Some Members Only : New Price Club, Chain’s Largest, Will Only Sell to Business Clients Until It Can Win Rezoning

Price Company, the San Diego-based chain of discount warehouse stores, will open its first Price Club store in Los Angeles on Sept. 23. The store, all 144,000 square feet of it on Tampa Boulevard in Northridge, will be the largest Price Club store to date, with parking space for 1,000 cars. But it’s not likely to be overflowing with autos for quite some time.

The reason is zoning--or more precisely, the lack of it. As a prominently displayed sign in front declares, the new store will sell merchandise only to business members, not to individual customers. Unless you represent one of the discount warehouse’s business members, you’ll be asked to go back home.

At the moment, the property is zoned only for wholesale and industrial uses.

Price Company, which has a chain of 45 Price Clubs offering low-cost merchandise to customers who pay a membership fee, says it plans to apply for a zoning change so it can sell goods to individual members. But company officials concede the zoning change, which must be approved by the city of Los Angeles, could take a year or more to complete.

Why open a store that only can sell to some of its customers? Brent Knudsen, Price Company’s vice president of marketing, says the decision was made to open the store without rezoning because businesses account for about 70% of a Price Club store’s average annual volume of $110 million.

Daniel P. Garcia, a partner in the Los Angeles law firm Munger, Tolles & Olson, which represents Price Company, said the company’s failure to obtain a zoning change by the opening date wasn’t an oversight, but merely reflects the need to prepare the zone-change application properly. “It’s just a cautious start,” said Garcia, who is the former president of the Los Angeles City Planning Commission, a five-member committee that oversees zoning issues. He adds that he expects the rezoning process to go smoothly.

Price Company acquired the 19.7-acre site last year as part of its $52-million takeover of Alfred M. Lewis, a Riverside-based food wholesaler. The Northridge facility was formerly a distribution center, but Knudsen said it is ideal for a Price Club because the surrounding area has strong demographics and business growth.

Given the immense amount of information a company must produce to apply for a zoning change, it’s not surprising that Price Company hasn’t applied for the change yet, said David Lessley, a city planner who works on zoning changes.

Even if no major snags occur, getting new zoning is a Byzantine process. After Price Company compiles the necessary information, such as a detailed map and environmental data, it must file its request for a change with the city.

A Los Angeles Planning Department committee decides if the store should receive environmental clearance, or if it should be required to prepare a full environmental impact report, which is often required for controversial projects. If, for instance, it’s determined that the store would generate a huge amount of additional traffic in the area, Price Company might be required to submit an environmental impact report, which could take up to a year to complete.

Lessley said it’s likely that the Price Club would receive environmental clearance if certain steps are taken to alleviate potential problems. For instance, many retail developments, such as mini-malls, face opposition because they provide too few parking spaces and add to traffic congestion. But Price Club’s big parking lot could alleviate that worry.

If the company wins environmental clearance, the Planning Department will schedule a public hearing. After the hearing, a Planning Department examiner will prepare a report that often lists conditions, such as a certain type of landscaping, for a zoning change to be accepted.

The approved zoning request moves to the City Council’s Planning and Land Use Committee, chaired by Councilman Hal Bernson. Another hearing, this one by Bernson’s committee, is held and the committee makes its recommendation to the full council. The council would then draft a zone-change ordinance, which the mayor must sign. Thirty days after the ordinance is published by the city clerk in a general-circulation newspaper, the change becomes effective.

Garcia, the Price Company’s lawyer, said it’s important to get every step right in the zoning maze. But he said the process is also “a pain in the neck.”