Los Angeles Requires Economic Impact Studies for Supercenters

Date: 17 Aug 2004 | posted in: Retail | 0 Facebooktwitterredditmail

After months of debate on the consequences of big-box development, the Los Angeles City Council this month enacted a law that requires supercenters to undergo an economic impact analysis before being approved.

The law applies to retail stores larger than 100,000 square feet that devote more than 10 percent of their floor space to food and that are seeking to locate in economic assistance zones. These zones are economically depressed areas where the city has used subsidies and other incentives to encourage development. They account for about half of the city’s land area.

The analysis, to be paid for by the developer and conducted by consultants approved by the city, would consider whether the supercenter would reduce employment, depress wages, have a negative impact on city revenue, or create blight by displacing existing businesses.

Supporters say the law could compel retailers like Wal-Mart to increase their wages and community benefits. “We don’t have to choose between low wages and low prices,” said Councilor Eric Garcetti, who co-sponsored the ordinance with Councilor Ed Reyes. “We can have a city that has good jobs and that does not have blight.”

“It’s a very reasonable and balanced approach,” said Roxana Tynan of the Los Angeles Alliance for a New Economy. “It allows communities, on a case-by-case basis, to review the project being proposed and to make a finding about whether it’s going to be good for their neighborhoods, or not be good for their neighborhoods.”

But the ordinance has significant short-comings. It only applies to Wal-Mart and Target supercenters that have grocery departments. It does not affect warehouse stores such as Costco and Sam’s Club, and other large retailers, such as Home Depot and Wal-Mart and Target stores without grocery departments.

The 100,000-square-foot threshold exempts Wal-Mart’s 99,000-square-foot “urban” supercenter—a new format unveiled this year that is designed to have as much economic impact as a full-scale supercenter, but at a size that will fit the constraints of inner city sites and skirt the growing number of city ordinances limiting stores to 100,000 square feet. Wal-Mart built the first one in Tampa and analysts say the company will likely seek to build hundreds more over the next few years.

California state lawmakers are also considering economic impact standards for supercenters. Under a bill (SB 1056) that has passed the Assembly, cities would be required to conduct an economic impact analysis before approving stores larger than 130,000 square feet with at least 20,000 items and 10 percent of their floor area devoted to groceries. The bill must pass the Senate and be signed by Governor Arnold Schwarzenegger. It did not receive enough votes in the Assembly to override a veto.

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.