terminator. Governor Arnold Schwarzenegger said yesterday that decisions on whether to build Wal-Mart stores should be left to individual communities. “In most cases in America, the communities welcome them because you have cheaper prices and you have great additional employment,” the Governor claimed. “But in some communities, there’s the argument: ‘I like my little store, where they hand-make the ice cream and you still go shopping the way you did in the old days.’ ”
So that’s Arnold’s understanding of the big box issue: the people who wants jobs vs. the people who want hand-made ice cream. Nostalgia vs. ‘great additional employment.’ The Governor no doubt has not seen the research that challenges Wal-Mart jobs as neither great, nor additions to the workforce. The Governor’s argument might melt if left out on the counter too long. The Los Angeles ordinance is seriously flawed if it leaves the economics up to the retailer to produce. Citizen groups will then have to submit their own economic impact studies which refute the Wal-Mart studies, and much time and expense will be wasted. The ordinance should mandate independent economic impact contractors chosen by the city, not the retailer. Otherwise, the ice cream is going to taste pretty good over at the Wal-Mart supercenter.
