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Battles Over Mega-Stores May Shift to New Studies

Law requiring economic impact reports could set the stage for skirmishes across Los Angeles.

August 12, 2004|Jessica Garrison | Times Staff Writer

Wal-Mart officials said Wednesday that they are confident that, if they wanted to build a Supercenter in Los Angeles, they could show the store would bring economic benefits to the surrounding area.

But Los Angeles City Council members, who passed a law Wednesday requiring economic impact reports for the enormous discount stores that also sell groceries, expect that Wal-Mart and other retailers could be pressed to pay higher wages and benefits to persuade wary city officials to approve a superstore.

"We don't have to choose between low wages and low prices," said Councilman Eric Garcetti, who pushed for the law along with Councilman Ed Reyes. "We can have a city that has good jobs and that does not have blight."

The new law, rather than ending the fighting, could set the stage for skirmishes over individual development proposals across the city.

Wal-Mart has not yet proposed bringing a Supercenter to Los Angeles. Only one has opened in California, in La Quinta, near Palm Springs. Two more of the massive stores, which combine discount items with groceries, are expected to open this fall, in Hemet and Stockton.

"The legislation passing the City Council does not end the debate," said Nelson Lichtenstein, a history professor at the Center for Work, Labor and Democracy at UC Santa Barbara.

"The reports themselves will undoubtedly become a subject of debate."

Lichtenstein said that Wal-Mart's business practices are "a legitimate subject of political debate," explaining that the company, with $256 billion in sales last fiscal year, is so big "that its employment policies are public issues."

The City Council voted in favor of the new law in concept on Tuesday and then approved it on Wednesday.

The law requires retailers seeking to build stores larger than 100,000 square feet, and with more than 10% of their sales floor devoted to food, to pay for an economic analysis before getting building permits. It applies in economically vulnerable areas of the city.

The analysis would examine whether a proposed store would eliminate jobs, depress wages or harm surrounding businesses.

City officials have said the law is necessary to prevent blight, saying the giant stores can have a devastating effect on local communities, lowering wages and driving out existing businesses.

As the nonunion Wal-Mart prepares to unveil 40 Supercenters across California in the next few years, several labor and city officials said they hoped the law would become a model that could be followed nationwide to spur companies to engage with communities about their business practices.

But Wal-Mart officials don't share that view.

"We are confident that the overall impact of a Wal-Mart Supercenter is positive on the community," said Wal-Mart spokesman Peter Kanelos. "Quite frankly, I don't think an ordinance in one city is going to have an impact on an entire company."

The new rules, which could go into effect as soon as September, apply not only to Wal-Mart but also to other retailers, such as Target, that sell both groceries and other items.

In what may be a precursor of battles to come, the city and Wal-Mart pointed to contradictory studies during the debate leading up to the council vote.

In December, city officials released a $30,000 study, prepared by the consulting firm Rodino Associates, that said Supercenters -- which can run to 200,000 square feet -- could harm the local economy, push down wages, strain public services and hurt smaller businesses.

A month later, a Wal-Mart-funded study by the Los Angeles County Economic Development Corp. said the company's entry into the Southern California grocery business would produce a net increase in jobs.

"It really depends on what you want to look at, and whether you are interested in looking at the whole picture," said Gregory Freeman, a public policy consultant who conducted the $65,000 study.

Garcetti said the required economic impact reports, which are expected to cost less than the Rodino report, would "give both opponents and proponents the ability to make their case in a very specific way."

"If the piles and piles of reports that talk about additional public costs and the net loss of jobs are wrong, they can try to express that. Similarly, if other studies say Wal-Mart is the best thing to happen to communities since crosswalks were invented, then they will get a chance also to show otherwise," Garcetti said.

Wal-Mart officials say they intend to make sure Los Angeles officials don't use the reports to hold them to a higher standard than other companies, such as Target or Sears.

"Let's be realistic: They have a political agenda and they are pandering to the special interest groups that fund their campaigns," said Kanelos, referring to the unions that have taken on Wal-Mart out of fear that Supercenters will drive down wages in the area.

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