Big box retailers may soon have face a California-sized hurdle if they want to open a new store in the Golden State.  The California legislature is currently considering Senate Bill 469, which would require its cities and counties to cause an economic impact report to be completed before approving a proposed development project that would include the construction of a superstore retailer.  The report would need to include a detailed analysis of, among other things:

  • the extent to which the proposed superstore would capture a share of retail sales in the market area.
  • how the construction and operation of the proposed superstore will affect employment in the market area, including all of the following:
    • the number of persons employed in existing retail stores in the market area.
    • an estimate of the number of people who will likely be employed by the proposed superstore.
    • an analysis of whether the proposed superstore will result in a net increase or decrease in employment in the market area.
    • the effect on wages and benefits of employees of other retail businesses, and community income levels in the market area.
  • the effect that the construction and operation of the proposed superstore retailer will have on retail operations, including grocery or retail shopping centers, in the same market area, including the potential for blight resulting from retail business closures and the nature of any businesses displaced,
  • the potential for long-term vacancy of the property on which the superstore is proposed in the event that the business vacates the premises, including any restrictions that exist on the subsequent use of the property on which the superstore is proposed to be located, including the provisions of any lease that, in the event the owner or operator of the superstore vacates the premises, would require the premises to remain vacant for a significant amount of time.
  • whether the superstore would result in any other adverse or positive economic impacts or blight.  

If passed, the bill will impact retail superstores, such as Wal-Mart Supercenters, that exceed 90,000 square feet of gross floor area and devote at least 10% of the sales floor area to the goods that are exempted from sales tax, such as food.

Proponents of the legislation claim that mandating the economic impact report will arm local officials with the information they need to make thoughtful decisions, considering for themselves whether the benefits of allowing a superstore outweigh the potential losses to smaller mom-and-pop retailers.

The California Retailers Association opposes the proposed legislation, saying that the bill “limits competition to favor one retailer over another.”  Of note is that warehouse and discount retail stores, such as Costco, that require shoppers to pay membership fees, would be exempt from the legislation and, as such, would not be required to complete the mandated economic impact report.

Other opponents of the bill tout the legislation as simply an ill-disguised labor union attack on Wal-Mart.

To-date, Senate Bill 469 passed the Senate with a vote of 21-14 (5/31/11) and passed the ASM Local Government Committee with a vote of 5-3 (6/22/11).  The proposed legislation is now being referred to the Committee on Appropriations for consideration.

To read the latest version of Senate Bill 469 go to: http://www.aroundthecapitol.com/billtrack/text.html?bvid=20110SB46996AMD