Big-Box Retailers Prepare for Fight
Big-box retailers are feeling fenced in.
California lawmakers are currently considering a host of new ordinances that would regulate big-box stores, such as those of Wal-Mart Stores Inc., the Target Corp. and The Home Depot Inc.
Dealing with these political challenges was a top concern at an International Council of Shopping Centers symposium held in Irvine, Calif., on April 22.
“The train has left the station,” warned Wal-Mart Real Estate Manager Chris Danos, who is responsible for new store development in Southern California and Hawaii. “And the train’s message is that we have some big-box ordinances coming.”
California legislators and city officials have been working to pass regulations that would keep big-box retailers in check. Recently, city council members in Inglewood, Calif., nixed the idea of a new Wal-Mart coming into the city without the company doing an environmental impact report to measure how much traffic would be generated by the project. Voters in early April backed up the City Council’s decision by overwhelmingly rejecting a Wal-Mart–sponsored initiative that would have exempted the company from zoning and environmental restrictions in the Los Angeles suburb.
That was a clear sign that big-box stores might have a harder time setting up shop in California than in other states. There are several anti–big box ordinances brewing around the state. They include:
San Francisco: In March, the San Francisco Board of Supervisors passed Ordinance 62-04, barring chain retailers from building outlets in the city’s neighborhoods, including the chic Hayes Valley district.
Los Angeles: The Los Angeles City Council has proposed a law that would bar big-box retailers from opening in redevelopment zones or in economically depressed areas where the city administers tax breaks to small businesses. The ordinance, authored by City Councilman Eric Garcetti, is scheduled for a hearing in June.
San Diego: This fall, the state’s secondlargest city will hold hearings on proposed laws that would regulate big-box retailers. Jean Cameron, a San Diego senior planner, said the city has not yet written the laws and will consider regulating the size and design of the stores.
California: State Sen. Richard Alarcoacute;n sponsored Senate Bill 1641, which would have cut government funds given to big-box retailers for relocation costs. It also would have demanded that retailers pay for local government’s environmental impact reports. However, SB1641 was pulled on April 23 because it did not have enough votes to pass. Luis Patino, Alarcoacute;n’s communications director, said the bill will be rewritten and re-introduced this summer.
These regulations have retailers worried. “The industry has to fight back and take a hard line,” said Mark A. Ostoich, a lawyer for San Bernardino, Calif.–based Gresham, Savage, Nolan & Tilden LLP who spoke at the event.
Ostoich said he feels that the property rights enjoyed by big-box retailers will dwindle if the proposed regulations are passed. He suggested testing the regulations in California’s courts.
However, Huntington Beach, Calif., city official David Biggs told developers they could avoid getting burned by city bureaucracies and local activists by following local laws and doing research to ensure projects fit into city plans.
“Cities want to attract retail sales dollars, but we won’t sacrifice on quality-of-life issues,” said Biggs, economic development director for Huntington Beach. “Developers have to be responsive to legitimate local concerns.”
Biggs also said developers need to pay attention to issues of local control, which are highly important to city and county government officials, who often chafe at even state regulations.
“Most local governments would oppose a big-box law if it came from the state,” he noted. “One solution would not fit all 470 cities in California.”
