Turlock, CA Regulation Regarding Large-scale Retail Stores
Status: Adopted in January 2004
Challenges: Wal-mart has lost two court challenges
Cities can outlaw big-box superstores in order to prevent the collapse of local businesses and resulting urban blight, a state appeals court ruled Wednesday in a case that sets a statewide precedent for ordinances aimed at retail giant Wal-Mart.
Upholding a 2004 ordinance in the city of Turlock (Stanislaus County) that was backed by neighborhood supermarkets and labor unions, the Court of Appeal in Fresno said the city legally used its power to "control and organize development within its boundaries.
The court also rejected Wal-Mart's argument that the city had failed to study the environmental effect of banning huge one-stop stores, which included a proliferation of smaller outlets, accompanied by increased traffic and pollution, according to the company. The court said those impacts were speculative and could be addressed if such stores were ever proposed.
The ruling, the first by a California appellate court on the issue, was delivered against a backdrop of legal and political conflict over Wal-Mart's efforts to establish a California network of discount supercenters -- stores that exceed 100,000 square feet and contain full-size groceries.
Local businesses fear ruinous competition from the world's largest retailer. Unions have been struggling for years, without success, to gain a foothold at Wal-Mart, and worry that the new stores would displace union-represented businesses or pressure them to cut wages.
"The decision will help provide a template for other communities which are considering regulating discount superstores, said Rick Jarvis, a lawyer for the city of Turlock.
Wal-Mart spokesman John Simley said the city's opposition is "unfortunate, because it goes against customer demand. He also said the ruling "weakens the state's environmental statutes and fails to recognize the environmental benefits of allowing customers to make fewer trips to buy what they need.
Simley said the company has not decided whether to appeal. Wal-Mart has also sued Turlock in federal court, claiming the ordinance unconstitutionally discriminates against one type of store and interferes with interstate commerce.
The Arkansas company has opened supercenters in seven California communities in the past two years, including Gilroy and Stockton, Simley said. He said about 20 cities and counties in Northern California have passed ordinances seeking to limit or block the stores.
Locally, San Francisco, Oakland and Martinez have measures excluding such stores. Contra Costa County supervisors enacted a ban in 2003, covering unincorporated areas, but it was repealed by voters in an April 2004 referendum in which Wal-Mart spent more than $1 million. After that vote, Alameda County supervisors rescinded a similar ordinance, under threat of a lawsuit. They passed a new measure last month requiring big-box retailers to describe the impact of new stores on the local economy and give details of employees' pay and benefits.
Turlock, which has a Wal-Mart store, considered plans for a supercenter in 2003, but the proposal stirred business and labor opposition that led to passage of the ordinance in January 2004.
It did not name Wal-Mart, but prohibited any retail store larger than 100,000 feet that devoted more than 5 percent of its space to non-taxable items such as groceries. The City Council said the purpose was to preserve neighborhood shopping centers, anchored by local supermarkets.
In Wednesday's ruling, which upheld a Superior Court judge's decision, the appeals court said the city acted with a legal purpose, even if its action had an anti-competitive impact.
"While zoning ordinances may not legitimately be used to control economic competition, they may be used to address the urban/suburban decay that can be its effect, said Justice Betty Dawson in the 3-0 ruling.
© 2006 San Francisco Chronicle