BILL ANALYSIS Ó
AB 667
Page 1
ASSEMBLY THIRD READING
AB 667 (Roger Hernández)
As Amended May 20, 2013
Majority vote
LOCAL GOVERNMENT 5-4 APPROPRIATIONS 11-5
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|Ayes:|Alejo, Bradford, Gordon, |Ayes:|Gatto, Bocanegra, |
| |Mullin, Frazier | |Bradford, |
| | | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Ammiano, |
| | | |Pan, Quirk, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Achadjian, Levine, |Nays:|Harkey, Bigelow, |
| |Melendez, Waldron | |Donnelly, Linder, Wagner |
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SUMMARY : Requires a local agency to do an economic impact
report prior to permitting the construction or alteration of a
superstore in an economic assistance area, as defined, and
requires the local agency to make a finding that the superstore
will not adversely affect the economic welfare of the impact
area, based on that report. Specifically, this bill :
1)Defines the following terms:
a) "Economic assistance areas" means existing economic
development areas, that may be amended from time to time by
the Legislature, including an enterprise zone, a local
agency military base recovery area, a manufacturing
incentive area, a targeted tax area, or a redevelopment
area identified by any successor agency to a former
redevelopment agency, as specified;
b) "Financial assistance" includes, but is not limited to,
any of the following in the amount of $100,000 or greater:
i) Any appropriation of public funds, including, but
not limited to, loans, grants or subsidies, or the
payment for or construction of parking improvements;
ii) Any tax incentive, including, but not limited to,
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tax exemptions, rebates, reductions, or moratoria of a
tax, including any rebate or payment based upon the
amount of sales tax generated from the superstore;
iii) The sale or lease of real property at a cost that is
less than fair market value; or,
iv) Payment for, forgiveness of, or reduction of fees.
c) "Impact area" means a five-mile radius surrounding the
proposed location of a superstore; and,
d) "Superstore" means a business establishment that exceeds
90,000 square feet of gross floor area, sells a wide range
of consumer goods, and devotes 10,000 square feet or more
of the sales floor area, as specified. "Superstore" shall
include a retail establishment with multiple tenants, and
the cumulative sum of related or successive permits that
may be part of a larger project, including piecemeal
additions to a building, where consumer goods and
nontaxable items are sold under the same roof with shared
checkout stands, entrances, and exits. "Superstore" does
not include a discount warehouse or retail store where more
than one-half of the items carried by the discount
warehouse or retail store are sold in large quantities or
in bulk, and the discount warehouse or retail store
requires shoppers to pay a membership or assessment fee.
2)Requires, prior to the permitting of the construction of, the
addition to, or the alteration of, any buildings or structures
that would create a superstore in an economic assistance area,
or where a superstore would be the recipient of over $100,000
in financial assistance, the legislative body of the city or
county to make a finding that, based on the consideration
of all economic benefits and costs, the superstore will not
materially adversely affect the economic welfare of the impact
area, in addition to the findings otherwise required by any
ordinance or regulation by the city or county.
3)Requires the finding to be based upon information contained in
an economic impact report, any other information received or
obtained by the designated agency of the city or county, and
any other information received before or at a public hearing
conducted, as specified.
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4)Allows the city or county to prepare the economic impact
report or contract with a private entity, other than the
permit applicant, or with another public agency for the
preparation of the report. Any private entity or other public
agency contracted to prepare the economic impact report shall
be qualified by education, training, and experience to conduct
economic and fiscal impact analyses.
5)Requires the applicant for the proposed superstore to pay the
city or county for the costs of preparing the economic impact
report.
6)Requires the report to include, but not be limited to, all of
the following:
a) An assessment of whether the proposed superstore will
meet the purposes of any designated economic assistance
area in which the superstore is proposed to be located.
b) An assessment of whether the proposed superstore will
negatively impact any retailer that is the beneficiary of
any benefits from any program adopted in connection with
any economic assistance area in which the superstore is
proposed to be located;
c) An assessment of the extent to which the construction
and operation of the proposed superstore will affect
employment in the impact area, including all of the
following:
i) The number of person employed in existing retail
stores in the impact area;
ii) An estimate of the number of people who will likely
be employed by the proposed superstore;
iii) An analysis of whether the proposed superstore will
result in a net increase or decrease in employment in the
impact area; and,
iv) The effect on wages and benefits of employees of
other retail businesses, and community income levels in
the impact area.
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d) A projection of the costs of public services and public
facilities resulting from the construction and operation of
the proposed superstore and the incidence of those costs,
including the cost to the state, city, or county of any
public assistance that employees of the proposed superstore
will be eligible for based on the wages and benefits to be
paid by the proposed superstore;
e) A projection of the public revenues resulting from the
construction and operation of the proposed superstore
retailer and the incidence of those revenues;
f) An assessment of the effect that the construction and
operation of the proposed superstore will have on retail
operations, including grocery stores or retail shopping
centers, in the impact area, including the potential for
blight resulting from retail business closures and the
nature of any businesses displaced;
g) An assessment of the potential for long-term vacancy of
the property on which the superstore is proposed if the
business vacates the premises.
h) As assessment of whether the superstore would require
the demolition of housing or any other action or change
that would result in a decrease or negative impact on the
creation of extremely-low-, very low-, low-, or
moderate-income housing;
i) An assessment of whether the superstore would result in
any other adverse or positive economic impacts or blight in
the impact area; and,
j) An assessment of whether any measures identified by the
superstore are available that may mitigate any materially
adverse economic impacts of the superstore.
7)Requires a city or county, at any regularly scheduled meeting
or meetings of the legislative body of the city or county, to
provide the opportunity for public comment on the economic
impact report and its findings, following the completion and
approval of the economic impact report as required and 30 days
prior to the issuance of any entitlement, including, but not
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limited to, a building permit.
8)Finds and declares that the review and regulation of
superstores is a matter of statewide concern and not merely a
municipal affair, thereby applying the bill's provisions to
charter cities and to charter cities and counties.
9)States that no reimbursement is required pursuant to the
bill's provisions because a local agency or school district
has the authority to levy service charges, fees, or
assessments.
10)States the intent of the Legislature to promote economic
development in all communities of the state.
EXISTING LAW :
1)Requires, under the Permit Streamlining Act, each state agency
and local agency to compile one or more lists that specify in
detail the information that will be required from any
applicant for a development project, and requires a public
agency that is the lead agency for a development project, or a
public agency which is a responsible agency for a development
project that has been approved by the lead agency, to approve
or disapprove the project within applicable periods of time.
2)Prohibits a local agency from providing any form of financial
assistance to a vehicle dealer or big box retailer, or a
business entity that sells or leases land to a vehicle dealer
or big box retailer, that is relocating from the territorial
jurisdiction of one local agency to the territorial
jurisdiction of another local agency but within the same
market area.
3)Requires, under the California Environmental Quality Act
(CEQA), lead agencies with the principal responsibility for
carrying out or approving a proposed discretionary project to
prepare a negative declaration, mitigated declaration, or
environmental impact report (EIR) for this action, unless the
project is exempt from CEQA (CEQA includes various statutory
exemptions, as well as categorical exemptions in the CEQA
guidelines).
4)Requires each planning agency to prepare and the legislative
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body of each county and city to adopt a comprehensive,
long-term general plan for the physical development of the
county or city, and of any land outside its boundaries which
in the planning agency's judgment bears relation to its
planning.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, by requiring cities and counties to prepare economic
impact reports on superstore projects, this bill creates a new
state mandate. The bill disclaims the state's responsibility
for reimbursing local government, citing local officials'
ability to charge processing fees that will offset their costs.
If the local charges for the new economic impact reports don't
exceed the reasonable costs of preparing and using those
reports, those charges will be permissible local fees that can
be adopted without a vote of the electorate.
COMMENTS : This bill requires a local agency (in this case, all
cities including charter cities, and counties) to do an economic
impact report prior to permitting the construction or alteration
of a superstore in an economic assistance area, and requires the
local agency to make a finding that the superstore will not
adversely affect the economic welfare of the impact area, based
on that report. The report would need to include a number of
different assessments relating to the impact of the superstore
on the community.
The bill defines a superstore to mean "a business establishment
that exceeds 90,000 square feet of gross floor area, sells a
wide range of consumer goods, and devotes 10,000 square feet or
more of the sales floor area to the sale of [food products for
human consumption]." The definition of superstore does not
include a discount warehouse or retail store where more than
one-half of the items carried by the discount warehouse or
retail store are sold in large quantities or in bulk, and the
discount warehouse or retail store requires shoppers to pay a
membership or assessment fee. The bill also defines other terms
including "economic assistance areas," "financial assistance,"
and "impact area."
The bill's provisions specify that the economic impact report
would be paid for by the project applicant. A local agency could
prepare the report or contract with a private entity that is
qualified to conduct economic and fiscal impact analyses to
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prepare the report.
This bill is sponsored by the United Food and Commercial
Workers, Western States Council.
According to the author, "In recent years, much concern has been
expressed about the economic impacts caused by large 'big box'
or 'superstore' developments. Among others, concerns have been
expressed by local small businesses, community groups, other
retail grocery stores, workers and labor organizations. At the
same time, millions of dollars in state and local tax credits
and other incentives are being offered to include these
developments in local jurisdictions throughout the State of
California.
"The goal of such 'economic assistance areas' is to promote
economic development with the goal of creating good jobs,
economically self-sustaining communities, and promoting a
vibrant small business sector. The purpose of the benefits
granted by 'economic assistance areas' is to stimulate business
investment and job creation for qualified disadvantaged
individuals in state-designated economically-distressed areas."
The author sites an April 2011 study entitled Living Wage
Policies and Big-Box Retail: How a Higher Wage Standard Would
Impact Walmart Workers and Shoppers, completed by the U.C.
Berkeley Center for Labor Research and Education, which found
the following:
"The growth of big box retail is a mixed blessing to local
communities. There is strong evidence that jobs created by
Walmart in metropolitan areas pay less and are less likely to
offer benefits than those they replace. Controlling for
differences in geographic location, Walmart workers earn an
estimated 12.4 percent less than retail workers as a whole, and
14.5 percent less than workers in large retail in general.
Several recent studies have found that the entry of Walmart into
a county reduced both average and aggregate earnings of retail
workers and reduces the share of retail workers with health
coverage on the job. The impact is not only one of substitution
of higher wage for lower wage retail jobs, but also a reduction
in wages among competitors. As a result of lower compensation,
Walmart workers make greater use of public health and welfare
programs compared to retail workers as a whole, transferring
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costs to taxpayers."
The sponsor argues that "it is crucial that local governments
making land use economic subsidy decisions have the information
they need to make an informed choice. We have seen superstore
after superstore come into communities with promises of economic
benefit only to have the opposite effect. In fact, studies
indicate that superstores have an adverse impact on workers and
the communities they are sited in?.we need AB 667 to ensure that
there is a procedure and a forum for decision makers to weigh
all of the economic information available when considering a
superstore development."
A coalition including the California Retailers Association,
Associated General Contractors, California Building Industry
Association, California Business Properties Association,
California Chamber of Commerce, California Grocers Association,
Commercial Real Estate Development Association, International
Council of Shopping Centers, Retail Industry Leaders
Association, and the Western Electrical Contractors Association,
in opposition, raise the following concerns:
1)AB 667 has the potential to create significant delays in the
local planning process, tying up local government resources
and delaying job creation.
2)The bill specifically targets economic development areas such
as enterprise and manufacturing zones, in California's hardest
hit communities that are already struggling.
3)Although the stated intent of the bill is to 'promote economic
development,' the real purpose of the bill appears to be
economic protectionism?
4)AB 667 also creates new opportunities for litigation of
projects in an already overly-litigious area.
5)Local consumers, through their elected officials, should make
the decisions about which stores they want in their
communities?AB 667 infringes upon local planning authority.
SB 1056 (Alarcón), which was vetoed by Governor Schwarzenegger
in 2004, would have required a city, county, or city and county
to prepare an economic impact report prior to approving or
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disapproving a proposed development project that would permit
the construction of a superstore retailer, defined as a store
greater than 130,000 square feet of gross buildable area that
generates sales or use tax pursuant to the Bradley-Burns Uniform
Local Sales and Use Tax that contains more than 20,000 stock
keeping units, and derives 10% of its total sales from the sale
of non-taxable merchandise.
SB 1523 (Alarcon) of 2006 similarly required an economic impact
report to be prepared prior to a city's or county's approval or
disapproval of a superstore retailer with greater than 100,000
square feet of , and was again vetoed by Governor
Schwarzenegger.
SB 469 (Vargas) of 2012 would have required a city or county to
prepare economic impact reports before it approves or
disapproves the construction or conversion of superstore
retailers. SB 469 was vetoed by Governor Brown, with the
following message:
While I recognize that the merits of large-scale
projects need to be carefully considered, plenty of
laws are already on the books that enable and in
some cases require cities and counties to carefully
assess whether these projects are in a community's
best interests. This bill would add yet another
layer of review to an already cumbersome process.
Support arguments: Supporters argue that it is crucial that
local governments making land use and economic subsidy decisions
have the information they need to make an informed choice, that
workers at the superstores have lower wages and little, if any,
benefits such as healthcare and retirement, and that local
business often have a difficult time competing with superstores
and often go under.
Opposition arguments: The League of California Cities argues
that "each of the state's 482 diverse cities must maintain the
ability to make decisions which best fit their community. Each
individual city, or the voters within local communities, may
reach different conclusions on the extent to which specific
enterprises add to or extract value...AB 667 fundamentally
undermines local land use discretion and authority."
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Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958 FN: 0000736