Walmart wins big with California initiatives
Thursday, November 24, 2011In a push to expand across California without interference, Walmart is increasingly taking advantage of the state's initiative system to threaten elected officials with costly special elections and to avoid environmental lawsuits.
The Arkansas-based retailer has hired paid signature gatherers to circulate petitions to build new superstores or repeal local restrictions on big-box stores. Once 15 percent of eligible voters sign the petitions, state election law puts cash-strapped cities in a bind: City councils must either approve the Walmart-drafted measure without changes or put it to a special election.
As local officials grapple with whether to spend tens of thousands or even millions of taxpayer dollars on such an election, Walmart urges cities to approve the petition outright rather than send it to voters.
While most development projects don't attract much controversy, Walmart has become controversial across California. Backers of organized labor have demonized the company for opposing unions and paying low wages, while other critics say its superstores cripple local businesses and increase sprawl.
Walmart's use of the initiative process has angered elected officials who say the company's political strategy effectively holds them hostage.
"They circumvented the system and blackmailed the town," said Rick Roelle, a councilman in Apple Valley (San Bernardino County), where Walmart pushed through a superstore proposal in April. "We've had controversial projects, but we were never bullied like Walmart."
Walmart and its supporters argue that the strategy helps speed up development that can boost employment and tax revenue as well as low-price shopping. The initiative process, according to the company, pressures cities only because it shows the strong community support for Walmart.
"The initiative process was an opportunity that allowed voters to voice their support for the benefits that Walmart would bring their community, including jobs, affordable groceries, increased tax revenue, and infrastructure improvements," Walmart spokeswoman Delia Garcia said in a statement.
The company has employed the same well-honed strategy across the state, from the Central Valley agricultural community of Kerman (Fresno County) to the Silicon Valley suburb of Milpitas to Apple Valley, where the main street has a special crosswalk button for horse riders.
Ramping upWalmart has ramped up the campaign in the last year, pushing through four new superstore projects and fighting big-box regulations in San Diego. The company spent $2 million on the effort, paying election lawyers, campaign consultants and public relations firms.
Walmart often rallies a crowd of supporters at city council meetings to back up its position. Pastor Ray Smith, president of a group called Pastors on Point, asked his followers to support Walmart in San Diego. He spoke passionately against an ordinance imposing new regulations on superstores, saying other stores don't hire enough African Americans.
At one city meeting, he called on a group of young people to stand and told the City Council, "You want to stop the violence? We need jobs."
Walmart paid Smith's church to bus supporters to council meetings and shuttle young people who gathered signatures for a ballot initiative petition against the regulations. Walmart's local political committee also reported paying $13,400 in salary and consultant payments to Smith directly, in addition to $5,500 labeled "van/bus rental."
Smith said the campaign filings were incorrect. "They did rent our buses ... but I was never a consultant for them," he said.
Walmart uses the ballot initiative process in part to shield its superstores from lawsuits under the California Environmental Quality Act. The landmark 1970 law requires state and local agencies to review and mitigate the environmental and traffic impacts of development projects. Lawyers often sue Walmart, contending that the review didn't go far enough.
The company has found a loophole: Once it switches to a ballot initiative, the law doesn't apply.
Other companies occasionally pursue ballot initiatives on development projects. But Walmart is the main player, and California is the main battleground.
Walmart's successful strategy raises questions about whether California's communities - dogged by economic woes - can afford an aggressive use of the state's system of direct democracy. Other interest groups could use the same strategy to pressure elected officials, as medical marijuana advocates recently did to defeat pot-club regulations in San Diego.
This year, four cities approved Walmart's initiative petition without an election. One of them, San Diego, repealed its own superstore regulations in the face of an election that could have cost $3.4 million. Only Menifee in Riverside County held a special election, costing taxpayers $79,000. Walmart spent nearly $400,000 there - and won handily.
Opponents' stanceThe strategy violates the spirit, if not the letter, of state environmental law, said Richard Frank, former California chief deputy attorney general for legal affairs.
"It is disturbing because it appears to be a fairly overt circumvention of the CEQA process," said Frank, now director of the California Environmental Law & Policy Center at the UC Davis School of Law.
Walmart argues that it closely adheres to California's extensive regulations. The strategy is necessary, it says, to avoid spurious lawsuits targeting the company for political reasons. The retailer points out that it goes much of the way through a lengthy planning process, allowing for an environmental impact report and public input, before heading to the ballot box.
"In many places around the state," Garcia said, "we often obtain store approvals but are subjected to special interests that attempt to use political and legal challenges to unfairly delay a store's construction."
Since the 1990s, activists also have used ballot initiatives to block Walmart stores.
Walmart turned that strategy on its head when it began proposing its own initiatives. The company suffered a sobering, nationally publicized loss in Inglewood in 2004. The company spent more than $1 million on a ballot measure to open a superstore there. Unions fought back, and voters shot it down.
But Walmart hasn't lost in California since.
In 2007, Walmart used the initiative process to force Long Beach to repeal an ordinance banning certain superstores that sell groceries. The council, facing tough budgetary times, decided the city couldn't afford an election, giving in to the company. In 2009, Walmart defeated a big-box ban in Salinas the same way.
Last year, city councils approved Walmart superstore initiatives without an election in the small Gold Country city of Sonora and the Mojave Desert military base community of Ridgecrest. This year, with five victories, has been Walmart's busiest.
Walmart continues to see a big opportunity for growth in California. The company already has 212 stores and employs 67,525 people in the state.
Sometimes, council members ask Walmart to pay for the election. This year in Pittsburg, for example, another developer offered to pay for the election costs of its ballot initiative. But Walmart always declines.
"We are not embarrassed by our decision to move to an initiative and to allow the electorate to overwhelmingly weigh in, but we are not prepared to cover any costs for an election," Walmart spokesman Aaron Rios said at an Apple Valley Town Council meeting in April.
California Watch, the state's largest investigative reporting team, is part of the independent, nonprofit Center for Investigative Reporting. For more, visit www.californiawatch.org.
This article appeared on page C - 2 of the San Francisco Chronicle