A new twist in the Wal-Mart wars

In a nod to small retailers, Los Angeles is planning to make it much harder for 'big box' stores to expand.

Proponents say it may become a national model for handling skirmishes over so-called "big box" stores moving into economically fragile communities.

Opponents call it another thinly veiled attempt by pro-labor legislators to stand in the way of stores like Wal-Mart and Costco, fearing the stores' low wages and low costs.

Still others see the new ordinance, given initial approval this week by the Los Angeles City Council, as more evidence of a deadlock between America's largest employer, Wal-Mart, and its largest state, California, over the store's future and its policies.

The ordinance, voted on Wednesday, says simply that developers of superstores (those over 100,000 square feet) must do cost/benefit analyses to assess their economic impacts. Beyond the current practice of "conditional use" permits - which hinge on parking, land, and pollution impacts - applicants would have to assess a new list of controversial concerns, using approved but independent consultants.

The key concerns include potential business displacement, housing and open-space effects, impact on city revenues, job creation or loss, and access to low-cost goods. Such concerns have been at the heart of battles nationwide, as Wal-Mart has expanded to more than 1,500 supercenters.

"We don't see this as something that tries to stand in the way of a train [driven by the incoming stores], but rather a way to divert the whole procedure to a different track," says City Councilman Eric Garcetti, chief proponent of the ordinance. That track, he says, is a straightforward discussion and more formal approval process with residents' input.

In battles across the state and elsewhere, Mr. Garcetti and others say that up to now, the first casualty has been the truth.

The ordinance is "a great idea because it would've prevented the whole ugly campaign here that pitted neighbor against neighbor in a war of propaganda on both sides," says Eliot Petty, a Los Angeles resident who lived through a citizen referendum this year. Barraged by Wal-Mart's TV ads (touting new jobs and tax revenue) and hordes of activists (claiming the ruination of local retail), Inglewood residents eventually said "no" to Wal-Mart's proposal. But the community's polarization remains.

"People here wanted development, but not at the expense of others," says Mr. Petty, "and it would've been nice to have a way to make a more rational decision."

Proponents favor the new measure because, unlike other legislative attempts, it doesn't attempt an outright ban. In the past, proposed bans - circumvented by store-backed referendums - never came to fruition. Supporters also call the new measure a useful planning tool to ensure responsible development, acknowledging that each community has different issues at stake - and it offers a means, too, of protecting cities' own long-term investments in their economic development.

If all goes well, it may be a way to combat outcomes like that in northern California's Cathedral City, where a new Wal-Mart Supercenter put several local retailers out of business - and then, when it moved to a new location, left the city with a vastly depleted retail tax base.

Even opponents of the ordinance call it a victory of sorts: After all, it falls short of banning the big-box stores or restricting their sales of groceries. Still, many balk at the idea of new restrictions.

"This is just additional red tape that will put a cramp on businesses moving to L.A.," says Wal-Mart spokesman Peter Kanelos. He says Wal Mart will marshal resources "to make these economic-impact studies are applied fairly and equitably across the board."

While some fear a new level of statistics battles and survey wars once reports are completed, others, like Petty, say independent analyses could help both sides make rational decisions.

"There is some history of both sides making different claims in situations like these," says Ken Jacobs, author of a just-released report ("Hidden Cost of Wal-Mart Jobs") for the UC Berkeley Center for Labor Research and Education. "But the inclusion of these new reviews really does change the equation.... In the process, facts come out on both sides which require study. It's the same way you buy a car, choose a home or school - you ask what are the costs and benefits are and weigh those. It's good public policy."