Parking Lot Fight Fuels Sales Tax Tug-of-War Bills
Retail giant Costco Cos.’ campaign to make the small Bay Area community of Martinez fork over $2 million to help upgrade its parking lot or face its leaving town for one nearby has triggered legislation aimed at curbing the bidding wars between neighboring communities over who will get the sales-tax-generating “big box” outlets and auto malls they all crave.
The state’s 1992 decision to shift about $2 billion annually in property tax revenue away from local governments has exacerbated local competition for sales tax generators such as major retailers. But lawmakers, particularly those with local government experience, now appear to be increasing their efforts to end what some characterize as the retailers’ extortion-like demands.
Assemblyman Tom Torlakson (D-Martinez), for 15 years a Contra Costa County supervisor, has introduced a bill that would prevent any local governing body--from cities to redevelopment agencies--from using public money to lure existing businesses from nearby communities within a given radius. While no exact radius has been set in the legislation, those following the bill say it should be set at 35 to 50 miles.
Similarly, Assemblyman George Runner Jr. (R-Lancaster) has reintroduced legislation for a constitutional amendment that could appear on the November ballot. Runner’s measure seeks to delete the requirement that local governments have to win voter OK of any sales-tax-sharing agreement they work out among themselves.
Agreements among communities to share sales tax revenue, Runner argues, could promote healthier regional economies by placing big retailers in the optimum location and allowing for all surrounding communities to reap the benefits and share the costs of development.
The voter approval provision effectively stymies such agreements, Runner says.
Both Torlakson and Runner tout their bills as ways to empower local governments so big retailers can’t pit governments against each other, getting municipalities to waive building fees, provide new roads, traffic signals or even the buildings themselves, and sometimes to grant outright cash subsidies.
Runner’s bill has gathered across-the-board support not only from city and county organizations but also from the California Business Properties Assn. Its 5,000 members range from so-called big box retailers such as Home Depot to neighborhood strip malls and office complexes.
“Business property owners are in these communities for the long haul, and for us, a viable community is a viable investment,” says Rex Hime, an association lobbyist.
In Martinez, a city of 35,000 across the bay from San Francisco, Costco is the largest generator of sales tax, providing one-sixth of the town’s $3-million sales tax haul for the last 10 years. Costco has 268 stores, 84 of them in California, with annual sales in excess of $20 billion. The company wants Martinez to contribute up to $2 million for a parking-lot upgrade.
While it wouldn’t break the town, says Assistant City Manager Ron Peterson, giving Costco $2 million would jeopardize Martinez’s ability to pay for its police force, which absorbs more than half of the $10-million annual budget.
“This is a business that needs to pay its own
bills,” he said.
But Peterson’s claim that Costco has threatened to relocate nearby if the city does not come through with a subsidy is hotly disputed by Costco representatives.
“We’re hoping not to move,” says Joel Benoliel, a senior VP with the Issaquah, Wash.-based Costco Cos. He said Costco is planning a multimillion-dollar expansion and remodel of its Martinez store, and the city should contribute.
“It would be fully reimbursed by payback [of sales taxes] over the long term,” Benoliel argues.
Torlakson’s AB 1835 was introduced Feb. 12 and is awaiting assignment to a committee, where it can anticipate major opposition from business interests, Torlakson’s staff members say.
Runner’s ACA 10 passed 9-1 in the Assembly’s Local Government Committee on Jan. 14 and is awaiting a second hearing in the Assembly Elections Committee. Runner says he is “fairly optimistic” that his bill can gain the two-thirds votes it needs for passage in the Legislature and placement on the November ballot.
Hot Bills
* Business Lemon Law
Bottom Line: Small businesses are not covered under the state’s automobile “lemon law,” which compensates owners of household vehicles when a new car experiences the same problem four times within 12,000 miles or 12 months of its purchase. This bill would extend the law’s provisions to small businesses, defined as those owning five or fewer vehicles.
Chances: Auto makers’ opposition defeated a similar bill last year in its first committee hearing, but they are said to be willing to remain neutral this time around if the author will work with them on their objections.
Next Step: Awaiting committee assignment, but likely to go to the Assembly’s Consumer Protection, Governmental Efficiency and Economic Development Committee in March. AB 1848 author is Susan A. Davis (D-San Diego) can be reached at (916) 445-7210.
