BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 469 HEARING: 4/6/11
AUTHOR: Vargas FISCAL: Yes
VERSION: 3/30/11 TAX LEVY: No
CONSULTANT: Detwiler
ECONOMIC IMPACT REPORTS FOR SUPERSTORES
Requires cities and counties to have economic impact
reports on permits for superstores.
Background and Existing Law
As the state and federal government cut financial support
for local agencies, the remaining revenue sources become
relatively more important. Cities and counties compete to
attract land uses that generate local revenues and shun
land uses that need expensive public services. This
fiscalization of land use distorts local land use decisions
by emphasizing sales tax revenues while discounting traffic
problems, air quality, open space, and affordable housing.
Some retailers ask local officials for subsidies as
inducements to locate in their communities. Placing fewer
demands on public services compared to the resulting sales
tax revenues, these companies ask local officials to spend
public dollars to gain more sales tax revenues. Some
companies are aggressive, playing one community off of
another, hoping to attract higher subsidies. State law
bans counties, cities, and redevelopment agencies from
subsidizing big box retailers to relocate within the same
market area (SB 114, Torlakson, 2003).
Some communities have local policies to discourage or
prohibit big box retailers. They decry the loss of
well-paid jobs when superstores enter the grocery business
and compete against chain grocery stores with unionized
employees. Governor Davis vetoed a bill that would have
imposed a statewide ban on big box retailers (AB 84, Floyd,
1999). The 2004 Bakersfield Citizens appellate decision
noted that a superstore's economic or social effects are
not significant environmental effects in an environmental
impact report (EIR) under the California Environmental
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Quality Act (CEQA), but that physical changes may require
EIRs to address urban decay. Since that decision, several
EIRs on superstore projects have included urban decay
analyses.
Some cities and at least one county have adopted local
ordinances that require economic impact reports before
acting on superstore projects. Although there is no
reliable inventory, ordinances exist in the cities of Galt,
Inglewood, Los Angeles, Petaluma, Sacramento, Vallejo, and
the County of Alameda. The San Diego City Council adopted
an ordinance in 2010 and then overrode the mayor's veto.
However, a referendum petition qualified before the new
ordinance took effect. Rather than call a special
election, the City Council rescinded the ordinance.
Proposed Law
Senate Bill 469 requires cities and counties to prepare
economic impact reports before they approve or disapprove
the construction or conversion of superstore retailers.
SB 469 requires city and county governing bodies to provide
the opportunity for public comment on the economic impact
reports and their findings at regularly scheduled meetings
after the reports' completion but 30 days before issuing
any entitlements. The bill doesn't preclude cities and
counties from conducting more studies.
Cities and counties must contract with experienced private
consultants (other than the applicant) to prepare the
economic impact reports. The applicants must pay for the
reports.
An economic impact report must contain:
An assessment of the effect on shares of retail sales in
the market area.
An assessment of the effect on supply and demand for
retail space.
An assessment of employment effects, including four
specific topics.
A projection of public service and facilities costs, and
their incidence.
A projection of public revenues, and their incidence.
An assessment of the effect on retail operations,
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including the potential for blight resulting from retail
business closures.
An assessment of the effect on implementing the local
general plan.
An assessment of the effect on retail customers' vehicle
miles traveled.
An assessment of long-term retail vacancies if the
superstore closes.
An assessment of the superstore's effects on affordable
housing.
An assessment of the destruction of parks, playgrounds, &
childcare facilities.
An assessment of any other impacts or blight.
An assessment of measures to mitigate adverse economic
impacts.
SB 469 defines a superstore as a business with more than
90,000 square feet that sells a wide range of consumer
goods and that devotes more than 10% of its sales floor
area to the sale of items that are not subject to state
sales tax. This definition includes buildings with
multiple tenants under the same roof. The definition
excludes discount warehouses and discount retail stores
that sell more than half of their items in bulk and require
shoppers to pay membership or assessment fees.
The bill relies on an existing statutory definition of
market area; an area that is recognized in the trade
literature as large enough to support a specific big box
retailer, but is no more than 25 miles from another big box
retailer.
SB 469 declares that it applies to charter cities and
charter counties because the effects of superstore
retailers are a matter of statewide concern that extend
beyond local boundaries. The bill also contains statements
of legislative findings and declarations.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . When superstores bring lower
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grocery prices to town, they can also bring lower wages and
benefits, part-time jobs, and traffic congestion. They can
be economic predators, crowding out established businesses
and accelerating the fiscalization of land use. Seduced by
hopes of higher sales tax revenues, some communities
initially embrace big box stores only to regret the later
effects. To help communities understand these costs and
benefits, SB 469 requires local officials to commission
economic impact reports before approving superstores.
Better information and a better perspective lead to better
decisions and better communities. After all, knowledge is
power.
2. Local discretion or state mandate ? Some communities
have general plan policies and land use ordinances that ban
big box developments or impose regulatory and design
standards that make them infeasible. Many cities and
counties require urban decay analyses in the EIRs they
prepare for superstore projects. At least a half-dozen
cities and one county already use their land use authority
to require specialized economic impact reports before they
act on superstore permits. These local ordinances rely on
size thresholds which range from 75,000 to 140,000 square
feet. With local officials able to adapt their regulatory
powers to fit local conditions and circumstances, the
Committee may wish to consider whether the Legislature
should impose a uniform procedure on all 481 cities and 58
counties.
3. Collateral attacks . Almost no one disputes the wisdom
of knowing about a project's environmental effects before
local officials make a decision. That's why CEQA requires
public officials to prepare EIRs on projects that may have
significant, adverse environmental effects. But many
builders complain about CEQA and EIRs. They say that
opponents who can't convince public officials to deny
projects turn around and file lawsuits over procedural
problems. These so-called collateral attacks slow down
development and result in higher costs. By requiring new
economic impact reports on superstores, SB 469 may result
in more of these collateral attacks. The Committee may
wish to consider whether SB 469 results in better
information or more lawsuits.
4. Size matters . Superstores with nonunion employees may
put competitive pressure on supermarkets with union
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contracts, but other big chain stores also compete with
existing local businesses. Traffic congestion, accelerated
blight, and the hollowing out of older malls and downtowns
can result when big retailers come to town. SB 469 doesn't
apply to all big retailers, only to those that stock lots
of items and devote a significant amount of their sales
floor to nontaxable items (mostly food). The bill doesn't
apply to discount warehouses or membership stores, even
though those stores may have similar land use, traffic, air
quality, or economic effects. Rather than focusing on
superstores that sell groceries, the Committee may wish to
consider an amendment to SB 469 that applies the
requirement for economic impact reports to all retail
stores bigger than 90,000 square feet. Alternatively, the
Committee may wish to consider using the existing statutory
definition of "big box retailer" (75,000 square feet) set
by the Torlakson statute.
5. Too much information ? Unlike CEQA, which delegates
many details to implementing regulations, SB 469 is quite
prescriptive about the type of information that must appear
in an economic impact report. Besides the obvious
information about public costs and public revenues, the
bill requires detailed data about retail employment, wages,
and benefit levels. Some of these categories may infringe
on proprietary information. The Committee may wish to
consider an amendment that reduces the bill's data needs
and instead requires an assessment of the proposed store's
costs and benefits to state and local public health and
social welfare programs.
6. Not in-house . Under CEQA, public officials are
responsible for the accuracy and quality of the
environmental documents. It doesn't matter if the public
agency's staff wrote an EIR or if the agency hired a
private consultant to do the work. SB 469 requires cities
and counties to contract with a qualified private
consultant to prepare the economic impact report. The bill
doesn't allow local agencies to do the work in-house or
even by contract with another local government or a
regional council of governments. The Committee may wish to
consider an amendment that allows cities and counties to
prepare the economic impact reports however they chose,
provided that they're legally responsible for the reports'
adequacy.
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7. State mandate, local fees . The California Constitution
requires the state to pay for the costs of new state
mandated local programs. By requiring cities and counties
to prepare economic impact reports on superstore projects,
SB 469 creates a new state mandate. The bill disclaims the
state's responsibility for paying, citing local officials'
ability to charge processing fees that will offset their
costs. Although Proposition 26 (2010) defined many local
charges as "taxes" that require voter approval, the
constitutional amendment specifically excluded charges for
"the reasonable regulatory costs to a local government for
issuing licenses and permits." 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 the kind of local fees that Proposition 26
recognizes.
8. Related bills . SB 469 is not the first bill to require
local economic impact reports on superstores. SB 1641
(Alarc�n, 2004) died in the Senate Local Government
Committee. Governor Schwarzenegger vetoed SB 1056
(Alarc�n, 2004) and SB 1523 (Alarc�n, 2006). On April 4,
the Senate Environmental Quality Committee will hear SB 620
(Correa) which gives a temporary CEQA exemption to projects
that convert vacant retail structures up to 120,000 square
feet if they meet three specific criteria.
Support and Opposition (3/31/11)
Support : California Labor Federation AFL-CIO, Building
Material, Construction, Industrial, Professional and
Technical Teamsters Union Local #36 San Diego County,
California Small Business Association, California Teamsters
Local 911, California Teamsters Public Affairs Council,
International Alliance Theatrical Stage Employees Local
Union 122, International Longshore and Warehouse Union
Local No. 29, League of Conservation Voters-San Diego
County, Ledford Enterprises, Northern California
Independent Booksellers Association, Neighborhood Marketing
Association, Painters & Allied Trades District Council 36,
Sacramento Central Labor Council AFL-CIO, Small Business
California, United Association of Plumbers & Pipefitters
Local 230, United Domestic Providers of America/AFSCME,
United Food and Commercial Workers-Western States
Conference.
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Opposition : California Business Properties Association,
California Retailers Association, Orange County Business
Council, Walmart.