The Los Angeles City Council on Tuesday overwhelmingly backed a proposed law that would make it harder for Wal-Mart to erect superstores in the city by requiring the company to study whether surrounding areas would be harmed by the addition of the mammoth centers.
City officials pushing the law believe that Wal-Mart may have a tough time showing that its mega-stores would have a positive impact on communities, which could give the City Council a reason to reject them.
But Wal-Mart officials declared Tuesday that the proposed law was a win for the company, saying the firm kept Los Angeles from adopting an all-out ban on the Supercenters -- 200,000-square-foot stores that combine the traditional discount offerings with groceries.
Under the ordinance, retailers wanting to build stores larger than 100,000 square feet that devote more than 10% of their sales floor to food and other nontaxable items would have to pay for an economic analysis. The report would forecast whether a proposed store would eliminate jobs, depress wages or harm neighborhood businesses in many parts of the city.
“This is highly significant,” said Nelson Lichtenstein of the Center for Work, Labor and Democracy at UC Santa Barbara. He added that the law, which has the support of 13 of the 15 council members, could help transform the way the world’s largest company does business.
The council gave its initial approval to the law Tuesday and will vote today on the actual ordinance, which applies not only to Wal-Mart but also to other retailers, such as Target.
The ordinance could become effective as soon as September.
Labor leaders and their allies on the council hope the law will become a national model. Since the nonunion Wal-Mart announced plans to build 40 Supercenters across California, unions and some local governments have battled the Bentonville, Ark., company.
Tuesday’s City Council vote on the issue, one of labor’s top priorities, comes in the midst of a mayoral election campaign in which two candidates, incumbent James K. Hahn and Councilman Antonio Villaraigosa, are vying for union support. In 2001, when the pair also faced off, Villaraigosa had the backing of much of organized labor.
Hahn and Villaraigosa both support the proposed law.
Two years ago Councilmen Eric Garcetti and Ed Reyes proposed banning superstores in economically depressed areas of the city, but later scaled back their measure.
Speaking by cellphone from the barbecue section of the Wal-Mart in Baldwin Hills, company spokesman Peter Kanelos said, “Organized labor and other special interests have failed in their objective.”
He said Wal-Mart had already provided a huge economic boost to three Los Angeles neighborhoods with its discount stores.
Bernard C. Parks, the only council member to vote against the policy, said it would “make it rough ... to do business in L.A.” and would send businesses and jobs to other cities that would absorb them like a sponge.”
Parks, who is running for mayor as a pro-business candidate, said the Baldwin Hills shopping center sat half-empty for five years until Wal-Mart opened a store there last year. Now, the area has sprung back to life, he said.
“There’s a whole lot of folks in Los Angeles that would give their left arm for a $9-an-hour job,” he said.
But many labor and community groups believe that the discount retailer has a devastating effect on local communities, depressing wages, driving out existing businesses and creating nightmarish traffic.
On Tuesday, some pointed to a UC Berkeley Labor Center report released last week that said Wal-Mart cost California $86 million annually in state aid by giving its workers inadequate wages and benefits. Wal-Mart dismissed the report as biased.
The specter of the coming Supercenters also fueled the longest supermarket strike in Southern California history last fall and winter, as union employees protested health-benefit reductions that the supermarkets said they needed to hold their own against Wal-Mart.
Some California municipalities have enacted bans that would prohibit superstores, prompting Wal-Mart to fight back. In the Bay Area’s Contra Costa County and the border town of Calexico, the company sponsored referendums and persuaded voters to repeal the bans. In Alameda County and the San Joaquin Valley city of Turlock, the company filed lawsuits.
In Inglewood earlier this year, Wal-Mart tried a different tack. The company sponsored a sweeping initiative that would have allowed construction of a shopping center the size of 17 football fields without normal city input. Voters defeated the idea soundly.
The lesson Los Angeles officials took from these battles was that communities were more likely to support tighter control over development than outright bans. A month after the Inglewood vote, Los Angeles officials decided to retool their ordinance to require companies to pay for reports on the economic impact of the proposed developments.
The reports would be submitted to the city’s Planning Department and would be considered by the City Council.
Membership-based stores such as Costco and Sam’s Club, which is owned by Wal-Mart, would be exempt.
At the state level, Sen. Richard Alarcon, who is also running for mayor of Los Angeles, has introduced a proposal that would make reports similar to those in the city’s ordinance mandatory statewide.
Gov. Arnold Schwarzenegger said Tuesday that decisions on whether to build Wal-Mart stores should be left to individual communities.
“In most cases in America, the communities welcome them because you have cheaper prices and you have great additional employment,” he said. “But in some communities, there’s the argument: ‘I like my little store, where they hand-make the ice cream and you still go shopping the way you did in the old days.’ ”
California’s first Supercenter opened this spring in La Quinta, and others are slated to open in Hemet and Stockton in the fall.
Labor and city officials in Los Angeles stressed that the ordinance would protect vast swaths of the city that have been declared economically vulnerable.
“Fundamentally, this is about land use and about blight,” Garcetti said. “We have a flexible, thoughtful, rational ordinance that says
As assembled opponents of Wal-Mart cheered in the audience, Councilman Martin Ludlow added some sharp words for the company itself.
“I think we have a moral obligation to vote this vote today,” he said, “to send a message loud and clear that we are open for business, but we are not open for abuse.”
Councilman Greig Smith recused himself, saying he owned stock in Wal-Mart.
In contrast to past hearings on the ordinance that have been packed with partisans on both sides of the issue, no one spoke against the measure Tuesday.
Wal-Mart spokesman Kanelos said officials would “reserve all of our options” as they saw “how this ordinance is applied and make sure it is applied fairly and equitably to all businesses.”
Some analysts were perplexed by Kanelos’ attempt to portray the council vote as a victory, and predicted that the company would fight hard if the council used the reports to keep Supercenters out of the city.
“That’s the kind of victory where, if you have many more of them, you’re going to want a defeat now and then,” said Harley Shaiken, a geography professor at UC Berkeley who studies labor and the political economy. “For Los Angeles, this is something that concerns the city. But for Wal-Mart, this concerns all of California and other places as well.”
Times staff writers Noam N. Levey, Abigail Goldman and Peter Nicholas contributed to this report.