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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Date: June 26, 2001
ORI"'" ~L
Vi' j In
Subject: Development Pennit Type II No,
01-05 - Appeal of approval ofa 155,917
square foot commercial use located
northwest of University Parkway and
Hallmark Parkway in the UBP-2, University
Business Park land use district.
.
1
From: James Funk, Director
Oept: Development Services
MCC Date: July 9, 2001
Synopsis of Previous Council Action:
None
Recommended Motion:
That the Public Hearing be closed and the Mayor and Common Council uphold the Planning
Commission's adoption of the Mitigated Negative Declaration and Mitigation
Monitoring/Reporting Program and approval of Development Pennit II No, 01-05 based on the
Findings of Fact in Development Code 919.44.060, subject to the Conditions of Approval and
Standard Requirements.
v~~~~~tw;rr:
Contact person:
Valerie C. Ross
Phone:
384,5057
Snpporting data attached: Staff Report
Ward:
6
FUNDING REQUIREMENTS: Amount: N/A
Source: (Acct. No,)
(Acct. Description)
Finance:
Council Notes:
Agenda Item No.
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
ST AFF REPORT
SUBJECT: Appeal of the Planning Commissions' approval of Development Permit Type II
No. 01-05 - A request to establish a 155,917 square foot commercial retail store
with ancillary gasoline sales,
Mayor and Common Council meeting of July 9, 2001
Applicant:
Harold Garcelon
Hallmark & Foreman
1152 N. Mountain Avenue
Upland, CA 91786-3669
909.982.7777
Appellant:
Carol Gold
6715 N. Miners Court
San Bernardino, CA 92407
800.622.0641
BACKGROUND:
Development Permit Type II No. 01-05 is a request to construct a Wal-Mart on vacant land
located northwest of University Parkway and Hallmark Parkway in the UBP-2, University
Business Park land use district.
On April 26, 2001, the Development/Environmental Review Committee (D/ERe) adopted the
Mitigated Negative Declaration and Mitigation Monitoring/Reporting Program and approved
Development Permit II No. 01-05. Kathleen Franks appealed the D/ERC's approval. Ms. Franks'
attorney, Raymond Johnson, submitted a letter dated May 29, 2001 raising issues regarding
traffic and circulation.
The appeal was scheduled for consideration by the Planning Commission on June 5, 2001. At the
meeting, Jennifer Buckman, from the law firm of Best, Best & Kreiger, submitted a letter on
behalf of Kathleen Franks and addressed the points contained within it (Exhibit 3). The Planning
Commission considered the comments from Ms, Buckman the verbal and written responses by
Mr. Dodson (Exhibit 4), and concluded that the D/ERC's adoption of the Mitigated Negative
Declaration and Mitigation Monitoring/Reporting Program and approval of Development Permit
II No, 01-05 were consistent with the California Environmental Quality Act and the requirements
of the City's General Plan and Development Code. The Planning Commission upheld the
D/ERC's approval of the project on an 8 to 0 vote. Commissioners present were Deny, Durr,
Enciso, Garcia, Lockett, Ramirez, Sauerbrun, and Thrasher. Commissioners absent were Welch.
Kathleen Franks did not appeal the determination of the Planning Commission. However, the
Planning Commission's approval of Development Permit II No. 01-05 and the Mitigated
Negative Declaration, were appealed by Carol Gold who had not previously been involved with
the project. Ms. Gold's grounds for appeal are included in Exhibit 5. Andrew Kahn from the law
firm of Davis, Cowell & Bowe is representing Ms. Gold.
.
The Planning Commission staff report (Exhibit 2) contains a complete discussion of the project.
The project applicant hired a certified court reporter to transcribe the proceedings of the Planning
Commission meeting (Exhibit 6), A summary of the key points and staffs responses are
included in Exhibit7.
It is staffs position that all of the potential environmental issues were adequately addressed in
the Initial Study and the DevelopmentJEnvironmental Review Committee's and Planning
Commission's adoption of the Mitigated Negative Declaration and Mitigation
MonitoringlReporting Program and approval of Development Permit II No, 01-0S were
consistent with the California Environmental Quality Act and the requirements of the City's
General Plan and Development Code.
FINANCIAL IMPACT:
None. The applicant paid the Development Permit processing fees and the appellant paid the
appeal fee.
RECOMMENDATION:
Staff recommends that Mayor and Common Council uphold the Planning Commission's
adoption of the Mitigated Negative Declaration and Mitigation Monitoring/Reporting Program
and approval of Development Permit II No. 01-0S based on the Findings of Fact in Development
Code 919.44.060, subject to the Conditions of Approval and Standard Requirements.
Exhibits:
I
2
Location Map
Planning Commission StaffReport*
Attachment I Location Map
Attachment 2 Development/Environmental Review Committee
Approval Letter
Attachment A Mitigation Monitoring and Reporting
Program
Attachment B Conditions of Approval and Standard
Requirements
Exhibit A Site Plan
Exhibit B Elevations
Exhibit C Landscape Plan Requirements
Attachment 3 Initial Study
Attachment 4 Initial Study Comments and Responses
Attachment S PC Appeal Application
Attachment 6 Letter from Raymond Johnson
Best, Best & Kreiger letter dated June S, 2001 *
Tom Dodson letter dated June S, 2001 *
MCC Appeal Application
Transcript of June S, 2001 Planning Commission meeting*
Summary ofIssues and Responses
3
4
S
6
7
*
Distributed under separate cover, June 28, 2001
EXHIBIT 1
CITY OF SAN BERNARDINO PROJECT: DP II NO. 01-05
PLANNING DIVISION
LOCATION MAP
LAND USE DISTRICTS HEARING DATE: 7/9/01
u
NORTH
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I
l
IT
Planning Commission Staff Report
Best, Best & Kreiger letter dated June 5, 2001
Tom Dodson & Associates letter dated June 4, 2001
Transcript of Jnne 5, 2001 Planning Commission Meeting
Distributed under separate cover
June 28, 2001
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EXHIBIT 2
EXHIBIT 3
EXHIBIT 4
EXHIBIT 6
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City of SilIl Benltlraillo
DcwloYlllellt Services
D~ptlrtlJlCllt
~
Application for Appeal
i
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EXHIBIT 5
APPEAL FROM A DECISION OF THE (check one)
o Development Services Director;
o DevelopmentfEnvironmental Review Committee; or
IJ. Planning Commission
Case number(s): Deve lopment Permit II No. 01 - 0 5
Project address:
NW Corner McArthur Blvd. & Hallmark Parkway
Appellant's name: Carol Gold
Appellant's address: 6715 N. Miners Ct.. San Bernardino. CA
Appellant's phone: 800-622-0641
q~1VI
Contact person's name: Andrew J. Kahn. Esa.
Contactpersol1'saddress: Davis, Cowell & Bowe. LLP, 100 Van Ness Ave. ,20th Fl.
. San Francisco, CA 94102
Contact person's phone:_ ,8110-622-~64 1 -
Pursuanlto Section 19.52.100 of the Development Code, an appeal must be filed on a City application fonn
within 15 days following the final date of action, accompanied by the appropriate appeal filing fee.
Appeals are normally scheduled for a determination by the Planning Commission or Mayor and Common
Council within 30 days of the filing date oCthe appeal. You will be notified, in wriling, of the specific dale and
time of the appeal hearing.
OFFICE IISr.; ONLY
Date appeal fih~d: ~ / I "1/ ~/.
Received by: b> ~ I~.. j.b
[lli~~~OW~IDJ
JUN 1 9 2001
CITY Of SAN BERNARDINO
DEVELOPMENT SERVICES
DEPARTMENT
511101
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REQUIRED INFORMATION FOR AN APPEAL
Specific acrion being appealed and the date of thaI action: Planninq Commission' s approval
of development permit No. 01-05 and mitigated negative .'. - .-..... .
declaration of 6/5/01.
Specific grail
Appellan
is .thj.s. proj ect. .
letters from Best, Best & Krieger
Also, the traffic study underestimates
traffic. impact hence mitiqation will not be sufficient--ITE
engineers published a study showing prior estimates of trip
generation rates significantly underestimate impact of such stores.
Action sought: Revpr~p t=lipprnu....' .::tnn rat'Jn;rt:l RT'R" At- ~ m;nimnm rnntinlJo
the matter to obtain further environmental analysis.
Additional informalion: This project threatens bliqhtinq of existinq retail
stores, in addition to the other detrimental impacts. At a minimum
the store should be downsized to reduce its impacts.
Signalllte of appellant: C JJ... ,\.,y{ 9. ~~
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Dale:
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SIIIIII
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CITY OF SAN BERNARDINO
DEPARTMENT OF DEVELOPMENT SERVICES
RECEIPT
I
Activity#:AP01-04
Appeal
SITE ADDRESS:
RECEIVED FROM:
RECEIPT NUMBER:
6715 N MINERS CT SB
PARCEL: 0261-481-16-0000
R01002454
Copy Reprinted on 06-19-2001 at 14:43:19
TRANSACTION DATE: 06/19/2001 TOTAL PAYMENT:
TOTAL PAID FROM TRUST:
TOTAL PAID FROM CURRENCY:
138.00
.00
138.00
TRANSACTIONS:
Type Method Description Amount
Payment Check 9463 138.00
TOTAL:
138.00
ACCOUNT ITEMS:
Description Account Code
Current Prnts
APPEAL TO MCC OR PC 001-000-4710
TOTAL:
138.00
138.00
RECEIPT ISSUED BY: GMB
ENTERED DATE: 06/19/2001
INITIALS: GMB
TIME: 02:42 PM
''1
SUMMARY OF ISSUES AND RESPONSES
JUNE 26. 2001
EXHIBIT 7
Specific Environmental Issues Raised in Response
Appeal, Dated June 19, 2001
1. Traffic. Whether the Project will cause: A . A detailed 50-page Traffic Study analyzed
substantial increase in traffic above existing potential increases in traffic compared to the
traffic loads/street system capacity, a substantial existing traffic load and street system capacity.
1I1crease 111 hazards due to design
. Conclusions of Traffic Study:
feature/incompatible uses or an individual or
cumulative increase in level of service standard (1) During constmction - the Project would
established by County Congestion Management have a less than significant impact on local
Agency. traffic volume because of the limited number of
trips associated with construction.
(2) During operation - the Project would
1I1crease congestion at several intersections
without mitigation. With mitigation, the Project
would result in a less than significant impact on
traffic. Per agreement from the applicant, one
mitigation measure required in 2010 will be
implemented prior to occupancy, i.e., restriping
University Avenue for the Southbound 1-215
onramp.
. Traffic Study considered cumulative impacts
from two projects and put a cumulative
background factor into the traffic analysis for the
year 2010 analysis.
. The Traffic Study for this Project does not
reqlllre compliance with the Congestion
Management Plan standards because the
threshold for retail uses is 1,000 peak hour trips
and the Project is below that threshold.
. CEQA does not require analysis of economic or
social impacts of a project. Pursuant to the
CEQA Guideline, anticipated economic or social
changes of a project may be traced through a
cause/effect analysis to physical changes caused
by such economic/social impacts wherc
necessary,
2,
Blighting of Existing Retail Stores.
. No such tracing of potential impacts is necessary
here as there is no evidence that the proposed
project will have such economic/social impacts
leading to or causing physical changes.
SUMMARY OF TRANSCRIPT OF PROCEEDINGS
CITY OF SAN BERNARDINO PLANNING COMMISSION
JUNE 5. 2001
1.
General Environmentallssnes Raised by
Incorporation of Letters from BB&K
Noise. Whether the Project will generate: .
Noise levels exceeding General Plan standards,
excessIve groundbome vibration, substantial
.
increase in ambient noise in the Project vicinity
above levels without Project.
2.
Biological Resources. Whether the Project will .
have a potentially significant impact on:
candidate, sensitive or special status species;
migratory fish or wildlife movements; federally
.
protected wetlands; or a sensitive natural
community.
3.
Air Oualitv. Whether the Project will conflict .
with the applicable air quality plan; violate any
air quality standard or contribute substantially
.
to existing/proposed air quality violations; or
result III a cumulatively considerable net
increase of any criteria for which project region
is in non-attainment under federal or state air
quality standards.
Response
The General Plan designates noise adjacent to
Interstate 215 Freeway at 75 to 80 decibels.
The Freeway creates background noise that is
higher than the construction phase of the Project,
which has higher noise levels from construction
equipment than do operations.
. The nearest sensitive nOIse receptor to the
Project is located Yo. mile away and the Interstate
215 Freeway is located between the Project and
the nearest residences,
The Project is not located within a Biological
Resources Management Overlay under the
City's General Plan.
The Project site has previously been prepared for
commercial development and 15 compacted,
graded and currently plowed.
. No native vegetation is located on the Project
site.
A site specific Air Quality Study was prepared
by Parsons Engineering Science, Inc,
Construction scenario: Short-term air emissions
from the Project are not forecast to exceed South
Coast Air Quality Management District
(SCAQMD) thresholds with or without
mitigation. However, mitigation measures will
be implemented to ensure that fugitive dust does
not rise to a significant level during construction.
. All Project operations emissions are below the
SCAQMD thresholds except carbon monoxide
(CO), which is only slightly above the threshold.
. However, SCAQMD thresholds for CO were
developed to advise local Agency's III their
decision making responsibilities. SCAQMD
thresholds are not determinative of the existence
of a significant environmental impact.
. The City has discretion to find an impact less
than significant, even for large new proj ects,
particularlv when the Proiect utilizes an existing
2
SUMMARY OF TRANSCRIPT OF PROCEEDINGS
CITY OF SAN BERNARDINO PLANNING COMMISSION
JUNE 5. 2001
General Environmental Issues Raised by
Incorporation of Letters from BB&K
4.
Land Use and Planning Analvsis, Whether the .
Project will physically divide an established
community or conflict with an applicable
Habitat Conservation Plan/Natural Community
.
Conservation Plan.
5.
Ponulation and Housing. Whether the 241 new .
jobs will be filled by local residents, as opposed
to commuters and whether these potential
growth new jobs will have a potential growth
inducing impacts. Additional demand for
.
housing, parks, and related servIces due to
creation of241 new jobs.
Response
developing area and will substantially enhance
the commercial and business community,
. The Initial Study concludes that the Project fully
conforms and implements the principal concepts
contained III the SCAQMD Air Quality
Management Plan and the Southern California
Association of Government's (SCAG) Regional
Comprehensive Planning Guide.
. The Initial Study incorporates the air quality
analysis prepared by Parsons which verifies that
San Bernardino IS III attainment for CO
emiSSIons.
The Initial Study and the Parsons Air Quality
Analysis indicate that background concentrations
for the San Bernardino area indicate a continued
downward trend in CO emissions due to the
reduction in mobile source CO emissions in the
future due to new technology, justifying a
finding of no significant impact.
This Project will not divide the community. The
Project Site is located next to the Interstate 215
Freeway, which already divides the community.
The Project is an in-fill development, adjacent to
industrial uses on the north and west and
commercial uses on the south.
The Initial Study concluded that jobs generated
by the Project would not require specialized
education or create the need to import skilled
labor from outside the area.
The new jobs will have an average salary of $7
to $10 per hour, making them uneconomical for
commuters. Therefore, it IS reasonable to
assume that the jobs will be filled by local
residents.
. The Project will not have significant growth
inducing impacts because 241 jobs in an area
such as the City of San Bernardino (which has
nearly 200,000 residents) does not amount to a
significant proportion of new jobs.
.
3
SUMMARY OF TRANSCRIPT OF PROCEEDINGS
CITY OF SAN BERNARDINO PLANNING COMMISSION
JUNE 5. 2001
General Environmental Issues Raised by
Incorporation of Letters from BB&K
6.
Earth Resources. Whether the Project will .
expose people/structures to: Risk of
loss/injury/death resulting from the rupture of a
known fault; strong seismic ground-shaking; or
seismic-related ground failure due to the fact
that the Project is located one mile southwest of
San Andreas Fault's Alquist-Priolo Zone and Y,
mile northeast of Glen Helen/Lorna Linda Fault
Special Studies Zone
7,
Water. Whether the Project will decrease .
groundwater recharge; or violate the City's
waste discharge requirements; and whether the
Project will violate any water quality standards
and whether the mitigation measure to control
potential contamination from the gas station
("spills") and automotive work base includes
specific performance standards.
Response
. Project is an in-fill development providing jobs
for local residents with no extension of services
and no leap-frog development. Therefore, the
demand for housing, parks and related services
will be less than significant.
. James Funk advised the Planning Commission of
an agreement to work with the City and Wal-
Mart to set a goal of 70% first time hires for San
Bernardino residents for this Wal-Mart store.
Initial Study's Earth Resources Analysis
indicates major faults with a potential of
producing major seIsmiC events m an
undetermined fault location north of the Project
area.
Mitigation Required: Before issuance of building
permit, the City shall review/approve a geo-
technical investigation of the site prepared by a
geotechnical professional, which will identify
specific safety-based performance standards that
must be met to ensure the safety of the structures
that will be occupied by humans,
The Initial Study concludes that the Project will
not reduce groundwater recharge, because the
existing pad has already been graded and
compacted and there is no upstream drainage.
The site sheds water because it has already been
compacted to 95% or greater to make sure water
runs off. The addition of structures, asphalt and
concrete placed on the Project site, will have no
affect on the groundwater recharge because the
site does not currently function for groundwater
recharge.
. The City controls all waste discharge
requirements. The only waste discharges from
the Project site will be to the sanitary sewer, over
which City standards apply.
. The Initial Study identifies specific standards to
extract pollutants from the runoff to a less than
significant level.
4
SUMMARY OF TRANSCRIPT OF PROCEEDINGS
CITY OF SAN BERNARDINO PLANNING COMMISSION
JUNE 5. 2001
General Environmental Issues Raised by
Incorporation of Letters from BB&K
8.
Hazards. Whether the Project will emit .
hazardous emISSIOns or handle acutely
hazardous materials, substances or waste within
v.. mile of an existing/proposed school.
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Response
. The mitigation measure related to spill hazards
requires the preparation of a plan which will
define how spills are to be remediated pursuant
to applicable state and local regulations
regarding cleanup and disposal of the
contaminant released,
Mitigation measures for potential gas "spills" are
identified in the Water Section of the Initial
Study. The Initial Study's Hazards Analysis
analyzes potential hazardous emissions for the
proposed gasoline operations. Potential impacts
associated with the potential release of
petroleum products are mitigated as identified in
the water section of the Initial Study.
. The Initial Study discusses the preparation of a
Business Plan in Section 4, and requires the
incorporation of the Spill Prevention Control and
Countermeasures Plan (SPCC). The SPCC
contains performance standards which must be
met to ensure that water quality is not degraded.
This standard IS more stringent that the
mandatory standards required by the City. The
Business Plan for Project operations shall
identify how the operation will handle any spills
or leakage of hazardous or toxic materials during
operational activities.
. As an additional mitigation measure, the Initial
Study requIres that the Business Plan be
integrated into a Construction Storm Water
Pollution Prevention Plan (CSWPPP) prepared
In accordance with current non-point source
permitting procedures. The CSWPPP shall be
provided to the City for review and approval
prior to initiating construction at the site,
. In addition to the Business Plan which IS
implemented by the City and County Fire
Departments, there is a significant amount of
regulation of hazardous emISSIOn discharges
regulated under South Coast Air Quality rules
and regulations identified in the Air Quality
Section of the Initial Study,
5
9,
SUMMARY OF TRANSCRIPT OF PROCEEDINGS
CITY OF SAN BERNARDINO PLANNING COMMISSION
JUNE 5. 2001
General Environmental Issues Raised by
Incorporation of Letters from BB&K
Public Service Analvsis. Whether the Project .
will have an impact on public facilities, due to
the increased traffic and increased wear on local
roads,
10.
Utilitv and Service Analvsis. Whether new .
stormwater drainage facilities will be
.
constructed or existing facilities will be
expanded which would cause significant
environmental effects and whether the Project
will be served by a landfill with sufficient
permitted capacity to accommodate the solid .
waste disposal needs and comply with
federal/state/local statutes and regulations
related to solid waste.
11.
Lighting. Whether the Project will create a new .
substantial source oflight or glare.
12,
Mandatorv Findings of Significance. Whether .
the Project has the potential to achieve short-
term as opposed to long-term environmental
goals, The City has failed to provide any list of
cumulatively considerable projects that took
.
into consideration in reaching its conclusion.
Rcsponse
.
According to the Initial Study, the proposed
Project may make a less than significant demand
on fire, police protection and paramedic services.
The Project will not have any impact on schools,
parks and recreational facilities or public
facilities.
.
The Project will not have a significant impact
upon the maintenance of public roads, because
no additional roads will be created as a result of
the Proiect and, in fact, one road will be vacated.
No new storm water drains will be constructed.
The Initial Study further states that the existing
stormwater runoff system is capable of handling
the runoff because this Project is not going to
increase the runoff by any significant degree.
Solid waste from this Project will be going to
one of three facilities: Colton, San Mateo and
Mid-Valley Landfill. These facilities comply
with the existing regulations and they have
capacity to accept additional waste from the
Project.
The Initial Study has referenced the County of
San Bernardino's 1995 Integrated Waste
Management Plan as verification.
The Initial Study found no significant impact
due to light and glare, because there is already
significant lighting on the streets 111 this
industrial/commercial area, and the surrounding
properties 111 this industrial/commercial area,
next to the Interstate 215 Freeway,
. The Project related lighting is required to be
directed away from the Interstate 215 Freeway to
prevent glare impacts to drivers on the freeway.
.
There are no Issues that the Environmental
Review Committee - Development Review
Committee felt had not been fully addressed in
the Initial Study.
There are no impacts identified that could not be
mitigated below a significant impact.
6
SUMMARY OF TRANSCRIPT OF PROCEEDINGS
CITY OF SAN BERNARDINO PLANNING COMMISSION
JUNE S. 2001
General Environmental Issues Raised by Response
Incorporation of Letters from BB&K
. There were no significant cumulatively
considerable impacts. The Initial Study
evaluated cumulative air quality and cumulative
traffic.
. All mitigation measures required to reduce these
impacts to a level of insignificance are identified
in the Initial Study.
13, Apoendix "G", Whether the City should have . Appendix G is not intended to be applicable to
used the Appendix "G" Environmental every jurisdiction,
Checklist Form published III the CEQA Every jurisdiction has the ability to establish its
Guidelines. .
own environmental checklist.
. The City's checklist focuses on local issues of
concern. For example, regarding Agriculture,
the City left agriculture off the checklist because
there is no agriculture left in the City.
f.
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7-9-01 1/'32-
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OFFICE OF THE CITY CLERK
RAcnEL G. CLARK, C.M.C. - CITY CLERK
,-
P.O, Box 1318. San Bernardino' CA92402
300 North "'D" Street. San Bernardino' CA 92418-0001
909.384,5002' Fax: 909.384.5158
8usiness Registration Division: 909.3845302
Passport Acceplance Facility: 909.384.5128
www.cLsan-bernardino.ca.us
July 11, 2001
Carol Gold
6715 N. Miners Court
San Bernardino, CA 92407
Dear Ms. Gold:
At the meeting of the Mayor and Common Council held on July 9,2001, the following
action was taken relative to Development Permit Type II No. 01-05 and your appeal of
approval of a 155,917 square foot commercial use located northwest of University
Parkway and Hallmark Parkway in the UBP-2, University Business Park land use
district:
That the hearing be closed; that the Mayor and Common Council uphold
the Planning Commission's adoption of the Mitigated Negative
Declaration and Mitigation Monitoring/Reporting Program and approval
of Development Permit II No. 01-05 based on the Findings of Fact in
Development Code Section 19.44.060, subject to the Conditions of
Approval and Standard Requirements.
If we can be of further assistance. please do not hesitate to contact this office.
Sincerely.
-1 : I __{:
.....::.,_..~_ '"_.J'J _....... ',..,
\
Rachel G. Clark, CMC
City Clerk
/~,
'......."
cc: Development Services Department (Planning)
Harold Garcelon, Hall & Foreman
John McClendon, Van Blarcom Liebold McClendon & Mann
CITY OF SAN BERNARDINO
ADOPTED SHARED VALUES: Integrity' Accountability' Respect for Human Dignity' Honesty
.
Pacific Retail Partners
o July 6, 2001
o
o
Honorable Mayor Valles and Members of the Conunon Council
City of San Bernardino
300 North "D" Street
San Bernardino, CA 92418-0001
Re: Fiscal Impacts of the Propost:d Retail Store Development at
University ParJ...-way and Gannett Drive, City of San Bernardino
Dear Mayor Valles and Members of the Common COWlcil:
The purpose of this letter is to identify and evaluate the fiscal impacts of developing a
retail store in the northwestern area of the City of San Bernardino.
I have sixteen-years of experience analyzing and selling commercial real estate and I
specialize in community shopping centers. Before working in real estate, I worked as a tinancial
analyst for Hughes Aircraft and I have a B.A in Business Administration with an emphasis in
Economics.
Primary Market Area
This analysis identifies the primary market area for the proposed Wal-Mart store. The
primary market area is the geographic area which defines the customer base. The size of the
primary IDarket area varies depending, in part, on the type of merchandise and the size of the
store. For example, some stores, such as Outlet Malls and large auto dealerships draw a large
percentage of customers from long distances with more of a regional market draw. The size of
the primary market area is also defined, in par., by the average distance people will travel to shop
for general retail merchandise in a convenient location. In this case, the primary and extended
market areas are initially shown as concentric circles around the proposed store site with
distances of 1.5 miles and 3.0 miles (see the attached map marked Exhibit "A"), However,
population densities and physical barriers must be taken into account because they determine
what store location is convenient.
Demographic data confirms that an estimated 22,833 people reside ~ithin the 1.5 mile
radius of the proposed Wal-Man. In addition to local residents, there are currently an estimated
16,600 students, faculty and staff at the California State University at San Bernardino, and that
number is anticipated to increase by approximately 40"/0 by the end of the decade to an estimated
23,000 people.
The geographic area around the proposed Wal-Mart contains physical barriers which
influence customer convenience. Customers living to the west of Lytle Creek wash and to the
south east of Shandin Hills would find it inconvenient to shop at the proposed Wal-Ma.1t, For
<:()lor.~tlo, t.;,; f l.J.k~..h~':r..: C:r ::-.:. ~~. (:I':llrn..., \ ::),.;I:?~~ . Td. ,'.~-\i ~ l' ','. :':-") . F:.l,"( ',,-, ':''':' ~ '.
L .\./Onngc C,)unt\": -'-q 1 :';r'i..;~.~-:h~lk~:" Rd ":',.;t-:: '~I)~, LH'.:! H~J."::-~. '..::\ "':..;;.; . rd. :;:,~.:. l,l.:.~'" "'I . ;:~c..; ,:.. 'l
I' , "-'.1 V . . ...:,.,-t,',,', I'"..........,','.. ,'\.)'<,',-.T_1. .','J~ '.,",.", .r.,", :,',' ''}-':'I.
n.:mu ~mpir"'~ 5..";. .: :1', on ~:r::.'1. :,r. ~ . ,-, - .. .. ..
" . ... - ...."'" -, ., . . , , -, },
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these reasons, the primary market area extends from the proposed WaI-Mart site an average of
1.5 miles.
DernollraDhic PODulation Data
We have gathered demographic data, a copy of which is attached as Exhibit "B", to
determine the number of residents in the area ~urrOW1ding the Gannett Parkway and University
Parkway intersection (the site of the proposed WaI-Mart). According to the data an estimated
2,219 people live within a one-half mile radius from the site, 12,317 people live within a I-mile
radius from the site, 22,833 people live within a 1.5 mile radius from the site, and 77,462 people
live within a 3 mile radius from the site. By the year 2006, the population is projected to
increase by 5%.
California State Universitv San Bernardino
The proposed Wal-Mart is located in a developing area within the City which has already
undergone, and is anticipated to continue to undergo, increased residential growth. In addition to
the residential growth. California Stale University San Bernardino is anticipating an increase
from the current 16,600 combined student, faculty and staff population to approximately 23,000
by the end of the decade. This significant increase in student enrollment over the next eight
years is necessary to match the growing educational needs in the City and the Stale. The
University Business Park Specific Plan, within which the Wal-Mart is proposed for development,
was approved by the City with these growth fuctors in mind.
Goograohic Location
Two factors that detennine customer choices among various retail options include the
location of convenient or competing stores and value. Assuming that the customers perceive two
competing retailers as offering similar values, then location will be the deciding factor.
Physical barriers, natural and man-made, can alter a store's primary market area. There
are several existing physical barriers within the 3-mile radius of the proposed WaI-Man which
reduce the size of the primary market area to less than 3 miles and show that the customer base is
not located within II well defined concentric circle. The first is the Lytle Creek floodway to the
west of the proposed site and the second is Shandin Hills, 1bese two natural barriers are located
within the 3-mile radius of the proposed WaI-Mart and reduce the primary market area as
described beiow.
Lytle Creek
Generally, there are IlQ residents in the Lytle Creek wash area west of the site, and the
residents located directly to the west of the wash in the northern part of the City of Rial to would
have to traverse the wash area to shop at the proposed WaI-Mart, Because crossing the wash
area takes more time and effort, residents living to the west of Lytle Creek will probably
continue to shop in Rialto or areas to the west and south. Because of the impact of the wash area
on customer convenience, the wash area reduces to approximately 1.5 miles the western half of
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the primary market area for the proposed Wal-Man. The area within the western half of the i,5-
mile radius includes portions ofMuscoy.
Shandin Hills
The primary market area for the proposed WaI-Man is also reduced by a natural physical
barrier on the east side: the Shandin Hills, The Shandin Hills divide the University area from
northern San Bernardino, acting as an obstacle which restricts travel from the south, This
reduces the primary market area east of the 1-215 to slightly more than I mile. Within the 1.5-
mile radius are residents living to the northwest of the Sbandin Hills who may (or may not)
choose to shop at the proposed Wal-Mart.
Establishment of a New Mamet Place
This will be the flI'St Wal-Man (and the first major genera1 merchandize store) in the
northwestern area of the City of San Bernardino, and the only such store in the
UniversityJMuscoy area. As a result, it will create a new marketplace for northwestern San
Bernardino residents. There is another existing Wal-Mart in the City located at the cross-town
highway (Highway 30) at the intersection of Highland Avenue. However, this store is located
approximately 10 miles away and services residents in the northeastern part of the City.
The proposed Wal-Mart will also serve some regional customers who commute on 1-215,
who will see the store from the freeway and imenupt a trip to another destination to shop. In
their traffic analysis for this proposed project, the City of San Bernardino traffic engineers
concluded that approximately 27% of the vehicles travelling to the new Wal-Man will already be
travelling on the 1-215 freeway and will stop and shop as a diversion. The remaining 73 percent
of the trips will use surface streets, and will originate from within the area surrounding the store.
This 73 percent of projected trips will originate from within the primary market area, so the
development of the proposed Wal-Mart will provide a convenient location for residents in the
northeastern portion of the City to purchase general merchandize,
Field Audit Data
We performed a field audit of existing retailers in the primary market area (the 1.5 mile
radius surrounding the proposed Wal-Mart) to identify the supply and distribution of retail space
in the northwestern area of the City of San Bernardino. The field audit includes all existing
retailers, including small retail centers containing "Mom and Pop" businesses, which typicall y
include restaurants, a bar or liquor store, dry cleaners, Laundromat, small grocery and
convenience stores, fast food restaurants and other services providers. The majority of these
stores are small neighborhood stores, providing convenient shopping and services to nearby
residents. Although we have included these stores in the lield audit for purposes of
completeness, they do not directly compete with Wal-Man due to their convenience orientation,
and due to the high concentration of service businesses, such as hair salons, insurance providers,
dry cleaners, tanning salon, florist and restaurants. These types of restaurants-services are not
provided by Wal-Mart,
o
FIELD AUDIT OF RETAIL ANCHORS IN WAL-MART PRIMARY MARKET
AREA
San Bernardino, ClLIifomia
Home Improvement
I
2
3
Highland Lumber
Best Wood Products
Home Depot
NWC Highland and Medical Center
NWC Highland and Macy
SEC Muscupiabe and 21" Street
Grocery Stores
4
5
6
7
Stater Brothers
Albertson's
Ralphs
Marshall's Market
SEC Kendall and 40111
NWC Wall and 40U>
4434 University Parkway
SWC "E" Street and Marshall
Convenience Stores
o
8
9
10
11
12
13
14
15
16
17
18
19
o
Chevron Food Mart NWC University Parkway and 1-215
Circle K University Parkway and 1-215
Shell Food Mart NEC Hallmark Parkway and University Parkway
AM/PM NWC Hallmark Parkway and University Parl.-way
Shop and Go Market 3512 Cajon Boulevard
Harold's Market 2790 Stme Street
7 - 11 1395 Kendall Drive
Jimmy's MktILiquor 2926 Duffy
Food/Meat Mkt Darby and Duffy (VACANT)
MJs MI..'l and Gas Darby and Macy
Victoria Market 2392 Augdon
Carniceria Mkt 2397 First Street
Drue Stores
20
21
Rite Aid
Walgreen's
SEC Kendall and 40U:
NEC Wall and 40th
Auto Parts
22 Kragen SEC Kendall and 40th
23 Auto Zone NWC Kragen and 40th
24 Venado Tires Cajon Boulevard and State Street
25 Rodriguez. Tire Darby and Stale Street
26 Econe Lube and Tune 1685 Kendall Drive
27 Acosta's Body Repair 3280 Cajon Boulevard
.....-J ................ ~......_....,
r.............' .. ...............r....... I"",c.. I...........
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28
29
Phillipes Tire Shop
Empire Auto Body
Cajon Boulevard
3930 Cajon Boulevard
Restaurants
30 Peking Inn 4434 University Parkway
31 Papa lohn's Pizza 4434 University Parkway
32 Donut Shop 4434 University Parkway
33 Hoagie Yogi 4434 University Parkway
34 ~ahlia's Pizza 1689 Kendall Drive
35 Inland Kabob 1689 Kendall Drive
36 Thai Place 1689 Kendall Drive
37 Rainbow Wok 1331-1357 Kendall Drive
38 Domy'sSub 1331-13S7KendalIOrive
39 Tommy's Burger #101331-1357 Kendall Drive
40 El Rancho Bar & Grill 3920 Cajon Boulevard (VACANT)
Video Stores
41 Hollywood Video 423S University Parkway
42 Video World 4434University PlII'kway VACA."''T
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Service Provider
43 State Farm Insurance 4434 University Parkway
44 Dry Cleaners 4434 Univet"5ity Parkway
45 Mail Mart 4434 University Park"Way
46 Hair Cuts 4434 University Parkway
47 Baroer Shop 2775 State Street
48 Inland Valley Roofing2760 State Street (previously U-Haul)
49 Copy Plus 1689 "0" Kendall Drive
50 Tanning Salon 1689 Kendall Drive
51 Florist 1689 Kendall Drive
52 Hairstylist 1689 Kendall Drive
S3 Farmer's Insurance 1331-1357 Kendall Drive (VACAJ'.J)
54 Miracle Hair Design 1331-1357 Kendall Drive
55 $ Pro Check Cash 1331-1357 Kendall Drive
56 Hair Salon 1331-13:57 Kendall Drive
57 Nail Salon 1331-1357 Kendall Drive
:58 El Dorado Cleaners 1331-1357 Kendall Drive
59 Campus Copy & Print 1331-1357 Kendall Drive
60 Family Karate Studio 1331-1357 Kendall Drive
61 C & J Lawn Care Cajon Boulevard
62 Suzette Hair Salon Blake and Macy
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..;..__...... ..;.. _.....~r..
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i r-.......,., r......_..:-..._ r-,,-, ....._'-
Electronics/Computers
63
Bank
64
Radio Shack
Dowpey Savings
Small Stores
65
66
67
68
69
70
7]
72
73
74
75
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Motel
Varjas Feed & Supply
University Book Exchange
Super $,99 Plus
Schwin Bicycles
Sister's Precious Pi~
Satellite Dish
Smoke Shop Plus
Kendall Drive Feed
Media Furniture
Rebel Feed Store
Calif. Casual Sport
76
77
Palms Motel
Cajon Motel
.
~......,;.. ....-.... ,.:;...'.....
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Liquor Stores
78
Norms Liquor Store
4434 University Parl..-way
4434 University Parl..-way
3170 State Street
1689 Kendall Drive
1331-13 57 Kendall Drive
1331-1357 Kendall Drive
1331-1357 Kendall Drive
1331-1357 Kmdall Drive
1331-1357 Kendall Drive
2340 Kendall Drive
3030 Cajon Blvd. (\I ACANf)
Cajon Boulevard near State Street
3940 Cajon Boulevard
3424 Cajon Boulevard
3436 Cajon Boulevard (V ACM-r)
3795 Duffy Street
Type of Retail Stores Witbin tbe 1.5 Mile Radius Primary Market Area
The large retail establishments loc.'lted in the primary maIket area fall into two categories,
large major chain competitors and smaller convenience stores. The smaller and convenience
stores generally do not compete with Wal-Man because they offer a different type of
merchandize in a small scale and with a service oriented atmosphere. Between the specialized
merchandize and the convenience oftbe location, these stores cater to a local clientele and do not
compete with Wal-Man.
The demographic data confinns that the number of residents living within the 1.5 mile
radius will support the operation of the proposed WaI-Mart and Dr. Ross Moran, Director of
Institutional Research at California Univeraity at San Bernardino, projects combined enrollment,
faculty and staffwill in=ase by more than 50% to an estimated 23,000 people at the University
by 2009-2010. These California State University students and staff will study and work within
o the 1.5 mile primary market area of the proposed WaI-Man.
~
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Wal-Mart MerchllDdize Categories Compared to Stores in the Primary Market
Area
Typical Wal-Mart products include merchandize from the following categories:
. Apparel and accessories
. Building materials and garden supplies
. Packaged food
. Automotive supplies and service
. Furniture and borne furnishings
. Food service
. Drugs
. Miscellaneous retail items
Comparison to Merchandize Sold By Existing Retailers in Primary Market Area
Neill:hborhood Convenience Centers Wal-Mart's potential entry into the market place
wi!! not havc an impal.1; on smaller neighborhood stores and convenience centers because these
types of stores operate on a smaller scale, offer a unique merchandise type which is not available
from larger stores, and provide convenient neighborhood I~ations.
o
GrOCery Stores There are four grocery stores operating within the market area, including
an independent store, Marshall's Mwket, which operates out of a store of a similar scale to a
grocery store chaim. At this time, other than packaged food, Wal-Mart does not sell groceries
in California, and DO firm plan now exists regardil'.g a change in that concept. Therefore, the
proposed Wal-Mart will not compete with grocery stores fur grocery sales, Even if a change
were to occur in the future, the expanding population of the area would eliminate the possibility
of there being too many large grocery facilities.
General Merchandize The sales generated by a typical Wal-Mart are grouped into major
categories for comparison with the types of merchandize offered by retail anchors in the primary
market area. Wal-Mart's largest sales are generated in apparel and accessories, with expected
sales of approximately $9.44 million. Other key categories in order of importance include
fumiture!home fashions/appliances ($3.98 million); household/personal supplies ($3.90 million);
and garden (S2.24 million).
Aooarel and Accessories At the present time, there are no retailers in the plimary market
area that offer the same type of merchandize and on the same scale as the Wal-Mart. However,
there is adequate population to support a Wal-Mart in the northwestern area of the City.
According to the demographic data and infurmation from the California State University, the
existing population within the 1.5 mile average primary market area is 22,833 plus an additional
16,600 people (students and staff) currently enrolled and working at California State University,
San Bernardino.
o
Household and Personal Suvvlies Wal-Mart's household and personal supplies category
may compete with a percentage of the merchandize offered at the two drug stores in the
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northeastern San Bernardino. However, the drug stores are located close to California State
University at San Bernardino; and. are located on the opposite side of the 1-215 freeway from the
proposed WaI-Mart. Common sense suggests that people choose the most convenient retail
location which provides the services they require. In this case, different pharmacies offer
different levels Df customeI" service. The two drug stores on the east side of the 1-215 offer full-
service pharmacies_ In this case residential and University customers are located on the same
side of the 1-215 freeway as the existing pharmacies and the level of service offered at those
locations differs from the level of service offered at the proposed WaI-Mart. Based on locatioll.
the existing drug stores are arguably more convenient ilian the proposed Wal-Mart in terms of
proximity to the residents on the east side of the 1-215. .
Automotive R~r Auto repair services are a quasi-retail use that predominates on the
west side of Lytle Creek in north Fontana_ The proposed WaI-Mart will not compete with these
stores because there is no current plan fur a Tire, Lube and Express facility at the proposed Wal-
Mart, This will eliminate the potential for competition with the existing tire stores and auto
service centers. If, at a later time, this concept were to change, the increasing population of the
area would avoid any danger of over-saturation. Wal-Mart does sell convenien<:e automotive
items but on a scale that does not comper.e with the inventory offeI"ed at the existing auto parts
store.
Sumnary and Condusions
1, The demographic data identifies an estimated 22,833 people reside within the 1.5
mile radius which represents the primary market area for the proposed Wal-Man. In addition,
there are currently approximately 16,600 combined students, faculty and staff at the California
State University, San Bernardino, and that number is expected to increase to 23,000 by the year
2009-10. This represents an increase of approximately 40% of the students and staff in the next
decade, The combined total of residents, students and staff amounts to 39,433 people within the
1.5 mile primary market area for the proposed Wal-Mart. This data contirms that the population
(resident and student) within the 1.5 mile radius of the proposed WaI-Mart is sufficient to
support the WaI-Mart in that location.
., The development and occupancy of the proposed Wal-Mart store represents a
significant net fiscal benefit for the City General Fund operating budget. The development of a
store approximately 155,900 square feet store in size on approximately 14.5 acres will generate
approximately $300,000 per year in sales tax T<:venue for the City General Fund.
Please call me if you have arty questions or request clarification regarding the
information contained in this letter.
Sincerely,
o
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EXHIBIT "A"
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"" , ,
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, \ (/,
,
. )
i ( ,
-
Symbols Explan.ation
~ Interstate :.-..~.-.'.' Scho
Hwy. c.cCU,
~ Californie O@ Fire~
State Route Po/ie,
0 Hasp
Freewey 'I"":"
. --.. Golfe
' . .
: - . ~ Park
'. , .
Intercity Hwy. >c.. .'~'.....
r.--'~'7-~-':-"': NlJtlo
Anerie' Street . . , Fores
...........
':"''';0-':: mTH STRECT . ruler
ADDRESSES ui/dir
0 1 2
I I I
I I IKM SeA
0 2 a
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EXHIBIT "8"
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Mon Jul 02, 200 1
-
CUSTOM SUMMARY Rm'ORT
POP-FAcrS: FULL DEMOGRAPffiC DATA
PREPARE!) FOR Pacific Retail Partner>
Hallmark & GalllICn (962093608)
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HALLMARK PKWY AT GANNETI PKWY
SAN BERNARDINO, CA 92407
COORD: 34.1647
-117.3358
DESCRIPTION
.so MILE
RADIUS
1.00 MILE
RADIUS
1.50 MILE
RADIUS
3.00 MILE
RADIUS
POPVLATION
2006 PROJECTION
2001 ESTIMATE
1990 CeNSUS
1980 CENSUS
OROWTIlI980. 1990
HOUSEHOLDS
2006 PROJl!CTION
2001 ESTIMATE
1990 CENSUS
1980 CENSUS
GR.OWTIl1980 - 1990
2001 ESTIMATED POPVLATION BY RACE
WHITE
BLACK
ASIAN AJIIl> P ACIPIC ISLANDER
OTHER RACES
o
2001 ESTIMATED POPULATION
HISPANIC omoIN
OCCUPIED UNITS
OWNER OCCUPIED
RENTER OCCUPIED
1990 AVERAGE PERSONS PER HH
2001 EST HOUSEHOLDS BY INCOME
St50,OOO OR MORE
$100,000 TO $149,999
5 15,000 TO 5 99,999
$ 50,000 TO $ 74,999
S 35,000 TO 5 49,999
. $ 25,000 TO $ 34,999
5 15,000 TO 5 24,999
5 5,000 TO 5 15,000
UNDER S 5,000
2001 EST. AVERAGE HOUSEHOLD INCOME
2001 EST. MEDIAN HOUSEHOLD INCOME
2001 EST. PER CAPITA INCOME
2,309 13,136 24,544 81,508
2,219 12,317 22,833 17,462
1,917 10,128 18,196 65,623
724 4,531 8,628 43,4 II
164.63% 123.52% 110.90% 51.16%
868 4,287 7,923 26,603
835 4,038 7,372 25,228
732 3.394 5,933 21,465
220 1,390 2,636 14,716
233.10"1. 144.09% 125.09"1. 45,86%
2,219 12,317 22,833 77,462
53,31% 53.17% 50,21% 51.74%
18.69% 16.58% 16.27% 18.93%
8.10% 5,27% 5.17% 4.14%
19.91% 24.98% 28.35% 25.19%
2.219 12,317 22,833 n,462
35.75% 43. t7';' 46.25% 42,57%
740 3,382 5,a93 21,523
27.93% 50.62% 49.81% 61.09%
72,07% 49.38% 50.19% 38.91%
2.6\ 2.96 3.01 3.00
835 4,038 7,372 25,228
0,01% 0.70% 1.07'i. I.U80/.
0.89% 1.76% 1.78% 2.93%
4.23% 5.69% 5.20% 7.07%
24.63% 24.75% 22,50% 21.37%
22.28% 23.57% 23.19% 20,06%
17.58% 15,02% 14.58% 14.27%
16.95% 15,070/. 16,82% 16,56%
11.50% 11.16% 1\.64% 13.63%
1.93% 2,29% 3.22% 3.03%
$39,676 543,.595 542,924 543,85 I
536,364 $39,124 537,417 536,880
514,959 514,331 $13,996 $14,451
GNWW.sITEREPORT8.COM
e 2001 CLARITAS INC.
1 800:u4 5973
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EXHIBIT "C"
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.
OFrom:
Sent:
To:
Subject:
Ross Moran [rmoran@csusb.edu]
Thursday, July 05, 2001 4:38 PM
ROSS _ V A@ci.san-bernardino.ca.us
North S6 Retail Projects
~
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CSUSB_Enrl_EscCVC
&Main.x1s
CSU5B_Enrl_EsCCVC
&Main.xls
Attached are projected Fulltime Equivalent and Headcount
enrollments for
CSUSB, main campus and Coachella Valley Campus through 2010. This is
subject to change and renegotiation with the esu system office.
Ross T. Moran, Ph.D. <rmoran@csllsb.edu>
Director of Institutional Research
California State University, San Bernardino
http,jjir.csusb.edu
Phone, (909) 880-5052
Fax, (909)680-7069
o
Realizing that we have a moving target, here is the current best guess for the
FTES and HC by College Year (which includes summers):
FTES Headcount
College Year Total CVC Main Total CVC Main'"
2001-2002 12,300 440 11,860 15,806 872 15,108
2002-2003 12,915 475 12,440 16,596 941 15,843
2003-2004 13,530 510 13,020 17,386 1,010 16,578
2004-2005 14,145 545 13,600 18,176 1,080 17,313
2005-2006 14,760 580 14,180 18,967 1,149 18,047
2006-2007 15,426 615 14,811 19,822 1,218 18,848
2007-2008 16,143 650 15,493 20,744 1,288 19,714
2008-2009 16,860 685 16,175 21,665 1,357 20,580
2009-2010 17,618 720 16,898 22,639 1,426 21,498
. Assumes that 20% of CVC students enroll at the Main Campus as well as CVC,
HC:FTES Ratios
Total 1.285
CVC 1.981
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L~'" AUOCIATJ,., INC.
DMZ I..a PLAIA. .VIT. S99
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July 5, 2001
Aliccn Wong
Ore.ham, Savage, Nol8ll & Tl1d~. LLP
600 N. Amlwhcad Av~ue, Suite 300
San Bernardino, California 92401.1148
Subject:
Noise Analysis for North San Bemardino WaJ.Mart
D\:ar Alicen;
As requested, LSA Assoclates,lnc. (LSA) hllll rcviewllll the City of San Bernardino's Initial Study
&TUllysis of potential noise impacts associated with the construction and operation of the North Ssn
Bernardino Wal-Mart. located on Hallmark Parkway west oflnterstate 215 (1-215), in the City of San
Bernardino, California. Based upon our review oflhis proposed project, we concur with the
conclusions of the City's Initial Study that the potential noise impacl9 will be less than significant.
Our analysis, which verifies the City's conclusions, is contained lIerein.
SENSITIVE LAND USES IN THE PROJECf VICINITY
111= are existing scnsilivc m1identia111U1d uses 400 feet to the northeast, 1,350 feet to the 8Outbwest,
and 3,500 to the northwest. The closest residences to the northeast arc located on the opposite .ide of
the I-2IS. The primary source of noise in the vicinity of the project site is noise generated by traffic
on the 1-2IS. The City's General Plan, pages 14-1110 14-12, concludes that noise levels along the 1-
215 range from 77 to 80 dBA in 1979, with the projected increases in traffic raising the noise levels
10 80-81 dBA in rutw'c years.
THRESHOLD OF SIGNIFICANCE
A prujecl wi11normally have a significant effect on the cnvirorunent rclatcod to noise if it will
substantially increase the ambient noise levels for adjoining areas or conflict with adopted
environmental plans and goals of the community where it is located. The applicable Doise standards
governing the project site are the criteria in the City of San IlmIardino Noiae Element of the General
Plan.
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City 01 San Bernardino Nolstl Gllldellnes
The City of San Bernardino adopted a Noise Element (December, 1993) in i18 General Plan. One of
the general goals of the San Bematdino CilyNoise Element is to davelop an\! adopt specific policies
and an effClClive implemelllatlon program to abate and avoid el(CCssivc noisc cxPOSU(l'lS in the City by
requirins that effective noise mitigation measures be incol'porated into the design of new noise
generating and new noise sensitive land uses.
Specific policies have been adopted by the City to accomplish the goals of the Noise Element,
including the following:
I. Areas \\ithin San Bernardino City shall be designated as "poise-impacted" if exposed to existing
or projected future exterior noise levels from mobile or stationary sources exceeding the
standatds listed in Tables A and B.
Table A: HOllrly Noise Level Performance Standards Locally Rq;ulatcd Sou"",,
1 LIIl. - 10 p..... 10 p.m. - 7 Lm.
Land Use C.t.,gory Leq L..u . Leq L.u
-- .&_. - . ... - .-..
~sldentiaJ or other noise sensitive receivers S5 75 45 65
So~: City of San Btmwdino, Noi,eBlemenf, 1993.
Table B: InteriorlEnertor Noise Level SlaDdards - Mobile Noise SOIlree5 CNEL or L..
Land use Categories Land Uses liUerlor ElItmor
Residential Slugle and mulliflPl1ily, 4uplox, mobile honIC$ 45 60'
. ,'.. 'R' _...
Commercial HOle~ mOlel, II'al1.Slent lodging 4~ 60'
-..-- ".M__' -
Commercial retail, bank, r8stawanl 50 nla
.. --
Office building, re.ellfCh and development, I 45 65
proCessional offices
.. ..-.---
Arnpbitl1e81et, concert hall, audltorium, movie theater 45 nla
.-
Institutional Hospital. nursing home, scllool cla$sroolDS, church. 45 65
Ilbtary ...-
- . ...
Open Space Park nla 65
Seurce: City of San Beml\l'dlno. Noise EJcmcn~ 1993.
All exterior nol..I.vel of up to 65 dBA CNEL (orl,..,) will be allowed provided exterior noise
levels have been ~ubstlll1tia11y mitigated through a rcasopablc application of the best available
noise reduction teChnology and interior noise exposure does not exceed 45 dBA CNEL (or L...)
with windows and doors closed. Requiring that windows and doors remain closed to achieve an
acceptable interior ooise level will necessitate the USe of air conditioning or mechanical
ve1\ulatlon.
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2. The City shall enforce the State Noise Insulation Standard. (California Code of Regulations, Title
24) and Chllpter 35 of the Unifono Building Code (UBe).
3. Subdivision approval adjacent to any developed/occupied noise sensitive land uses shall require
that the developer submit a construction related noise mitigation plan to tlte City for review and
approval prior to issuance of a irading penn it. The plan must depict tbe location of colllltructlon
equipment and how the noise from this equipment will be mitigated during construction of this
project. tI1rough lhe use of such methods as the following:
. remporary noise attenuation fences
. Preferentiallacation of equipment
. Use of CUrreJ1t technology and noise suppression "'IUiPlllcllt
The operatioo or lIIle hetween the hours of ten p,m and seven a.m. of any pile driver, steam shove~
pneumatic hammer, derrick, steam or electric hoist, power driven saw, or any other tool or apparatus
the use of which is attended by loud and excessive ncise is prohibited, except with the approval of the
Mayor and Common Council,
IMPACTS
Implementation of the proposed project would result in sherHenn con.truction and long-tenn
opecAlionAI noise impaots, The following focuses on the increase in noise associated with the
construction of the propOsed project and the on-site operational noise source impacts.
Construction Activities
Two types of ahort-term noise impacts would occur during project construction, The first is the
increase in traffic flow on local streets associated with the transport of worlcen, equipmcnt, and
materials to and from the project site. The pieces ofbeavy equipment for demolition, grading, and
consl1uctiO/l will be moved to the site and remain for the duration of each construction phase. The
increase In traffic flow (In the surrounding roads due to construction traffic is expected to be small.
The associated increase in long-tenn traffic noise will not be perceptible. However, there will be
short-term, intermittent high noise levels associated with InIck pass by ROllI the project site,
The second type of short-term noi.e impact is relatcd to the noise generuted by heavy equipment
operating on the projoct site. Construction is completed in di~crete <laps, each of which has its own
mill: of cqulpment and, consequently, ils own noise characteristics. These various sequential phases
would change the character ofthc noise generated on the site and, therefore, the noise levels
surrounding the site as construction progresses. Despite the variety in the type and size of
construction equipment, similarities in the dominant noise sources and patterns of operation allow
construction related noi.e rBn$"s to bc categorized by work phase, Tabl. C lists typical construction
equipment noise levels recommended for noise impact assessments, bASed on a distance of 50 feet
between the equipment and a noise receptor.
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Table c: Maximum CODltruedon Equlpmeat Noise: Ln-.:ls
RanEe or Sound LenlA S1lcgqt\lll Saud
Meuured J,evek en.. Aualyais
Type olEqulpment (dBA at 50 reet) (dBA at 50 feet)
Pile Drivers. 12,000 to 1&,000 tl-lblblow 8\ to 96 93
-- .-.--. -..-...
Rock Drills 83 to 99 96
..- .. . ..
Jack Hammers 75 to 85 82
... ... .n -...-
Pneumatic Tools 78 to 88 85
.. . -.- ...
Pumps 68 to 80 77
. .. ... __.__M_ -.. -
Dozers 85 to 90 88
....-.....,.... .. n .-.-
Tl'lICtors 77 to 82 80
~--_... ... ...
Front-End Loaders 86 to 90 88
.... - . -- -
Hydraulic Backhoe 81 to 90 86
.. -.-. --.- ....---- .. , -
Hydraulic Excavators 8110 90 86
....-..-.-- ,... .. --
Graders 79 tn 89 86
...~. ---- --
Air Compressors 76 to 86 86
.. .. n. -
Trucks 81 to 87 86
Source:: Noi", Control for Buikllng.' and MaIlufilcturilli Plants, BoI~ Beranek" Newman. 1987.
Typical noise levels range up to 91 dBA L.... at SO feet during the noisiest construction phases, The
~ite preparation phase, which includes excavation and EJ1I(Iing of the site, tends to generate the
highest noise levels, because tile noisiest construction equipment Is eartbmovlng equipment.
Earthmoving equipment includes excavating machinery such as backfillers, bulldozers, draglines, and
frootloaders. Earthmoving and compacting equipment Includes compactors, scrapers, and graders,
Typical operating cycles for these types of construction equipment may involve one or two minutes
ofMl power operation followed by three to four minutes &1 lower power settings.
Construction of the proposed project is expected to require the use of earthmovers, bulldozers, and
water 8!1d pickup trucks. Noise typically associated with the use of construction equipment is
estimated between 79 and 89 dBA at a distance of SO feel rrom lhe construction effort for the grading
phase. This equipmont would be used on the project site. AF. seen in Table C, the maximum noise
level generated hy each earthmover on the proposed project site Is assumed to be 88 dBA at SO feet
from the earthmover. Each bulldozer would also generate 88 dBA at SO feet. The maximum noise
level generated by water and pickup trucks is approximately 86 dBA at 50 feet from these vehicles.
Each doubling of the sound sources with equal sirength increases the noise level by 3 dBA.
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Assuming that each piece of conStl1lctlon equipment operates as an individual noise source, the worst
case composite noise level durlna this phase of construotion would be 91 dBA T ..... at a distance of 50
feet from an active construction area. The nearest sensitive receptors to the project sites are located
at a distance of approximately 400 feet, and may be subjected to ahort-term noise reaching 73 dBA
L,.." generated by conStnlctioD activities, The other rcsidentiallocations In the genel'll! vicinity of the
proposed project are at a distance of 1,350 feet and 3,500 feet; the constnlCtion noise I~els at these
locations would be 62 dBA L",.,. and 54 dBA L..... respectively.
Construction related noise impacts of the proposed project would not exceed the maximum noise
level permitted for locally regulated sources, and the impact would be less thm significant. However,
to minimize the impact of the constnlction noise on existing buildings on the project site and
residences adjacent to the project area, compliance with the City's Noise Control Ordinance would be
required.
During conStnlction, the project shall implement the following measures:
. The operation or use of any pile driver, steam shovel, pneumatic hammer, derrick. steam or
electric holst, power driven saw, or any other tool or apparatus, the use of which i. attended by
loud and excessive noise shall be restricted to the hours between seven a.m. and ten p.m., except
with the approval of the Mayor and Common Council
Lonl-Term No;'" ImpactA
The long-tenn noise impacts at the project site would be associated primarily with stationary or
mobile equipment used within the proposed project ~Ite. Proposed on-site commercial uses are
expected to gen=te little or very low noise levels eKccpt at individual loading docks, where
loading/unloading activities would generate moderate noise levels.
Track Delivery and Lo~dlnglUnlo.ding. The on-site noise generating activities closest to any off.
site sensitive uses would be from the loading/unloading activities assooiated with the remi! store.
There will be a loading dock at the northwest comer ofthe retail store:, approximately 400 feet from
the nearest residences. Based on noise readings from loading and unloading activities for other
similar projects, a noise level of 75 dBA Lma at SO fect was used in this analysis. The noise
attenuation of loading/unloading activities, provided by distance diver~nce at 400 feet, is
approximately 18 dBA compared to the level at 50 feet. Therefore, residences to the northeast would
be exposed to loading/unloadlnlt noise levels of up to 57 dBA LM... The other l'Csidentiallocations in
the general vicinity of the proposed project are at a distance of 1 ,350 feet and 3,500 feet: the
loading/unloading noise levels at these locations would be up to 46 dBA L.,,, and 38 dBA Lm..,
l'Cspectively. These noise level9 arc much lower than the City', exterior noise standard of75 dDA
T..,.". during Ille day (7 a,m. to 10 p.m.) or 65 dBA L.... during the nigbt(IO p,m, to 7 a.m.).
Therefore, it is not anticipated that noise associated with the truck delivery and loading/unloading
activities will have any significant impact on the residences adjacent to the project site.
Parking Lot Activitieo, Representative parking activities. sucb as customer conversing or door
closing, would generate intermittent, maximum noise levels of approximately 60 dBA L_ at SO feet.
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The !loise attenuation of parking lot activhles, provided by distance divergence at 400 feet, is
approximately 18 dBA cornp8l'Qd to the level at SO feet. Therefore, residences to the northeast would
be exposed to parking lot activity noise levels nf up to 42 dBA 1,.... This level of noise is much
lower than that of the traffic on the area roads, including the J.21 5, or the loading/unloading of
trucks. Therefore, it is not anticipated that noise associated with the parking lot activities will have
any stlP1lficant impact on the residenceS adjacent to the project site.
Traffie Noile. The proposed project will generate additional traffic trips within the project vicinity.
However, these trips would add a small, less than significant amount of noise along roadway links in
the project vicinity.
CONCLUSION
Construction oithe proposed project would not result in any significant Inorease in 10ng-tOJTll
stationary or mobile noiae in the swroundlng areas. Construction activities are localized noise
sOQTCeS and would affect only land uses immediately adjacent to the projcct site with direct line of
sight. None oflhe possible stationary noise sources o'n the project site will have the potential to
affect nearby sensitive land uses.
if you have any questions please contact me or Tony Chung at (949) 553-0666,
Sincerely,
UAj7~C
Keith Lay
Assistant Project Engineer
7"'01 ((P:\OV8033\n:Ybed Nolsc.wpd"
6
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07/05/01 16:33 FAX 19099821516
14102
~ PR.OWESTER.N DEVELOPMENT COMPANY am
July 5,2001
. Mark Ostoich
Gresham, Savage, Nolan & Tilden, LLP
600 N. Arrowhead Avenuc, Suitc 300
San Bemardino, CA 92401-1148
Re: University Business Park/Wal-Mart/Appeal
Dear Mark:
PUTfiUAnl In ynur rr:fJ.llr.~1 tnliAY. ynn hAt! ARk-r.t! mr. In mr.mnriAlizr. A tr.1C!lhonr. conversation Thad
with the original appcllant Kathleen Flanks on June 11,2001.
On June 11, 2001, at approximately 11:30 a.m., I placed a call to Kathleen Franks to see if!
.eould dise\l3! her eoneems and eftellU1'nge n meetill.g with. Detty All.dC1'9on and mY9olf. Whon
specifically questioning her pertaining to somc ofthc issues she raised in her appeal presented by
Jennifer Buchman of Best. Best and Krieger at the Planning Commission Meeting, she shared
with me that she had no knowledge about any of the specific issues.
When discussing with her the many benefits Wal-Mart and other related business and services to
fol1~ "''Ould pMvido 18 tho OOMft"dl!l.ity, aka quisldj' diaolaaoo that hOl!' offorta ","FO not dirootod
against the development oftIle site. the City or the land ownership. but directly against Wal-Mart
since they did not hire union workers. She shared that as a resident of San Bernardino, she had
been asked to assist the union and cooperate in blocking WaJ-Marl's efforls to establish this
store.
The conversation was terminated shortly thereafter.
I hope this information will assist the Mayor and City Council Members to clearly recognize that
the original appellant, Kathleen Franks, was nothing more than a representative of the United
Food and Comrnerical Workers Union. Kathleen Franks was not personally concemed regarding
the suitability oCthe Wal-Mart Store being constructed in the University Business Park. Her
only objection was that Wal-Mart will not hire union workers.
If! can be of any further assistance, please do not hesitate to call.
Sincerely.
~~
./~ "'1~ /'/
Mark Boen
President
o
GRESHAM, SA V AGE, NOLAN & TILDEN, LLP
A REGISTERED LIMITED LIABILITY PARTNERSHIP
LAWYERS. FOUNDED 1910
FOR TilE fiRM
J..hIlC.Nolu
600 N. ARROWHEAD A VENUE, SUITE 300
SAN BERNARDINO, CALIFORNIA 92401-1148
(909) 884.2171 . FACSIMILE (909) 888-2120
WILLlAMGUTHRlE(I886-I947)
DONALD W. JORDAN (1907_1989)
JOHN B. LONERG....N (RETIRED 1976)
July 6, 2001
Mayor Judith Valles
Members of the Common Council of San Bernardino
City of San Bernardino - City Hall
300 North "0" Street
San Bernardino, CA 92418
Re: Appeal Relating to Development Permit II No. 01-05
Hearing: July 9, 2001
Honorable Mayor and Council Members:
The purpose of this letter is to express, on behalf of our client, W AL-MART STORES,
INC., its concern that the referenced appeal may be motivated by business competition rather
than the result of good faith environmental concerns.
o
The California Environmental Quality Act ("CEQA") sets out that it is the policy of the
State to provide a high quality environment (Public Resources Code, section 21000) and a
method to insure that such environmental quality is provided. CEQA is not, however, to be used
as a business "weapon" by someone opposed to a project applicant.
Indeed, last year, the California Court of Appeals, in the case of Waste Management of
Alameda County v. County of Alameda (2000) 79 Cal.App.4th 1223, concluded that, if a project
opponent was objecting to the project because of business or competitive reasons, then that
objector did not have "standing" to pursue the objections. According to the Appeals Court,
CEQA objections are to be advanced, in good faith, by someone who would likely suffer
environmental detriment if the project were approved.
The instant project is located near the intersection of the 215 Freeway at University
Parkway in the Sixth Ward. Interestingly, however, the first person to object to it was Kathleen
Franks, who resides on 1974 East Lynwood Drive, in the Fourth Ward. In a telephone
conversation with Mark Boen, one of the current owners of the project property, Ms. Franks
acknowledged that she had been requested by the United Food and Commercial Workers Union
("UFCW") to object to the Project.
W AL-MART sales associates are not affiliated with the UFCW; however, the UFCW, of
course, would like to expand its membership to include the sales associates. In furtherance of
UFCW's desire to have W AL-MART agree to UFCW's representation of its sales associates,
UFCW has interposed environmental objections at various locations where W AL-MART is
contemplating building stores hoping to delay, or frustrate, those projects.
o
Riverside Office. 3403 Tenth Street, Suite 518, Riverside, CA 92501 . (909) 684-2171 . Facsimile (909) 684-2150
Victorville Office. 14350 Civic Drive, Suite 120, Victorville, CA 92392. (760) 243-2889. Facsimile (760) 243-0467
. GRESHAM, SA V AGE, NOLAN & TILDEN, LLP
John C. Nolan
o
o
o
Mayor Judith Valles
Members of the Common Council
of San Bernardino
July 6, 2001
Page 2
Interestingly, Ms. Franks is no longer the official opponent to this Project. Instead, that
position is now occupied by Carol Gold. Ms. Gold, who resides in the Fifth Ward, has been
observed on the premises ofUFCW's facility in Bloomington and is now represented by Andrew
Kahn, an attorney whose offices are in San Francisco. Mr. Kahn has been involved as an
attorney opposing other W AL-MART projects, including most recently, a lawsuit against the
W AL-MART in Palmdale, which involved the UFCW as one of the parties in the settlement.
Although Ms. Gold has not acknowledged that she is acting on behalf of the UFCW, the
Union's Attorney is representing her, so at the very least, we believe she is having her legal
advice and fees supplied by the UFCW.
The proposed WAL-MART store in North San Bernardino, like every other project, is
one that should be evaluated on its own environmental merits. Because CEQA is not a tool to
advance business objectives, we urge you to determine for yourself, whether you believe Ms.
Gold's environmental objections are being advanced in good faith.
We strongly believe that the presentation that will be made at the hearing of July 9, 2001
will clearly indicate that this Project is in compliance with CEQA.
Very truly yours,
C .')1,#et .-..1
J C. Nolan of
GRESHAM, SA V AGE,
NOLAN & TILDEN, LLP
JCN:tdg
cc: James F. Penman, Esq. - City Attorney
Mark A. Ostoich, Esq.
o
o
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CITY OF SAN BERNARDINO
Development Services Department - Planning Division
Interoffice Memorandnm HECEIVr~}-CI1'I CI [i'r
"01 JUL -6 AlO:51
TO:
Mayor and Common Council
Valerie C. Rj'!fPrincipal Planner
FROM:
SUBJECT:
Appeal of Development Permit II No. 01-05 - Wal-Mart Project
DATE:
July 6, 2001
COPIES:
James Penman, City Attorney; Fred Wilson, City Administrator; Rachel
Clark, City Clerk; James Funk Director, Development Services
Attached are copies of The Impact of Big Box Grocers on Southern California and The
Shils Report related to the appeal of the Planning Commission's approval of the Wal-
Mart project, item No. 32 on the July 9, 2001 Council Agenda.
Since only five sets were received and The Shils Report is copyrighted, distribution was
as follows:
. Mayor*
. Council Office*
. City Attorney
. Project Applicant
. Planning
* After the meeting, I would appreciate it if you could provide a copy to the City Clerk to
keep with the official record.
Jul 06 01 10:56a
UFCW LOCAL 1167
9098775986
UFCW LOCAL 1167, AFL-CIO-CLC
UNITED rOOD AND COMMERCIAL WORKERS UNION
85:i West San Ucmardino Avenue Insurance
P.O. Box 1167, Bloomington, CA 92]16-llO]0 Food & Mc:u - (909) 877-1110
Business Officc - (909) 877-5000 Drug & General Sales - (909) 877-23]1
Bill Saurio!, President Bill Lalhrup, Sccrciary-Treasurer
July 6, 2001
Common Council
c/o Valerie Ross, Senior Planner
City of San Bernardino
Re: Appeal of Carol Gold of Development Penn it II 01-05 (hearing 7/9)
Honorable Councilmembcrs,
J have bcen in the grocery husiness for 30 years, in the last 20 within the Inland Empire. I follow trade publications in
the retail business and observe and hear about retail conditions in other parts of the conntry. In my professional opinion
a new Wal-Mart Supereenter at the State College Business Park will cause other stores to close and become run-down in
appearance.
o
The Council has already seen this prohlem when Ralphs shut down a store several years ago. Other tenants in the same
shopping center also closed, and new tenants were hard to find, the vacancies lasting for years. When stores sit vacant,
they often become eyesores, especially from graffiti and lack of maintenance and landscaping. Those new tenants which
can bc found often do not kcep up their stores as well as previous oncs, All of this brings down property valnes in the
area.
Here, the Ralphs store about one mile east of the proposcd Wal-Mart is already struggling, which we scc from it having
reduced staffing to minimal levels. It will likely close if a Wal-Mart Superecntcr opens hcrc. This Ralphs might close
even from just a conventional Wal-Mart because of the overlap in general sales, whieh prnvide grocery stores with a higher
profit margin than grocery items and makc up about a third of all sales in grocery stores.
Wal-Mart's impact stems from its enonnous size and from its refusal to compete fairly: Ralphs pays a living wage and
provides its enlire workforce with family health bcncfits and pensions; Wal-Mart pays less and as of its last report to the
Labur Department, it provides health bcncfits to less than one-third of its workforce (most are either ineligible or cannot
afford the premium charged them, so they end up receiving medical eare from public facilities at laxpaycr expense).
Wal-Mart's size and ability to chargc Icss than its competitors mcan it also has a devastating imp.ct 011 lIoll-grocery
rctailers, who have sometimes reacted to Wal-Mart by closing, bllt even without closing, usually have reacted by spending
less on upkeep and thcrcby blighting the area. I havc attached a list of retailcrs at particular risk hcrc of becoming
blighted other than the Ralphs.
Please obtain an Environmental Impact Report to look at this problem.
o 1tf '
B,ll Lathrop, Presidcnt
UFCW Local 1167
Il!>~([)
Jul 06 01 10:56a
UFCW LOCAL 1167
,
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Store
Al bertsons
Rite Aid
Stater Bros
Stater Bros
Radio Shack
University Town Center Cleaners
#6501
#5711
#36
#107
Address
140 W. 40th SI.
949 Kendall Dr.
161 East 40th SI.
977 Kendall Dr
4434 N. University Parkway
4434 N. University Parkway
9098775986
p.3
City
San Bernardino
San Bernardino
San Bernardino
San Bernardino
San Bernardino
San Bernardino
.-I)
.:
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-~
ORANGE COUNTY
--- - - -
BUSINESS COUNCIL
The Impact of Big Box Grocers
I
.J" Southern California
obs, Wages, and Municipal Finances
<ECUTIVE
SUMMARY
lrpd for the Orange County Business Council
ion Boarnet, Ph.D.
:i,ce Professor
rL'Tlent of Urban and Regional Planning and Economics
.rsity of California at Irvirie
;all Crane, Ph.D.
jate Professor
c nf Public Policy and Social Research
_ "sity of California at Los Angeles
=J<ecutive Summary Highlights the key finding from the research. Persons desiring a more
)Iete description of the research are referred to the final report, available on-line at
. -' oebc.org. The opinions expressed in this report ore those of Professors Boornet and Crane.
.'~GE COUNTY BUSINESS COUNCIL
'~~K PLAZA SUITE 100 IRVINE,CALlFORNIA 92614.5904
. 949.476.2242 FAX 949.476.2240 www.ocbc.org
""l_HE COPY OFTHIS REPORT IS AVAILABLE ONLINE ATWWWQCBC.ORG
EXECUTIVE COMMITTEE
CHAIRMAN OF THE BOARD
Thomas H. Nielsen
President 0
The Nielsen Company
CHAIRMAN ElECT
Thomas P. Merrick
President
Strategic Planning Associates
IMMEDIATE PAST CHAIRMAN
Dick Allen
President
DIMA Ventures,/nc.
PRESIDENT, CEO & SECRfj-:",R.Y
Stan Oftelie
President & CEO
OCBC
TREASURER
Robert B. Grant
Managing Partner
Deloitte & Touche LLP
VICE CHAIR.BOARD DEVELOPMENT
Wayne D.Wedin
President
Wedin Enterprises
VICE CHAIR-ECONOMIC DEVELOPMENT
Peter Case
Senior District Vice presidenO
Merrill Lynch
VICE CHAIR.LONG RANGE PLANNING
Bill Ross
Vice President, Public Affairs
Disneyland Reson
VICE CHAIR-PUBLIC AFFAIRS
Jo Ellen Allen, Ph.D.
Director of Public Affairs
Southem u,/ifomia Edison Company
VICE CHAIR-STRATEGIC INITIATIVES
Robert Hovee
President
RAH Consulting Group Inc.
VICE CHAIR. SPECIAL PROJECTS
Gary H. Hunt
Executive Vice President
The Irvine Company
EXECUTIVE STAFF
VICE PRESIDENT
RESEARCH & COMMUNICATIONS
Wallace Walrod
VICE PRESIDENT
BUSINESS DEVELOPMENT
William Carney
o
VICE PRESIDENT
DEVELOPMENT & INVESTOR RELATIONS
Mike Noonan
VICE PRESIDENT
PUBLIC AFFAIRS
lulie Puentes
~
IiI)
,.
--~
() ORANGE COUNTY
BUSINESS COUNCIL
There is a revolution going on in your grocery store.
It is a change that is in its earliest stages. but it is a change so profound that Goldman Sachs said
earlier this year that it is "the biggest secular market share shift in American retailing today -
bigger so far than even the Internet."
It is a megatrend that is both consumer-driven and a decision by the so-called big box discount
retailers to sell groceries, produce, dairy, and other food products, promising benefits in the
form of lower prices and greater choices for consumers. It is a megatrend that will affect
what we eat and where we buy it. And it is a mega trend that is collding with an extraordi-
narily complex local issue - the fiscali2ation of land use by local government decisionmakers.
o
For more than 20 years, cities have been romancing big box retail stores - the sales tax
generating land uses that bring tax dollars into city government to pay for police, fire, and
other municipal services, However, as the report - The Impaa of Big Box Grocers on Southern
California - illuminates, the decision by big box discount retail stores to expand from taxable
(and tax-generating) products to non-taxable (and non-tax generating) groceries could have a
profound effect on municipal finances while generating significant community impacts.
To place this national megatrend in a local decision making context, the Orange County
Business Council asked UCI Professor Marlon Boarnet and UCLA Professor Randall Crane to
explore the impact of big box discount retailers moving into the grocery business - and to
develop a checklist that local government officials could use to assess the expansion or
conversion of existing retailers into the new supercenters. OCBC believes that the relation-
ship between land use decisions and local finance economics deserves closer examination.
The liS-page report Drs. Boarnet and Crane developed is summarized in this document. It
does not advocate nor oppose supercenters or big box retail centers, but does offer key
questions on municipal finance and community impacts that local government officials should
consider when confronted with local land use decisions which will shape their communities.
We hope this study will provide context and assistance to the serious deliberations of
decisionmakers who will help shape the revolution that is going on in our grocery stores and
our big box retail discount stores.
Sincerely,
~eM1 Ob~
o
President and CEO
Orange County Business Council
EXECUTIVE SUMMARY
T he research report, The Impaa of Big Box Grocers on Southern Califor-
nia: Jobs. Wages. and Municipal Finances. was prepared for the
Orange County Business Council by Professors Marlon Boarnet (Uni-
versity of California. Irvine) and Randall Crane (University of California,
Los Angeles), The author is publish broadly in the areas of local eco-
nomic development, land use, and municipal fiscal policy. The Orange
County Business Council also has a long-standing interest in both the
fiscal impacts of local land use issues and the economic impacts of
govemment decision-making and the changing California business climate,
In this report they examine the enormous. and ever-growing retail
grocery business, and the many changes occurring this industry.
One of the most important developments is the combination of big-
box discount retail and grocery sales into a single store known as a
supercenter. Several discount retailers, including K-Mart and Target,
have experimented with the supercenter format, but Wal-Mart has
been the fastest growing developer of supercenters in the past de-
cade. While K-Mart and others have experimented with retail grocery
sales in recent years, Wal-Mart has quietly become the second largest
grocer in the country by adding large grocery stores to their retail
stores to form supercenters that are often as large as 220,000 square
feet. For that reason, this research focuses on the potential impacts of
the entry ofWal-Mart supercenters into the Southern California mar-
ket. Vet the analysis is intended to illustrate some of the impacts of
supercenters more generally. while using the case ofWal-Mart as an
example of a potential near-term entrant into the Southern California
retail food business.
This study is designed as an aid to public decision-making regarding
supercenters. which have negative as well as positive impacts. Neither
are always
well understood, or
carefully consid-
ered, in the
municipal race for
sales tax revenue.
However, this report
clearly shows that the
fiscal benefits of
supercenter, and of
discount retail more
generally, are much
more complex, and
often lawer. than
they {lrst appear,
POLICY QUESTIONS
The nature of the grocery business has changed
dramatically in some areas, with conventional gro-
cery stores having difficulty competing on wages.
Cities, starved for sales tax revenue but also
protective of their existing retail base, are un-
sure of how these big-boxes will affect either
their economic structure of their fiscal bottom
line. This study is designed mainly as an aid to
public decision-making regarding such projects,
which have negative as well as positive impacts.
Neither are always well understood, or consid-
ered, in the municipal race for sales tax revenue.
KEY FINDINGS 0
[J The aggressive entry of supercenters such
as those operated by Wal-Mart into the
Southern California grocery business is ex~
peeted to depress industry wages and
benefits at an estimated impact ranging from
a low of $500 million to a high of almost
$1.4 billion per year. potentially affecting
250.000 grocery industry employees,
tJ The full economic impact of those lost
wages and benefits throughout Southern
California could approach $2.8 billion per
year.
g Discount retail chains that operate
supercenters, including Wal-Mart. typically
offer much less comprehensive health care
coverage than major California grocery
chains. One negative economic impact of
Supercenters could be a dramatic reduction
in health coverage for most of the 250,000
grocery employees in California. This can 0
lead to lower quality of care for grocery
employees whose health insurance benefits
are reduced.
iii The fiscal benefits of supercenters. and of
discount retail more generally. are often
much more complex, and lower. than they
first appear, This is particularly true when
big box retailers close existing stores to
move into larger quarters elsewhere. when
they expand an existing store into food.
and when retailers reconfigure an existing
store to sell food without expansion. In
each case the additional tax revenues gen-
erated will in part come from existing
businesses elsewhere in the city in the form
of lost market share.
D Supercenters, especially Wal-Mart
supercenters. are often conversions of ex-
isting discount retail stores. Thus local of-
ficials should carefully consider the possibil-
ity of a future conversion to a supercenter.
and any attendant negative economic. fis-
cal. or land use impacts. when approving
big box discount retail projects. even when ()
the proposes land use does not include
immediate plans for grocery sales.
THE IMPACT OF BIG BOX GROCERS ON SOUTHERN CALIFORNIA
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THE ECONOMIC IMPORTANCE OF THE
GROCERY INDUSTRY
The grocery industry is an often unnoticed but viral part of
many local economies. In an era of increasing part.time em.
ployment and reduced pay and benefits, grocery chains pro-
vide what is becoming increasingly rare - entry level jobs that
pay living wages with good benefits. The retail food sector
employs 250,000 persons in California; slightly more than
half of those are in the Southern California region. Of the
128.000 Southern California grocery employees, the 80,000
employees of the major chains are unionized and earn at-
tractive wage and benefit packages. The average grocery
employee at a major Southern California chain earns $32.385
on a full-orne annual basis - virtually the same as the average
statewide pay for all job sectors.
o
It is also instructive to compare grocery employment and
wages with other industries that are commonly considered
an important part of the Southern California economy. Em-
ployees of me major grocery chains earn wages that are es-
sentially the same as the average annual wage paid in the con-
struction industry. and the 80,000 unionized Southern Cali-
fornia grocery workers number about one-third of the region's
total construction employment. Few doubt the role that
construction plays in providing good wages and economic oppor-
tunity to persons with entry-level skills. Grocery employment
serves a similarly important role in the economies of South-
ern California cities and for the entire region. Compared to
other industries that provide entry-level jobs, such as the tour-
ism sector, wages at major grocery chains are close to double
what can be earned in. for example, hotel and motel employ-
ment. Major Southern California grocery ch.1ins also pay. on
aveldge, more than twice as much as the pay earned by gen-
eral merchandise employees. This is representative of the pay
gap between grocery stores and the discount retail firms that
have entered the grocery market in other SGltes.
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WHAT DOES THIS MEAN FOR ORANGE
COUNTY AND SOUTHERN CALIFORNIA?
Three sets of policy issues are imporGlnt
I. Supercenters are often conversions of exist-
ing discount retail stores, and local
officials should be aware of that possibility,
In 1999, Wal-Mart estimated that 72% of all new
Supercencers would be built by converting existing
Wal-Mart discount centers. Because the grocery
and general retail industries differ dram.1tiC1l1y in their
pay scales, function within the community. and abil-
ity to generate sales tax revenues, this is far from a
simple expansion of an existing business. local offi-
cials should be aware of the possibility for conversions
of existing discount centers into supercenters.
2. The grocery industry in Southern Califor-
nia pays substantially higher wages, and
offers better benefits, than many of the dis-
count retail chains that currently operate
supercenters. 8y far the largest controllable cost
in the grocery industry is wages and benefits. large
labor cost differentials do not persist in the gro-
cery business. Should a discount retailer enter the
Southern California grocery market and compete
effectively while paying wages below the current
norm for the industry. the pressure on existing
chains to lower wages and benefits would be im-
mense. As an example, estimating that Wal-Mart
supercenters could capture from 10% to 20% of
the Southern California grocery market, we calcu-
late the direct value of lost wages and benefits to
range to nearly $1.4 billion per year, Accounting for
the multiplier effect as those wage and ben-
efit cuts ripple through the economy, the total
economic impact on the Southern California
economy could approach $2.8 billion per year_
3. The fiscal benefits of supercenters, and of dis-
count retail more generally, are often
complex. Supercenters in particular combine many
non-taxable food items under one roof with general
merchandise. Furthermore, any discount retail out-
let potentially shifts sales from existing local retail.
and the net impacts on local sales tax revenues are
far from cerrain.
SUMMARY
STUDY OVERVIEW
A brief synopsis of the research is given below. For
the full study. including citations for all information.
data sources. and a detailed description of the meth-
ods. see the full report, available at www.ocbc.org.
The wage and benefit impacts of the entry of big box
grocers into the region are estimated using a two
step process, First, we estimate the market share
that Wal-Mart supercen~ are expected to capwre in
Southern California. based on current averages of
between 47 and 57 stores per distribution center.
Using data on market share and number of stores in
several urban areas. we conclude that one distribu-
tion center roughly tr.msJates to a 10% market sh.lre
of Wal-Mart supercenters in Southern California. The
assumptions that let to that estimate were uniformly
conservative. and so we also use an estimate of 20%
long-run market share for supercenters. comparable
to the major existing chains in Southern California.
ESTIMATES OF REGIONAL INCOME LOSSES I'N 'MILLIONS)
FROM LOWER WAGES PAID BY BIG BOX GROCERS
3.000
2,500
2,000
1.500
500
.~
$7.97 $8.62 $9,26
WAGE GAP BETWEEN MAJOR. GROCERY CHAINS AND DISCOUNT RETAILERS
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We then calculate the wage impacts of these market
share estimates, Even a 10% market share for
supercenters is a substantial competitive threat to
existing chains. and those chains are likely to respond
aggressively. Case studies of similar competition be-
tween low and high labor cost grocers illustrate that
grocery chains cannot tolerate large labor cost gaps.
This evidence indicates that in the short-term gro-
cery chains typically seek to close approximately one
half of the wage gap with major competitors. Over
the long term. the grocery chains may seek to lower
wages to their workers to eliminate the entire differ-
ence between their pay and that of discount retail
employees an average difference of over $9 an hour
currently.
o
Using data on current wages and benefits. we calcu-
lated that the direct impact on workers in Southern
California would likely fall in the range of about $500
million to $1 .4 billion per year in lower pay. depending
on the big box grocers' market share, Using the South-
ern California Association of Governments estimates
of how these lowered wages would impact the re-
gional economy. the total regional drop in spending
ranges from about $1 billion to over $2.8 billion per
year, The numbers will rise the larger the market
share of big box grocers. and could well top even
these figures over time.
III.OWESTlMA1E
In addition. we find that the tax rev-
enue impacts of big box grocers are
uncertain. While big box retail does
typically capture taxable sales from out-
side the jurisdiction. it also captures
business from local retail. thus hurting
the local economic base of the com-
munity. There is evidence as well that
the initial growth in sales tax revenues
from the big boxes may not be either
steady or sustained in some situations.
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_ MEDIUM ESTIMATE
II HIGH ESTIMATE
More to the point of this report, a much
larger share of food sales are not tax-
able at all. Most of the Wal-Mart
supercenters result from the conver-
sion of existing Wal-Marts into a combination of
general merchandise and food sales. Thus. the
floorspace devoted to taxable sales may actually fall
as these conversions continue.
There is also evidence that general merchandise stores
are far more vulnerable to market shifts than food
stores, Thus. this trade off presents itself: big box ret-
ailers will most likely boost overall retail sales and tax
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THE IMPACT OF BIG BOX GROCERS ON SOUTHERN CALIFORNIA
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revenues on entry, only to be among the first to con-
solidate or fold when conditions begin to change, If a
big box were to include food sales in its operations,
then free-standing food stores would likely yield mar-
ket share and in some cases become vacant, while
taxable sales from grocery operations would shift to
locations that are much ore prone to the impacts of
regional business cycles,
GENERAL MERCHANDISETAXA8LE SALES PER PERMIT
IN LAGUNA NIGUEL
8,000
7,000
6,000
5,000
4,000
3,000
2,000
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o 199011991119;211993 1994 1995 1996 1997
(NOTE:THEWAL.MART OPENED IN 1995)
HOW SHOULD LOCAL OFFICIALS PROCEED?
These potential impacts are significant, with respect
to both the Vitality of the local economy and the pub-
lic budget bottom line. The transformations in the
grocery industry thus present local officials with some
key policy considerations. The grocery business is a
vital part of the economic and the community fabric
of most every municipality in the region. The changes
occurring in that business have the potential to quickly
and adversely affect the economic health of localities,
and officials should be aware of that potential as they
evaluate future discount retail projects.
In particular, the following questions are important in
evaluating discount retail projects.
o
I, Is there potential for changes in the use of the
property? Discount retail chains are increasingly
taking on the functions of grocery stores, In light
of that trend, local officials should both be aware
of the potential for the conversion of discount
retail sites into supercenters and inquire about
future plans for discount retail stores seeking lo-
cal planning commission and city council approval.
2. How will the discount retail store affect the 10
cal labor force? Discount retail chains traditionally
pay substantially less than the grocery industry
in Southern California. local officials should care-
fully asses the possibility that a particular
discount retail project might depress wages in
other stores in the municipality,
3, What are the fiscal impacts of a discount retail
store? At the most general level, local business
both require public services and have the poten-
tial to produce local taX revenues - a point often
missed when officials focus exclusively on the taX
revenue side of the equation. Any land use, even
big box retail oudets that are perceived as mu-
nicipal cash "cows", must be carefully evaluated.
Some land uses do not generate tax revenue
that outweighs municipal costs. In other in-
stances. the data in the full report (particularly
Chapter 3) suggest that discount retail stores
produce only short-term increases in local sales
tax revenue. And the cyclical nature of retail
sales tax revenue suggests that the revenue
streams from supercenters might be highly vari-
able over time. Local officials should carefully
evaluate these and related issue when they as-
sess the fiscal impact of a discount retail oudet
or supercenter.
For decades, grocery stores have been hidden but
important parts of the health of many Southern Cali-
fornia municipalities, Recent changes in the grocery
industry have the potential for catching local officials
unaware of the possible impacts in their communi-
ties. The full report (available at www.ocbc.org)
highlights the potential for economic impacts as dis-
count retail chains develop supercenters, while also
emphasi2ing the uncertain nature of any local fiscal
benefits, Local officials should carefully evaluate the
implications for their communities.
EXECUTIVE SUMMARY
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The Impact of Big Box Grocers
on Southern California:
Jobs, Wages, and Municipal Finances
Prepared for the Orange County Business Council
By
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Marlon Boarnet, Ph,D.
Associate Professor
Departments of Urban Planning and Economics
University of California at Irvine
949-824-7695
mgboarne@uci.edu
and
Randall Crane, Ph.D.
Associate Professor
School of Public Policy and Social Research
University of California at Los Angeles
3 10-206-1859
crane@ucla,edu
with the assistance of Nicholas Compin, Angela Koos, Gregg Macey, and Amanda Wallace.
Final Report: September 1999
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Executive Summary
The following research analysis, The Impact of Bil! Box GrocerI on Southern California: Joh...
Wal!eI. and Municipal Finances. was prepared for the Orange County Business Council by
Professors Marlon Boarnet (University of California. ]rvine) and Randall Crane (University of
California, Los Angeles). The authors publish broadly in the areas of local economic development,
land use. and municipal fiscal policy. The Orange County Business Council also has a long-
standing interest in both the fiscal impacts of ]ocalland use issues and the economic impacts of
government decision-making and changing business climates in California.
In this report they examine the enormous, and ever-growing retail grocery business. and the many
changes occurring in this industry. One of the most important developments is the combination of
big-box discount retail and grocery sales into a single store known as a supercenter. Whi]e K-Mart
and others have experimented with retail grocery sales in recent years, Wal-Mart has quietly
become the second largest grocer in the country by adding large grocery stores to their retail stores
to form massive retail "supercenters", often as large as 220,000 square feet.
This stUdy is designed as an aid to public decision-making regarding such projects, which have
negative as well as positive impacts. Neither are always well understood, or carefully considered,
in the municipal race for sales tax revenue, However. thiI report clearly shows that the fiscal
benefits of supercenters, and of discount retail more genera(()', are much more complex, and
often lower, than the}'first appear.
THE POLICY QUESTIONS
. The nature of the grocery business has changed dramatically in some areas. with conventional
grocery stores having difficulty competing on wages.
. Cities. starved for sales tax revenue but also protective of their existing retail base, are unsure
how these big-boxes will affect either their economic structure or their fiscal bottom line, This
study is designed mainly as an aid to public decision-making regarding such projects. which
have negative as well as positive impacts. Neither are always well understood, or considered. in
the municipal race for sales tax revenue.
And now the supercenters are coming to California. What will happen"
KEY FINDINGS
. The aggressive entry of supercenters such as thosc operated by Wal-Mart into the
regional grocery business is expected to depress industry wages and benefits at an
estimated impact ranging from a low of $500 million to a high of almost $1.4 billion per
year, potentially effecting 250,000 grocery industry employees. (Chapters 2 and 4)
. The full economie impact of those lost wages and benefits throughout southern
California could approach $2.8 billion per year. (Chapters 2 and 4)
. Discount retail chains that operate supercenters, including \Val-Mart, l)'pically offer much <)
lcss comprehensivc health carc coveragc than major California grocery chains. One
negative economic impact of Supercenters could be a dramatic reduction in health covcrage
for most of the 250,000 grocery employees in California. This can lead to lower quality' carc
for groccry employecs whose health insurance bencfits are rcduccd. (Chaptcr 2)
. Thc fiscal bcnefits of supercenters, and of discount retail more gencrally, are oftcn
much more complex, and lowcr, than thcy first appcar. This is particularly truc whcn
big box retailers close existing stores to move into larger quarters elsewhcre, when they
expand an existing store into food, and when retailcrs reconfigure an existing store to
sell food without expansion. In each case the additional tax revenues generated will in
part come from existing businesses elsewhere in the city' in the form of lost market
share. (Chapter 3)
. Supercenters, especially \Val-Mart supcrcenters, are often conversions of existing
discount retail stores. Thus local officials should carefully consider the possibility of a
future conversion to a supercenter, and any attendant negative economic, fiscal, or land
use impacts, when approving big box discount retail projccts, cven when thc proposed
land use does not include immediate plans for grocery sales. (Chapter 1)
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A CHECKLIST FOR Ev ALVA TING BIG Box RETAIL PROJECTS:
Ovcrall, our analysis ofthcsc data iIlustratc thc grcat complcxity, and possiblc unintcndcd
consequences, of the entry of large footprint discount rctail into thc grocery business. To help
preparc local and regional officials to revicw proposed big box projects generally, wc suggest
communities systematically assess thc positive and negativc local impacts of such projects. The
following checklist is onc way to do so. It proposes a systcmatic rcview of the impacts on local
workcrs. on municipal finances. and on othcr kcy community issucs.
1. Economic and Emplovment Impacts
5J How much will the new big-box outlet cut into existing local retail markct share?
TASKS: "'> Nced to invcntory thc local rctail basc
,'C) Assess markct arcas and markct impacts
5J What will happen to the local work forcc"
TASKS: :::) Asscss impact on cxisting local rctail
c:> Calculate direct impact of job changcs. lowcr wagcs
:c) Calculate impacts of Icss mcdical coveragc and othcr fringe benefits
'. Calculate ripplc impacts of lowcr wagcs on local cconomy
(multiplicr impacts)
5J Will the new big-box outlct Icad to vacancics or changes in local land use"
TASKS: :c) Inventory vacant land and commercial properties.
'. Assess rc-use or redevelopment possibilities for competing sites.
2. Municipal Finance Impacts
5J How much will the new development cost your municipality?
TASKS: c:> Services and capital cxpcnditurcs: Calculate cost ofinfrastructurc & utilities
(i.e.. strccts. scwcr connections, water lines, etc.)
c:;' Traffic and othcr scrvice impacts?
::::> Calculate the cost of associated economic dcvelopment inccntivcs
(c.g.. tax credits)
,"C' Asscss the impact ofrcdevelopment zonc tax-incrcment financing.
5J How much will the ncw developmcnt rcally changc local tax rcvenues?
TASKS: ::::> Assess net changes in local retail salcs
(e.g.. including sales lost to the new big box).
,~ Calculatc nct changcs in salcs and propcrty tax revenue.
Examine the stability of the retail salcs tax revenue ovcr timc.
3
3. Communitv Impacts
o Will the big-box footprint possibly expand in the future? In the same line of business?
TASKS: ::') Ask about future plans up front
;::) Examine industry trends
,...,. Plan for expansion contingencies
o What localities will benefit from and/or be disadvantaged by the big-box development.
TASKS: -::) Assess the differences between local and regional impacts,
;::) Are local gains at the expense oflosses in other cities~
Must these be mitigated')
o How will the new retail outlet affect your community's quality of life~ For example, will it
reduce the appeal of a downtown core that you are trying to preserve or revitalize?
TASKS: ;::) Inventory locations of competing retailers.
,...,. Assess impact on existing local retailers,
4
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Contents
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Executive Summary ....................................................................................................................1
The Policy Questions ................., ............. .......,................. ............,..... ..................... ......,.......... I
Key Findings....,' ...............".... ........,.." ............, .......... ................... ...............,. ................,..",.... I
A Checklist for Evaluating Big Box Retail Projects:................................................................3
1. Economic and Employment Impacts ..............................................................................., 3
2. Municipal Finance Impacts...... ..........." ..........., ................ .................,.... ................,..."....3
3. Community Impacts.......... ...... ........... ......", ..........".. ............." ......:.......,......, ...............".. 4
Lis t 0 f Tab les ............................................................................................................................... 6
Lis t of F i gures.............................................................................................................................. 8
Chapter I: Issues and Trends ................................................................................................... 9
A. Policy Issues.,.."........ ........,..,. ......",.." ..........,., ......., ...........,..... ........................., ................ 9
B: The Grocery Sector in the United States........................................................................... II
I, Trends and Corporate Consolidations............................................................................. II
2. Competition........".... ...........".. ............... ......". ......"..,...... ..........".."............. ............ ..... 13
3. State of the Retail Food Industry ...................................................................................14
C: The Combination of Big-Box Discount Retail and Grocery Sales ................................... 19
D. The Economic Importance of the Grocery Industry .........................................................22
E. What This Means for Orange County ...............................................................................29
Chapter 2: Job and Wage Impacts.........................................................................................33
A. Differences in Employment & Wages Across Discount Retail & the Grocery Industry.. 33
B: Examples of the Labor Market Impact of Wage Differentials - Cases from Canada.......45
C. Wage and Benefit Impacts ofWal-Mart Supercenters in Southern California.................47
D. Projected Market Impact of Wal-Mart Supercenters in Southern California ...................48
E: Labor Market Impacts ....................",................................".............................................. 57
I. Economic Impact of Lower Wages Paid to Supercenter Employees ............................. 57
2. Economic Impact of Lower Wages Paid to Grocery Employees ................................... 58
F: Regional Induced Impacts and Land Market Impacts......................................................,63
1. Regional Impacts .,..,...........",..................."............,.........."...........",:"........,......,.......... 63
2. Land Market Impacts ........"........................"..........,........,.............................,,.."........... 64
Chapter 2 Appendix: Health Care Coverage Issues.............................................................. 67
Chapter 3: Municipal Finance Impacts .................................................................................80
A. The Fiscalization of Land Use Planning........................................................................... 80
B. Big Box Fiscal Experiences .............................................................................................. 81
C. Taxable Sales and Tax Revenues ...................................................................................... 83
D, The Fiscal Impacts of Big Box Grocers............................................................................ 84
E. Summary.. ..........,...... ..........,...... .........."..... .......,.., .............. ...........,......... ......................... 93
Chapter 4: Concluding Comments......................................................................................... 94
References ..................................................................................................................................99
Append i ces ...............................................................................................................................1 03
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List of Tables
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Table 1-1: EBITDA Multiples for Recent Supermarket Mergers and Acquisitions..................... 12
Table 1-2: Rates of Return ............................................................................................................13
Table 1-3: Food Store Sales by Size and Ownership (1997).........................................................15
Table 1-4: Types and l\umber of Stores (1988 vs. 1998)..............................................................16
Table 1-5: Median Average Store Size..........................................................................................16
Table 1-6: Supermarket Facts (Year End 1997) ........................................................................... 17
Table 1-7: Top Ten Food Retailers by Annual Sales ....................................................................18
Table 1-8: Top Ten Food Retailers by Store Count ......................................................................18
Table 1-9: Store Counts of Super Kmarts & Wal-Mart Supercenters...........................................20
Table 1-10: Wal-Mart Store Transformations ...............................................................................21
Table I-II: Total Yearly Employment for the Grocery Industry...................................................22
Table 1-12: Total Yearly Payroll Per Employee for the Grocery Industry ....................................23
Table 1-13: Total Yearly Payroll Per Employee for all Industries in California............................23
Table 1-14: Total Yearly Employment for the Construction Industry ...........................................24
Table 1-15: Total Yearly Payroll Per Employee for the Construction Industry.............................25
Table 1-16: Total Yearly Employment for the Tourism Industry ..................................................26
Table 1-17: Total Yearly Payroll Per Employee for the Tourism Industry....................................27
Table 1-18: Total Yearly Employment for the Hotel and Motel Industry......................................28
Table 1-19: Total Yearly Payroll Per Employee for the Hotel and Motel Industry .......................28
Table 1-20: Big Box Retailers in Orange County ..........................................................................29
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Table 2.1: Total Yearly Employment for the Grocery Industry .....................................................34
Table 2.2: Total Yearly Payroll Per Employee for the Grocery Industry.......................................34
Table 2.3: Total Yearly Employment for the General Merchandise Industry ................................35
Table 2.4: Total Yearly Payroll Per Employee for the General Merchandise Industry ................35
Table 2.5: Total Yearly Employment for the Variety Store Industry............................................36
Table 2.6: Total Yearly Payroll Per Employee for the Variety Store Industry .............................37
Table 2-7: Hourly Wage Structure of the Major Grocery Chains in Southern California ............39
Table 2-8: Comparative Benefit Analysis .....................................................................................41
Table 2-9: Comparison of Southern California Grocery & Wal-Mart Wages ...............................44
Table 2-10: LA Metro Area Market Share Information................................................................50
Table 2-11: Market Share Points Per Store ...................................................................................51
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Table 2-12: Regional Supermarket Market Share Percentages ....................................................52
Table 2-13: Market Share Information, Selected Comparison MSAs............................................53
Table 2-14: Estimated Wal-Mart Southern California Market Share.............................................54
Table 2-15: SCAG County Population Forecasts...........................................................................56
Table 2-16: Direct Economic Impact of Lower Wages Paid to Supercenter Employees..............57
Table 2-17: l\ear-Term Indirect Economic Impact from Lower Wages ........................................59
Table 2-18: Indirect Economic Impact of Lower ...........................................................................60
Table 2-19: Estimates of Total Wage and Benefit Impact .............................................................61
Table 2-20: Estimates of Total Regional Wage and Benefit Impact..............................................63
Table 2-21: Large-Scale Vacancies in Orange County and Site Information...............................64
Table A2-1: The Cninsured in Major Metropolitan Areas............................................................ 70
Table A2-2: Percent Distribution ofCninsured Households by Income Level, 1990-1995.........71
Table A2-3: Trends in Health Insurance Coverage ....................................................................... 72
Table A2-4: Percent Cninsured by Age and Gender, 1990-1995..................................................73
Table A2-5: Sources of Health Insurance...................................................................................... 74
Table A2-6: Reasons for Ineligibility of Employer-Sponsored Health Insurance ........................75
Table A2-7: l\umber of Workers Offered, Accepting; Ineligible, ................................................ 76
Table A2-8: Getting Medical Attention......................................................................................... 78
Table A2-9: Studies Examining the Relationship Between Insurance and Health .......................79
Table 3-1: Wal-Mart Locations in Orange County and Opening Dates.........................................88
Table 3-2: Sales Per Square Foot and Selling Square Fool...........................................................91
Table 3-3: Pearson's Correlations for Orange County Taxable Sales............................................92
7
List of Figures
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Map I-I.............................................................................................................................31
Chart 2-1: Components of Hourly Wage ..........................................................................42
Chart 2-2: Estimates of Total Wage and Benefit Impacl.................................................. 62
Figure 2-1. Vacant Grocery Store in Costa Mesa ...........................................................64
Figure 2-2. Vacant Grocery Store in Costa Mesa ............................................................65
Figure 2-3: Vacant Grocery Store in Costa Mesa............................................................ 66
Figure 3-1. Estimated Total Sales: Food Stores and General Merchandise ................... 84
Figure 3-2. Taxable Sales: General Merchandise as a Percentage of Total RetaiL........ 85
Figure 3-3: Food Taxable Sales as a Perccntage of Total Retail Taxablc Sales.............. 86
Figure 3-4: General Merchandise Taxable Sales per Permit ............................................ 86
Figure 3-5: Food Stores Taxable Sales per Permit ...........................................................87
Figure 3-6: General Merchandise Taxable Sales per Permit in Anaheim ........................ 89
Figure 3-7: Food Stores Taxable Sales per Permit in Anaheim........................................ 89
Figure 3-8: General Merchandise Taxable Sales per Permit in Laguna Niguel............... 90
Figure 3-9: Food Stores Taxable Sales per Pemlit in Laguna Niguel.............................. 90
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Figure 4-1. Estimates of Regional Income Loss From Big Box Grocers ..........:.............93
C)
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Chapter 1: Issues and Trends
A. POLICY ISSUES
The grocery business in the United States is currently undergoing dramatic and rapid change.
Some differences in food retailing arc evident even to casual observers - for example, stores
across southern California have changed ownership and sometimes names as part of the recent
mergers in the grocery industry. Yet the food retailing business is changing in ways that go
beyond the larger trend toward corporate consolidation. Several major retail chains, all with little
previous direct connection to the grocery business, have begun to combine discount retail and
full-service grocery stores under one roof. These "supercenters" represent a restructuring that will
have potentially more dramatic impacts on local public policy than the current wave of
consolidation among traditional grocery chains.
In this report, we examine the local and regional impacts of the trend toward combining
discount retail and groceries under One roof. At first glance, the issues might seem minor - two
classes of goods that previously were sold in different stores arc nOw increasingly sold in the
same place. Yet that seeming ordinariness belies the importance of the grocery industry for local
economics. There is little public awareness of the ways that the discount retail and groccry
industries differ - differences that suggest that a trend toward merging the two activities will
change the face of the grocery business. The policy issues from such a restructuring of the
grocery business are twofold.
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J. The trend toward combining discount retail and grocery sales raises the potential for
unanticipated changes in local land uses.
Discount retail firms, such as K-Mart, Target, and Wal-Mart, often build supercenters by
adding a grocery store onto an existing discount center. When considering whether to approve
specific discount retail stores, local officials might often not consider the possibility - a very real
possibility, as this report documents - that the store will expand in the near future into full service
grocery sales. This might seem nothing more than an ordinary expansion of the floor space ofa
particular business. Yet the expansion of a retail store into groceries is an expansion from one
business sector into a different line of business, with different competitors and different
community, economic, and fiscal impacts. The food retailing and discount retailing industries
. differ dramatically, so that an expansion of a discount retail site to include grocery is best
considered a change in the land uSe rather than a simple expansion of an existing land uSe. Most
importantly, grocery and discount retail have different impacts on the local community, cconomy,
and municipal revenue stream. This Icads to the second policy issue.
2. Because of differences in pay and benefits in the discount retail and grocery sectors, a
shift from traditional grocery stores to supercenters creates the very real risk that high
wage jobs will be replaced with low wage jobs.
o
The grocery industry, nationally and in southern California especially, has traditionally paid
good wages with amactive benefit packages. Average wage and salary pay for full-time hourly
workers in major southern California chains is S32,386. The major southern California chains
offer a complete benefit package, including health care coverage for employees and dependents,
9
and a retirement plan. Discount retail traditionally pays substantially less, uSeS more part-time 0
workers, and offers limited or no health insurance or retirement plans. Everything that is known
about the discount retail chains now entering the grocery business suggests that supercenter
employees earn wages and benefits comparable to discount retail employees, substantially less
then what southern California grocery workers carn. Thl/s the development ,,(a robl/st
sl/percenter sector in sOli/hem California will lead 10 the cOI1\'ersion ,,(high wage jobs into 101\'
wage jobs.
The purpose of this report is simple: The grocery business is changing and public officials
should be aware of the potentially adverse impacts on cities and local economics. Yet the
seeming ordinary nature of this issue is part of the policy problem. The pace of change in the
grocery industry is rapid, and the everyday character of most persons' experience with groceries
belies the importance of the retail food business for local economies. We show later that the entry
of discount retailers into the southern California grocery industry can lead to wage and benefit
losses that could be as high as nearly $ 1.4 billion per year. The economic impacts on specific
communities can be quite large. Yet unless local officials arc aware of these issues now, they will
be caught by surprise by the fast pace of change in the grocery industry.
This report seeks to educate local officials about the policy importance of the changes in the
grocery industry. In the rest of Chapter I, we discuss trends in the grocery business in the United
States and more specifically in southern California. Two key points emerge from that discussion.
First, discount retail firms are rapidly entering the grocery business. Second, discount retail and
grocery are sufficiently different, in terms of pay, benefits, and employment practices, that the
entry of discount retail into groceries will have profound economic impacts. We focus At.
specifically on those labor market impacts, for the case of southern California, in Chapter 2. In \,I
Chapter 3, we discuss the broader community and fiscal impacts that can result from the entry of
discount retail into the food retailing business.
The rest of this introductory chapter proceeds in four sections. Section B describes the food
retailing business in the United States. Section C discusses the recent trend toward combining
grocery sales with big-box discount retail. Section D discusses the economic importance of the
grocery business. Section E discusses the implications of grocery trends for Orange County and
southern California.
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B: THE GROCERY SECTOR IN THE UNITED STATES
1. Trends and COT/Jorate Consolidations
A recent report on the U.S. food retail industry (S & P, 1998) identifies a few key trends that have
emerged in the supermarket industry in the past several years. These trends arc as follows:
. In an attempt to accommodate consumers' desires for increased shopping convenience, more
and more food retailers arc experimenting with cyber supermarket aisles in the form of home
delivery and on-line shopping;
. In an attempt to increase customer loyalty and boost profit margins, food retailers continue to
develop private-label products;
. In an attempt to adapt to such demographic changes as the aging and increasing ethnicity of
the U.S. population, supermarkets arc spending more time conducting market research:
. In an attempt to counter competition from retail formats encroaching on their territory
supermarket retailers arc opening more larger-sized combination food/drug stores:
o
. In an attempt to achieve growth in a mature industry where opportunities for internal growth
through physical expansion have narrowed, supermarkets are expanding through mergers and
acquisitions.
While each of these trends has contributed to the changing face of the food retail industry,
consolidation has been the underlying theme for the supermarket industry in the past several years
(S & P, 1998). The U.S. food retail industry, historically highly fragmented and diversified,
became increasingly consolidated in recent years.
In the past year, Kroger's 513.5 billion merger with Fred Meyerwas the largest and most
expensive deal in food retailing history. That merger created the nation's largest grocery store
chain, with 2,200 stores in 31 states (Kroger, 1999). Albertson's recent merger with American
Stores for S 11.7 billion made Albertson's the nation's second-largest retailer specializing in food
and drugs, with approximately 1,800 grocery stores and 535 billion in annual sales (Progressive
Grocer, 1999).
In the midst of the recent mergers and acquisitions, Safeway dropped to the rank of third-largest
chain (after being second for several years) with annual sales of around 525 billion. Safeway
recently acquired Randall's Food Markets, a privately owned 116 store Texas-based chain, for
approximately 51.8 billion. This neW partnership will allow Safeway to continue its growth
strategy while re-entering the rapidly growing Texas market (Safeway, 1999). The California
chain has also had much success with both its 1997 purchase of the Vons chain in southern
California, which brought Safeway back to southern California after a decade-long absence, (S &
p's Industry Surveys, Supermarkets & Drugstores, 24 Sept 98) and its recent acquisition of
Dominick's for 51.2 billion (Progressive Grocer, 1999).
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II
Table I-I presents "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA) 0
multiples for many of the recent supermarket mergers and acquisitions that occurred in the U.S.
food retail industry since late 1996. While many consolidations occurred in order to achieve
economics of scale in volume-based purchasing, procurement, distribution, information
technology, and corporate overhead, many were defensive moves spurred by the pressures from
the newer entrants into supermarketing, most importantly discount retail chains.
TabId-I: EBITDA Multiples for Recent Supermarket Mergers and Acquisitionsl
Enterprise Enterprise
Date Date No. of Value' EBITDA Value I
Announced Comnleled Acouirer Tarl'et Stores ISmm} ISmm} EBITDA
Oct-98 May-99 Kroger Fred Mcyer 821 12,890 ; 1275 10.1
Aug-98 May-99 Albertson's American Stores 1.557 11,865 1261 9.4
Aug-98 Apr-99 Safeway Carr-Gottstein 49 332 45 7.3
OCI-98 Kov-98 Safeway Dominick's 112 1,855 170 10.9
May-98 Oct-98 Ahold Giant Food 170 2.634 248 10.6
Jan-98 Oct-98 Albertson's Buttrey Food & Drug 43 169 21 8.0
Feb-98 Mar-98 Somerfield Kwik Save 882 780 229 3.4
Kov-97 Mar-98 Fred Meyer Ralphs Grocery 406 3,048 381 8.0
J\ ov-97 Mar-98 Fred Mcycr Quality Food Centers 147 1.569 131 12.0
Scp-97 Mar-98 Richfood Farm Fresh 110 253 ' 38 6.6
Jan-98 Jan-98 Albertson's Seessels Holdings of 10 88 10 9.0 ()
Bruno's
Jul-97 K ov-97 Jitney-Jungle Delchamps 128 236 42 5.7
May-97 Sep-97 Fred Meyer Smith's Food & Drug 151 1,955 240 8.2
May-97 Aug-97 Giant Eagle Riser Foods 36 469 56 8.3
Kov-96 Mar-97 Quality Food Hughes Family Markets 56 391 49 8.0
Centers
Kov-98 KIA. J Sainsbury Star Markets' 53 490 48 10.3
Apr-97 KIA. Kohlberg Kravis Randall's Food Markets 122 714 ' 93 7.7
Roberts
Mar-97 KIA. Lund Food Byerly's II 90 13 6.7
Dec-96 KIA. Dart Group Shoppers Food 225 40 ' 5.7
Warehouse
Dec-96 KIA. Bruno's Seessels Holding 10 63 7 8.5
Sources; SEe Filings and Progressive Grocer's 6(jf/l Annual Report of/he Grocery Indusl1)', April 1999.
l EBITDA = Earnings Before Interest, Taxes. Depreciation and AmoI1ization
2 Enterprise Value = market value of equity plus net debt minus cash and cash equivalents
J Revenues, EBITDA and EBIT from Fred Meyer include acquisitions nfSmith's, QFe and Ralphs.
~ Does not include options granted to Fann Fresh to purchase 1.5 million RFH shares at 525.
5 Imnlied transaction value. assumin[! a 64% acauired stake: includes ootions to nurchasc 3.6 million Randall's shares at $11.11.
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2. Comvetition
Competition in the grocery industry is largely a function of product price and quality, store
location, quality of service, product variety, and overall store reputation. Because food retailers
are interacting in such a fiercely competitive market, it is not unCommon for these retailers to see
profit margins of only I or 2 percent on sales. This is illustrated in Table 1-2.
Table 1-2: Rates of Return I
Comoanv
Albertsons Inc
American Stores Co
Food Lion Ine
Giant Food Inc
Great Atlantic & Pacific
Tea
,Year
End
Jan'
Jan'
Dec
Feb'
Feb'
Return on Revenue (%) , Return on Assets (%)'
1993 1994 1995 1996 1997 1993 1994 1995 1996 1997
3.0 3.5 3.7 3.6 3.5 10.9 12.1 12.0 11.2 10.4
1.4 1.9 1.7 1.5 1.5 3.9 4.9 4.4 3.8 3.4
0.1 1.9 2.1 2.3 1.7 0.2 6.1 6.7 6.7 5.0
2.6 2.5 2.6 2.2 1.7 6.9 6.8 7.1 5.8 4.7
0.0 NM 0.6 0.7 0.6 0.1 NM 2.0 2.5 2.1
Hannaford Bros Co Dec 2.6, 2.7 2.7 2.5 1.8 7.0 7.4 7.6 7.0 4.9
Kroger Co Dec 0.8 1.2 1.3 1.4 1.7 3.9 5.9 6.5 6.5 7.3
Meyer (Fred) Inc Jan' 2.4 0.2 0.9 1.6 1.9 5.9 0.5 1.9 3.5 3.4
0 Publix Super Mkts Inc N/A. N/A. N/A. N/A. N/A. N/A. N/A. N/A. N/A. N/A.
Ruddick Corp Sep 1.7 IT 1.9 2.0 2.1 5.3 5.2 5.8 5.6 5.7
Safeway Inc Dec 0.8 1.6 2.0 2.7 2.8 2.4 5.0 6.4 8.6 8.9
Supervalu Inc N/A. N/A. N/A. N/A. N/A. N/A. N/A. N/A. N/A. N/A.
Whole Foods Mia Inc Sep 1.2 2.2 1.7 NM 2.4 5.0 7.1 4.9 NM 7.5
Winn-Dixie Stores Inc Jun 2.2 2.0 2.0 2.0 1.5 11.7 10.3 10.0 10.0 7.3
Wal-Mart Stores Inc ^ Jan' 3.5 3.2 2.9 2.9 3.1 9.9 9.0 7.8 7.9 8.3
I Source: S & p's Industry Surveys, Sup('rmarkeL\' & Drug.\"(ores, September l'N8. unless otherwise no led.
: l'\et income divided by operating revenues.
1 r\et income divided by average total assets.
. Of the following calendar year.
r-;~ - not meaningful
f\;/A. - nol available.
^ Source: S & p's industry Surveys. Re/ailing: General, OCIIQQ~.
At first glance, these narrow profit margins seem to indicate that the grocery industry is a highly
saturated market with no room for new competitors. A closer look at food retailers' rates of
return, however, indicates that the opportunity for new competitors to be profitable does in fact
exist. More specifically, some food retailers arc realizing a return on assets of 10 percent or more,
indicating that neW market entrants who are able to achieve high sales volume will be able to
successfully enter the food retail industry.
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13
In the past, food retailers commonly competed with local, regional, and national supermarket
chains, as well as with convenience stores, membership warehouse clubs, specialty retailers, and
discount food stores. In recent years, however, food retailers also faced competition from
supercenters. In 1998, a few of the larger supermarkets, including Hannaford Bros and Winn-
Dixie Stores, specifically cited Wal-Mart as a major source of competition in the geographic
regions in which they competed (Hannaford Bras', 1998; Winn-Dixie's SEC Form lOoK).
Several other major supermarkets, including Albertson's, Safeway, and Food Lion, mentioned
supercenters in general as a source of competition.
3. State of the Retail Food Industrv
According to Progressive Grocer (S & P, 1998), at year end 1997, total grocery store sales were
5436.3 billion, of which 5334.5 billion (77%) was contributed by the approximately 30,300
supermarkets in the LT.S. that had 52 million or more in annual sales. 18,955 (63%) of these
supermarkets were affiliated with a chain, and they had sales of 5262.0 billion (78% of all
supermarket sales). The remaining 11,345 supermarkets were independently operated, and they
had sales of 572.5 billion.
Table 1-3 provides a more detailed overview of food store sales by size and ownership at year end
1997.
14
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Table 1-4 provides a comparison of how the types and number of food retail stores have changed
Over the past ten years. The recent industry trend of mergers and acquisitions has greatly
contributed to the increases in both the large ($2+ million) and chain supermarkets.
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<)
Table 1-4: Types and Number of Stores (1988 vs. 1998)
1988 1998
Number %of Number %of
Total Total
All Stores 148,000 100.0 126,000 100.0
Supermarkets (S2+ million) 30,400 20.5 30,700 24.4
Chain Supermarkets 16,850 11.4 19,530 15.5
Independent Supermarkets 13.550 9.1 11,170 8.9
Other Stores (< 52 million) 62,600 42.3 37,550 29.8
Convenience Stores 55,000 37.2 57,000 45.2
Wholesale Club Stores N/A. N/A. 750 0.6
Sources: 56th AI1111W/ Report offllc Grocery industry. April 1989. and 66th Annual Report oj"
the Gron.'/l.' /ndliSlrl'. Amil 1999. as. cited in httn:/iwww.fmi.or!.!/kevfacts/storcs.html.
As the number of both large (52+ million) and chain supermarket increases, it is not surprising that
the median average store size is also increasing. Table 1-5 indicates that the median average store
size has increased from 31,000 to 39,260 ft2 (27%) in eight years.
0
Table 1-5: Median Average Store Size
Grocery
Store Size
Year (ft,)
1997 39,260
1996 38,600
1995 37,200
1994 35,100
1993 33,000
1992 32.400
1991 3 1.500
1990 31,000
Source: Food Marketing Industry Speaks, 1991-1998.
as cited in htto://www.fmi.om/kevfacts/storesize.htrnl.
Other interesting facts about the state of the supermarket industry at year end 1997 are found in
Table 1-6.
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16
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Table 1-6: Supermarket Facts (Year End 1997) 1
1997
Totals for the Industry'
Number of Employees
Number of Grocery Stores
3.5 million
126,000
Average Supermarket
Square Feet of Typical Supemlarket '
Square Feet of Selling Area
Number of Checkouts
Number of Full-Time Employees
Population Per Supermarket
Households Per Supermarket
Square Feet Per Person
Square Feet Per Household
Number of Items Per Supermarket'
39,260
27,723
8.8
64
8,820
3,259
3.14
8.5
30,000
o
A verage Annual Performance ($)
Sales Per Supermarket
Sales Per Square Foot
Sales Per Employee
Sales Per Checkout
11,039,638
398.21
172,602
1258,186
Average Weekly Performance ($)
Sales Per Supermarket
Sales Per Square Foot
Sales Per Employee
Sales Per Checkout
212,300
7.66
3,319
24,196
1 Source; Table from Progressive Grocer's Annual Repor! qf the
Grocery Indus,ry, as cited in S & p's Industry Surveys, April 1998
and 1999, unless othcrwise noted.
1 Source: Taken from Progressive Grocer as cited in
httn:l/www.fmi.orc/food/suncrfact.html.
Recall that at year end 1997, the supernlarkets with S2+ million in sales accounted for S334.5
billion of the S436.3 billion total grocery store sales in the U.S. The top ten food retailers had
combined food sales of nearly S175 billion (40'% of total grocery store sales). Table 1-7 lists the
top ten food retailers in terms of annual sales at year end 1997. (Note that recent consolidations.
detailed elsewhere in this report and in the report appendices, have changed this ranking in
several respects.)
o
Supervalu Inc (S 17,20 I million) and Fleming Cos (S 15,373 million) arc also among the top food
retailers, but because their sales totals include revenueS from wholesale operations, their relative
position in this ranking could not be determined. The top ten food retailers in terms of store count
17
as of mid-1998 can be found in Table 1-8.
()
Table 1-7: Top Ten Food Retailers by Annual Sales
(Year End 1997)
Rankin!! Comoanv
1 Kroger Co
2 Wal-Mart Stores
3 Safeway Inc
4 American Stores Co
5 Ahold USA
6 Albertsons Inc
7 Winn-Dixie Stores Inc
8 Meyer (Fred) Inc
9 Publix Super Mkts Inc
10 Great Atlantic & Pac Tea Co
Net Sales
(Million $\
26,567
25,000 ·
22,484
19,139
18,500 #
14,690
13,219
12,800 #
11,100 ·
10,262
Source: Table from S & p's Industr)' Surveys. Supalnurker,\" &Drug\'torC'.\'. September lQ9~.
. - reported as an estimate
# ~ pro f(Jrma
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Table 1-8: Top Ten Food Retailers by Store Count
(Mid-I998)
Rankin!! Como3nv
I Kroger Co
2 Safeway Inc
3 Food Lion Inc
4 Winn-Dixie Stores Inc
5 Great Atlantic & Pac Tea Co
6 A lbertsons Inc
7 Ahold USA
8 Meyer (Fred) Inc
9 American Stores Co
10 Publix Super Mkts Inc
No. of
Stores
1,389
1,370
1,175
1,168
919
916
830
823
804
563
Source: Table from S & p's Industry Surveys,
S'lfJermarkets & Drllf?stores, Seotember 1998.
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~
o C: THE COMBINATION OF BIG-BOX DISCOUNT RETAIL AND
GROCERY SALES
Big-box discount retailers arc currently engaged in a rapid trend toward incorporating full-scale
grocery stores into their discount centers. Michigan-based Meijer was the first to combine a
grocery and general merchandise store, doing so in the 1960s (Meijer, 1999). They currently
operate 116 supercenters in the Midwest. Fifty-nine of these stores arc located in Michigan,
thirty-two arc in Ohio, nineteen arc in Indiana, five are in Kentucky, and one is located in Illinois.
Their stores arc as large as 250,000 square feet, and most stores include forty deparTments
featuring over 120,000 different items. Although information on Meijer's expansion plans was
limited, none of the resourCeS available suggests that Meijer has plans to expand beyond the
Midwest.
More recently, Target has entered the supercenter business. Target has been experimenting with
the supercenter format for four years. Target recognizes that the supercenter concept provides
additional opportunities for future growth, yet its most recent annual report does not emphasize
the expansion of traditional Target stores into SuperTargets. In 1998, for example, Target opened
fifty-five neW Target stores, yet only fourteen of Target's 851 existing stores arc currently
SuperTargets. Target plans to open only two additional SuperTargets in 1999.
o
Target's growth efforts instead appear to be focused on the expansion of traditional Target stores
in the Northeast and mid-Atlantic regions of the U.S.. including Baltimore, Washington, D.C.,
Boston, Philadelphia, Pittsburgh, and greater Ne\v York City. At year end 1998, Target operated
sixty-five stores in these regions. By the year 200 I, Target expects to double its store base in
these regions (Dayton Hudson. 1998).
Kmart introduced its Super Kmart concept in 1992. By 1995, the Super Kmart store count was at
eighty-seven stores. Since 1995, however, the conversion of traditional Kmarts into Super
Kmarts has slowed considerably. The annual growth rate in Super Kmarts was only 3 percent in
both 1997 and 1998 (Kmart, 1999). At year end 1998, there were 102 Super Kmarts operating in
twenty-one states throughout the U.S. (Kmart, 1998).
While Kmart is a much bigger player in the supercenter business than Target,l the top priority of
Kmart's rcal estate strategy is the completion of its comprehensive convcrsion of traditional
Kmart stores to Big Kmarts (Kmart, 1999). Big Kmarts differ from Super Kmarts in that Super
Kmarts aim to provide the ultimate shopping experience by combining a complete assorTment of
fresh groceries with a broad selection of general merchandise (Kmart, 1999). Big Kmarts, on the
other hand, emphasize those departments that arc most important to the typical Kmart shopper.
Additionally, located near the front of each Big Kmart store arc everyday basics and consumables.
These items are typically priced at a zero-to-three percentage differential from Kmart's leading
competitors in order to increase inventory turnover and gross margin dollars (Kmart, 1999). By
year end 1998, Kmart had 1,245 Big Kmart stores (Kmart, 1998). The remainder of eligible
stores are expected to be converted during 1999 (Kmart, 1999).
o
I Be.hind Wal.Man and Meijer, Kmart was the third largest supcrccntcr finn in the U.S. in 1997 (Kman. 1999).
19
Wal-Mart, currently the number one general merchandise retailer in the U.S., began ~
experimenting with the supercenter concept in 1988. The recent growth ofWal-Mart
Supercenters has far surpassed that of other retail supercenters, as is evidenced by the store count
comparison for Wal-Mart Supercenters vs. Super Kmarts shown in Table 1-9. In 1999, for
example, Wal-Mart plans to open 150 new Supercenters while Kmart expects to open only four
neW Super Kmarts.
Table 1-9: Store Counts of Super Kmarts & \Val-Mart Supercenters
Year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999 '
2000 '
Super Kmart
Store Count'
o
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5
19
67
87
96
99
102
106
N/A.
Percentage
Chanl!e
280%
253%
30%
10%
3%
3%
4%
N/A.
Wal-Mart
Store Count'
6
9
10
34
72
147
239
344
441
564
714
Percentage
Chanl!e
100%
50%
11%
240%
112%
104%
63%
44%
28%
28%
27%
o
I Source: hnp:/Jwww.kmar1.cnm1tl_aboutlfinanciat:factbk_] 99S17.sun
; Source: \\'al.Mart Annual Report. 1999.
1 Estimates as stated in Kman Corp Annual Report. 199~, and,Wal.Man Annual Report. ]999
David Glass, the President and CEO of Wal-Mart Stores, discusses Wal-Mart's entry into the
food business in Wal-Mart's 1998 Annual Report:
"[The Supercenter concept] took the idea of retailing both general merchandise and food
in the same building and created the convenience of 'one-stop shopping.' It has become
our key domestic growth vehicle and will remain so for at least the next 10 years. This
year alone we are going to open approximately 150 Supercenters in the Unites States as
well as using it as a key vehicle in our international growth."
Although many of the existing Wal-Mart Supercenters are located in the Midwest and Southeast,
the threat of their entry into Southern California is very real. In 1999, it is estimated that 72
percent of the neW Wal-Mart Supercenters openings in the U.S. will be the result of conversions
from traditional Wal-Mart Discount Stores into Wal-Mart Supercenters (Wal-Mart SEC Form 10-
K, 1999) (see Table 1-10). Because California is currently the home to over 106 Wal-Mart
discount centers, including Seven in Orange County, there is a very strong possibility that some of
these conversions will occur in California. 0
20
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Given Wal-Mart's rapid expansion, One can conclude that Wal-Mart is by far the most aggressive
competitor in the supercenter business. At Wal-Mart's current superccntcr expansion pace, the
firm will have more supercenters than traditional discount centers in less than ten years. Wal-
Mart is a discount retail firm that is essentially transforming itself into a combination general
merchandise/food retailing business. Because Wal-Mart is currently the most aggressive entrant
into the supercenter market, much of this report will focus On the impacts of the entry of Wal-
Mart Supercenters into Southern California. A thorough examination ofWal-Mart Supercenters
will help grocery retailers better understand the effects and consequences of discount retailers'
entry into the grocery industry.
Table 1-10: Wal-Mart Store Transformations
o
Year
1994
1995
1996
1997
1998
1999 ·
2000 ·
Number of
Discount Store
Conversions
37
69
80
92
75
88
90
Number of
Supercenters
Ooened
38
75
92
105
97
123
150
%of
Supercentcr
Openings
Resulting from
Conversions
97%
92%
87%
88%
77%
72%
60%
Source: Wal-Mart SEe Form IO-K. January 1999, unless
otherwise stated.
. - Expansion plans as stated in Wal-Mart Annual Report. 1999.
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D. THE ECONOMIC IMPORTANCE OF THE GROCERY INDUSTRY
~
Table I-II shows grocery industry employment (standard industrial classification, or SIC, code
541) for southern California counties and statewide. Table 1-12 similarly shows average per
employee wages paid to southern California grocery employees. For comparison, Table 1-13
gives average annual per employee wages for all businesses in California.
Table 1-11: Total Yearly Employment for the Grocery Industry
(SIC Code # 541)
Area 1993 1994 1995 1996
Imperial 1,512 759 1,586 1,377
Los Angeles 64,655 61,375 61,341 60,513
Orange 20,532 19,136 21,056 21,075
Riverside 10,057 9,358 9,356 9,726
San Bernardino 10,338 10,371 10,778 10,633
San Diego 19,540 18,911 18,538 19,739
Ventura 5,203 4,840 4,899 5,408
Southern CA Region 131,837 124,750 127,554 128,4 71 0
CA State 247,117 238,913 241,180 250,206
Sour~: Countv Business P3Unu~ Annual (1991.19<)6); L'S. Depanment of Lmm. Bureau oflheCensus
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"1
0 Table 1-12: Total Yearly Payroll Per Employee for the Grocery Industry
(SIC Code #541)
1993 1994 1995 1996
Imperial 517,222 515,749 515,830 515,717
Los Angeles 520,860 521,231 521,871 521.729
Orange 521,783 522,458 522,612 521.948
Riverside 521,873 522,357 523,307 522,410
San Bernardino 522.315 521,995 521,609 522.323
5an Diego 520,201 520,443 520,80 I 520,175
Ventura 521,890 522,999 523,424 520,429
Southern CA Region 521,096 521,483 521,905 521,508
CA State 520,996 521,495 521,923 521,154
All figures adjusted to 1999 dollars using the CPI-W index for the Los Angdes-Riverside-Orange
County area (US Bureau of Labor Statistics).
o
Table 1-13: Total Yearl}' Payroll Per Employee for all
Industries in California
Area 1993 1994 1995 1996
Statewide 530,120 530,669 531.232' 532.376
Source: County Business Pattems Annual (1993-1996): US
Depanment of Labor. Bureau of the Census.
. Payroll includes. all forms of compensation: salaries, wages,
reported tips, commissions. bonuses etc...
All figures adjusted to 1999 dollars using the CPI-W index for the Los
Angdes-Riverside-Orangc County area (US Bureau of Labor
Statistics).
- Excludes most government employees. railroad employees, and sclf-
emploved oersons
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In 1996, the grocery industry in southern California paid wages that were 65.3% of the statewide
average. That comparison should be treated with some caution, as the County Business Patterns
data shown in Tables 1-11 through 1-13 do not distinguish between full and part-time workers.
To the extent that some grocery employees work part-time, average annual full-time wages will
be higher than what is shown in Table 1-12. That comparison understates the importance of the
major chains in the southern California economy. Of the approximately 128,000 southern
23
California grocery employees, about 80,000 arc unionized. Those union members, employed by (It
the major grocery chains (Albertsons, Hughes, Lucky, Ralphs, Smiths, Stater Bros., and Vons),
earn substantially higher wages than the non-unionized grocery employees. Drawing on
information from the southern California employers, we show (in Chapter 2) that the average
grocery employee at a major southern California grocery chain earns S32,385 - virtually identical
to average annual pay for all of California.
Another way to get insight into the importance of the grocery industry is' to compare it to more
highly visible sectors. Here we compare the grocery business to construction and tourism,
because both arc commonly associated with the strength of the southern California economy. In
Table 1-14, we show employment in construction jobs in southern California counties, while per
employee annual wages for the construction industry arc shown in Table 1-15.
Table 1-14: Total Yearly Employment for the Construction Industr)'
(SIC Code # 15)
Area 1993 1994 1995 1996
Imperial 1,552 1,642 1,342 1,350
Los Angeles 101,359 104,380 113,883 111,713 0
Orange 54,154 54,512 56,226 56,652
Riverside 23,428 21,478 23,435 25,280
San Bernardino 21,806 21,733 22,156 23.729
San Diego 40,905 42,000 45,098 48,457
Ventura 10,507 10,586 11,344 11,426
Southern CA Region 253,71 i 256,331 273,484 278,607
CA State 475,509 480,078 495,037 513,401
Source: County Business Pallt'llls Annual (I99J-19961: CS Department uf Labm. Hurcau ofthc ('CnsllS.
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24
o
Table 1-15; Total Yearly Payroll Per'Emplo)'cc for the Construction Industry
(SIC Code # 15)
Area 1993 1994 1995 1996
Imperial 519,878 519,767 523,079 520,595
Los Angeles 531,727 533,425 532,648 533,578
Orange 531,697 532.346 531,690 533,598
Riverside 524,947 528,194 528,255 529,349
San Bernardino 527,190 529,115 528,685 529,012
San Diego 529,973 530,237 530,164 530,640
V cntura 528,085 529,209 528,902 529,527
Southern CARegion 530,199 531,608 531,142 532,069
CA State 531,501 532,50 I 533.113 533,750
Source: County Business Patterns Annual (1993-1996); US Depanmcnt of Lahor. Bureau of the Census.
. Payroll includes all ronns of compensation: salaries, wages. reponed tips. commissions, bonuses etc...
All figures adjusted to 1999 dollars using the CPI.W index for the Los Angeles-Rivcrsidc-Orangc
County area (US Bureau of Labor Statistics).
o
Statewide and in southern California, grocery employment is approximately half as large as
construction employment. Construction pays higher wages - based on the data shown in Tables
1-12 and 1-15, the average per employee wage in grocery is about two-thirds what is paid in
construction. But again if attention is limited to the 80,000 employees of major southern
California chains, grocery employees earn essentially the same annual wage as construction
workers, on average.
Few doubt that construction is vitally important to the southern California cconomy, and many
recognize the role that construction jobs play in providing good wages and economic opportunity
to persons with entry-level skills. Grocel)' employment selves a similarly important role. In
southern California, the major grocery chains pay wages comparable to that earned in
construction, and their 80,000 members in the region number about one-third the region's total
construction employment.
Tables 1-16 and 1-17 show, respectively, employment and per employee annual wages in tourism,
which we define as hotels and motels (SIC 7010), racing and track operations (SIC 7948),
amusement parks (SIC 7996), and miscellaneous amusement and recreation (SIC 7990).
Employment and wages arc substantially higher in the grocery industry than in tourism.
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Table 1-16: Total Yearly Employment for the Tourism Industry
(SIC Codes: # 7010, # 7948, # 7990, # 7996)
Area 1993 1994 1995 1996
Imperial 493 559 519 481
Los Angeles 74,188 71,856 72,390 73,926
Orange n/a n/a n/a n/a
Riverside n/a 16,133 n/a 17,914
San Bernardino n/a n/a n/a 8,168
San Diego n/a n/a n/a 40,002
Ventura 4,241 n/a n/a n/a
Statewide 316.122 317,388 329,918 341.3 70
Source: County BusIness Patterns Annual ( 199)-1996); US Department of Labor, Bureau of the
Census.
TourISm Includes the Following lndustries: Hotel and Y10lel (SIC:; 7010), Racing and Track
Operations (SIC # 7948). N1iscellaneous Amusement and Recreation (SIC # 7990). and
Amusement Park ISIC # 7996).
ct
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o
Table 1-17: Total Yearly PayroU Per EmpIo)'cc for the Tourism Industry
(SIC Codes: # 7010, # 7948, # 7990, # 7996)
Area 1993 ,.. 1994 1995 1996
Imperial S8,815 S8,41O S8,716 S9,122
Los Angeles S16,289 S17,171 S 16.363 S16,720
Orange n/a n/a n/a n/a
Riverside n/a S15,189 n/a S16,184
San Bernardino n/a ilia n/a SII,240
San Diego n/a n/a n/a S 16,280
Ventura SI2,283 n/a n/a n/a
Statewide S15,680 S15,912 S 15,663 S16.267
rourism Includes the Following Industries: Hotel and Motel (SIC # 7010), Racing and Track
Operations (SIC # 7948), Miscellaneous Amusement and Recreation (SIC # 7990), and
Amusement Park (SIC # 7996)
Source: County Business Patterns Annual (1993-1996): US Department of Lahor, Bureau of
he Census.
. Payroll includes all forms of compensation: salaries, wages, reponed tips, commissions,
bonu!'.cs etc.
All figures adjusted to 1999 dollars using the CPI.W index for the Los Angeles-Riverside-
OranfJ'c Count'" area (US Bureau of Labor Statistics).
o
Because many of the categories of tourism employment do not report data at the county level, We
isolate employment and wages in the hotel/motel sector in Tables 1-18 and 1-19. That more
specific comparison with the grocery sector yields the same conclusions - the grocery industry
employs more persons, and at higher wages.
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27
Table 1-18: Total Yearly Employment for the Hotel and Motel Industry
(SIC Code # 7010)
Area 1993 1994 1995 1996
Imperial 382 418 408 371
Los Angeles 39,916 36,682 37,248 36,617
Orange 18,418 17,618 17,354 18,571
Riverside 10,083 8,254 11,191 8,877
San Bernardino 2,855 2,790 2,811 3,238
San Diego 22,383 22,289 22,616 22,965
Ventura 2,225 2,394 2,036 2,006
Southern CA Region 96,262 90,445 93,664 92,645
Statewide 170.467 163,694 170,032 168,580
Slmn.:e: County Business Patterns Annual (1993-1996): CS Depanment of labor. Bureau of the Census
f)
.
Table 1-19: Total Yearly Payroll Per Emplo)'ec for the Hotel and
Motellndl1str)'
(SIC Code # 7010)
Area 1993 1994 1995 1996
Imperial S8,603 S8,726 S8,62 I S9,228
Los Angeles S15,870 S16,758 S17,011 S 18,527
Orange S15,197 S15,432 S 15,246 S 16,278
Riverside S 13,424 S14,218 S14,119 S17,569
San Bernardino S9,122 S9,825 S9,729 . S9,184
San Diego S 15,698 S 15,553 S 15,424 S16,470
Ventura Sl3,l27 S13,381 SII,133 S 12,830
Southern CA Region S15,152 S15,63l S 15,572 S 16,987
Statewide SI5,364 S15,829 S15,865 S17,021
Source: County Business Patterns Annual (1993.1996); US Department of Labor.
Bureau of the Census.
* Payroll indudes all ronns of compensation: salaries, wages, reported tips,
commissions, bonuses etc.
All figures adjusted to 1999 dollars using the CPI-W index for the Los Angeles-
Riversidc-OranlJe County area (US Bureau of Labor Statistics\.
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'1
o
E. WHAT THIS MEANS FOR ORANGE COUNTY
Table 1-20 lists the big-box discount retail outlets in Orange County. The locations of Orange
County discount centers arc also shown on Map I-I. Target has the most discount retail outlets in
the county, with fifteen stores, followed by K-Mart, which has nine Orange County locations. K-
Mart also has three K-Mart Super Centers in the county. Wal-Mart's presence in Orange County
is exceptionally new - half of the Wal-Mart discount centers listed in Table 1-20 were built in
1997 or later.
Table 1-20: Bill Box Retailers in Oranl'e Countv
Costco
17900 Newhope St Fountain Valley 92708
900 S Harbor Blvd Fullerton 92832
11000 Garden Grove Blvd Garden Grove 92843
115 Technology Dr Irvine 92618
27972 Cabot Rd Laguna Nigucl 92677
2655 EI Camino Real Tustin 92782
22633 Savi Ranch Pkwy Yorba Linda 92886
Kmart
0 10870 Katella Ave Anaheim 92804-6116
2222 E Lincoln Anaheim 92806-4107
5885 Lincoln Ave Buena Park 90620-3461
2200 Harbor Blvd Costa Mesa 92627-2501
16111 Harbor Blvd Fountain Valley 92708-1305
19101 Magnolia Huntinl,>'\on Beach 92646-2233
1855 N Tustin Orange 92865-4604
2505 EI Camino Real Tustin 92782-8920
15440 Beach Blvd Westminster 92683-6237
Kmart Super Centers
26501 Aliso Creek Rd Aliso Viejo 92656-2882
1095 N Pullman Anaheim 92808-2516
1000 W Imperial Hwy La Habra 90631-690 I
SAM'S Clubs
17099 Brookhurst Fountain Valley 92708
629 S Placentia Ave Fullerton 92831
16555 Yon Karman Ave Irvine 92606
12540 Beach Blvd Stanton 90680
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29
<)
Table 1-20 (cont.):
Bi2-Box Retailers in Oran2e County
Target
26935 La Paz Rd
1881 W Lincoln Ave
8148 E Santa Ana Canyon Rd
6835 Katella Ave
2920 Yorba Linda Blvd
13831 Brookhurst
12100 Harbor Blvd
9882 Adams Ave
3750 Barranca Pkwy
1000 E Imperial Hwy
24500 Alicia Pkwy
2191 N Tustin
3300 S Bristol
1330 E 17th
16400 Beach Blvd
Wal-Mart
440 N Euclid St
2595 E Imperial Hwy
26502 Towne Centre Dr
27470 Alicia Pkwy
2300 N Tustin St
3600 W Mcfadden Ave
13331 Beach Blvd & I 22
Aliso Viejo
Anaheim
Anaheim
Cypress
Fullerton
Garden Grove
Garden Grove
Huntington Beach
Irvine
La Habra
Mission Viejo
Orange
Santa Ana
Santa Ana
Westminster
Anaheim
Brea
Foothill Ranch
Laguna Niguel
Orange
Santa Ana
Westminster.
30
92656
92801
92808
90630
92831
92843
92840
92646
92606
90631
92691
92865
92704
92701
92683
92801
92821
92610
92677
92865
92703
92683
o
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l
o
Ma 1-1
Big Box Retail in Orange County -
By City
O"~[" ..FhllcltC'1l1*
~1.Ja - ~Ul\........ '~, -
....--.-. "
Sl:lr1l\lf1.. I "'*
Cvpi'e;,", '*
"-"...:;;.* *"-~n.h<irn "'Orange
Gardetl Gl\lVt-_...._. ''''''......_ ....* .JI{
..* .
../ . '* *_--Tlmm
"
SantA ;c\n11
*-M..._.Jrv~.,(: /:.
'*
,,/
.'
,
HllIltingtO<l Be,1ch
o
C(l'Sra ,Mesa AU,() Vit,;,)'
/'*
/'
Laguna Nigucl/
c:=J Orange County
* 1 Big Box Retailer
* 2 Big Box Rctailcl's
* 3 or ~'lore Big Box Retailers
t'J
\V
1.1
o
7
14 Mile s
s
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31
As We mentioned before, the economic concern is not big-box discount retail per se, but the trend 0
for discount stOreS to include full service grocery sales. Discount retail pays considerably less
than the major grocery chains. The policy issue is thus that, if supercenrer grocery sales will
crowd out sales in grocery chains, some otherwise well paying grocery jobs will become lower
paying jobs.
The growth of low wage jobs has become a source of concern in Orange County. The Orange
Counry Business Council, drawing on data from the U.S. Bureau of Economic Analysis, has
shown that Orange Counry's per capita income growth from 1994 through 1996 was lower than
competing high technolol,'Y regions such as the Silicon Valley, Seattle, Minneapolis/St. Paul,
Austin, and San Diego. Per capita income growth in Orange County was also below both state
and national averages during that time period. The Business Council has estimated that the
majoflry of Orange County job growth from 1989 through 1997 was in relatively low paying
SeCtOrs - for example, during those nine years, the county's service employment increased by
58% while manufacturing jobs in the county fell by 22%.
Against that backdrop, it becomes important to encourage job I,'fowth in sectors that pay well -
especially those sectOrs, like the I,'focery industry, that offer a living wage to persons with entry-
level skills. The emergence of supercenters, which pay wages typical of the low-paying discount
retail sectOr, threatens to convert many high wage jobs into low wage jobs. Because that fact is so
central to the policy concerns in this area, we focus explicitly on the labor market impacts of
supercenrers in the next chapter.
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'I
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Chapter 2: Job and Wage Impacts
In this chapter, we examine the labor market impacts of the entry of discount retailers into the
grocery industry in southern California. Because Wal-Mart supercenters arc currently the most
vigorous potential competitor to southern California grocery chains, we focus on that possibility.
But the arguments developed here arc general, and apply to any caSe where a new entrant in a
market dramatically lowers labor costs.
Using data on current wages and benefits, we calculate that the direct impacr on workers in
southern California would likely fall in the range of about 5500 million to S 1.4 billion per year in
lower pay, depending on the big box food sales market share. Using the Southern California
Association of Governments estimates of how these lowered wages would impact the regional
economy, the total regional drop in spending ranges from about S I billion to OVer 52.8 billion per
year. The numbers will rise the larger the market share of big box grocers, and could well top
even these figures over time.
o
The discussion below proceeds in four steps. Firsr, we discuss the differences in pay and benefits
across the discount retail and grocery seClOrs, as those are vital for understanding the possibility that
high wage jobs will be converted into low-wage jobs. Second, we describe what happened in
Canada when a similar low-labor cost competitor entered the grocery business. Third, We estimate
the likely impact that Wal-Mart will have On the grocery industry in southern California. Fourth, we
examine the possible labor market impacts of competition from Wal-Mart, focusing on employment
impacts, downward pressure on wages, and the implications for employee health benefits.
A. DIFFERENCES IN EMPLOYMENT & WAGES ACROSS DISCOUNT
RET AIL & THE GROCERY INDUSTRY
Tables 2-1 through 2-4 show employment and per employee annual wages for the grocery (SIC
code 541) and general merchandise retail (SIC code 53) seClOrs for 1993 through 1996.2 All wage
data arc expressed in 1999 dollars. For the seven county southern California region, the per
employee annual wage in the grocery industry was 521,508 in 1996; the per employee annual
wage in general merchandise retail in 1996 was 514,432. In southern California, general
merchandise employees earn, on average, about two-thirds the salary of grocery employees. That
proportion is roughly constant for the four year rime period shown in Tablcs 2-1 through 2_4:'
~ According to the definition of the Standard Industrial Classification (SIC) code system, general merchandise retail
includes stores that sell a number of lines of merchandise. such as dry goods, apparel and accessories. furniture. small
wares, hardware, and food.
o
.1 The per employee wage data in Tables 2-2 and 2-4 allow comparisons between the broad categories of general
merchandise retail and grocery. The question of competition between Wal-Mart and major southern California 1:,'TOccry
chains is better infonned by specific comparisons. shown later in this chapter, for the major grocery chains and Wal-
Man. for example, the wage data in Table 2-2 likely understate per employee wages among the employees at major
grocery chains, who are represented by union contracts. Approximately 80,000 southern California h'Tocery employees,
out ofa total employment ofapproximatcly 128,000 for SIC 541, are union members, All employees of the major
southern California grocery chains are union members. Also note that, because County Business Panems does not
33
Table 2.1: Total Yearly Employment for the Grocery Industry
(SIC Code # 541)
Area 1993 1994 1995 1996
Imperial 1.512 759 1.586 1,377
Los Angeles 64,655 61,375 61,341 60,513
Orange 20,532 19,136 21,056 21,075
Riverside 10,057 9,358 9.356 9,726
San Bernardino 10,338 10,371 10,778 10,633
San Diego 19,540 18,911 18,538 19,739
Ventura 5,203 4,840 4,899 5,408
Southern CA Region 131,837 124,750 127,554 128,471
CA State 247,117 238,913 241.180 250,206
Source: County BUSiness Patterns Annual (1993-1996); CS Department of Labor. Bureau of the Census.
(>>
Table 2.2: Total Yearly PayroU Per Employee for the GroceI')' Industry
(SIC Code #541)
, , Area " ..' 1993 1994 1995 1996
Imperial 517,222 515,749 515,830 515,717
Los Angeles 520,860 521,231 521,871 521,729
Orange 521,783 522,458 522,612 521,948
Riverside 521,873 522.357 523,307 522,410
San Bernardino S22,315 521.995 521,609 522,323
San Diego 520,20 I 520,443 520,801 520,175
Ventura 521,890 522,999 523,424 $20,429
Southern CA Region 521,096 521,483 521,905 521,508
CA State 520,996 521,495 521,923 521,154
:-:ote: . Payroll includes all fonns of compensation: salaries. wages, reponed tips. conunissions. bonuses etc.
Clerical Workers (CPI-W) from tile US Bureau of Labor Statistics (BLS)(1982-R4 '" lOll).
Real rlollars calculated using the CPl index for the Los Angeles-Riverside--Orange County area
Source' COllntv Business Patterns Annual (1993-1996): CS Depanmenl of Labor. Bureau oflhe rensm
o
rcp~Jrt infonnation on hours worked, the data in Tables 2-1 through 2-4 combine part-time and full-time workers.
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34
o
Table 2.3: Total Yearly Employment for the General Merchandise
Ind ustry
(SIC Code # 53)
Area 1993 1994 1995 1996
Imperial 1,629 1,505 1,451 1,264
Los Angeles 57,738 51,873 56,264 55,797
Orange 21,031 19,101 21,041 19,797
Riverside 10,843 10,203 10,726 10,236
San Bernardino 11,991 12,018 12,903 12,976
San Diego 18,388 17,662 18,953 18,612
Ventura 5,190 5,340 5,484 5,221
Southern CA Region 126,810 117,702 126,822 123,903
Statewide 220,198 209,937 222,399 216,454
Source: County Business Patterns Annual (1993-1996); L"S Department of Lahor. Bureau of the Census
0 Table 2.4: Total Yearly Payroll Per Employee for the General
Merchandise Industry
(SIC Cod~ #53)
Area , 1993 1994 1995 1996
Imperial 513,002 513,725 513,637 S15,259
Los Angeles 513,998 515,483 ,514,404 514,290
Orange 514,023 515,724 514,300 514.753
Riverside 512,520 513.567 513.595 513,745
San Bernardino 513,537 514,230 514,055 514,300
San Diego 513,783 514,784 514,436 514,983
Ventura 512,761 514,239 513,630 514,235
Southern CA Region 513,737 515,044 514,245 514,432
Statewide 514,284 515,119 514,579 514,609
Source:: County Business Patterns Annual (1993-1996); L.:S Depanment of Labor. Bureau of the Census
. Payroll includes all ronns of compensation: salaries. wages. reportell tips. commissions, bonuses etc.
All figures adjusted for inflation using the June 1999 Consumer Price Index fur Crban Wage Earners and
Clerical Workers (CPI.W) from the L"S Bureau of Lahor Statistics (BLS) (19R2-R4 '=' 100)
Real dollars calculated us in I! the CPI imlcx for the Los Anl!e1es-Riverside-Oranl!c County area
o
35
In Tables 2-5 and 2-6, we present employment and annual per employee wages in the
variety retail sector (SIC code 533). The Securities and Exchange Commission classifies
Wal-Mart as being in SIC code 533, which is a subset of general merchandise retail (SIC
code 53).. In 1996, per employee annual pay in variety retail was S 15,733 in Orange
County and SI4,I47 in Los Angeles County. Overall, the wage differential between
groceries and variety retail is similar to the differential between grocery employment and
the broader general merchandise retail category. .
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Table 2.5: Total Yearly Employment for tbe Variety Store
Industry
(SIC # 533)
Area 1993 1994 1995 1996
Imperial 104 107 99 n/a
Los Angeles 2,342 2,140 1,937 1,768
Orange 231 164 151 134
Riverside 158 71 n/a n/a
San Bernardino 239 136 102 84
San Diego 561 444 304 203 0
Ventura 62 51 58 53
Southern CA 3,697 3,113 n/a n/a
Region
Statewide 6,681 5,186 4,486 3,735
Source: County Business Patlc:rns Annual (1993-1996); L'S f>cpanment of Labor. Rureau of the
Censlls
.. Variety retail is defined as "establishmems primarily engaged in the retail sale of a variety of merchandise in the
low and popular price ranges," We caution that the low employment figures shown in Table 2~5 suggest that Wal.
Mart and other major discount retailers may not be reflected in the variety retail category, regardless ofSEC
classification. Comoarison to the wages for general merchandise rCLail shown in Table 2-4 may be more appropriate.
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36
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Table 2.6: Total Yearly Payroll Per Employee for the Variety Store Industry
(SIC # 533)
Area 1993 1994 1995 J996
Imperial S10,228 S9.234 S7,778 n/a
Los Angeles S 12,484 S 12,276 $13,312 S14,147
Orange S12,143 S13,137 S 13.573 S 15,733
Riverside S 10,355 S7,811 n/a n/a
San Bernardino SII,008 SIO,166 SII,491 SI1.l43
San Diego S10,661 S I 0,435 S 10,853 S10,262
Ventura S 11,862 Sll,785 S 10.599 S10,762
Southern CA Region Sll,926 SIl,752 n/a n/a
Statewide SII,507 Sll,414 $11,831 $ 12,399
. 'Ole: Source: COUnlY Business Pallerns Annual (1993-1996); CS DC[lanmcnt of Labor. Bureau oflhe Census
. Payroll includes all forms of compensation: salaries. wages. rcportc'tl tips. commissions, bonuses etc.
All figures adiuslctl to 1999 dollan usinc the CPI index for the Los An .e1es-Riverside.Oranl!c Clluntv area.
o
Wages vary substantially across the general merchandise and food retail sectors. Any discount
retailer, if it enters the food sector in southern California and then pays its grocelJ' employees a
wage that is comparable to what it pays its discollnt retail employees, will. in effect, be
converting high wage jobs into low-wage jobs. As an example, we compare grocery wages and
benefits to those offered by Wal-Mart, because Wal-Mart is the discount retail chain that is most
aggressively entering the retail food business.
Because Wal-Mart's hourly employees are not covered by a collective bargaining agreement
(unlike southern California grocery employees), it was difficult to obtain wage information for
Wal-Mart. What we do know suggests that hourly employees at Wal-Mart earn a starting wage of
approximately S6.00 to S7.00 per hour. Newspaper and consulting reports suggest that Wal-Mart
hourly employees earned S5.00 per hour in 1991 (Stod.10n Record, 1991) and S6.00 per hour in
the San Francisco Bay Area more recently than 1995 (Golman, 1997). For the background
research for this study, a Wal-Mart discount center in Orange County reported that starting hourly
employees earn S7.00 per hour.5 Telephone conversations with Wal-Mart Supercenter managers
in other states revealed that hourly employees at stores in Ohio and Missouri earned starting
wages ofapproximately S6.00 per hour.6 The manager of an Ohio Wal-Mart Supercenter
contacted for this study estimated that salaried employees in the bakery and meat departments
received only a small wage premium over other store employees - earning SO.25 more per hour.7
5 Telephone interview with personnel manager, Wal-Man. Foothill Ranch. California discount center, July 22. 1999.
" This infoffil3tion is from telephone interviews with managers ofWal-Man Supcrccntcrs in Alliance. Ohio and
Springfield Missouri on July 8. 1999.
o
Telephone interview. manager of Springfield. Missouri Wal-Mart Supen.:enter. July 8. 1999.
37
These data arc not extensive, but the picture is consistent. Wal-Mart's Supercenter employees A
appear to be paid wages that are similar to wages earned by Wal-Mart's discount store employees, V
with hourly wages starting in the range of56.00 to 57.00 per hour.
The pay scales of grocery workers at the major chains in southern California arc listed in Table 2-
7. Most hourly employees arc divided into one of three broad categories - general merchandise
clerks, food clerks, and meat cutters. Both the meat cutters and the food clerks earn starting
wages that arc substantially higher than the 56.00 to 57.00 per hour starting salary at
Supercenters.
Effective October 4, 1999, food clerks at the major grocery chains will earn a starting wage of
59.78 per hour, while beginning meat cutters will earn 511.43 per hour. (The Food Employers
Council, the collective bargaining unit for southern California grocery chains, estimates that as of
July, 1999, half of all hourly employees in southern California grocery chains arc in the meat
cutter and food clerk categories. (Bailey, 1999))
For the grocery industry in southern California, only general merchandise clerks earn a wage that
is similar to Wal-Mart wages; general merchandise clerks start at 57.07 per hour. General
merchandise clerks ar~ a special category designed to allow grocery stores to compete in non-
perishable items with other, lower paying, retail outlets. General merchandise clerks do not
handle food items. The general merchandise pay scale at the major chains is, in some ways,
suggestive of what happens when grocery stores must compete with competitors who have lower
labor costs.
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0 {,
Hourly Wage Structure oftbe Major Groeer~' Cbains in Soutbern California .
Table 2-7:
10/4/99 10/2/00 10/1101 10/7/02
MeatCutters
Head Meat Cutter S18.98 S19.38 S19.78 S20.18
I Journeyman Meat Cutter S17.98 S 18.38 S18.78 S19.18
Apprentices: 4th six months S15.82 S15.82 S15.82 S15.82
3rd six months S14.06 S14.06 S14.06 S14.06
2nd six months S12.31 S12.31 S12.31 S12.31
1st six months SI1.43 SI1.43 SI1.43 S 11.43
Food Clerks
Department Head S17.70 S18.10 S18.50 S18.90
Experienced Clerk S16.70 S17.10 S17.50 S17.90
Apprentices: 4th 26 weeks S14.67 S14.67 S14.67 S14.67
3rd 26 weeks S 13.04 513.04 513.04 S 13.04
2nd 26 weeks SI1.41 S 11.41 S 11.41 SI1.41
1st 26 weeks S9.78 S9.78 S9.78 S9.78
General Merebandise Clerks
Department Head S 12.3 7 S12.67 S12.97 S13.27
Experienced Clerk S 11.27 SI1.57 SI1.87 S12.17
Apprentices: 4th 26 weeks S9.78 S9.78 59.78 S9.78
3rd 26 weeks S8.70 S8.70 S8.70 S8.70
C 2nd 26 weeks S7.61 S7.61 S7.70 S7.85
1st 26 weeks S7.07 S7.25 S7.40 S7.55
. Source: Food Employers' Council. J999
The gap in starting hourly pay understates the full wage differential that exists between nearly all
current grocery workers and Wal-Mart employees. The current prevailing wage structure increases
rather rapidly - food clerks, for example, will earn 33% more than their starting salary after One year
of employment. It also guarantees part-time employees a minimum of twenty hours of work per
week, and in October, 1999 that part-time guarantee rises to twenty-four hours per week. Part-time
members currently usually work considerably more than the minimum guarantee - as of July of
1999, part time employces at the major grocery chains averaged 35.5 hours of work per week
(Bailey, 1999).
For those reasons, and because these employees receive an amactive benefits package (summarized
later in this chapter), current grocery employees often pursue a career in the grocery industry. What
we know about Wal-Mart suggests that, as compared with current practice in the southern California
grocery industry, the Wal-Mart pay scale increases less rapidly with experience, Wal-Mart is a
heavier user of part-time work, part-time employees likely work fewer hours per week, and the
typical Wal-Mart employee stays with the company for a shorter time. The net effect of both the
rapid increase in wages with experience and the longer average job tenure for current southern
California grocery employees implies that the wage differential between Wal-Mart and southern
California employees will be larger than what is suggested by Table 2-7.
o
39
Yet hourly wages are only part of the story. The current major grocery chain labor contract offers ~
full health insurance coverage for all southern California grocery employees (full and part-time)
and their dependents, with no co-payments or deductibles. Health plan costs are paid by the
employer. Wal-Mart, in comparison, requires that employees share the cost of health insurance
premiums. Insurance coverage is only available to full time employees. Wal-Mart health plans
have deductibles that range from 5250 to 51000, and employees must pay the full premium for
dependents. A summary of Wal-Mart and the current southern California grocery benefit plans is
shown in Table 2-8.
o
o
40
o
o
o
Annual
Paid
Holidays:
Vacations:
Table 2-8: Comparative Benefit Analysis
Chain Grocer' Stores
nine paid holidays per year
One week after I year. Two weeks after 2
years. Three weeks after 5 years. Four weeks
after 15 years. Five weeks after 20 years.
Sick Leave: Accrues at 4 hours/month, or 6 days/year.
Medical
Insurance:
Annual eash buyout for unused sick leave.
Several plans are offered. Most extensive
coverage is the PPO Plan. Cnder PPO plan,
employer pays full premium for employee and
all dependents. Ko deductible. Most
procedures reimbursed at 90 - 100%: S 10
doctor's office visits.
Maximum out-of-pocket expense is S500.
Wal-Mart
six paid holidays per year
One week after I year. 'Two weeks after 2 years.
Three weeks after 7 years.
Accrues at .023077 hours for each hour worked (approx.
4 hours per month) or 6 days per year, to a maximum of
192 hours (24 days). Ko cash buyout for accrued sick
leave in excess of maximum. 50% of accrued sick leave
may be used as personal time off from work.
Employer paid with employec sharing premium. Four
deductible options are offered ranging from
S250 to S 1,000 with varying employee premium share.
Employee pan of premium ranges from S5.50 to S18.50
bi-weekly depending on deductible.
Employee pays full premium for any dependents.
Plan includes employee co-insurance.
Dental Employer pays full premium for employee and Employee shares in premium payment (S2.50 bi-
Insurance: all dependents. Ko deductible and weekly) and pays full premium for dependents.
Pension
Pbn:
Other:
no co.tnsurancc.
Provides a defined benefit retirement plan.
Employer's contribution is SI.225 per hour.
Ko-cost vision insurance coverage.
Retiree medical insurance coverage.
Plan includes annual deductible and co-insurance.
Offers an employee stock ownership plan.
Company pays J 5% of employee company stock
purchases to an annual maximum stock purchase of
S I ,800. (approximately SO.135 pcr hour)
Offers employee-paid life insurance.
Provides profit-sharing plan.
Provides employee, 10% discount card on Wal-Mart
purchases. Offers reduced-cost medical plan for eligible
retirees.
Sources; 1998 Wal-Mart Associate Benefit Book. Summary Plan Description. Food Employers' Council (Bailey. 1999).
41
Many Wal-Mart employees are not covered by any of the company's health benefit plans. In ~
1995,38% of Wal-Mart employees were covered by one of the company's health plans; another
35% were eligible but did not elect coverage, likely because of the employee cost-sharing and
large deductibles; the remaining 27% were not eligible for health benefits (Source: IRS 5500
forms. )
By comparison, in June of 1999, the health plans covered 77,540 employees at the major southern
California grocery stores and 103,388 of their dependents at no out-of-pocket cost to the employee
(Bailey, 1999).
The contribution of benefits (health care included) to prevailing labor costs is shown in Chart 2-1.
Taking account of job classification and experience, the average hourly wage at the major chains
in southern California is SI2.82, as of July, 1999, Employer contributions to health benefit plans
arc the equivalent of another S2.36 per hour. Pension and other employer trust contributions add
another SO.32 to labor costs. Premium pay, including overtime, Sunday, and holiday premium
pay, is the equivalent ofSI.74 per hour. Vacation and unused sick leave come to SI.OI per hour.
Totaling the value of employee wages and benefits, a unionized grocery employee earns an
equivalent ofS18.25 per hour, which translates to an annual average wage ofS37,960. Excluding
benefit payments and focusing only on wages paid to employees, the average grocery employee at
a major chain store carns S 15.57 per hour, or S32,386 on an annual basis.
Chart 2-1: Components of Hourly Wage
,
,
I
,
114.00
111,00
110,00
I,
I:
Ii
I
"
"
18.00
16.00
,
I:,
10,00
I
I
I:
II
hourly pay
vacalion and
unused sick
leave pJY
health
benefits
olher trust
contributions
premium pay
I,
"
!:'Jcomponents of hourly wage of518.25 -I
42
II
I
I
I
I
,
,
o
II
I
I
o
o
o
o
"ct:!"
An informative comparison with Wal-Mart wages and benefits can be made with the infornlation
available. Assuming Wal-Mart hourly employees earn an average wage ofS7.50 per hour, and
assuming that Wal-Mart employees earn premium, vacation, and unused sick leave pay in the same
proportion to base wages that most southern California grocery employees now earn (likely an
overestimate, given that Wal-Mart offers fewer vacation days than the current south em California
contract), total Wal-Mart average hourly cash wage would be S9.11 per hour.
Given that only 38% ofWal-Mart employees are covered by health care, compared with virtually
all employees at the major chains in our region, the ratio of health care costs to base wages was
scaled down by a factor of 0.38 to account for the lower share of employees covered by Wal-Mart
health plans' This resulted in an estimated cost ofWal-Mart health benefits of SO. 56 per hour.
Overall, this exercise suggests that Wal-Mart employees might earn the equivalent ofS9.63 per
hour, or S20,038 on a full-time, annual basis. Given Wal-Mart's heavy use of part-time labor,
converting the wage to a full-time basis is likely an overestimate of the value of wages and benefits
available to the typical Wal-Mart employee. Average hourly and the full-time annual equivalent
wages are shown for grocery workers and Wal-Mart workers, under different assumptions about
Wal-Mart wages, in Table 2-9.
~ Chart 2-1 shows that health benefits provided by the major h,'Tocery chains are. on an hourly basis, the equivalent of
18.4% of base hourly pay. That percentage was multiplied by 0.38. the fraction of \Val-Man employees actually
covered, to obtain an estimate ofWal-Man benefit payments as a fraction of hourly pay. The resulting estimate is
that Wal-Mart health benefits are the equivalent of 7% of base hourly pay. This is likely an overcstimaw. The Wal-
Mart benefit plan requires an employee cost share, has high deductibles compared to the union plan, and does not
cover dependents. All these factors imply that the Wal-Mart plan wit! be less expensive, and less valuable, on a per-
covered~cmploycc basis, than that covering the employe~s of the major grocery chains.
43
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44
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o
B: EXAMPLES OF THE LABOR MARKET IMPACT OF WAGE
DIFFERENTIALS - CASES FROM CANADA
Wal-Mart Supercenters are an excepTionally neW phenomenon in the United StateS. Five
years ago, there were only 34 Supercenters nationwide. Supercenters have not likely reached
markeT penerration anywhere in the United States, and to infer what can happen in a market
with a marure presence of Supercenters it is useful to look elsewhere. An excellent example
can be found in Canada.
Loblaws, a Canadian grocery and retail chain, opened Real Canadian Super Stores (RCSS) in
Canada several years ago. RCSS combines food and discount retail under one roof, paying
wages that arc typical of the discount reTail industry, as do SupercenTers in the United States.
RCSS entered the market in Albena in the late 1970s and early 1980s.Safeway has been the
primary unionized supermarket in Alberta for years, and Safeway wages in Albena were
considerably higher than RCSS. By the early 1990s, competition with the lower labor-cost
RCSS began to have a dramatically negative impact on Safeway profits.
Safeway executives estimated that the wage gap between their employees and RCSS workers
was between 58.00 and 512.00 per hour in Canadian dollars. to In 1993, Safeway concluded
it could no longer compete without drastically cutting pay and benefits. Management
presenTed employees with two choices - either Safeway would cut its losses and leave the
Albena market, or cut pay and benefits by the equivalent of S5.00 per hour (Canadian).
Evenrually, the unionized employees agreed to the pay and benefit cuts. Safeway
implemented the pay cuts both by reducing pay and benefits and by buying out the contracts
of 4,000 experienced employees and replacing those workers with persons earning
approximately 56.00 per hour with no benefits. It In 1997, Safeway employees went on strike
in an effort to restore wage and benefit concessions that Were part of the 1993 agreement.
The strike ended without the union regaining the wage and benefit concessions that were part
" .
of the 1993 agreement. -
In 1996, similar competition berween grocery chains with dramatically different labor costs
sparked a labor dispute in Vancouver, British Columbia. RCSS operated with a lower cost
union contract than either of the two primary Vancouvcr chains -- Safeway and Overwaitea
(a Canadian firm).13 Safeway estimated the labor cost differential, including benefits, at
, Andreef (1997): Laghi (1997): Smith (1997).
III The exchange rate for the Canadian dollar varied from a low of 0.7516 US dollars per Canadian dollar in
December of 1993 to a high of 0.8020 US dollars per Canadian dollar in March of 1993. (Exchange rate
information is from the Pacific Exchange Rate Service of the University of British Columbia.
hlln:,'/bla(.'ktusk.cunU11t:~rce.ubc.ca.) Taking the midpoint of that range, this implies that the wage differential, in
1993 U.S. dollars, was between 56.21 and 5932.
" Andreef (1997): Levant (1997): Smith (1997).
" Kent (1997).
13 "The Changing Face of Labor," Grocer Today, September, 1996.
45
S 11.58 (Canadian) per hour. The cost differential greatly reduced Safeway's and
Overwaitea's ability to compete in the Vancouver market, and from 1985 through 1996
RCSS gained nine percentage points in market share in that urban area. Having already
faced similar competition with RCSS in Alberta, Safeway was committed to closing the labor
cost gap before profits turned to staggering losses. After a bitter strike, Vancouver Safeway
employees accepted a new contract that reduced pay and benefits. 14
~
As another example, A&P faced similar competition from low labor-cost competitors in
greater Toronto in the early I 990s. Non-union competitors such as Sobey's had lower labor
costs, as did the "No Frills" warehouse grocery chain operated by Loblaw's. (The "No Frills"
stores were unionized, but under a different contract that allowed lower wages and benefits
compared with what A&P's union contract required.)
A&P felt that it was at a competitive disadvantage and forced a strike to gain contract terms
more comparable to the lower wages paid to the non-union and "No Frills" competitors. The
strike lasted from November, 1993 to February, 1994. The resolution was a compromise that
did not fully satisfy either parry. A&P came out of the strike in a weaker position, and was
less able to renovate, expand, and open new stores than it would have otherwise. The union
wages and benefits were also downgraded as part of the resolution of the labor strife. I;
Supermarket Nell'S stated in June of 1996 that, "Partly because of the residual effect of that
strike, A&P converted 19 of its Ontario stores to Food Basics, a lower-cost format that it
operates under a separate bargaining agreement."'.
The lesson is that major grocery chains will compete, and compete vigorously, for market
share and profit when faced with low-cost competition. That competition takes the form of
both short-term and long-term labor disputes. In the short-run, the Canadian chains (A&P,
Canada Safeway, and Overwaitea) sought immediate wage and benefit concessions onCe
competitors with lower labor costs became clear competitive threats. The short-run
concessions often took the form of buy-outs of more experienced, higher-paid workers
combined with a two-tiered war_e structure that included substantially less valuable pay and
benefit packages for new hires. ' In some instances those buy-outs were combined with
wage and benefit reductions for existing employees. In most of the labor disputes, the chains
involved sought immediate labor cost reductions. For example, in Alberta Safeway appeared
to try to close between forry percent and sixty percent of the labor cost gap with RCSS.
(Recall that the 1993 concessions reduced Safcway labor costs by roughly S5.00 per hour,
approximately forty to sixty percent of the estimated S8.00 to S12.00 per hour gap.) Yet that
estimate ought not be taken as firmly indicative of the type of response that would occur in
o
l-l Canada Safeway Limited, Press Release. July 8, 1996.
l~ "The Changing Face of Labor:' Grocer Today, September, 1996, pp. 13-UL
In As quoted in "The Changing Face or Lahor," Grocer Today, September, 1996, p. 14.
17 "An Open Letter to Safcway Employees," newspaper advertisement placed hy Canada Safcway Limited,
Vancouver SlIn, June 8, 1996; Andreef (1997): Smith (1997),
o
46
o
other markets. Given the dynamics of union bargaining, it is possible that the concessions
observed in Canada were interim steps, and that grocery chains will continue to seck labor
cost reductions until they have parity with low cost competitors.
Labor represents approximately 60% of the controllable costs (exeluding the cost of product)
in the grocery industry, so competition often takes the form of meeting a rival's labor costs.
Safeway argued in British Columbia that parity with RCSS in new hire labor costs was the
only fair solution to the labor dispute. IS A&P converted 19 stores in Ontario to a low-cost
format to take advantage of the lower-cost union contract for such stores. 19 The mediator of
the labor dispute in British Columbia was quoted after the strike as saying, "Safeway and
Overwaitea are legitimately frustrated with the substandard collective agreement in place
between Real Canadian Superstore and UFCW Local 777 and that issue must be
addressed."'o Overall, the experience in Canada suggests that major chains will seck parity
with lower labor cost competitors, if not immediately then certainly in the long run through
mechanisms such as two-tiered contracts that reduce costs for new hires or changes in
collective bargaining agreements.
o
The ability of grocery chains to obtain wage and benefit parity with low cost competitors
hinges on the relative bargaining power of a chain and the union in any particular market.
Yet the evidence suggests that wage and benefit differentials across stores that compete
vigorously with each other will lead to substantial downward wage pressure until those
differentials are elosed. The same will almost certainly be true in southern California ifWal-
Mart Supercenters enter the market; paying lower wages and offering limited benefit plans.
An estimate of the labor market impact ofWal-Mart's entry into the southern California
grocery market is given below.
c. WAGE AND BENEFIT IMPACTS OF W AL-MART SUPERCENTERS
IN SOUTHERN CALIFORNIA
In the rest of this chapter, we derive estimates of the wage and benefit impact of Wal-Mart
supercenters in southern California. Three types of estimates arc developed - a low
estimate, based on uniformly conservative criteria, a medium estimate, and a high estimate.
The low and high estimates provide, respectively, reasonable lower and upper bound
impacts, although the low estimate, designed to be conservative, could quite possibly
understate the full impact of supercenter competition in southern California.
The logic of each estimate follows a two step process. First, We estimate, in Section D
I~ "An Open Letter to Safeway Employees," newspaper advertisement placed by Canada Safeway Limited,
VallcoU\'er SUII, June R, 1996; "The Facts: A Message to Safeway Customers," newspaper advertisement placed
by Canada Safeway Limited. Vancouver Sun, 1996.
1'1 "The Changing Face of Labor," Grocer Toda,v, September, 1996, pp. 13-18.
o
20 ''The ChanhTing Face of Labor," Grocer Toda.v. September, 1996, pp. 13-18.
47
below, the market share that Wal-Mart supercenters can be expected to capture in southern
California. From that, we estimate, in Section E, the impact on wages and benefits both for
Wal-Mart employees and for employees in other chains that will See the need to meet Wal-
Mart's labor C,osts.
o
D. PROJECTED MARKET IMPACT OF W AL-MART SUPERCENTERS IN
SOUTHERN CALIFORNIA
Wal-Mart typically builds stores within one day's drive of its distribution centers21,
suggesting that southern California Supercenters built by the chain will be served by a
southern California distribution center. Wal-Mart currently is seeking approval for a
distribution center in Riverside County. The corporation has looked into sites near the
intersection of Interstate 15 and State Route 60 that can accommodate buildings ranging from
300,000 to OVer I million square feet22 To the best of our knowledge, Wal-Mart has not
stated publicly whether that center will be for food distribution, but the impact on the
southern California grocery businesses, if the new distribution center serves Wal-Mart
Supercenters, can be substantial.
What follows below is a simulation predicated on the assumption that Wal-Mart builds one
distribution center to serve Supercenters in southern California. Whether the currently
planned Wal-Mart distribution center is for groceries is beside the point, as the below
exercise demonstrates what can happen if Wal-Mart decides to bring Supercenters to
southern California at any time in the near future.
o
In 1998, Wal-Mart had twelve distribution centers serving 564 Supercenters - an average of
47 Supercenters per distribution center.23 IfWal-Mart enters southern California, it is quite
reasonable to expect the firm to attempt to achieve a similar scale economy in distribution.
Wal-Mart is unlikely to build a distribution center, open two or three stores, and then
abandon a local market. The current average of 4 7 stores per distribution center is suggestive
of what to expect once Wal-Mart opens a distribution center for groceries in southern
California.
, Yet 47 stores is a lower bound of the number of stores that can be supported by a distribution
center. The economics of grocery retailing allows a much larger number of stores to be
served by a distribution center, depending on the strategy of a particular firm. Furthermore,
Wal-Mart Supercenters arc so new that it is possible that the chain has not achieved their
desired scale economy in food distribution. By comparison, Wal-Mart serves 1,889 discount
stores with 33 non-food distribution centers - an average of 57 stores per distribution
21 Telephone interviey.' with Dr. Kenneth E. Stone of Iowa State University on 29 July 1999.
"
Telephone interview with Shawn Purcell. Riverside Plarming Office, July, 1999.
2.1 Phone interview with Dr. Kenneth E. Stone of Iowa State University on 29 July 1999. (Original Sources of
Data: Combination of various SEe Form lO-K reports and Discount Store ~ews issues.)
o
48
o
o
o
center.24 If Wal-Mart eventually seeks comparable scale in food distribution, this suggests
that eventually an average of 57 Supercenters will be supported by one distribution center.
That number could be higher, but it is unreasonable to believe that Wal-Mart would open a
food distribution center and seck less than their current average of 47 stores per distribution
center.
Overall, we simulate the impact of Wal-Mart on southern California market share by
assuming that a food distribution center will support either 47 or 57 stores. Given Wal-
Mart's desire to place stores within a day's drive of a distribution center, it is likely that
virtually all Supercenters served by a southern California distribution node will be in this
region. Of course, Wal-Mart could build more than one distribution center in southern
California, or could serve more than 57 stores from a single center. The estimates below are
purposefully a conservative estimate of the possible impact ofWal-Mart Supercenters in the
southern California market.
The next step in estimating Wal-Mart's impact is to aSSeSS how much market share can be
expected from 47-57 stores in southern California. Our logic will flow from estimating Wal-
Mart's' market share to the impact of that market share on grocery employment, wages, and
benefits. What follows is an estimate ofWal-Mart Supercenter market share associated with
one distribution center in southern California.
Table 2-10 lists market share and number of stores for major chains in the Los Angeles
urbanized area from 1996 through the first half of 1999.
2J Phone interview with Dr. Kenneth E. Slone ofIowa State University on 29 July 1999. (Original Sources of
Data: Combination of various SEe Fonn lO-K reports and Discount Store ~ews is~ucs.)
49
~
"
Table 2-10: LA Metro Area Ma~ket Share Information
LOS ANGELES 1996 1997 1998 J ul-99
No. of % Mkt No. of % Mkt No. of % Mkt No. of %Mk
Stores Stores Share Stores Shlife Stores Share Stores Share
Ralphs 143 20.53 183 25.86 212 30.89 201 29.21
Vons 118 16.74 117 19.39 116 18.82 119 20.07
Lucl.:y Stores 82 14.25 84 13.89 86 13.87 86 13.99
Albertson's 23 3.25 34 4.74 35 5.02 36 5.19
Smart & Final 57 5.79 55 2.97 53 2.76 54 2.92
Superior Super 8 1.93 8 2.14
Stater Bros 13 1.87 13 1.87
Hughes 29 4.70 30 5.84
Food 4 Less 40 6.43
Source: Shelby Report (various vears).
Based On the information in Table 2-10, We calculate market share points per store for each
chain, shown in Table 2-11. Market share points per store are also ShO\\l1 in Table 2-11.
Market share per store is remarkably similar across the major chains (Ralphs, Vons, Lucky, 0
and Albertsons.) In 1999. market share per store ranged from 0.144 for Albertsons to 0.169
market share points per store for Vons. For comparison, Table 2-12 gives market shares for
several California urban areas, but the data source used for Table 2-12 does not report the
number of stores, and so it as not possible to calculate market share points per store for other
California urban areas.
o
50
o
Table 2-11: Markel Share Points Per Store
(LOS ANGELES REGION)
Stores
Ralphs
Vons
Lucky Stores
Albertson's
Smart & Final
Superior Super
Stater Bros
Hughes
Food 4 Less
1996
14.4%
14.2%
17.4%
14.1%
10.2%
1998
14.6%
16.2%
16.1%
14.3%
5.2%
24.1%
14.4%
1997
14.1%
16.6%
16.5%
13.9%
5.4%
16.2%
16.1%
19.5%
1999
14.5%
16.9%
16.3%
14.4%
5.4%
26.8%
14.4%
Source: Author,' calculations, based on dara from Shelby Report (various
years)
For comparison, Tables 2-13 lists market shares and number of stores for major chains in
three urban areas with Wal-Mart Supercenters - Atlanta, Dallas, and Fort Worth25 Market
share per store is also listed for each chain in each urban area. Market share per store varies
much more across urban areas than within urban areas. For example, an average (or typical)
store in Dallas can gamer approximately 0.4 market share points, and an average (or rypical)
store in Fort Worth can claim 0.9 market share points - both substantially higher than market
shares per store in Los Angeles. This reflects the smaller size of the Dallas and Fort Worth
urban areas and the fact that those markets are served by fewer stores.
o
2S The comparison MSAs were chosen based on the availability of data for urban areas with a relatively large
number ofWal-Man Superccntcrs. Currently, Supercemers arc predominantly in the South and Midwest.
Many food industry data sources, such as Progressive Grocer, do not gather market share infonnation on Wal-
Mart and other discount retailers. The data in Table 2-13 is from the Shelh.v Report, which does gather market
share data for both grocery stores and discount retailers. but only in a limited number of urban areas. Choosing
urban areas with both Wal-Man Supercenters and Shelhy Rt.'porf data led to the MSA5!isted in Table 2.13.
o
51
~
Table 2-12: Regional Supermarket Market Share Percentages I
Orange Riverside! San San
Company Count)' San Diego Sacramento Francisco Oakland
Bernardino
Ralph's 29 20 19
Vons 18 II 30
Lucky 18 14 23 20 16 34
Albertson's 12 II
Stater Bros 30
Food-4-Less
Oth C crt Groe
PavilJion
Raley's I Bel Air 38
Safeway 42 35
Cala Foods 12
Non Reporting · 13 15 18 11 20 21
All others <10 <10 <10 <10 <10 <10
1 Source: Progressive Grocer 1998 Markel Scope (http://www.amcrieanstores.eom) unless otherwise
noted.
· - estimated .' 0
Importantly, market share per store does not vary much across chains within an urban area;
the variation is much more stark across urban areas. Looking specifically at market shares
per Wal-Mart Supercenter in Atlanta, Dallas, and Fort Worth, Supercenters perfonn slightly
better (on a per store market share basis) than some other chains, but the difference is not
dramatic.
Again, the primary determinant of market sharc per store appears to be the size of the urban
area, and Table 2-13 suggests that Supercenters can be expected to capture market shares on
a per store basis that arc typical of, or at best slightly better than, other chains in the same
city.
o
52
o
o
o
Table 2-13: Market Share Information, Selected Comparison MSAs
ATLANTA,GA 1996 1997 1998 J ul-99 1999
No. of % Mkt No. of % Mkt No. of % Mkt No. of % Mkt mkt share
Stores Stores Share Stores Share Stores Share Stores Share per store
Kroger 88 31.33 95 31.72 97 32.30 100 32.54 0.33
Publix 52 17.09 63 18.34 70 20.35 7J. 20.26 0.29
Winn-Dixie 63 11.43 65 11.21 59 10m 56 9.80 0.18
Ingles 45 6.95 44 6.18 49 6.87 46 6.63 0.14
Super Disc (Club) - - 13 5.22 17 6.19 18 5.91 0.33
A&P 37 6.21 37 5.82 36 5.44 31 4.78 0.15
Wal-Mart 7 2.34 8 3.26 10 3.57 9 3.13 0.35
Hatry's 3 2.38 3 2.41 6 2.75 7 2.59 0.37
Cub Food 13 6.15 - - - - - - -
Bruno's 19 4.62 18 4.22 - - - - -
DALLAS. TX 1996 1997 1998 J ul-99 1999
-
No. of % Mkt No. of % Mkt No. of % Mkt No. of % Mkt mkt share
Stores Stores Share Stores Share StoreS Share Stores Sha re per store
Albertson's 47 21.08 52 22.31 57 23.71 57 22.62 0.40
Tom Thumb 42 20.19 41 16.67 42 20.30 42 20.09 0.48
Kroger 40 14.76 40 15.31 38 14.43 39 14.92 0.38
Minyard 60 15.20 60 15.23 60 15.29 60 14.66 0.24
Brookshire 26 7.54 27 7.81 27 8.36 27 7.92 0.29
Wal-Mart 5 2.42 8 4.85 8 4.13 11 5.06 0.46
Winn-Dixie 14 3.22 14 3.11 12 2.97 13 3.51 0.27
Fiesta Mart - - - - 5 1.83 5 1.75 0.35
Food Lion 25 3.54 24 3.11 - - - - -
Wal-Mart Hype I 1.31 - - - - - - -
FT. WORTH. TX 1996 1997 1998 J u 1-99 1999
No. of % Mkt No. of % Mkt No. of % Mkt No. of % Mkt mkt share
Stores Stores Share Stores Share Stores Share Stores Share per store
Albertson's 21 21.18 24 23.07 24 22.68 26 24.46 0.94
Winn-Dixie 31 17.24 32 18.63 34 19.08 35 18.46 0.52
Kroger 25 19.32 27 18.71 23 16.70 23 15.02 0.65
Minyard 21 10.47 22 10.06 22 9.76 25 10.93 0.43
Tom Thumb 9 8.16 9 6.26 II 10.84 12 10.91 0.90
Wal-Mart 5 6.90 5 7.32 6 8.10 6 6.48 1.08
Food Lion 9 2.80 10 3.28 - - - - -
Wal-Mart Hype I 2.65 - - - - - - -
Source: The Shelbv Report
53
To be conservative, we assume that Wal-Man Supercenters capture per-store market share that is <)
typical, but not better than, the range observed for existing southern California chains. We
bound projected Supercenter per-store market share to be equal to both the lowest number
(0.144) and the highest number (0.169) for major chains in the first half of 199926 Combining
that information with two estimates for the number of southern California stores served by one
distribution center, we get overall projected Los Angeles area market shares associated with one
Wal-Mart food distribution center, shown in Table 2-14.
These are conservative estimates, both because the number of stores for one distribution center
could be higher and because the market share per store, based on experience in Atlanta, Dallas,
and Fort Worth, could be slightly higher than even the upper bound shown in Table 2-14.
Table 2-14: Estimated Wal-Mart
Southern California Market Share
Share Per Store
14% 17%
Number of
Stores:
47
57
6.77%
8.21%
7.94%
9.63%
~ote: Share per store is market share points per
each store, estimated as described in the tex.t.
~umbers in bold arc estimated southern California
market shares for \oVal-Mart Superccntcrs, for one
distribution center supporting the number of stores
shown in the two rows.
o
The largest estimate in Table 2-14, still a conservative number, suggests that Wal-Mart can
capture approximately 10% of the Los Angeles metropolitan area market. We take that as a
lower bound for the possible market share of Wal-Mart Supercenters in the southern
California market. The estimates that lead to a 10% market share - one distribution center,
serving from 47 to 57 stores, with each store capturing market share comparable to other
chains in the region - are all conservative. Should Wal-Mart choose to enter the southern
California market more aggressively, they could likely operate more than 57 stores from one
distribution center or build additional distribution centers.
As a high estimate of possible Wal-Mart market share in southern California, we use 20%. This
is based on the observation, from Table 2-10, that the three largest southern California chains
currently average slightly more than 20% market share. Wal-Mart's efficiency in its core
discount retail business, plus their quick expansion pace into !,'foceries, suggests that in the long-
term the firm could potentially compete with the largest of the southern California food chains.
2f1 For major chains. we exclude Smart and Final, Superior Super, and Stater Brothers because each chain has a small
number of stores in the Los Angeles MSA in the first half of 1999.
o
54
o
Below we use the two estimates of market share - 10% and 20% - to obtain estimates of
the economic impact ofWal-Mart Supercenters in southern California. We start by
providing some discussion of how quickly the estimated market shares might be realized, and
what Wal-Mart competition means for existing southern California grocery chains.
Because the time span of our data arc limited, we arc not able to estimate when or how
quickly Wal-Mart might build to a ten or twenty percent market share in Los Angeles. Much
of that depends on company strategy. For example, Waf-Mart now has 6.5% of the market in
Fort Worth, and Supercenters arc, for all practical purposes, a six-year-old phenomenon.
Given Wal-Mart's exceptionally aggressive history of building Supercenters, and their
expansion pace, the chain could reach a ten percent share in Los Angeles, or most likcly
other markets that it targets, much more quickly than would be expected for other
competitors.
In other markets, Wal-Mart has typically built Supercenters first in exurban areas and then in
the rapidly growing urban fringe. This reflects both WaJ-Mart's traditional emphasis on
small towns and suburban markets and the difficulties of obtaining land for Supercenters that
arc, on average, 180,000 square feet, in central portions of urban areas. Given the exurban
and suburban focus of Wal-Mart, it is likely that their plans for Supercenters in southern
California will focus most heavily on Orange County, the Inland Empire, the western San
Fernando Valley and eastern Ventura County, and Santa Clarita and the high desert areas to
the north. .
o
This puts Supercenters in the most rapidly growing portions of southern California,
suggesting that Wal-Mart will be a major competitor in the region's grocery industry. Given
the fact that Los Angeles County contains almost two-thirds of southern California's
population, and the fact that the market share estimates in Table 2-14 arc quite conservative,
it is reasonable to assume that the estimated Supercenter market shares of ten and twenty
percent can be applied to all of southern California. Doing that, we next examine the
competitive pressure exerted by a new entrant that has the potential to achieve market shares
similar to those shown in Table 2-14.
One way to get a good intuitive feel for the type of competition represented by a new firm
with, for example, a ten or twenty percent market share is to ask how much growth in the
market is lost to the new competitor. Southern California is projected to grow rapidly over
the next twenty years. Population growth projections, from the Southern California
Association of Governments, are shown in Table 2-15. Southern California grocery chains
are no doubt aware of this future gro\\1h, and have likely built growth projections into their
long-range business plans.
While Supercenter market share will not all come at the expense of future growth, it is a
useful exercise to assume that all Supercenter market share is part of the overall growth in the
southern California market, and to then ask how much growth would be captured by
Supercenters.
o
55
G
Table 2-15: SCAG County Population Forecasts
COUNTY 1994 2000 2005 2010 2015 2020 2000 -
2020
Imperial 138,400 149.000 I 72,nOO 207,000 241,000 280.000 87.9:!%1
Los Angeles 9,231,60n 9,818.200 10,329,500 10,868.900 1 1.513.400 12.249,100 24.76%
Orange 2,595,300 2,859,200 3,005,800 3,105,300 3.165,4QO 3.244,600 13.48%
Riverside 1.376,900 1,687,800 1,976.900 2.265,300 2.531.700 2.816,000 66.84'Y.
San Bernardino 1.558,600 1,772.500 2,005.400 2.239,600 2,512,700 2,830,1 00 59.67%,
Ventura 709,900 712,700 744.900 804,300 861,600 932,300 30.81%
SCAG 15,610,700 16,999.000 18,234,000 19,491,000 20,826,000 22,352,000 31.49%
Soun:c: SeAG, I99S RTP Adop~d Forecast.. April 1998
For illustrative purposes, we assume that the grocery market in southern California will grow
in proportion to population growth, and that Wal-Mart Supercenters can achieve either the
lower bound estimate of 10% market share or the higher estimate of 20% market share for
southern California. If all of that market share comes at the expense of future growth in the
grocery market, this implies that Wal-Mart Supercenters will capture between 42% (for a
10% total market share) and 84% (for a 20% market share) of the growth in the market.
o
We do not mean to imply that all Supercenter sales will be come from market l,'fowth. No
doubt Wal-Mart, or any new entrant, can also take sales away from existing stores. Yet as an
exercise it is useful to ask what would happen if all Supercenter sales were strictly from
serving the growth in the southern California market. The anSWer is that, under that scenario,
Wal-Mart would capture from 42% to 84% of all growth in one of the nation's fastest
growing grocery markets OVer the next twenty years.
The entry ofWal-Mart into southern California will be, for its competitors the equivalent of
an event that would cut projected gro\\1h in sales by, using reasonable estimates, anywhere
from 42% to 84%. The implication is that Wal-Mart's entry into southern California will
almost certainly be perceived by existing chains as a major competitive threat, and they will
almost certainly respond. The response, given the labor cost differential between Wal-Mart
and southern California grocery chains, will most likely take the form of the type of wage
and benefit cuts witnessed in Alberta and British Columbia, Canada.
o
56
o
o
o
E: LABOR MARKET IMPACTS
Competition from Wal-Mart Supercenters will result in lower wages for southern
California grocery employees through two channels of influence - (I) employees that would
have otherwise worked in higher paying union jobs will earn lower wages and benefits, and
(2) competition with Supercenters will caUSe unionized employers to lower their wages and
benefits. We examine each channel of influence in turn below.
1. Economic Imvact of Lower Waf!es Paid to Suvercenter
Emvlovees
Approximately 80,000 of the 128,000 southern California grocery employees arc employed
by the major grocery chains. As shown in Table 2-9, these employees receive a considerably
more valuable wage and benefit package than Wal-Mart employees, based on the
assumptions about Wal-Mart wages and benefits listed in the note for Table 2-9. IfWal-Mart
captures southern California grocery market share, some grocery employees who otherwise
would have been employed by the major food chains will take jobs in Supercenters, at
substantially lower wages. Thus, the first channel of economic impact is that low paying
Supercenter jobs crowd out higher paying jobs.
We assume that the number of grocery jobs displaced is in direct proportion to the market
share ofWal-Mart Supercenters; for example, ifWal-Mart captures a ten percent market
share, ten percent of existing jobs at the major chains will be converted into lower-paying
Supercenter jobs. For the three values of wage gaps implied by Table 2-9, we calculate the
total annual wage bill lost for different assumptions about Wal-Mart market share. The
results arc shown in Table 2-16, below.
Tablc 2-16: Direct Economic Impact of Lower Wages Paid to Supcrccnter Employces
in Lost Wages, Per Year ($ millions)
Hourlv Wa1!e GaD
$7.97 $8.62 $9.26
Estimatcd 10% SI18 SI27 SI37
Superccntcr Markel
Sharc: 20% S235 S255 S274
]\ote: Annual lost wages are calculated by multiplying the wage gaps in Table 2-9 by the estimated
annual hours worked by employees of the major grocery chains. Currently, these employees average
35.5 hours of work per week (Bailey, 1999).
57
2. Economic Impact of Lower Wa2es Paid to Grocerv
Emplovees
(>>
Large labor cost differentials cannot be sustained in the grocery industry. The experience in
Canada demonstrates that major grocery chains will ultimately close much of the labor cost
gap. The implication is that the entry of Supercenters into southern California will affect the
wages of all grocery employees in southern California, whether or not they work at
Supercenters.
The fact that low labor cost competitors exert downward wage pressure on an entire industry
is not surprising. In a 1989 study of pay in the grocery industry, Paula Voos, an economist at
the University of Wisconsin, found that as the fraction of the metropolitan labor force that is
unionized drops, wages among the remaining union members fall (Voos, 1992). She noted
that this relationship is common in many industries, and is indicative of the tendency of firms
to lower wages to meet the labor costs of competitors.
Using data for southern California, we estimate the annual impact of the downward wage
pressure that would result from Wal-Mart Supercenters entering southern California. We
assume that major chains in the region lower their wage and benefit package to immediately
close part, but not all, of the pay gap shown in Table 2-9. Based on the experience of
Safeway in Alberta (discussed in Section B), we estimate chains would seck to close between
forty and sixty percent of the wage gap in the ncar-term. We later estimate the long-run
impact on workers if major chains achieve wage parity with lower cost supercenters, closing
all of the wage gap. We calculate the total annual value of reductions in pay and benefits in
chains that compete with Supercenters, under different assumptions, below.
o
o
58
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Grocery chains in southern California arc likely to seck to close the entire wage gap ifWal-
Mart, or any low cost competitor, enters the market. In Table 2-18, we show the indirect
wage impact on major grocery chain employees ifall of the wage gap between current
wage and benefit standards and Wal-Mart supercenter pay is closed.
<)
Table 2-18: Indirect Economic Impact of Lower Wages Paid to Superecnter Employees
in Value of Lost Wages, Per Year Assuming Full Wage Gap is Closed ($millions)
Total Wage Gap
$7.97 $8.62 $9.26
Estimated 10% $1,059 SI,146 SI,23I
Supercenter 20% S942 SI,018 SI,094
Market Share Kote: Annual lost wages are calculated by assuming that of the 80,000 union members in 1999, the
fraction not in Supercenter market share (90% or 80%) remain members of the union. Those members
are assumed to experience wage cuts that close the full amount of wage gap sho\\.11 on the top TO\\'.
E.g., in the first column the per hour wage cut is 57.97. That wage reduction is multiplied by 35.5
hours per week for the average union member, and then annualized and multiplied by union
membership less the fraction assumed to be workin.. at Wal-Man.
o
In Table 2-19, we present low, medium, and high estimates of the total wage and benefit
impact of Wal-Mart supercenters entering the southern California grocery market.
(Illustrated graphically in Chart 2-2.) These are derived by summing the direct impact on
supercenter employees, shown in Table 2-16, with'the indirect impact on employees of
other major chains, shown in Tables 2-17 and 2-18. The low estimates use the most
conservative assumptions, and so represent a lower bound of possible impacts.
As we mentioned earlier, the economic impact will likely exceed what is reflected in the
,low estimates. The medium estimates arc calculated based on a 20% Wal-Mart market
share while assuming that existing grocery chains do not close all of the wage and benefit
gap with Wal-Mart. The medium estimates assume that the amount of wage gap closed is
the average of the gaps used in Table 2-17.
The use of a 20% supercenter market share for the medium estimate reflects a reasonable
long-run outcome, while the assumption that existing chains close only a fraction of the wage
gap is more reasonable in the ncar-term than in the long-run. Thus the medium estimates mix
both long-run and ncar-term responses in the grocery market. Given that it is impossible to
predict the exact timing of ncar-term versus long-run impacts, this mixing has the advantage
ofrefiecting the influence of both, in some sense averaging effects that cannot be precisely
amibuted to specific years and effectively reflecting a "middle range" scenario.
o
60
o
The high estimate assumes that Wal-Mart obtains a 20% market share and that all of the
wage gap with competitors is closed.
Table 2-19: Estimates of Total Wage and Benefit Impact
Summing Direct Effect for Wal-Mart Employees and Indirect Effect on other Grocery
Emplo)'ees ($millions)
Total Wage Gap Closed
$7.97 $8.62 $9_26
Low 5541 5586 5629
Medium 5706 $764 5821
High 5 1,1 77 51,273 51,368
l'ote: Low estimate incorporates the most conservative estimates -- 10% superccnter market
share and 40% of wage gap closed. Medium estimate is based on 20% supercenter market share
and half of the wage gap (average of40% and 60%) closed. This is an average of impacts in
Table 2-17. Hieh estimates assume that all wage gan will be closed. as shown in Table 2-18.
o
o
61
~
Chart 2-2: Estimates of Total Wage and Benefit Impact
Wage Gap Between Major Grocery Chains and Discount Retailers
o
rn Low Estimate
III Medium Estimate
o High Estimate
o
62
....---,.
'I
o
F: REGIONAL INDUCED IMPACTS AND LAND MARKET hlPACTS
1. ReflionalImoacts
The overall impact oflower wages in the grocery sector goes beyond the impacts on grocery
workers. Each dollar lost to the region in wages lowers the spending of grocery employees on
goods and services in the region, and in turn reduces the income and hence spending of others.
This effect is known as the multiplier impact or a change in local wages - a lost dollar locally
generates more than a dollar in overall economic impacts as it ripples through the economy.
The most common estimate of the multiplier impact of\vage dollars in our region is provided by
the regional council of governments, the Southern California Association of Governments
(SCAG). SCAG's wage multiplier is currently 2.08. That is, each dollar increase in wages in
the southern California economy is calculated to generate a total of$2.08 of new spending: The
$1 increase plus another $1.08 in indirect multiplier impacts. The total impact is about twice the
direct effect.
The same relationship is calculated by SCAG analysts to hold for wage losses. Thus, every $1 lost
in wages in the region induces a total loss of$2.08. As an example, Table 2-20 calculates the total
regional impact the SCAG multiplier generates for the wage losses estimated in Table 2-19.
o
If the wage gap between Wal-Mart and southern California grocery chains is $9.26 per hour, for
example. then the regional impacts are calculated to range between about $1.6 billion to nearly $3
billion per year, depending on the big box grocer market share
... . .
.." ...
... ..,. .. ,.... ...
2-20: Estimat~s oiTotal Regional W~gc~DdBenefit Impact of Big Box
Grocer Entry into Southern California,
(Smillions)
Total Wage Gap Closed
S7.97 S8.62 S9.26
Low $1.179 $1.3 79 $1,575
Medium $1,602 $1,801 $1.999
High $2,448 $2,648 $2,845
Note: These are the total regional economic impact estimated to result from the wage and
benefit losses calculated in Table 2-19. They include the losses to grocery employees and the
multi lier effect of those losses due to the reduced local s enJin bv those em lovees.
o
63
2. Land Market Impacts
()
Because they remain vulnerable to changes in the real estate market, there is a risk that big box
retailers and supermarket operators will opt to vacatc one or more sites when they are no longer
cost-effective. A survey of vacant supermarket properties in Orange County provides an
example of the county-wide impacts of corporate restructuring and consolidation. Table 2-21
lists vacant supermarkets located in Orange County. Note that much of this unused property
became vacant when Alpha-Beta Grocers was purchased by Ralph's.
Table 2-21: Large-Scale Vacancies in Orange County and Site Information
Site Former Vacancy Size Building Remains City
Owner or Vacant
241 East 17'b Street Alpha-Beta August 1994- 2.44 Remains Costa
present acres Mesa
6011 Chapman Alpha-Bcta 1985-1999 3.83 Vacant Garden
A venue acres Grove
17482 Y orba Linda Ralph's June 30, 1997- 3.01 Remains Yorba
Boulevard . present acres Linda
23641 La Palma Ralph's July 199R- 9.4 Remains Yorba
A venue present acres Linda
11382 Beach Alpha-Beta I 997-prcsent 3.RR Vacant Stanton 0
Boulevard acres
The first site, located in Costa Mesa, neighbors a thriving Rite-Aid and specialty retailers, and
serves to impede pedestrian traffic between the two (Figure 2-1). The pathology of this
underutilized property stems from its attraction of parking lot vendors with excessive signage
(the parking lot in front of this site is leased for the sale of fircworks), its offering of temporary
shcltcr to homclcss persons, and its symbolic message to passing trartic on East 17th Street.
64
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,j< 760-9150
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Figure 2-1. 241 East 17th Street, Costa
o
Usually the largest store in a complex (referred to as the "base" or "anchor" tenant), big box and
supermarket retailers will remain vacant longer than other shopping center components because
they take the longest to sell. When a base tenant is empty. the property owner will eithcr sell
land or lease to a new tenant. Often, the owner will want to sell after a base tenant has vacated.
This is difficult, given the less frequent turnover rates and the square footage involved. When
the owner does try to lease, potential lessees desire to lease the property for at least ten years,
given the capital investment required to lix up the property and ready it Cor use.
The owner, on the other hand. will typically want to lease a property lar live years or less.
especially when the market hasn't proven itselC in the past lar a given property. Therefore, lease
arrangement difficulties encourage longer vacancies for base tenants. The vacant site in Figure
2-2, located in Garden Grove. has Callen victim to such a dilemma, rcmaining unimproved for
more than a decade.
o
65
Vacancies for base tenants are further complicated by the cost to retrofit. zoning and
environmental concerns. The cost of retrofitting. combined with unfavorable lease terms, limits
the perceived ROI as determined by potential business partners. Zoning is also a concern. A
base tenant vacancy may spark interest in rezoning the property for alternative uses. The time
and resources required for commercial rezoning add further time to the vacancy.
If the site was shared with a gas station, the EPA is required to perform a risk assessment, and
past. current. and future site owners as well as lenders arc potentially liable for any
encouragement of environmental harm or health effects. This constraint on redevelopment
would apply to base tenants that vacate a property. encouraging the adjoining station to vacate as
well.
66
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Chapter 2 Appendix: Health Care
Coverage Issues
A. INTRODUCTION
The incredible strength of the U.S. economy has shown no signs of abating despite the slowdown
in many overseas markets. Since 1992, the U.S. has enjoyed an unprecedented combination ofa
rising budget surplus, low interest rates, virtual price stability, rising wages and salaries, and low
unemployment. Optimistic U.S. consumers and investors served as the main engine of national
growth last year as they pushed the growth rate in domestic demand up from 4.5 percent in ] 997
to 5 percent in 1998. Thus, it is no surprise that Americans also accounted for nearly half of the
growth in world demand (and output) last year (International Monetary Fund (lMF), 1999).
o
Yet despite the unprecedented economic boom in the U.S. during this past decade, the erosion of
health care coverage in the U.S. is taking Americans down a dangerous path (Findlay and Miller,
"Down a Dangerous Path: The Erosion of Health Insurance Coverage in the United States,"
National Coalition on Health Care (NCHC), May 1999). While it is true that businesses have
increased wages and expanded fringe benefits" during this economic boom, the number of
Americans with no health insurance has risen ovcr 20 percent since 1990. In 1990,35.6 million
of the non-elderly population lacked health insurance. By 1997, the number of uninsured below
the age of65 had risen to 43.1 million (Findlay and Miller, 1999). In 1997, this translated into
approximately one in six Americans being without health insurance in a typical month. Over the
course of the year, around one in five Americans were without health insurance coverage for
some period of time (U.S. Bureau of Census, 1998, and Kaiser/Commonwealth, ]997; as cited in
NCHC, 1999a).
Even if the U.S. economy continues on its path of strong growth. conservative estimates indicate
that at least 47 million Americans will be uninsured by 2005 (NCHC, "The Uninsured
Phenomenon," available from http://wv..W.nchc.o.g/know/uninsured_myths.html; accessed 22
July] 999b). It is also projected that 52 to 54 million non-elderly Americans, or one in five, will
be uninsured in the year 2009. In the event of an economic downturn, as many as 61.4 million
non-elderly Americans, or one in four. could be uninsured in 2009 (Findlay and Miller, 1999).
Figure A2-1 illustrates the steady growth in the number of uninsured non-elderly Americans
since 1990 (table from Findlay and Miller, 1999; original data from Employee Benefits Research
Institute (EBRI)).
17 An increasing number of large- and mid-sized companies now offer their employees retirement plans. child care
services. flexible spending accounts, and various ronns of insurance.
o
68
o
Figure A2-\:
Growth in the Number of Uninsured, 1990-\997
Millions of Non-elderly Uninsured
356
36,3
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1994
1995
1996
1997
One of the more commonly believed myths about the uninsured population is that those that arc
uninsured arc unemployed. but the reality is that most of the uninsured either work or are
dependents of workers. In 1997.57 percent of those aged 18 to 64 who had no health insurance
worked either full- or part-time (Findlay and Miller, 1999). Recent studies indicate that although
the economy generated 5.5 million jobs between 1993 and 1995, the number of uninsured
Americans continued to grow by one million in each of these years (NCHC, 1999b).
Additionally, from 1996 to 1997, the number of uninsured Americans increased by 1.7 million,
the largest annual increase since 1992 (Findlay and Miller, 1999).
()
Thus, the fact that the national unemployment rate recently dipped to a 29-year low of 4.2
percent (IMF, 1999) does little to remedy the uninsured problem in this country. In many of the
nation's largest metropolitan areas, the situation is particularly grim. In twenty-one of the
nation's largest metropolitan areas, at least 20 percent of the non-elderly population currently
lacks health insurance. Table A2-l presents uninsured statistics for seven major U.S.
metropolitan areas-. including Los Angeles.
69
o
o
Table A2-1: The Uuinsured in Major
Metropolitan Areas
Metropolitan Area
EI Paso, TX
Los Angeles, CA
Houston, TX
Tucson, AZ
Miami, FL
New York City, NY
New Orleans, LA
% of Residents Lacking
Health Insurance
39
31
29
29
28
25
22
Source: Levan. ct at. (1999)
o
In sixteen states, the number of uninsured residents excecds the national overage of 16 pcrcent of
all residents. Additionally, in Arizona, Arkansas, California, Mississippi. New Mexico, and
Texas, more than one in five non-elderly residents do not have health insurancc (U.S. Bureau of
Census, 1998; as cited in Findlay and Miller, 1999). Thus, despite California's decline in the
unemployment rate from 9.4 percent in 1993 to 5.6 percent in February 1999 (Kimbcll, Dhawan
and Lieser, 1999), sustained economic growth in Califomia cannot be relied upon to address the
uninsured problem.
B. THE UNINSURED
For over a decade, researchers have agreed that income level is positively correlated to health
insurance coverage. Simply stated, low-income Americans are at a much greater risk of lacking
health insurance than the affluent. In 1996, three in five of the uninsured population were low-
income: 28 percent were living below the poverty level. while another 32 percent were near-
poor with incomes between poverty and twice poverty (Davis. 1996). But the relationship
between income and insurance coverage has become increasingly complex in recent years. More
and more of the middle-income population are at risk of becoming uninsured bccausc of the
rising cost of health insurance since the mid-1980s. Today, adequate health insurance lor many
middle-incomc Americans is just not affordablc (Findlay and Miller, 1999).
The following three tables provide an overview of some recent trends in hcalth insurance
coveragc. Table A2-2 illustrates that nearly one-half of uninsured Americans live in households
earning less than 133 pcrcent of the federal poverty linc. where the povcrty linc is defined as a
single person earning less than $9,800 a year or a family of four earning less than $20,000 a year
in income. Table A2-2 also illustrates that the largest percentage increase occurred among
families with incomes of around $50,000 to $60,000 (or 351-400 percent of poverty). The
second largest percent increase occurred among families earning approximately $10.000 to
$15,000 in income (or 0-99 percent of poverty) (Thorpe, 1997).
o
70
~
Table A2-2: Percent Distribution of Uninsured Households
by Income Lcvel, 1990-1995
% Poverty
0-99%
100-133%
134-150%
151-185%
186-200%
201-300%
301-350%
351-400%
400+%
1990
% Uninsured in
Income Thrcshold
0.34
0.346
0.293
0.267
0.211
0.138
0.052
0.064
0.051
% Total
Uuinsured
34.1%
12.2%
4.9%
10.5%
3.6%
15.1%
15.1%
2.7%
1.8%
100.0%
1995
% Uninsured in
Incomc Threshold
0.343
0.322
0.307
0.251
0.234
0.148
0.060
0.095
0.073
Source: Table reproduced from Thorpe (1997). (Original
tabulations from the Cun-ent Popula/ion Survey, March 1991.)
% Total
Uninsured
36.6%
11.5%
5.0%
9.0%
3.9%
13.4%
14.5%
3.9%
2.2%
100.0%
Table A2-3 points out that middle income families with children were more likely to be without
health insurance coverage in 1995 versus 1990 if their earnings were between $20,000 and 0
$60.000.
71 0
0
Table A2-3: Trends in Healtb Insurance Coverage
by Household Composition and Income, 1990-1995
(Millions of People)
Income as a Percent of Poverty
Year 0-100% 101- 151- 201- 301- 400+%
150% 200% 300% 400%
Single
1990
No. Uninsured 5.5 1.9 1.8 1.9 1.0 0.9
% Uninsured 38.2% 26.0% 26.4% 19.8% 13.7% 7.4%
1995
No. Uninsured 7.2 2.3 2.0 2.0 0.9 1.0
% Uninsured 38.3% 26.4% 27.1% 19.5% 14.7% 8.6%
.Single Adult wJChildren
1990
No. Uninsured 2.8 1.1 0.7 0.6 0.2 0.2
% Uninsured 18.8% 27.8% 22.4% 13.7% 9.0% 9.0%
1995
No. Uninsured 3.8 1.3 0.7 0.8 OJ 0.2
0 % Uninsured 20.9% 25.5% 19.3% 16.6% 12.0% 8.6%
Twn Adults, No
Children
1990
No. Uninsored 0.8 0.5 0.6 0.8 0.5 0.7
% Uninsured 28.3% 14.7% 15.2% 9.4% 6.6% 2.7%
1995
No. Uninsured 1.0 0.6 0.6 0.9 0.5 1.1
% Uninsured 31.3% 16.3% 12J% 9.8% 6.4% 4.4%
Two Adults w/Children
/990
No. Uninsured 3.5 2.6 2.0 2.2 0.9 1.1
% Uninsured 37.4% 29.4% 19.1% 9.6% 4.5% 3.0%
1995
No. Uninsured 4.1 2.8 2.3 2.2 1.0 1.2
% Uninsured 36.4% 28.2% 19.9% 10.2% 5.1% 3.2%
Source: Table reproduced from Thorpe (1997). (Original tabulations
from the Current Population Survev. March 1991 and 1996.)
o
72
Table A2-4 illustrates that the probability of being uninsured increased for men and women of all
age cohorts (with men aged fifty through fifty-nine serving as the only exception). The largest
percentage increase in uninsured occurred among adults aged thirty through thirty-nine. Table
A2-4 also illustrates that the pattern of insurance coverage among young adults is changing. In
particular, young adults aged nineteen through twenty-nine were at great risk of being uninsured.
~
I
Table Al-4: Percent Uninsured by Age and Gender, 1990-1995
1990 1995
Male Female Male Female
A"e Number Percent Number Percent Number Percent Number Percent
0-18 4.7 13.4% 4.4 13.2% 5.3 14.0% 5.1 14.1%
19-29 6 28.5% 4.4 20.5% 6.4 31.7% 4.8 23.5%
30-39 3.9 18.6% 2.7 12.6% 4.7 21.7% 3.6 16.1%
40-49 2.1 13.3% 2.1 12.4% 3 15.7% 2.7 13.7%
50-59 1.3 12.6% 1.5 12.6% 1.5 12.4% 1.8 13.8%
60-64 0.5 10.6% 0.8 14.2% 0.6 12.4% 0.8 14.5%
Total 18.5 17.0% 15.9 14.5% 21.5 18.6% 18.8 16.1%
Source: Table reproduced from Thorpe (1997). (Original tabulations from
Supplements of the Current Population Survey. March 1991 and 1996.)
Although it is commonly believed that the uninsured are typically middle-aged, unemployed,
lower-income, and able to obtain care from primary care providers through acute care hospitals,
this is not the case. Of those who will be lacking health insurance coverage sometime this year,
. only 15 percent will be unemployed, on welfare, or five in a household where no one is working.
The majority of the uninsured live in households with an annual income under $30,000 (NCHC,
I 999a). Counting both uninsured children and adults, approximately 85 percent ofthc uninsured
population are in households where the head of the family works full- or part-time (Davis. 1996).
o
The typical uninsured American is actually a young adult. between the ages of nineteen and
thirty-nine". with children and an annual income between $40.000 and $60,000. This young
adult is generally a contingent worker in a small business or in the service sector (Thorpe, 1997).
C. SOURCES AND TYPES OF HEALTH INSURANCE
The primary source of health insurance coverage in the U.S. is through cmployers. The
govemment is also a large provider of health insurance both as an employer and through public
health insurance programs such as Medicare and Medicaid (NCHC, 1999a). Table A2-5
provides a breakdown of the sources of health insurance for Americans.
2~ Because Medicare coverage applies to nearly every elderly American. mosl of the uninsured populalion is under
the age of sixly.five (Rowland. Feder. and Keenan. 1998).
73
o
'I
o
Table A2-5: Sources of Health Insurance
Source ofInsurance
Number of People
(Millions)
Private Employers
Federal Government as Employer (Includes Military)
State and Local Government as Employer
Retired People with Employer-Based Coverage
Medicare
Medicaid
Purchased Individually
No Insurance
120
17.3
21.9
13.2
38
41
16
43.3
Source: Table reproduced from l'CBc' "Health Care Facts." available from
(Original data from The C.S. Census Bureau. the Department of Labor.
EBRl. and the Kaiser Commission on Medicaid and the Uninsured.)
o
In recent years. employers have quickly switched to managed care plans in an effort to save
money while pushing for improvements in the quality of care. As a result, most have abandoned
the traditional "fee-for-service" health insurance coverage that often paid medical bills with no
questions asked. Three of the more popular forms of managed care arc HMOs, PPOs and POS
plans. HMOs provide comprehensive coverage for a fixed payment given that patients and
physicians and hospitals within their "network." PPOs, or Preferred Provider Organizations,
enable a patient to pay less for care obtained through providers that the health plan has
contracted to accept discounted fees. Service fees increase if care is obtained outside of the
network. POS, or Point-of-Service, plans arc often affiliated with HMOs. Like PPOs, doctors
and hospitals outside of the HMO's network can be used for an additional fee (NCHC, 1999a).
D. DECLINING EMPLOYER-SPONSORED HEALTH CARE COVERAGE
Employer-sponsored health care coverage has been declining slowly but steadily since it peaked
in the late 1970s, and recent trends indicate that the uninsured population is likely to increase as
employment-sponsored health insurance continues to erode (EBRI. 1996; as cited in Davis,
1996). In 1987,69.2 percent of the non-elderly population had health insurance through ajob or
a family member's job, but by 1996 this percentage declined to 64 percent (NCHC, 1999a). This
decline in employer-sponsored health care coverage has been fueled in part by a reduction in the
percentage of workers accepting coverage when it is offered (Thorpe and Florence, 1999).
Ineligibility is another reason that employees are not taking health insurance through their
employers. In 1997,9.1 percent of wage- and-salary and alternative workers, orten million
workers, were ineligible for health coverage through their place of employment. Table A2-6
o
74
outlines some reasons for this ineligibility. Table A2-7 then outlines coverage by type,
eligibility, and acceptance.
~
Table Al-6: Reasons for Ineligibility of Employer-Sponsored Health Insurance
When Offered (1997)
Actual Insurance Status
%eiting Other Family Individual
Reason for This Employment Member Purchase Public Uninsured
Inelil!ibilitv Reason
Doesn't work enough 53.3% 2.6% 56.5% 5.9% 10.4% 24.6%
hours per week or
weeks per year
Contract or temporary 7.7% 3.2% 41.0% 11.0% 13.0% 31.7%
employees not allowed
in plan
Hasn't worked for 27.2% 4.5% 21.2% 4.4% 5.7% 64.4%
employer long enough
Has preexisting 1.1% 8.8% 30.5% 3.7% 30.3% 26.6%
condition 0
Other 10.8% 2.1% 38.6% 6.7% 22.6% 30.1%
Total' 100.0% 3.2% 43.5% 6.0% 10.9% 36.5%
Source: Table reproduced from Thorpe and Florence. 1999. (Original tabulations from the Contingent Worker Supplement
to the Current Population Sun>ey. February 1997.)
KOle: t\umber of workers is 1085 million. and the number of ineligible workers is 9.9 million.
I Totals exclude the self-emnloved. and indenendenl contractors.
75
<)
1
o
Table A2-7: Number of Workers Offered, Accepting, Ineligible,
and not Offered Health Insurance, By Primary Source of Coverage. 1997
(Millions of Workers)
Firms Offerin!! Insurance
Eligible Eligible Workers Firms Not
Workers Workers Not Orrering
Primary Source of Coveraoe Total Accented Declined . Elil,ible Insorance
Own Employment 66.7 66.7 n.a. n.a. n.a.
Family Member 21.9 0.0 7.5 4.4 10.0
Individual Purchase/Other 9.6 0.0 0.8 0.9 7.9
I
Employment
Public and Other 2 4.5 0.0 0.6 1.1 2.8
Uninsured 20.3 0.0 2.5 3.7 14.1
All Workers 123.0 66.7 11.4 10.1 34.8
Source: Table reproduced from Thorpe and Florence. 1999. (Original tabulations from the
Contingent Worker Supplement to the Current Population SUn'(.')'. February 1997.)
1 Includes individually purchased coverage. as well as coverage from previous employers. other employer. or own
company. .
,
. Includes Medicare. Medicaid. labor union. a..sociation or club. school or university. and other.
o
Many workers opt not to buy coverage through their employers because it is not affordable. In
1980,74 percent of US. employers paid the entire cost of health insurance for their employees.
By 1993. this figure had dropped to 37 percent (NCHC, 1999a). As the price of health care
coverage has risen, many employers have passed along some of the cost increases to their
employees. In 1998, for example, employees of small businesses (fewer than 200 workers) paid
an average of 44 percent of the premium for family coverage, up from 34 percent just a decade
earlier. Employees of larger businesses (more than 200 workers) have also been hit by the rising
eosts of health insurance through their employers. They paid an average of 28,percent of
premium costs for family coverage in 1998 (Gabel et al., 1999). Additionally, a recent study
found that in 1996.9.1 million employees who were considered to have employer-sponsored
coverage did not even get any help from their employers in paying for that coverage
(Carrasquillo et al., 1999; as cited in Findlay and Miller, 1999).
An indication of the extensive health care cost shilling is the fact that so many employees now
opt for health insurance through a spouse's or parent's health plan. This is otien done if the
spouse's plan is cheaper, and employers are well aware of this occurrence. Employers have
responded to this phenomenon in a couple of different ways. Some employers now restrict
spouses from joining their health care plan if their own joh also offers them coverage. Other
employers have instead raised the cost for spousal and dependent care coverage (Meyer and
Naughton, 1996; as cited in Findlay and Miller, 1999).
o
76
-~
Employers also pass along the rising cost of health care in a few less obvious ways. As an 0
employee, a consumer, and a taxpayer, Americans are feeling the effects of some hidden costs of
rising health care costs. Employers pass along some health insurance costs to their employees in
the form of lower wage increases. In 1996, for example, employees earning between $30,000
and $50,000 were paid an average of$2,OOO less because of the rising cost of health care.
Consumers feel the effects of increased health insurance costs by paying more for products and
services. Because government programs fund 47 percent of Americans' health care coverage,
taxpayers eventually end up footing much of the bill. In 1998, health care accounted for
approximately 20 percent of the federal budget. as well as around 20 percent of most state
budgets (NCHC, 1999a).
The decline in the number of workers covered by union contracts is yet another reason that the
share of workers with health care coverage is on the deCline. Studies indicate that union
members arc significantly more likely to have health insurance than non-union workers. In
1995, for example, 16.8 percent of non-union workers were without health insurance, while only
5.9 of union members lacked coverage. Also contributing to this non-union coverage problem is
the fact that many of the economic sectors experiencing the largest employment growth (e.g. the
service and retail tradc industries) tend to havc few union members (Thorpe, 1997).
E. THE CONSEOUENCES OF BEING UNINSURED
Although the uninsured are sometimes able to obtain health care when needed, the means
through which the uninsured obtain their care (e.g. community health centers or public hospitals) 0
do not guarantee access and health outcomes that arc comparable to the insured (Rowland, Feder
and Keenan, 1998). Some of the consequences of being uninsured include failure to obtain
preventive care, postponement of care, preventable hospitalizations, lack of a regular source of
continuing care, inadequate maintenance of chronic conditions, lower utilization levels for
physician care, and higher mortality rates (Davis, 1996: and Rowland. Feder and Keenan, 1998).
Table A2-8 and the discussion that follows presents statistics on some of these consequences of
being uninsured. (See Table A2-9. for a closer look at some of the aforementioned consequences
of lacking health insurance.)
77 0
'I
0 . ",
Table A2-8: Getting Medical Attention
Had Had Gaps Currentl)'
Insurance in Uninsured
Coverage
Did Not Fill Prescription 6% 21% 24%
Had Difficulty Getting Needed 10% 27% 51%
Care (Assessed By Sell)
No Physician Visit in Past Year. 17% 19% 42%
Postponed Care Due to Cost 12% 40% 55%
Had Trouble Paying Medical 11% 33% 33%
Bills
Had to Change Life 4% 13% 17%
Significantly to Pay for Medical
Bills
Source: Table reproduced from KCHC (1999)
o
Studies indicate that the uninsured are much less likely to receive preventive care. In 1995, for
example, 52 percent of uninsured women did not obtain a Pap smear, while only 36 percent of
insured women failed to receive this preventive care. Additionally, only 38 percent of insured
women berween the ages of 40 and 64 did not get a mammogram in 1995, compared to 69
percent of uninsured women (Brown. 1995; as cited in Davis, 1996.)
Due to financial reasons, the uninsured arc more likely to postpone care. A recent study found
that 71 percent of the uninsured delayed seeking care due to financial constraints, while only 23
percent of the privately insured population postponed care for the same reason. 34 percent of the
uninsured reported going without needed care in the prior year due to financial constraints, while
only 9 percent of the insured faced this dilemma (Davis et a!., 1995; as cited in Rowland, Feder
and Keenan, 1998).
The uninsured have higher hospitalization rates for health conditions and chronic illnesses that
do not typically necessitate hospital care. The uninsured are 2.8 times as likely to be hospitalized
for diabetes than the insured, 2.4 times as likely to be hospitalized for hypertension, and 2.0
times as likely to be hospitalized for immunizable conditions. Given proper continued care, all
three of these conditions can generally be treated and managed without hospitalization
(Weissman, Gastonis, and Epstein, 1992; as cited in Rowland, Feder and Keenan, 1998).
o
78
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Chapter 3: Municipal Finance Impacts
This chapter considers another issue of great importance to local officials, one often playing a
central role in the evaluation of retail projects in particular: municipal tax revenues. Big box
retail is ollen characterized as a no-brainer, fiscally speaking. These projects arc described as
needing little in the way of public services yet generating enormous sums of sales taxes, a
substantial part of which goes directly into the city's general fund.
But this view is not always accurate, as an undetermined share of the new tax revenue will
simply reflect a loss of sales to existing businesses in the community. Tax rebates and other tax
incentives reduce this revenue stream further. More to the point of this report, big box retailers
who shi ft some floor space to groceries are migrating toward a sales base that generates
substantially less tax revenue. Food sales are, for the most part, not subjcct to salcs taxation.
This chapter reviews these issues to draw three principle lessons:
I. Discount retail is a competitive and fluid business, with implications for the stability of
municipal revenues. Local officials should be cautioned that a single store they lure today
comprising a huge share of the local retail base might soon relocate to another location, either
in search of a better incentive deal or to find room to expand.
o
2. Supercenters are often built by either expanding a discount center or closing a discount center
and building a supercenter nearby. Local oflicials should consider the impact of possible
future expansions on land use, community character, local employment base and local tax
revenues.
3. The fiscal impacts of Supercenters arc uncertain, both because many grocery items arc non-
taxable and because the net impact on localities must balance service costs and shifts in local
retail base with any net gain in municipal taxable sales.
The chapter explores these issues in detail in five sections: (A) The fiscalization of land use
planning. (B) big box fiscal issues, (C) taxable sales and tax revenues, (D) the fiscal impacts of
big box grocers, and (E) a short summary.
A. THE FISCALlZATION OF LAND USE PLANNING
Local governments in California have little direct control over their revenues. Property tax rates
are largely fixed and property assessments are market based only the year in which the property
changes hands. One thing local governments can control is permitted land development patterns,
which in tum influences the amount orIand generating sales tax revenues.
While the sales tax rate varies throughout the state, and sales tax revenues are collected by the
state, a penny from each dollar of taxable sales is returned directly to the jurisdiction where the
sale took place. This is known as the situs rule. So, it is not surprising that local officials have
tended to seek out retail to bolster local finances. Some are better able, or more inclined, to do
so and the end result is that the fiscal position of cities varies dramatically across the state.
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80
-
One consequence is that the fiscal strategy of many communities is to seek retail development.
particularly high volume retail such as automobile dealerships and big box retail. This trend
toward using land use planning to generate revenues is known as the "fiscalization" of land use
(e.g., Lewis and Barbour, 1999).
C)
In this setting, large individual retailers have become the apparent "cash cows" of the municipal
fiscal environment. In case after case, communities agreed to accept big box retail development
as revenue generators rather than as means to meet other community demands.
But the actual fiscal benefits of such efforts are unclear and undocumented. They may indeed
backfire in some instances. Four problems arc most apparent:
. New retail development in a city is somewhat at the expense of existing retail in a
city. Thus, a share of the sales taxes generated by new retail is not new to the city
at all. In addition, some cities experience only a short term spike in sales tax
revenues associated with big box retail, with tax revenues leveling off after only 2
or 3 years.
. This is even more true at a regional level. Tax competition among jurisdictions
can even have negative regional economic impacts, especially when tax rebates
and other locational incentives are involved.
. Large retail sites do impose additional community costs in the form of traffic,
sectirity, environmental, and other impacts (e.g.. Altshuler and Gomez-Ibanez, 1993).
. Most grocery sales arc not taxed, 'so the tax base of the host city will suffer as
existing retail uses shift to groceries. The use of redevelopment zones further
complicates the property tax part of this story, as redevelopment zones can divert
some portion of any increase in property tax revenueS within a zone away from
municipal governments (e.g., Dardia, 1998).
o
B. BIG Box FISCAL EXPERIENCES
California municipalities have for years engaged in fierce cross-city competition for sales tax
revenues. This fisealization of land use raises several concerns. Arc communities offering deals
that are worth more than the local benefits generated? Even if localities end up better off, do
regions suffer as retail stores play one city off against another in search of the best deal? Do
fiscal concerns cause local governments to devote more land to retail uses than they otherwise
might? Now, with the entry of discount retail into the grocery business in other parts of the
country, the already complicated questions of local fiscal policy and land use become even
murkier. Several points can be gleaned from recent experience:
I. Tax incentive deals are often large. The Los Angeles Times (Shuit, 1998) reports that Long
Beach rebated half of the city's share of sales taxes generated by a recently built automobile
dealership. The deal was viewed by city officials as necessary to encourage the car dealer to
relocate from Signal Hill. In Ventura, K-Mart requested dismissal of$I.5 million in
81
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o
development fees for a Super-K, K-Mart's version ofa supercenter (Sommer, 1995). The
Super-K development was proposed for a site across the street from an existing K-Mart.
Ventura council members acknowledged pressure to meet K-Mart's terms because nearby
Oxnard had recently lured Price Club and Wal-Mart with similar deals (Sommer. 1995).
Lake Elsinore's redevelopment agency, in 1993, agreed to reimburse Wal-Mart $2.2 million
out of the city's share of sale and property tax to encourage the development of a discount
store in that city (Perkes, 1999).
2. The tax deals, like the one involving Long Beach, often move businesses from one city to
another. In the Bay Area, Costco re'cently relocated from Martinez to Concord (Finz. 1999).
When Cost co announced the move, officials in Martinez. faced with the loss of their single
largest source of sales tax revenue, responded by trying to interest other discount retail firms,
including Wal-Mart, in the site (Finz. 1999).
o
3. Some tax incentive agreements exact unexpected costs from government coffers. In 1986,
the Colton Redevelopment Agency agreed to reimburse Price Club $2.5 million for the cost
of land for the store. The $2.5 million payment, plus interest. was to be paid by rebating to
the company half of all sales tax revenue generated for no more than fifteen years. The
agreement specified that Price Club would pay the city a penalty if it opened other stores
within a twclve mile radius. In 1992. because Price Club wanted to open two stores within
the twelve mile radius, the agreement was changed to both lower the fraction of sales taxes
rebated to 31 percent and remove the fifteen year time limit. In 1996, the store, then owned
by Costco, was closed. COStco officials said that the Colton store's low sales were due. in
part, to competition from other Price Club and Costeo stores in the area. Yet the original
incentive agreement had been tied to the store site, not to the store itself. and Colton owed
$900,000 of the $2.5 million agreement when Costco closed in 1996. The $900,000 debt
remains, and interest is accruing on the debt. despite the fact that Price/Costco has not
occupied the site for three years (Perkes, 1999).
The above examples illustrate that any tax incentive deal is complicated and risk)'. and should be
evaluated carefully. Efforts to lure the newly emerging supercenters arc even more complex, for
several reasons.
I. Supercenters arc often expansions of existing discount centers. In Macon. Georgia. Wal-
Mart closed a discount center to open a new Supereenter across the street (Krause, 1999).
2. A K-Mart near Omaha added grocery aisles without increasing floor space, likely in part to
compete with a nearby Wal-Mart Supereenter (Olson. 1999). Had that occurred in
California, the loss of retail floor space to groceries (most of which are not taxable) could
have led to a reduction in sales tax revenue generated at the site.
3. In some cases, relocations of big-box retail outlets leave behind vacant store sites and smaller
shops that lose customer traffic without an anchor tenant. Riehland Hills, outside of Fort
Worth, recently saw their Sam's Club membership discount store relocate to nearby North
Riehland Hills (Hornaday, 1999). In Lake Wales, Florida, Wal-Mart closed a discount center
when it constructed a Supercenter two blocks away. Store owners in the complex that
included the old discount center expressed concern about the loss of customer traffic to the
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82
new Supercenter location (Circelli, 1999).
~
4. The conversion of a discount center to a Supercenter can have unanticipated land use
consequences. In Pinellas Park. Florida, Wal-Mart recently sought permission to double the
size of a discount center as part of a conversion to a Supercenter. The firm proposed
expanding onto six acres of wetlands adjacent to the discount center site. The expansion
plans have generated heated opposition. as residents have argued that the wetlands should be
preserved (Lindberg, 1999).
The next section looks at broader regional trends.
c. TAXABLE SALES AND TAX REVENUES
Local governments share an increasing concern for the fiscal impacts of land use decisions.
"Land" in this respect represents a resource that can be vacant, improved (i.e., it contains a man-
made structure that is in use), or abandoned. Due to the impact of Proposition 1329 on the ability
of jurisdictions to generate sufficient property taxes on commercial and residential land uses.
land is increasingly gauged in terms of total and taxable sales generated by an owner or lessee.
Of course, the ability of a locale to support a land use will be based in part on its potential market
for items sold or distributed from a given site. Thus. cities are also concerned with the effects of
different categories ofland usage on employment and the overall vitality of impacted
communities. This section concerns both the fiscalization ofland use and the subsidiary impacts
of land use decisions on community vitality, should the ability ofa given square footage to 0
generate sales and tax revenue fall short, yielding of vacancy.
Two categories of retail land use were chosen for purposes of comparison: general merchandise
and food stores. General merchandise is defined as any retail establishment permitted to operate
as a limited price variety, department, drug, or other general merchandise store (State of
California Board of Equalization, 1997). Food Stores comprise supermarkets, grocery stores
with or without alcohol, grocery stores with beer and wine, and specialty grocers. such as
bakeries.
In order to estimate the impact of these categories on a local government, let liS consider their
relative abilities to generate sales, and more importantly, taxable sales. Total sales generated by
~" Proposition 13. passed in 1979. limits the assessed value of property for tax purposes to its 1977 value. or its
purchase price if sold after 1979. plus a maximum of 2%, appreciation per year.
83
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c
general merchandise and food stores in Orange County were calculate using taxable sales and the
Census of Retail Trade (United States Depanment of Commerce, 1992) data. Since data
pertaining to total sales arc only available for] 987 and 1992. these figures were used to calculate
the percentage of total sales by category that are taxable in Orange County. It was determined
that in 1992,70% of total general merchandise sales are taxable, compared to 38.6% for food
stores. These percentages mirror those derived from 1987 data (State of Cali fomi a Board of
Equalization, 1987). Data was compiled in an Excel spreadsheet for taxable sales Orange
County city, and the above percentages were used to determine total sales. Figure 3-1 rcpresents
these estimates for 1990 through 1997.
Figure 3-1 illustrates that following 1992, total food store sales began to fall, while general
merchandise sales remained relatively constant throughout most of the County's recession
period. Total estimated sales were $4.5 billion for general merchandise and $3.26 billion for
food stores in 1997. It can be concluded that general merchandise has a far greater potential
impact on the County's economy.
Figure 3-1. Estimated Total Sales: Food Stores and General Merchandise Stores in
Orange County ($ thousands)
o
Sales
(in SOOOs)
S5,OOO,000
S4,500,000
S4,OOO,000
S3,500,000
S3,000,000
S2,500,000
S2,000,000
S 1,500,000
S 1 ,000,000
S500,000
SO
1992
1993
1995
1996
1997
o Food
. General
D. THE FISCAL IMPACTS OF BIG Box GROCERS
To better understand the fiscal impacts of these categories that are realized by city governments,
taxable sales were investigated. The State Board of Equalization maintains statistics lar taxable
sales as well as the number of store pcrmits from which they are generated. Through use of such
information, one can better understand the potential impact of a single land use decision, though
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84
it remains potentially skewed by the range of store size in each category. It can also suggest ,.
previous impacts of big box retail sitings within individual jurisdictions. Figure 3-2 and Figure \I
3-3 show the percentage of taxable sales that arc accounted for by general merchandise and food
stores in Orange County, respectively.
Figure 3-2, Taxable Sales: General Merchandise as a Percentage of Total Retail
16.0
1996
1997
()
16.5
15.5
% of
Total
Retail
85
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Figure 3-3: Food Taxable Sales as a Percentage of Total Retail Taxable Sales
%of
Total
Retail
1996
1997
Figure 3-4 and Figure 3-5 represent taxable sales per permit for the two groups.
o
Figure 3-4: General Merchandise Taxable Sales per Permit (S thousands)
Sales Per
Permit
(in OOOs)
S4,000
53,000
1997
57,000
S6,000
S5,000
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86
Figure 3-5: Food Stores Taxable Sales per Permit (S thousands)
t)
$800
1990 1991
1992
1994
1995
1996
1997
$1,000
Sales Per $600
Permit
(in OOOs)
While general merchandise taxable salc's per permit feU significantly in 1997. they remain more
than four times higher than food store taxable sales. It remains evident that both industry groups
are susceptible to economic and market shifts, although the trend for per permit taxable sales for
general merchandise appears to be one of gradual and then accelerated decline. This decline
suggests either a change in the industry mix in temlS of the relative size of general retail
establishments (i.e.. a growing proportion ofsmaUer vendors could reduce sales per permit), or
in the eflieieney ofperrnit operators. For instance, if big box retailers do not continue to account
for their high floor-to-area ratios (FAR) and intensive usage of parking space with similar gravity
effects (i.e.. the attraction of a proportionately larger market radius) and merchandise turnover,
then lower sales per square feet would ensue. Another possibility would be that the mix of goods
sold and purchased at larger retail establishments might be shiliing to one that includes more
non-taxable items, such as prescription drugs.
o
To further investigate the impact of big box retail on a local economy. taxable sales per permit
were calculated for two cities that have experienced the introduction of a Wal-Mart within the
last ten years. Table 3-1 gives the opening dates for Wal-Mart stores within Orange County.
87
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Table 3-1: Wal-Mart Locations in Orange County and
Opening nates
Wal-Mart Location
440 N. Euclid Street, Anaheim
ODened
1/31/95
27470 Alicia Parkway, Laguna Niguel
1/95
2595 E. Imperial Highway, Brea
1/98
2300 N. Tustin Street, Orange
1/98
3600 W. McFadden Avenue, Santa Ana
1/98
13331 Beach Boulevard, Westminster
6/20/98
Source: Cities of Anaheim. Laguna ~iguel. Brea. Orange. Santa Ana. and
Westminster Planning Denanments
o
Figure 3-6 and Figure 3-7 show taxable sales per permit for general merchandise and food stores
in Anaheim, while Figure 3-8 and Figure3-9 provide the same information for Laguna Niguel.
The remaining Wal-Man locations within Orange County were opened in 1998, for which
complete sales tax data were not available.
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88
Figure 3-6: General Merchandise Taxable Sales per Permit in Anaheim (S thousands) c:t
Sales Per
Permit
(in OOOs)
$3,500
$3,000
$2,500
$2,000
1993 1994 1995
1996
1997
Figure 3-7: Food Stores Taxahle Sales per Permit in Anaheim (5 thousands)
Sales
PeT
Permit
(in ODDs)
o
1990 1991
1992
1993
1995
1996
1997
1994
89
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~
"
.-- ..
Figure 3-8: General Merchandise Taxable Sales per Permit in Laguna Niguel (5 thousands)
Sales Pcr
Pennit
(in 0005)
$8,
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
o
1990 '
1991 1992 1993 1994
1995 1996
1997
Figure 3-9: Food Stores Taxahle Sales per Permit in Laguna Niguel (5 thousands)
$700
$600
$500
Sales Per
Permit
(in 0005)
199]
1992
1993
1995
1997
1994
1996
o
90
o
The rapid increase in taxable sales per permit in 1995 suggests that the shear size of a Wal-Mart
can change the fiscal landscape of even a large city. Amazingly, gains in taxable sales per
permit made through the addition of a big box retailer were all but erased by 1997. This, too,
reflects the volatility of large-scale retail operations, where establishments that would appear to
be the "anchor" of a given location are not immune to downturns or closures. Laguna Niguel is
also instructive, as it represents a relatively small retail market. Between January, 1995 and
December, 1996, general merchandise sales per square foot doubled. Again, these per-square
footage gains were erased by the end of 1997.
One lesson that can be gleaned from even a cursory glance at Figure 3-6, Figure 3-7, Figure 3-8,
and Figure 3-9 is that in spite of the inevitable Ouctuations in taxable sales caused in part by the
entry and exit of big box retail, sales per permit will always overshadow that which is generated
by food stores. When we shift our analysis from permits to square footage, however, we find
that much of this discrepancy is caused by the fact that big box retailers operate such vast
facilities. While on a per square footage basis these stores may not be as efficient as grocery
stores (see Table 3-2). the size of the store, coupled with differential sales to taxable sales ratios,
will result in the taxable sales gap presented.
Table 3-2: Sales Per Sql1are Foot and Selling Square Foot for
Discount Stores and~upermarkets
Store
Sales Per,
S uare Feet
210
211
31&
234
355
264
398
Selling Square
Foota e Per Store
39,689
70,692
26,912
109,296
97,475
68,813
27,723
o
JC Penny
Kmarl
Sears
Target
Wal-Mart
Discount Store Average
Average Su ermarket
When considering the siting of a big box retailer such as Wal.Mart. fiscal impacts will
undoubtedly come into play. While these facilities can offer the promise of large aggregate tax
revenue, they also pose some serious risks. Pearson correlations were used to calculate the linear
association between total taxable retail sales change from 1990 through 1997 and the component
parts of general merchandise and food stores. Such a relationship will suggest the ability of One
industry to weather changes in the overall retail market. While correlation docs not necessarily
prove causation, it can theoretically suggest the effects of one variable on another.
91
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For instance, a significant and positive correlation berween rwo variables would suggest that as
one variable increases, the other will do the same. Table 3-3 presents the results of Pearson's
correlations. Correlations were also run for change in taxable sales per permit from 1990 through
1997, berween total retail and the rwo variables.
o
Table 3-3: Pearson's Correlations for Orange County Taxable Sales % Change and Sales Per
Permit % Chanl!e
% Change: Total Pearson 1.000 .591 .374 .944 .786 .062
Retail Correlation
Sig. (2-tailed) .005** .066 .000* * .000* * .769
N 25 21 25 25 21 25
% Change: General Pearson .591 1.000 .301 .645 .832 .068
Merchandise Correlation
Sig. (2-tailed) .005 ** .185 .002** .000** .771
N 21 21 21 21 21 21
% Change: Food Pearson .374 .301 1.000 .224 AI5 .515
Stores Correlation
Sig. (2-tailed) .066** .185 .282 .062 .008**
N 25 21 25 25 21 25
% Change in Per Pearson .944 .645 .224 1.000 .780 .093
Permit Sales: Total Correlation
Retail
Sig. (2-tailed) .000** .002** .282 .000** .659
N 25 21 25 25 21 25
% Change in Per Pearson .786 .832 .415 .780 1.000 .042
Permit Sales: Correlation
General
Merchandise
Sig. (2-tailed) .000* * .000** .062 .000** .858
N 21 21 21 21 21 21
% Change in Per Pearson .062 .068 .515 .093 .042 1.000
Permit Sales: Food Correlation
Stores
Sig. (2-tailed) .769 .771 .008** .659 .858
N 25 21 25 25 21 25
** Correlation significant at the 0.01 level (2-tailed). ....' .,........,.: ...,............
These correlations suggest that as total taxable retail sales increase, total retail sales per permit
and total general merchandise taxable sales will also increase. No such relationships were found
between total retail sales and taxable retail sales or sales per permit for food stores. In addition,
changes in taxable sales per permit for the entire retail industry were significantly related to
changes in total retail sales, changes in general merchandise sales, and changes in per permit
gcneral merchandise sales. Again, similar relationships were not found between total retail and
food stores categories.
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E. SU:vJ:vJARY (t
The risk implied by these results is twofold: general merchandise stores are far more vulnerable
to market shifts than food stores, and changes in sales per permit is related to total sales. Thus,
the tradeoff presents itself: big box retailers will most likely enter a community. boosting overall
retail sales and tax revenues, only to be among the first to consolidate or fold when conditions
begin to change. If a big box retailer were to include food sales in its operations, these
relationships might also hold true. Free-standing food stores would likely yield market share and
in some cases become vacant. while taxable sales from grocery operations would shift to
locations that are much more prone to the impacts of regional business cycles.
Large-scale retailers present a cost-benefit assessment problem to an interested city. Consider
the typical public hearing for the siting of a Wal-Mart in Orange County: concerns over
potential clientele, crime, design changes and character arc raised (Wolfe, 1999). The fiscal
impacts of the facility arc often seen as clear-cut, but they are not, particularly when a big-box
retailer expands into food sales. This thrcatens to lower the taxable sales per square feet for a
land use that is alrcady riddled with inefficiencies and great risks should market conditions
become unfavorable.
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93
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10
Chapter 4: Concluding Comments
ct
The grocery industry in the United States and California is currently changing rapidly. One of the
most important trends is the combination of big-box discount retail and grocery sales into
supercenters. Wal-Mart stands out as the most aggressive entrant into the supercenter market. In
1990, Wal-Mart operated six supercenters. By the year 2000, Wal-Mart is projected to have 714
such stores, solidifying its position as the leading owner and operator of supercenters nationwide.
What does this mean for Orange County and Southern California?
Three sets of policy issues arc important.
I. Supercenters, especially Wal-Mart supercenters, are often conversions of existing
discount retail stores, and local officials should be aware of that possibility. In 1999,
Wal-Mart estimated that 72% of all new Supercenters would be built by converting existing
Wal-Mart discount centers. Because the grocery and general retail industries differ
dramatically in their pay scales, function within the community, and ability to generate sales
tax revenues, this is far from a simple expansion of an existing business. Local officials
should be aware of the possibility for conversions of existing discount centers into
supercenters.
o
2. The grocery industry in Southern California pays substantially higher wages, and
offers better benefits, than Wal-Mart. IfWal-Mart or other low labor cost food retailers
enter the southern California market, the ability of the grocery industry to provide high-
paying, entry-level jobs will be considerably reduced. By far the largest controllable cost in
the grocery industry is wages and benefits. Large labor cost differentials do not persist.
Should a discount retailer enter the southern California grocery market and compete
effectively while paying wages below the current norm for the industry, the pressure on
existing chains to lower wages and benefits would be immense. Estimating that Wal-Mart
supercenters could capture from 10% to 20% of the southern California grocery market, we
calculate the direct value of lost wages and benefits to range to nearly $ 1.4 billion per year.
Accounting for the multiplier effect as those wage and benefit cuts ripple through the
economy, the total economic impact on the southern California economy could
approach $2.8 billion per year.
3. The fiscal benefits of supercenters, and of discount retail more generally, are often
complex. Supercenters in particular combine many non-taxable food items under one roof
with general merchandise. Furthermore, any discount retail outlet potentially shifts sales
from existing local retail, and the net impacts on local sales tax reVenues are far from certain.
o
94
,
o
What did we find?
. The aggressive entry of supercenters such as those operated by Wal-Mart into the
regional grocery business is expected to depress industry wages and benefits at an
estimated impact ranging from a low of $500 million to a high of almost $1.4 billion per
year, potentially effecting 250,000 grocery industry employees. (Chapters 2 and 4)
. The full economic impact of those lost wages and benefits throughout southern
California could approach $2.8 billion per year. (Chapters 2 and 4)
. Discount retail chains that operate supercenters, including Wal-Mart, typically offer much
less comprehensive health care coverage than major California grocery chains. One
negative economic impact of Supercenters could be a dramatic reduction in health coverage
for most of the 250,000 grocery employees in California. This can lead to lower quality care
for grocery employees whose health insurance benefits are reduced. (Chapter 2)
. The fiscal benefits of supercenters, and of discount retail more generally, are often
much more complex, and lower, than they first appear. This is particularly true when
big box retailers close existing stores to move into larger quarters elsewhere, when they
expand an existing store into food, and when retailers reconfigure an existing store to
sell food without expansion. In each case the additional tax revenues generated will in
part come from existing businesses elsewhere in the city in the form of lost market
share. (Chapter 3)
o
. Supercenters, especially Wal-Mart supercenters, are often conversions of existing
discount retail stores. Thus local officials should carefully consider the possibility of a
future conversion to a supercenter, and any attendant negative economic, fiscal, or land
use impacts, when approving big box discount retail projects, even when the proposed
land use does not include immediate plans for grocery sales. (Chapter 1)
The wage and benefit impacts of the entry of big box groceries into the region arc estimated
using a two step process. First, we estimate the market share that Wal-Mart supercenters are
cxpected to capture in southern California, based on current averages of between 47 and 57
stores per distribution center. Using data on market share and number of stores in several urban
areas, we conclude that one distribution center roughly translates to an 10% market share for
Wal-Mart supercenters in southern California. The assumptions that led to that estimate werc
uniformly conservative, and so we also USe an estimate of 20% long-run market share for
supercenters, comparable to the major existing chains in southcm California.
o
We then calculate the wage impacts of these market share estimates. Even a 10% market share
for supercenters is a substantial competitive threat to existing chains, and those chains are likely
to respond aggressively. Case studies of similar competition between low and high labor cost
grocers illustrate that grocery chains cannot tolerate large labor cost gaps. This evidence
indicates that in the short-term grocery chains typically seek to close approximately one half of
the wage gap with major competitors. Over the long term, the grocery chains may seck to lower
wages to their workers to eliminate the entire difference between their pay and that of discount
95
retail employees, an average difference of over S9 an hour currently.
()
Using data On current wages and benefits, we calculated that the direct impact on workers in
southern California would likely fall in the range of about S500 million to S 1.4 billion per year in
lower pay, depending on the big box food sales market share. Using the Southern California
Association of Governments estimates of how these lowered wages would impact the regional
economy, the total regional drop in spending ranges from about SI billion to OVer S2.8 billion per
year (Chart 4-1). The numbers will rise the larger the market share of big box grocers, and
could well top even these figures over time.
Chart 4-1: Estimates of Regional Income Losses
From Lower Wages Paid by Big Box Grocers (from Table 2-20)
S500
o
S3,000
S2,500
S2,000
Total
Regional
Income
Impact
(Smillions)
S I ,500
S I ,000
so
S7.97
S8,62
S9.26
Wage Gap Between Major Grocery Chainsand Discount Retailers
rJ Low Estimate
Ii Medium Estimate
o High Estimate
In addition, we find that the tax revenue impacts of big box grocers are uncertain. While big box
retail does typically capture taxable sales from outside the jurisdiction, it also captures business
from local retail, thus hurting the local economic base of the community. There is evidence as
well that the initial growth in sales tax revenueS from the big boxes may not be either steady or
sustained in some situations (e.g., Figure 3-8).
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96
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-- ~-.
Figure 3-8: General Merchandise Taxable Sales per Permit in Laguna Niguel (from page 88)
(Note: The Wal-Mart Opened in 1995)
Sales Per
Permit
(in 0005)
$8,000
$ 7 ,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1990 1991
1992 1993
1995
1997
1994
1996
More to the point of this report, a much larger share of food sales are not taxable at all. Most of
the Wal-Mart supercenters result from the conversion of existing Wal-Marts into a combination
of general merchandise and food sales. Thus, the floorspace devoted to taxable sales may
actually fall as these conversions continue.
There is also evidence that general merchandise stores arc far more vulnerable to market shifts
than food stores. Thus, this tradeoff presents itself: big box retailers will most likely boost
overall retail sales and tax revenues on entry, only to be among the first to consolidate or fold
when conditions begin to change. If a big box were to include food sales in its operations, then
free-standing food stores would likely yield market share and in some cases become vacant,
while taxable sales from grocery operations would shift to locations that arc much more prone to
the impacts of regional business cycles.
How should local officials proceed?
These potential impacts are significant, with respect to both the vitality of the local economy and
the public budget bottom line. The transformations in the grocery industry thus present local
officials with some key policy considerations. The grocery business is a vital part of the
economic and the community fabric of most every municipality in the region. The changes
occurring in that business have the potential to quickly and adversely affect the economic health
of localities, and officials should be aware of that potential as they evaluate future discount retail
projects.
97
In particular, the following questions are important in evaluating discount retail projects.
~
1. Is there potential for changes in the use of the property~ Discount retail chains arc
increasingly taking on the functions of grocery stores. In light of that trend, local officials
should both be aware of the potential for the conversion of discount retail sites into
supercenters and inquire about future plans for discount retail stores seeking local planning
commission and city council approval.
2. How will the discount retail store affect the local labor force? Discount retail chains
traditionally pay substantially less than the grocery industry in southern California. Local
officials should carefully assess the possibility that a particular discount retail project might
depress wages in other stores in the municipality.
3. What are the fiscal impacts of a discount retail store? At the most general level, local
business both require public services and have the potential to produce local tax reVenues - a
point often missed when officials focus exclusively on the tax revenue side of the equation.
Any land use, eVen big box retail outlets that are perceived as municipal "cash cows", must
be carefully evaluated. Some land uses do not generate tax revenue that outweighs municipal
costs. In other instances, the data in Chapter 3 suggest that discount retail stores produce
only short-term increases in local sales tax revenue. And the cyclical nature ofretail sales
tax revenue suggests that the revenUe streams from supercenters might be highly variable
Over time. Local officials should carefully evaluate these and related issues when they assess
the fiscal impact of a discount retail outlet or supercenter.
o
For decades, grocery stores have been hidden but important parts of the health of many southern
California municipalities. Recent changes in the grocery industry have the potential for catching
local officials unaware of the possible impacts in their communities. This report highlights the
potential for economic impacts as discount retail chains develop supercenters, while also
emphasizing the uncertain nature of any local fiscal benefits. Local officials should carefully
evaluate the implications for their communities.
o
98
o
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99
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f)
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100
o
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102
~
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Appendices
The following appendices are "Supermarket Fact Sheets", one page "summary of operations" on
each of the fifteen supermarkets highlighted in the background section of the report.
These fact sheets include information on such things as employment, size, average weekly sales
per store, growth in number of stores, recent mergers, presence in Southern California, and labor
union affiliations where applicable and when avai]able.
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A Checklist for Evaluating Big Box Retail Projects
Overall, our analysis of these data illustrate the great complexity. and possibly unintended conse-
quences, of the entry of large footprint discount retail into the grocery business,To help prepare
local and regional official to review proposed big box projects generally, we suggest communities
systematically assess the positive and negative local impacts of such projects. The following
checklist is one way to do so. It proposes a systematic review of the impacts on local workers,
on municipal finances, and on other key community issues.
[;1' ECONOMIC AND EMPLOYMENT IMPACTS
How much will the new big-box outlet cut into existing local retail market share?
TASKS: Need to inventory the local retail base
Assess market areas and market impacts
What will happen to the local workforce?
TASKS: Assess impact on existing local retail
Calculate direct impact of job changes, lower wages
Calculate impacts of less medical coverage and other fringe benefits
Calculate ripple impacts of lower wages on local economy (multiplier impacts)
Will the new big-box outlet lead to vacancies or changes in local land use?
TASKS: Inventory vacant land and commercial properties
Assess re-use or redevelopment possibilities for competing sites
[;1' MUNICIPAL FINANCE IMPACTS
How much will the new development cost your municipality?
TASKS: Service~ ;'Iud capital expenditures: Calculate cost of infrastructure & utilities (Le..
streets, sewer connections. water lines, etc.)
Trame and other sel"vice impacts?
Calculate the cost of associated economic development incentives (e.g.. tax credits)
Assess the impact o( redevelopment zone tax-increment financing
How much will the new development really change local tax revenues?
TASKS: Assess net changes in local retail sales (e.g., including sales lost to the new big box)
Calculate net changes in sales and property tax ,-evenue
Examine the stability of the retail sales tax revenue over time
[;1' COMMUNITY IMPACTS
Will the big-box footprint possibly expand in the future? In the same line of business?
TASKS: Ask about future plans up front
Examine industry trends
Plan (or expansion contingencies
What localities will benefit from and/or be disadvantaged by the big-box development?
TASKS: Assess the differences between local and regional impacts
Are local gains at the expense of losses in other cities? Must these be mitigated?
How will the new retail outlet affect your community's quality of life? For example,
will it reduce the appeal of a downtown core that you are trying to preserve or
revitalize?
TASKS: Inventory locations of competing retailers
Assess impact on existing local retailers
.
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07/05/0t l11U 14:12 FAX I 415 626 2860
D,_C, ,&_8.,
1i!I00? ,
o A V I 5 .
COWELL
&
BOW E
L L P
'Counselors'and Attorneys at law
o
Reply to:
July 5, 2001
, ~t\..~.It....
':..1.1......,.~
lO'V""......",,,2Othfloo< By fax 909-384-5080
Sanfr~Oljforni~Ml02i
.'5.626.1880 i
,,,411,620_ Valerie Ross
.Principal Planner
l.rryS.JeUilOO(CAJ I . .
J,fho...........(CA.N'I) ic~ty of San Bernard~no
'.....U........"ICA.N'I) ;San Bernardino CA 92418
Richard G. McCr<<ten (eA. NY)
w. David Hohbeny lCA. NV) ,
E1iubolhAn"""",""ICA.N'I) iRE: Appeal of Development Permit II No. 01-05 (July 9th
And,,,,!.Koh"ICA.NV.A2l ~Council hearing)
John.l. DavI5.Jr. (CAJ
F~E.culp(CA.NV) j
MichaeIT.Andenon(CA,NV,DC.MAJ : Dear Ms. Ross:
TImothy !iran (eA, N\f, DO .
KristlnLMartin(CA) . did
. Enclose please f n additional information
Phlll""'::;;::; !supporting our appeal for you to distribute to the
M"'''....(Il<) Council, an expert opinion from retail management
,. jconsultant Peter Whelan. It supports our claim that this
C';5~tht,;~~1project will likely blight other retail stores.
W"'",glo<\DC'OOO5 , The enclosed opinion refers to a study by Wharton
202.m'62. IProfessor Edward Shils: by overnight mail you will receive
fu.202.223.8651
:six copies of that study, along with six copies of another
-...,....phyO>Q i study of WalMart's impact by UC Professors Boarnet &
Jon""rM"'ID~"'MOI ' Th t d' 1 th t f
. Crane. ese s u ~es are too eng y 0 ax.
i Under separate cover you will be faxed an expert
,
; ... t t\ l.}l'~:opinion letter on this subject from William Lathrop,
88tkOn5treel,.4thFloor :
..,.to.,M""" ihopefully by the end of today.
m.m."'. ! Thank you for your consideration.
f..611127.5161
,
,
Mid\aellAnderson(CA,NV.DC.MA) !
Sincerely,
RobertP:CowtII(1911-198C) .
&:-j;:-
!
''!o\~
~.. ".!.\1IMP......1
1630S.ComnrrceStreet,SufteA.' i fax cc:
l..J!Vtgil'l.NeYad.89102 .
702.38&.5107 i
faJ.102.386.98411
Attorney for Carol Gold
John McClendon
Carol Gold
Q
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07/05/01 1'1111 14: tJ FAX I 415 626 2860
D,C, & n,
IlJOOJ
PETER M. WHELAN
9479 ViCtoria Lane
Windsor, CA 95492
May 7, 1999
Clerk of the Board
Board of Supervisors
COUNTY OF RIVERSIDE
4080 Lemon Street, 1411\ Floor
P.O, Box 1147
RiverJide, CA 92502-1147
Re: ' Appeal of Penny Newman re: Wal-Mart Warehouse, Plot Plan No.
15861 (FfA 99-4), EnviroMlcntal AnellSlTlent No, 37602
Honorable Board Membc<1:
I am a management advillOr/consultant who is vet)' Wniliar with gencral merchandise ilnd
!Dod retailing including the unique procurement, warehousing and distn"bution characteristics
associated therewith. In addition, I have extensively studiod the economic, social and
environment impact ofWal-Mart's corporate phil~sophy and retail ~rategy in numerou8
conununities within California. Attached is a brief summary of my professional experiences, sJcills,
and qualifications.
It is my undersi.anding WaI-Man is proposing to build a distn'bution center in Riverside'
County. I have been asJced for ~ opinion on the economic impact such a development will have
and the environmental impact assoc~ated therewith.
Construction of.. Wal-Mart distn'bution center in Riverside County will act as I cawysl to
development ofWaI-Mart stores in Southern California and activate its move into the grocery
business through its Supercenter format. This in turn will create disruptive and possibly costly
changes to traffic: patterns in many communities, ,
Wal-Man's plans were summarized by its qliefExecutive Officer David D. GlllSs at the
June 7, 1996 annual stockholders' meeting, In discussing Wal-Mart's future expansion plana, Mr,
GIISI said: "We're going to dominate North AmeriCL" Wharton Business School Professor
Edward Shils conducted discussions with rctoilcrs in Califomia, city plannerJ, San Diego City
Council members and San Diego city financial officials, These are reviewed in his 1997 report,
"Mta3Uring the Economic and Socioloeical Impact of the Mega-Ri:taiI Discount Chains on Small
EnterPrise in Urban, SubuIban and Rural Communitias." Professor Shits concluded,wal-Mart'8
m 39\1d
013 53XOB lIIIW
912:2:BE:8L9L
65:69 666t/9t/59
07/05/01 TflU 14: 14 !'AX I 415 626 2860
D.C. & Il.
~004
o
Page Z
May 7. 1999
objective mi&ht be to build over 500 stores in CllIifomia alone. Compare this to the latat datil
from Wal-Mart: there are onlyl00 WaJ.Mut stOres in the stlte, All are discount storcll, none are
SUperecnten.
The closest WaI-Mut distribution centers are currently located in Porterville, California
and New Mexico, which allows the company to competently :service general merchandise stores in
CalifomiL However. the location ortbes. distribution centers precludes the company &om
introduciIlg the Supercenter fOl1l1a1 in Southern California because or the complex turn-around
sehedule required to service I grocery operation with the larger number of deliveries required U1d
the expanded varlety and perishability of the product mix.
However, with a dilllnoution center located in Riverside County, WaI-Mart is likely to
exponentially expand in Southern California, particularly with Supercenters, The extent to which
it would do so is evident by the fact WaI-Mart has not introduced this Connat in California. while
it has installod 441 Supen;entcrs in the rest of the country,' Jonathan Laing, in a May, 1996
article in Barron's. conlinned the growth plMS ofWaJ-Mart by reporting projections by Wal-Mut
CEO David Olua that by the year 2000, the grocery business to be CJ1ioyed by WaI-Man's new
Supercenters "will blow past the 524 billion business volume of Kroger, the dominant
supel1l1llIket chain,"
o
Wal-Man tends to locate its new stores on undeveloped land,often on the outslciru of
existing towns/cities rather than in already-urbanized areas. This encourages conversion of
agricultural land near the new WaI.Man to non-agricultural uses,
Development of new Wat-Mart stores and entry of existing Wal-Mart stores into the
!!J'Oe8TY bulin,," hu frequently had a devastating impad on the economie, social and
environmental characteristics ofsulTounding communities. Its huge discount Slores especially
impact the traditional depllrtlnDllt store amI the "Main Street" retailer, but also h&w begun to
transform fonneely-prosperous retail malls into replicas or city ghettos, On visits to California,
New York, minois and Pennsylvania, Professor Shils and his stafrwitnessed what I also have
seen: thl! inCJ"ll88ing decay of smaller stores and their environment in malls when hit with
competition &om discount meaastores. Typically, these malls mIght have had a nonna1-aized
discount store (60,000 square feet) as an anchor, A major rival such as WaI-Mart would then
coll5tluct a Supercenter (125,000 to 200,000 square feet) perhaps ona-halfmile away from the
older mall, with a new parldng area and an invitation for new stores to open in the area. After 6
o
'These Supen:eoten include 72 in Texas, 33 in Florida, aDd 30 in MisSOllri (Source: Wal.Mut
&IIIW&! rcpart to slaRbolders lOr end ofFY 1998, available at wwww31nwt.eom). Florida allo has 102
n:gular Wal.MaJ1 discount stores, aDd Texas has 169. Wal-Man bas much gremr density in _ which
arc far smaller 1han Califurnl.a in size IIId POPUlation: for ell8/llple, Missouri has 79 WaI-Mart disCOllDt
I\UIW and 30 $upua:nlerl, Kearudcy bas 45 discount $tOrc:s and 23 Supercmterl, and Georgia has 62
discount stOres and 2S SUpm;altcrJ. '
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monthJ to a year, the smaller discounter surrenders, and the store becomes vacant. Traflie density
in the older maIl begins to di<lu shoppers go to the newer and larger mega-retail dierount store,
Within a year, every second or third retail store is closed. These stom than take on a pttoized
boarded-up appearance. Graffiti.lron grills and unsightly signs then appear, and what 5 to 10
yean earlier was a hlllldsome mall now resembles an urban ghetto,
Strip stores within a JIlIle or two dc. MW WaI-Mart llI"O libwise endangwed, Owners of
florist shops, apparel stores, pet food stores, automotive stores, plwmaeies and othera typically
ended their interview with Shils' researchers with I statement like: "No matter how etfe<:tivdy I
can compete, If the store next door becomes vacant, ttaffic dellJity diminishes, and my store will
have to <:loJO as wen as the one next door," These retailers cooperate in securing naw tenants fur
the VllCllllI lItores, but it is largely a losing fight, In some of the huge malls visited, u much AS a
33% vacancy rate wu observed within 6 month. to 1 year ofthe anival of a big box discount
.tore neaIby.
Not only are small and medium-sized retailers being hammered by WaJ-Man and the like,
but even larger discount chains arc: falling by the wayside, as attested to the banlauptcy
applications ofCaldor and Bradlees, Charming Shoppes, with over 1,400 retail stores, i! reported
to be in real trouble, while SlIo's has closed all stores,
o
Analysts trace the ~d to a redrawing of battle lines. The expansion into nearly CM:l)'
market ofthe so-caJled Big Three.. WaI-Man Stores. K.Mart Corp. and Dayton Hudson Corp's
TlUlI"Cl chain - has pitted diseounter against di5COunter in a competition that f'avon Jize. "The
smaller chains arc gatting caught in a battle between the Big.." says Linda KristillllSCll, a New
York retail analyst with Wertheim Schroder, A diSlenting opinion by J Arkansas Supreme Court
Justices in the I99S Conway WaI-Man predate!)' pricing case included these rcmarlcs, which
aucclnctly state the problem and a basic reason for concern - the corporate philo.sophy:
We also find that the Chancellor could have found an intent to injure competitors from the
811idCll\te in the record and panicularly from the testimony otDavid Glass, Pre!lident of
Wal-MaIt Stores, Inc,. who used language such u "aggressive, .. "do wh4tever it takes. ..
"1rt1J the competition's momentum" and ''wcu Z01IU. "
Senior retaillll1alyst WaIter Loeb of Loeb and Associates ~ys the luger firms such as Will-Mart
are saininglncreasing control over the competitive environment and suppliers, When Wal-Mart,is
growing at Ig.200/o a year, with the economy growing only about 3%, somebody is aiYing up
business.
Retailen responding to Shils' questionnaire saw the reduction in the number of
wholesalers and middlemen wiIIin& to sell to small retailers as affecting their business negatively,
Ovv 50"10 5lW the direct selling to mega-retail discount chains by supplico lIS being "negative" or
'very negative."
o
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WaI-Mart's recant vemure into groceI)' depattmenu through its Superceruecs creates
devastating ~mpetition for the small grocer and more traditional supermarket. The ability of
WaI.Man to buy direct from food processors and supplicfI provides better margina than are
available to small retailers, Further, wholesalers are disappearin& since the giant diKOunt ehains
are buyina "direct" where possible.
In a separate study of the impact of mega-discount retailers, the National Trust for
Historic Preservation notes that tho ~c, location llnd desi&n ofthellc ncw storcs create major
problems in both subuman and rural oommunities, These include:
.
displacing axisting businesses, especially indepcmdently-owncd small buaine3ses
who contnoute significantly to local civil life, by building stores vastly out of scale
with a town's ability to absomthem.
.
setting the stage for higher property and state income taxes by creating
developments that are costly to SCfVll and require new roads, water and sewer
linea, police protection and other public 88I'Vices,
.
causing the wute or abandonment ofprevloul public and private Investments in
cxistina buildinis. streelJ, parks and otha community as!ets,
o
homogenizing America by building stOres that have no relation to their
surroundings,
New or expanded WaI-Mart stores in Southern California would sl&nlficanlly injure existing
department stores and genera1 men:handise. drug, toy and grocery stores, and liIc~y cause a
number to close or otherwise become run-down in appearance,
In my cltperiencc, 'once a department, general merchandise, drug, toy or grocery store
dOBllB, It usually is vel)' difficult to find an new tenant for it. It becomes II lingering ll)'I!SOI'Il, The
~ of a ready market fur closed stores is illustrated by Wal-Mart's own problems in this regard:
for atlcast several months WaI.Mart's website has been advertising for sale or lease over 300 of
its own stores which are currently closed,
IfWal.Mart is allowed to build the proposed distribution center, my experience and
research lead me to believe this wilt cause Wal-Mart to introduce Supercenters into California
Thi.I will not only destroy a healthy segment of the currently-viable small and mediurn- sized
srocery retailers and eliminate tbe jobs linked thereto, but would ultimately result in the loss of
many high-paying job snow fuund in chain supermarkets. W &l-Man's increasing push into the
food industry is motivated by the drive to increua toUII retail sales, According to company
statement.. total retail 9aIes should increase some 30'10 due to the synergies established at
combinstlon stores, Furthermore, it has been suggested that WaI.Mart will use food as a loss
o
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May 7, 1999
leader in order to increase store traffic, The impact of Supercenters on the food industry will
pan/let the etfCCl WaI.Mart has had on the tra.dltlonal retail industry c1escribed above.
Supc:rmarltets work on very thin margins. The wmbination ofWal-Mart's cheaper labor and low
prica will haw murderous impact on traditional food slores, large or small. Company-pald health
benefits and retirement plans now prevalent in supennarlcet& might disappear. WaI.Mart provides
heahh benefits to a far smaller seiP1ent of its workforce than most 5Ilpermarket chains. The shift
in health benefit costs will go directly 10 the taxpayer, while laid-off supermarket workers are
likely to leek benefits fi'om federal, local, and state iovemments,
Thank you for the oppoltUlllty to provide the Board with my observations and inlights
into the CCOIIOrnic, socilll and environmental impacts of the development ofa Wal-Mart
distribution center in Riverside County,
Sin.cerely,
~ JI1 jJ~
Peter M Whelan
<;R "I9\1d
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7-17-1998 2,18PM
FRO>1 OFFICE DEPOT 941 1 7~7 542 2338
''0..-/
o
Peter M. Whelan
'-.....--
11471l VICtoria Ulne I WlIldsor, CA 115492 I (707) 83lHl21l7
OBJECrIVE: fully utilize proven leadership skills, business acumen and management expertise to make a
positive contribution to a customer responsive, progressive business.
STRENGTHS: Enthusiastic, people-oriented, hands-on, professional manager with:
(I Broad experience in P&L administration and capital allocation strategies,
(t Goal-oriented, with consistent success in profitably "growing" a business and controlling expenses.
(I first-hand knowledge of issues, opportunities and challenges facing business today.
(I Solid and successful track record in the development and execution of diverse business strategies.
(I Extensive experience in motivating and directing people to strengthen/improve organizational
performance.
(I Innate ability to quickly recognize potential roadblocks and promptly resolving the issue(s) to ensure
attainment of business objectivels),
SUMMARY OF EXPERIENCE
o
Provi&o Corp., San Rafael, California - General Manager with total P&L responsibility for Warehouse Store
Division of this large Northern California food distributor/retailer. The profit center was a ground-up project,
and the units were operated both corporately and under a definitive licensing agreement, Responsibilities
included:
(t Establishment of division's goals and objectives,
(I Development, Implementation and administration of business/financial plan, including ancillary support
programs. ,
(I Organizational design, recruitment, training and leadership,
(I O1airman 01 Licensee Committee, whose primary function was to monitor group performance and
prudently fine-tune, strengthen and broaden marketing programs,
(t Site selection, lease negotiations, design of store spec package, supervision of construction activity and
facility management.
(I Member of Provigo Corp. Executive and Finance Committees. The Executive Committee established
overall company priorities/strategy, while the finance Committee determined capital
strategy/allocations.
MclanejPaclfic Inc., Merced, California _ Presidenl of this California start-up corporation. The parent company
is headquartered in Texas and is a major supplier of products and services to the convenience store and food
service segment of the food market. Primary responsibilities basically mirrored those of my prior position, as
the business was also a start-up project requiring a focused, aggressively executed commercial strategy,
Colonial/Grand Union, Paramus, New Jersey. Regional Vice President with total P&lresponsibllity for various
conventional and warehouse store divisions,
Red Owl food Stores, Hopkins, Minnesota - Vice President of Retail Operations, with total P&L responsibility
for multidivision, multi formatted stores. '
EDUCATION: Graduate, Michigan State University's School of Business and was President of Food
Oistr\ib~tion Program,
o PROFf5SIONAl..CJVlC AC17V1T1fS:
Director of several retail food companies
Director of San Mateo County Cancer Society
Director of several state Food Councils.
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CITY OF SAN BERNARDINO
Development Services Department - Interoffice Memorandum
Planning Division
TO: Mayor and Common Council
'y(;f2.-
FROM: Valerie C. Ross, Principal Planner
SUBJECT: Appeal of Deve]opment Permit II No, 01-05
DATE: June 28, 2001
COPIES: Rachel Clark, City Clerk; James Penman, City Attorney; Fred Wilson, City
Administrator; James Funk, Director, Development Services
On July 9,2001, the Mayor and Common Council will consider an appeal of the Planning
Commission's adoption of the Mitigated Negative Declaration and Mitigation/Monitoring and
Reporting Program and approval of Development Permit II No, 01-05 - is a request to establish a
155,9] 7 square foot commercia] retail store (Wa]-Mart) with ancillary gasoline sales on 14,5
acres. The project site is located on the northwest comer of McArthur B]vd. and Hallmark
Parkway in the UBP-2, University Business Park land use district.
Backup items related to the project are being distributed separately to give you addition a] time to
review them, If you have any questions, feel free to contact me at 384,5057,
The backup items include:
Exhibits:
2
3
4
5
Planning Commission Staff Report
Best, Best & Kreiger letter dated June 5, 2001
Tom Dodson letter dated June 5, 2001
Transcript of June 5, 2001 Planning Commission meeting
o
o
o
EXHIBIT 2
SUMMARY
CITY OF SAN BERNARDINO PLANNING DIVISION
CASE:
AGENDA ITEM:
HEARING DATE:
WARD:
Deve]opment Pennit Type II No, 01-05
6
June 5, 2001
6
APPLICANT:
Harold Garcelon
Hallmark & Foreman
1152 N, Mountain Avenue, Ste. 100
Upland, CA 91786-3669
APPELLANT:
Kathleen Franks
1974 E, Lynwood Drive, #13
San Bernardino, CA 92404
909.475,5809
REQUESTILOCATION: An appeal of the Deve]opment/Environmenta] Review
Committee's approval ofa 155,917 square foot commercia] retail store with ancillary
gasoline sales on 14,5 acres. The project site is located northwest of the intersection of
University Parkway and Hallmark Parkway in the UBP-2, University Business Park
land use district.
CONSTRAINTS/OVERLAYS:
iii High Wind Area
ENVIRONMENTAL FINDINGS:
o Not Applicable
o Exempt
o No Significant Effects
iii Potential Effects, Mitigation Measures and Mitigation MonitoringlReporting Program
STAFF RECOMMENDATION:
iii Approval
iii Conditions
o Denia]
o Continuance to:
S:IPLANNINGIPLNG SECRETARy\FORMSISUMMARY
o
o
o
Development Permit II No. 01-05
Hearing Date: 06/05/01
Page 2 of6
REQUEST
Raymond Johnson, representing Kathleen Franks, has submitted an appeal of the
DevelopmentJEnvironmenta] Review Committee's approval of Development Permit II No,
0]-05, Deve]opment Permit II No, 01-05 is a request to establish a 155,917 square foot
commercial retail store (Wa]-Mart) with ancillary gasoline sales on 14.5 acres.
LOCATION
The projeCt site is located on the northwest comer of McArthur Blvd. and Hallmark
Parkway in the UBP-2, University Business Park land use district. (Attachment],) The
University Business Park Specific Plan, adopted by the City in ]992, includes the parcels
located between Saratoga Way and University Parkway, and between Georgia Bou]evard and
the 1-215, excluding the service station and fast food restaurant on University Parkway,
BACKGROUND
. February 12,2001. Deve]opment Permit II No. 01-05 was submitted. Included with the
application was a draft Initia] Study prepared by Tom Dodson and Associates.
. March 1,2001. The DevelopmentJEnvironmental Review Committee (D/ERe) conducted
a preliminary review of the project, which was continued to March 8, 2001.
. March 8, 2001. The DIERC reviewed the site plans and considered the Initial Study,
Based on their independent review and analysis of the Initial Study, the D/ERC
recommended that a Mitigated Negative Declaration be prepared and continued the
project to April 19, 2001 for a 20-day public review period.
. March 9, 2001. Planning staff and the applicant determined that Caltrans was a
responsible agency as defined by the California Environmental Quality Act. As a result, a
30-day public review period was required, and the Initial Study and proposed Mitigated
Negative Declaration were submitted to the State Clearinghouse for distribution to state
agencies,
. March 13,2001. The City's Notice of Intent to adopt a Mitigated Negative Declaration
was published in The Sun.
. March 14 - April 12, 2001, Public review period for the proposed Mitigated Negative
Declaration.
. During the public review period, Planning staff and the applicant worked on design and
development concerns identified by the D/ERC.
. April 19,2001. The DIERC continued the project to April 26, 2001 in order to prepare
responses to comments received during the public review period,
. Apri] 26, 2001. The DIERC adopted the Mitigated Negative Declaration and Mitigation
MonitoringiReporting Program and approved Development Permit II No. 01-05 based on
the Findings of Fact in Development Code 9 19.44,060, subject to the Conditions of
Approva], including revisions to the site plan, elevations and landscape plan and the
Standard Requirements. (Attachment 2.)
o
o
o
i
Developmellt Permit II No, 0 },05
Hearing Date: 06/05/0}
Page 3 of6
ENVIRONMENTAL REVIEW
As noted above, Tom Dodson prepared an Initial Study to address the potential impacts
resulting from the development proposal. (Attachment 3,) A draft was submitted to staff with
the Deve]opment Permit application, After reviewing the draft document, staffrequested
various revisions before distribution to the D/ERC. At their meeting of March ],2001, the
D/ERC requested revisions to the Initial Study to address their concerns, and those raised by
members of the public, The D/ERC independently reviewed and analyzed the findings and
analysis in the Initial Study before recommending that a Mitigated Negative Declaration be
prepared.
The Initial Study and proposed Mitigated Negative Declaration were made available for
public review and comment. Responses were prepared to address the comments received
during the review period. (Attachment 4.) The D/ERC reviewed the responses and concluded
that they adequately addressed the comments, and determined that environmental review
process completed for the project met the requirements of the California Environmental
Quality Act.
The DIERC also approved the Mitigation Monitoring/Reporting Program (Attachment A of
Attachment 2), which identifies the mitigation measures, implementation schedule,
responsible party, and verification of completion.
DEVELOPMENT PERMIT FINDINGS
I, Is the proposed development permitted within the subject zoning district and
does it comply with all of the applicable provisions of the Development Code,
including prescribed development/site standards and any/all applicable design
guidelines?
Yes, the proposed use is a permitted use in the UBP-~, University Business Park land
use district, with approval ofa Deve]opment Permit. The proposed project complies
with all applicable policies in the University Business Park Specific Plan and the
provisions of the Deve]opment Code, including the cornmercia] design guidelines as
shown on the site plan, elevations, and landscape plan, and the Conditions of
Approval. (Attachment B of Attachment 2,)
2. Is the proposed use consistent with the General Plan?
Yes, The University Business Park Specific Plan is incorporated into the City's
General Plan, University Business Park Specific Plan Goals I and 2 state as follows:
"Provide employment opportunities within the University Business Park for
existing and future residents of the City and those of adjacent communities."
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Developmelll Permit II No, 01-05
Hearing Date: 06/05/01
Page 40f6
"Provide for the continuation and development ofland uses within the
University Business Park which meet the needs of regional and local
populations."
Deve]opment of the Wal-Mart project provides retail employment and shopping
opportunities for area residents, Wal-Mart's typically provide 241 full and part time
positions. Although there are grocery stores located on University Parkway at College
Avenue and Kendall Drive at Shandin Hills Drive, there are no genera] merchandise
stores within the immediate vicinity,
3. Is the proposed development harmonious and compatible with existing and
future developments within the land use district and general area, as well as
the land uses presently on the subj ect property?
Yes, the proposed facility will be compatible and harmonious with the existing and
surrounding land uses in the area, The proposed new construction will enhance the
existing site and be a benefit to the surrounding area due to its high-quality
, architectural design,
4.
Is approval of the Deve]opment. Permit for the proposed development in
compliance with the requirements of the California Environmenta] Quality
Act and Section 19,20,030(6) of the Deve]opment Code?
Yes, an Initial Study was prepared, public comments were received and responses
prepared, and a Mitigated Negative Declaration is proposed for this project, as
discussed under Environmenta] Review above, In addition, Goa] 3 of the UBP
Specific Plan states as follows:
"Ensure that the types ofland uses developed in the University Business Park
eomplement and do not adversely affect the quality of life and health of the
City's residents and businesses,"
The project was reviewed for compliance with the provisions of the specific plan as
well as CEQA requirements,
5, Are there potential significant impacts upon environmental quality and natural
resources that could not be properly mitigated and monitored?
No, all potentia] negative impacts are addressed with mitigation measures as specified
in the Initial Study, which will reduce those impacts to less than significant levels. A
Mitigation MonitoringlReporting Program was prepared to correspond to Mitigation
Measures identified in the Initial Study, and adopted by the D/ERC.
6,
Is the subject site physically suitable for the type and density/intensity of use
being proposed?
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Development Permit 11 No. 01-05
Hearing Date: 06/05/01
Page 5 016
Yes, the site is physically suitable for the type and density/intensity of the project
being proposed, as evidenced by project compliance with all applicable Development
Code Standards,
7.
Are there adequate provisions for public access, water, sanitation, and public
utilities and services to ensure that the proposed use would not be detrimental
to public health and safety?
Yes, all agencies responsible for reviewing public access and providing water,
sanitation and other public services have had the opportunity to review the proposal
and none have indicated an inability to serve the project. The proposal will not be
detrimental to the public health and safety in that all applicable Codes will apply to
the construction of this project.
8. Are the location, size, design, and operating characteristics of the proposed
development detrimental to the public interest, health, safety, convenience, or welfare
of the City?
No, the location, size, design, and operating characteristics are consistent with all
provisions of the Development Code and will not be detrimental to the public interest,
health, safety, convenience, or welfare of the City. The proposed construction of the
155,917 square foot commercial retail store with ancillary gasoline sales will be
compatible with the existing development in the area.
APPEAL ISSUES
The appeal filed by Ms, Franks contains no discussion of the perceived impacts to traffic, air
quality, noise, and blighting influence, (Attaclunent 5,) As discussed under Environmental
Review, staff believes that the Mitigated Negative Declaration adequately addresses potential
impacts from development of the Wal-Mart project, and the Mitigation Monitoring/Reporting
Plan ensures implementation of the mitigation measures,
Raymond Johnson, Ms. Franks' attorney, submitted a letter questioning the traffic mitigation
measures, (Attaclunent 6,) Mr. Johnson believes that it is improper to defer the traffic
mitigation improvements. The traffic-related mitigation measures are required to be
completed prior to issuance of a Certificate of Occupancy, with the exception of the freeway
off-ramp improvements, These ramp improvements are not anticipated to be required until
2010 as per the traffic study completed for this project. However, Public Works has required
the applicant to complete this improvement concurrent with the other traffic-related
improvements, prior to the issuance of the Certificate of Occupancy.
CONCLUSION
The Development/Environmental Review Committee's adoption of the Mitigated Negative
Declaration and Mitigation Monitoring/Reporting Program and approval of Development
o
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Development Permit 1/ No. 01-05
Hearing Date: 06/05/01
Page 6 016
Pennit II No, 01-05 were consistent with the California Envirorunental Quality Act and the
requirements of the City's General Plan and Development Code,
RECOMMENDA nON
Staffrecommends that the Planning Commission uphold the D/ERC's adoption of the
Mitigated Negative Declaration and Mitigation MonitoringlReporting Program and approval
of Development Penn it II No. 01-05 based on the Findings of Fact in Development Code S
19.44,060, subject to the Conditions of Approval, including revisions to the site plan,
elevations and landscape plan, and the Standard Requirements,
Respectfully Submitted,
James Funk
Director of Development Services
YtfWvf/,f(N4-
Valerie C, Ross
Principal Planner
Attachment I
Attachment 2
Location Map
Development/Envirorunental Review Committee Approval Letter
. Attachment A Mitigation Monitoring and Reporting Program
. Attachment B Conditions of Approval and Standard
Requirements
. Exhibit A Site Plan
. Exhibit B Elevations
. Exhibit C Landscape Plan Requirements
Initial Study
Initial Study Comments and Responses
Appeal Application
Letter from Raymond Johnson
Attachment 3
Attachment 4
Attachment 5
Attachment 6
"!I
ATTACHMENT 1
(~
CITY OF SAN BERNARDINO PROJECT: DP II No. 01-05
PLANNING DIVISION
LOCATION MAP
LAND USE DISTRICTS HEARING DATE: 6/5/01
u
NORTH
<.....l
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May 15,2001
Harold Garcelon
Hallmark & Foreman
1152 N. Mountain Avenue, Suite 100
Upland, CA 91786-3669
ATTACHMENT 2
DEVELOPMENT SERVICES DEPARTMENT
300 North "D" Street. San Bernardino. CA 92418,0001
909,384.5057 . Fax: 909,384.5080
PIl'l!t,' Works Fax: Q09.384.5155 . www.ci.san,bernardino.ca.us
RE: Development Permit No, 01-05 - North San Bernardino Retail I Project
Dear Mr. Garcelon:
The Development/Environmental Review Committee took the following action at its
meeting of April 26, 2001,
The D/ERC adopted the Mitigated Negative Declaration and Mitigation Monitoring and
Reporting Program (Attachment A) and approved Development Permit No. 01-05 upon
the Findings of Fact in Development Code S 19.44.060, subject to the Conditions of
, Approval, including revisions to the site plan, elevations and landscape plan and the
Standard Requirements (Attachment B),
The decision of the D/ERC is final unless a written appeal is filed, with the appropriate
fee, within IS days of the D/ERC's action, pursuant to Section 19.52,100 of the
Municipal (Development) Code,
Sincerely,
VdtWJt. ~
Valerie C. Ross
Principal Planner
cc:
Roger & Vivian Wang
7957 Oceanus Drive
Los Angeles, CA 90046-2044
HCK Properties
c/o Chin Cho
117 Tree Top Drive
Santa Cruz, CA 95060
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A TT ACHMENT A
DEVELOPMENT PERMIT II NO. 01-05
NORTH SAN BERNARDINO RETAIL 1 PROJECT
MITIGATION MONITORING/REPORTING PROGRAM
This Mitigation Monitoring and Reporting Program has been prepared to implement the
mitigation measures outlined in the Initial Study for Development Permit II No, 01-05,
This program has been prepared in compliance with the California Environmental
Quality Act (CEQA) and the State and City of San Bernardino CEQA Guidelines,
CEQA Section 21081,6 requires adoption of a monitoring and/or reporting program for
those measures or conditions imposed on a project to mitigate or avoid adverse effects on
the environment. The law states that the monitoring or reporting program shall be
designed to ensure compliance during project implementation.
The Mitigation Monitoring and Reporting Program contains the following elements:
1.
The mitigation measures are recorded with the action and procedure
necessary to ensure compliance, The program lists the mitigation measures
contained within the Initial Study,
A procedure for compliance and verification has been outlined for each
mandatory mitigation action, This procedure designates who will take
action, what action will be taken and when, and to whom and when
compliance will be reported,
The record sheets, the pertinent actions, and dates will be logged, and
copies of permits, correspondence or other data relevant will be retained
by the City of San Bernardino,
The program is designed to be flexible, As mo.nitoring progresses, changes
to compliance procedures may be necessary based upon recommendations
by those responsible for the program, If changes are made, new
rnonitoring compliance procedures and records will be developed and
incorporated into the program,
2.
3.
4,
The individual measures and accompanying monitoring/reporting actions follow, They
are numbered in the same sequence as presented in the Initial Study.
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10
.
ATTACHMENT B
Conditions of Approval and Standard Requirements
DP II 01-05
North San Bernardino Retail ]
I.
Within two years of development approval, commencement of construction shall
have commenced or the pennitlapproval shall become null and void. In addition,
if after commencement of construction, work is discontinued for a period of one
year, then the pennitlapproval shall become null and void,
Expiration: April 26, 2003
2. The review authority may, upon application being filed 30 days prior to the
expiration date and for good cause, grant a one-time extension not to exceed 12
months, The review authority shall ensure that the project complies with all
Development Code provisions ill effect at the time the extellsioll request is filed,
3.
In the event that this approval is legally challenged, the City will promptly notify
the applicant of any claim or action and will cooperate fully in the defense of the
matter. Once notified, the applicant agrees to defend, indemnify, and hold
harmless the City, the Economic Development Agency, their affiliates, officers,
agents and employees from any claim, action or proceeding against the City of
San Bernardino, The applicant further agrees to reimburse the City and the
Economic Development Agency of any costs and attorney's fees whieh the City
or the Economic Development Agency may be required by a court to pay as a
result of such action, but such participation shall not relieve applicant of his or her
obligation under this section.
4. No vacant, relocated, altered, repaired or hereafter erected structure shall be
occupied or no change of use ofland or structure(s) shall be inaugurated, or no
new business commenced as authorized by this permit until a Certificate of
Occupancy has been issued by the Department.
5. Construction shall be in substantial conformance with the plan(s) approved by the
Development Review Committee,
6.
A temporary Certificate of Occupancy may be issued by the Department subject
to the conditions imposed on the use, provided that a cash bond or other security
is filed with the Department of Public Works prior to the issuance of the
Certificate, if necessary, The deposit or security shall guarantee the faithful
perfonnance and completion of all tenns, conditions and perfonnance standards
imposed on the intended use by this pennit.
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DPII No, 01-05
Page 20f9
May 15, 2001
7.
The approval is subject to all the applicable provisions of the Development Code
in effect at the time of approval. This includes Chapter 19,20 - Property
Development Standards. and includes: dust and dirt control during construction
and grading activities; emission control of fumes, vapors, gas and other forms of
air pollution; glare control; exterior lighting design and control; noise control;
odor control; screening; signs, off-street parking and off-street loading; and,
vibration control.
8. Signs are not approved as a part of this permit. Prior to establishing any new
signs. or replacing existing signs, the applicant shall submit an application, and
receive approval for a sign permit from the Planning Division, All signage on the
site shall be permanent. Signs painted on exterior building surfaces are
prohibited,
9, The address number of every commercial building shall be located and displayed
so that it shall be easily visible from the street. The numerals in these numbers
shall be no less than six (6) inches in height and be of a color contrasting to the
background, In addition, any business that affords vehicular access to the rear
through any driveway, alleyway, or parking lot shall also display the same
numbers on the rear of the building,
10.
A dedicated parking space, marked for Police Department use only, shall be
provided near the main entrance to the building.
I I. At Plan Check submittal, the Site Plan, Elevations and Landscape Plans shall be
modified to incorporate the conditions of approval listed below, Any items that
are not requested for modification shall remain on the plans, Numbers correspond
to the redlined plans.
A. Site Plan Requirements (Exhibit A)
1.
A minimum of two (2) benches shall be located within the vieinity
of both trellises,
The cart corrals shall be relocated to an area closer to the building,
The area for seasonal display shall be clearly delineated and
enclosed by a tubular steel fence or other materials approved by
the Planning Division, Chain link is not permitted, Seasonal
display shall be subject to the following standards:
. The seasonal display area shall be enclosed by a tubular steel
fence (or other material approved by the Planning Division),
. Prior to use of the marked area for seasonal displays, Wal-Mart
shall provide a seasonal displays operations plan for review
and approval by the Planning Division, This plan shall outline
the frequency and duration of -contemplated seasonal displays,
2,
3,
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DPlI No. 01,05
Page 3 of9
May 15. 2001
4.
All carts shall be stored inside, unless the Planning Division
approves an alternative, outside location: Should outside storage
be selected, a minimum 3' high screen wall and other screening
materials approved by the Planning Division shall be used to
screen the carts.
Outside storage shall not be permitted.
5,
B. Elevations (Exhibit B-2 pages)
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I.
All mechanical and roof-mounted equipment shall be fully
screened from public view by being placed below the lowest level
of the parapet wall, Should the equipment extend beyond the
parapet wall, it shall be screened in a manner found acceptable to
the Planning Division,
The E.I.F,S. elements added on all elevations shall be squared off
on the bottom to be consistent with the major entry, Darker
elements, consistent with the main entry shall be provided to
provide the visual support for these elements.
Signage is not part of this application, A separate application is
required,
Colors and materials for the gas canopy shall be compatible with
the main building. All light sources shall be energy efficient,
stationary and shielded or recessed within the roof canopy so that
the service station shall be indirectly visible and light is deflected
away from adjacent properties and public rights-of-way, Lighting
shall not be of such a high intensity as to cause a traffic hazard or
adversely affect adjoining properties, No luminaire shall be higher
than 15 feet above finished grade,
Garden Center
. Any covers that are proposed over the Garden Center shall be
subject to approval by the Planning Division,
. Entry features, as approved by the Planning Division, shall be
provided at all major entries to the Garden Center,
. No bulk materials (i,e" mulch, stacked inventory) may be
located adjacent to the Garden Center fence where it is visible
from the street or parking lot. Items may not be stacked higher
than the height of the fence,
The loading docks shall be screened with a screen wall.
All ladders shall be internalized,
Chain link or barbed wire fences shall not be permitted.
2.
3.
4.
5.
6.
7,
8.
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DPII No, 0/-05
Page 4 of9
May /5, 200/
c.
Landscape Plan Requirements (Exhibit C)
1. One (1) evergreen vine shall be planted per each post of the
trellises located on the southeast elevation.
2.
One (I) tree, minimum 36" box, shall be planted on each side of
the trellis, Each trellis shall be surrounded by a minimum of two
trees, Said trees shall be shadel canopy trees,
Existing mature trees along Hallmark Parkway shall be preserved
in place or relocated.
Parking lot landscaping shall be provided at Itree/4 spaces,
Additional trees may be required along the 1-215 frontage to screen
the loading docks, The Planning Division shall approve final
plans,
The garden area will be enhanced/screened from Hallmark
Parkway to the satisfaction of the Planning Division,
An overall site landscape percentage calculation shall be included
on the plans.
The parking spaces along Hallmark Parkway shall be screened by a
36" high opaque wall or landscaping, A combination of walls,
berms and landscape material is highly recommended,
All landscaping shall be consistent with Section GI9,28,l30
Landscape Design Guidelines from the City's Development Code,
3.
4.
5,
6.
7,
8.
9.
16. Proposed changes to the hours of operation shall be provided to the Planning
Division for review and approval at least one month prior to the contemplated
change,
17. Proposed changes to the project to include additional uses and/or building
expansion will require a new Development Permit.
18. Wal-Mart shall consider the purchase of a defibrillator for use on-site, as may be
needed. The applicant shall provide a letter confirming that the installation/use of
a defibrillator has been considered by Wal-Mart management.
19, Any public pay phones located on the site shall be located near the main entry and
set to provide outgoing calls only and 911 only from 12 a.m. and 5 a,m,
20. The project shall notify the Police Department of graffiti on site within 24 hours,
so that it may removed. A photo of the graffiti shall be taken before removal.
21.
The applicant shall comply with the Mitigation Monitoring and Reporting
Program (Attachment A).
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DPIl No, 0/-05
Page 5 oJ9
May /5. 200/
22.
All exterior lighting shall be energy efficient with the ability to lower or reduce
usage when the store is closed, Store signage may be required to be turned-off
when the store is closed, consistent with the governor's executive order D-19-0I,
dated January 17, 2001.
23, The vacation ofa portion of Gannett Parkway northeasterly of Hallmark Parkway,
and a portion of McArthur Boulevard northwesterly of Gannett Parkway shall be
completed prior to the issuance of grading and/or building permits,
24. This permit or approval is subject to the attached conditions or requirements of
the following City Departments or Divisions:
a, Police Department
b. Development Services Department - Public Works Division
c. Development Services Department - Plan Check Division
d. Public Services Department - Refuse Division
e, Water Department
f. Fire Department
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DPII No, 0/,05
Page 60f9
May /5. 200/
SAN BERNARDINO POLICE DEPARTMENT
CPTED (CRIME PREVENTION THROUGH ENVIRONMENTAL DESIGN)
STANDARDS
"The proper design and effective use of the built environment can lead to a reduction in
the fear and incidence of crime, and an improvement of the quality oflife"
CPTED as defined by the National Crime Prevention institute.
1. Natural Surveillanee
A design concept directed primarily at keeping intruders easily observable, Promoted
by features that maximize visibility of people, parking areas and building entrances:
doors and windows that look out on to the streets and parking areas; pedestrian-
friendly sidewalks and streets; front porches; adequate nighttime lighting,
2. Territorial Reinforcement
Physical design can create or extend a sphere of influence, Users then develop a
sense of territorial control while potential offenders, perceiving this control, are
discouraged. Promoted by features that define property lines and distinguish private
spaces from public spaces using landscape plantings, pavement designs, gateway
treatments, and "CPTED" fences,
3. Natural Aeeess Control
A design concept directed primarily at decreasing crime opportunity by denying
access to crime targets and creating in offenders a perception of risk, Gained by
designing streets, sidewalks, building entrances and neighborhood gateways to clearly
indicate public routes and discouraging access to private areas with structural
elements,
4. Target Hardening
Accomplished by features that prohibit entry or access: window locks, dead bolts for
doors, interior door hinges, Presented along with each of these CPTED strategies are
guidelines which, as a homeowner, builder or remodeler, you can apply to reduce the
fear and incidence of crime and improve,the quality oflife,
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DPII No, 0/-05
Page 70f9
May /5.200/
CPTED Reauirements for Commercial Properties
1. Natural Aeeess Control
. The cash register should be located in front of the store near the main entrance,
. The cash register should be visible from the street.
. The public path should be clearly marked,
. Signs should direct patrons to parking and entrances,
. There should be no easy access to the roof. Permanently affixed ladders leading to
roofs shall be fully enclosed with sheet metal to a height often (10) feet. This
covering shall be locked against the ladder with a case hardened hasp, secured with
non-removable screws or bolts and a padlock with a minimum three-eighths (3/8)
inch hardened steel shackle, locking at both heel and toe, and a minimum five (5) pin
tumbler operation with non removable key when in an unlocked position, Hinges on
the cover will be provided with non-removable pins when using pin-type hinges,
2. Natural Surveillance
. Windows should be on the front and rear of the building, allowing visibility of all
parking areas,
. Window signs should cover no more that 15% of windows
. Interior shelving and displays should be no higher that five feet for increased
visibility,
. Exterior of buildings should be well IiI. All exterior doors should be well lit.
. Dumpsters should not create blind spots or hiding areas,
. Parking and entrances should be observable by as many people as possible,
. Shrubbery should be kept less than two feet in height for visibility,
. Orient buildings in a complex for good visibility of the streets, parking lots and other
buildings in the complex,
. Loading areas should not create hiding places.
. Clear visibility should be maintained from the store to the street, sidewalk, parking
areas and passing vehicles.
. Orient parking spaces to provide good visibility between cars,
. Maintain continuous front setbacks for buildings along a street.
. Retention areas should be visible from the building or street, it should be a visual
amenity, not hedged or fenced off.
. All entrances should be under visual surveillance or monitored electronically,
3. Territorial Reinforeements
. Property perimeters defined by landscaping post and pillar fencing or gates.
. Signs should clearly identify interior business,
. Use strong locks and construction materials on all doors and windows.
. Limit numbers of entrances and exits to the buildings, parking lots, etc,
. Locate entrances and exits in areas that are under surveillance or direct supervision,
. Install burglary and robbery alann systems, Alarm pennits must be issued prior to
the use of any burglar or robbery alarm, Contact the alann unit of the San Bernardino
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.
.
.
.
.
.
.
1.
2.
3.
4.
5.
6.
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DPlI No. 01-05
Page 80J9
May 15, 2001
Police Department at (909) 384-5715. The office is located at the main station at 710
N, '0' Street, San Bernardino 92401.
. Install closed-circuit television (CCTY) cameras or mirrors where sight lines are
obstructed,
. The following standards for lighting and address markings shall apply to commercial
buildings:
I) The address number of every commercial building shall be located and
displayed so that it shall be easily visible from the street. The numerals in
these numbers shall be no less than six (6) inches in height and be of a
color contrasting to the background, In addition, any business that affords
vehicular access to the rear through any driveway, alleyway, or parking lot
shall also display the same numbers on the rear of the building,
I) Rooftop address numbers shall be provided, They shall be a
minimum of three (3) feet high and two (2) feet in width and of
contrasting color to the background, Numbers shall be placed
parallel to the street address as assigned, Each building within a
commercial complex shall have its own address/assigned number
affixed to the roof.
Management
Parking close to the store should be available to nighttime employees.
Operating hours should coincide with those of other neighboring businesses,
Pay phones should be call-out only and under surveillance at all times,
Interior space should be well lit.
The interior office door to the managers office should have a lock and a door eye
viewer.
Install "No TrespassinglNo Loitering" signs on the property.
Use signs to:
Discourage access to dangerous areas,
Indicate opening and closing times,
Indicate minimal caSh on hand,
Direct people to safe paths, exits, emergency assistance, etc,
Inform people how to report maintenance problems,
Inform intruders of access control measures, alarms, etc,
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DPll No, 0/-05
Page 9 0[9
May /5. 200/
CPTED Reouirements for Parkwavs. Pedestrian Paths and Common Areas
. Maintain tree canopies at least 8 ft above the ground. Shrubs should be trimmed to or
below 36 inches.
. Use open landscaping and see-though fences instead of solid walls or hedges for
boundaries where privacy or environmental noise mitigation is not needed,
. Grade land where practical without substantially altering the natural terrain to provide
unobstructed sight lines within the project and from adjacent streets and developed
areas.
Eliminate possible hiding or entrapment spots along pedestrian paths, e,g" dense
shrubs. high walls or hedges, or alcoves, along pedestrian paths.
Employ design features and materials that cannot easily be vandalized, stolen or used
to damage the property,
A void use ofloose rocks as decoration,
Use graffiti-resistant paint or anti-graffiti coatings on walls, benches, light poles,
signs, etc,
Use low-maintenance designs and irrigation systems, and drought resistant plants to
facilitate upkeep over time,
Pedestrian scale street lighting should be used in high pedestrian traffic areas,
Provide exterio'r lighting for visibility at night on streets, parking areas, sidewalks,
pedestrian paths, possible entrapment spots, etc, to enable people to see where they
are going and identify others along their route, Light should be consistent to reduce
contrast between shadows and illuminated areas,
Make sure that trees or other landscaping does not block light.
Use screens, wired glass, or other protection for light fixtures and bulbs,
Use vines, thorny plants, and other landscaping along walls to make access more
difficult and prevent graffiti,
Provide adequate light for nighttime use of paths to and from the entrances and exits
of buildings and throughout the project or neighborhood,
Locate amenities and activities at or near entrances, exits and major circulation paths
to increase risk of detection for intruders.
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I
, STANDARD REQUIREMENTS
I
I DEPARTMENT OF DEVELOPMENT SERVICES/PUBLIC WORKS DIVISION
I
DESCRIPTION: 155,917 S,F. COMMERCIAL
CASE NO: DP II NO. 01-05 RETAIL STORE WITH
ANCILLARY GASOLINE SALE
LOCATION: N/E CORNER OF McARTHUR
APPLICANT: BOULEVARD AND HALLMARK
HAROLD GARCELON PARKWAY
I
. NOTE TO APPLICANT: Where separate Engineering plans are required, the applicant is
responsible for submitting the Engineering plans directly to the Engineering Division. They may
be submitted prior to submittal of Building Plans,
1. Draina2e and Flood Control
a) A local drainage study will be required for the project. Any drainage improvements,
structures or storm drains needed to mitigate downstream impacts or protect the
development shall be designed and constructed at the developer's expense, and right-of-
way dedicated as necessary,
b)
All drainage from the development shall be directed to an approved public drainage
facility, If not feasible, proper drainage facilities and easements shall be provided to the
satisfaction of the City Engineer.
c) If site drainage is to be outletted into the public street, the drainage shall be conveyed
through a parkway culvert constructed in accordance with City Standard No, 400,
Conveyance of site drainage over the Driveway approaches will not be permitted,
d) Applicant shall mll1gate on-site storm water discharge sufficiently to maintain
compliance with the City's NPDES Storm Water Discharge Permit Requirements. A
"Notice of Intent (NOl)" shall be filed with the State Water Quality Control Board for
construction disturbing 5 acres of more ofland.
e) All contaminated drainage from spills in the vicinity of the fuel dispensers shall be
contained in a tank on-site and properly disposed of by hauling to an approved
contaminated waste disposal facility, Contaminated drainage shall not be discharged into
the City streets or storm drain system.
Page 1 of 9 Pages
5/1512001
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I STANDARD REQUIREMENTS
DEPARTMENT OF DEVELOPMENT SERVICES/PUBLIC WORKS DIVISION
DESCRIPTION: 155,917 S.F. COMMERCIAL
CASE NO: DP II NO. 01-05 RETAIL STORE WITH
ANCILLARY GASOLINE SALE
LOCATION: N/E CORNER OF McARTHUR
I APPLICANT: BOULEVARD AND HALLMARK
! HAROLD GARCELON PARKWAY
i
f) The City Engineer, prior to grading plan approval, shall approve an Erosion Control Plan,
The plan shall be designed to control erosion due to water and wind, including blowing
dust, during all phases of construction, including graded areas which are not proposed to
be immediately built upon,
2, Gradinl! and Landscaoinl!
a)
If more than l' of fill or 2' of cut is proposed, the site/plot/grading and drainage plan shall
be signed by a Registered Civil Engineer and a grading permit will be required, The
grading plan shall be prepared in strict accordance with the City's "Grading Policies and
Procedures" and the City's "Standard Drawings", unless otherwise approved by the City
Engineer. '
b) Ifmore than 5,000 cubic yards of earthwork is proposed, a grading bond will be required
and the grading shall be supervised in accordance with Section 70 12( c) of the Uniform
Building Code.
c) If more than 1,000 cubic yards of earth is to be hauled on City Streets then a special
hauling permit shall be obtained from the City Engineer. Additional conditions, such as
truck route approval, traffic controls, bonding, covering of loads, street cleaning, etc. may
be required by the City Engineer.
d) An on-site Improvement Plan is required for this project. Where feasible, this plan shall
be incorporated with the grading plan and shall conform to all requirements of Section
15.04-167 of the Municipal Code (See "Grading Policies and Procedures"),
e) A refuse enclosure, if necessary, constructed in accordance with City Standard Drawing
No. 508, The minimum size of the refuse enclosure shall be 8 feet x 15 feet, unless the
Public Services Department, Refuse Division, approves a smaller size, in writing,
Page 2 of 9 Pages
5/15/2001
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STANDARD REQUIREMENTS
DEPARTMENT OF DEVELOPMENT SERVICES/PUBLIC WORKS DIVISION
DESCRIPTION: 155,917 S.F, COMMERCIAL
CASE NO: DP II NO, 01-05 RETAIL STORE WITH
ANCILLARY GASOLINE SALE
LOCATION: N/E CORNER OF McARTHUR
APPLICANT: BOULEVARD AND HALLMARK
HAROLD GARCELON PARKWAY
f) Retaining walls, block walls and all on-site fencing shall be designed and detailed on the
On-site Improvement Plan. This work shall be part of the On-site Improvement permit
issued by the City Engineer.
g) This project is located in the "High Wind Area", Therefore, all free standing walls and
fences shall be designed for a minimum wind load of 23 pounds per square foot of
vertical surface, unless a lower value is approved by the City Engineer.
h)
The on-site improvement plan shall include details of on-site lighting, including light
location, type of poles and fixtures, foundation design, conduit location and size, and the
number and size of conductors. Photometry calculations shall be provided which show
that the proposed on-site lighting, design will provide I foot-candle of illumination
uniformly distributed over the surface of the parking lot during hours of operation and
0,25 foot-candles security lighting during all other hours.
i) The design of on-site improvements shall also comply with all requirements of The
California Building Code, Title 24, relating to handicap parking and accessibility,
including retrofitting of existing building access points for handicap accessibility, if
applicable.
j) A handicap accessible path of travel shall be provided from the public way to the
building entrance. All pathways shall be concrete paved and shall provide a minimum
clear width of 4 feet. Where parking overhangs the pathway, the minimum paved width
shall be 6 feet.
k) Where the handicap accessible path of travel crosses drive aisles, it shall be delineated by
striping or textured/colored concrete pavement.
I) A reciprocal easement shall be recorded prior to grading plan approval if reciprocal
drainage, access, sewer, and/or parking is proposed to cross lot lines, or a lot merger shall
be recorded to remove the interior lot lines.
Page 3 of 9 Pages
5/1512001
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STANDARD REQUIREMENTS
DEPARTMENT OF DEVELOPMENT SERVICES/PUBLIC WORKS DIVISION
DESCRIPTION: 155,917 S,F. COMMERCIAL
CASE NO: DP II NO, 01-05 RETAIL STORE WITH
ANCILLARY GASOLINE SALE
LOCATION: N/E CORNER OF McARTHUR
APPLICANT: BOULEVARD AND HALLMARK
HAROLD GARCELON PARKWAY
m) The project Landscape Plan shall be reviewed and approved by the City Engineer prior to
issuance of a grading permit. Submit 5 copies to the Engineering Division for Checking.
n) The public right-of-way, between the property line and top of curb (also known as
"parkway") along adjoining streets shaH be landscaped by the developer and maintained
in perpetuity by the property owner. Details of the parkway landscaping shall be
included in the project's on-site landscape plan, unless the parkway area is included in a
landscape maintenance district, in which case, a separate landscape plan shall be
provided.
0)
The applicant shall join the existing business owners' association related to maintenance
of the landscaping along Hallmark Parkway or establish a Landscape Maintenance
District,
p) Separate sets of Landscape Plans shall be provided for the Landscape Maintenance
District, if applicable,
q) An easement and covenant shall be executed on behalf of the City to allow the City to
enter and maintain any required landscaping in case of owner neglect. The Real Property
Section for execution by the property owner and shall ensure that, if the property owner
or subsequent owner(s) fail to properly maintain the landscaping, the City will be able to
file appropriate liens against the property in order to accomplish the required landscape
maintenance. A document processing fee in the amount of $200.00 shall be paid to the
Real Property Section to cover processmg costs. The property owner, prior to plan
approval, shall execute this easement and covenant unless otherwise allowed by the City
Engineer.
Page 4 of 9 Pages
5/1512001
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STANDARD REQUIREMENTS
DEPARTMENT OF DEVELOPMENT SERVICES/PUBLIC WORKS DIVISION
I DESCRIPTION: 155,917 S.F. COMMERCIAL
CASE NO: DP II NO. 01-05 RETAIL STORE WITH
ANCILLARY GASOLINE SALE
LOCATION: N/E CORNER OF McARTHUR
APPLICANT: BOULEVARD AND HALLMARK
HAROLD GARCELON PARKWAY
3, Utilities
a) Design and construct all public utilities to serve the site in accordance with City Code,
City Standards and requirements of the serving utility, including gas, electric, telephone,
water, sewer and cable TV (Cable TV optional for commercial, industrial. or institutional
uses).
b) Sewer main extensions required to serve the site shall be constructed at the Developer's
ex pense.
c)
This project is located in the sewer service area maintained by the City of San Bernardino
therefore. any necessary sewer main extension shall be designed and constructed in
accordance with the City's "Sewer Policy and Procedures" and City Standard Drawings,
d) Utility services shall be placed underground and easements provided as required.
e) A street cut permit, from the City Engineer, will be required for utility cuts into existing
streets where the street is not being repaved as part of the required improvements,
t) Existing Utilities whieh interfere with new construction shall be relocated at the
Developer's expense as directed by the City Engineer, except overhead lines, if required
by provisions of the Development Code to be undergrounded. See Development Code
Section 19.20,030 (non-subdivisions) or Section 19,30.110 (subdivisions),
g) Sewers within private streets or private parking lots will not be maintained by the City
but shall be designed and constructed to City Standards and inspected under a City On-
Site Construction Permit. A private sewer plan designed by the Developer's Engineer
and approved by the City Engineer will be required, This plan can be incorporated in the
grading plan, where practical.
Page 5 of 9 Pages
5/1512001
o
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STANDARD REQUIREMENTS
DEPARTMENT OF DEVELOPMENT SERVICES/PUBLIC WORKS DIVISION
i
, DESCRIPTION: 155,917 S.F. COMMERCIAL
I CASE NO: DP II NO, 01-05 RETAIL STORE WITH
i
ANCILLARY GASOLINE SALE
LOCATION: N/E CORNER OF McARTHUR
APPLICANT: BOULEVARD AND HALLMARK
HAROLD GARCELON PARKWAY
4, Street Improvement and Dedications
a) All public streets within and adjacent to the development shall be improved to include
combination curb and gutter, paving, handicap ramps, street lights, sidewalks and
appurtenances, including, but not limited to traffic signals, traffic signal modifieations,
relocation of public or private facilities which interfere with new construction, striping,
shall be accomplished in accordance with the City of San Bernardino "Street
Improvement Policy" and City "Standard Drawings", unless otherwise approved by the
City Engineer, Street lighting, when required, shall be designed and constructed in
accordance with the City's "Street Lighting Policies and Procedures", Street lighting
shall be shown on street improvement plans except where otherwise approved by the City
Engineer.
b)
For the streets listed below, dedication of adequate street right-of way (R,Q,W,) to
provide the distance from street centerline to property line and placement of the curb
line(C.L.) in relation to the street centerline shall be as follows:
Street Name Ril!ht of Wav(ft.) Curb Line(ft)
HALLMARK P ARKW A Y 40' (EXISTING) 32' (EXISTING)
c) Construct sidewalk adjacent to the site in accordance with City Standard No. 202, Case
"A" (6' wide adjacent to curb).
d) Construct Handicap Ramps in accordance with City Standard No. 205 at all curb returns
within and adjacent to the project site. Dedicate sufficient right-of-way at the corner to
accommodate the ramp.
Page 6 of 9 Pages
5/15/2001
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STANDARD REQUIREMENTS
DEPARTMENT OF DEVELOPMENT SERVICES/PUBLIC WORKS DIVISION
DESCRIPTION: 155,917 S.F. COMMERCIAL
CASE NO: DP II NO. 01-05 RETAIL STORE WITH
ANCILLARY GASOLINE SALE
LOCATION: N/E CORNER OF McARTHUR
APPLICANT: BOULEVARD AND HALLMARK
HAROLD GARCELON PARKWAY
5, Relluired En!!ineerinl! Permits
a) Grading permit (If applicable.).
b) On-site improvements construction permit (except buildings - see Development Services-
Building Division), including landscaping,
c) Off-site improvements construction permit.
6.
Applicable Enl!ineerinl! Fees!
a) Plan check and inspection fees for off-site improvements - 4% and 4%, respectively, of
the estimated construction cost' of the off-site improvements.
b) Plan check and inspection fees for 'on-site improvements (except buildings - See
Development Services-Building Division) - 2% and 3%, respectively, of the estimated
construction cost' of the on-site improvements, including landscaping.
cJ Plan check and inspection fees for grading (If permit required) - Fee Schedule available
at the Engineering Division Counter.
I All Fees are subject to change without notice,
'Estimated Construction Cost for Off-Site Improvements Is based on a list of standard unit prices on file with
the Public Works Division,
) Estimated Construction Cost for On-Site Improvements is based on a list of standard unit prIces on file wIth
the Public Works Division,
Page 7 of 9 Pages
5/1512001
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I STANDARD REQUIREMENTS
DEPARTMENT OF DEVELOPMENT SERVICES/PUBLIC WORKS DIVISION
DESCRIPTION: 155,917 S.F. COMMERCIAL
CASE NO: DP II NO. 01-05 RETAIL STORE WITH
ANCILLARY GASOLINE SALE
LOCATION: N/E CORNER OF McARTHUR
APPLICANT: BOULEVARD AND HALLMARK
HAROLD GARCELON PARKWAY
d) This project is greater than 5 acres and has been determined the City Engineer to be
eligible to pay the drainage fee at the large parcel rate; therefore, a drainage fee in the
approximate amount of $46,456,00. Based on Square Feet @ $0.429 per square foot for
the first 3,000 square feet of impervious lot area (estimated as 85% of the net lot area),
then $0.147 per square foot for each square foot over 3,000 square feet but less than 5
acres, and $0.0489 per square foot for each square foot of impervious area over 5 acres,
e) Traffic system fee in the estimated amount of $190,270.03, Based on 11,123 trips per
day @ $17.1 06 per new trip generated by the project. The City Traffic Engineer shall
determine exact amount at time of application for Building Permit.
f)
A portion of the Traffic Systems Fee paid for this commercial/industrial project can be
credited to the initial developer based on the actual cost of installation of a new traffic
signal or upgrade of existing traffic signals in addition to the mitigation of traffic related
conditions identified in the project review process and required as part of the approved
development. See Resolution No. 88-140.
g) Sewer Connection fee in the approximate amount as follows based on $242,91 per 3,000
square feet or fraction thereof: $12,631.32
h) Sewer inspection fee in the estimated amount as follows based on $20.48 per connection:
$20.48
i) Street or easement dedication processing fees in the amount of $ 200.00 per document.
7, Additional Requirements - General
a) Hallmark parkway/Gannett parkway: Traflie Signal Installation,
Page 8 of 9 Pages
5/15/2001
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STANDARD REQUIREMENTS
DEPARTMENT OF DEVELOPMENT SERVICES/PUBLIC WORKS DIVISION
DESCRIPTION: 155,917 S.F, COMMERCIAL
CASE NO: DP II NO, 01-05 RETAIL STORE WITH
ANCILLARY GASOLINE SALE
LOCATION: N/E CORNER OF McARTHUR
APPLICANT: BOULEVARD AND HALLMARK
HAROLD GARCELON PARKWAY
b) Hallmark ParkwaylUniversity Parkway: Modify intersection to permit unrestricted
westbound right turns on University Parkway at Hallmark Parkway. The design is
subject to approval by the City Traffic Engineer.
c) 1-215 Southbound RampslUniversity Parkway: Addition ofa separate eastbound right
turn lane on University Parkway at the 1-215 southbound on-ramp as proposed on the
Wal-Mart Store #3276 University Parkway Striping Plan. 1/9/01 Hall & Foreman, Inc,
d)
The report has acknowledged an awareness of the proposed southbound freeway off-
ramp modifications at the northwest quadrant of the University Parkway/I-215
Interchange that is listed on the current RTIP, This proposed loop ramp project would
most certainly eneroach into the proposed site plan for the Wal-Mart development.
Page 9 of 9 Pages
511512001
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES
PLAN CHECK DIVISION
COMMERCIAL & INDUSTRIAL BUILDINGS
PLAN SUBMITTAL CHECKLIST
The following is a list of items required by the City of San' Bernardino for commercial
& industrial projects:
BUILDING PERMIT ISSUANCE:
1. Site plan with all standard conditions, Development Plan, or C,U,P, approvals,
2, Grading plan signed and grading permit issued by City Engineer, Plan must have
the address (assigned by Engineering),
Note: The grading permit requires a separate application submitted to Public
Works/City Engineering.
3,
Landscape drawings approved by Public Works/Engineering,
Note: Lan<:!scape plan! require a separate submittal to Public Work~/City
Engineering.
o
4,
Fire Department approvals for all on-site improvements. Fire sprinkler plans
must be submitted directly to the Fire Dept, for plan check, approval, &
permit, Contact the Fire Marshals Office at 909-3B4-5388.
5, Title to property if permit is issued as Owner/8uilder, A list of all sub-
contractors must be submitted to the City Clerk's office,
6, All Contractors must have a current State License and a City Business
Registration at time of permit issuance, The Contractor must furnish the
information on the workers' compensation carrier & policy number at the time of
permit issuance, The City does not keep certificates on file,
7, A receipt from the applicable school district. San Bernardino Unified is located
at 7T7 N, F St, phone 909-381-1238,
8, Sewer capacity fee receipt from the City of San Bernardino Water Department
located on the 5th floor, Contact Neil Thompson/909-384-5093,
9,
Additional Impact fees will be assessed by Public Works or resolution/ordinance
and payable on the building permit for:
a. Sewer connection
o
b,
0 c,
d,
E,
f,
g,
..,
Storm drain
Traffic systEm
VErdEmont InfrastructurE (if applicablE)
Cultural dEvElopmEnt fEES
StatE of Californio strong motion fEE (0,00021 x valuation)
Planning DEpartmEnt zoning vErification
10, CErtain Occupancy classifications (LE, REstaurants, SErvicE Stations, Factoriu,
dc,) may rEquirE additional clEarancEs and approvals from othEr agEnciES: (list
is not all inclusiVE)
a, County HEalth DEportmEnt 909-387-3043
b, South Coost Air Quality ManagEmEnt District 909-396-2000
c, WatEr REclamation 909-384-5141
11. If prOjECt rEquirES a 'ParcEI Map, it must includE:
a, ThE assusors parCEl numbEr for Each dEVElOPEd lot and thE
rEquirEd sdbacks,
b, AddrESS & uqu,EncE list for multi-tEnant prOjECtS
PLAN CHECK SUBMITTAL:
a,
0 b,
c,
d,
E,
f,
g.
h,
4 compldE sds of plans, drawn to scalE (minimum 18" x 241
(5 sds arE rEquirEd for EXPEditious rEviEW)
2 sds EnErgy calculations
2 SEtS signEd/stampEd Enginuring
2 SEtS of signEd/stampEd truss calculations
1 copy of soils rEport
2 COpiES of rEports/approvals of any spEcialty EquipmEnt
4 COpiES of C,U.P,. DPI,& DPn conditions of approval
A signEd Air Quality PErmit ChECklist (rEquirEd by AQMD,)
NOTE: PLAN CHECK TIME ON THESE TYPES OF PROJEcrs IS
APPROXIMATELY 5-6 WEEKS FOR 1ST CORRECTIONS. EXPEDmOUS
REVIEW IS 10-15 WORKING DAYS,
10
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CITY OF SAN BERNARDINO
PUBUC SERVICES DEPARTMENT - REFUSE & RECYCUNG DMSION
STANDARD DEVELOPMENT REQUIREMENTS
300 North 0 Street-4th Floor CA 9241~1
909-384-5335
_.~-
Project Number J7'?1C C'l - C:;- Project Planner
Project DescriptionlBusiness Name \r\W.A ,.l.......~
Project Location/Address It? O~, ...-z,Ir'~ cL Y
Reviewed By Review Date:!;J I ')(!
[Otrice Use Only: City Service Application No, Date Completed Application Returned _1_1---1
COMMERCIAL
1. Eslabish commercial refuse enclosU'e(s) according to City Pubic Works Stand8rd 508 with a width of
end a length of , Location and orientation of enclOSU'e(s), gates. and compactor unil(s) shal
be shown on SIte Plans. labeled with cimensions and specifications to meet Pubic Works Standard 508,
1.. 2. Locate refuse enclOSU'e(a) and compactor unil(s) to be safely accessible tor service vehlcles and without
obstruction to drive aisles. driveways, Ioacing zones. parking, or handicap access, Enclosure must be at least 5'
trom combustible wals, eave lines. or openings [98 CA F.-e Code 110322J, Minimum radii of 40' for an drive turns
along the main ingress to and egress trom enclosU'es and compactor pads.
3. Instal_ compactor unil(s) with a minimum capacity of _ cubic yards for each Irit. Roll-olf box unil(s)
shaD meet Pubic Works Stand8rd 510,
4. Refuse and recycling service to this location shaD be provided by the City of San Bemardino unless otherwise
noted. New accounts require a completed Sefvice Application with a fill deposit returned to the City of San
Bemardino Refuse & Recycling Division prior to issuance of the tinal Certificate of Occupancy,
5. City tront-load colection services shaD be established 'at the foDowing minimum levels:
.;
~
0-
x
-
.1
'V JJ~:.. .~r~..,.
REFUSE SERVICE
OTY BIN DAYS/WEEK
1.2CY
3CY
4CY
BCY
RECYClING SERVICE
OTY BIN DAYS/WEEK
1.2CY
3CY
4CY
BCY
ORGANICS SERVICE
OTY BIN DAYS /WEEK
1.2CY
3CY
4CY
BCY
6. Sealed compactor unil(s) shal be instaled with a recommended minimum 30 cubic yard roll-olf box:
I unil(s) for refuse. f unil(s) for commingled dry recyclables. and unit(s) for organics,
7. Applicant shal submit a completed Integrated Waste Management Survey to the Public Services Department
Refuse :ucr~ Division ~minimum of 5 City wor1l days for approval prior to issuance of any City permits.
Contact . t P -:v. 909-384--5549. ~tG,9--t1hone or 909-384--5190 tax,
RESIDENTIAL
1. Residential refuse and recycling services are to be provided by the City of San Bemardino Refuse & Recycling
Division. lhe City shal provide one set of a blue, green, and black 96 or 64-ilalon automated service carts to each
single family unit OR one set to every two-unit multiple family dweling up to six units,
2. Residential units shal have a minimum 3 feet by 9 feet cona-ete pad located out of view of public right-of-way .
for storage of each set of three automated carts, Minimum gate openings shaD be 3 feet, and the path of travel
trom the storage pad to curb shal be continuously paved,
3. A minimum 12-foot space along the curb on the street must be clear for residential automated service carts,
including a minimum 2-foot setback of al structures, fences, and raised landscaping,
4, Day of automated cart service shaD be: M T W Th
ADDITIONAL CONDITIONS OR NOTES
C' ,~
<-""~/.
(White-AppIe.nl] {folaw-PtMln/nQ] {Ffnk-R.1tJse & Recydng (CSRs)] LG_nxUJERC fie]
R._ 3.8.2000
PUBLC SERVICES-REFUSE ,..J!VISION
ROLL-OFF CONTAINER MODIFICATION 10, 20, 30, 40, & COMPACTOR UNITS
NOTE:
)' SPECIAL ORDER
NOT TYPICAL
~O~
10 112"][8"
R01l.ER
WHEEL
NOTE:
HYDRAUUC TAILGATES
MUST BE SINGLE HOSE
1" DIA, QUICK-CONNECTOR
TYPE,
NO SWlNG-AWAY COMPACTOR
( ;EADS,
SCALE
ARCH, 1/2" = 1'-0"
ENG. I" = 2'
11"
-~.
;r-
eo
--L
...
7~" FROM TOP OF ROLLER
TO BOTTOM OF CHANNEL
2 X, 6 CHANNEL
GUSSETS
INSIDE OF
CHANNEL
6"
0"
ALL INSTALLATIONS SUBJECT TO INSPECTION AND APPROVEL
BY PUBUC SERVICES DEPARTIlENT - REFUSE DMSION
HOOK
FRONT VIEW
NO. SO
() CITY OF SAN BERNARDINO
-DEVELOPMENT SERVICES-PUBLIC WORKS/ENGINEERING
TRASH COMPACTOR
HOOK
I
I
27,
J
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UTSIDE GUSSET'
I
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22~"
....
....
'-
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IT ....."",
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6"
.1 HOOK ~
SIDE VIEW
STANDARD
NO.
APPROVED ~ 0
~~~=
510
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CITY OF SAN BERNARDINO FIRE DEPARTMENT
STANDARD REQUIREMENTS Case: DPlL 0/-06
VJ A...LM A.. R::r Date: ~ '3 ' 0 I _ 0 I
/vie A)<:.-rl-/vr- ( If !lU-fVlp..,R..K. fAAKWAY Reviewed By: G~
GENERAL REQUIREMENTS:
J Provide one additional set of construction plans to Building and Safety for Fire Department use al time 01 plan check.
Contact the City of San Bemardino Rre Department at {9OO} 384-5388 for specific detailed requirements.
The developer shall provide for adequate fire flow. Minimum fire flow requirements shall be based on square footage, construction features, and exposure
Information supplied by the developer and!!!!!!! be available Drior 10 placing combustible materials on site.
WATER PURVEYOR FOR FIRE PROTECTION:
~ The fire protection waler service for U1e area of this projed is provided by.
o San BernardIno Municipal Water Departmenl-Engineering (90S) 384.5391
o East Valley Water Oistrict-Engineering (909) 888-8986
o Other Water purveyor:
Phone:
flIBLIC FIRE PROTECTION FACIUTIES:
~ Public fire hydrants are required along streets at intervals not to exceed 300 leet tor commercial and multi-residential areas and at intervals not to exceed
500 feet for residential areas.
)g, Fire hydrant minimum flow rates 011,500 gpm at a 20 psi minimum residual pressure are required lor commercial and multi.residential areas. Minimum lire
hydrant flow rates 011,000 ~ at a 20 psi minimum reskfual pressure are required for residential areas.
Pi Fire hydrant type and specific klcation shall be jointly determined by the City of San Bernardino Fire Department in conjunction with the water purveyor. Fire
"tat hydrant materials and installation shall confonn to the standards and specificatiOns at the water purveyor.
,t:\l Public lire hydrants, fire services, and public water facilities necessary to meet Fire Department requirements are the developer's financial responsibility and
shall be installed by the water purveyor qr by the developer at the water purveyor's discrelion. Contact the water purveyor indicated above for additional
inlormation.
ACCESS:
D Provide two separate, dedicated routes of ingress/egress to the propeny entrance. The routes shall be paved, all weather.
...& Provide an access road to each building 10; fire apparatus. Access roadway shall have an all.weather driving surface of not less than 20 feet at unob.
structed width.
I 0 Extend roadway to within 150 feet of all portions of the extertor wall of all single story buildings.
o . Extend roadway to 'Nithin 50 feet of the exterior wall of all multiple.story buildings.
r' Provide "NO PARKING- signs v.tlenever parking of vehicles would poSSible reduce the clearance 01 access roadways to less than the required widlh. Signs
are to read "FIRE LANE-NO PARKlNG-M.C. Sec. 15.16-.
\..... JDead.end streets shall not exceed 500 feet In length and shall have a minimum 40 toot radius 1urnaround.
~ The names of any new streets (public or private) shall be submitted to the Fire Department lor approval.
IE:
All access roads and streets are to be constructed and usable prior to combustibla construction.
. Private fire hydrants shall be instalkKf to protect each building located more than 150 teet from the curb line. No fire hydrants should be within 40 teet 01 any
exterior wall. The hydrants shall be Wel Barrel type, WIth one 2~ inch and 4 inch outlel. and approved by the Fire Department. Areas adjacent to fire
hydrants shall be desfgnated as a "NO PARKING" zone by painting an 8 inch 'Nide, red stripe for 15 teet in each direction In front of the hydrant in suth a
manner that it will not be blocked by parked vehicles. lettering to be in while 6" by 'h-.
Q\JILDINGS:
J5: Address numerals shall be Installed on the building at the tront or olher approved location in such a manner as to be visible from the frontage street. Com.
mercial and mutti tamity address numera~ shall be 6 inches tall, single family address numerals shall be 4 inches tall. The color 01 the numerals shall con.
trast with the color of the background. ~ 0 N f<- 0 0 F / .. x 4- I
o Identity each gas and electric meter with the number of the unit it serves.
..E( Fire extinguishers must be installed prior to the building being occupied. The minimum raling lor any tire extinguisher is 2A 1 DBlC. Minimum distribution at
fire extinguishers must be such that no interior part ot the building is over 75 leet travel distance lrom a fire extinguisher.
o Apartment houses with 16 or more units, hotels (motels) with 20 or more units, or apartments or hotels (motels) three stories or more in height shall be
equipped with automatic lire sprinklers designed to NFPA standards.
;g" All buildings, over 5,000 square feet, shall be equipped 'With an automatic lire sprinker system designed to NFPA standards. This includes existing buildings
vacant over 365 days. ~ \
5 Submit plans for the lire protection system to the Fire Department prior to beginning construction of the system. Permit required. "l K::Je 11-000
o Tenant improvements in all sprinkJered buildings are to be approved by the Fire Department prior to start at construction. Permit required. ~
..D Provide tire alarm (required throughout). Plam must be approved by the Fire Department prior 10 start of installation. Pennit required.
..;rs Fire Department connecttan to sprinkler system/standpipe s~tem, shall be required at Fire Department approved location. .
.tiLFir.CodePe""~requjr.d r:-~ A"='~m'8L-v 'Pt5r...m ,.,- - P"r;::::;-rAv/l.Afl7r A,q~ (A.-:j')
~- Fire Sprinkler monitoring required. Plans must be approved by the Fire Department prior to the start 01 construction. Permn requtti!d.
v..( "ST~-'Y\,
Q(Jil-IN-,(
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P1Gov/ V E.___ _
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FPB170101~
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SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
o
STANDARD REQUIREMENTS
7 ; i. 7 " : Date Compiled:
, N ,-
J ,; Compiled By:
" ;- "
" '. . Number of Units:
" .. .. /
i....-
Review of Plans:
OwnerlDevelope~: '
Type of Project:
Location:
WATER DEPARTMENT ENGINEERING:
.,--','
Fax:
Contact:
Phone: ~ ',<" 'J
Note: All Water Services are Subject to the Rules & Regulations of the Water Depal1ment.
o Size of Main Adjacenttbe Project:
, (
:.''/'
~,
: ! t. ~. ~ /.....:..
J.. : ,
-,.-: /N
~ I 7l/
I
~ Approximate Water Pressure: .'" I Elevation of Water Storago:
Q Type, Size, Location, and Distance to Nearest Fire Hydrant: .i,1 i ....;'J
\
.I'; -
Hydrant Flow @ 20 psi:
,
~'.':; I
t.'.<<':
o Pressure Regulator ~eqllired on Customer's Side on the Meter.
o Off.site Water Facilities Required.
o Area Not Served by San Bernardino Municipal Water Department,
o Comments:
QTER OlJAUTY CONTROL:
t!ntact: : I :;/ i.~ '._ ,I! T -~1
Phone:
,~
"
Fax:
o R.P.P. Backflow Device Required at Service Connection.
I
o Double Check Bacldlow Device Required at Service Connection.
[J Backflow Device to be Inspected Before Water Service can be Activated,
,
>,'
, .~
.,' i .
, ,
'fl,
o No IIacktlow Device Required at Ths Time,
ENVIRONMENTAL CONTROLIINDIJSTRIAL WASTE:
Contact:
Phone:
.. Fax:
>
Note: No Brine Regenerative Water Soft~ners May be Installed, Unless Holding and Hauling is Provided for tbe Brine, Alllntercel~o'"
will be a 1200 Gallon Capacity witb a Sanlple Box Included,
o Industrial Waste Pennit Required.
o Grease lnh:rceptor Required.
o Pre-treatment Required.
o Sand/Oillnterceptor Required,
o No Issues at this Time.
SEWER CAPACITY INFORMATION:
Contact:
Phone:
Fax:
Note: Proof of Payment Must be Submitted to the Building & Safety Department Prior to Issuance of the Building Permit.
o No Sewer Capacity Fee Applicable at Ths Time.
cewer Capacity Fee Must Be Paid to the Water Department for ~ () i. Gallons Per Day, Equivalent Dwelling Units:
~Ihject to Recalculation of Fee Prior to tbe Issuance of Building Pennit.
Breakdown of Estimated Gallons Per Day: (... [ :::1 I <; (
7/
" ~ -
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STDREQ\'U.FRM t~N71
,
:
jG NERAL REQUIREMENTS:
Provkkt one additional set at consln.dion ~ans to Building and Safety for Fire Department use at lime of plan check.
Contact the City 01 San Bernardino Are Department at (909) 384-5388 for specifIC detailed requirements.
'The developer shall provide tor adequate fire Pow. Minimum fire flow requirements shall be based on square footag8, construction features, and exposure
Information supplied by the developer and !!!!!!! be available Drtor to placing combusti~ materials on she.
WATER PURVEYOR FOR FIRE PROTECTION:
~ The tire protection water service for the area of this project is provided by.
~ 0 San Bernardino Municipal Water Departmenl-Engineering (909) 384.5391
o Easl Valley Waler District-Engineering (909) 888-8986
o Other Water purveyor.
Phone:
PUBLIC FIRE PROTECTION FACILITIES:
D Public fire hydrants are required along streets at intervals not to exceed 300 feet tor commercial and muhl.residentiaJ areas and at intervals not to exceed
7" 500 feet tor residential areas.
[1..- Fire hydrant minimum flow rates of 1,500 gpm at a 20 psi minimum residual pressure are required for commercial and muhi-restdential areas. Minimum lire
,7'-. hydrant flow rates of 1,000 gpm at a 20 psi minimum residual pressure are required for residential areas.
% Fire hydrant type and specific location shall be jointly determined by the City of San Bemardino Fire Department in conjundion with the water purveyor. Fire
hydrant materials and installation shall conform to the standards and specif.cations of the water purveyor.
'J\r Public lire hydrants, fire services, and public water facilities necessary to meet Fire Department requirements are the develope(s financial responsibility and
7' shall be installed by the water purveyor or by the developer atlhe water purve'{or's discretion. Contact the water purveyor incficated above for additional
information. "
ACCESS:
~ Provide t'NO separate, dedicated routes of ingress/egress to the property entrance. The routes shan be paved, all weather.
Provide an access road 10 each building lor fire apparatus. Access roadway shall have an all.wealher driving surface of nolless than 20 leel of unob-
structed width.
" 0 Extend roadway 10 within 150 feet of all portions of lhe exterior wall of aa single story buildings.
lA Extend roadway to within SO feet of the exterior wall of all multiple-story buildings.
I Provide -NO PARKING- stgns ~never parking 01 vehides would possible reduce the clearance of access roadways to less than the required width. Signs
are to read "FIRE LANE-NO PARKlN~,C, Seo.15,16",
k Dead.end streets shall not exceed 500 feel in length and shall have a minimum 40 fool radius tumaround.
~ The names of any new streets (public or private) shall be submitted to the Fire Department for approval.
SITE:
o All access roads and streets are to be constructed and usable prior to combuslible construction.
o Private fire hydrants shall be installed to protect each building located more than 150 feetfram the curb line. No fire hydrants shoukt be ""thin 40 feet ot any
exterior wall. The hydrants shall be Wet Barrel type, with one 2~ inch and 4 inch outJel and approved by the Fire Department Areas adjacent to fire
hydrants shall be designated as a '"NO PARKING" zone by painting an 8 inch wide. red stripe for 15 feel in each direction in front of the hydrant in such a
manner that it will nol be blocked by parked vehides. Lettering to be in white 6" by Y.I".
~ILOINGS: '
Address numerals shall be installed on the building at the front or other approved location in such a manner as to be visible from the frontage street. Com-
mercial and multi family address numerals Shall be 6 inches tall, Si" gle famir address numerals shall be 4 inches tall. The color of the numerals shall con-
Irast with the color of Ihe background. ;1"" N li..no ~ ,. x. 4
o Identify each gas and electric meter with the number 01 the unit it serves.
JiCr Fire extinguishers must be installed prior to the building being occupied. The minimum rating for any fire extinguisher is 2A 10BlC. MinimLm distribution 01
lire extinguishers must be such that no interior pan of the building is over 75 feet travel distance from a fire extinguisher.
o Apanmenl houses with 16 or more units, hotels (motels) with 20 or more units. or apartments or hotels (motels) three stories or more in height shall be
equipped with automatic fire sprinklers designed to NFPA standards.
F;r All buildings, over 5.000 square feet, shan be equipped with an automatic fire sprinker system designed to NFPA standards. This indudes existing buildings
/"'-- vacant over 365 days.
.a.. Submit plans for the fire protection system to the Are Oepanmenl prior to beginning construction of the system. Permit required.
o Tenant tmPfovementsln an sprinklered buildings are to be approved by the Fire Department prior to start of construction. Permit required.
l Provide fire alann (required throughout). Plans must be approved by the Fire Department prior to start of installation. Permit required.
Fire Oepamnent connec1ion 10 sprinkler system/standpipe system, shall be required at Fire Department approved location.
Fire Code Permit required.
Fire Sprinlder monitoring required. Pians must be approved by the Fire Department prior to the start of construction. Pennit required.
Note: The applicant must request, in writing, any changes to Flre Department requirements.
ADDITIONAL INFORMATION:
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ATTACHMENT 3
INITIAL STUDY
FOR
THE SAN BERNARDINO
STATE COLLEGE BUSINESS PARK-
NORTH SAN BERNARDINO RETAIL 1
(City of San Bernardino Retail Shopping Complex)
Independently reviewed by:
CITY OF SAN BERNARDINO
DEVELOPMENT AND ENVIRONMENTAL REVIEW COMMITTEE
300 North "D" Street
San Bernardino, California 92418
Prepared for
GRESHAM, SAVAGE, NOLAN & TILDEN
,600 North Arrowhead Avenue, #300 '
San Bernardino, California 9240 I
Preparation assistance by:
TOM DODSON & ASSOCIATES
2150 North Arrowhead Avenue
San Bernardino, California 92405
MARCH 2001
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CITY OF SAN BERNARDINO'
DEVELOPMENT SERVICES DEPARTMENT
TABLE OF CONTENTS
Page
P' D ..
rOJect escnptlon ,..........."...""........,.,..",.....,..
1
Environmental Factors Potentially Affected .... . , , , . , . . . . . . . . . . , . . . ,. 3
Determination .,.,.........,........."...;...",....,......... 3
Evaluation of Environmental Impacts . , . . . , . . , . . . . , , . , . . , . , . . . , . . . ., 4
1. Land Use and Planning ,.,...."..,.,.,...".....,...,.,. 4
2. Population and Housing . , . . , , . . . . , , . . . , , . . . . . . . . . . . , , . . ., 5
3. Earth Resources ',........,...,....,.",..,......"..,.. 6
4, Water.. . . . , . , , . . . . . . . , , . . . . . . . . , , . . . . . , , , . , . . . . . . . . .. 9
5. Air Quality ......"......,... ~ . . . . . , , . , . . . , , , . . . . , . . , ,. 12
6. Transportation/Circulation. . . , . . , , . . . . , , . . . . . . , , . . . , , . . . ,. 16
7. Biological Resources .,',.."....,....",..........,...,. 18
8, Energy and Mineral Resources ..",..""....,.,.......". 19
9. Hazards,.. . . . . . . . . . . . , . . . . , . . , . . . . . . . . . . . . . . . . , , . . . . ,. 20
10. Noise.,.......,.,......,........"....."....,...,.... 21
11. Public Services . , , . . . . , . , , . . , , . . . , . . . . . , . . . , . . . . . . , . . . .. 22
12, Utilities and Service Systems, , . . , . . . , . . . . . . , . . . . , . . ,. . , , .. 24
13. Aesthetics ., , . , . . . . . , , , . . . . , . . . . , . . , , . . , . . . . . , . . . . . . , '. 26
14. Cultural Resources. . , , , . . . . , , . . . . . . ; . . . , . . . , , . . . , . . . . . .. 27
15. Recreation...,."",...."...,...,.......,..,........., 28
16. Mandatory Findings of Significance ..,....."....."...,... 29
References ....,",......,',....",.......,.....,...,....."... 30
Mitigation Measures ..,',........,...........",....",..",..,. 30
Appendices
Appendix 1 - BMP from Supplement A
-11-
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
obtain discretionary approval from a governmental agency and is not exempt from CEQA. The purpose of the Initial
Study is to detennine whether or not a proposal, not exempt from CEQA, qualifies for a Negative Declaration or
whether or not an Environmental Impact Report (EIR) must be prepared. '
I. Project Title:
San Bernardino State College Business Park-North
San Bernardino Retail I (City of San Bernardino Retail Shopping Complex)
2. Lead Agency Name:
Address:
City of San Bernardino, Development Services Department
300 North D Street, San Bernardino, CA 92418
3. Contact Person:
Phone Number:
Ms, Valerie Ross
909-384-5057
4.
Project Location
(AddresslNearest cross-streets):
The project site consists of a 14,50-acre parcel ofland located northwest of the
University Parkway and Hallmark Parkway intersection in the City of San
Bernardino, California. See Figure I
o.
Project Sponsor:
Address:
Hall & Foreman, Inc.
1152 North Mountain Avenue, Suite 100
Upland, CA 91786-3669
6. General Plan Designation: CG-I (Commercial General)
7. Description of Project (Describe the whole action involved, includitig but not limited to later phases of the project, and any secondary,
support, or off-site features necessary for its implementation. Attach additional sheets, if necessary):
The proposed project will consist of the development of a commercial retail department store that will include
an automotive service station and, at some point in the future, a fast food restaurant (unspecified). The
project will be constructed in two phases on the 14.50-acre site located on the east side of Hallmark Parkway,
about 300 feet north of University Parkway in the City of San Bernardino. See Figure 2 for a plot plan of
the project.
The first phase will consist ofthe construction of the retail store and the service station, The retail store will
consist of an approximate 140,817 square foot building, which will include a six-bay auto service area, a
15, 100 square foot garden center, truck loading facilities, temporary outdoor sales facilities, container storage
facilities, and parking for 706 automobiles. This will produce a parking ratio of 5,01 parking spaces per
1,000 square feet. The retail store is forecast to employ approximately 241 people. The service station will
be unmanned and consist of eight fueling positions with a canopy cover located in the southeastern portion
of the site. The second phase of the project is proposed to consist of the construction and operations ofa fast
food restaurant approximately 2,000 square feet in size, with a drive-through window, including room to
stack five cars, and 20 parking spaces, with a parking ratio of 10 parking spaces per 1,000 square feet.
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GS-053/GS-053 Initial Study
Page -1-
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
The project site is currently bisected by Gannet Parkway, which knuckles into McArthur Boulevard. As part
of project construction, the section of Gannett Parkway east of Hallmark Parkway will be vacated, and the
portion of McArthur Boulevard south of the northerly project boundary will also be vacated. McArthur
Boulevard will be modified to knuckle at the northerly project boundary and will extend west to Hallmark
Parkway.
8. Surrounding Land Uses and Setting:
The surrounding land uses include the 1- 215 Freeway to the north and east; commercial office and industrial
uses to the north; commercial uses and University Parkway 215 to the south and southeast; and undeveloped
space and commercial office and industrial to the west. The nearest residential uses are across the Interstate
to the north and east and about one-half mile southwest in the community of Muscoy, west and southwest of
Cajon Boulevard. Several lots to the south remain undeveloped at this time. The site itself is 14.50 acres
and is currently graded, plowed and vacant
9.
Other agencies whose approval is required (e,g., permits, fmancing approval, or participation agreement):
The other permits that may be required for development of this project include: a Storm Water Construction
NPDES (National Pollutant Discharge Elimination System) permit, a Notice of Intent must be filed with the
Stale Water Resources Control Board, and a Storm Water Pollution Prevention Plan (SWPPP) must be
compiled and implemented, A copy of the SWPPP must be retained onsite for inspection by the Regional
Water Quality Control Board. The Regional Board does not issue any permits for construction or operation
of underground storage tanks. The gasoline station will require permits from the County (Fire Department
Hazardous Materials) for construction and a general operations permit for the underground storage tanks and
generation of hazardous waste (including Business Plan), local Fire Department, and the South Coast Air
Quality Management District. No other permits are known to be required.
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Environmental Factors Potentially Affected
The environmental factors checked below would be potentially affected by this project, involving at least one impact
that is a "Potentially Significant Impact" as indicated by the checklist on the following pages.
0 Land Use and Planning 12I Transportation/Circulation 12I Public Services
0 Population and Housing 0 Biological Resources 0 Utilities and Service Systems
12I Geological 0 Energy and Mineral Resources 0 Aesthetics
12I Water 0 Hazards 0 Cultural Resources
12I Air Quality 0 Noise 0 Recreation
0 MandatoI)' Findings of Significance
Determina tion
Con the basis of this Initial Study, the City of San Bernardin~, Environmental Review Committee finds:
That the proposed project COULD NOT have a significant effect on the environment, and a
NEGATIVE DECLARATION will be prepared.
o
That although the proposed project could have a significant effect on the environment, there will not
be a significant effect in this case because the mitigation measures described on an attached sheet
have been added to the project. A NEGATIVE DECLARATION will be prepared.
121
That the proposed project MAY have a significant effect on the environmen~ and an
ENVIRONMENTAL IMPACT REPORT is required.
o
That although the proposed project could have a significant effect on the environment, there WILL
NOT be a significant effect in this case because all potentially significant effects (a) have been
analyzed adequately in an earlier ElR pursuant to applicable standards and (b) have been avoided
or mitigated pursuant to that earlier EIR, including revisions or mitigation measures that are
imposed upon the proposed project.
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Signature
Crinted Name
0310BIOI
Date
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Evaluation of Environmental Impacts
p-
Signi6cant
"",,",oIIy UnI<u ""-
Significant Mitigation ~ No
1m.... In...,.,,,,,,,, 1m.... ...,.""
1. LAND USE AND PLANNING, Will the proposal result in:
a. A conflict with the land use as designated based on the 0 0 0 ~
review of the General Plan Land Use Plan/Zoning Districts
Map?
b. Development within an Airport District as identified in the 0 0 0 ~
Air Installation Compatible Use Zone (AICUZ) Report and
the Land Use Zoning District Map?
c. Development within Foothill Fire Zones A & B, or C as
identified on the Land Use Districts Zoning Map?
CSubstantiatiOn:
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l.a
The project site is designated as CG-I (Commercial General) and surrounding area is designated as industrial
in the City General Plan. The proposed project would be compatible with the land use designations and the
surrounding land uses which are a mix of commercial and industrial uses. No adverse conflicts with the
General Plan or wne designation for the site are forecast to occur from implementing this project. No
mitigation is required.
o
An evaluation was also performed to determine whether the proposed project location is near any existing
retailers, Based on a field review of the surrounding area, the nearest retailers are located in a shopping center
on University Parkway, approximately one mile east of the 1-215 freeway at College Avenue in San
Bernardino. Occupants in the shopping center include a Ralphs supermarket, a dry cleaners, four fast food
restaurants and a doughnut shop. The shopping center has absorbed competitive impacts from four large
retailers within six-nine miles of the shopping center, including Target (at the comer of Sterling and Highland
Avenues in San Bernardino, a K-Mart (at the corner of Victoria and Highland Avenues, in Highland), Costco
(on Hospitality Lane in San Bernardino), and Wal-Mart (in the City of Colton, near the 1-215 interchange at
Washington Avenue). Located adjacent to the entrance to Cal State San Bernardino, the shopping center draws
from the east side of the 1-215 Freeway. In addition, four gas stations are located at the Interstate 215 and
University Parkway interchange. Approval of the proposed retail store and service station on the west side of
the 1-2 I 5 is not forecast to have an adverse competitive impact on either side of the 1-215. Existing businesses
on the east side of the freeway draw customers from Cal State San Bernardino and the surrounding residential
areas, and the existing gas stations at the freeway interchange will benefit from the increase in traffic as
customers exit the 1-215 at University to patronize the proposed conmlercial development. The increase of
traffic is forecast to be of benefit to the existing gas stations.
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
l.b The project site is not located in an Airport District as shown in the City General Plan Land Use Map,
Figure 5, Page I-50, of the adopted General Plan. No adverse impacts from airport conflicts are expected to
occur.
l,c The project is located south of the Foothill Fire Zone, which is shown on Figure 61 of the City General Plan,
There are no native plant communities in the vicinity of the proposed project site, No adverse impact due to
foothill fire hazards can occur as the project is not located in any Foothill Fire Zone, No mitigation is required,
References
1. City of San Bernardino. 1989. Genera/Plan.
2. City of San Bernardino. 1989. General Plan Environmenwllmpact Report
3. City of San Bernardino. 1988. Ci.tyofSan Bernardino General Plan Update Technical Background Report.
Potenn..uy
Significant
Potentially UnI<u c.unw.
Signi6can1 Mitigllion Signi6eant No
1m.... In<<lIpQfIlted 1m.... Irnpec:t
02. POPULATION AND HOUSING. Will the proposal:
a. Remove existing housing (including affordable housing) as 0 0 0 loa
verified by a site survey/evaluation?
b. Create a significant demand for additional housing based on 0 0 121 0
the proposed use and evaluation of project size?
c. Induce substantial growth in an area either directly or 0 0 0 loa
indirectly (e.g., through projects in an undeveloped area or
an extension of major infrastructure)?
Substantiation:
2.a
2.b
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The project site is currently vacant. No housing structures exist onsite. No impact to housing resources can
occur and no mitigation is required.
The proposed project will create new jobs in the City San Bemardino, since the project consists of a retail store,
and a future fast food restaurant. These jobs would not require high specialization that would create a need to
import skilled labor from outside the area. Many of these jobs would be most likely filled by local residents,
and no significant influx of people into the City is forecast to fill these positions and therefore create a demand
for new housing. Presently the area has a large stock of existing housing available. A recent "Inland Empi:re
Quarterly Economic Report" (April 2000) indicates that a total of 16,635 residential units were sold in the
Inland Empire during the fourth quarter of 1999. The annual rate of home sales in 1999 was approximately
66,000 units, Under worst case conditions, an additional 241 employees would have access to thousands of
units, new or old, based on the latest review of house availability in the area. While this project will generate
a small additional demand for housing in the Inland Empire, the data clearly indicate that such housing is and
will be available at reasonable prices. Based on the above data and evaluation, it is concluded that the number
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
of new employees is not sufficient to create a significant demand for housing in the project area. No significant
adverse impact to housing resources is forecast to occur and no mitigation is required.
2.c The proposed site is situated within the developed portion of the City of San Bernardino, The site is presently
served with all forms of infrastructure (roads', sewers, water, utilities, etc.). Development of the project has
no potential to induce substantial growth in the community, either through the extension of infrastructure into
an undeveloped area or due to the absolute number of new jobs created by the project, No significant growth
impact is forecast to occur and no mitigation is required.
References
1. City of San Bernardino. 1989. Genera/Plan.
2. San Bernardino Associated Governments. October 1998. "Inland Empire Quarterly Economic Report".
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0 CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Polcntially
Significan[
PotentiaUy ...... .....-
Signi6can1 Miligation Sjgni&anl No
1-, lllCOfJlOf1led. Impact Impact
3. EARTH RESOURCES. Will the proposal result in:
a. Earth movement (cut and/or fill) on slopes of 15% or more 0 0 0 W:!
based on information contained in the Preliminary Project
Description Form No. D?
b. Development and/or grading on a slope greater than 15% 0 0 0 W:!
natural grade based on review of General Plan HMOD
map?
c. Erosion, dust or unstable soil conditions from excavation, 0 ~ 0 0
grading or construction activity?
0 d. Development within the Alquist-Priolo Special Studies Zone 0 0 ~ 0
as defined in Section 12.0-Geologic & Seismic, Figure 47,
of the City's General Plan?
e. Modification of any unique geologic or physical feature 0 0 0 W:!
based on field review?
f. Development within areas defined as having high potential 0 0 ~ 0
for water or wind erosion as identified in Section 12.0-
Geologic & Seismic, Figure 53, of the City's General Plan?
g. Modification of a channel, creek or river based on a field 0 0 0 W:!
review or review of USGS Topographic Map (Name)_?
h. Development within an area subject to landslides, 0 0 0 W:!
mudslides, subsidence or other similar hazards as identified
in Section 12,O-Geologic & Seismic, Figures 48, 5 1,52 and
53 of the City's General Plan?
l. Development within an area subject to liquefaction as 0 0 0 ~
shown in Section 12.0-Geologic & Seismic, Figure 48, of
the City's General Plan?
(SUbstantiation:
la-b The project site is located on an essentially flat, graded parcel that slopes from the north to the south towards
Hallmark Parkway. The slope on this site does not exceed 2 percent, as illustrated in the Preliminary Project
Description, and it is located outside the Hillside Management Overlay District (HMOD) which is shown on
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
I,
3.c
03.d
3.e
3.f.
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Figure 5 of the General Plan. No potential exists on this site for an adverse impact due to steep slopes and
earth movement on this site will be minimal. No mitigation is required.
The project site is essentially flat and has been previously graded and compacted. As noted above the site is
not located within the HMOD. There is minimal potential for unstable soils or water erosion to occur on the
site, but the area has been identified as having a high potential for wind erosion of soils (Figure 53 of the City's
General Plan). In the long term, the paving and landscaping on the proposed project site will minimize or
eliminate the potential exposure to wind or water erosion. The entire site will be either hard surfaced (buildings
and paving) or landscaped.
In the short term, construction activities have the potential to generate dust and expose soil to water erosion
during storm events. To ensure a less than significant impact mitigative measures have been defined and are
listed under the water and air quality section of this Initial Study. Please refer to those sections (Sections 4 and
5 of this Initial Study) for a listing and detailed discussion of these measures. With implementation of these
measures (control of fugitive dust by watering during site disturbing activities and installation of measure to
prevent surface runoff from eroding soil and depositing it at other locations), the potential impacts associated
with unstable earth conditions can be mitigated to a level of nonsignificance.
The project site is not situated within an Alquist-Priolo Special Studies Zone (Figure 47 of the City's General
Plan), The project site is situated about I mile southwest of the San Andreas fault and its Alquist-Priolo zone
as shown on Figure 47. The Glen HelenlLoma Linda fault Special Study Zone is located about Yo mile to the
southwest of the site, These are major faults with the potential of producing major seismic events. An 8.0-9.0+
magnitude quake is possible on the San Andreas fault. In addition there may be hidden or blind fau'lts in the
area which are unknown at this time, A possible undetermined fault location is located just north of the project
site, see Figure 47 of the General Plan. The mitigation outlined in 3.d.1 can reduce the issue of onsite fault
rupture and related geological conditions to a nonsignificant level of impact, To reduce potential seismic
related groundshaking impacts to a less than-significant level, the following measure shall be implemented:
J.d.1 Before issuance of 8 Building Permit. the City shall review and approve a Geotechnical Investigation of the site
prepared by a licensed geotechnical professional. This study shall identify specific safety~based performance
standards that must be met to ensure that any structures that will be occupied by humans will be able to withstand
seismic and unstable earth hazards and ensure that the unstable earth conditions that may exist at the site do not
cause any significant safety hazards for future human occupants of such structures. The recommendations of the
study shall be incorporated into the grading and building plans approved by the City for this project.
The project site is a parcel that is located on alluvial sediments and has been graded in the past. The site does
not contain any natural geologic or physical features. No potential for impacting such resources exists and no
mitigation is required.
The project site is situated within an area identified has having a high potential for wind erosion as identified
on Figure 53 of the City's General Plan. Since the site is currently graded and compacted, it does not serve as
a major source of fugitive dust. During construction, disturbance of the pad for building construction can
generate fugitive dust. For detailed mitigation see the discussion under air quality. Essentially, use of water
to control dust, control of construction vehicle speeds and ternlination of ground disturbing activities during
construction can reduce potential fugitive dust generation during construction to a nonsignificant level of
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
impact. Regarding potential for wind damage to plants due to high winds at this location, the site design has
taken this into consideration and the outdoor garden facility will be located on the lee side of the structure,
where it will receive maximum protection from north and northeast Santa Ana winds, A question regarding
potential for wind capture of trash placed outdoors has been raised, and the commercial facility operator
indicates that this facility will not utilize outdoor storage (dumpsters) for trash. Trash collected at the facility
is placed in a compactor and utilized until it is full, The full compactor is removed and replaced while the
compacted trash is hauled to a disposal site, This minimizes the potential for strong winds to capture and blow
trash from the project site once the facility is in operation.
3,g The project site has been graded and compacted in the past when the development pads were constructed. The
site did not contain any natural channels before grading, reference the North San Bernardino 7.5' USGS
Topographic Quadrangle, and no channels, creeks or rivers currently occur on or within the vicinity of the site,
Cajon Wash is located about one mile southwest of the project site. No potential for disturbance of any
channel exists from implementing this project and no mitigation is required.
3.h-i The project site is not located within any area identified as having potential for susceptibility for any other
o geologic hazards, including landslides, liquefaction, ground subsidence, etc, No mitigation is required.
References
t. Bortugno, E,], and Spilller, T.E. t986. "Geologic Map of the San Bemardino QlIadrallgle. Map No. 3A (Geology), Scale 1:250,000".
2. City of San Bernardino. 1989. Final Environmental Impact Report, City of San Bernardino General Plan.
3. City of San Bemardino. 1999. General Plan.
4. City of San Bernardino. 1988. City o/San Bernardino General Plan Update Technical Background Report
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Potentially
Significant
1m"",
Potentially
Signi6eant
""""
Mitiplion
Incorponiled
No
Impact
....",."
Signi6can1
1m"",
4, WATER. Will the proposal result in:
a.
Changes in absorption rates, drainage patternS, or the rate
and amount of surface runoff due to impermeable surfaces
that cannot be mitigated by Public Works Standard
Requirements to contain and convey runoff to approved
storm drain based on review of the proposed site plan?
~
o
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b,
Significant alteration in the course or flow of flood waters
based on consultation with Public Works staff?
o
o
o
~
c.
Discharge into surface waters or any alteration of surface
water quality based on requirements of Public Works to
have runoff directed to approved storm drains?
o
~
o
o
d.
Changes in the quantity or quality of groundwater?
o
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e.
Exposure of people or property to flood hazards as
identified in the Federal Emergency Management Agency's
Flood Insurance Rate Map, Section l6.0-Flooding, Figure
62, of the City's General Plan?
o
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Substantiation:
4,a Development of the project will result in the hard surface covering (paving and structures) of almost the entire
site, This hard surfacing may cause an increase in drainage water runoff or the current absorption rates on the
-14.50 acre site. The increased runoff would be collected in the street section (Hallmark Parkway) and carried
by local storm runoff channel to Cajon Wash. This method of drainage is fully consistent with the City's Public
Works Standard Requirements and was designed when the original development pads were installed. No
additional mitigation will be required for this project.
4.b The project site's drainage is already installed as a result of previous approvals and no change in the drainage
system will be required to accommodate the proposed project on this site. No mitigation is required.
4.c
The proposed project has the potential to affect surface water quality through the generation of urban runoff
from commercial development of the site. To ensure a less than significant impact to water quality from
discharge of storm runoff from the site, the following mitigative actions will be taken.
4.c,1 The project proponent ,hall ,elect be,t management practice, from the Supplement A Attachment (Appendix 1) that
achieves a 600/0 percent reduction in pollutants generated on the project site during construction for suspended
sediment, oxygen demand, trace metals and bacteria. and a 200/0 reduction in total phosphorus and total nitrogen.
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
These measures will be integrated into the construction Storm Water Pollution Prevention Plan (SWPPP) that must
be prepared for this project in accordance with current non.point source (National Pollutant Discharge Elimination
System (NPDES) permitting procedures, The construction SWPPP shall be provided to the City for review and
approval prior to initiating construction at the site. .
4.c.2 The SWPPP prepared for the project site shall include a spill response program for accidental release of water
pollutants during construction that shall. at a minimum. meet the following performance standards: adequate
resource, shall be maintained on the site by the contractor to control any release of pollutants; if a spill occurs. the
pollutant shall first be contained, second the spill shall be reported to appropriate authorities, third the pollutant
contaminated material (soil, water, etc.) shall be collected in proper containers, fourth the pollutant contaminated
material shall be delivered to a facility with the capability to treat or dispose of the contaminated material in
accordance with existing laws and regulations in place at the time of the accidental spill; fifth the area contaminated
by the spill shall be cleaned (remediated) to background conditions, or alternatively to a level that meets the
requirements of existing laws and regulations at the time of the clean-up and that does not leave any residual threat
to humans or the environment in which the spill occurs.
The potential for long-term surface water pollution must also be controlled by the implementation ofBMP's
that must be inCorporated into an SWPPP and a Business Plan that must be prepared and submitted to the City
for use in responding to an accidental release of hazardous or toxic material being stored and/or used on the
project site. The Attachment to Supplement A (a copy of the pertinent percentage reductions in this
Supplement is provided as Appendix I) addresses the potential for non-point source releases of pollutants into
surface runoff from general activities. Low levels of petroleum products, fertilizers, and other materials can
be produced from an urbanized, landscaped site such as that proposed by the project. The construction
SWPPP prepared for this project shall achieve a 60% reduction in any pollutants generated on the project site,
by capturing surface runoff and processing it through a "first flush" filter/treatment unit on the property or a
comparable alternative process. The following mitigation measure will be implemented to meet this
performance standard, ,
4.c.3 The project proponent shall select best management practices from the Supplement A Attachment that achieves an
60-/. percent reduction in pollutants generated on the project site during facility operations. These measures will
be integrated into the Storm Water Pollution Prevention Plan (SWPPP) that must be prepared for this project in
accordance with City non.point source and National Pollutant Discharge Elimination System (NPDES) pennitting
procedures. The operations SWPPP shall be provided to the city for review and approval prior to initiating
operations at the site.
The Business Plan typically incorporates a Spill Prevention Control and Countermeasures Plan (SPCC) that
defines the steps that will be taken by the owner/operator to control, minimize, or prevent spills of hazardous
ortoxic materials; what responses will be taken to remediate the adverse consequences of any accidental spills
and how any contaminated materials will be managed once collected for treatment and disposal. The following
mitigation measure ensures that the effects of any accidental spills are managed to achieve a nonsignificant
level of adverse impact.
4.c.4 The Businen Plan prepared for project operations shall indicate how the operation will handle all spills or leakage
of hazardous or toxic materials during operational activities. This Plan shall incorporate a Spill Prevention Control
and Countermeasures Plan to minimize the potential release of hazardous materials on the project site duriIlg
operations, The Plan shall also define how such spills will be remediated In compliance with applicable state and
local regulations regarding cleanup and disposal of the contaminant released. The contaminated waste shall be
collected and disposed of at an appropriately licensed disposal or trealment facility,
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Implementation of these measures outlined above can ensure that potentially significant impacts to surface
water quality will be controlled to ensure that construction and operation activities do not cause a significant
level of water quality impact.
The construction and operation of a gasoline station is subject to rigorous requirements and standards that are
implemented through existing regulations and permits. These include the following:
a. The County Fire Department Hazardous Materials Division issues both a construction permit (to control
the installation of underground storage tanks (UST) and a General Permit for the UST operation and
storage and use of hazardous materials at the site, This permit requires a continuous monitoring system
to ensure that any leaks are identified immediately within a double walled tank and the tank can be closed
and repaired before any leakage occurs to the environment, particularly the adjacent sediment (vadose,
zone) or groundwater. Since these permits and requirements are mandatory, they do not need to be
required as mitigation measures.
b.
A Business Plan (see above) must be filed with the County and local Fire Department which usually
issues its own permit. This Plan identifies the quantities of hazardous materials generated on site and
the measures that will be implemented to minimize potential releases, or to clean up any hazardous
materials or wastes released into the environment. See mitigation outlined above.
c, Different jurisdiction may require the preparation of an industrial nonpoint source discharge permit,
National Pollutant Discharge Elimination System (NPDES) permit. This would typically be covered be
implementing best management practices during operation of the facility as outlined in the Business Plan,
specifically the spec Plan, Therefore, the requirement to complete the Business Plan as outlined above
ensures that an onsite management plan will be in place to minimize potential releases to hazardous
materials or wastes to the environment.
4.d Development of this previously graded site which has no upstream drainage area has no potential to reduce
recharge to the groundwater aquifer. The site does not currently serve as a recharge location and installation
of impermeable materials is not forecast to cause any adverse impacts to groundwater quantity. Further, this
project will not result in any direct withdrawals of groundwater' from the basin. A potential does exist for storm
runoff to contribute to groundwater degradation, but the mitigation measures outlined above will prevent
significant degradation of surface water quality, and thereby any potential for significant degradation of
groundwater quality,
4.e
The project site is not located within any 100-year floodplain areas shown on Figure 62 of the City of San
Bernardino General Plan. Data obtained from the City Engineering Department indicates the site is located
within Flood Zone X which represents areas that are not within a 500-year floodplain, Review and approval
of grading, site development, and drainage plans by the City are considered adequate to mitigate the potential
for the exposure of people or property to flood hazards. No further mitigation is required.
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
References
1. City of San Bernardino. 1989. Final Environmental ImpacI Report. City of San Bernardino General Plan.
2. City of San Bernardino. 1989. Genera/Plan.
3. City ofSsn Bernardino. 1988. City of San Bernardino General Plan Update, Technical Background Report
4. Santa Ana River Regional Water Quality Control Board, 1995, Water Quality Control Plan.
POlcntiaDy
Signific:ant
1m"",
Potentially
Signi.6can1
Unl<u
Mitigation
"""pen""
.....-
s;,.;.....
1m"",
"0
Impa<.
5, AIR QUALITY. Will the proposal:
a.
Violate any air quality standard or contribute to an existing
or projected air quality violation based on the thresholds in
the SCAQMD's "CEQA Air Quality Handbook"?
o
Iii
o
o
b.
Expose sensitive receptors to pollutants?
o
o
Iii
o
o
c.
Alter air movement, moisture, or temperature, or cause any
change in climate?
o
o
o
WI
d.
Create objectionable odors based on information contained
in the Preliminary Environmental Description Form?
o
o
Iii
o
Substantiation:
5.a The proposed project is located within the South Coast Air Basin (SCAB). The South Coast Air Quality
Management District (SCAQMD) has jurisdiction over air quality issues and regulations within the SCAB.
The SCAQMD has published a "CEQA Air Quality Handbook" (CEQA Handbook) that identifies threshold
values for emissions to assist local agencies in determining if a project's emissions could pose a significant
adverse impact to air quality and air quality standards.
The thresholds are:
Reactive Organic Compounds (ROC)
Nitrogen Oxides (NOx)
Carbon Monoxide (CO)
Particulate Matter (PMIO)
Sulfur Oxides (SOx)
ConstnIction
75 Ibs/day
100 Ibs/day
550 Ibs/day
150lbs/day
150lbs/day
ODerations
55 Ibs/day
55 lbs/day
550lbs/day
150 lbs/day
150 lbs/day
o
A site specific air quality study for the proposed project was prepared by Parsons Engineering Science, Inc.
This study is available for review at the City Planning office for interested parties, Based on the proposed
construction scenario, the study detennined that short-term air emissions are not forecast to exceed the
SCAQMD thresholds outlined above, with or without mitigation. Table 8 of the Parsons' air quality study
quantifies construction emissions and it may be viewed at the City Planning office. However, to ensure that
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
no significant local fugitive dust impacts occur during construction, the following mitigation measures will be
implemented.
5,a,1
The project will comply with regional rules such as SCAQ.MD Rules 403 and 402 which would assist in reducing
short.term air pollutant emissions. Rule 403 requires that fugitive dust be controlled with best available control
measures so that the presence of such dust does not remain visible in the atmosphere beyond the property line urthe
embsion source. Rule 402 requires dust suppression techniques to be implemented to prevent fugitive dust from
creating a nuisance off-site. These dust suppression techniques are summarized below.
Portions ofthe construction site to remain inactive longer than a period oUhree months shall be seeded
and watered until grass cover is grown or othenvise stabilized in a manner acceptable to the City.
All active portions of the construction site shall be watered a minimum of two times dally to prevent
excessive amounts of dusl
On-.lte vehicle .peed .hall be limited to 15 mph,
All on-site roads shall be paved 35 soon as feasible or watered periodically or chemically stabilized.
All material eIt3vated or graded shall be sufficiently watered to prevent excessive amounts of dusl
Watering, with complete coverage, shall occur at least twice daily, preferably in the late morning and
after work is done for the day.
All clearing, grading, earth moving, or excavation activities shall cease during period of high winds (i.e.,
greater than 25 mph averaged over one hour) or during Stage 1 or Stage 2 episodes.
All material transported off-site shall be either sufficiently watered or securely covered to prevent
excessive amounts of dusl
The area disturbed by clearing, grading, earth moving, or excavation operations shall be minimized at
all times.
5,..2
The construction contractor shall select the construction equipment used on-site based on low emission factors and
high energy efficiency. The construction contractor shall ensure that construction grading plans include a statement
that all construction equipment will be tuned and maintained in accordance with manufacturer's specificatioD!i.
5,.,3
The construction contractor shall time the construction activities so as not to interfere with peak hour traffic and
so as to minimize obstruction of through traffic Janes adjacent to the site; if necessary, a flagperson shall be retained
to maintain safety adjacent to existing roadways.
5.a.4
The construction contractor shall utilize as much as possible precoated/natural colored building materials, water
based or low VOC coating, and coating transfer or spray equipment with high transfer efficiency, such as high
volume low pressure (HVLP) spray method, or manual coatings application such as paint brush, hand roller. trowel,
spatula, dauber, rag, or sponge. .
With implementation of these measures, no significant air quality impacts are forecast to occur during the
construction phase of this project.
During the operational phase, the Parsons' study indicates that mobile source emissions caused by the proposed
project will result in emissions of carbon monoxide (CO) during operations to exceed the threshold. All other
pollutant emissions associated with the proposed project are not forecast to exceed operational thresholds, This
is in part due to the fact that the trip distance is very short, since the nearest competing large-box retailers
(including a Wal-Mart) are about six-seven miles east and south of the project site and the mileage for each
trip is assumed to be from within a distance ofapproximately two miles of the project site,
The CO emission generation during operations was evaluated for violation of the CO National and State
Ambient Air Standard in relation to a CO hotspot and it was deterniined that under worst case conditions, no
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
hotspot would be created. Further, the evaluation by Parsons observed that CO emissions will gradually be
reduced in the future to a point below the SCAQMD significance threshold.
It must be kept in mind that the SCAQMD CEQA Handbook was developed in an advisory capacity relative
to the local agency's decision making responsibilities. See Page 6-2 of the CEQA Handbook for a discussion
of this issue, The responsibility for making a determination of significance for air quality impacts rests solely
with the Lead Agency, This approach to reviewing projects was incorporated into the CEQA Handbook
because various circumstances, aside from emissions, need to be considered as part of the decision regarding
the significance of air quality impact and the SCAQMD realized that the thresholds in the Handbook do not
always take into consideration all of the issues regarding potential significance of air emissions from a project,
Some of these considerations include:
a. Would the emissions occur anyway since the demand for the service or goods exists independent of the
project?
b. Would the same level of emissions or greater, occur without the project if built at another location?
c.
Could the same or greater emissions occur if the demand for goods require a number of separate visits
to other locations?
d. Is the project area served by convenient access to freeways, transit, rail and/or other facilities that reduce
emissions?
e. Is the project consistent with the AQMP and' regional growth plans? Does it enhance the local
jobslhousing balance?
If the answers to these questions are positive, then the magnitude of project-related emissions'relative to the
SCAQMD thresholds will not necessarily support a finding of significant impact for air quality issues, There
is clearly discretionary leeway to find for a less than significant impact, even for a large new project,
particularly when it represents the planned and much anticipated utilization of an existing developing area that
will substantially enhance the commercial and business community and jobslhousing balance for cities or a
region, such as the east San Bernardino Valley. In this context it is essential to note that the only operating
emissions that exceed thresholds is CO. Parsons' study verifies that the forecast CO emissions from the project
will not cause a local violation of the state or federal CO standards, in the short- or long-term. Further, the C 0
background concentrations for the region indicate a continued downward trend is occurring which is forecast
to continue due to the reduction in mobile source CO emissions in the future.
Thus, the issue here is not the potential for violation of a health standard, either directly or cumulatively, it is
an issue of whether by exceeding the SCAQMD emission threshold in pounds may result in a signific:rnt
adverse impact. As the discussion above indicates, tile question of impact significance from developmmt-
associated emissions should not be solely related to the size of a project or the magnitude of the emissions, b~t
rather whether such growth has been properly anticipated, i.e., is consistent with, in the regional air quali-ty
planning process. The development of the project site into a job-generating commercial uses is planned as pa.rt
of the City of San Bernardino's Gen~ral Plan. The City has envisioned commercial development of this area
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INmAL STUDY
since adoption of the General Plan in 1989. The conversion from bare, graded commercial pad to job
producing uses is therefore anticipated and desired by the City. Based upon such considerations, the General
Plan EIR concluded that implementation of commercial development was consistent with applicable air quality
management plans and would have less than significant air quality impacts.
Similarly, the answers to the above questions for the proposed commercial project support the conclusion that
this project will not contribute to a significant air quality impact. Specifically:
a. Even without the implementation of this project, emissions will occur as a result of shoppers going to
some location within the general project vicinity to obtain the goods and services that will be provided
by the proposed project.
b. This development is within the highly urbanized portion of the City of San Bernardino, i.e., it is an infill
project. Building a comparable sized project out of the immediate project area would result in greater
emissions to serve the local populace, i.e., the local market area, that will utilize this commercial project.
c.
Emissions would be reduced by this shopping center relative to the use of individual shopping facilities
which may be currently used in place of this shopping center. The proposed project is a large box retail
that provides a wide range of commercial products, services and related uses at one spot right in the
middle of the highly populated northern portion of the City.
d. Freeway access is immediately adjacent to the site and transit access is excellent along University
A venue which is located a few hundred feet from the project site.
e, This project is forecast to generate a large number of new jobs ranging from minimum wage to
managerialleve!. This new commercial project replaces a vacant commercial development pad with a
large job generating facility. The jobslhousing balance of the east San Bernardino Valley, which is not
currently in balance will be substantially enhanced as a result of providing a net of several hundred jobs,
This project fully conforms and implements the principle concepts (infill redevelopment, better jobslhousing
balance, and reductions in vehicle miles traveled) contained in the Air Quality Management Plan and SCAG's
Regional Comprehensive Plan and Guide. For the above reasons the City of San Bernardino concludes that
the air emissions associated with this project would be fully consistent with regional air quality planning
guidelines, and with the applicable air quality management plans. Further, these air quality planning
documents forecast that clean air standards will be met as long a planned growth conforms with the goals and
policies of these plans. The proposed project meets the above tests and for these reasons, the proposed
project's air quality impacts are considered less than significant.
Regardless, the following mitigation measure will be implemented to reduce emissions.
5.a.5 To reduce emissions during operations, particularly mobile source emissions, the developer shall implement the
following measures:
To the extent feasible, implement a verifiable ridesh.tre program that will reduce vehicle miles traveled by
employees and shoppers.
o
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I.
02.
3.
4,
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Provide a bus stop (adequate turnout area, bench seat and cover, or comparable facility) at the front of the
property along Hallmark Parkway and attempt to arrange for Omnitrans, the local mass transit company, to
provide bus senrice to the project site.
Implementation of this measure in conjunction with the forecast emissions will result in a nonsignificant impact
to air quality over the long-term,
The proposed project also incorporates a gas station as one of its components, Because of the hazards
associated with air emissions from gas station operations and from accidental releases of gasoline into the
environment, elaborate permitting requirements have been developed. Those associated with the accidental
release of gasoline to the environment are discussed in the hydrology section, under issue 4.d, From an air
quality perspective, controls on gasoline have been in place for a long time due to the contribution of volatile
organic compounds (VOC) to ozone concentrations in the atmosphere. Rules 461-463 of the SCAQMD require
that all gas stations install emission controls to limit the amount of hydrocarbons that can escape to the
atmosphere to specific limits. These Rules mandate any station to obtain permits to construct and operate
through the SCAQMD prior to beginning operations. Therefore, they control gasoline emissions at a level that
is consistent with minimizing the formation of ozone in the atmosphere. A second, equally important issue,
relates to the toxic air emissions from a gas stations, The District's 1400 series rules are specifically designed
to reduce or control emissions of toxic component of gas station operation so that they do not cause or
contribute to a significant exposure to toxic air contaminants. Prior to initiating operations a public health risk
study will have to be prepared for the gas station and this information is required by the District before it will
issue the permits to construct or operate. Without the acquisition of such permits, the City of San Bernardino
will not allow the gas station to be constructed, Therefore, the existing regulations and permitting process are
self monitoring and ensure that the station cannot be installed unless it meets all air pollution requirements.
5,b
There are no sensitive receptors in the immediate project area. This fact, combined with the forecast emissions
from this project, result in a finding of no significant impact from the project's implementation. No additional
mitigation is required.
5,c
Based on the type of use and the size of this project, there is no potential to significantly alter air movement,
moisture, temperatures or cause a climatic change. No mitigation is required.
5.d
This proposed project does have a potential to generate odors from operating activities (food odors, outdoor
nursery odors, vehicle odors) but there are no potential sensitive receptors in the project area. Therefore, no
potentially significant adverse impact from odor generating activities is forecast to occur from implementing
this project, No mitigation is required.
References
City orSan Bernardino. 1989. Final Environmental Impact Report. City of San Bemardino General Plan.
City or San Bernardino. 1989. General Plan.
Parsons Engineering Science, Inc. October 31, 2000 "Draft San Bemardino Wal.Mart Air Quality Study" and
March 6, 2001 "Updated CO Hotspots Analysis,"
South Coast Air Quality Management District. 1993, CEQA Air Quality Haudbaok,
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Potentially
Signilicant
Implct
POlentially
Signi6can1
UnIao
Mitiplion
,..,.,,,.,,,,,,
N.
Imp&<(
.....-
Sipi6cant
1m....
6. TRANSPORT A TION/CIRCULA TION. Could the proposal
result in:
a.
A significant increase in traffic volumes on the roadways or
intersections or an increase that is significantly greater than
the land use designated on the General Plan?
o
o
ia
o
b. Alteration of present patterns of circulation? 0 0 ia 0
c. A disjointed pattern of roadway improvements? 0 0 0 ~
d. Impact to rail or air traffic? 0 0 0 IOiil
0 e, Insufficient parking capacity on-site or off-site based on the 0 0 0 IOiil
requirements in Chapter 19.24 of the Development Code?
f. Increased safety hazards to vehicles, bicyclists or 0 ia 0 0
pedestrians?
g. Conflict with adopted policies supporting alternative 0 0 0 IOiil
transportation?
h. Inadequate emergency access or access to nearby uses? 0 0 0 IOiil
Substantiation:
o
6.a
The proposed project will have a less than significant impact on local traffic volume during the construction or
operational phase because of the limited number of trips associated with construction. This is the conclusion of
the report generated by LSA and Associates dated February 6, 200 I. A copy of this report is available for publ ic
review at the City Planning office at 300 North D Street in the City of San Bernardino, However, traffic
conditions during operation would be impacted by increased congestion at several intersections and would
degrade by 20 I 0 to LOS F at three intersections without mitigation. With mitigation all three would be brougl1t
to level LOS D or higher during peak hour which is the City's threshold of significant impact to the circulation
system. Table I of the Traffic Study (see end of this document) provides the mitigation for the year 2003 plus
project condition and the mitigation required to maintain an acceptable level of service at the year 20 I 0 plus
project condition. The following measure incorporates the Table I mitigation and can reduce circulation system
impacts to a less than significant impact.
6,a.1 The recommended mitigation for 2003 includes: Signalize Hallmark Parkway/Gannet Parkway (project Access); al:1d
Restrict access at the Hallmark Parkway/South Project Access to right-in/right-out only, The recommended year20JO
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
mitigation includes one additional measure: Addition of a separate eastbound right~turn lane at the 1-215 Southbound
RampslUnivenity Parkway.
6.b
The proposed project will include a request to the City to vacate the section of Gannett Parkway east of Hallmark
Parkway and the portion of McArthur Boulevard south of the northerly project boundary. These proposed
physical changes in the local circulation system will not adversely impact the local traffic pattern since these
streets were designed to provide access within and on the periphery of the project site. With the proposed
commercial retail development this access will no longer be required, Any parcels that are currently using
Gannett Parkway to access McArthur Boulevard will have direct access to McArthur from Hallmark Parkway,
No mitigation will be required if these roads are vacated.
6.c
The proposed project does not involve any physical changes to the circulation system or any roadway
improvements that could create a disjointed pattern oftrafIic or pedestrian circulation. No impact is forecast and
no mitigation is required,
6.d
The proposed project does not have activities that can affect air or rail traffic systems in the area. No impact
is forecast a no mitigation is required.
The proposed project will have 706 parking spaces. This will provide a parking ratio of 5.01 spaces per 1,000
square feet which exceeds the City's requirements. No adverse impact is forecast and no mitigation is required,
6,f
Ingress and egress to the facility will be obtained through the Gannett Parkway and Hallmark Parkway, There
is a low probability that the proposed project would have any safety impacts during either the construction or
operational phase since all construction will be on the parcel itself, not the street section. However, during the
construction period, safety hazards may occur on adjacent City roads when curb cuts and other access
improvements are constructed which could temporarily affect traffic safety, Such hazards can be managed by
using appropriate traffic management tools. To mitigate this potential impact, the following measure will be
implemented:
6.r.l For periods when construction activity encroaches onto Hallmark Parkway, the developer shall implement a traffle
management plan approved by the City that specifies the equipment, manpower and other material that will be utilized
to ensure that potential hazards are minimized and safety 01 vehicle traffic, pedestrians and bicycles is ensured.
6,g
The City is served by nearby regional routes and AMTRAK and Metrolink rail connections. The project area
is served by local bus routes which provide service to the University and Hallmark Parkway intersection. This
provides adequate alternate transportation for the public and the project itself does not contain any activities or
cause physical changes in the environment that could conflict with adopted policies supporting alternative
transportation. No mitigation is required.
6.h.
The proposed project does not involve any physical changes to the enviromnent or any roadway improvemen-'s
that could interfere with emergency access or access to adjacent properties and uses. No impact is forecast to
occur and no mitigation is required.
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
References
1. City of San Bernardino. 1989. Deve/opmentCode.
2. City or San Bernardino. 1989. General Plan.
3. LSA Associates. 2/6/01 "Traffic Impact Study for the San Bernardino Walmart".
Potentially
Si.gni.6can1
Potentially """" .....-
Significant Mitigation Significant No
Impod Incorponled Impod Im_
7, BIOLOGICAL RESOURCES. Could the proposal result in:
a. Development within the Biological Resources Management 0 0 0 ia
Overlay, as identified in Section 10,O-Natural Resources,
Figure 41, of the City's General Plan?
b. Impacts to endangered, threatened or rare species or their 0 0 0 ia
0 habitat (including, but not limited to, plants, mammals, fish,
insects and birds)?
c, Impacts to the wildlife disbursal or migration corridors? 0 0 0 ia
d. Impacts to wetland habitat (e,g., marsh, riparian and vernal 0 0 0 ia
pool)?
e. Removal of viable, mature trees based on information 0 0 0 ia
contained in the Preliminary Environmental Description
Form and verified by site survey/evaluation (6" or greater
trunk diameter at 4' above the ground)?
Substantiation:
7.a-e The projeet site is not located within a Biological Resources Management Overlay as identified in Section 10,
Figure 41 of the City's General Plan. This site has been previously compacted and graded and is currently
plowed. No native vegetation is located on the project site and no trees occur on this pad which has been
prepared for development. No mitigation is required.
References
1. City orSan Bernardino. 1989. Final Environmental Impact Report, City o/San Bernardino General Plan.
2. City of San Bernardino. 1989. Genera/Plan.
3. City or San Bernardino. 1988. City o/San Bernardino Ge1Jeral Plan Update, Technical Backgrollnd Report.
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
PotentiaDy
Signifialnl
Impo<t
Polenlia1ly
Significant
.......
Mitig.tion
Incorpor.at~
Lou_
Signi6eanl
Impo<t
No
Impocl
8. ENERGY AND MINERAL RESOURCES. Would the
proposal:
a.
Conflict with adopted energy conservation plans?
o
o
121
o
b.
Use non-renewable resources in a wasteful and inefficient
manner?
o
o
o
iOi!
c.
Result in the loss of availability of a known mineral
resource that would be of future value to the region and the
residents of the State?
o
o
o
iOi!
Substantiation:
08.a
According to the California Commission on Energy's most recent Electricity Report, the implementation of the
proposed project will not cause any available electricity supplies to be exceeded. The proposed project will not
conflict with any adopted energy conservation plans and the proposed facilities will incorporate all currently
required energy conservation measures. The additional electricity demands related to the project are within the
existing electrical supply demand forecast for the San Bernardino area, Also, the City has adopted building codes
that require implementation of energy conservation measures for new development. Implementation of these
design and construction standards are considered adequate compliance with energy conservation goals and
policies, The additional energy demand resulting from the project would normally be considered a less than
significant impact. However, recent shortages in generation capacity may require the new facility to pay higher
costs for electricity or to accept short-term rolling black outs in response to excessive short-term demand, These
limitations will be resolved as new generating capacity is brought on line over the next few years. This short-tenn
electricity constraint is not considered to be a significant adverse impact, particularly since the new facility is
being constructed with an awareness of these constraints. No additional mitigation in required.
8.b Construction and operation of this project will result in the use of some non-renewable resources (concrete,
asphalt materials, steel, fuels etc.). The construction and operation of this facility, however, is not considered
a wasteful use of such resources and all such non-renewable resources are currently available from commercial
markets with no known current limitations. No potential for significant resource impact is forecast to occur and
no mitigation is required.
8.c The project site is not known to contain any mineral resources. This project has no potential to result in the loss
of any known mineral resources. No mitigation is required.
CRererences
1, City of San Bernardino. 1989. Final Environmental Impact Report, City o/San Bernardino General Plan.
2. City of San Bernardino. 1989. General Plan.
3. City of San Bernardino. 1988. City olSon Bert/aMino General Plan Update, Teclmicol BackgrOlmd Report.
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Potc:nliaUy
Signifieanl
1m,...
Potentia1ly
Signi6cant
UnI<u
Mitigltion
I",o.po...",
","Thon
Signi6cant
Impa<:l
No
Im_
9. HAZARDS. Would the proposal:
a.
Use, store, transport or dispose of hazardous or toxic
materials based on information contained in the Preliminary
Environmental Description Form, No. G(l) and G(2)
(including, but not limited to, oil, pesticides, chemicals or
radiation)?
o
ii!I
o
o
b.
Involve the release of hazardous substances?
o
ii!I
o
o
c.
Expose people to the potential health/safety hazards?
o
ii!I
o
o
Substantiation:
09.a The proposed project will result in the use and storage of hazardous materials on the project site, including
petroleum products, garden pesticides, and other "household" hazardous materials. See the Preliminary
Environmental Description Form which is available at the City Planning office. This facility will use, store,
and transport hazardous or toxic substances of various quantities. Mitigation is identified in the Water Section
of this document, which requires both short- and long-term measures to be in place to ensure that any accidental
releases of hazardous materials can be managed so that it will not cause a significant adverse impact on the
environment. No additional mitigation is required.
9.b In both the construction and operation phase, the potential for the release of petroleum products and other
chemicals and substances will exist. The potential impacts associated with such an occurrence are mitigated
by measures outlined in the Water Section of this Initial Study (Section 4). No additional mitigation is
required.
9.c This site has been historically graded and compacted for commercial uses. The potential for any contamination
on this site to pose a potential health/safety hazard, particularly during construction, is not considered to be
significant based on mitigation defined in Section 4 of this Initial Study.
References
I. City of San Bernardino. 1989. Final Environmental Impacl Report. City of San Bernardino General Plan.
2. City of San Bernardino. 1989. General Plan.
3. City of San Bernardino. 1988. City of San Bemardino General Plan Update, Technical Background Report.
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CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
10. NOISE, Could the proposal result in:
a.
Development of housing, health care facilities, schools,
libraries, religious facilities or other noise sensitive uses in
areas where existing or future noise levels exceed an Ldn of
65 dB(A) exterior and an Ldn of 45 dB(A) interior as
identified in Section l4.0-Noise, Figures 57 and 58 of the
City's General Plan?
b,
Development of new or expansion of existing industrial,
commercial or other uses which generate noise levels above
an Ldn of 65 dB(A) exterior or an Ldn of 45 dB(A) interior
that may affect areas containing housing, schools, health
care facilities or other sensitive uses based on information in
the Preliminary Environmental Description Form No, G(l)
and evaluation of surrounding land uses No. C, and verified
by site survey/evaluation?
10
Substantiation:
Potentially
Significant
Impllct
Polentially
Significanl
""""
Mitigation
Incorpot1Iled
No
Im_
l.<unw.
Signi6can1
1m"",
o
o
ia
o
o
o
o
Ia
IO.a The proposed project does not consist of any housing, heath care, schools, libraries, religious facilities or other
noise sensitive uses. No potential for significant noise impact is forecast to occur from implementing the
proposed project and no mitigation is required.
lO.b The project area is designated for Industrial/Commercial uses. The adjacent freeway creates an existing high
noise background environment. The surrounding land uses are industrial, commercial, or transportation related
and will not experience any sensitivity to noise generated during construction and operation of this project,
Based on the project site noise setting and existing land uses surrounding the project site, no potential for
significant noise impacts from implementing the proposed project is forecast to occur. No mitigation is
required.
References
1. City of San Bernardino. 1989. Final Environmental Impact Report, City olSan Bernardino General Plan.
2. City of San Bernardino. 1989. General PIau,
3. City of San Bernardino. 1988. City of San Bernardino General Plan Update, Technical Background Report.
o
o
~
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
11.
PalentWly
SigniDnI
1m.....
Potentially
Significanl
U......
Mitiption
tnroq>on....
No
Impacl
Lao.....
Signi6can1
ImJ*l
PUBLIC SERVICES. Would the proposal have an effect upon,
or result in a need for new or altered government services in any
of the following areas:
a. Fire Protection? 0 0 Ia 0
b. Medical Aid? 0 0 Ia 0
c. Police protection? 0 0 Ia 0
d. Schools? 0 0 0 WI
0 e. Parks or other recreational facilities? 0 0 0 WI
f, Solid waste disposal? 0 Ia 0 0
g, Maintenance of public facilities, including roads? 0 0 0 WI
Substantiation:
Il.a
Il.b
o
The addition of a major retail shopping center to the City is forecast to have a minor impact on demand for
emergency fire control needs. The City Fire Department maintains 4 fire stations in the area. City Fire Station
#5 is located about I mile away at 1640 Kendall Drive. Other stations are #7 282 West 40th, Street, # 4 is
located at 2641 North E St. and #3 located at 2121 Medical Center Drive. Adequate resources are availab Ie
to respond to the project site in less than the three minute threshold of significance identified in the General Plan
EIR, Note that these stations are located west or south of the project site so the presence of railroads on the
tracks adjacent to Cajon Boulevard will not cause any delay in access to the project site in the case of an
emergency, The Fire Department uses the Uniform Fire Code, the National Fire codes, and the California Code
of Regulations as the basis for its enforcement programs. In addition, the City has adopted more stringent fire
regulations in areas of building construction. The result is that a structure fire at this new facility has a low
probability of occurring and ifone does occur, the sprinkler and other code protection will be sufficient to allow
rapid suppression. No mitigation is required.
The proposed project could have an impact on the City's need for EMT-Paramedic services, In the City of San
Bernardino, this service is provided by both a contracted ambulance service and the City Fire DepartmeIlt
trained personnel. The closest hospitals to the site are San Bernardino Community Hospital and St.
Bernardine's Hospital. All hospitals are within a 5 to 10 minute drive from the project site. The amount CJf
available response capability and response times are adequate to ensure that emergency response will not incur
a significant adverse impact from random demand by the proposed project.
o
I
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
11.c
INITIAL STUDY
11.d
o
ll.e
11.f
o
11.g
The City's General Plan ties future demand for police services to growth in population. The proposed project
is not forecast to result in a significant increase in population within the City or the surrounding area.
Commercial facilities place a modest, not significant demand on police services within the Community, The
General Plan indicates that the funds generated by growth, including sales tax growth, will be sufficient to
provide for increases in the number of police officers to meet demand without causing a significant adverse
demand on police services. Private security at such facilities helps to reduce random crime events, including
shop lifting, A commercial facility such as proposed does add to the demand load for City Police Department,
but the increase in demand is not identified as being project specific or cumulatively significant. From a law
enforcement safety standpoint, adequate design mechanisms will be incorporated in the design of the project
to assist with police minimizing safety problems at the project site, in accordance with the development plan
review process. No potential is forecast for the project to create a new, significant demand on the available
law enforcement capacity of the City. No mitigation is required,
The proposed project will not cause any direct increase in demand for school capacity within the City, Indirect
impacts may occur but would be very small based on the total employment at the proposed commercial facility,
Mandatory school fees paid by this project are deemed adequate to mitigate any such indirect impacts. No
additional mitigation is required.
The proposed project and its operation does not place any direct demand on park and recreation resources.
Indirect impacts may occur but would be very small based on the total employment at the proposed commercial
facility. No mitigation is required.
The project site has very little debris on the ground surface and development of the site is not forecast to
generate substantial volume of solid waste from clearing and grubbing. During construction and after
operations are initiated, the proposed project will generate solid waste requiring disposal. The City has
implemented its Source Reduction and Recycling Element programs and is required to divert 50 percent of the
solid waste generated City-wide. This facility would generate used oil, used coolants and solvents, empty
containers made from metal, plastic and paper and used mechanical parts. For facilities such as this, the City
seeks to have a source reduction and recycling plan submitted for review and approval to ensure that as much
waste can be recycled as possible, Therefore, the following mitigation measure will be implemented:
l1.f.l The developer or occupant shall provide a source reduction and recycling plan for facility operations that Identifies
a recycling goal of recycling 500/0 of the solid waste. This plan shall be submitted to the City Solid Was te
Department for review and approval prior to issuance of building permits.
Implementation of this measure will ensure that the proposed project contributes to the City's overall source
reduction and recycling goals and will reduce potential solid waste generation impacts to anon-significant level.
The waste generated will be disposed of at the Colton, San Timoteo or Mid-Valley landfills. Adequate capacity
exists within these County landfills to meet disposal requirements over the next five years, which is the current
planning period for landfills. Based on this analysis, no potential for project specific significant impact to sol id
waste systems is forecast to occur and no mitigation is required.
No public facilities are known to be affected by this project. No mitigation is required.
o
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
References
INITIAL STUDY
1. City orSan Bernardino. 1989. Final Environmenlallmpacl Report. City o/San Benlordino General Plan.
2. City or San Bernardino. 1989. General Plan.
3. City of San Bernardino. 1988. City of San Bernardino General Plan Update, Technical Background Report.
4. County or San Bernardino. 1995. Countywide Integrated Waste Management Plan.
12.
Potentially
Significant
1m"",
Potentially
Signi6cant
Unku
Mitis_lion
-""
No
Im_
....."""
SignifiCUlI
1m"",
UTILITIES AND SERVICE SYSTEMS. Will the proposal,
based on the responses of the responsible Agencies, Departments,
or Utility Company, impact the following beyond the capability to
provide adequate levels of service or require the construction of
new facilities?
a. Natural gas? 0 0 12I 0
0
b, Electricity? 0 0 12I 0
c, Communications systems? 0 0 0 1011
d. Water distribution? 0 0 12I 0
e, Water treatment or sewer? 0 0 12I 0
f. Storm water drainage? 0 0 12I 0
g. Result in a disjointed pattern of utility extensions based on 0 0 0 1011
review of existing' patterns and proposed extensions?
Substantiation:
12,a
012.b
The proposed project will use natural gas that will be provided by Southern California Gas, i,e, The Gas
Company, Since the developer must follow conservation guidelines in constructing the building, the proposed
project is forecast to have a less than significant impact on natural gas resources. Note that costs of natural
gas are rising due to short-term supply limits. These shortages will be corrected by increased production over
the next few years and the proposed project is not forecast to cause or experience a significant adverse impa.ct
on natural gas supplies.
Table A9-11-A of the SCAQMD' s CEQA Handbook estimates that conmlercial structures utilize about 13.55
kilowatt-hours per square foot per year. A total of about 137,000 square feet of conunercial structures at the
site are forecast to utilize approximately 1,856,350 kilowatt-hours per year. The most recent electricity (I99~)
and fuel (1995) reports prepared by the California Energy Commission indicate adequate electricity resources
are commercially available to meet current and immediate future demands for power and fuels. However, due
"
o
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
to the change from regulated to competitive electricity provision, short-term energy costs are forecast to be
relatively expensive and short-term power limits will be experienced during the summer peak demand period
for a few years. New power plants are being constructed which will provide sufficient electricity to reduce costs
and meet growth demand. Notwithstanding the foregoing, this impact is not considered to be significant and
no mitigation is required.
12.c The proposed facility will use the existing commercial telephone companies. As such, this project will have
no significant impact on the area's communications system. Because no significant communications system
impact is forecast to occur, no mitigation is required.
12,d
Water demand for this project is forecast to be 12,000 to 15,000 gallons per day based on a water duty of
-1,000 gallons per acre of commercial development. The City General Plan indicates that sufficient water is
available to meet the buildout of the City and the water usage of this project will not exceed the City's capacity
to provide adequate water supplies to existing and/or future development. It is presently estimated that the
Bunker Hill Basin (the source of supply for the City) has about 5,000,000 acre-feet of water in storage of
which about 3,000,000 acre-feet is available without adversely effecting the supply and quality of water in the
Basin (Mr. James Dye, City of San Bernardino Water Department, personal communications, 1997), Based
on the availability of groundwater in the Basin and the current groundwater recharge policies, it is concluded
the City has adequate water supplies to serve this project without adversely effecting its service capabilities.
Other than the mandatory provision of adequate sized water mains in the adjacent roadway to provide adequate
fire flow, no mitigation is required.
o
12.e The proposed project will generate modest amounts (about 10,000 gallons per day) of wastewater from sewage,
The City General Plan EIR projected cumulative sewage flows at City buildout of 14.1 million gallons per day
(MGD), As a result, the regional plant has been significantly expanded over the past several years, and
currently has about 9 million gallons of excess treatment capacity currently available. Adequate sized sewer
collection lines occur in the adjacent streets to transport the wastewater generated by the project to the regional
plant. The payment of connection fees is a standard requirement for new development and must be provided
by the proposed project, With adequate cumulative capacity to meet the project's needs, no potential for
significant impact to the wastewater treatment and collection system is forecast to occur and no mitigation is
required.
12.f Potential impacts to the stormwater drainage system are evaluated in Section 4(a-c). No significant impact is
forecast to occur and no mitigation is required.
12,g The proposed project is essentially a "in-fill" project. The site is located within an area that contains existing
development and infrastructure. No utility extensions are required to develop this project. No potential for
significant impacts due to disjointed or poor infrastructure patterns are forecast to occur from implementing
the proposed project and no mitigation is required.
o
,
o
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
References
1. California Energy Commission. 1998. Electricity Report
2. City of San Bernardino. 1989. Final Environmental Impact Reporl, City of San Bernardino General Plan.
3. City orSan Bernardino. 1989. General Plan.
4. City orSan Bernardino. 1988. City of San Bernardino General Plan Update, Technical Background Report.
5. South Coast Air Quality Management District. 1993. CEQA Air Quality Handbook.
Potentially
Significant
Impact
Potentially
Signilieant
""""
Mirigltion
Incorponlcd
""_
Significant
Impm
No
Imp""
13. AESTHETICS.
a.
Could the proposal result in the obstruction of any
significant or important scenic view based on evaluation of
the view shed verified by site survey/evaluation?
o
o
o
~
o
b.
Will the visual impact of the project create aesthetically
offensive changes in the existing visual setting based on a
site survey and evaluation of the proposed elevations?
o
o
~
o
c.
Create significant light or glare that could impact sensitive
receptors?
o
o
~
o
Substantiation:
13.a-b The proposed project is an infill/redevelopment that will result in the construction of a commercial facility in
an already developed commercial and industrial park adjacent to Interstate 215. The location is not an
important view shed, nor will it have an impact due the elevation of the site or structures. No potential for
significant interference with views or offensive changes in the visual setting is forecast to occur from
implementing the proposed project and other than mandatory compliance with City design requirements, no
mitigation is required.
13.c The proposed project is within an area that is industrial/commercial with no surrounding light sensitive uses.
Other than ensuring as part of the development review process that no glare affects the adjacent freeway the
proposed project is not forecast to cause any light and glare impacts. Since the requirement to prevent safety
hazards from glare is a mandatory requirement, no mitigation is required.
References
1. City or San Bernardino. 1989. Final Environme,Jlollmpacl Report. City ofSau Bernardino General Plan.
02. City of San Bernardino. 1989. General Plan.
3. City of San Bernardino. 1988. City o/San Bernardi/Jo General Plan Updale, Technical Background Reporl.
o
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Potentially
Signi6~t
1m""
Potentially
Signi6can1
U.....
Mitigation
'''''''1'0''''''
""Thon
Sipi6cant
Impm
No
Im_
14. CULTURAL RESOURCES. Could the proposal result in:
a.
Development in a sensitive archaeological area as identified
in Section 3. O-Historical, Figure 8, of the City's General
Plan?
o
o
o
~
b.
The alteration or destruction of a prehistoric or historic
archaeological site by development within an archaeological
sensitive area as identified in Section 3.0-Historical, Figure
8, of the City's General Plan?
o
o
o
~
c.
Alteration or destruction of a historical site, structure or
object as listed in the City's Historic Resources
Reconnaissance Survey?
o
o
o
~
o
Substantiation:
14.a-c The proposed project site is not located in an sensitive archaeological area as identified in Section
3.0-Historical, Figure 8, of the City's General Plan. Further, the site has been previously graded and compacted
as part of the creation of master development pads, so no potential exists for any cultural resources to occur
on the project site. No mitigation is required.
References
1. City or San Bernardino. 1989. Final Environmental Impact Report. CiryofSan Bernardino General Plan.
2. City of San Bernardino. 1989. General Plan.
3. City of San Bernardino. 1988. City olSan Bernardino General Plan Update, Technical Background Report.
o
o
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
Potentia1ly
SipUficanl
Impec:1
Potenba1ly
Significant
""""
Mitigation
,...."...""
""Thon
SipU6can1
Implct
No
Im_
15. RECREATION. Would the proposal:
a.
Increase the demand for neighborhood or regional parks or
other recreational facilities?
o
o
o
~
b.
Affect existing recreational opportunities?
o
o
o
~
Substantiation:
15.a-b The project site has no recreational values at this time and its development can not affect any existing
recreational resources. No impact is forecast to occur and no mitigation is required.
C~.r:::;san Bernardino.
2. City of San Bern"dino.
3. City of San Bernardino.
1989. Final Environmental ImpacI Report, City of San Bernardino General Plan.
1989. General Plan.
1988. City o/San Bernardino General Plan Update, Technical Background ReporL
o
0 CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INmAL STUDY
pl)tentiaUy
Significanl
PotentiaUy """" t..uThon
Significanl Mitiption SiwUlicanl No
Impod 1"'"<1''''''''' Impm Im_
16. MANDA TORY FINDINGS OF SIGNIFICANCE.
a. Does the project have the potential to degrade the quality of 0 0 0 ~
the environment, substantially reduce the habitat of a fish or
wildlife species, cause a fish or wildlife population to drop
below self-sustaining levels, threaten to eliminate a plant or
animal community, reduce the number or restrict the range
of a rare or endangered plant or animal, or eliminate
important examples of the major periods of California
history or prehistory?
b. Does the project have the potential to achieve short-term, to 0 ~ 0 0
the disadvantage oflong-term, environmental goals?
0 c. Does the project have impacts that are individually limited, 0 ~ 0 0
but cumulatively considerable? ("Cumulatively
considerable" means that the incremental effect of a project
are considerable when viewed in connection with the effects
of past projects, the effects of other current projects, and the
effects of probable future projects.)
d. Does the project have environmental effects which will 0 ~ 0 0
cause substantial adverse effects on human beings, either
directly or indirectly?
Substantiation:
16.a-<l
The proposed project is an infill project that continues the City's efforts to develop its commercial resour=
based at various locations within the City. The impact evaluation presented in this Initial Study determined
that the proposed project has a potential to cause significant adverse impacts during construction and operation.
Mitigation measures have been identified and will be required by the City in order to reduce these potentially
significant adverse impacts to a nonsignificant level. Measures are identified to mitigate potentially significant
impacts for the following resource issues: earth resources; water resources; air quality; transportation/circu-
lation; hazards; and solid waste. All other issues were deternlined to experience no impact or nonsignificant
impact without any mitigation. Based on the data and findings in this Initial Study, the City proposes to issue
a Negative Declaration with mitigation measures as the appropriate CEQA determination for the north San
Bernardino retail project as outlined in the Project Description in this Initial Study.
o
o
011.
o
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
References
The following references cited in the Initial Study are on file in the Planning and Building Services Department/Public
Works Department.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10
City of San Bernardino General Plan.
City of San Bernardino General Plan Land Use Plan/Zoning Districts Map.
City of San Bernardino Development Code (fide 19 of the San Bernardino Municipal Code).
City of San Bernardino Historic Resources Reconnaissance Survey.
Alquist-Priolo Earthquake Fault Zones Map.
South Coast Air Quality Management District, CEQA Air Quality Handbook.
Federal Emergency Management Agency, Flood Insurance Rate Maps.
Public Works Standard Requirements - water.
Public Works Standard Requirements - grading.
Draft Traffic Study San Bernardino Walmart, City of San Bernardino, LSA Project No. HLF030,
February 6, 2001
Draft San Bernardino Wal-Mart Air Quality Study, Parsons Engineering Science, Inc., October 31,2000.
Mitigation Measures
3.d.l
Before issuance of a Building Permit, the City shall rcview and al'IJrove a Geotechnical Investigation of the site
IJrepared by a licensed geotechnical professional. This study shall identify specific safety-based perfonnance
standards that must be met to ensure that an)' structures that will be occupied by humans will be able to
withstand seismic and unstable earth hazards and ensure that the unstable earth conditions that may exist at
the site do not cause any significant safety hazards for future human occupants of such structures. The
recommendations ofthe study shall be inCO'llOrated into the grading and building plans approved by the City
for this project.
4.c.l
The project proponent shall select best management practices from the Supplement A Attachment that achieves
a 60% percent reduction in pollutants generated on the IJrojcct site during construction for susllended sedime..t,
oxygen demand, trace metals and bacteria, and a 20% reduction in total Jlhosphorus and total nitrogen. These
measures will be integrated into the construction Storm Water Pollution Prevention Plan (SWPPP) that must
be prepared for this projeet in accordance with current non-point source (National Pollutant Discharge
Elimination System (NPDES) Ilennitting procedures. The construction SWPPP shall be IJrovided to the City
for review and approvallJrior to initiating construction at the site.
4.c.2
The SWPPP prepared for the project site shall include a spill resllOnse program for accidental release of water
pollutants during construction that shall, at a minimum, meet the following performance standards: adequate
resources shall be maintained on the site by the contractor to control any release of pollutants; if a spill occurs,
the pollutant shall first be contained, second the Sllill shall be reported to alllJrolJriate authorities, third the
pollutant contaminated material (soil, water, etc.) shall be collected in proper containers, fourth the pollutaIlt
contaminated material shall be delivered to a facility with the capability to treat or diSpose of the contaminated
material in accordance with existing laws and regulations in place at the time of the accidental Spill; fifth the
area contaminated by the spill shall be cleaned (remediated) to background conditions, or alternatively to a level
o
o
Cs.a.3
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
that meets the requirements of existing laws and regulations at the time of the clean-ull and that does not leave
any residual threat to humans or the environment in which the spill occurs.
4.c.3 The project proponent shall select best management practices from the Supplement A Attachment that achieves
aD 60% percent reductioD in pollutants generated on the Ilroject site during facility operations. These measures
will be integrated into the Storm Water Pollution Prevention Plan (SWPPP) that must be prepared for this
project in accordance with City nOD-point source aDd National Pollutant Discharge ElimiDation System (NPDES)
permitting procedures. The ollerations SWPPP shall be provided to the city for review and apllroval prior to
initiating operations at the site.
4.c.4 The BusiDess Plan prepared for project ollerations shall indicate how the olleration will handle all spills or
leakage of hazardous or toxic materials during operational activities. The Plan shall also define how such spills
will be remediated in compliance with applicable state and local regulations regarding cleanull and disposal of
the contaminant released. The contaminated waste shall be collected and disllosed of at an allllropriately
licensed disposal or treatment facility.
5.a.l
The project will comply with regional rules such as SCAQMD Rules 403 and 402 which would assist in reducing
short-term air pollutant emissions. Rule 403 requires that fugitive dust be controlled with best available control
measures so that the presence of such dust does not remain visihle in the atmosllhere heyond the property line
of the emission source. Rule 402 requires dust suppression techniques to be imlllemented to preventfugitive dust
from creating a nuisance off-site. These dust sUllpression techniques are summarized below.
o Portions of the construction site to remain inactive longer than a period of three months shall be
seeded and watered until grass cover is grown or othen.ise stahilized in a manner acceptable to the
City.
All active portions of the construction site shall he watered a minimum of two times daily to preveatt
excessive amounts of dust.
o On-site vehicle speed shall be limited to 15 mph.
All on-site roads shall he llaved as soon as feasible or watered periodically or chemically stabilizetl.
o All material excavated or graded shall be sufficientl)' watered to prevent excessive amounts of dust.
Watering, with comlllete coverage, shall occur at least twice daily, preferably in the late morningarlld
after work is done for the day.
o All clearing, grading, earth moving, or excavation activitics shall cease during period of high winds
(i.e., greater than 25 mph averaged over one hour) or during Stage 1 or Stage 2 ellisodes.
All material transported off-site shall be either sufficiently watered or securely covered to IlreVeatt
excessive amounts of dust.
. The area disturbed by clearing, grading, earth moving, or excavation operations shall be minimized
at all times.
5.a.2
The construction contractor shall select the construction equipment uscd on-site based on low emission factors
and high energy efficiency. The construction contractor shall ensure that construction grading Illans include
a statement that all construction equipment will be tuned and maintained in accordance with manufacturer's
sllecifications.
The construction contractor shall time the construction activities so as not to interfere with lleak hour traffic arlld
so as to minimize obstruction of through traffic lanes adjacent to the site; if necessary, a nagllerson shall be
retained to maintain safety adjacent to existing roadways.
o
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
5.a.4 The construction contractor shall utilize as much as possible precoated/natural colored building materials, water
based or low VOC coating, and coating transfer or sllray equillment with high transfer efficiency, such as high
volume low pressure (BVLP) spray method, or manual coatings allplication such as paint brush, hand roller,
trowel, spatula, dauher, rag, or sponge.
5.a.5 To reduce operating emissions, the developer shall implement the following measures:
To the extent feasible, implement a veritiahle rideshare program that will reduce vehicle miles traveled
by employees and shoppers.
Provide a bus stop (adequate turnout area, bench seat and cover, or comparable facility) at the front of
the property along Hallmark Parkway and attempt to arrange for Omnitrans, the local mass transit
company, to provide bus service to the Jlroject site. .
6.a.l
The recommended mitigation for 2003 includes: Signalize Hallmark Parkway/Gannet Parkway (project Access);
and Restrict access at the Hallmark Parkway/South Project Accessto right-in/right-out only. The recommended
year 2010 mitigation includes one additional measure: Addition of a sellarate eastbound right-turn lane at the
1-215 Southbound RampslUniversity Parkway.
06.f.l
For periods when construction activity encroaches onto Hallmark Parkway, the developer shall implement a tnimc
management plan approved by the City that specifies the equipment, manpO\verand other material that will be utilized
to ensure that potential hazards are minimized and safety o(vehlcle traffic, pedestrians and bicycles is ensured
11.f.l
The developer or occullant shallllrovide a source reduction and recycling Illan for facility ollerations that
identifies a recycling goal of recycling 50% of the solid waste. This Illan shall be submitted to the City Solid
Waste Department for review and allJlrovallJrior to issuance of building permits.
o
l
o
CITY OF SAN BERNARDINO
DEVELOPMENT SERVICES DEPARTMENT
INITIAL STUDY
5.a.4 The construction contractor shall utilize as much as possible precoated/natural colored building materials, wa1er
based or low VOC coating, and coating transfer or sllray equipment with high transfer efficiency, such as high
volume low pressure (BVLP) spray method, or manual coatings application such as paint brush, hand roll er,
trowel, spatula, dauber, rag, or sponge.
5.a.5 To reduce operating emissions, the developer shall implement the following measures:
To the extent feasible, implement a verifiable rideshare program that will reduce vehicle miles traveled
by employees and shoppers.
Provide a bus stop (adequate turnout area, bench seat and cover, or comllarable facility) at the front: of
the property along Hallmark Parkway and attempt to arrange for Omnitrans, the local mass transit
company, to provide bus service to the Ilroject site. .
6.a.1
The recommended mitigation for 2003 includes: Signalize Hallmark Parkway/Gannet Parkway (project Access);
and Restrict access atthe Hallmark Parkway/South Project Access to right-in/right-out only. The recommended
year 2010 mitigation includes one additional measure: Addition of a separate eastbound right-turn lane at .he
1-215 Southbound Ramps/University Parkway.
.0.r.l.
For periods when CODstMlction activity encroaches onto Hallmark Parkw~1! the developer shall Implement a tnimc
management plan approved by tbe City thatspecili..the equipment, manpower and other material that will be utilized
to ensure that"potentlal hlWlrds are minimized and sarety ofvehlcle traffic, pedestrians and bicycles Is ensured.
11.f.1
Tbe developer or occupant shall Ilrovide a source reduction and recycling Illan for facility operations th at
identifies a recycling goal of recycling 50% or the solid waste. This Illan shall be submitted to the City Sol id
Waste Department for review and allprovalllrior to issuance of building penuits.
o
o
APPENDIX 1
o
o
o
. _.. ~... v. "u..'" "'....'". ... "".....w.Io-..., _n.n\ol~
lSI\"'i~Or.:"lfs.lriC.
'I
. .-..' .1' v.....,;. ......... _._'"
Tshle F - Fulun' PIUl Project Condilions With Mi[ig~tion Intersection Levels of Senice
Vonr 2011J 1'111., I'rojcClI'.IIt. Peak lIour COlluilillll'
Intl'rseClion
1 . Il1du<trhl Wn\'/l'nhn Avenu)
2 . Ha!imark Parkway/Gun nett Parl,:wu)"
J . Norlhpnrk BoulevardlUniversit)" Parkway
4 . KemlalllJrivc/University l'urkway
5 . 1-215 Northbound RalJ1pslUnivcrshy l'arkv..3)"
6 . I.' 15 ~("'thbnlln,lllntnp,IUr:ivcr~ily Parkwa)'
7 . Hal1mnl'k P'lI"kwnylUni"ers'ty Parkway
8 . Cnjol1 Bnukv:.rwUnh....ity P,,,!.w"y
9 . l/al1mark Prirk\\":l)'/South Projc;:t Access'
Wilhont )liti/:lltlon
V/C Delay LOS
With :\Jili{;alian
ViC Dcln\' I OS
.
1 J.ll
B
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n
0.44
0.74
0.63
0.S2
0.81
0.32
S7.5
29.5
37.9
19.4
35.7
48.4
IH
117.6
0.53
,
23.7
c
.
IO.~
0 Year 2010 Plu.l'roject 1'.1\!. Peuk Hour Condltinns
Without 1I1iti::utlon With Mitigation
Inlcrsl,cliulI VIe Delay LOS v/c JJeluf LOS
1 . Indu>lr1al Way/l':llm AVCll\lel 13.9 B
"l . J lallmnrk t'urkWa)'/Ullnnett Parkway' 124.5 F . 0.55 23.6 C
3 . NOr1!)park BOll)evnrd!l!ni.~crsity Parkw,,>, OA8 31.0 C
4 . Kendall DrivdUniversity Parkway 0.36 43.0 n
5 . 1.21.<; Norlhh,'"nrlll.mrsIUnj"~rsity Park",.y 0.66 19.G n
6 . ].215 SOlllhbound RampslUnivcrsily Parkw<\y 0.91 59.6 F. . 0.70 26.6 C
7 . Hr.llmnrk Parkwny/lJnhcr:<ity Pal!.way 0.8~ .55.4 E 0.(j3 31.0 C
8 . C.'ljon Boulevard/University ParJ.:WR}' 0.40 15.2 B
'> . H alhr,ark Parkway/South Projcct ^"cess I 156.6 F . 10.4 B
o
.. LOS exceeds lhrcs110Id C'ritcri~.
Notes:
VIe ~ Volum~/carJ"iry fOlio
LOS = Lev.1 ofScrvice
l.'u~if'.n;'t!h::.;d interseclion.
211.J/21J()l (R:\fi:.H)jO\~f",.;cl,).I~\ Mil LOS)
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LEGEND: <>
1'1~a1 Projsct Site N
C PROJECT LOCATION.
TOM DODSON & ASSOCIATES
Environmental Consultants
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COMMENT LETTERS
AND
RESPONSES TO COMMENTS
DEVELOPMENT PERMIT II NO. 01-05
NORTH SAN BERNARDINO RETAIL 1 PROJECT
o
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ATTACHMENT 4
o
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In accordance with the California Environmental Quality Act (CEQA) procedures, this report and
the attached responses to comments constitute a completed package of information for the City
of San Development/Environmental Review Committee to use when it considers adoption of a
Mitigated Negative Declaration (MND) for the entitlements that will allow development of the
North San Bernardino Retail I project. This package consists of the Initial Study; the comment
letters and responses to the comments; and any other staff reports or information that the City
Staff compiles in support of a decision to allow construction and development of the proposed
project.
Comment letters on the Initial Study and proposed Mitigated Negative Declaration were received
from six agencies and one individual. The commenting parties included:
1.
2.
3.
4.
5.
6.
7.
Governor's Office of Planning and Research, State Clearinghouse
San Bernardino County, Department of Public Health, Environmental Health Services
California Regional Water Quality Control Board, Santa Ana Region
Department of Toxic Substances Control
Mr. Stewart D. Cumming
Department of Transportation, District 8
City of San Bernardino, Fire Department
City Staff working with legal counsel has prepared the attached responses to all comments.
Combined with the Initial Study, the Development/Environmental Review Committee can rely
on this total package of information to make a decision on the proposed project. It is the Staffs
recommendation that, based on the whole of the record before the City, the proposed project can
be implemented without causing significant adverse environmental impacts. Adoption of a
Mitigated Negative Declaration is justified based on the findings in this total information
package.
. This package has been independently compiled and reviewed by the City Staff on behalf of the
City of San Bernardino.
o
o
o
.
Gray Da..is .
com..:."'iOl
DATE:
TO:
Lt;n:U{ U!
STATa Or CALIFORNIA
Governor's office of Plan ping aud Research
State Cleazinghouse
A~
1* T:
~ ~ e
~"-:J!ft ;
.~.
Sn\"e Niss....,
Aert:i~ DrUC"tCt
ACKNO~~EDG~~~TOFRECEWT
March 29, 2001
OO@@~DW@[Q) .
APR 0 2 2001 .
lvts. Valerie Ross
City of s.m Bernardino
300 North D Street
San Bernardino. CA 92413
c!rr 0;: SAN BERNARDINO
cevEl.OPMe~1T SEIlVICE5:
OEPARThIer.rr
RE: San Bernardino Retail 1
SC11:k 2001031060 .
Tbisis.toackiiowledge.thatTi1e-S~te Cie:iimghouse bas. received your eIi'rrironn:leIitafci6cument
for state re\'iew. The review period asSigned by the State Clearinghouse is:
Re\1e\y. Start Da~:
Review End Date:
MatCh 14, 2001
April 12, 2001
We have distributed your document to tho following agencies and departments:
1-1
I.
California Iiighway Patrol .
Caltrans, District 8
. Department of Conservation
Departmen.t ofFish and Game. Region 6
Department of Parks and Recreation .
. Department of Toxic Substances Control
. Native American Heritage Commission
Office of Histone Preservation
Public Utilities Commission
Regional Water Quality Control Board, Region 8
. ReSources Agency'- . .
State Lands Commission
The State Clearinghouse will provide a closing letter with any state agency comments to your
attention on the date following the close of the review period.
Thank you for 'your. participation in the State Clearinghouse review proc~. .
..~
Posl.it~ Fax Note
TOfi\ . ."'-
eo...'08Ft.
7671 0a1O
OV\ From
~.
00: L
pa!ile.!;'"
.
Pl>ooe .
'C'
1.;00 n."ITH $T1EET 1'.0. EOX
916-4<4S4r3 P.u ~;r,-:;CI~
Pill'
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1-1
RESPONSES TO COMMENTS
LETTER #1
Governor's Office of Planning and Research
State Clearinghouse
This letter is acknowledgment by the State Clearinghouse that the environmental
document was received by the State and assigned a State Clearinghouse number,
SCH#200 I 031 060. It also identifies the State agencies that were provided copies of the
environmental document for public review and comment. No specific response is
required to this letter since it does not raise any environmental issues.
LETTER 1/2
U .1Ii COUNTY OF SAIl BERHAROIliO
\.. ...~;;l HUTlIAII SBi"EES SYSliM
./1' ') THOMAS J. ~R;NO<;"G;>.S"I". JA..lI.O. f.I?H
Otrec:or 01 P\:lr. p~
-
DANIEl. J.AYEAA REnS
Chief. DlYision 0: Erril.l"nmetlt2i Hf:.2:'tt:
1
DEPARTMENT OF PUBt...~ HEALTH
EIMRONMEIITAI.IIEALTH SERVICES
C' 385 Nortll .lu....hiad AJieme . San BeminlIIo, CA 92415-0160 . (909) 381 1056
1647 East tIolI3olIlrtanl . Otttario, CA 9t 764 . (909) 45S-S573
15505 Cim Drl\'e . lIICUlrriJe, CA 92392 . (760) 243-3141
o 17780 AnW bleYanI . J'IlDtlna, CA m35 . (909l3:i6-6444
r; San Iler11aIIIiro Coanly '1~ CoatnlI Program
2355 Easl Fiftb Street . San Bemarlino, CA 92415-0064 . (9ll9) 38&4600
i-'\D is ~ r= ii\,,:7 ~ r,::'\D
. .t.S\0t:=:Li ::.J LS I
lffi ~I ,') ~ "',-...i l\:ij
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~~"n;t';*citi!sol:
M<!:l:cb. 15,2001
O'i"y ~ s.:.!': ':~~NA.~:r.};O
DEV~CPME;\:T s~~.VICES
C.::Ail'iM.NT
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City of San Bernardino
Development SetVices Department .
300 Nortb "0" Street
San Bernardino, Ca 92418
Atm: Valerie Ross, Principal Planner
SUBJECT: INITIAL STUDY FOR THE SAN BERNARDIJ."iO STATE COLLEGE
BUSINESS PARK-NORTH SAN BERNARDINO RETAlT~ 1
o
I bave re,':iewed, the subject document and find on page 2 that no mention was made of .
this Department's requirements for plan check and permit to oper:ate for any retail food
facility.
2-1
I am sure that it "'"'35 an oversight on the part of the authors of the study.
I have no other comments. If you have any questions, please contact the undersigned at
909-387-4666.
Sincerely,
Post-it' Fax Note
7671 Qale
110m
Co.
tot ~
pages
PRone I
PtlOnO ::
Safe Drinking Water Program
Fox"
Fa'"
Scott Maass, REHS
Liquid Waste and Land Use Specialist
Cc: Debby Leuer, SB Food Supervisor
". ..
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2-1
RESPONSES TO COMMENTS
LETTER #2
San Bernardino County
Department of Public Health
Environmental Health Services
Your comment is noted and will be fOlwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail 1
project to be developed. The Department's plan check and pennitting authority for retail
food facilities will be added to the list ofpennitting agencies.
LETTER #3
1
e
California l,-.:gional Water Quality
Santa Ana Region
. :nitrol Board
G
Gray DO\"
GO\l:~r
l'Ucr:l:l Ad4r=ss: ~:/Iv.v.~.r';l,Teb.C:l.~:w/N-qcbi
;737 MiliQ St:ee:. Suit: SOC>. R1\1e:sid:, Cam~mia ~2501.;348
Ph"" (909) 7!2-4130. FAX(909)7S:-62!S
O'VinslOn a Hickox
Secft:Drj fer
En...jf"l'}Mlt.1l:a::
Prnftc:iOlt
March 19,2001
.... ._-. r - .. 7~"""'"
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... I~ ._,-. ..', ,... U
,._./ -............ .._,!. _ l
:ll----.. ---I j
;\J ., ... '
- ?J;,:",:,::' ~l~l:.:; --
Ms. Valene C. Ross
City oi San Eernardino
Development Services Deputmcnt
300 North "D" Street
Saa Bcmudino, CA 92418
:;~~':; ~;~I:j:~:~~..~: ~~~~~l~;~'i'i~'~~
i~ti'''',:';'i:/1:}Jr
RESPONSE TO THE NOTICE OF INTENT TO ADOPT A MITIGATED NEGATIVE DECLARA nON FOR
TIIE SAN BERNARDINO Sl'ATE COLLEGE BUSINESS PARK-NORTH, CITY OF SANBERNARDlNO,
SANBERNARDlNO COUNTY
Dear Ms. Ross:
Staff 01 lhe Regional Water Quality Control Board. Santa Ana RJ,g\on(RVlQCB). have reviewl:lllhe Nolke Q[ Intent
lor the above relerenced project and have the following commeaL"
3-4
I. RWQCB personnel have determined that this project may require coverage uader the S~1te Water Resources
Control Board's General Construction Activities National Pollutaat Discharge Elimination System (NPDEs)
Storm Water Permit. PICll~"C contact Milasol Gaslon (909) 782-4419 with the Regional Board's Storm Water
Section to funher discuss your project. Appropriate best management practices (BMPs) should be developed and
implemented during construction to control the diSCharge of pollUla.nts, prevent sewage spills. and [() avoid
Incking of sediments into the streets, storm water conveyance channels, or waterways.
fi Nonpoinl source pollution fro~ continued urban development cculd negatively affect water quality. Post-
L. construction impacts to water quality fr?m daily runuff and stonn water runoff from this site should be evalualed.
[. This project will result in a large parcel 01 land being paved, which will alter the rates and volumes of groundwater
rechaige and surface water ruaoff. The Negative Declaration states that groundwater recharge capability will not
change. We encourage the use of pervious areas to relain absorption withi. the site.
. . .
f.l fmpacts:tnd control of toxic subst:mces ha~dling and/or dispoSe. i can affect surl'ace water and groundwater quality.
L The appropriate best management pr.~oes (BMP"s) should be addressed in lIle negative declaration. .
3-1
o
3-2
3-'3
If you have any questions, please call me at (909) 782-4468 or you may contaCt Troy Johnston at (909) 782-7958.
Sincerely,
)j (h-,j~ L
/'
~/\:r--
Wanda Smith. Chief
Planning Section - Coastal Wate~
ce: Scan Morgan - Slate Cle:uinghouse
o
Califomw Environmentlll Protection Agency
6 R.<)~led Paper
o
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3-1
3-2
3-3
3-4
"
RESPONSES TO COMMENTS
LETTER #3
California Regional Wat~r Quality Control Board
Santa Ana Region
Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail I
project to be developed. Specific mitigation is included in Section 4 of the Initial Study
to ensure that appropriate best management practices are implemented under a NPDES
Stonn Water Pennit for construction activities. The developer will be directed to contact
the Board's point of contact.
Aside from having to meet the City's general stonn water pollution penn it requirements,
measures have been included in Section 4 of the Initial Study to reduce potential post-
construction (operational) non-point source water pollution impacts.
The project site is a graded and compacted pad and therefore, it does not provide any
pervious areas for percolation or recharge at this time. With the required landscaping the
proposed project will increase pervious surfaces and increase absorption within the site
by a small amount.
Best management practices for managing the handling of toxic substances are required by
mitigation measures in Section 4 of the Initial Study, including a Spill Prevention Control
and Countenneasures Plan and a Business plan to reduce minimize potential for releases
of toxic substances from future operations.
LETTER #4
~OO@@rno~ent of Toxic Substan
~ APR 022001. Edwin F. Lowry, Di~e~0.9r.
a C(iY OF S'.' ~~.. 5796 Corporate Avenue
~, ~""",.o.?OINO . .,.
'Vinston H Hick~~~FMOO SEllVIC~S Cypress, Call,cml2 90630
y . OE.OARiMeNi
AgenC)' Secretai"'/
California Environmental
Protection Agency
I .
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s Control
~.~
, "--;"
"
~-"'....'
, .
....~
Gray Oa>,1s
Governor
Man::h 28, 2001
Ms. Valerie Ross
.. Devel.opmeot..S.entices Department.
City of San Bemardino
300 North D Street
San Bernardino, Califomia 92418
NOTICE OF INTENT FOR A NEGATIVE DECLARATION OR A DRAFT
ENVIRONMENTAL IMPACT REPORT FOR THE SAN BERNARDINO RETAIL 1 -
2001031060
Dear Ms. Ross:
The Department of Toxic Substances Control (DTSC) has received your Notice of Intent
document to determine whether or not the proposal qualifies for a Negative Declaration.
(NO) or a Draft Environmental Impact Report (Draft EIR) for the above-rroentioned
\ Project.
.Based on the review of the document, DTSC's comments are as follows:
F
4-1 L
2)
4-2
4-3
L
r
4-4
The NO or Draft EIR needs to identify and detennine whether current or historic
uses at the Project site have resulted in any release of hazardous
wasteS/substances at the piojaCt area. .
The ND or Draft EIR needs to identify any known or potentially contaminated site
located within the proposed Project area. For all identified sites, the EA needs to
evaluate whether conditions at the site pose a threat to human health or the
environment .
The NO or Draft EIR should identify the mechanism to initiate any required.
investigation and/or remediation for any site that may require remediation. and
which government agency will provide appropriate regulatory ove~ight.
The Notice of Intent failed to address the rest of the Hazards' section checklist,
which includes the following: .
. TJ)e M9-1VY c.~I&7;S ~'79 bfi'rfcmfa i$ ~1. Evet}' ~:foroien nHds ?o :2ke t~7.rle ecfur7 ~o .~t.'Cfa ef'!er-;"/ ~su~.
I'cr . Os< "" siml* v...ys jW oon =e ccmand and cu: ~ enervl _!so see cur 11fl>I>.$il. ~ W'f\V,alsc.CIl,goV.
@ Printed on Recycled Paper
o
4-4a
4-4b
4-4c
4-4d
o 4-4e
o
,
Ms. Valerie Ross
March 28,2001
Page 2
[:-
[-
Co
5)
4-5
.
Would the project be located on a site which is included on a list of
hazardous materials sites which complieQ pursuant to Government Code
Section 65962.5 and, as a result, would it create a significant hazard to
the public or the environment?
For a project within an airport land use plan or. where such a plan has not
been adopted, within two miles of a public airport or public use airport,
. .WGYId.t'1:: pr-ojcct-result-in a safety hazard for people-r-esidfng-cr.working..- --
in the project area?
For a project within the vicinity of a private airstrip, would the project result
in a safety hazard for people residing or working in the project area?
Would the project impair implementation of or physically interfere with an
adopted emergency response plan or emergency evacuation plan?
.
Would the project expose people or structures to a significant risk of loss,
injury or death involving wildland fires, .including where wildlands are
adj~centto urbanized. areas or where residences are.intennixed with
wildlands?
If during construction of the project, soil contamination is suspected, construction
in the area should stop and appropriate Health and Safety procedures should be
implemented. If it is determined t~at contaminated soil eXi$, the ND or Draft
EIR should identify how any required investigation and/or remediation will be
conducted, and which government agency will provide appropriate regulatory
oversight. . ....... .
DISC provides guidance for the Preliminary Endangerment Asse'5sment (PEA)
preparation and cleanup oversight through the VoluntalY Cleanup Program (VCP). For
additional infolTI1ation on the VCP or to meet/discuss this matter further, please contact
Ms_ Rania A. Zabaneh. Project Manager at (714) 484-5479.
4-6
Sincerely,
~
Halssam Y. Salloum, P.E.
Unit Chief
Southern California Cleanup Operations Branch
Cypress Office
o
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4-1
4-2
4-3
4-4
i
RESPONSES TO COMMENTS
LETTER #4
Department of Toxic Substances Control
As the site is unoccupied and undeveloped vacant land, it is unlikely that current or
historic uses have caused any residual contamination at the site. The project site is a
completely engineered development pad, and with the mitigation measures proposed in
Section 4 of the Initial Study, there is no known potential for contamination from the
onsite release of any hazardous wastes/substances.
Although the groundwater in the vicinity of the project site is known to be contaminated
with solvents from historic military operations in the area, no known or potentially
contaminated sites occur within the project area that could pose a threat to human health
or the environment.
Several mitigation measures require best management practices to be implemented in
controlling runoff or pollution from the project site. If any contaminants are introduced
by the proposed development or found at the site, 1hen the standard point of contact is
with the San Bernardino County Fire Department's Hazardous Materials Division, which
maintains the records and oversees local remediation efforts. If the Division requires
additional assistance, it is assumed that they will contact either the Regional Water Board
or the Fire Department for additional follow-up as prescribed by State law.
Each jurisdiction has its own Initial Study Environmental Checklist and the City's fonn
does not contain the questions identified in this comment. Responses to these questions
are as follows:
a. The City's Preliminary Project Description Fonn requires an applicant to verify
before submitting an application for Site Plan Review, that the site is not on the
"identified Hazardous wastes sites" list from the State Office of Planning and
Research pursuant to Government Code Section 65962.5. As the site was not
included on that list, no significant hazard to the public or environment is forecast to
occur if the project is developed as proposed.
b. The nearest airport is more than five miles distant (San Bernardino International
Airport) and no potential hazards are associated with the presence of this facility.
c. The nearest airport, including private airstrip, is more than five miles distant (San
Bernardino International Airport) and no potential hazards are associated with the
presence of this facility.
d. The proposed project does not involve any physical changes to roadways that could
. interfere with emergency access or to access on adjacent properties. The traffic study
verifies that adequate access can be maintained to the project site with mitigation.
o
o
o
4-5
4-6
e. The surrounding property is either developed or graded and no wildland vegetation
exists near the property that could expose the site to a wildland fire hazard.
Your comment is noted and will be fOIwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail I
project to be developed. The procedures for responding to any suspected soil
contamination are required to be incorporated into the Storm Water Pollution Prevention
Plan (SWPPP) that must be prepared as part of best management practices for the
construction NPDES permit. Please refer to response to comments in the Regional
Board's comment letter, comment letter #3, responses 3-2 and 3-4, which further address
this issue.
Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail I
project to be developed.
o
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5-1
5-2
5-3
LETTER 115 .
11 April 2001
~)@@rnnw@l{)\
wU APR' 2 ZUni \!:0
CTTY 0;: S~N aE'lNAnOrnO
OEVELO?M!N7 SERVICeS
O;?ARTMENT
Development Services
City Of San Bernardino
300 North 'D' Street
San Bernardino, c.t>... 92418
-----
-------
Posl-it" Fax Nole
T. -,.
00,0<;>'. --IDm
Phone #
7671
t
F
Re: DP II 01-05 Comments Relating to Initial Study.
Fs.,C
To whom it may concern:
My name is Stewart D. Cumming. I am a resident of the city of San Bernardino residing
at 4377 North Crist)' Avenue in the Cirnarron Ranch development. I have Lived in the .
northwest end of the city for the last 10 years and have personal knowledge of the area
being considered for this project. I have for the last 10 years \raveled through the proj~
area as it is one of OO\Y 2 main arterial$ from which access to business':;S in me city such.
as grocery stores, banks, retail shopping etc. can be had. I am an elected member of the
Northwest Redevelopment Project Area Committee. As a member oftbe aforementioned
committee I chair the Planning and Development sulH:ommitt.ee and in the course of my
duties I have thoroughly re"iewed the proposed Initial Study and the associated traffic
study for this project In the course of conducting normal daily activities I travel on or
tIuough most or all of the streets and intersections in the IS multiple times and have a
personal knowledge of lhe conditions existing there.
The IS i.s, as presen.tty -proposed, not in cotllp1.ilmJ:e with:CEQA requirements. Following
is a list of the IS deficiencies.
5-4
1.) The IS does not incorporate 3 mitig:uion monitoring/reporting plan as required by
Sec. 21081.6 CCR.
2:) 'The lS fails to acknow1edge or ad.dress that a main arterial affected by this project
is currently being expanded or that it crosses a major rail artery that is within the
Alameda Corridor East.
3.) CEQA requires that a lead agency consult Vvith transportation pl"nn;n~ agencies
when a project of area "ide significance is being considered and that that
consultation be the same as that would be required of a responsible agency.
Nowhere does the initial study reflect any input from SANBAG (the regiooal
tranSpOrtalion pJ.nni"g agency) or the Rail Transit Authority (BNSF).
4.) SA.NBAG stUdies reflect a possible grov,th in rail traffic over the nen 10 to 20
ye<m of U1> to '200%. in ~llver;ati.Oll. v;ith ootpOrate relations at BNSF I was
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cant.
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informed that their train traffic through the project area has increased from 50 to
75 trains per day over the last 5 years v.ith continued growth projected.
5.) The grade crossing at ~ion Blvd. And University Pkv..yJSt.ate St is not
identified by SAi'1BAG as one of the priority crossings for improvement related
to the AJameda Corridor East proJeCt yet the propos:d project will significantly
impact this crossing.
6.) The City and the project proponent have failed. to address tile cumulative impact$
of the follo\ving projel:ts currently p1aDned and/or underway in the immediate
project area; the installation of3 additional] mile plus long sidiD~ along the
BNSF right ofvray just to the north and south of University Pkwy. @Cajon Blvd.
currently under coostnIction, the current and future expansion planned at CaI
State San lkmardino, the increased ttafflc from CUP 00-25 recently approved by
the City. Sec. 21083 CCR of CEQA requires that these cumulative impacts be
addressed as wel1 as the potential for impact from future projects in the area..
7.) The draft dOCUInetlts circulated for this project fail to reflect the independent
judgement of the City as lead agency and instead rely on proponents judgement.
8.) As to the related traffic study prepared by the project proponent for this project, r
requested in writing from Mr. AnwerWagdy city traffic engineer copies of the
most recent city counts for the 8 intersections addressed in the study. Mr. Wagdy
was unable to provide any data for 5 of the 8 intersections or data that could be
conelated tQ aw1y to these intersections. The i:atmections laclUng data included
University Pkwy.@ 1215 NB tamps, 1215 SB ramps, and Hallmark Pkwy. all of .
these intetSections are main routes into the project. Sec. 21082.1(c)(1) CCR
requires that a lead agency independendy review projectTepOrts or declarations
and in light of the met that there is no data for the previously mentioned
intersections this could not have been done. Additionally, when the city counts
from June 15 and 16 1999 at the intersections of Cajon Blvd. and Kendall Dr.
with University Pkwy were compared with the stUdy's figures the city's] yr old
figures are 15 to ZOOIo higher than the prop<>nents counts. This discrepancy is a
significant tlaw in. the proponent's study and calls into questions all related
conclusions based on their counts. Lastly the discrepancies in counts not being
addressed in the project documents further supports the reasonable conclusion
that the city has fulled to exercise independent review and judgement with regard
to the project
9.) As a resident of the area I have personal knowledge of the. near impossible
conditions that already exist at University Pkwy and Cajon Blvd that include the
inability to make a left turn from SB Cajon onto EB University in a r=ooable
3Il1.ount of lime, delays at the same intersection resulting from train traffic ofup to
IS min. or more and the resultant backup of traffic associated. with these delays.
In light of the aforementioned facts and conclusions based on fact the IS is not
adequate as prepared. 1bis leaves US with. only twO possible remedies move to an EIR
or incorporate further mitigation to alleviate these problems. I would suggest that the
latter ~y is the m~ appropriate aM that fue fcl\Q"i:ng be done. The e':tisting
mitigation m= for th= project be advanced to .coincide v,ith project opening and
that additionally the traffic signal at Cajon and University be modified to include left
5-11
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cent.
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= C"/des coIl1rOlled by arrow. That tile grade crossing at University and Cajon be
made a priority project for improvement That a lv.lMR.P be incorporated into the
proje...""t documents. That as a pm of the MlvlRP the city be required to maintain
current data on affected intersections. These measures would seem to be the easiest
and most effective w;r.y of mitigating significant impacts for the present time.
In conclusion, I do not feel that the project pro~llent should be responsible fer me
cost involved .,,,ith incorporating the mitigation measures other than tor the cost of the
signal at Hallmarl: and ilimnett P1.-wys as all other improvements would be necessary
as a result of the areas growth even without the project.
Respectfully submitted,
~~.
Stewart D. Cumrnin~
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RESPONSES TO COMMENTS
LETTER #5
Stewart D. Cumming
5-1
Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail I
project to be developed.
5-2
Section 21081.6 CCR does not require that an Initial Study contain a mitigation
monitoring and reporting program (MMRP). This code section requires a MMRP to be
adopted when the public agency makes its decision. A MMRP has been prepared and
will is available for adoption by the City when it makes a decision on the proposed
project.
5-3
Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail I
project to be developed. On April 4, 2001, the San Bernardino Association of
Governments (SANBAG) Board of Directors approved a grade separation at the
intersection of Cajon Boulevard and University Parkway to be funded in part by
Assembly Bill 2928. As the grade separation project was not approved until after the
Initial Study was distributed, this information was not included in the Initial Study. If the
road is being expanded, it should enhance traffic flow when it is completed. The point in
referencing the Alameda Corridor East is not clear.
5-4 The proposed project is not a project of area wide significance as defined by CEQA.
Section 15206 identifies project of areawide significance as being a proposed shopping
center employing more than 1,000 persons or encompassing more than 500,000 square
feet of floor space. The proposed project is about 30% of this threshold and therefore is
not a project of areawide significance, which would require consultation with regional
agencies, such as SANBAG.
5-5 Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail I
project to be developed.
5-6
SANBAG has recently identified the intersection at CajonlUniversity Parkway as a
priority location for the construction of a grade separation facility. The Traffic Study
prepared for the project does not, however, identify that project will result in significant
impacts at this intersection. Rail traffic has the right-of-way and will continue to operate
without any impacts from traffic generated by this project. Project related traffic using
University Parkway, State Street or Cajon Boulevard will either wait for trains to pass or
will use alternative routes, including HallmarklIndustrial Parkway or the freeway to
Highland Avenue, one mile south of the project site where a rail overpass exists.
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5-7
There is no evidence that the proposed project will make a significant incremental
contribution to traffic impacts at the Cajon Boulevard/University Parkway intersection.
The Initial Study in Section 16 analyzes whether the project will have impacts that are
individually limited, but cumulatively considerable. "Cumulatively considerable" means
that the incremental effect of the project is considerable when viewed in connection with
the effects of past projects, effects of other current projects, and the effects of probable
future projects. According to a representative of The Burlington Northern and Santa Fe
Railway Company (BNSF), the rail sidings under construction adjacent to University
Parkway at Cajon Boulevard are intended to store railway cars. Traffic from the retail
project is not forecast to have any significant effect on the intersection, so any additional
train cars stored adjacent to the main railroad tracks would not change this conclusion.
Therefore, BNSF sidings will not contribute to cumulative impacts of the proposed
project. Furthennore, rail traffic has the right-of-way and will continue to operate within
any impacts from traffic generated by this project.. Project-related traffic using University
Parkway, State Street or Cajon Boulevard will either wait for trains to pass or will use
alternative routes, including HallmarklIndustrial Parkway or the freeway to Highland
Avenue, about one mile south of the project site where a rail overpass exists.
Regarding the projected expansion of students planned at California State University San
Bernardino, a public relations officer for the University estimates total enrollment by
20 I 0 will be 25,000 students, compared to slightly less than 15,000 at present. This
growth was considered and included in the traffic study. To accommodate this increase,
the City and California State University are proposing, for Caltrans consideration, a new
entrance to the University between Palm Avenue and University Parkway, which is
estimated for completion in 2007 to 2008.
CUP 00-25 is a self-storage facility located on the south side of University Parkway south
of Ostrem's Way. According to the traffic section of the Initial Study, the storage facility
will contribute little or no demand for service or roadway capacity that would be subject
to cumulative impact.
5-8 Although much of the documentation was prepared by the applicant's consultants, the
City Staff has independently reviewed all of the infonnation and at the City Development
Review CommittedlEnvironmental Review Committee authorized release of the Initial
Study and proposed Negative Declaration based on an independent review and vote on
this matter.
5-9 As indicated in response number 5-8, the City's traffic engineer directed the preparation
of the Traffic Study. First, the City engineer identified the appropriate procedure and
methodology for the preparation of the traffic study and was involved in its preparation
from start to finish. The City traffic engineer indicated that the East Valley Traffic Model
would detennine the future traffic volume; he specified the methodology to be used in the
. analysis and that 201 0 serve as the target year for analysis of future traffic. The traffic
engineer also reviewed the draft Traffic Study and made comments regarding the
methodology which were incorporated into the final study. The Traffic Study data were
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based on actual traffic counts compiled by a professional consultant and intelpreted in
accordance with the methodology prescribed by the City.
The fact that the traffic counts at the Cajon/University Parkway intersection were 15% to
20% higher in 1999 than they are today does not reflect a significant flaw in the traffic
counts. According to the City's traffic engineer, there are many reasons for increases and
fluctuations in traffic, and the fact that the intersection contained 20% more traffic one
day in 1999 than it did one day in 2001, does not mean that the 2001 traffic counts are
inaccurate. The City traffic engineer accepts the current traffic counts, with its reduction
in volume, without disputing the accuracy of the traffic counts compiled by the County in
1999.
5-10 As discussed above in response number 5-6, the Cajon/University Parkway intersection
will be a tier-one priority grade separation project and the City traffic engineer has
indicated that construction is estimated to begin in 2006. In the meantime, the occurrence
of delays related to rail operations at the Cajon/University intersection are a result of rail
operations that area drivers realize occur in the area. Several means of avoiding these
delays are possible with only minor changes in route. For example, access to 1-215 can
be assured by traveling one mile south to Highland A venue where over passes assure
east-west access. Similarly, if one is traveling north, an undelpass exists beneath the
railroad tracks to access 1-215 or other area roadways. There is no factual basis to
indicate that the traffic attempting to access the proposed project will cause significant
adverse impacts to existing traffic flow, which is already disrupted by train traffic.
CEQA specifically requires the existing physical condition to be examined, and the
existing condition is that traffic on University Parkway is already subject to delays due to
trains. If train traffic increases before the grade separation has been completed,
alternative routes will have to be used, the best of which is Highland Avenue and the
crosstown freeway.
5-11 Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail 1
project to be developed.
5-12 Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail I
project to be developed.
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LETTER //6
i< I.=: ...::;.. '-'=!..: \:J i..5/ U i
UU API;> 1 _:~l ~
GP.AY 0A't1S, GQo.-em:x'
STATCcF<:.wPcR.'llA.-eusu<ESS, tlUN!
rAnoN ~ l1OJS\NG "Ge\C'f
DEPARTMENT OF TRANSPOR'iA nON
DISTRICT a
46-1 W FoUllh Stree1, S" Floor MS 726
San Ileman:lino, CA 92401.1400
PHONE (90S) 3S3-6327
FAA (909) S83-889O
.
ClT"'( CF &AM ~=tt~ARC:l,O
O!VElO'MENT SERVICES
OEPAATMENT
April 12, 2001
08.SBd-215-PM 11.857 +1-
._~ --
Ms. Valerie C. Ross
'Develoj)menfCervices Department
City 01 San Bernardino
300 N. OD" Street
San Bernardino, CA 92418
Post-it" F,ax Note..,...... 7lj71 1)0<. 1:01 ..
page<
TQ '-^
.
co./c~t. , Co.
phot\O& F'ftCflei
F",,' F""
Dear Ms. Ross:
Notice of Intent to adopt a Mitigated Negative Declaration for the proposed San
Bernardino Retailt (City of San Bernardino Retail Shopping Complex); Development
Permit II No.01-0S
Thank you for the opportunity to comment on the Initial Study for the propasec'
Mitigated Negative Declaration dated March 13, 2001.
.,' The proposed pmjecl consis1s of the development ot approximately 155,917 square
feet of commercial retail store with ancillary gasoline safes. The project's site is located
northwest ot the University Parkway and Haflrnarl< Par1<way Intersection. The site abuts
the. Interstate 215 Freeway t(J the northeast. .
LAfter ~ re~e~ of the Initial Study, our off'~ has the follOV'ling comments;
. Submit for our review copies of the latest proposed Site Plan and
Street improvement plans, when avaUable.
[. Submit copies of latest proposed Grading and Drainage improvement
plans (including hydraulic calculations) for our review, when available.
c.
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Submit copies of the latest proposed Irrigation and landscape
improvement plans. Specifically for areas that could have a significant
effect on or near the Interstate 2'5 Freeway and its facilities, when
available.
~.......-- -. -."-.. ....-.. ---, -.
"!I
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Ms. Valerie C. Ross
Apn112,2001
Page 2 of 2
Any proposed improvements within the State's right-of-way shall be per
Caltrans' Standards and Specifications and will require an Encroachment
Pennil Our Encroachment Pennit office can be reached as follows:
6-4
Office of Permits
Cardomia Department of Transportation
464 West Forth Street, 61h Roor, MS M
San Bernardino, CA 92401 - 1400
Phone No. (909) 383-4526
Should you have any questions regarding the above comments, please contact Canos
Dillon, Development Reviewer at (909) 383-4808.
Sincerely,
~
LlNDA GRIMES, Chief
Office of Forecasting!
IGRlCEOA Review
c: Frank Haider. Encroachment Permits, MS M
Syed Raza: Freeway Operation, MS 714
Patty Romo: Hydraulics, MS 1161
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RESPONSES TO COMMENTS
LETTER #6
Department of Transportation
Region 8
Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail 1
project to be developed. A copy of the Site Plan and street improvement plans will be
provided to Caltrans when available.
Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail 1
project to be developed. A copy of the grading and drainage improvement plans,
including hydraulic calculations, will be provided to Caltrans when available.
Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail 1
project to be developed. A copy of the irrigation and landscape plans, including the area
near or adjacent to the Interstate 215 Freeway and its facilities, will be provided to
Caltrans when available.
If any of the proposed improvements within the State's right-of-way are proposed, the
City will require them to meet Caltrans' Standards and Specifications. Ifrequired, an
Encroachment Permit will be acquired by the applicant prior to encroaching within the
State's right-of-way.
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LETTER 1/7
FmE DEP..urrME.'IT
LAlUl:Y It. PI:rl::t:R. FlIZ CIIID'
200 East ThiId Street. San BeIlIaromo . CA 9241 Q.ol889
909.384.5286. Fax: 909.384.5281
www.ci.saD-bernrdino.ca.us
~
April 17 , 2001
To: Valerie Ross
From: Geri Franske, Plans Checker
RE: WalmartlDPIIOI-05
There were some concerns expressed in regard to Fire Department access to the proposed
Walmart on Hallmark Parkway and University because of the railroad tracks running
along Cajon.
7-1
The main fire station for this location is Station 225 located at 1640 Kendall Drive. The
response time would be unimpeded by the r.Wroad tracks. The secondary dispatch would
be from 282 W. 401b Street or 2121 N. Medical Center Drive. The stations and dispatch
have a very good working relationsbip and are very aware of the railroad and freeway
obstructions. . .
In addition AMR generally stages in the proximity of University and 1-15.. It is possible
that when this project is complete, it would add a Kstaging" location for AMR.
Hopefully this will clarify any concerns about this issue.
. EMERGE."!CY OnRmoss . Fms l'RIl....llZ't"IIDN . DISASlllR l'REPt.REDNEss . TlwNING
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RESPONSES TO COMMENTS
LETTER #7
City of San Bernardino
Fire Department
Your comment is noted and will be forwarded to the City decision-makers for
consideration before a commitment is made to allow the North San Bernardino Retail 1
project to be developed.
o
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V J.-
GRESHAM, SAVAGE, NOLAN & TILDEN, LLP
A REGISTERED LIMITED LIABILITY PARTNERSHIP
LAWYERS. FOUNDED 1910
FOR THE FIRM:
Alicen Clark Wong
600 NORTH ARROWHEAD A VENUE, SUITE 300
SAN BERNARDINO, CALIFORNIA 92401-1148
(909) B84-2171 . FACSIMILE (909) 888-2120
WILLIAM GUTHRIE (1886-}9-17)
DoNALD w. JORDAN (1907-1989)
JOHN B. loNEkGAN {RETIRED 1976)
April 25, 200 I
HAND DELIVERED
Mr. Anwar Wagdy
Traffic Engineer
City of San Bernardino
Development Services/Public Works
300 North "D" Street
San Bernardino, CA 92418-000 I
Re: North San Bernardino Retail Project
Traffic Observations Due to Train Delay
Cajon Blvd./University Parkway/State Street
Dear Anwar:
I am enclosing the above-referenced summary prepared by Kevin Fincher at LSA
Associates, Inc. (LSA) interpreting traffic count data and train delays at the above-referenced
intersection. During the P.M. peak period (between 4:00 p.m. and 6:00 p.m. on Friday, April 20,
200 I), eight trains crossed University Parkway. The average delay for a vehicle was two
minutes thirty-six seconds per train. The P.M. peak period includes seventy-five traffic signal
cycles, sixteen of which were effected by trains. When the average train delay was included in
the LOS calculation, the intersection remained LOS B, becoming LOS C only at the westbound
left and though movement from Cajon Boulevard to University Parkway/State Street. Based on
this interpretation, even the worse case turning movement still permits traffic at the intersection
to operate within County LOS standards.
1 apologize for the late submission of this information. Could we meet at 8:45 a.m.
tomorrow (before the D/ERC at 9:00 a.m). to discuss this information? Please advise whether
you will be available at that time.
Very truly yours,
AU-. ~
Alicen Wong Clark, of
GRESHAM, SA V AGE,
NOLAN & TILDEN, LLP
RIVERSIDE OfFICE. 3403 TENTH STREET, SUITE 518, RIVERSIDE, CA 92501 . (909) 684-2171 . FACSIMILE (909) 684.2150
VICTORVILLE OFFICE -14350 CIVIC DRIVE, SUITE 120, VICTORVILLE, CA 92392. (760) 243-2889. FACSIMILE (760) 243-0467
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GRES:IAM, SAVAGE, NOLAN & TILDEN, LLP
Mark A. Ostoich
April 25, 2001
Page 2
ACW:cac
Enclosure
cc: Valerie Ross
Y oun Kim
N:\WS36-001\LtrsIWagdy,A-02
'It. v I (/V' ,
ATTACHMENT 5
City Of Sail Bemardillo
(O\VelOYlIlellt services
~yartmCllt
Application for Appeal
,~POI~()L-
APPEAL FROM A DECISION OF THE (check one)
o Development Services Director;
till Development/Environmental Review Committee; or .
o Planning Commission
Case number(s): ~,<;IIE1..pP IfJE~T Ie. tt.1It,T 1/ Aio. 0/- 0')
Project address:
JJw C.D~AJt'!L ..r Iffe "'~TH"U.. Ot..Vb. t/.. 1114c..t..."u.~ It:w"'.
F'teI4JJIt.S
L. //0114>00/1.. j)tl.
111'5 A
S"t4Al gt5t.Jl1IILlJAAlO ~ q q 2. "o~
Appellant's name: k A"f"H L~I":~J
Appellant's address: IIf" -f Gr.
Appellant's phone: ~7<:)- 5'&O'f
Contact person's name: R (lVrtfDtJtl uJ. J OM,.) ~o,..)
Cnact person's address: 1 U> 7({' c:; Co t4 lM,tV 0 sec..o ,- etlu:.c..WI.. 04 C.4 '1'2. 0:; "TO
I .
Contact person's phone: C:;Oc.- qq:z. c:;;
Pursuant to Section 19.52.100 of the Development Code, an appeal must be filed on a City application form
within 15 days following the final date of action, accompanied by the appropriate appeal filing fee.
Appeals are normally scheduled for a determination by the Planning Commission or Mayor and Common
Council within 30 days of the filing date of the appeal. You will be notified, in writing, of the specific date and
time of the appeal hearing.
OFFICE USE ONLY
Date appeal file
Received by:
/
o
5/1/01
,
REQUIRED INFORJ'\1A TION FOR AN APPEAL
Cecific action being appealed and the date of that action:-il P f /l(),)a~ of;: ~ Ii: IJI::"'OPIlf~
/J€t../IH ,r "'" APLII-;1.(. ~Oj)'
(:.. ,
Specific grounds for the appeal: r it/lie. rc"
-!5LIWI-fTIAJi(- IA>FL"'5".o':'~
T"p
T~"U:;:, e. Allt ~ I{ Ac.. ,.rfJ JJOIt;,t:;
I I . )
Action sought })c:-.vIAl.- DF- P/lD,)I!!:c..r API1UIlI4t...
o
Additional information:
Signature of appellant:
o .
Date:..J!14r ~ olDj) I
2
5/1 ItJ I
Ha~ 29 01 03:23p
Poll~ Johnson
9095069725
p.l
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. OJfIc.'U: oot)-GOO'fl9:t:i
;.
May 29,2001
Ms. Valerie C. Ross, Principal Planner
City of San Bernardinu
Development Services Department
300 N. "0" St.
San Bernardino, CA 9240 I
,
RE: Appeal of DPII No. 01-05
Upon review of the Initial Study and other documents for the above referenced project it
appears that thc traffic mitigation is improperly being dcfcrred. While the project does result in
individually significant traffic impacts, mitigation for these impacts merely consists of payment
offces prior to occupancy. The mcre payment offces does not adequately mitigate traffic
improvemcnts. It is thc construction of the physical improvcmcnts that provides the mitigation
for traflic impacts.
It would be appropriatc to change the timing ofthc mitigation and the Mitigation
Monitoring and Compliance program to require that the physical improvements be completed
prior to occupancy of the project. This would result in the complete mitigation of traffic impacts.
It would appear that thc Northwest Redevelopment PAC in their review of the project also felt
that the timing of the mitigation was inappropriate and physical improvements should be
required prior to occupancy.
Unless the physical improvements are made prior to the opening of the store there will be
significant traffic impacts and the Ncgative Declaration would be inappropriate. My client
requests that the City require that thcse improvemcnts be in place prior to thc impact occurring
so that there is no inappropriatc deterral of mitigation.
Sincerely,
{!JII. JR.
R'!Imond\W. Jphnson, Esq. AICP
( I
BEST BEST & KRIEGER LLP
A CAL.II'"ORNIA LIMITED LIABILITY PARTlolERSHIP INCLUDING PROI'"ESSIONAl,. CORPORATIONS
O ARntUR L. L.1TT\..r.WOATIl"
WILLIAM R. DlEwaLl't:"
AICI-lA"D T. ANDERSON"
,JOHN D. WAHl,.IN"
.JOHN E. BROWN
MICHAEL T RIDDELL"
....'CH...EL GRANT"
I'""ANeIS'" BAUM"
GEORGE M _ REYES.
WILLIA... W. "LOVD. ,JR.
GREGORY L. 1'1...,,01([
KENO...LL H M..cV[y
CLARK H, ALSOP
OAVlo,J. ERWIN"
MICHACl.. oJ. ANDEl-SON"
DOUGLAS $. I"HILI..IPS'
GRI!:GORY K. WILKINSON
GENE TANAKA
VICTOR L Wall'"
DANIEL E. OUVI[l'~
HOWAAD 8 GOLDS
S~"'Hf:N p _ OUTseN
,JOHN It ROTTSCHAI!:"[A
""""TIN A. MVELL.ER
.... MICHAEL SUMMEROUR
SCOT'!' C. $MITl1
......ct< 8. CLARKE,,J1Il
I!AIAN M LEWIS'
BRAOLEY [. NEU"U.O
PETER M. BA"'......CK
..U:,.,.R[Y II. DUNN
STEVEN C. DEBAUN'
[AIC L. OAANEP'
O[NNIS M COT...
PH W,'_ PEARCE
ROBERT W H"'RGAEAVES
C. MICHAEL. COW["TT
BRUCE W, BEACi'I
",RI,.ENE pAATER
MARK A EASTER
MICi'lEI,.I,.E OUEI,.I,.ETTE
KEVIN K. R...NOOl,.pi'I
CYNTHIA M. GERM"'NO
MARGUERITE S STIl...NO
KYI,.E...., SNOW
......MES B. GIU>IN
KIM'" BYRENS
OE"'N OERI,.ETH
SONI... RUBIO C....RVAI,.i'lO
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.... pI'lOF'ESSIONAL CORpORATION
By HAND
Hon. Planning Commissioners
City of San Bernardino
300 N. "D" St.
San Bernardino, CA 9240 I
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LAWYERS
BERNIE I.. WII,.I,.I...MSON
G, HENAY WEI,.I,.ES
0....'0'10.... H....NCOCK
H...y...EY E PETERSON
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.......MES p. MORRIS
KEVIN T COI,.I,.INS
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",[NNlr[R T. BUCKMAN
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MARYMICH"'[I,. MCI,.EOO
......MES R, TOUCHSTON[
STEVEN M. ....NO[RSON
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I,.YSA M. S.......TZ""...N
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....I,.ISON D. AI,.P[RT
KAISH"'N S. CHOpR...
......""ES C. TURNEY
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K....REN "'. rREEM....N
June 5, 200 I
Re: Appeal ofDPII No. 01-05
Hon. Planning Commissioners:
...OHN 0 HIOGINBOTl'1"''''
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EXHIBIT 3
3?50 UNIVERSITY "'VENUE
PO eox loze
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TEl..EPHONE IQOQl eee'l 450
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or COUNSEL
CHRISTOPHEA .... C,",RpENTER
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KIAK W S""TH
DIN'" O. H...ARIS
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Best Best & Krieger LLP has been retained to assist Ms. Kathleen Franks with her
appeal of the above-referenced development permit. This letter is intended to supplement the letter
submitted on Ms. Frank's behalf on May 29,2001. We apologize for not getting this letter to you
sooner, but we did not receive the agenda packet we had requested until this morning.
We have had only a brief opportunity to review the Initial Study and Mitigation
Monitoring and Reporting Program proposed for the project. However, our preliminary review has
revealed the following defects:_
.
.
o
The Initial Study makes no effort to analyze the project's impacts on agricultural
resources, nor has the City explained why it is deviating from Appendix G of the State
CEQA Guidelines on this point.
The Initial Study's Land Use and Planning Analysis does not analyze whether the
project will physically divide an established community or conflict with an applicable
habitat conservation plan or natural community conservation plan, nor has the City
explained why it is deviating from Appendix G of the State CEQA Guidelines on this
point.
o
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LAW OFFICES OF
BEST BEST 1). KRIEGER LLP
Hon. Planning Commissioners
June 5, 2001
Page 2
. There is no evidence whatsoever to support the supposition in the Initial Study's
Population and Housing analysis that the 241 jobs expected to be generated by the
project will be filled by local residents as opposed to commuters.
. The Initial Study concedes that the project will generate "small" additional demand
for housing, parks, and related services, but inconsistently concludes that the project
will not have significant growth-inducing impacts, despite its creation of241 new jobs
in the area. This conclusion cannot be supported.
. The Initial Study's Earth Resources analysis fails to analyze whether the project will
expose people or structures to: potential substantial adverse effects, including risk of
loss, injury or death resulting from rupture of a known fault; strong seismic ground-
shaking; or seismic-related ground failure. Again, the City's deviation from Appendix
G of the State CEQA Guidelines is not explained, but risk of strong seismic activity
in the project site area is great due to the project's location 1 mile southwest of the
San Andreas fault's Alquist-Priolo zone and Yo mile northeast of the Glen HelenILoma
Linda fault special study zone.
.
Although the project site is concededly composed of alluvial sediments and located
within a groundwater basin, the Initial Study's Water analysis concludes that the
construction of the project will not decrease groundwater recharge. There is no
evidence to support this conclusion. Moreover, this conclusion directly contradict's
the Initial Study's conclusion that the development of the project and construction of
impervious structures on site will increase drainage water runoff.
.
The Initial Study's Water analysis fails to analyze whether the project will violate any
water quality standards or waste discharge requirements. Again, the City does not
explain its deviation from Appendix G of the State CEQA Guidelines.
.
Mitigation Measure 4.c.4 does not state the performance standards which will be
required, and, therefore, improperly defers mitigation of the potential contamination
that could result from the project site's anticipated development of a gas station and
automotive work bays.
.
The Initial Study's Water analysis fails to analyze the project's potential impacts to
groundwater quality.
.
The Initial Study's Air Quality analysis fails to analyze: whether the project will
conflict with or obstruct implementation of the applicable air quality plan; whether the
project will violate any air quality standard or contribute substantially to an existing
or projected air quality violation; and whether the project will result in a cumulatively
considerable net increase of any criteria for which the project region is in non-
attainment under an applicable federal or state ambient air quality standard (including
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LAW OFFICES OF
BEST BEST & KRIEGER LLP
Hon. Planning Commissioners
June 5, 2001
Page 3
releasing emissions which exceed quantitative thresholds for ozone precursors).
Again, the City has failed to explain why it has deviated from Appendix G of the State
CEQA Guidelines. Furthermore, had these topics been analyzed, the City would have
been forced to conclude that the project would have potentially significant air quality
impacts because the project will violate SCAQMD's air quality standards, and the
South Coast Basin is currently in non-attainment for carbon monoxide and particulate
matter.
. The Initial Study's Air Quality analysis improperly assumes that the vehicle trips
generated to the project site will be two miles or less, despite evidence that the nearest
comparable large-box retailers are located 6- 7 miles away from the project site. This
improper baseline taints the City's Air Quality analysis and results in an incorrect
determination that the project will not cause a local violation of the state or federal
carbon dioxide standards. The analysis should be redone using a more realistic
baseline, e.g., vehicle trips to the site will be 3-3 Y, miles.
.
The Initial Study's Air Quality analysis improperly defers analysis and mitigation of
health risks from the project's proposed operation of a gas station: the project
proponent is not required to analyze these risks until some time "prior to initiating
operations. "
. The Initial Study's Air Quality analysis improperly limits its analysis of odor-
generation to potential sensitive receptors in the project area and therefore improperly
concludes that the project will not have potentially significant odor impacts. In fact,
the project includes restaurants, with resulting grease traps, and a large trash
compactor, yet there is no mitigation provided for the potentially offensive odors
created by these facilities. Again, the City fails to explain why it has deviated from
Appendix G of the State CEQA Guidelines.
. The Initial Study's Transportation analysis fails to analyze whether the project will:
cause an increase in traffic that is substantial in relation to the existing traffic load and
capacity of the street system, substantially increase hazards due to a design feature or
incompatible uses, or exceed, either individually or cumulatively, a level of service
standard established by the County congestion management agency for the designated
roads or highways. Again, the City fails to explain why it has deviated from Appendix
G of the State CEQA Guidelines.
.
The Initial Study's Biological Resources analysis fails to analyze whether the project
will have potentially significant impacts on any candidate, sensitive, or special status
species, on migratory fish or wildlife movement, on federally protected wetlands, or
on a sensitive natural community. Again, the City fails to explain why it has deviated
from Appendix G of the State CEQA Guidelines.
o
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LAW OFFICES OF
BEST BEST & KRIEGER LLP
Hon. Planning Commissioners
June 5, 200 I
Page 4
.
The Initial Study's Hazards analysis fails to analyze whether the project will emit
hazardous emissions or handle acutely hazardous materials, substances, or waste
within 1/4 mile of an existing or proposed school. Again, the City fails to explain why
it has deviated from Appendix G of the State CEQA Guidelines.
.
The Initial Study's Noise analysis fails to analyze whether the project will result in:
exposure of persons to or generation of noise levels in excess of standards established
in the local General Plan or noise ordinance or other applicable standard, exposure of
persons to or generation of excessive groundborne vibration or ground borne noise,
or substantial permanent, temporary or periodic increase in ambient noise levels in the
project vicinity above levels existing without the project. Again, the City fails to
explain why it has deviated from Appendix G of the State CEQA Guidelines.
.
The Initial Study's Public Services analysis improperly concludes that the project will
have no impact on public facilities, even though the project will result in increased
traffic upon, and increased wear of, local roads.
The Initial Study's Utilities and Service Systems' analysis fails to analyze whether the
project will: require or result in the construction of new storm water drainage
facilities or the expansion of existing facilities, construction of which could cause
significant environmental effects; be served by a landfill with sufficient permitted
capacity to accommodate the project's solid waste disposal needs; or comply with
federal, state, and local statutes and regulations related to solid waste. It is evident
that the project will require construction of storm water runoff facilities, but the
impacts of those facilities have not been analyzed. It is unclear what landfill will serve
the project and how much capacity is available. Likewise, it is unclear whether the
proposed retention of trash on site in a large compactor complies with all applicable
solid waste regulations. Finally, the City has again failed to explain why it has
deviated from Appendix G of the State CEQA Guidelines in this section of its
analysis.
.
The Initial Study's Aesthetics analysis fails to analyze whether the project will create
a new source of substantial light or glare which would adversely affect day or
nighttime views in the area. The project will require extensive lighting for its large
(>700 spaces) parking lot, but the City has not analyzed the potential environmental
impact of this light. Instead, the City improperly limited its analysis to determining
whether the project would create" significant light or glare that could impact sensitive
receptors." Once again, the City has failed to explain why it deviated from Appendix
G of the State CEQA Guidelines on this issue.
.
The Initial Study's Mandatory Findings of Significance analysis is woefully inadequate.
There is no evidence to explain or support the City's findings that: the project has the
potential to achieve short-term, to the disadvantage oflong-term, environmental goals
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LAW OFFICES OF
BEST BEST & KRIEGER LLP
Hon. Planning Commissioners
June 5, 2001
Page 5
but can be mitigated to below a level of significance; the project's impacts are
cumulatively considerable but can be mitigated to below a level of significance; and
the project has environmental effects which will cause substantial adverse effects on
human beings, either directly or indirectly, but can be mitigated to below a level of
significance. Most notably,. none of the mitigation required to reduce these impacts
to a level of insignificance is identified. Furthermore, the City has utterly failed to
provide any list of the cumulatively considerable projects it took into consideration
in reaching its conclusion.
Unfortunately, time and space constraints preclude identification of additional defects
in the Initial Study and Mitigation Monitoring and Reporting Program. However, given all the
problems noted above, the appellant respectfully suggests that the Planning Commission should deny
this project.
We thank you for this opportunity to comment on the proposed development permit.
If you have any questions about any of the issues raised in this letter, please feel free to contact me
at (909) 826-8268.
Sincerely,
dn;:1;:~n ~
for BEST BEST & KRIEGER LLP
o
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\
EXHIBIT 4
TOM DODSON & ASSOCIATES
2150 N. ARROWHEAD AVENUE
SAN BERNARDINO, CA 92405
TEL (909) 882-3612 . FAX (909) 882-7015
E-MAIL tda@tstonramp.com
~
~~}i
....-,.
MEMORANDUM
June 4, 2001
From: Tom Dodson
To: City of San Bernardino Planning Commission
Subj: Discussion of issues raised in the appeal of Development Permit II No. 01-05
The grounds for appeal of Development Permit II No. 01-05 were identified as follows: impacts, to
traffic, air quality, noise, blighting influence. Let's examine the record for facts and findings for
each of these issues:
Noise:
What are the facts according to the Initial Study and administrative record?
I. The proposed project is a retail commercial store which is not a noise sensitive use.
2. The project site is located in a very high noise environment located on the southwest side of
Interstate 2 I 5. According to the City Geneml Plan, Table 37, the Ld' noise contour at the
property boundary (100 feet from the freeway) is estimated to be 80 dB (A).
3. The adjacent land uses are industrial and commercial uses with the freeway between the
project site and the nearest residences, i.e., sensitive receptors.
4. No mitigation was required for construction and operations at this site because of the high
noise background condition and the fact that the freeway would overwhelm any noise from
the construction and operation of the proposed retail commercial store at the nearest
residential areas.
5. No comments were received from any party during the public review period regarding a
potential for significant noise impacts from constructing and operating the proposed
commercial retail store.
What was thc finding made through the DRCIERC review process?
The Initial Study concluded that the proposed project would not significantly impact any sensitive
noise uses, either by exposing new sensitive uses to significant noise levels, or by generating high
noise levels that could significantly impact sensitive uses.
o
o
o
Have any facts or other information been submitted to contradict the facts summarized above
or to substantiate a different finding?
No. None of the facts provided or referenced in the City's review process for Development Permit
II No. 01-05 have been shown to be incorrect and no substantiated data have been submitted that
would contradict the finding regarding noise.
Traffic:
What are the facts according to the Initial Study and administrative record?
1.
A traffic study was prepared by LSA Associates, Inc. for the proposed project that examined
forecast conditions for the years 2003 and 20 I O. Specific assumptions included in the traffic
study were approved by the City Traffic Engineer.
Nine intersections were selected for analysis in the Traffic Study, see attached map.
Trip generation by the project was forecast to be 11,123 trips; however, 2,744 trips were
assumed to be pass-by trips; therefore, the study assigned 8,379 net new trips forecast to be
generated by the proposed retail commercial center.
The P.M. peak hour traffic volume was identified as 837 trips, with 629 trips being net trip
generation.
Based on these assumptions, it was determined that in 2003 with project traffic, all but two
intersections would operate with acceptable (adequate) levels of service. Two mitigation
measures were identified to improve 2003 project traffic impacts on the circulation system
to acceptable levels of traffic flow during peak hour. These measures are: a) Hallmark
Parkway/Gannett Parkway (Project Access), Signalization; b) Hallmark parkway/South
Project Access, restrict access to right-inlright-out only.
In addition, the Conditions of Approval for Development Permit II No. 01-05 require the
following mitigation measure:
2.
3.
4.
5.
6.
(b) Hallmark ParkwaylUniversity Parkway. Modify intersection to permit unrestricted westbound right turns
on University Parkway at Hallmark Parkway. The design is subject to approval by the City traffic Engineer.
7. Based on the above assumptions, it was determined that in 2010 with project traffic, all but
three intersections would operate within acceptable levels of service. One additional
mitigation measure was identified to improve the 2010 project traffic impacts on the
circulation system to acceptable levels oftraffic flow during peak hour. This measure reads:
(c) 1-215 southbound rampslUniversity Parkway: Addition of a separate eastbound right turn lane on University
Parkway at the 1-215 southbound on ramp as proposed on the Wal-Mart Store #3276 University Parkway
Striping Plan.
Again, the MMRP requires that prior to occupancy the developer shall provide funding to
signalize Hallmark Parkway/Gannet Parkway and provide a bond or funding for the
southbound on ramp at 1-21S/University Parkway. The Conditions of Approval reflect the
2
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8.
developer's intent that all traffic mitigation measures (whether required in 2003 or 201 0) be
completed prior to occupancy. With implementation of these measures, the City DRC/ERC
concluded that the proposed retail project would not cause significant circulation system
impacts.
Extensive comments were received from a private citizen regarding concerns with traffic
flow at the University Parkway/I-215 interchange; potentially significant delays for
emergency vehicles accessing the project site; and concerns about greater delays at the
University Parkway intersection with the railroad tracks that parallel Cajon Boulevard..
These issues were addressed in responses to comments and at the April 26, 200 I DRCIERC.
Fundamentally, the City Traffic Engineer, City Fire Department and the applicant's traffic
consultant concurred in concluding that the project's impacts would not be significant for any
of these three issues.
What was the finding made through the DRCIERC review process?
After extensive discussion of the above issues, the City Public Works Department Engineers
expressed full confidence in the factual content of the data before the City and voted to issue the
project a Negative Declaration with mitigation measures. This finding was consistent with the
recommendations in the Initial Study, which based on the data in the Traffic Study, concluded that
the proposed project could be implemented without causing short-term or long-term project specific
or cumulative impacts to the area circulation system.
Have any facts or other information been submitted to contradict the facts summarized above
or to substantiate a different finding?
No. The appellant has submitted a letter (May 29,2001) indicating that the traffic mitigation is
being deferred, but no data have been presented that any of the Traffic Study analysis, facts, or
findings are incorrect. The letter's statement that traffic mitigation is being deferred is clearly
incorrect for the following reason. The MMRP and conditions of approval require all circulation
improvements for the 2003 date to be in place prior to issuance of occupancy permits. Further, the
City condition (7c) goes further and requires the 1-215 and University Parkway improvement to be
in place prior to occupancy and this was identified as a year 2010 mitigation measure. For the
remaining 20 1 0 mitigation measure, the MMRP requires that the project's proportional or fair share
funding be made available to the City prior to occupancy. Therefore, none of the traffic mitigation
measures have been deferred, and, in fact, one measure has been brought forward and will be
implemented before occupancy, instead of before the year 2010.
Air Qualitv:
What are the facts according to the Initial Study and administrative record?
1.
An Air Quality Study was prepared by Parsons Engineering Science, Inc. that examined
short-term construction and long-term operational emissions from the proposed retail
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2.
commercial center.
The potential construction emission were quantified on Table 8 of the Air Quality Study.
The construction emissions were determined fall below the SCAQMD significance
thresholds. Regardless, mitigation measures were included in the Initial Study to ensure that
no locally significant fugitive dust impacts would occur during construction
During operations, ongoing emissions were determined to exceed the threshold of
significance for carbon monoxide (CO) emissions. A CO hotspot evaluation was conducted
to determine whether the project could cause or contribute to a violation of the CO ambient
air quality standard. Under worst-case conditions, no hotspot violation of the CO standard
would result from implementing the proposed project, including future cumulative traffic
growth. .
No comments were received from any party during the public review period regarding the
air quality analysis in the Parson's study or regarding the potential for significant air quality
impacts from constructing and operating the proposed commercial retail store.
3.
4.
What was the finding made through the DRCIERC review process?
The Initial Study concluded that the proposed project would not significantly impact air quality since
it would not cause or contribute to any direct violation of any ambient air quality standard. However,
a detailed discussion was presented in the Initial Study regarding a local jurisdiction's authority (in
this case the City of San Bernardino) to make findings that emissions are not significant, even though
one of the quantitative thresholds established by SCAQMD was exceeded. The SCAQMD CEQA
Air Quality Handbook states: "the District recommends that these thresholds be used by lead
agencies in making a determination of significance. However, the final determination of whether
or not a project is significant is within the purview of the lead agency pursuant to Section 15064(b)
ofthe CEQA Guidelines." Simple stated, the City had factual data which demonstrated that the CO
emissions would not cause a violation of the CO ambient air quality standard and based on the type
of job generating value and on vehicle miles traveled reductions that cold be produced by the
proposed project, the DRCIERC concurred with the findings and rationale in the Initial Study that
the proposed project would not cause or contribute to significant air quality impacts.
Have any facts or other information been submitted to contradict the facts summarized above
or to substantiate a different finding?
No. None of the facts provided or referenced in the City's review process for Development Permit
II No. 01-05 have been shown to be incorrect and no substantiated data have been submitted that
would contradict the finding regarding air quality.
BIi!!ht:
What are the facts according to the Initial Study and administrative record?
I.
The potential for a blighting influence from the proposed project was not identified as a
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2.
potential impact of the proposed project because there are no major big box retail operations
within about three to four miles of the project site. The proposed project will not complete
directly with the anchor grocery store located about one mile from the project site on the east
side oflnterstate 15. No factual basis for conflict with existing retail commercial operation
was identified and no physical changes to the environment from blight, i.e., closure and
deterioration of existing commercial facilities.
The adjacent uses are industrial, other types of retail commercial and lodging operations. As
the-vast majority of the operations that might compete with the retail commercial center are
operated by existing national chains (Shell, Jack in the Box, M9bil, Texaco, Chevron,
McDonald's, there was no major competitive advantage identified with approval and
implementation of the proposed project.
No comments were received from any party during the public review period regarding a
potential for significant blighting impacts from constructing and operating the proposed
commercial retail center.
3.
What was the finding made through the DRCIERC review process?
The Initial Study contained very little discussion of blighting except in the project description. The
Initial Study concluded that the proposed project would not significantly impact any resources issue,
excluding socioeconomic issues unless it can be shown that significant physical changes in the
environment will result from implementing a proposed project. No factual basis was identified to
substantiate a potential for significant blight that could significantly impact existing businesses.
Have any facts or other information been submitted to contradict the facts summarized above
or to substantiate a different finding?
No. None of the findings or assumptions provided or referenced in the City's review process for
Development Permit II No. 0 I-OS have been shown to be incorrect and no substantiated data have
been submitted that would support a finding of significant blight being cause by approval and
implementation of the proposed project.
Based on the summary of facts and findings presented above, the issues raised in the appeal do not
rise to a level that would justify overturning the approval of Development Permit II No. 01-05 by
DRC/ERe
7h9h
Tom Dodson
Attachment
5
,
(
Northpark Blvd.
sa
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LEGEND:
~~~~ Project Site
o Inter.;ections 10 be analyzed
PI} 2/00(1lLFOJOJ
Figure 3
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I o~ 1,200' 2.400' N
San Bernardino Wa/man
Analysis Intersection Locations
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(cIElR? 'IITDFIIIEIIJ) (C(Q) IFY
EXHIBIT 6
PLANNING COMMISSION MEETING
OF THE
CITY OF SAN BERNARDINO
TRANSCRIPT OF PROCEEDINGS
APPEAL NO. 01-02
DATE AND TIME:
LOCATION:
JOB NO.:
TUESDAY, JUNE 5, 2001
7:42 P.M. TO 9:10 P.M.
CITY OF SAN BERNARDINO
COUNCIL CHAMBERS
CITY HALL
300 NORTH "0" STREET
SAN BERNARDINO, CA 92418
10908DO
REPORTED BY:
DAWN M. DAVILA, C.S.R., R.P.R.
(C.S.R. NO. 8383)
y ollfl8er Qepo~ &rvices
6m Mapolia Avenue
Rivenide. CA 92S06
(909) 276-1333 Fax (909) 276-17Sg
o
c:> :3
9
10
! ~
12
1
~ P D ~ ~ RAN C E S
2
3 SFF B~RNFRDINO P~FNING COMMISSiON:
4
C.~OL A. T~R~SE~R, C~~I~~~
~
NE=~ JERRY, CO~~ISSIONER
c
.~rREDO P. ~NCISO, COMMISSIONER
7
K~NNETH DURR, COMMISSIONER
~
~
JOE ~~IREZ, COMMISSIONER
EVELYN J. LOCKETT, COMMISSIONER
ERNEST F. GFRCIA, COMMISSIONER
MIKE SAUER3RUN, CO~~ISSIONER
LINDA DORTCH, SECRET.~Y
14 S~AFF MEMBERS:
24
() 25
15
16
17
: p
19
20
21
22
23
~~ERIE ROSS, PRINCI?F~ PL~NER
JOE BEL~~DI, SENIOR P~FNER
RAYMOND CASEY, CITY ENGINEER
JF~~S ?UNK, DIRECTOR - DEVELOP~~NT SERVICES
DEPARTMENT
HENRY EMPENO, JR., DEPUTY CITY ATTORNEY
YOUNGER REPORTING SERVICES
2
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12
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13
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1; .
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19
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REPRESENTATIVES FOR THE APP~IC.~~T WF~-M?RT:
2
G~ESHAM, SAVAGE, NO~~ & TI~DEN, LL2
3
BY: M?RK A. OSTOICH
500 NORTH ARROWHEAD AVENUE, SUITE 300
J
S~~ 3ERN~3DINO, C.~::ORNIA 92401-1148
o
(909) 884-2l71
7
8
9
TOM DODSON, DODSON & ASSOCIATES
2150 NORT~ ARROWH~~ AVENUE
SAN BERN~RDINO, CALFORNIA 92405
(909) 882-3612
~~?R~SENTA!IVES :OR T~E APP~LLfu~T K~~~L2EN F?ANKS:
BEST, BEST & KRIEGER ~L?
BY: JENNIFER T. BUCKMAN
3750 UNIVERSITY AVEW0E, SUITE 400
RIVERSIDE, CALIFORNIA 92502-1028
(909) 686-1450
20 MEMBERS OF T~E ?UBLIC:
21 SETTY .~DERSON, COUNCILWO~p~ OF THE SIXTH WARD
22
23
24
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YOu~GER REPORTING SERVICES
3
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MS. ~OSS
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6
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MS. 3UC!<]JfJ.JJ
MR. EMPSNO
10
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::'2, 38
CCMM. JURR
COMM. SAUERBRUN
12, 68
MR. OSTOICH
27
MR. DODSON
29
MR. r-UNK
59
MS. .Zl.NDERSON
63
MR. CASEY
67
65, 69
69
15. COMM. DERRY
16 COMM. LOCKETT
17
18
:'9
20
21
22
23
24
o 25
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TU~SJAY, JUN~ 5, 2001
S~~ 3~~N;3~:NO, 0~
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C~;:RM~~ T~RP.SE~R:
i:2:n
..... ~.....,1""'.e;: 1
--~~' .....-
Numbe ::
Ne:::
01-02.
o
MS. ROSS:
"PDe N"'moe- Ol-u~_? i.c; 2.'""
.'"'".. al :~,. _ _ ___.
=.ccea~
~ -
v_
I ~je 0eve~opment and ~nvi~~nrnen~al Review Comm:::2e's
3 appr;)val cf Development ?er~it Type :I, Number 01-05.
9 This development permit was approved to establish a
10 155,917 square foot Wal-Mart retail store with ancillary
11 gasoline sales on 14.5 acres. The project site is
12 located on MacArthur Boulevard and Ha11~ark ?arkwav.
~ ":(
~~
::'s in the UBP-2, University Business Park specific
l~ plan land use district.
A little bit of background on this: The
16 development permit application was submitted in early
17 February. With the application, we received a draft
:3 initial study that was prepared by Tom Dodson &
19 Associates. And included with the initial study was the
20 traffic analysis that was prepared by LSA.
21 I reviewed the initial study for compliance of
22 the California Environmental Quality Act requirements.
23 Public Works Staff reviewed the traffic analysis to make
24 sure that it met -- it adequately addressed potential
25
impacts from this project.
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Mr. Dodson was asked to prepare rev:s::~s :0
~ :je i~itial study, which he completed. At that pc:~:
3 the project was scheduled for review by the DE~C. We
4 reviewed it first on March 1st. !he committee ~embers
~ ~eques~ed some changes :0 ~~e :ni:ial s:udy :0 :eflec:
6
-~e' r ~oncar~~ =s ~ell -s concerns -~a- wera r-'--~
_.J. __ "- ___.1..1.___, __ "., _ =. ...... L.J.':' L _'- _~_;:,c::.......
~..
~y
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members of the public who attended the mee::.ng.
We went back to DERC on March 8th, 200l. In
addition to reviewing the sit:e plans, we considered t:he
9
10 revised initial study, based on the Development and
11 Env:ronmental Review Committee's independent review and
,/ analysis of t:he initial study and the information
1.3
contained therein. It: was recommended that a mitigat:ed
negative declaration be prepared and circulated for
public review.
We continued the project to allow for the
17 required 20-day review period. After the meeting,
18 Planning Staff and the Applicant determined that since
19 CaItrans would be a responsible agency because of
20 proposed improvements at the intersection there, that a
21 30-day public review period was required, as per CEQA
22 requirements. The initial study was sent to the state
23 clearing house for distribution to potentially affected
24
25
agencies.
It was also advertised in the paper -- in the
Sun Newspaper on March 13th, that the City proposed to
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~dopt ~he mitigated negative decla=ation, ana iden:::iei
2 ~~a~ the public ~2view period would be held f~8m Mc=:~
3 14th th=ough Ap=il 12th.
4
At the conclusion 0: the oublic
......0........ .....c.
~'-'--,""" ,
.=eview
~
~
cc~ents ~ere ~2ceived ==om one me~be= of :he ~~C~::
-..........;
'::'..1.....
6 some responsible agencies. We orepared ~espcnses :0 :je
C8mmen~s, dis~=:buted ~hose
to the DE~C. And on
3
....DY'~ 1 ?6-~ af+-eY' Y'~vi,=.wi~g
.-.. _..:..._ _ \...., i-............. __ J..
the =esponses to comments
9
and the mitiga~ion monito=ing and =epor~ing prog=am, the
Development and Environmental Review Committee adopted
-",.., ;~~ -.....::lod n ....i~o. , r.....;...~on ~ne, i-igation
~_,e m_~-,-ga~_ ..ega~_v_ aec-,-a_",~~ , ~.1 m_L_ _.
monitoring and =epo=ting program, and approved
Development Pe=mit TVDe II, Numbe= 01-05, based on the
14 findings of fact in the Development Code subject to
15 conditions of app=oval and standard requirements. P~d
~c the conditions included some design revisions to ~he
17 plan's si~e planning elevations and landscape plan.
18
After that, an appeal was filed by
19 Miss Franks. That appeal identified perceived irnpac~s,
20 but there was no disc~ssion of what the potential
21 imDacts to ~raffic, air quality, noise, or blighting
22 influence would be.
23 We received a letter from Raymond Johnson, an
24 attorney representing Miss Franks. P~d he questioned
25
the traffic mitigation measures. He believed that it
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was irnD~coer :0= us, :~e Ci~y, :0 defer the t~af::c
2 mi~iga(ion ~mDravemen~s. ~oweve=, the tr~ffic-rela:2d
1 ~~ -0 De ~~molo~~d cr~n~
..,J mi-;:igat.:.on measures a::-e requi.r-........:. L ' I....,\.) _ --I....... ~ __v_
4 ~o issuance of a ce=:i:~ca~e or occupa~cy :0= :~e
~
. .",
DL.:l...:..-::.::;.g.
tJ
Now,
-::~e one
a~-ODrion ~_o -n--
.....8\.1..........1..._.. ....: QL
=:-eewav
was
:::-J.e
I J::-~amp i~p~ov~men1:s 1:hat wer~ n01: identified or
.3 =~-'('iD--a,..; -0 "0 ~e--ss-r'l u,.,r' , ?010 -s ~er -;..,e
_,,~____ c__.... _ ~_"....-' c~_ ..L.__ _ _ a "., _ L...
9
Eowever, even though the numbers
-Y'-.::..... ......... d
1._:::1_.l...lL. =>....U y.
10 supported probably not needing these improvements until
, -
. ,
2010, ?~blic Works believed that they should be done
12 ~rior to thac. So in meeting with the Applicant, the
13
Applicant agre~d, when ?ublic Works required the project
14 proponent or the Applicant 1:0 comple1:e this improvement
15 also concurrent with c:he other t~affic-related
16 improvements, all of them prior to issuance of a
17 certi:icate of occupancy.
13 A le1:ter was receiv~d 1:onighc: from the law firm
19
20
of 3est, Best & Krieger.
I have partially gone through
__ and haven't completed reading
, ~
~L .
i3ased on what I
21 have read and [he previous aC1:ions of City Staff, the
22 Development and ~nvironmen[al Review Committee, I
23 believe that the adoption of the mitigated nega1:ive
24 declarac:ion and mitigation monitoring and reporting
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program, . and approval of Development Permit Type II,
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Numbe~ 01-05, we~e consisten: with Califo~nia
~nvi~onmental Quality ACt itself, and in addition,
......~Q
1....__
requiremen(s of t~e City's General Plan and development
code. ~~d Sta=='s recommendation is t~a: the
?lan~~~g Commiss:~~ uphold Lhe ~evelopme~[ and
~~vi~onrnen:a: ~evi2w Commit:ee's approval
,...,: .....'.,,....
v_ L...C
pr8]ec\:.
3
Tha: conc~~des my oresen:a:ion.
9
C~~I~~~ TH~~SH~R; .~lY questions of Staff at
, . ~?
:nis pOlnL.
(No audijle response.)
CHF.=~p~ ~SR~SHER: ~s the appeal applicant
here?
Give us vour name and add~ess :or the record,
15 please.
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MS. BUCKMF~; Good evenlng, your Honors. My
name 1S Jenni=er 3ucY~an. I'm with the law firm of
18 Best, Best & ~rieger, 3750 University Avenue, Suite 400,
19 ~iverside, Cal~fo~nia.
20
I'm here tonight on behalf of the Appellant in
21 this matter, Kathleen rranks. .~d as Staff has already
22 indicated, we did submit a five-page letter (0 the
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Council this afternoon. I apologize for not getting
24 that (0 you earlier. The agenda packet was mailed to I
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on May 31s: and received on Monday, yesterday. And v
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we=e just =2tained on the case, actually~ yeste=day and
received the packet then from the previous co~nsel.
2
3 I would just point out that based on all the
4 issues =aised in t~e letter, I bel:2ve a fair argument
5 can be made that ther2 a=e potentially significant
6 2nvironmental impacts relating to this project
7 necessitating the preparation of an environmental impact
8 =eport as opposed to the mitigated negative declaration
9 that has been presented.
10 .And I'm available to answer any questions you
11 may have regarding the issues raised in the letter or
12 the issues =aised by prior counsel.
13
CHAIRMAN THRASHER: Does anyone have any
14 questions at this time?
1 "
-~.
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Mr. Empeno.
MR. EMPENO: Madam Chai=man, if I may, I would
17 like to ask Ms. Buckman a couple of questions.
18 The first question I would lik2 to ask is who
19 do you represent? Are you representing the Appellant
20 Kathleen F=anks?
21
MS. BUCKMAN: The Appellant Kathleen Franks. I
22 unde=stood the Chai= to request the Appellant to come
23 fo=ward.
24
25
CHAIRMAN THRASHER: Yes.
MR. EMPSNO: Your letter says you're assisting,
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:sn'[ clea~ whether vou'~e ac:ually ~ep=esen::~g
,md
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he~ or re?=2se~ting a third party :~ this ~aL~e=.
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3 [hat's why I asked the quest:on.
~
MS. 3UC!0t.AN:
~e ~r~ ~~or~sen~i~c
~. ----- -......- .... .~--_....
J Kat~leen F~anks, to the ex[en[ I ca~ a~swer ~h~~
o
ques[:::m.
of course,
-no
_1.......
it delves ::::0
3ecause,
---~~"'ev-cl;~n- or;'J;'cr>c wh;.-h <'m SP~~ I,'CU
:::"-'-"-'-~.... _..:..-... l,.. .. -- ---'-':J......, .....-. - --'- _
:3 understand.
9
MR. SMPENO: Well, I think this bcdy has a
right to find out who the Appellant is and if there is
any other parties that are expressing an i~[eres: in
this appeal.
I think [hose parties should be
:dentified, and this Commission has a right to find the
14 identity of [hose other parties.
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MS. BUCKMAN: The Appellant has been
16 identified.
''''
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~~. EMPENO: chere aren't any ot~er Appellants,
18 then?
19
20
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MS. BUCKMAN: Not that I'm aware of.
MR. EMPENO: If I can ask Miss 3uckman, lS
Miss Franks here?
MS. BUCKMP~: I don't believe she is.
23 Although, frankly, I haven't met her. As I say, we were
24
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retained yesterday.
MR. EMPENO: I don't have any o[her questions
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righL now. Thank you.
?
C~~IRM~~ TBRP.SP.S~: All r:gnL. Thank yc~.
j
Commissioner Durr, did you have _ quesL:on?
~
COMM. DURR: Yes.
=
Jen~:fe~1 when you say you believe
-'.;;:- -;.........
,-.._ _ '-.;.~c
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L~aL you disagree w::h :he env:ronmen:al :mpac:,
- ""...-
L....c,-
7
is a a'~o-~~r ~mo-c- ~.~a-.~ wha-~ is
-:- ..._,-aL~_~. _ a L _~. _
V~" .....e1; ~':'TO .....1.-,-..... -no cr~
_.......... U ___II..... l....c.~ L. ..............
3 i~ :je ~epo~~, what do you base tha~ on?
9
MS. 3UC~~F: Basically, all the issues :hat
10 are identified in the letter. There are a number of
l1 areas that have nOL been analyzed Lhat are covered in
12 Appendix G of the State CEQA Guidelines. The :nitial
l3
studv form that Lhe City is using apparently devla:es
14 from Append:x G in significant respects, and the bases
15 for those deviations are nOL explained, as set forth in
:"6 my letter.
17
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COMM. DURR: Thank you.
CHJI.IRMAN THRP.SHE?: Does anyone else have any
19 questions?
20 Commissioner Sauerbrun.
21
COMM. Sll.UER3RUN:
I guess this should be to
22 Staff. Aren't we allowed some latitude for Appendix G,
23 to make decisions on that? I mean, it's not cut and
24 dry?
25
MR. EMPENO: Can we do this:
I would like to
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ask
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CI t~e test:mcp.y can be provided to
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':".l...
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Cc~mission from both sides, and then Staff can
ar:s ~..Je.:
~. ~ h - one- ml~n- h C1-ve 2bo~-_ an'.1
~ tDe ques<.-iop.s t~at t. e commis::>i . _ . . ~:.L . --
~ of these issues.
J
COMM. SAUE;BRUN: That's fine.
,
c
I think -- wny can'~ y:~
C~_I~~~ !~~~SHSR:
"7
that auestion now?
_ ~ean, why shou:c we ~c7e
~~
~V
ans~,,,,;e.:
Q wait for an answer? ~: a commiss:oner comes up w::~ a
9
question, I don't think we should have
because.
.~
"Co Wall..,
we can ask questions
+- +-.
a<.- any <.-lme.
~R. SMPSNO: Well, first of all, I wonderec ::
12 t~ere is any other speakers here on behalf of the
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~...~_ ....._0. L.
~,d then, secondly, I think that the
14 ~esDondent should be allowed an opportunity to respond.
15
C~~I~~ THRASHER: .~,d they will. But I feel
16 if any commissioner has any question at any time, they
17 have a right to ask a question and not wait until
18 everything has been presented.
19
20
MS. BUCKMAN: I would like to -- I'm sorry.
CnAI~~~ THRF.SHER:
So I'm going to -- cap.
21 Co~~issioner Sauerbrun's question please be answered.
22
MR. EMPENO: Well, I don't know about Ms. Ross,
23 but frankly, I don't have an answer to Mr. Sauerbrun's
24 question right now. And that's why I would like to ask
25
the ResDondent if they have any information.
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CHAI~~~ ~~RASHER: If that was you~ ~~ascn
?
MR. S~PSNC: We juSt got th~s doc~me~t jus: a
3 few minutes ago.
4
C~~:~~ ~~~~3ESR: -- that's a good reason.
~ gut to ~ell us the: we can': ask ques~:ons u~t~~ ~~e
6 ene, ~hat's nc: a gaoe
7
MR. ~~?SNC: 'or.:y asked, Madam Chairman.
8 'Thank vou.
9
C~.I~Ju~ 'I'~RASEER: All right.
MS. BUC~_~: May I address Commission
S;:lne~D. r;'n I ~ .......l'cS~i ,...,.,...?
__ _ _~ ~ ~~_ ~_vl~.
. C~_:?~~~ ~ERF.SE~R: Go ahead, Ms. Buckman.
MS. 3UC~~~: Public agencies are allowed
14 latitude i~ de:er~~~i~g what thresholds of significance
15 they can use for a~y particular project; that's true.
16 :1owever, to the e~::ent tha.t public agencies deviate from
17 the criteria set forth in Appendix G, typically they are
18 required -- not "required,n but typically they explain
19
20
the
:0::
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,-ne
deviations;
why those topics that
reasons
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recomme~ded for coverage in ll.ppendi:: G are not being
21 covered in your i~itial study. That hasn't been done
22 here for a variety of topics.
23 So while it is discretionary with the public
24 agency to set its own thresholds of significance, you
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can look to Appendix G for some guidance on the topics
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caMM. SAUERBRUN: So there is nothing soesifi:
3
~h ~ could ~u~ 'lour Fi~ger ^n -h-~
~,a~'you ,,~_ ___" ~..J.~"c~
t~eylve devia:ed
4 from that you have questions about? 'mean, ycu refer
5
- 'l "'Appe~Q' i.~ r
Lv.... _ .J. _..... \,,;
_~'om ~he C-QA ^U'~A"~O~
_ ~.i.J. .:.... I..: .;.......____.~...........,
t"at
:he~e :!..S
a
ciev:at:ion
- ~,
from --
but
-her~ ~s ~o-~~~a
l.~L .. '- _ .L l......____
-pe-' =, - -:.,--
~. c___\... .....::::.....
-,
,
you could tel~ this 3cdy what i: is that you'=e conf~sed
.3
9
"0" oU7 r.;"_p~. r,or o""pi.=':n':ng -nc.i,... Q"ov';~";,,,';'on .:............m?
_ .... _ _..H.. .... .......\... _....._....:.... '-.1..........._ ..... _.....'-"_ .. __v..
i:l-~U-11V
.....l.. L c:..l....... _ I
MS. BUCKMAl\l:
h . -. . . .
: e SpeCl!lC aev:atlOns
10 from Appendix G are set forth in my letter practically
12.
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13
14
verbatim.
First and foremost, as vou can see in my
='r-- ~o'nr -n.oro is no e==or-s r~ an-'v-o
-";".;..;:'1... t..J ..l.... '-I L __......... .... ..:....1.. L ,-u l. a__~.....
'[he
prsjec~'s impacts on ag~icul:ur31 =esources wha:soeve~.
caMM. SAUER5RUN:
T'm s",rrv
.... l. v___,
I was looking at
15. the traffic study mainly. That was my main concern.
16 3u: that's fine. I can -~ like I said, we jus: received
17 this ourselves, so I haven't had a chance -- I was
1.3 lOOking at the traffic study_
19
20
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MS. BUCKMAN: .~d I apologize for that.
I
den't know i: this is
-nO 0 ki nc o~ noti co '"0''' -"meT'~
L.__ .._L _J. -....-_............__L...L
that is subject to Government Code Section 65090 or
22 65091. But the notice that -- the packet that was
23
24
25
mailed to the Appellant was not mailed to her until
May 31st.
caMM. SAUERBRUN: Very good.
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M. Ch.
LaCam ~a.:.:-man,
2..: ~
may make a sugges::o~.
2
CH.Zl..IRJv1JlB T::PJI.S.HE:R:
Yes.
3
COMM. SAUERBRUN: It seems to me that like --
J. h- all ~~.~ -nc i~'s ~USt been crouGh: :orth
si~ce we ,eve __~; ~_ = . _ _ .
~ ton~g~~, t~at maybe we should move ~h~s to the ~ex~
o meeting and have Sta:: nave a chance to review i: and
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:he City A::or~ey have a chance :0 =eview it.
H
~
C~.IRMAN THPJI.SHER: Well, Miss 3uckman, why
9 con't vou take the time, since we just gOt the letter,
10 and you go down each point. And tell us what your
, .
objections are or what you're trying to put across, your
~? =2asons for this appeal.
13
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MS. BUC~Jl~: Certainly.
:lrSt, as I me~tioned, the initial study does
not analyze the project's impacts on agricultural
resources, which is one of the topics that is covered by
Zl. d. G
. .ppen lX .
Second, the land use and planning analysis that
19 is contained in the initial study does not analyze
20 specifically whether the project will physically divide
21 an established community or conflict with an applicable
22 habitat conservation plan or natural community
23 conservation plan. ~~d those are both topics that are
24 recommended for consideration under Appendix G of the
25
State CEQA Guidelines.
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Th~=d, Lhe :nitial -- and I'm en page 2 c: ~y
? le-:::e= :lOW.
3
Third, the initial study noes DOt contain any
4 ev:dence ~o suppor~ :ts suppos:::on ~~a~ ~he 241 jobs
e::oec~ec :c be c=ea~ed as a =esul: of :his prcjec~ wili
6 be f:~~ed by local =esidents as opposed to cc~~ute=s.
, ."-..'1d obviotlsly, whe::e these pec~.:.e a::e coming f::om to
3
,'cv-1.. ...~ ....h..: S net.T .....V"......~ec~
,/IJ _.'\. d.... 1-.1.':'_ ....,.. ::-'_"';~ I..
is gc:~g [0 have an impacL on
9 the t::affic analysis and othe:: aspects of the initial
lO study.
11
Third, the initial study indicates that the
:2 project will generate additional demand for housing,
- ~
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~-r'K- --d rcl--cd servi~cs
~a_.:;" ::::'.:..1. ___C\",,- _\.......... .
In othe:: words, it
14 indicates that these new jobs that are going to be
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created as a result of the project will, in fact, cause
16 people to move here. However, the initial study
17 indicates that the project will not have significant
:8 growth inducing impacts. That's inconsistent, and it
19 can't be supported by the conclusions that are reached
20 in other portions 0: the initial study.
21
Okay.
~ifth, some of the topics that are
22 covered in lI.ppendi:{ G of the State C=:QA Guidelines are
23 whether the project will expose people or structures to
24
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potential substantial adverse effeCtS, including risk of
loss, injury or death resulting from rupture of a known
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:oul[; s:~ong seismi~ ground-shaKlng or seismic-~e~o:e~
2 g~ound :oi1ure.
3
The ini:ia1 study has not analy:ed those ~:sks
4
."i -n
>/'J_ .......
to :his project.
.:\~"1d agair.,
l:.::3.-:'s
:-espec:.
-
~
i:lco~s:s:e!1t. with P-.ppendix G 0: the St.ate
("";"Qi:
......- --
c
Gui::ieli:les.
.:i:lT".C. _~t's ..........Y"-ic.,l-r'y 'mpoV"-~nt"" .:~ ~.;'.e
_ _ t--a_l...- ...._c. - ~.. _ ____..... _.. .....
case
c: t~~S o=oject. whe=e the i~itial sLudy 3emi:s ~hat :::e
S p~ojec: is loca~ed one mile southwest 0: the San .~dreas
9 faul: and one half mile northeast of the Glen Helen/Lorna
10 Linda fault special study zone.
:1 So the~e is probably a subs:antial -- at least
12 t.here lS enough evidence in the reco=d to support a !alr
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argument that there is a substantial ~isk of strong
seismic ground shaking at the project site.
Sixth, the project site is concededly composed
o~ alluvial sediments, and the project site is located
17 wi~hin a groundwate~ basin. The initial study concedes
18 these points. However, th~ water analysis concludes
:9 that the construction of the project will not decrease
20 groundwater recharge, despite the construction of
21 impervious surfaces on the site.
22 This conclusion runs directly contrary to the
23 initial study's conclusion that the de7elopment of the
24 project and construction of impervious structures on the
25
site will increase d~ainage water runoff. And the
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i~i~ial s~udv concludes that ~he si:e, as 1: c~==e~:_v
2 e::ists, is i:npe!"-Jious to groundwater oe.::colation. ':'::e!"e
~ is no evidence Nhatsoeve.:: to support that: conclusio~.
<1
Ne,""', -~e '~'-',,1 s-"o'v"s w--=>~ ---1..,,'5 ~=""
~_ 1.-:1 _.........L...l......._ 1.-.... _ C1"..,-_ Ol..&.c. y...._ _.....__...
~ to analv:e whethe.:: the p!"oject will violate any wate.::
o
~ua~::v s:andards O~ was~e d:scha=ae recui~emenLs.
- - .... .
~ .
_--.J.'1C
again, ~ha~ type 0: ~nalysis is called for in
:3 ~ d. ~ - . S~. rmQ~ r. . '01;
~ppen lX u o~ tne ~ate ~~ ~ ~Ulc~~_nes.
9 1 think !':n up to number 8, and that is the
10 Mitigation Measu!"e 4.c.4 does not state the perfo!"mance
1: standa.::ds which would oe .::equired. ~~d 1n that sense,
~2 i: imorooerly de:ers mitigation or potential
13
conLamination that CQuld =esult from the site's
14 anticipated development of a gas station and automotive
15 work bays.
16 Those uses of the projects that are anticipated
- -
i:
- .
carry with them potential risks to groundwater and soil
18 l~ there is any kind of leak or spill of the chemicals
19 that a!"e used on site, o!" the oil. A~d the mitigation
20 measu.::e does not state what -- exactly what the property
21 owner will be requi.::ed to do in the event of a spill; it
22 just says that a plan shall be developed to deal with
23 the spill.
24
Nine, the initial study's water analysis fails
?:;
-~
to analyze the project's potential impacts to
YOUNGER REPORTING SERVICES
19
o
o
o
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,
~
groundwa~er qual~~y, even though the in~tial s:ucv
? a~~i:s that this is -- th~s projec~ is be~ng develcDed
3 In a groundwater basin area.
~
Ten ~ne ;n;~l.-l s-udv"s -'r ~u~lit\/ -n- vs's
ul L.~.I...... _B_I."..::1_ '-... c__ ~ .....__ _ C.I. ol .;.
- ~o a--"/-e .ne-her -he ~r"~ec~ will .-on:c,,--- ..i~;.,
_3.:":"5 _ ~.c.~:..:....... W _ L 1....._ L.. ~_vJ ~ L. .....__ '... _....____'- IV_ L..~
Q
O~ obS:::'JCI
;~Dl-~en--~'on 0: ~ne -P01';'---D. Ie -ir
_"'1. _:=...l___..L::::l.L.":" l.. \-".1. 0... _.....:::. _'- c:.~_
~u, - 1 ~ ':"'" ~ .
~ c......:...__!
7 plan. Tha: will be the air quality plan adop~ed by the
3 South Coast Air Quali:y Management District. Whether
9 the project will violate any air quality s~andard or
10 contribute substantially to an existing or projected alr
1 '
~l
-U-1'r\/ v'r1--ion -nd whe-her -c.he
I..i 0.__...._ .........J..aL......, a '-_
project
wi II resul t
12 ~n a cumulatively considerable ne~ increase of any
13
c=iteria for which the projec~ ~egion is in
14 non-attair~en: under an applicable federal or state
15 a~ient air quality standard.
16
In this area, we are subject to the South Coast
17 Alr Quality Management District and its plans. The
18 Scu~h Coast Air Quali~y Management District is in
19 non-attainmen~ for both carbon dioxide and particulate
2~ :nat:er. 30th of ~hose are a direct result of vehicular
21 traffic. They're both related to the amount of traffic
22 that is generated and the way that the air circulates in
23 t:his area.
24 So the analysis that has been neglected here
25
and which is called for in Appendi:{ G of the State CEQA
YOUNGER REPORTING SERVICES
20
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1
Guidelines would reveal some real
au-1i-.V .....V"--~iClrT'lS
_ 0.__1.._ :7-'-'''-'-~''1..
ai.r
2
=esul~i~g ==8ffi tn:s projec~ and :rom t~e
- _. .
:.ra:::: ~na: 2..:
3 is projected 'co ge!1er:;.te. .Zl.nd,in fac;:, tl"1.e i:-,: :i:;.2.
~
study i:self
:~dicates that the
~rOJ. "'c-
~- '-...
no: be
w::l.2.
~
~eeting :~e South C~as;:'s air emissions tl"1.reshclds. 3U1:
o
:he ini::'=.2-
goes on to say that ;:he
C:.ty
....I""\~ r"1Q
-~ "::V_~.J
t:::'!""11Q.'.
.....1..- :!
~ ~c adopI a d~:fe=e~~ ~hr2shold.
8
Next, regarding the air quality analYs:s, is
9 the fact enat the air quality analysis assumes that
10 vehicle trips generated to the project site wi" be two
11 miles or less. F~d tha;: assumption is used as a
12 predicaIe:.o :ind ~hat the emissions lirn:~a~ions wi.ll
- ~
, .
-~
no:. be e:{ceeded.
1 4
~ -
However, the evidence also shows tha'c the
15. nearest comparable large box retailers are going 1:0 be
16 loca;:ed six to seven miles away from the project site.
17 So the use of this baseline of two miles or less 1S
13 1mproper. The baseline should be three or
19 three-and-a-hal: miles, which would be 1:he point at
20 which people would star'c to go to this projec'c instead
21 of one of 1:he other compe'cing large bo:{ re'cailers.
22
Next, the ini'cial study's air quality analysis
23 defers analysis of mitiga1:ion of health risks from the
24 project's proposed operation of a gas station in that
25
the project proponent is not required to analyze these
YOUNGER REPORTING SERVICES
21
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1
~isks ~hrough a health s~udy un~il some time Gown the
2 road.
3
~he
;",',"ial S'-UO.'1'S
_.....1......_ '- _.
air ~~ali~y analysis
Next,
4
limi~s
'-s ~-a;vsis of odo~ ceno~--'~r.
~'... .....!l. _... _ _ -..i ....._~L_'-"'.
-~ ...,o-=-n-~;::.
_"-' ~ L__._....___
:;
se~s:::ve ~eceptars in t~e ?rcjec: a~e~.
~:: 8t:,e:-
6
- . . -. .
0: S:g~l:lcance :nan
words, you set
. .' . ., .
a ~lgne~ tnresnc~c
I what is called for under ll.ooendi:;; G of ::"'.e State CSQP.
"
v
3uidelines.
is going to include
;.:o.o.e..... .....',.,i S ""~o":'o,-.t-
u W,-v _, L....I._ ::-'_ ;...........1..
9 res~aurants which will have grease traps. And it's
10 going to .include a large trash compactor in lieu of
11 dc.mosters.
12
There is no mitigation provided for ~he
::'3
potentially offensive odors that could be released from
14 any of these facilities, and the City has no~ explained
15. why it's not going with the lower threshold that has
16 been established and suggested by Appendix G of the
17 Sta~e CEQA Guidelines.
18
Nex~, we come to transpor~ation.
In
19 transportation, the initial study's analysis fails to
20 analyze whether the project will cause an increase in
21 traffic that is substantial in relation to the existing
22 traffic load and capacity of the street system,
23 substantially increase hazards due to a design feature
24 or incompatible uses, or exceed, either individually or
25
cumulatively, a level of service standard established by
YOUNGER REPORTING SERVICES
22
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,
the County's congestive management agency fo::: Co...:::
2 designaLed ~oads 0= highways.
1
~
~hese, agai~, are ~he :j=esholcs tha: a=e
4 suggested by }l.ppendi:: G of the State C:::QP. Guidelines;
:J
and it:'s ::.c-;:
e:{plained why ~he
:::ghe:r
r~ -.,
.......-...."
is adopti::g
c :hresholds that ~ould be easier :c= :~e Droiec: :Q s_:p
-; ;~nde.!:'.
8
Rega:::ding the biological :::esou:::ces, the
9 analysis fails to analyze whethe::: the project will have
10 potentially significant impacts on any candidate,
11 sensitive, 0::: specia~ status species. ~he initial study
12 is limited to endangered or threatened soecies where the
, .
-~
guidelines call for a broade::: net than that to be looked
14 at.
15 The initial study also fails to analyze whether
16 the project will have impacts on migrato:::y fish or
17 wildlife movement, on federally protected wetlands, or
18 on any sensitive natural community. .~~d again, those
19 are all called for by .ll.ppendix G of the guidelines.
20
'1'h t ; 4
.,e op o~ page', we come to
the haza1:'cis
21 analysis. The hazards analysis fails to analyze whether
22 the project will emit hazardous emissions or handle
23 acutely hazardous materials,. substances, or waste within
24 one-quarter mile of an existing or proposed school.
25
I don't know the area around the site well
YOUNGER REPORTING SERVICES
23
o
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o
-
,,>noucn i:) t. ~11
~d -", ~_ ___
you whethe= or no: :he=e :s a schoo:
L
:::at area, but
the City has set a different th=esho:d
3 ~gain f~om what would be required -- O~ suggestec, _
oJ shou:d sav, under Appendix G 0: the State CSQP..
:J Guidel::.r,es.
6
N ,~ ~ne no -e an-1'1-'S ~_.he _i-.,_it_;~_l ~~"'QY.
l e.{~, ,; .1 i" .c_.,,':'.. _ ,,_~
7 does not analyze whethe= the project will result in
8 exposu=e of persons :0 generation of noise levels in
9 excess of standards established, exposure of persons to
10 or generation of excessive groundborne vibration or
11 ;rJundborne noise, or substantial permanent, temporary,
12 or periodic inc=ease in ambient noise levels in the
1 1
~~
project vicinity above levels existing without the
10J project.
15 Again, In this area, the City has set a
16 diffe=ent threshold of significance. It's not explained
17 why they are adopting a higher threshold than what is
18 called for or suggested by Appendix G in the
::'9 guidelines.
20
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L_
Next, the public se=vices analysis concludes
that the project will have no impact on public
22 facilities. Yet the initial study identifies roads as a
23 public facility, and also indicates that there will be
24 an inc=ease in traffic as a result of the project. So
25
even though the project will result in increased tra
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2
upon, and necessarily increased wear 0: local raaes, :~e
initial s~udy reaches ~he erroneous conclusion that the
3 project would have no impact on these public facilities.
~
Ne"~ tn~ 1.ni-:-i....1 c:......'dv's 1.,....~ '1 ~-~.=.c:
.... ..,.'-, .... .. ___0._ .....\,..1..4 _ ..J.,-___l._""...
and se:--,l:.,:e
;)
systems
analysis f",ils
'Grcject
~o -n-'v~o ~n. -~hep p.no
'- Co c._ _ ... '-" .-~ 1::.... _ '-.__
O ..~11 roa'~~rc ~r res"l~ ~n the cons~=uc:icn 0: ~ew s~o=~
w___ _... .u._...._ v_ _ U. I...
7 wa~er dra:.nage facil~ties or the e}:pansicn of e:{isting
8 facilities, construction of which could cause
9 significant environment",l effects; be served by a
10 landfill with sufficient permitted capacity to
~1 accommodate the project's solid waste disposal needs; or
12 compiy with federal, state, and local s~atutes and
.L.5
regulations related to solid waste.
14 ~otably, there is no analysis whatsoever of
15 where the trash from this project is going to go in
16 terms of a landfill. And although the initial study
17 does indicate that storm water drainage facilities will
18 be required as a part of the project, there is no
19 indication of what environmental impacts construction of
20
p~ose reaul.red :-C;l;-;oS may h-vo
,-.:..1. _ _ _ a __ _ __ L _ __ ~ ! a ,-.
So again, the
21 deviation is from Appendix G in the suggested topics for
22 consideration in the initial study. F~d as a result,
23 there are holes in the City's analysis.
24 Next, the initial study's aesthetics analysis
25
fails to analyze whether the project will create a new
YOUNGER REPORTING SERVICES
25
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1
source of substantial light or glare which woule
2
nighttime views in the area.
adversely af:ec: day
~~
~-
3
The project is going to require extensive
'; . ;
-,-~gnt_ng,
4 because it's gOt a very large parking lot :: more t~an
700 spaces.
I bel~eve :he :otal ~s 703. But the ~~:v
o
has not analyzed the potential environmental impact of
this light:.
3
~nstead, you've adopted a threshold which
9 limits the analysis to whether the project would create
10 significant light or glare that could impact sensitive
" 1
.1._
:-ecep'Cors.
So again, you're deviating from Appendix G
12 by establishing a higher threshold, limiting the
13
analysis as to the effects of the proJect on sensitive
14 receptors rather than the effects on the public as
1 -
_J
indicated in Appendix G. &~d there is no explanation
16 :or this deviation.
17 Finally, we come to the initial study's
13 ~andatory :indings of significance analysis. .~d ~n
19 that section, there is no evidence to explain or support
20
?1
-~
22
23
24
25
the City's findings regarding the potentially
significant but limited to below a level of significant
impact, those three impacts that are identified with
that category.
None of the mitigation required to reduce those
impacts to a level of insignificance is identified. .lIJ1d
YOUNGER REPORTING SERVICES
26
o
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o
1
regarding especially the cumulative impac~s, ~nere :s DC
2
effor~ made ~o iden~ify wha~ cumulatively considerab:e
3
being considered wiLh
-,-.., -.,..,....
l.v 1-...._.::1
;:;rej ec~s
respec'C
- VA
c.__
-1
Ovo"er-
~ - j '- '-..
'"
~
3c tiat's basically a sammary or mv ~e::e=.
~
o
CE;.:~~ T~~~SEER:
All
v1. Nn. -
_ ~..L.
Thank yo!.:,
I Miss nuckma~.
S
9
just in~errupt a memen:. Can
- , .
~ m gOlng
to
; .=
_.L
~he air conditioner is on. It 1S
Staff check to see
10 really getting warm.
11 Does anyone have any ques~ions of Miss 3uckman
l~ ~t :iis time?
::"3
14
1 -
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16
(No audible response.)
-"...12.
vi gn' ~
_.... l..
Thank you, Miss Buckman.
MS. BUCKMAN: Thank you, your Honors.
C~~I~_~ TH~~SH~R: Now, Mr. Mark Ostoich.
17 Give us yeur name and address for the record, please.
18
MR. OSTOICE: Thank vou. Mark Ostoich,
19 O-s-t-o-i-c-h, fer the benefit of the court reporter.
20 Gresham, Savage, Nolan & Tilden, 600 Nor~h Arrowhead
21 Avenue, San Bernardino, California.
22 Thank you very much for giving us the
23 epportunity to respond to Miss Buckman's allegations
24 here this evening. Mos~ of her comments, as you can
?-
_J
see, are addressed to technical aspects of the initial
YOUNGER REPORTING SERVICES
27
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S~UGY, wh~c~ was prepared bv Dodson & Associa~es a~G
2 independently reviewed by :he City of San 3ernardino.
3
WOe --me -h'S eveninC -- ~om Dodson is here wi:~
1_0. '_.._ ......~_.:. ..
~ ~e, and ~'m go:ng ~o br:ng him down here in J~St a
~c~ent to address seme of :hose :~ems. 3u~ we came t~:s
~ even:~g pre~ared to give you a ~resen~a~:on :~ =2spo~se
t8 the ~a~erial that was :iled by Ms. ?ranks' or:g:na~
Q
u
.~d Tom will do :ha:
" . - h
a:: ~orney, "aymonc vO..nson.
9 brieflv.
10 Bu~ while Miss Buckman was making her
11 presen:a~ion, ~om and : also reviewed her let~er and
12 be~ieve t:hat: we can respond in plain language for you
13
chis evening ~o each and everv one of her allegations.
14 _~d: think we can do it in a way WhlCh will dispose of
15
1 ~
_0
17
them.
I'd like to have the opportunity to do that, and
I would also like you to please bear with us.
I know
i~'s a long evening, and it is hot.
i wasn't sure
13 whether it was the air-conditioning army blood pressure
1 Cl
~~
20
~ ,
L~
22
,,-
Lj
24
25
chat was making me hot back t:here. But please bear with
us. We'll try -:0 be brief, but we do want to respond to
her allegations in a clear, concise manner.
,'I.nd I would like 1:0 ask Tom 1:0 come down now to
do that. And then, of course, both Tom and I will be
available to answer any questions that you do have.
CHAIRMAN THRASHER: Thank you.
YOUNGER REPORTING SERVICES
28
0 1
?
3
4
5
0
M=. Tom Jodsor.. Give us you= name and add=ess
for the record.
MR. DODSON: Yes, ma'am.
I: I may, jus~ give
~e ~ ~cme~L :0 ge( myse~: se~ up ~e~=.
C~~~?~1L~ T~PASn~R: 3u~e. Take vou= ~irne.
M~. JODSON: I can stand.
I gOt an :n"urv here
=l~S:- ......::::.....Qr.-i.v
~ \,..0. ... _ __ '-'-....1.,..__ .
8
9
Good evening to you a~l. My name is
Tom Dodson.
I'm at 2150 North Arrowhead Avenue in the
10 City of San Be=nardino. I have the dubious task of
I1 trying:o unravel all the things you just heard in a
12
-Cl
- ~
~j
mar.ne= that will hopefully make some sense.
I have two
parts of the p=esen:ation that I would like to make to
14 you tonight. The fi=st part add=esses the issues that
15 were raised on appeal, and I would like to take those
16 lssues and address them very quickly.
17
~cpefully, you have a letter f=om me or a
18 memorandum from me to the ?lanning Commission, which
19 goes over the appeal issues and discusses some of them.
20 Some of these issues also, by the way, will address or
21 focus on the same topics that were just raised in the
22 letter before you. My goal is to show you where -- by
23 asking a few questions and by presenting you some
24
o
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_J
information, where the data is that was used.
Joe, that's delightful. Thank vou, sir.
YOUNGER REPORTING SERVICES
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Can you hear me okay?
2
CP~.~~~~~ ~~~.SHER: ~es.
3
~R. DODSON: Let's beg~n wl~h talk~ng about the
4 appeal :ssues. We have four appeal issues ~ha~ were
. ..........----,-. .::Ii,.... cu:::.~ ": ;~! a.nd
:-a.lsec, 3.:10 -;:~ey rrJe:-e :1oise, '-_:=':::"'-f __.... _ ....__'-~
-
o
:"',1; ......n. t ~ -....'ues
......._-~ - -,;:,,::, .
~e~ me just do a Gu:ck sumrna=y 0: :he
7 ~a:erials ~~at ~Ive crenared for you.
~
."
~he ~ay I approach this lS trying to sit in
9 your shoes. Wha~ would I actually want to know? F~d
10 that is: What was the information that was available to.
~1 :~e decis:on makers, in this case the 2RC/DRC
,? members? Did anybody raise any ~ssues that conflicted
~3
w:-;:j the :onc~usions t~at were reached? F~d to give you
14 a final conclusion that was reached by the ERC/DRC staff
_1') 1
_ peop e.
::'6
Let's talk, just for a moment, about the noise
:7 s:~uation. One of ~he comments that was made in the
18 le~ter from 3es:, 3est & Krieger and their attorney
19 related to noise. Well, in fact, there is a very good
20
21
~?
L_
23
reason wny there wasn't a detailed discussion of the
noise issue, and that's presented to you in the
memorandum that I've provided.
~irst off, this project is located directly
24 adjacent to the I-215 Freeway. The noise levels on this
25
property range between about 75 and 80 decibels,
YOUNGER REPORTING SERVICES
30
o
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i
accordi~g ~o the City's general plan, which is
2
referenced in the material that we have -- that :'ve
3 submitted i~ to the City Staff. The adjacent uses are
4 :.ndus'[:::-:.a.].. or corrnnercial uses that: are e~~pcsed :c: the
~ same leve: of noise; and as a result, the whole area has
o
::c ser:.Sl::'7e
~oise r"''"cotr-''''s
... -- '-'-''-. ~- .
:1cise --
The nea.reS"L
pardon me
sensitive noise receptors are l~ca:ed about
8
a half m:le
awav but
- ,
~"'ev' .,..'"
L..1 _ _.....
on the other
a :;uarter to
9 side of the freeway.
10
Therefore, there
is a freeway between this
, -
, ;
......-......-i-.~-..... ...........Qi ='j d
~c___~u~~_ ?c_c~_ 0_ _an
that is generati~g 75 to 80
12 dec:bels, which is much higher than this project will
1 -
_.5
ever generate, even during construction. When you have
1~ something that's i~tervening that creates a noise level
15 so loud, then it can't be the source of a conflict with
16 any sensitive noise land uses. That's the conclusion
17 tha~ was reached by the Staff; that's the information
1 :)
_u
that's presented to you as. the facts that were contained
19 ~n the initial study.
20
What was the finding that the DRC made? The
21 initial study concluded the proposed project would not
22 significantly impact any sensitive noise uses, either by
23 exposing new sensitive uses or by generating high noise
24 levels that would affect existing sensitive noise uses.
25
~~d the point here is, is that we have a large
YOUNGER REPORTING SERVICES
31
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.!.
bcx commercial retail opera:icn that is suitable for
2
this noise level, and it is an acceptable noise level
3 for i~ to be installed in. Therefore, you have no
4 conflict between the proposed use and the existing higr.
~ ~o~se envi=onment.
Q
Were any fac~s p~esen(ed anywhe=e,
-no
,-.......
even. ::1
~r~~~n~~~ion -hiS
.t-' ~.....'=_l'-_...._ ,-..1,..-
evening by the young lady from Sese,
3 Sest & Krieger, that contradict that? No, those are the
9 basic facts. They're the facts that we relied upon in
10
making the judgment and that the ERC/DRC relied upon in
making their judgement about the noise issue.
12
. ~e:'s go :0 the next issue,
. . n .
wn!.c4.0 1.S
traffic.
Again, what are the facts and what's in the
:4 administrative ~ecord? There was a detailed traffic
15 study that was prepared. It did specifically consider
16 cumulative impacts in two characteristics.
17
i C
~"
19
One, it identified projects that were being
develcped in the area right now.
I believe there is two
of those, and I don't remember their names.
It also put
20 a cumulative background road factor into the traffic
21 analysis to look at the traffic that was forecast out
22 through the year 2010.
23 There were nine intersections that were
24 evaluated in the traffic study. The trip generation for
25
this project was identified to be 11,123 trips. But of
YOUNGER REPORTING SERVICES
32
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24
25
~~ose, a cer~ain proportion are considered :0 be ~ass-~y
? trips; trips that would already be on the roads go:~g :~
3 the adjacent uses. Keep in mind, for those of you who
4 ~now ~his site, and remember ~hat ~he project
J description i~ the i~itia: s~~dy ve~y c~9arlv :e~ls vou
6 what the adjacent uses are.
-;
The adjacent uses consist of :ndus:rial uses,
3 and to the ncr~h and :0 ~he West, commercial uses,
9 including a variety of gasoline stations, fast food
10 marke~s, motels and so on, that are adjacent to
': university Parkway which is on the south, and of course
12 the freeway forms the eastern boundary for ~he
. ,
-~
par~icular project site.
:'4
We've talked abou~
in here I talk about the
L~ P.M. peak traffic issues. And ~hen one of the issues
1 '
_0
raised in the letter by Mr. Johnson was his concern that
~~Q ~ir;r~a~ion measu~~s
~..J...... ..u_ __-:! L_ .I. .........
were not going ~o be implemented
, P
-~
in a timely manner. ~~d his comment was that ~hey
19 appeared to be being deferred.
20
What you've heard ~his evening from Valerie's
? 1
-~
presentation is tha~, in fac~, not only is the
22 mitigation no~ being deferred, it's ac~ually been
23 brought forward and is being implemented now, because
the mitigation for the year 2010 is going to be
implemented by the Applicant. And the mi~iga~ion
YOUNGER REPORTING SERVICES
33
0 1
")
..
~
~
~
-
~
0
moni~o~ing plan specifically ~e~~i~es these ~easu~es :0
be :~plemen~ed prior to. occupancy, whic~ means :0 ~he
~ime tha~ the projec~ can gene~ate any t~aII:C a~ all.
So the measures that have been identified to
~~duce t~e lmpac~s
-0" non-,,'~~''=i-an-
.... ...... .... _'::.~~.:..._L.: ........
a:1a these
lev'elf
~re ~~e cumula~:ve impac~s, a=e goi~g t8 be :~ place
~e:ore ~he p=:Jec~ begi~s.
o
o
~he bottom line, we had a lot of discussion
9 about traffic issues at the ERC/DRC. This was both on
10 the pa~t of ce~~ain parties that were interested in the
11 proj ect, and also on the pa~t or the Starr, in
I .
10
, -
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partic~la~, the ~ublic Works Staff. The conclusion
Nas is that ~he study was acc~ra:e; it could be
:4 relied upon in that the conclusion tha~ there we~e no
~~. significant impacts was accurate and defensible.
:6
, ,
..:.. I
F~r quality. What are the facts regarding air
/"'T -.,;....
~uc:...:.......,-y
in ~nis ~a~-icular Sl.~u--ion?
...... '-~..- t" - '-..... ......... I- a l-..... .
Well, we did an
:9 analysis, and we found tha: when you looked at the data,
:9 that, in fact, we had one single pollutant that exceeded
20 the South Coast's threshold. That's the ca~bon
21 ~onoxide. All the o~hers ~hat were related to
22
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construction o~ operation we~e below the th~eshold.
Now we had a carbon mono:dde that was slightly
24 above the threshold. And one or the issues that was
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discussed earlier in the presentation by Best, Best &
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Yr1.0ger's -~~or~ev ;s ~ha~
~_ _ ..... :::. l. \.,.. ..... ~_ _ ~ 1..... L.,
wel]",
we're
~;.,anci,..,'"
'-.... ... "'" ......_~
:~e
2
~hresholds ~hat are used by Sou[h Coast.
1::'5 not tie
3 fact.
4
South Coast specifically says, "Look, we've
d S l~S 3u- 'n r~ali~.v -~~ '0C~1
5 def:ne ~hese 'Lhre ho~"':. L,.:...... _'C _..... L , '......1.C ....'-' .::.-
6 Jurisdiction, the local -- the entity tha~'s making
decisions
C~ s pne c~-r~r~ ~n-~r'l PO ~a~e
on the orole '-I i~: ......__.........'-.... .'__1.....: \.,.. w......
. "
8 the final judgment about what is and isn't a significan[
9 impact."
10 There was also a misstatement by the young lady
11 regarding the fact [hat there are CO violations, carbon
12 monoxide violations, in the South Coast air basin.
13
She's correct. 3ut our area 1S a subarea tha[ is not in
14 violation and is in attainment for carbon monoxide. .~d
15
that is specifically noted in the reports that we've
16
presented to you.
1 ..,
-'
What we did then was to say, Okay, since carbon
18 monoxide is a very localized pollutant .situation, it's
19 not a situation where you're adding to ozone, or not a
situation where you're adding to particulates.
It is a
21 gas that is highly localized. We did a detailed model
22 that came up and said, we're not going [0 exceed the
23 threshold of this particular locale now or in the
24
25
future. Based upon that information, a decision was
made that this isn't going to cause a significant
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acverse impac~ 8n a'~ quali~y.
2
Th2.t information is all i:l eit:J.er t:J.e te:c OI
~
j
~nll'~~~' ~~Lua.v. or '!l ~~e t ev~
_.. '-_............. _ _....... ,-.l... .... '-
OI the air pollution
the
~ ~he deLailed :echnical air pc~lution s:udy tha~ was
~ ~. rov-l.c.pd. ~he~c;:o~c -g-i.., ~.ne c~nc1""ion was :h2.t
~ ~ _ _' ___ ~_, '" ",_,., L. ~ ____.
c oy tje JRC/~~C, tjat this project would not h2.ve
-':t:n':=':c"n.l... ,::l":V'
:::'-:1 ....:.._- .......Ll.. ---
quality impacts.
~~c the cata that I've
8 presented to you, ~ think, verifies t:J.at.
9
The last issue is the blighting issue. And
10 fundamentally, this issue wasn't raised at all during
: "1
I mean, there was not a single
:je review process.
12 comment that carne in that talked about blight. We
13
discussed that a little bit in the project description,
14 talking about other project locations. ~~d one of the
15 key concerns that was raised was, Well, what are the
16 nearby stores? Are they going to be directly affected?
17
Well, if you look at the !learby.stores, there
18 is _ grocery store, and then there is a series of
19 national chains. Now, these national chains are already
20 competing all the time with the large box retailers, and
21 they do just fine. They're large companies; these are
22 not small, local companies that are going to be
23 impacted.
24
25
Based upon this information and what I've
presented to you here, we don't believe that there is
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~.
.<:
3
4
::J
6
10
~ rhe_ra wi_l_l be a o'nvsi--" h~' ~h-
any subs~an:i.::.:ion ~ha"C __ _ _ ~ .. _.....co..;.. 0__,:!..'-
that f...Jill occur.
Lec: me e:-:olain somec:hina ;:0 vou.
- -'
C::'Q"-
- ..
doesn't ~equi~e you to add~ess socioeconomic issues.
Ycu're nOL recu:~ed :0 address ~hem di=ecL~Y. Yout~e
only ~equi=ed ;:0 add~ess c:hose economic issues whe~ a
socioeconomic issue wil~ =esu~;: in a physical change :n
7 I c:he enVl=onme~: c:ha~ can be documenc:ed or demons;:rac:ed
3 c= subs;:an;:iated.
9
Wha;: we have done in ;:he mac:erials that we've
p~esented to you is to show that we don't believe there
, ,
is any substanc:ia:ing da;:a thac: would demonsc:rac:e thac:
12 c:his p~oject has any possibility of creating blight.
o
13
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1 "
Now, if I may, it's inte~es;:ing when you sit up
c:he~e as mo~e o~ less the judge and the jury on making
15 decisions, you're going to hear a diametrically contrary
16 point or view about the information in this document
17
18
::"9
20
than you just hea~d from the attorney.
I. want you to
cleanse your mind fo:: a mome~c:, because .~ will help.
lc..
One of the things that happens at times is that
somebody has a point they want to make so much, that
21 they ignore what's really in a document. What I would
22 like to do is take you through what's in your document
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in front of you to be able to do this. Now, I know it's
a little bit onerous to be going through all these
issues again, but you have to realize that a le;:ter like
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we received from 3es~, 3est & Krieger is rea~_y
2 establishi~g a foundation for litigation. And one of
3
the things ~hat I do
and I teach CSQA classes as a
4 practi:ioner, not as an attorney, by the wav.
:;
~
Cne of the things that we need ~c do is we need
6
LO make sure Lha~ as you're balancing out the :acts in
front of you this evening, is :0 give vou t~e c:Jr.\peting
7
8 facts that were -- contrary to those that were prese~ted
9 to you so you can do the weighing. You are the ultimate
10 judges here this evening. ~~d what I'm going to try and
:1 do is point out to you where certai~ things occurred.
12
Le~'s start with the point of issue about
13
.A.ppendix G. ll.ppendix G is the new State CSQF. n I'm
". J
.l... 50===-Y.
15
COMM. DURR: I'm sorry. If I'm going to follow
16 you, could you kind of go page by page?
17
MR. DODSON: I sure will. You bet.
- .
~ m going
18 to go page by page, and also by issue. But I wanted to
19 start out with the .A.ppendi:{ G issue, because it's a
20 broader scope question.
21 Svery jurisdiction has the ability to establish
22 its own initial study checklist form. The City of
23 San Bernardino focused the checklist form on the major
24
25
issues of concern to it. Now, let's take the
agricultural issue here for just a moment, because it's
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one that's a no-brainer.
We don't have any
a............; ...,,1 -1~.....0
'::--"-'......-.-......-'-
?
left in this
.~. ,
Ana so ~ne ques~lon
was not inc~~ded
c:~y.
3 on the checklist form for the City, because there is
4 none.
::J
Now, one can sav, well, we didn't adcress that
6 issue direc~~y because we didn'~ have tha~ ques~~on C~
..,
G~r lis:. We did~'t do :hat; that's a correc:
S statement. But at the same time, if you look at twO
9 things in your document -- let's start off right on the
10 front pages now, and this will be page 1. And you will
11 see that there, on those twO oaaes, are a list of what
12 this site is. It says, "What is the site we're dealing
13
wi:h?" Folks, this is a graded, comoac:ed pad.
It is
14 an engineered pad already; it's compacted. That means,
15. fundamentally, if you just use logic, it doesn't act as
16 an area that receives and recharges water, simply
17 because it can't. It sheds that water because it's been
18 compacted to 95 percent or greater to make sure the
19 water runs off.
20
Now, that's stated in here, and on top of that
21 are stated the specific uses. So let's take these in
22 order of the questions raised. The firSt was
23 agricultural, and why didn't we tell why we were
24
25
deviating? Because it wasn't necessary. We've already
identified that this site, both based upon zoning and
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land use, as it is cu~~e~~ly ~ight now, i~'s desi;~a~eG
2 for comme~cial; and thefac~ tha~ it's a ;~aded pad, it
3 is not being used for agricultu~al pu~poses. It's ve~v
4 clearly stated what ~his site is used for and what it's
J ~n~e~ded :0=.
o
~ow, do we have to go back ane stew and answer
I _ question like that? Not ~ea~ly, because ~he ja~a is
Q
self-evident he~e.
It says ~his is not being used for
9 agricultural; this is a pad for comme~cial development.
10 The next question in here is that we don't
:1 analy:e whether the project will physically divide a
12 community. Well, it's very clear, when you look at the
:3
project description in the maps, tha~ this can't divide
14 anything, because i~'s sitting next to the major divide~
15. of the co~munity. It's on one side. It's adjacent to
16 the freeway; the freeway is the dividing component. And
17 ~his sits ~ext t8 t~at f=eeway; it sits next to
18 indust~ial uses on the north, west, and commercial uses
19
on the south.
It is not dividing any community at all.
20 It is simply addressing -- it is simply an in:ill
21 commercial project, and that's all it is. .~id that's
22 what's stated in your initial study. It's very clearly
23 stated.
24
25
There is no evidence whatsoever ~o support the
supposition ln the initial study abou~ ~he population
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11
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, ~.nat _?4.'_, J.obs a=e ex~ected to be gene==:ed bv.'
nousing .,. t""
2
the project and will be. filled by local =esiden:s as
3 opposed to commuters,
4
Well, in fact, there is a high probability,
=
based upon the type of units -- I mean, the type of
Q ?=sjec: this is. ~hat fo= the type of jobs, you're nct
-
,
goi~g to have people commuting f=om Orange County to
.
w '-orne ..,o_rk 2-,_ ::: -o--i, -ommerci:::1 f-Ci1i"''' ~n. -~ ~-VS
v '- trV __ __ _.....'-::::1__ \..... .- ........._ _::::1 ....___} L.. c'- ~a...
9 7-and-a-half to $10 an hour. They can't afford to
d,....i.....o
........v.......
It just doesn't happen.
So there is a basis for making that conclusion
that it's more reasonable to assume that the population
Will be -- the population that will work here will come
14 f=om the local community.
15 In addition to that IS the point that this is a
16 community of almost 200,000 people, and 241 jobs here
:7 and the people that might be associated with it are not
18 going to be significant when you place it in that
1 a
-~
overall context.
:t is nc big deal to have 200 and
20 so-on people. Because in this particular situation, 200
21 jobs is minor when you look at the Inland Empire with a
22 million jobs and ove=, as most of us know exist in this
23
24
25
a-o-
__Co
now.
Going on to the next one, is that it will -- a
small additional demand to housing inconsistently
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concluces ~jat the p~oject will not have sign~:~ca~:
2
growth inducing impacts.
3
There is a ~eason it won't have significant
. . .., ".,' .. -i--I-- m-v be
~ growt:n l:1Cuc::.ng lmpacts. _ne p09U.l.ation L._"at.. . a_
J rela~ec ~o it is sma~: ~ela~ive tQ the overa:l
o population of tne a~ea. There is no exte:1sion 0:
7 se~vices, and there is no :ea9 frog devel09ment
8 associated with this 9rojeCt. Those things are stated
9 in this project, that this is not growth inducing
10 because it is an infill development; it 9rovides jobs
11
he~e for
'ac::>' oe"o''''
_ ........... v...l..__.
l2
Then we go into the next one about the
:L3
significant adverse effect of faults.
I'm going to use
14 this one as 9robably one of the very, very best
15 examples. Let's go to page 8 in your initial study, if
16 you would.
17 If you look at item 3.d, we talk. about the fact
13 that there are major faults. We talk about the fact
19 that there is major seismic events that can occu~. And
20 we've deter~ined, based upon the initial study, that
21 there is an undetermined fault location just north of
22 the site. We reference figure 47 in the general plan.
23
Then we indicate that the mitigation outlined
24 1n 3.d.l can reduce the issue of on-site faults, rupture
25
and related geologic conditions to a non-significant
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impact.
reduce
Do~=>n-'-l
_ I.... ~~... 1-":"'':<'_
seismic-~e~a:~c
It says
to
2
g~ound shaking impac~s to less ~han significant, we have
3 a mitigation measure. ~hen the claim in he~e is t~at,
4 well, even though you may have identified it, that you
~
haven't shown that you've gOt a standa~d to mitigate
o to. That is not co~~ect.
~his mitigation measu~e specifically says this
8 study that is going to be done will specific -- pa~don
9 me -- identify specific safety-based performance
10 standards that must be met to ensu~e that structures
11 that will be occupied will be able to withstand seismic
12 and unstable earth hazards, and ensure that the unstable
, <
-~
earth conditions that may exist at the site do not cause
14 any significant hazards for future human occupants of
15 the structures.
16
For a person familiar with the geotechnical
17 terminology, there are two types of designs that you
18 design to: a safety based design and a functional based
19 design. We design our hospitals to be functional after
20 an earthquake, because we know they're going to be
21 needed, and we put a lot into them. But for a structure
22 like this, it doesn't have to be needed after an
23 earthquake. We design it to a safety based standard,
24 which is a standard that says it protects human health
25
and safety of all those people who are in the
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-~
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s"Cruct:ures.
2
There is a saeci::c oerformance sLa~da=d ~ha~'s
~ identified here t:o protec"C those people. The discussio~
4 in here about: not: menticni~g these issues, ~ot:
J describing these issues, and TIO"C defini~g t:he impact:s
6 and not: est:ablishing Derfcr~ance sta~darcs :s incorrect:.
i Just: fla"C wrong.
a
Let's go t:o "Che next: issue about alluvial
9 sediments and locat:ed within a aroundwat:er basin,
10 concludes that the construction project will not reduce
1 !
~~~'nc'w-~e~ ~Q~ha~ge
~ _ '-' u.. Co _ _ _............. _ .
Well, on that: par"Cicular issue,
, .d. h. . .
nna: we sa: lS L~ ~s s~~e lS
already graded and
"'! ~
comDact:ed.
I"C already sheds all the wa"Cer that: falls on
it.
It: doesn't act as a recharge area.
If you put a structure on it:, make impervious
surfaces, it's still going to all run off more. or less
~7 t:he same as i"C does now. :t's not going to change --
18
19
just: so minimally, you couldn't: even hardly measure it
,= veu --ere s--nd'ng ~hQra and looking at;~ o~ i= you
~_ _ w '-a.....:.... I-J...___.... .i. __ .__ _'-, __.:..
20 had a Wier (phonetic) to measure it. 30ttom line, it:'s
21 not: going to affect: recharge, because the site can't
22 funct:ion as a recharge. ~~d that: is specifically stated
23 in this document:.
24
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Going to the next item, it fails to analyze
whether the project will violate any water quality
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s':anda.rds.
Well,
a2.SC:"'la~;2
firs:
-- or was;:e
1""'-....
.........:.......
"
L
It does ac~ually add.ress
;:ha;: issue.
requi.rements.
~ ?i=s~ of:, all L~e was~e discha=ge =equi=eme~~s a=e
j '1 th C -y ~na. ~;"e on1," ".'-s-" "';is~;"-~ae"
. CC!'l::=o.L.-ed by . e i L_. _-..... l...~i ~_j {VC 1..... '-0...... \""..1.0._ _ ......
"
~
:....'''m -;.,' S :30'-; 1 i,.y ',vi 11
__....Il ,-..._ .... _____~_ ___
~o
~e -~ -he ~-~~-~r" ~~we""
..... -..... I...~...... ~a,;..._ ._....._:1 -''- - .
o :~e sa~i:a=y sewe~, :he CiIV has speci::c s:anca=js :~a:
7 sav you can discha.rge these ki~d of thi~gs intJ the
Q
-
-an;--~y sewe....
~ J..._,_.:::.__ _0
T_ ,ou evceoc . "e~ ~_."en... "-'e'~~ ~o_':~,c cO
.::~. -. -' :::, -", -., .. - - ': . - -
9 cut you off, and you can't discha.rge anymo.re.
10 Rega.rding s':orm wate.r .runoff, if you go to page
, -:
vou will see three mitigatiJn measures on -chis
- -,
12 ~age -- or on this page and the previous page, that
1 -:;
sne~':i--l1V s~a~o "3ero 's wha~ vou ~~o ao'na -0 do
~ ...-..l..__I..-C___ I.,.. L...., .. ........... L.. _ ____ _ _........ _
to
'.,j. n...."-/on- su....:a-o ,.'--"r ~nn~am'n-tion -;.,-- could - "0 ead
:;-__v__ '- _-'- '-~ ~a~__ ~'"'.~ ._, a _ _ ~.la~ "'.:._ 1
15 to groundwater contamination." And the way we're going
16 to do that is we're going"to control that runoff by
17 put':ing in specific types of controls on the runoff
13 itself that extract the pollutants. Specific standards
19 are identified.
20
In one of the cornmen~s in here, i~ points ou;:
21 that it doesn't identify how we're going to deal with
22 spills because we didn't es;:ablish a standa.rd for spills
23 regarding haza.rds. If you look at the bot;:om of the
24 page, read the language in the next-to-the-last sentence
25
which says, "The Plan shall also define how such spills
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will be remediated in compliance with applicable S~~~~
2
and local regula~ions regarding cleanup and disposal of
3 the contaminant released."
4
Now, when you're writing a generic conc:~:o~
J like this, you don't want :0 list every single pollu:~nt
6 :~ ~he world ~hat can come or:. What vou wan: to do :5
...,
,
vou want to say here is a standard you have to meet,
8 and we're meeting the standards; ~hat whatever that
9 contaminant is, it will be cleaned up to the point th~t
10 it meets 'all the current regulatory standards, state and
,~ federal laws. That's an exact performance standard that
12 can be utilized and ensure that water quality is not
13
degraded.
l4
Further, these standards are even more
15. stringent than the standards that come from the City
16 that has its own set of requirements that are
17 mandatory. !hey're not just mitigation measures;
18 they're required. :ou can't discharge off the property
19 pollutants that will exceed certain thresholds, because
20
::le City lS ~~S:Jons'bl'" if you do that.
_ '- _ .I.. _ _
I'm pointing over to Ray for this situation,
because he's the gentleman that's in charge ~- ma ki ng
v.L
21
22
23 sure everybody lives up to that obligation. Bottom
24
line, we did identify standards; we are protecting
?;
-~
surface water quality. By protecting surface water
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quality, we're protecting groundwater quality.
~
L
Moving on to the next item. We've been :~r:ugn
3 mitigation me~sure 4.c.4 and the potential impacts en
j. -~~unc'w""-~r """"1;::1 i-v Now let's talk a:OOU~ ai::::- G.ua::.:",v'.
\:f-...J CL.__ ~u.____I..._.
J
Whe:je= ~he projec~ will conflic~ w::~ a~
O :;DD_'_i("'ar_~e -- '~p''''men--t'on ~-F "n "DP.L".-"c' 1", "i~
_ ~ _ _ ':''''.';'_. ~c:':' V~ _ _. _ ___ __ ___
...,
~et's
"0 ~o -ir
'j .1... c__
w:'.::::
au- l' -.V
_ C_J.. 1..._
d:scussion,
,....l~-'~-., pl"n
~1..4c:._-""J _-.......1..
8
, ~
~
- -'
.:1.......10 if
is on page -- let me get there
page
9 you'll go to the nex~-to-the-last paragraph that begins
10 "This project fully conforms."
11 Now, we've gone through a detailed discussion
12 of why this project will mitigate emissions, laid OUt
13
14
why it will, and how that will be accomplished; acain,
v~~v ev~1iri~ ~'-'g-~ion me-sur~s
........... "'...~__........ '- ~l.L..... __ CI........ 0. _...... .
,~d then it says,
15 "This project fully conforms and implements the
1 r
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P~' nc' ~l'" conc"'pt- (i nr-i 11
_..............L.~ '- '-.:::. ......1.. ..i...........
redevelopment, better
17 jobs/housing, reduction in vehicle miles traveled)
18 contained in the Air Quality Management Plan and SCAG's
19 Regional Comprehensive Plan and Guide."
20
21
It specifically said it's going to conform with
that. That issue was not not addressed
pardon the
22 double-negative -- meaning it was.
23 Whether the project will have a cumulatively
24 considerable net increase. This document clearly
25
concludes it will not have a cumulatively significant
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increase.
The mention about nox emissions. We're below
3 the nox emissions th~eshold totally. So from air
4 quality standpoint in the handbook, we get a pass.
5 Regarding carbon monoxide, I've al:eady shared with you
6 on that issue wha~ the circumstances ar'e. This portion
7 of the South Coas~ Air Basin is not -- pardon me, is in
8 a~tainmen~ for CO. It's only the portions In downtown
9
10
Los Angeles in the coast that are having a problem.
And in this particular case regarding carbon
monoxide, we did a detailed model to see if we'd cause a
1 '
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l2 violation. We don't. And that included the cumulative
13
background for that area and cumulative traffic for that
14 area. So we know that we won't be creating a CO hotspot
15 or violating a CO requirement.
16
Okay. We've talked -- the initial study's air
17 quality analysis assumed that the net vehicle miles will
18 be two miles, and it was based upon, they've indicated
19 In here, the big box retailers are six to seven miles
20 away. Well,-let I 5 do two things. One, most of you know
21 where Home Depot is; it's less than two miles from this
22 site. The Target store at Sterling and Highland is less
23 than five miles from this site. These are the
24 facilities that we picked as being comparable facilities
25
that could do it.
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Two comparable s~ores to t~is are
- 1~--~.:::.
c. ______
bi~
?
T~ev'~e the ~e==es~ =21atives of
:his
:urther.
3 facility. ~~d they're loca:ed, as you k~ow, in Colton
4 a: the Washington offr~mp, ~nd in the City of
jSan 3er~arji~c, but at ~ighl~nd Avenue where :he 30
o
crosses. 3ot:om line, the consult:ant Ielt ]us:i:ied in
.,
usi~g the numter of two miles for :he :rips, based upon
8 %nowing where these locations were; and t:hey were
9 specifically evaluated and identified.
'.1.0 M '~h ' d d
ov::.ng ~o t..e next lssue regar ing 0 or
11 ;e~e~ation -- pardon me, rega=ding the gas s~a~ion. Let
12 me take you :0 a section tha: deals wit:h t:hat:, and we
13
~eed to go to "Hazards" which is on page -- oh, I'm
14 sorry. I:'s not "Hazards." It's on page 17, which is
1 -
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in the air quality notes.
16
If you know that there is a specific s:andard
17 that is going to apply to a project that .cannot be
13 avoided, that: is no longer a requirement to mitigate
19 that particular issue, Secause the regulatory process
20 itself imposes a solution. What is laid out in this
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paragraph is the fact: :ha~ South Coast will not allow
22
~~y permits for a gasoli~e station unless,
first,
~'
l..ne
23 public health risk assessment is completed and a
24 determination is made that it will not n "not" create
25
any health hazards.
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The~efore, i: doesn't mat:er whethe~ we ?~t _
2 ~i:igation measure in he~e or discuss this iss~e any
3 :u~tner. The whole fact is they can't build tnat gas
4 station without complying and reducing their emissions
J to a level that meets the South Coast rules and ~egs.
6
I''ie iden~i:ied :he specific =eaulcI:ons,
7 ~~les 46: and -63, and :he district's 1400 series which
8 eStablish :he threshold :haL is used tha: cannot be
9 exceeded; and that is protective of human health.
10
nO~1'''''
_^L.
issue is odors.
This is sitting next
The
II
to a freeway wir~ a hundred-thousand-plus
~.....i"",S
I---::J
per
12 da'l. Now, it's on the same side as th~ee othe~ gasoline
, ~
.;..j
stations, three other fast food marke~s -- or fast food
:4 operations. There are no sensitive receptors for odors
15 in this particular area. People are coming here because
16 they'~e there :0 get gas, and they know what gasoline
",
~,
smells like, and/or to geL food, whatever.
I'm talking
18 about fast food.
19 So you have your nearest residence :hat could
20 be exposed, sensitive noise ~eceptors, over a half
21 mile -- quarter mile away. I'm sorry. Quarter mile
22 away across the freeway. You've got an intervening
23 source of odors that's going to wipe out everything
24 else. ~~d that's the reason that we concluded that
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there is no sensitive receptors in the vicinity of this
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;'h....~Ic::
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why there will
~~
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be
imoac"C.
project;
~ .
___no
2
is specifically st~ted in this
do c:.:.'"::er: t.
3
~. ~~_::'~.... -1 . :....~1S -0 -n-~v-~
~ne ~~c:~~l,-- anc:_ysls ~c:~_ ~ c: c:___~
wheLhe~
~
-~Q prn~oc~ wil_' c~llse an i~c=ease :~ :~af::c I~at is
.......-... ~ -.....J '-.... -- ........-
= subs:~~:ial:n rela::on ~o ~~e e~::s::~g t~a~~:c load a~d
6 capacity of :he s~=eet.
7
Bologna. :eu've get a 40-~age, SO-page ~ra:::c
8
s~udy that says that's not going ~J happen.
~L: said :..t
9 could happen if we didn't impose some mitigation
10 measures, but it's not going to happen because we're
11 going to implement those mitigation measures. ~~d it
12 specifically says we will not cause a subs~antial
:;'3
14
:ncrease in traffic in relation to.
It also savs we're not going to create any
1~ hazards that are going to be design features that are
16 incompatible. s~d it also says that cumulative levels
17 of services will not be exceeded.
:8
Now this scope goes back to the concept of
19 Appendix G where the term used here is by the County.
20 This is another situation where the guidelines are very
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specific. :ou're supposed to use your thresholds, your
22 City guidelines as a basis for making judgements, not
23
24
25
the
('oun~v's
.... .I.. \,.. _ .
They don't apply.
Now, yes, the language In the guidelines, this
Appendix G, reads that way; but it's not intended to be
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applicable to every jurisdic~ior-.
:n ~~:s oa~~::~la=
2 case, ~he answe~ :0 this question is IO~ the s::ua~icn
3 ~ha~ i~ is, this fully complieswit~ the City's
4 S--na'-~~~ Ana -hero 'S no- a ~'~co ~~ ~~,~ i~ her?
:_.o.~ c_.......... ...ll';....;. ..........:.. i... ~~..............- -'-""'- ~ -
J :hat says i: doesn'~ even a=clv :0 :he COUnti'S
~
o s:.anaa~as.
7
We don': know that,
because
~~."'v ~~~n'- ~y~s~~-
-" -_ .......-......... '- t;-'--- -.;;:;.....
3 those and we don't have them :n Iront of us. But ~he
9 measure you should be using and which vour 2RC/DRC was,
10 the fact that this fully complied with and met the level
~l of se=vice requirements -- cumulative level of service
12 requiremen~s for these particular nine intersections
:"3
'!""t,.....-
,-..0. '_
were evaluated.
14
Moving on to the biological resources issues.
15. Because we didn't list the fact that we hadn't addressed
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ocher sensitive species. Well, let's look a~ what the
17 biological analysis says real Quick, and let's get down
18 ~o the real issue. It's not loca~ed in your biological
19 resources overlav, that's number one, in ~he general
20 plan. .~d it's been previously complete, compacted and
21 graded, and it's currently plowed.
22 There is no native vegetation on the site.
23 Now, if you have a site tha~'s been totally converted to
24
urban use, it's been compacted, graded, it's being
plowed, and it doesn't have any native plants on it,
25
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i~'s more than obvious that it can': have any im~acts on
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any sensitive biological issues.
I:'s very, very clea~,
3 ~nd:t should be.
4
The next issue is failu=e to analy:e ~ossible
~
~
emlt of ha:arcous emissions.
In fact, we did look at
Q the r.aza=dous emissions, as : told you. !hey were
7 limited to gasoline operatio~s. The res: of the
3 facility was nc~ associated with ~hat par:isular lssue.
9
.~d mo=e important, in the section that dealt
lO with the mitigation measures in section 4, we included a
11 requirement that the business plan be completed to deal
l2 with any hazardous materials and waste, that there be
13
programs to prevent those f=om being released.
14
Those are specific prog=ams that the city fire
15 department and the county fire department implement.
16 ~~d we've got a specific set of guidelines that say this
17 will not occur; and if it does, we've got the means in
:3 place to be able to take care of it.
19
The noise analysis fails to analyze whether the
20 project will result in exposure of persons to generation
21 in excess of established standards in the general plan.
22 Folks, this project, as I said, is in an area
23 :hat probably has noise levels at the property boundary
24 on the east side, which is adjacent to the freeway, of
25
80 decibels, 75 decibels out to the edge of the property
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on the west side. It's a high ~oise environmen~. ~~is
2
lS a perfect use for this envi~onment.
3
That's what the noise analysis says.
It says
4 ~here are no sensi~ive noise ~eceptors ~~a~ ca~ De
::;
~
"~~~r~"'d '0'/ .~iS p~o"e'-~ ~ec="=e ~~"'~~ "r", none
......__................._ _ l......_ J.. _: '-'-I ...; .............. -. '--_ ....__
~~J.
the
o a~ea. ,;nd because there is an inte~vening major noise
sou=ce, :ncerstate
?" -
-~~,
'oe-'-'e'en .'nis "no' rhe "--r,,,s.
. ~V"\I ~J. '- __ __ ...... ..'=0_ __ '-
8 se~si~ive ~eceptors.
9 Public service analysis concludes that the
10 project will have no impact on public facilities. Well,
in fact, what the oublic services analysis says
and
12 ~et's go to that section real Quick -- is that, yes, we
, <
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will make a small demand on fi~e, we will make a small
:4 demand on medical aid, and we will make a small demand
15 on police protection.
16 We won't have any impact on schools of any
17 significance, pa~k and recreation facilities; and we may
:3 have an impact on solid waste disposal. And guess what,
:9 we've got a mitigation measu~e in here that deals with
20 the specific-conce~n of the City. .~d we've identified
21 where ~he waste is going.
22
The waste will be going to one of three
23 facilities: Colton, San Mateo, and Mid Valley Land
24 rill. And those facilities comply with the regulations,
25
and they have that capacity. And we've referenced the
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CounLY of San Bernardino's 1995 integrated waste
2 management plan to verify that.
3
Regarding the maintenance of roads, strangely
"
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enough,
-'n's pro]''''cr 's --k;ng -"'ay on'" r~ad
L.L 1 ..... '-' '-..:.. ....0. _~::"if'I '- -v I
because
5 Gannet Parkway, if my memory is ~orrec~, will be
6 eliminated as a road. And the roads that they're go~ng
7
, '1" 1 d
to oe Ut~_l:lng are a_rea y existing roacs.
So there is
3
no incremental addition to roads that people
-ro ao'ng
0.___ ... ..........
9 to have to be maintained, because everything else will
10 be maintained by the project.
11
ULilities and service systems fail to analyze
12 whether the projecL will result in construction of new
1.3
storm water drains. It's not going to. It SLates in
14 here that it's not going to nappen. .~d the reason it
15 won't is because iL's going to discharge directly
16 it's already discharging the same amount of water or
17 almost equivalent, because it's a compacted site. And
::"8 it's going to be dischargin'g it directly into the
19 drainage system that's adjacent to the property. And we
20 specifically state that.
)'
-~
One step further, we state that this particular
22 system is capable of handling the runoff, because this
23 project is not going to increase the runoff by any
24
25
significant degree.
We've talked about landfills. It's evident
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that the project will reaui~e sto~m ~unoff faci:it:es.
2 P~oposed retention of trash on si~e will comply w::~ all
3 applicable solid waste regul3tions. Those a~e al~eadv
4 specifically addressed in he~e ~bout solid waste
~ regula~icns; ~he City has already requ:=ed them.
o
"nc aaa"n ,- ~v~'~.~s ~r.'.v we'vp c'ev-_.~-,-~ri
.t"'.... 'f ~.l., ~\- 1;:;.":-,,,:,,-":'.:.- 'fV _ _ ___
7
:=om
I mean, it says we den't explain why we deviated
8 :~om F-.ppendiz G. Again, you don't have to e:-:plain it.
9 You've just got to make sure that the issues a~e
10 addressed and fully evaluated.
11 Now why didn't we say that the~e was a
12 significant impact due to light? Because there is a
:3
major set of lights on the streets that already ezist;
14 the su~rounding properties are all lit, and you'~e next
15 to a freeway. And the lighting is all away from
16 sensitive light receivers, which are on the other side
17
0: the
Froowa'v
--'-- -'
which is where the homes are.
'!'hat was
18 the basis for the conclusion, and it's specifically
19 sta~ed as the basis.
20
21
If you look a~ the discussion on light and
glare in section 13 on page 13.c.
It's within an -- no
22 surrounding light sensitive uses other than ensuring, as
23 part of the development review process, which has
24
25
already gone forward, that no glare affects the adjacent
freeway. 'The proposed project is not forecast to cause
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-nIl 11gh. "nd g'a, l~P-C.S We'vf> a_l_~f>c:;C'y _irie.".:-.'-_~_'~c'
::. _ ::..:. : _ ':':-e' "'.:: : . _ _ _ _ _ _ _
? (hose oarticular issues.
3
Now we go down to the discussion of
woefu2.':'y
4 i~adequate discussion of t~e mandatory findi~gs a:
. . _.
s2..;;n:':2.cance.
:;'i~S~ OF~ T'ne cone -hr~ucn', ;on'" snow",,"
___ L' __, _ v... L.1.....v _.. _._..... __
o you ~haL in :his par~icula= document, we have ~ddressec
,
~ll these issues. ~here '-S no~hing hanging out. ~here
8 ~ere no issues that the SRC/JRC felt had not jeen fully
9 addressed.
There are no i~pacts that were identified :hat
could not je mitigated below a significan: impact, and
12 :hat's wha:'s s~ated in the summary section at the
, ~
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back. ~~d it was pointed out that :here were no
14 cumulatively considerable, because we evaluated
15 cumulative air quality, cumulative traffic. We've
16 evaluated the cumulative issues where there was a
17 potential for impact.
13
~~d '-n here we talk about none of the
19 reauired -- mitigation requi:-ed to reduce these impacts
20 to a level of significance is identified. We don't have
21
to go back and discuss those.
If you'll look a~ ~he
22 bottom of the last two pages, the specific mitigation
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25
measures that are referenced in the text where we talked
about mandatory findings are specifically listed again,
aside from the fact they've already been listed in the
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main -::e:':~.
,lilld it says, "Measures are identi:ied tJ
~i::.gate potentially signi:icant impacts :or the
fo~lowing =esou~ce issues: ea~~h resou=ces; water
~~s"""P""'-o::::' ;::l~"'" c,,:::.l":'-:-v' -.....;::l,...s~o~,..a-;on/,-.;.....,..l'j~-,;Oll.
_~ v'-__........., ___ .\,..0......__...._, 1-__.... t-" _'- '-_ _...._'-'.............L.....,
~a=ar::is; ane sol:d waste." P._T1d again, L:hose a!'2 l:s:ec.
:~ed:a:ely a:~e=~a~ds, just like you'=e supposed tC do
3 ~~ he "~1,,, ~o ~ommull'c--~ ~U1iv
~-.." _ _........;.._ _ "- l ...... :=.'.-..... .:.. ~_...'
9
Anyway, you've had too much of this, I know,
10 this evening. But there are two dif:erent views.
11
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Somebody did _ superficial analysis of this without
referring to any of the re:erence materials. Thev
did~'~ =eal~y read ~he material, as is very clear when
l~ you look at the dat3 that I've reference L:O you, that
15 clearly shows that we've addressed the specific issues
16 that have been raised.
.:.. /
It's probably self-serving on my part, and I
18 don't want tJ take you down that oath, but in my
19 opi~ion, you have su::icient infor~ation in here. And
20 there has been no substantial evidence presented to you
21 tonight to say that the conclusions that were made
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within this initial s~udy are not accurate and are
23 not -- and are based upon lots of facts, more facts than
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most documents are.
I'll leave that to Valerie and the sum-up that
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she dces;
DU~ in mv cp:~icn,
vou :olks have a ~o~e
__.I'::'..
,
,
-a'O,.u--o Q'oc"~e~-
.::1 -'-i c.........' ~HL ..1......
_:md" you don I -: ha.ve a bas::.s fo~ :~:s
j appea~ to be going forwa~d based upon ~oise impacts,
4 ~sgecially whe~ you've got a high noise e~vi=o~~en~
-,
,,_'_.....~.~c'y,. -.",.-.::~I"'" ':""P"l.-~s w'nil......n ;:.....0. -~~~-~\. "'T'Ii......;,...,..;:-~Q'
_ -=::. '-_.::....__,_ ..:.....H_..... .... I J. _ .I. ___'- "-_-..........__.! HL_ __~'----'-
~
a.nd w'ell
:n: ~igated bef':>re
begin
-'..,,0.
1...:..,-
project
v.lill even
operation.
:;
::,..; .....
w"hi.c:;.
1'- c::
"'c:_
shown you why i,.
:!:: 've
f"V'.- , ... -,.
~u.c.~..:.._:!,
9
net significant.
It's below all the th~esholds but
10 one. We did an ai~ quality model to ~easure that last
l2
:3
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one a~d found it wasn't significant.
F~d blight: In this particu:a~ case the
~djacent uses a=e not
aoi~a to exoer:ence blicht,
""'... - ...
~p_~~use ~L.r.,er~ ~:~ ~-r'on-' cn-ln ~pe~--lons
..; __ . _ ___ ..c:.':' c:::' 'c:'. v. _::lc.'
capable 0:
15 competing with this project.
.0
I'll answer any questions you have. And thank
l: yeu :~r all '~he time.
, .
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CE~:~_~ :HRASH~R: Does anyone have any
::'9 questions of M~. Dodson?
20 (No audible response.)
2:
22
23
24
25
CF~I~~ TH~~SHER: Thank you, Mr. Dodson.
~~. FL~K: Madam Chairman, Members.
C~I~n~ THRP.SHER: Yes, Mr. Funk.
MR. FUNK: Yes, I'm James Funk, the development
services director. .~d at least four of my staff and
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six people in this room have heard this
, ,
mat:erlaJ.
-~~
- -'-
2 ~bout the ~hird time and had to have ~ead i~ and
3 reviewed it, it seems like, O~ mO~e than cne occasio~.
~
= would like to sum up th~ee points with
~~a~ .....~
-....."".....-.....
3u'C
~
the jobs, :he ~~affic, and t~e ai= qua:i:y.
r
o
They were issues well-discussed. One thing
7 :ha~ we asked Wal-Ma~t and thei~ atto~ney is would they
~ S"'~ ~ go"_' o_r '0 ~e~~"'n- fi~s---'~e h'~~s fo_~
oJ _ _ _::l..... ,::, _'-..... '- _....._ l.. __..LL ....:...;...... _
9 San Bernardino residents. They said they would be happy
10 to work with us on that issue. And that is in -- I
l' jelieve in the public record; and the attorney for
12 Wal-Mart can verify that.
13
So we were sa~isfied that a high percentage of
14
~ ; ro.oc::
...--.............. ,
hire employees of this facility, our
:ne
15 residents, were going to get an ,excellent opportunity at
16 first-time hires for those positions.
17 Now, with regard to air quality and traffic,
13 always amusing. In one respect, this project is a
19 mitigation with regard to the auality of air, you can
20 look at it like that, and t~affic and energy
21 conservation. Secause at the north end of this city,
22 there is a deficiency of this type of retail use. And
23 people at the nor~h end of the city have to travel south
24
a considerable distance to get to this type of a
facility to shop. It's much needed.
25
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?ict:u:re t:~is: sc.::\.G is projening by :he '.;~~:r
?
2025, that the City of San 3erna:rdino alone will have
3 300,000 people. Now, with or without this Wal-Mart
4
p:roject, those people a:re likely to a:r:rive
__ :":J[ 8:
J :hem a:re going to be in the no:rthe:rn por:ion of t~e
o
~~mmun'-"
-.......... u~ J.~..;..l..J.
:;laced
r'h....- ......... r ; .:
N ..C.L dC.ppeds .-~
.....~.:~ ':;:.c":1":-'J .:S....l-
.....:..1.__ _..... ....__"-.1 _ 1.. '-
at that location? The oppo:rtunity for :his pl~cemen~ of
Q
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~n-~ ;-Cl"'-V l'S "k~'y '0 be gone.
_;,..0._ _ct ___\-_ __ '-.... _
T-'S "0- go'na -~
........ l.. L ...:.................
9 be near the 215 Freeway, and it's not: going to be as
10 accessible to the population.
What happens if it is p:roperly placed? ~~d
:2 this lS something that was discussed and wasn't felt .-
, -
..!..j
was necessary to pUt in. But:f a facility is properly
14 placed, that actually reduces the distance that people
15
have to travel, reduces the time that people have to
16 t:ravel to get to that needed facility, and saves energy,
1 ~
. I
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19
20
21
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as well as wea:r and tea:r. And :reduces accidents, and
actually can have an impact on benefiting the air
quality of the region.
There were, at the time of these reviews, at
least four people that identified themselves in the
audience and specifically acknowledged themselves, and I
23 concurred that they were, experts in t:raffic, because
24 three of them were our employees, that agreed with the
25
findings.' .~d individually, each of them were recorded,
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I believe, as saying and ag=eeing with :his
? envi=onmental impact report with =egard to :=af=is a~c
3 the othe= extensive discussions that ocsu=red with
4
=egard ~o L~is envi=onmental
! should say
J environmenLal documen(.
6 So I would just iike to SQ~ up by sayi~g that _
7 realize a: the present time, along with Wal-Ma=t, :his
8 is not an ",Zl," site at the p=esent time; it's conside.:ed
9 a "a" site. But within five years, with or without
10 Wal-Ma.:t, Wal-Mart is considering this to be an "A" site
~1 because of the population ~hat is projected to and most
12 likely to occu.: around this a.:ea.
13
Now, t~at population is going to show up at
14 that site. Are we going to have them d=ive considerably
15 farther south to get to this type of facility, adding to
16 the .:ates of traffic and energy consumption and air
17 quality problems? I see this as -- in one respect,
18 could be conside=ed mitigation to some of those issues
19 that I think were so tho=oughly and so adequately
20 add.:essed by the consultant Ior the project.
21
Thank you.
22
CHA,_TRM, ,~" THD~SHER'. ~hank M ~ nK
. U".J.' _ ""'" .< you, ..:. cU ' .
23
Betty .~de.:son, Councilman for the City of
24
San Be.:nardino. Give us your name and address for the
25
record, please.
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MS. ~~DERSON: Thank you.
l-'m Be--'I ~~~"'.so~
.... ... ~ _-:....~"-"'- - ..,
and _ ~es:de at ~665 Magnolia Avenue in San Berna~dino.
.~ld this is an opportunity that I've neve~ had befJre,
:8 be O~ ~~:s e~d 0: t~e spec~=urn. ~~d :'ve ~eve~
addressed chis CJmmissicn, bu: it's really ~~ce tJ be
.....,.::::......~
......- '-'
I'~e been dcwn here, but I've never addressed
Y8U.
3 We~l, I would like ~o say I'm he=e as c
9 ~ep~esen:ative of the 30,000-plus constituents tha: I'm
",l"'ct"'~ ~o ~"'prQsert
___'- -...'-..4 L _...... __ '- .J..
.~d this is a project that I have
:~te~est i~, because it
means someth:ng fo~ my
2.2 C8r:Sl.l:uen:s. I: means jobs; it rnea~s a tax base :0= ~y
::'4
.... ......0-
::::l_....c.
M\" ....,..............
uj :;'_-:::0.
has long been neglec:ed
; r C'''''ii.",1'oDmen~
__.... ..........J.. _ L .. L.
_:;""1d
" '
-::n2.5 :'5
oppor;:un.:ty
fo~ development to come to
an
15 our area.
^ ,
10
~~d, you know, I came tonight because I was
~7 i~te=ested in meeti~g ~athleen Frank. Kathlee~ is ~ot a
1 0
- -
constituent of the Sixth Wa~d; she does not live in my
::'9 a~ea. ~~d I wanted to meet her :0 find out jus: the
20 basis, wny she's i~:e=ested i~ depriving people who need
21 jobs. ~~d this will be an opportunity for them to geL
22 Jobs, not to have it. P~d I was interested in knowing
23 why she has such a great in:erest in the Sixth Ward in
24
25
the City of San Bernardino.
What is this issue about? It's something that
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~
1
I, as a Cou~c:lpe~son, shcu~d be awa=e ~: the=e 's~c~
2 a neglec~ed =eason why i~ should not ~e there, t~at ~
3
should be concerned myself.
3ut. ~ have been -- I've
4 hea=d :h~s j:sse~~~tion ana :~lS dissection 2~C :~ese
-:8mrne!1l:.S aDOU:
Wa:-~a=~ co~ing to the
.3i:~:~
..-. '-
wa:::., ane
6 Nonde::ed, W~a: am = miss~~g? 3ecause :~e peo91e i~ my
wa=i ~re in ~eed of ]ocs.
, ..
:nat a..:...!..
242.
"fie
-"n' - "'a'.'
1..-........ ... __ :!
9 will carne f=cm ou= wa=~, but if we have a hund=ed people
9 in the Six~h Ward who will have the oppo=tunity for an
10 entry-level job -- and as was stated before, peoDle from
,~ Orange Coun:y ~=e not going ~o drive au: here to apply
,_/ .
_ :or tnese jobs.
13
So my people need this oppor:unity, and we need
1 ~ :he ta;, base and we need the development in our area.
15' If this is going to happen, no one is going to try and
develop anything In the Sixth Ward.
If we're going to
17 have outside influence -- which I will call this outside
13 influence, because Kathleen, I have neve~ met her.
19 She's Dever come to meet me to tell me how interested or
20 what development she would like to see and help me get
?1
22
for the Six:h Ward. I have not had that opportunity.
3ut I want to tell you tonigh: that I am here
23 representing 30,000-plus people who are in need of such
24 a development, and I, myself, as a leader and as a
25
person who is in charge of development and bringing jobs
YOL~GER REPORTING SERVICES
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, ~
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d h l~n -no sa-~-v' -nd -~e r"'-sons fny_ ou_r ?_'~~~~~_n.~~
an ,ea~ c.' c:' :"",_, c:.. c;, _~C: _v - ._~ -- -_
2 to the City of San 3e.::-,a.:dino. ll.nd I tl':ank you ve::v
~ muc~ for listening ~o me. I had a lot of no~es he::e,
4 but I missed them.
: ~hank you.
6
C~~I~_~ ~E~.SESR: !hank you, Mrs. ,~~de::son.
.,
a:-.yol'.e else in
a"c" ~ncQ .., -'n;"g -0
u ..:...... .... 'w,,:,,:;,~ _~. l.
Is tje.!:e
....."'0
1.........
8 speak on this i[em?
9
(No audible response.)
CHP.IRMll~ TERP.SHER: Seeing none, Commissioners,
l' :::0 vou have questions? Discussion?
:2
(No audible response.)
CHAIRMF~ !E~~SHER: Are you ready to make a
14 Ttc"C.ion?
15
, -
-'0
:7
:3
:9
MR. DERRY: I would like to make a --
MS. ROSS: May I comment also, please,
CHll,I~~~ ~~RP.SHER: Yes, Ms. Ross.
MS. ROSS: -- befo::e any mo~ion is made?
I also read the letter that was received
20 tonight from Best, 3es";: & K::ieger. Appendix G of CEQll.
21 ~hat is ::eferred to throughout this letter is the
22 envi.:onmental impact's checklist. I think Mr. Dodson
23 mentioned that.
24 CSQA provides it as an example for
25
jurisdictions to use. To try and create this on your
YOUNGER REPORTING SERV!CES
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own wOI12.d be extremely difficult. This is an e;;~:np_e.
2 We are not reauired to follow it to ~he le~ter of the
3 2.aw or ~he way it's written exactly in C~QA.
~
C Qn -Iso orov'des 'us :;ne' ~V~_~'I o-L~e=
::: ., :::. _.:. - --
.
'.. , "'~' -' -=1 "'b"'-' "'0 modi-=v -:J."-
J..J.r~S"""'_CL2.0n Lne _.....e.:....:.. J.....-'-1 .... -......_ L...........
c::.eck2.:s: as
o ~eeded ~o sui: the Ci:y of San 3e~na=d~nc. We did
r' :n21:.
Q
.~
Appendi;{ G in CEQA does not contain any
9 specified thresholds, as Miss Buckman inferred
10 throughout her letter. You have in front of you the
11
',.,it" -1 -tuC'y
~~.L_ .:..::1._;::' _ ,
which includes the City's version of
12 .:::"ppendi;( G along wi ~h an explanation. There are no
l.j
specified thresholds in CEQA. SO I believe tha~ the
l~
lc....~Qr
___L_...........
is misleading when it s~ates tha~ we, the City,
1 "
-::>
varied from those thresholds.
16
When the City created its initial study, and
17 it's on page 32 in particular, we have a list of
18 references. Those references are what we used
19 throughout the initial study; and they are documents on
20 file in the Developmen~ Services Departmen~ and/or maps
21 on file in the same location. !hose documen~s and those
22 maps provide a lot of the background information, like
23 the Alquist-Priolo earthquake faults zones map, for
24 e;{ample. That's on file in our department; it's also
?-
_J
part of our general plan. That's referred to here.
YOUNGE~ REPORTING SERVICES
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0 l
"
.!.
3
4
=
~
0
;
8
9
10
o
o
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'N'e t_~_iea' ~~ i~co~~or--~
L....... _.~ _~ ....CoL_,
by !."eference,
as :rlar'.j"
or t~e bacKq~ound documen~s as we could to make tn:s
documenI more readab~e fc~ you
and memiJe~s
0: ~he
, , '
PUDJ..IC
who possib~y don't ~eview Q~ ~ead ini-:ial sIudies en a
dai:v basis. All of the :~:or~ation is there, either
~~~~~-1\1 ~QYQ in~l"c'ea' DV ~Q ~~Qnca nd/or on ,~"
.....____........__ .~'-_....., ....._ 1..,.._1..> . _ _.....:~_....... __, OJ. .... fi.:....... .:......
au::" :.e:Je..r::nen'C..
I would like to stress one more
.'
;..:.me,
Develooment Services Department believes that we
properly met the requirements of CEQA in the preparation
of the mitigated negative declaration, the mitigation
~~ monitori~g and repor~ing program; and we believe that
13
the Development and Snvironmental Review Committee's
14 approval of the project should stand.
15 Thank you.
16
'..7
:3
:9
20
21
CHP,I~MAN THRASHER: Thank you, Miss Ross.
Mr. Casey, did you wish to speak?
MR. CASEY:
T__F T . H
.I. may, your .onor,
very quickly.
- -ius.
- J ~
have two poin~s I want to clarify.
Ray Casey, City Eng:neer.
Number one, there is a specific threshold
22 adopted In our congestion management program that's also
23 adopted by others in the county pursuant to or in
24
25
association with Sandbag, the regional transportation
agency which sets the threshold for retail uses like
YOUNGER REPORTING SERVICES
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this.
In te=ms of the impac~s above that threshold
2
CMP level of ~raffic st~dy or
rp - ~ '
.:..l...-., 3.~C
would
require a
3 less under that threshold would simply adhere to our
4 guidelines. Tha~ ~hres~old :~= ~he =etail use :5 a
~ thcusand t~ips at peak hou=, ~~d we a=e be:cw that,
Cl
, . . . - sho - -or ~~l'S ~-r~i~"I~~
i-Jr:.:C:l IS whv -- the -...h.:-e .:. ~....:. ~ l,.... ,7'c.- 1.._.........._....._
I h'.-n ,- 'hy -n'e pr.~""'-- adhe_~ps:-o the Ci:v.'s
project., W _,-,d ...:::. W L... ~ ---J __L.:.... _.....
8 traffic study policies versus the regional traffic study
9 requirements.
10 Another point I would like to make very quickly
, '
:s to follow on to the discussion that Mr. Dodson had
12 relative to the att~inment of carbon monoxide. One
13
::'4
1 -
_J
, -
.LO
point that I don't think he touched on was, ln fact,
this region is experiencing a decrease
an overall
decrease, in carbon monoxide over time.
So I wanted to just clarify those two issues.
::'7 I don't know that they were touched on.
18
19
C~~I~~ THRF.SHER: :hank you, Mr. Casey.
Is there anyone else in the audience wishing to
20 speak?
21 (No audible response.)
22
CHF.I~~ THRF.SHER: Seeing none -- Commissioner
23 Sauerbrun.
24
~;
L~
COMM. SAUERBRUN: I would like to make a
motion that the Commission uphold the DERC Committee
YOUNGER REPORTING SERVICES
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adoption of ~he mitigated negative declaration a~d
2
mi~igated monitoring reporting program, and appro,al
~-
v_
3 the Development Permit II, Number 01-05, ~ased or. the
4
-- , "",. '194JA6"
findings 0: :acc In t"e eevelopment coca _ .._.u U,
-'0' "ocr ro t""e cone'i-'ons 0= "PC~O"-' '''c1''e''nc
~U...t'-'-'- J.. _.l..._ _....._~_,,:::._,_.J._....._.....
~
6
"""0-.';';1"'\ ..... -' ';.;....e ola olo'l'J--i.......r.S
__\/_s_vns '_0 L.!1e s........ ~..L. i1, '-_'- O'L_......... I
.:.ancscapl:-.g
7
"",' -. .....,S
::-,";"0.1_ I
-no -t-nea~~ ro~'-'r-~en-~
0..1. . ::::J :::.~ . .......:. _......"i'-_-t:~lL . L__.
8
9
MR. DERRY: Second.
MS. LOCKETT: Second.
C~~I~~~ TP.~~SHER: We have a motion and a
j 1 second. ..D..2.1 in :avor?
1 ~
.1.'<:
, ,
-~
14
1 ~ .
--'
16
"
...1
, -
.~
_v
19
20
21
22
23
24
25
(-'I.yes. )
CP~.I~~~ T~~.SHER:
Opposed?
(None. )
CHAI~~ TH~~SHER: Unanimous.
MS. ROSS:
I'm sorry. Who made the second?
CS;IRMP~ THRF.SHER: Commissioner ~ockett.
MS. ~OSS: Thank you.
(The Motion carried by the following vote:
Ayes: Chairman Thrasher. Commissioner Derry.
Commissioner Enciso. Commissioner Curro
Commissioner Ramirez. Commissioner ~ockett.
Commissioner Garcia. Commissioner Sauerbrun.
Nays: None.
Absent: None.)
YOL~GER REPORTING SERVICES
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17
18
19
20
21
22
23
24
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1
(2nd of proceedings on Appeal No. 01-02,
2
9:10 p.m.)
3
4
J
Q
~
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3
9
10
, ,
~ ?
~-
1 -;
-~
1.4
15
YOUNGER REPORTING SERVIC~S
01
2
3
REPORTER'S CERTIFICATE
4
5
6 THE UNDERSIGNED SHORTHAND REPORTER DOES HEREBY
7 DECLARE:
8
9 THAT THE FOREGOING WAS TAKEN BEFORE ME AT THE
10 TIME AND PLACE THEREIN SET FORTH AND WAS RECORDED
11 STENOGRAPHICALLY BY ME AND WAS THEREAFTER TRANSCRIBED,
12 SAID TRANSCRIPT BEING A TRUE COPY OF MY SHORTHAND NOTES
o
13
THEREOF.
14 IN WITNESS WHEREOF, I HAVE SUBSCRIBED MY NAME
15 THIS DATE: ~ II, a..OO/
16
17
18
19
(/!dMc~ C7daL
CERTIFICATE NUMBER 8383
20
21
22
23
24
o 25
YOUNGER REPORTING SERVICES
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6-5-01, Planning Commission Meeting
o
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S 1 0 - attorney
City of San Bernardino
lability (II 38:21 'aftcmOOn(l1 9:23 'answer (101 10:10 11:5
able (41 37:2343:11 53:18 afterwards [IJ 58:7 !3:2,~.3,23 23:24 40:6
158:8 agam 1161 18:4 19:723:3 '2:209:16
above[J) 24:13 34:24 23:1824:3.1525:20 16:11 ans:w~red(11 13::1
68:1 32:1336;537:2547:13 anticIpated III S:S
Absent (II 69:25 56:6,857:2458:6 19:14,16
acceptable (I] 32:2 agen~ieS(41 6:~4 7:6 I Anyway [II 58:9
accessible (I] 61:10 [4:IJ,16 lapologIZCl21 9:23 15:19
accidents (II 61:17 agenc~ 141 6:1914:2-1 appeal (IS] 1:55:4,6,0
,. 13:16/:25 I 7:18.199:1111:1: 16:11
accomm?date(l] ,::11 agenda(l] 9:24 29:15,19 30:-IA 59:3 70:1
aceom~hshe~(I] -li:13lago(l] 14:3 1 appeared (II 33:19
accordmg(l] JI:I iagreed(21 8:13 61:24 Appellant['1 3:13 9:2U
a~curate('1 34:13,15 I agreeing [II 6~:1 10:19,21.2211:10,15
...g,"I"I I"'j'" 1 ...,..
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acknowledged [I] 116:15 38:2S 39:23 -10:3,9 Appellan. tS111 !1:17
61:21
agriculture (I] 39:1 I Appendix (321 12:12,j.j
acrcs(1l 5:11 lahc d 141'" 1::::2214:17.20.2515:5
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acutclY[l1 23:23 20:1O.15,17,18,2221:l.5 26:1S 38:13.13,)9 51:19
dd' 11:8.9.2222:327:930:5 51:2556:865:2066:8.12
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I 41:1555:8 49:1557:1558:559:8,10 56:3
I additional (21 17:12 ~0:5,17.J~ ~I:I~ 62:16 applicant(1) 3:16:18
41 :25 au-condItIonIng {lJ 8:12.13.149: 12 33:25
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addressed(12] 5:24 28:13,21. approach III 30:8
27:2547:2152:1556:4 II 16 '9'1
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dJdre:' 14:13 d '971'
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a uVla [21 18:16 -14:8 A 'I "38
addressing (I I 40:20 I __ pn 121 " ,
a most (2] 41:16 >>:17 area '0" 16" 01,'
adequate (II 59:2 I (261 - ,J, ,_J u,'
a one (II 61:2 23:2524:2,1526:231:5
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62:19
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ia ereltl 68:3 66:23 53:~2 54:6 62:12 63:\3
lad?eres(1) 68:7 !alwaYS[1160:18 63:13,15.1964:14
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afford (II 41:9 An 'eles , 48'9 attended(l] 6:7
g I J, attorney [101 2:20 7:24
YOUNGER REPORTING SERVICES - RIVERSIDE - (909) 276-1333
Index Page 1
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attorney-clicnt - convertcd
City of San Bcrnardino
6-5-01, Planning Commission Meeting
16:7 18:8 30: 18 35:1 b!ol~gic~! ~I 23:8 52:141 2::~ 37:2,38:3.1! 65:"0 commg [31 17:7 50:15 50:24
37:1738:460:7,1 I )2:11.18.,:_ 6),_4 66:,,4,8,\) 67,10 64:5 concludcs 1'1 9:8 18:18
attorney,c1ient(1) 11:7 bit (41 5:1536:13 37:24 l'c~rtainl41 33:134:10 COMM(l414:8,9.15,16 19:114:1042:144:10
audible ("] 9:1117:13 49:1 ,8:1146:19 12:4.17,21 13:5 15:2.14 4;:1554:9
59:::065:9,12 68:21 b!ig~t!"1 ~O:~ 36:12 37:1 ICerta~nlY(l1 16:13 15:1516:338:1568:24 I conclusion (121 7:4
audlcncc[3) 61::: 65:7 .>?:L :9:1-.1.) icerttflcate(418:4.17 comment PI 33:1836:1:1 18:22.2319:3 25:2 30:1~
68:19 bhghtmg[21 7:2136:9 I 71:3,19 65:16 II 31:1634:12.14 36:5 41:11
, bl d I h comments (71 7:5,;,8 56:18
automotive (II 19:14 00 (1118:18 C ain(1) 59:14 I . I
available 131 10:10 28:14 body (21 11:915:7 'chamS(2136:19,19 27:1430:1745:1064:5 Iconc us Ions 131 17:19
I commercial 1'1 31:4 30:1358:11
30:10 Bologna(1) 51:7 Chairrll 10:21 I d
A 132:1 33:S 40:1,9.18.11 concurre (II 61:13
venue 1'1 3:4,9,169:18 bottom (61 34:844:20 Chairman (431 1:44,4 41:8 concurrent (II 8:15
27:21 29:949:563:1 45:2346:1349:057:22 5:49:9.12 1O:13.J6.14
'd d Commission 19' 1:ll:3Iconditionlll 46:4
avO! e (1149:18 ,Boulevard III 5:11 11:1.1813:6,15,1014:1:4 9' II ' " 10
aware 121 11:1904:1 lib. dary --'1' 14:7,9,1116:U,817:6 ,:0 :1,' .I~:~ ,1,4: iconditionerrll 17:9
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carried(lJ 69:19 clearly("] 33:540:4,12 concededlY(1I 18:10 continued (11 6:16
carry [II 19:17 47:1458:1559:5 concedes (II 18:17 contradict (1) 32:8
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0.:18,2068:18 35:4,1148:7,949:1150:5 38:1454:20 control (II 45:16
category (II 16:23 Coast'S(21 1}:5 34:10 concerned (II 64:3 controlled (II 45:4
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B(l1 62:9
background [51 5:15
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basin (51 18:1"' 20:3
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basis P\ 41:11 51:22
56:18.1959:263:'::067:5
bays (II 19:15
bear [21 18: 16.19
begin [2} 30:3 59:6
bcgins 121 34:7 47:9
behalfl21 9:10 13:12
believes III 67:9
BELLANDlIII 1:16
below 161 16:21 34:11
48:257:11 59:968:5
bcnefitl" 27:19
benefiting PI 01:18
Bcrnardino (I') 1:3.8
1:1':: :::3 3:5.10 .5:117:21
'::8:2 '::9:10 38:13 49:5
60:961:262:2463:2.24
65:2 66:6
Bernardino's (II 55:1
best(l71 3:14,148:19.19
9:18,1830:18.1832:7.8
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between[41 30:2531:10
32:4 54:7
big(21 41:1948:19
o
YOUNGER REPORTING SERVICES - RIVERSIDE - (909) 276-1333
Index Page :2
Multi-Page 1M
COpy - expressing
City of San Bernardino
6-5-0 I, Planning Commission Meeting
o
COpy [II 71:12
correct ['J 35:7,13 39:7
43:6 55:5
Council [21 1:99:23
Councilman [II 62:23
Councilperson [II 64:1
COUNCILWOMAN
[II 3:21
counsel [21 10:2,12
countY[61 41:751:19
53:1555:164:116i:23
COUDty'S PI ~3:1 5l:.~3
5~:5
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couplc[ll 10:17
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crcatcslIJ 31:14
creating [21 37:1248:14
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01111:11
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data 171 29:2434:1836:7
37:11 40:752:458:14
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DAVILA [II 1:15
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deal [41'19:22 -11:19 -15:2]
53:11
dealing [I) 39:] 2
dcals [21 49:]254:]9
dcalt ['J 53:9
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decibels [41 30:2531:12
53:25.25
decision 121 30:11 35:24
decisions PI 12:23 35:1
37:15
declaration [7] 6:147:1
7:11 8:24 10:8 67:J I 69:1
DECLARE [II 71:7
dccrease [3J 18:1968:14
6S:15
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defers [21 19:122J:23 67:6 dry [II 12:24 ,erroncouslIl,5:2
deficiency [II 60:22 director 121 2: IS 59:25 dubious [lJ 29: 10 [espeCiallY [21 C7: I 59:-1
define [II 45:25 disagrcc[1I 12:6 due[2[ 22:2356:12 cstablish[41 5:938:21
defined [11 35:5 discharge [71 19:645:1 dumpsters [II 22:1 I ,-15:2250:8
defining [II 44:5 45:3.7,9 46:IS 55:15 during 121 31:1336:10 !estabhshed['J [6:2[
degraded III 46:13 discharges [II 45:4 Durr 171 2:7 4:8 [2:3.4,17 I ,2: Ib61.::5h24:9 53:21
discharging [21 55:16 38:1569:21 ,esta IS IOgPI 26:12
degree[lJ 55:24 55:IS 3S:244:6
delightful [II 29:25 discretionary [II [4:23 -E- evaluated [61 ;2:2-149:9
delves [II 11:6 discuss [21 50:257:21 52:1356:10 57:1-1.16
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I 5~:13.I..U..l 36:1301:12 carJY[l15:16 cvcningfl21 9:10 2i;'::~
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I demonstrated JlI 37:7 discussion[llJ 7:20 carthquakel31 43:20,23 1 33:20 3S:7.10 58:10
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depriving PI 63:20 disposal[31 ,5:1146:2 eastem[1J 33:12 evidence [71 1':418:12
DEPUTY [II ,:20 54:IS economIc [II 37:5 ~9:3 ,1:1426:1940:24
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description [31 33:5 distributcd [lJ 7:7 effort [II 27:2 example [31 65:2466:1
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designated [21 23:240:1 district's [I] 50:7 elected [II 63:10 45:S 46:19
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42:20 47:24 51:2 57:6 59:2 62:5 Empcno (l4J 2:20 ..:7 lexist fJ1 41 :22 43:1.3
dctennining[l114:14 67:3 10:15,16,2511:9.17.20 56:13
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deviates (II 12:13 DORTCH III 2:12 Eng.meer[21 2:]767:20 37:256:7,S
deviating 121 26:1 I double-negative [IJ engmeered [IJ 39:14 explained [41 11:]5
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deviation [41 15:6,S down ['1 16:10 22:1 28:4 ensunng [II 56:22 explainingllJ 15:8
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deviations PI 12:15 63:6 entry-level [II 64:10 explanation 121 26:15
14:1915:9 downtown [II 48:S environment[sJ 32:5 66:J2
diametrieallY(lJ 37:15 draft[lJ 5:17 37:754:1.259:4 explicit III 47:14
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24:165S:1O 25:1755:19 5:226:117:10 S:22 9:2,6 expOSedl2J 31:450:20
difficult[lJ 66:1 drains [II 55:13 10:6,712:615:9.1926:6 expostog 31'"
. 62:2.4.5 65:22 67:13 [IJ ,->
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direct[l] 20:20 DRCIERC[l136:6 eqUivalent [II )):17 53:20
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Index Page 3
YOUNGER REPORTING SERVICES - RIVERSIDE - (909) 276-1333
6-5-01, Planning Commission Meeting
Multi-Page ThI
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extension [I) 42:6
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fau1L'141 42:13,18,24
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YOUNGER REPORTING SERVICES - RIVERSIDE - (909) 276-1333
Index Page 4
6-5-0 I, Planning Commission Meeting
industrial [31 31:433:7 Jennifer[31 3:J5 9:17
~O:18 1~:5
infcrred [11 66:9 job (21 1: IJ 64:10
infill [31 40:2042:10 jobs [15] 17:4.1441:1.6
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intluenccPI 7:22 64:17 6J:l~.21.22 64:7.12.25
64:18 jobslhousing[l) 47:17
information 1121 6:12 Joe (3) 2:8.1629:25
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07:4 jurisdictions [11 65:25
injury [21 i7:2529:6 jury [I) 37:14
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insignificance [II
26:25
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instcadl21 21:2026:8
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intendcd (21 40:5 51:25
intcrcstll) 11:1163:11
63:':::3
interested (Sl 34:10
63:17.20.2264:19
interesting [11 37: 13
intcrrupt [I) 27:8
intersection II) 6:10
intcrscctions 121 32:23
52:12
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intcrvcningp131:J4
50::': 54:6
issuanccJ21 8:4.16
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12:9 13:4 ~9:14.J6.19.20
30:4.4.6.1233:15.1534:9
34::4 37:3.5.:5 38:24
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landfill (2) 25:10.16
landfills [I) 55:25
landscape [11 7:17
landscaping [I) 69:6
language fJI :8:J2 45:24
51:24
largel1] 21:15,21 :2:10
26:431:2536:20.21
last [l) 36:9 57:22 59:10
latitude 121 12:22 14:14
law P] 8:189:17 66:3
laws [I) 46:1 I
lead III 45:14
Icadcf(1) 64:24
leak [II 19:18
leap [I) 42:7
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I Los JlI 48:9
Iloss [I] 17:25
I lots (I) 58:23
loudJlI 31:15
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likcly P) 61 :4,8 62: 12 makcrs [I) 30: II
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21:1630:2331:744:9 meanlng(l) 47:22
49:351:18 means [6) 34:239:14
location 141 1:842:21 53:1763:1l.J2.12
61:766:21 mcasurc(llJ 19:10,20
locations (2) 36:1449:8 43:3,744:18,2047:350:2
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69:17,22 measures [Il) 7:25 8:3
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-
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City of San Bcrnardino
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minutcs [I) 14:3
misleading [I] 66:14
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11:21 16:8 27;7.11.14.~3
28:10 66:9 67:16
misscd (II 65:4
missing (II 64:6
misstatcment ['I 35: 10
mitigate (4) 43:5 47:12
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7:11 8:23 10:8 57: 11 59:5
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7:258:2.3.24 19:10.12.19
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51:9.1) 53:10 54:]9 57:)9
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modcl131 35:2J 48:11
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68:25 69: 10.19
move [21 16:5 17:16
movement (I] 23:17
Moving [31 47:249:10
52:14
Index Page 5
6-5-0 I, Planning Commission Meeting
N(l1 ":1
name pq 4:29:J.1.1i'
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names (I) 3:'::19
nationallJI 36:19.19
59:1.1
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natural (2) 16:2223:18
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near[l) 61:9
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49:250:1954:7
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neglectcd (J) 20:24 obstruct [II 20:6
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parklng[l] 26:4 31:134:142:2245:25
privilege (I) II: 7
parks (I) 17:13 47:7,18.1952:2053:1 I
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55:5 plan S(I) 7:17 problem (II 48:9
part(71 25:1829:1434:10 PLANNER (2) 2:15,16 problem,s (21 "1:1 62:17
34:1156:2358:1766:25 planningJ71 1:12:36:18 procecdsngs(2) 1:470:1
part~aIlY(11 8:19 7:179:516:18 "9:18 IP:o~SSP) 36:1149:19
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YOUNGER REPORTING SERVICES - RIVERSIDE - (909) 276-1333
Index Page 6
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:!7:4 30:23 31:11.21 31:25 redUCe(6] 26:1434:5 66'
qUIck [31 '0 - " I '7 57:19:_ room III 60',1
33:4.1334:3.7.11 35:: . -' :..; ':..: -; 4.2:2443:1 44:10 ~ :19
'661'14'71"4011 54:11 d' 1 I' - rcquirementl4115:20 ROSS[IOI_':I.'4:.'.':o'
"':.J. J:_ : rcucesPlol:4.).li 48:1549:1853:11
40:13.2141:2.642:1.S.9 quicklyr31 29:1667:18 reducing[lJ 50:4 13:2265:16.17,1867:16
44:10,2547:5,10,12,15 68:10 requirements [JJI 5:22 69:16,18
47:2349:1751:1.453:10 reductioO(lJ 47:17 6:21 7:.159:J 19:b 45:~.3 Iroutined{IJ 10:1
53:2254:5,10 55:4.10,]2 I -R- referrl! 15:4 46:1602:11.1267:10 08:9
55:~3 56: 1.25 59:rl.! 5 reference (S) 42:~2 69:7 rules (21 50:5.7
611:IS 61:4 62:20 63:10 IRI21 2:14:1 5S:12.1467:1.6 rcquireS[l134:1 run II! HI6
07!4 oS 7,7 [R.P,R[l1 1:15 referenced PI 31'2 reside [II '63:2 runoff PI IS:2545:1O
t' 1- I' I I ~ ";5'16 I"" "."" ..... '0'1
proJcc S (S] ). J b:) raise {q 30' r:! 5'L~5 57'23 residence fll 50:19 . . I __.__._J ~ .
19...'.,1.,~"l".11 d' runS[21IS',_",J'''',I''
_. - ,- -.. raise [121 6:610:4,11 relcrences [21 66:18.IS residents [41 17:641:2 7 ,
projectcd r31 20 10 21'3 10'12 29' I 5,21 30,5 33,161 referred {2[ 65'21 6625 60:9,15 rupture [21 17:25 4::24
h~:ll 36: 10.15 39'2258:16 referring (I) 58:12 resource (11 58:4
projecting [II 61:1 Ramirezr21 ~:8 69:22
reflcct[ll 6:5 resourccs [11 15:13
projCCtS[3] 19:1627:3 range [II 30:25 1616'38 21' 19 'S'
32: 17 regard [>1 60:4.17.19 62:~ .:. _: 5:" ~:"
rates [II 62:16 62:4 08:0
properly [31 61.11.13 rather [II _'6',1' d' rcspcct[41 18" "
67:10 - regar 109 [1>1 10:1 I :, _7,J
Ray I 1 46'167'0 21:823:826:2027:1 60:IS 62:17
propcrtics [II 56:14 2:_:_
Raymond [31 2:177:23 34:1635:1145:10,2346:2 respccts [II 12:14
p;zr~7n;12~ 9;~~ ~0:25 28:S 4S:5.10 49:10,1 I 55:3 rcspond [41 13:14 27:23
Proponcnt 8'14 'I'" reached [41 17:1930:13 reglOn[31 20:13 61:19 2S:12,20
. [21 ' - --- 30:1431:17 68:14 Rcspondent[21 13:14
proportIOn [II 33:1 I reaches [II 25:2 regional r31 47:1967:24 13:25
proposcdl" 6:20,'::5 d 8 '145 '4 '813 68:S respOnSC[11 9:11 27:13
'::L~"; ~3:24 31:~1 32:4 r~g:1 (:}1~-67:4:- ): regs [1] 50:5 28:659:2065:9.1168:21
50:2.25 readable (II 67:3 rCb'UJations [61 25:13 responses 121 7:6,8
protcet[1! 44:3 reading [II 8:20 46:250:654:'::456:3.5 responsiblel31 6:]97:6
Protectcd [II 23: 17 regmlatory [21 46 10 46 '0
rCadS[l1 51:25 ,~ : :-
protccting['146:24,25 49,19 rest [II OJ 7
47:1 ready [II 65:13 rel~ted[11 17:1320:21 restaur~:tS[1122:9
protection [II 54:15 r~~:\r;1 21:1 52:17.1S 2;:13 30:19 34:2142:5 result (14) 17:5.1519:13
protcctivc [II 50:9 I ty 3< 5 4_:2~ 20:11.1024:7,24,2525:6
IProtcetS[l143:24 rea i III _: relatmgll! 10:6 25:2231:537:653:20
providclll 66:22 realize[2) 37:2562:7 relationl3) 22:2151:5 55:12
providedl41 13:122:12 really [61 27:1037;21 51:13 resulting 121 17:2521:2
311:2236:5 3S:1 40:758:13 63:5 relative[21 41:568:12 retail 161 5:10 32:141:S
Providcs {'I 42:10 65:24 rcason 171 14:1.430:20 relatives {If. 49:2 60:2267:15 6S:4
42:350:2455:1"; 64:2 .
on:~ released PI 12:13 ~6:J retaIlers (4' 21:15.:1
publicl2S1 3:205:236:7 reasonable [I) 41:12 I 53:13 36:104S:19
6:15.211:2.4.5 S:11.13 reasons [31 14:1916:12 jreliedjJJ 32:9,10 34:14 retaincd[ll 11:24
14; 13,16,23 24:20,21.23 65:1 remediated III 46:1 retention [II 56:2
25:326:1434:1249:23 received 1'1 5:177:5.23 rememberr21 32:1933:4 reveal [I] 21:1
54:9,10,1160:1167:3 8:189:2510:215:1638:1
purposes III 40:3 65:19 report PI 10:8 12:S 62:2 reVleW[I'1 5:76:3,11.11
receIvers {II 56:16 REPORTED [11 1:14 6:15.17,21 7:1,4.10 S:22
pursuant [II 67:23 reporter {21 27:19 71:6 967:6, ,161 :6,7 36:11 56:23
put [11 15:316:1132:19 receIves [II 39:16 _ J
43:2144:1550:161:13 recently [II 29:7 REPO,RTER'S[l1 71:3 rev'i~wed[61 5:21.236:4
putting[lj 45:17 receptors[lOl 22:526:11 reportlOg[>1 7:9.12 S:24 2S:2.1160:3
26:1431:6,750:14,20.25 67:1269:2 reviewing[2J 6:97:S
-Q- 54:4,S reports [II 35:15 reviews (II 61:20
, reeharge[>] IS:20 44:11 represent [21 1019 6J 10 . d
qualIty [46) 5:117:21 9:1 44:14,21.22 . : ': revlsc (I) 6:10
196 '0 I 46 - 8 9 II 10 representatIve [II 63:9 revisions [31 6:1 7:16
, : -- : ~. ", '~, ~,' recharges 111 39:16 REPRESENTATIVES 69',6
_O:II.IS _J:I,S,9,__ __:3 d .
30:534:16.1736:1.7 rccommen atIOn{ll [213:LJ3. right[l2111:10.1312:1.2
44:2546:12,2547:1.1.4.4 9:4 representlOg [6' 7:14 13:17,2414:927:6.14
47:7,7.18 4S:4,17 49:15 recommended [31 6:13 10:19 11:1.1.4 64:13 32:IS 39:9 40:1
57:15 5S:5 59:8.10 60:5 14:1016:14 requcstlll 10:12 risk [31 17:2418:13 49:23
60:17,1961:1962:17 reCOrd[11 9:14 IS:12
6-5-01, Planning Commission Meeting
Multi-Page Th<
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YOUNGER REPORTING SERVICES - RIVERSIDE - (909) 276-1333
projcct's - Secing
City of San Bcrnardino
-S-
S [31 2:1 4:J.!
safety 141 43:18,23,25
65:1
safcly'bascd [II 43:9
sales [II 5: II
San [221 1:3.8.122:33:5
3:10 5:J 18:8 :7:21 ~S:2
19:10 38:23 ~9:5 5~:~3
55:J 60:961:162:2463:2
63:14 65:.2 66:6
Sandbag [II 67:24
sanitary 131 45:5.6,S
satisfied (II 60:13
Sauerbrun (121 2: II 4:9
12:10.21 13:5 15:2.14.25
16:368:13.1469:13
Saucrbrun'sl31 13:21
13:23 14:11
Savagc 121 3:2 27:20
savcs (II 61:16
'saYS(2IJ 10:2519:2235:4
39:1240:843:1.7.24
45:2547:14 51:8.11,14
51:16 52:5.J7 54:3.3.11
56:7 58:2
SCAG(l161:1
ISCAG'S(l147:18
scheduled [11 6:3
school [21 23:24 24: I
schools [II 54:16
scope [21 38:20 5l:lS
second 1>1 16:IS 69:8,9
69:11.16
secondly (II 13:13
SECRETARY [II 2:12
section ['I 15:21 26: 19
49:1253:9.10 54:12 56:21
57:12
sediments [21 IS:1644:9
see ['I 15:11 27:9,15
39:1 I 45:11 48:11 62:17
64:20
Seeing [21 65:106S:22
Index Page 7
6-5-0 I, Planning Commission Meeting
Multi-Page'"
42:2243:1344:12.21
~8:21.23 52:22.23 55:17
56:262:8.9.10,1469:6
site's (11 19:13
sits [21 40:17,17
sitting (2) 40:14 50:10
situation [9) 30:1; 34:17
35:18.19,2041:2046:21
51 :20 52:2
44:245:2246:7,11 49:16
69:7
standards 1161 19:6,11
24:9 43.10 44:6 45:1.6.18
46:8,10,14.15.2452:4.6
53:21
standing (I) 44:19
standpoint (I) 48:4
start (4) 21:2038:12,19
39:9
o
selsnuc 141 18:1.I442:19
43:11
scismic-relatcd (2)
18:1 43:1
sclf'evidcnt (I) 40:8
sclf-scrving (II 58:17
SENIOR[I) 2:16
SCnSC(2) 19:1129:12
sensitive (201 22:523:1 J
23:1826:10,13 31:6.7.16 SIX [31 21:1648:1960:1
31:22,23,2450:14,20.25 Sixth[HI 3:21 18:15 statC(21) 6::2 12:12
52:1653:254:4,856:16 63:18,2364:5,9,16,21 16:2517:2218:519:8.10
56:22 I. hi 19:2020:14.25 22:i.17
S Ig t Y [11 34:23 23:424:4 :5:12 38:13
scntlll 6::::: 1
sip (11 23:6 45:13 46:1.10 55:20,21
scntcncc III 45:24 small (6) 36:2: 41 :25 statcmcnt (I) 39:8
scncs (2) 36:1850:7 42:554:13,13,14 statcs 121 55:13 66:14
scrvcd(l) 25:9 smells (II 50:17 station 1>1 19:1421::4
SCrvlCC(6) :::::2525:4 50-0D[1141:20 49:11.1250:4
52: 11.11 54:9 55:11 socioeconomic [21 37:3 stations (2) 33:9 50:13
sCfV1CeSl9j 2:181i:1J J~:6 statuS{I) 23:11
24:2042:751:1754:11 J 1917
59:2566:2067:9 SOl. III : statutes (II 25:12
S'?lt?[6! 25:11.I3 54:18 STENOGRAPHICALLY
SCtll31 12:15 14:17,24 )6:~,: )8:6 (117):)1
15: 10 22:6 24:2.15 29:4 I t 4900
46:1653:1656:1300:8 so u Ion [I) . :- stcp [I) 55:21
71:10 sorryJ7) 13:1915:14 St r 4800
38:14.1549:1450:21 .cr 109 [I) :u
scts III 67:25 69:16 stili (I) 44:16
scvcnI2121:1648:19 soUrCC[4126:131:15 storcp) 5:1036:1848:22
sewer 13} 45:5.6.8 50:23 54:7 stores (3) 36:16.17 49:1
shaking (2) 18:1443:2 th 008161801 - t '561- " 10
sou. [1>1 _ :, , _:) S onn [>1 _ : , , _):
shall 12) 19:2: 45:25 33:11 34:2035:2.4.12 55:1356:1
sharcdll148:5 40:1948:7 _49:2150:5 strangclY(l) 55:3
shcds (2) 39:17 44:13 60::362:1) strcel(3) 1:112::2251:6
shoes III 30:9 southwcst (II 18:8 streets II) 56:13
shop III 60::5 spac~s III 16:5 stress [I) 67:8
SHORTHAND (2) spc~ (3) 65:867:17 stringcnt [II 46:15
7l'6 12 68,_0
, '. 0 ,,, , , ,spcakcrs (I) 13:12 strong (21 18:1.13
show 14) _9,__ ~7,1O 40,6, structure(21 43.0144'15
0"13 spCClal[21 18:1023:11 ,- ,
, -, '_ _ "structures [') 17:23
showed [II ) I:> sr;cles (3) 2,.1 1.12 18:1443:10.1544:1
shown(2) 43.' '9'8 ,_,10 .
. "'-:;,, spccific{2ol 5:1315:1,6 stud'CS[l167:4
shows [21 ,1.1- "8, L 15:9 39:11 43:8.944:: study (39) 5:18.19.:1 0:2
SI.~CI61_ 31:~ 40:1550:12 45:6.17,1849:1650:6 6:5.10.11.118:911:13
:-..):24 :-4:1 :-6:16 51:215]:14.16 5.I:.ZO 14:.11 15:15.1816:14.19
sidCS(lI 13:2 57:2258:1567:21 1i:3.1O.11.16.20 18:3.7
significancc[HI 14:14 spccificallYI171 16:20 ~~:1O.l7 19:1 ~O:I ~~:4.6
-14'14 no' '4'1626'18 '0'1' '4'1 3"4 I' "'7 __:123:11.15.4:6.-.
.. -_. _. .. J....;). ..I...;"'). '5-"16''''''8'1''1'19'1
q-17 57''''''0 4"""'1 '5'1' '7,00 '9'9 - .-. .--...... .). .-
. "..- _,h - , ~ - ,- - , -2'150433'" '4'1' '6"
signifi~a~t~:51 10:5 ~l:~.I~ ~~~10 56:4.18 ~6;4 ji22 ~~:~2:25 ~2~~5
12:14 l,:j I _~:1O 25:9 ),,_401.._ 42"043'8 '1'8 -8'"
'6 10'" .f' d ,- ,),) ,--
: :0 ,~LI 34:1) 35:8 SpCCI Ie 121 66:9.13 66:II,J6,1968:2,8,8
~5:_5 ~6:7 41:18 42:1.3 spcctrum [I) 63'4 d '
42:1343" 14 47.0; ;<'04. ' stu y S [II) 18:23 19:4
,.. .-. ,".- s II 19'18 -I " 19'0 00' 0),0' '0'3 9
56:1: 57:11 58:359:9,11 pi 13) , ,. --~ ,.4 - .4 - ._- --, .I
, '. spl'lls (3) '5"2" 05 25:4.2426:1748:16
slgmflcantly [II 31 :22 - ,- .--,-
. square [I) 5'10 subarea [I) 35:13
srmply (4) 39:1640:20 ' . _ ,
40:2068:3 staff(l61 2:145:23 6:18 subJcct[~) 7:141):.1
, J 8,01 9'901 10,02 I'" 20:1669:)
smgC(3) 34:1936:11 '~ 0'.'-' ,-'- ,"'- . ,'0
46" 16,6 _7,9 ~O,14 31.3.17 subnut(ll 9,"_
, ,- 34:11.1259:25 subnu'tted[21 5'16 'I"
SIt (21 30:837:13 .. .J.J
. Staff's [I) 9:4 SUBSCRIBED
SltC[341 5:116:97:17 0 [1/
18:14.15.16.21.1519:1 stand[21 _9:667:14 71:14
19:1921:10,1623:2533:4 standard[131 7:1520:9 substanccs[l) 23:23
33:1339:12.12,2540:4 20:1522:2543:5,23,24 substantial (') 17::4
o
o
~
scismic - traffic-rclatcd
City of San Bcrnardino
18:11.I322::1 24:11 16:llthcmsclvesl21 61:21.:2
51:5,12 5~:20 ,THEREAFTERIIJ
substantially (2) 10:10 71.11
22:23 Therefore (41 31: 10 3:::3
substantiatcd [I) 37:8 36:5 50: I
substantiating (I) thercinl21 6:1371.10
37:11 THEREOF[I) 71:13
substantiation [II 37:1 thcy'vcPI 15:348:18
such (4J 45:2563:2364:1 57:25
64:13 third(SI 11:2 17:I.J.11
sufficicnt 12) 15:10 60:1
58:19 thoroughly [I) 61:19
suggested (5) :::1623:4 thousand (IJ 68:5
14:3.18 25:21 h
Thras Cf[391 1:4 4:4 5:4
suggestion [I) 16:1 9:9.12 IO:13.~4 1::~.IS
suit[l) 66:6 13:6,15,2014:1.4.9,1:
suitable {II 32:1 16:2.827:6.16 2S:2S 29:5
Suite PJ 3:4.169:18 30:2 59:1S.21.23 02:22
65:6,10,13.1767:1008:18
sum [21 60:4 62:6 68:21 69:10,13.15,17,:0
sum-up III 58:15 thrcatened II) 23:11
summary (3) 17:530:6 threelHI 11:1816:12
57:12 45:1150:12.13 54:22 60:4
Sun (II 6:15 61:24
supcrficial (I) 58:1) thrcc'and-a-half(l)
support ['1 17:418:12 21:19
19:316:1940:24 threshold [201 11:712:6
suPportcd(2) 8:10 17:19 12:1514:1,16,1726:8,12
"'4'''0 .,... '4 ...5..,.... 48"
supposed 121 51 :21 58:7 :.- ._-~- .,: ._J ~ .J
, . 00:8 67:_1._) 68:1.~.4.6
sUPf,osltton 12) 17:4 thresholds [131 14:14,24
40,_, 'I" -3'3 6 '5" <46'19
surfaccp) 45:14 46:25 51:~t59:9 t6:9~j-3,15
46"5
,- through['1 7:38:19 :1:1
surfaces (2) 18:2144:16 32:2237:22.2447:2.11
surrounding 121 56:14 57:5
56:11 throughout 131 65:11
SystCffiP) 22:2255:19 66:10.19
55:22 TIA (II 68:2
systcms (2) :5:555:11 Tildcn (2) 3:227:20
timely I') 33:18
timcs [I) 37:19
TOm(91 3:85:1828:3.8
28:J 1.22.23 29:J.9
tonightlH) 8:189:1016:5
:9:1458:21 63:1664:12
65:10
too (I) 58:9
top 121 23:20 39::0
topics IXI 14:J9.22.25
16:16,:317:2125:11
29:21
total III 16:5
totally [21 48:3 52:13
touchcd [21 68: 13.1 7
traffic [421 5:20.23 7:2J
7:258:1.915:15.1817:9
20:21.2121:222:21.22
24:14.1530:532:12,14
32:20.21.24 33:J5 34:3.9
48:1351:3,4,5,7.13 57:15
59:560:5,17,1061:23
62:2,16 68:2,8,8
traffic.rclated 121 8:1
8:15
-T-
T(I) 3:15
taking [I) 55:4
Targctlll 48:12
task [II 19:)0
tax 121 63:J2 64:14
teach (I) 38:3
tear (I) 61:17
technical [21 27:25 36:4
tclls [I) 33:5
temporary (II 24:11
Tcn (II 10:4
term(l) 51:19
terminology [I) 43:17
terms [21 15:1668:1
testimony (I) 13:1
text (4) 36:2,3 57:23 58:1
thank (23) 11:1.2.17 14:8
27:6.14.15,18,22 18:15
29:2559:16.21 62:21.22
63:165:2,5,667:15,16
'68:1869:18
YOUNGER REPORTING SERVICES - RIVERSIDE - (909) 276-1333
Index Page 8
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transportation [31
ee:18,1967:24 Valerief21 e:15 58:25
transportation/circulation Valerie's (II 33:20
(1158:5 ValleYl1154:23
traps [I I 22:9 varied III 66: 1 5
trash [31 22:1Il 25:J5 56:2 variety [21 14:2233:9
travel 131 60:23 61:15.16 vegetation [I) 52:2~
traveledllJ 47:17 Ivehi~le[31 el:1047:17
tned[l167:1 148:1,
trip III J2:2~ vehicuJarrlJ 20:20
tripS171 21:10 3::~5 33:2 verbatimpJ 15:11
33:2 ':9:7 50:11 6&:5 verifies {II 36:8
true 121 14:1571:1e verify [21 55:260:J2
try [41 e8:2U 38:1Il 04:15 VerSIOn III 66:11
65:':5 versus (II 68:8
trying [31 16:1129:11 vibration III 24:10
30:8
vicinity PI 24:JJ 50:25
TUESDAY [21 1:65:J vlewllJ 37:16
two ["I el:lO,J7 29:12 views [21 26:258:10
3e:16,18 39:8,1143:17
48:18,eO,21 49:1.757:22 vioJate[31 19:520:9
58:10 07:19 6~:16 44:25
type [101 5:87:138:25 vioJating(l148:15
1~:741.5,5,660:22,24 violation[31 2U:1135:14 zone(ll 18:10
62: 15 48: 12 zones [I) 66:23
types 121 43:1745:17 violationS{21 35:11.J2/Z0ning[l) 39:25
typically 121 14:17.18 vote III 69:19
-U- -W-
6-5-01, Planning Commission Meeting
TRANSCRlBED [II
71:11
TRANSCRlPTl21 1:4
71:12
utilized [II 46:12
utilizing [I I 55:7
-V-
,
Multi-Page '"
TRANSCRlBED - zoning
City of San Bernardino
UBP-2IlJ 5:13 wait[31 13:8,9,17
ultimatcll138:9 Wal-Martl91 3:15:10
Unanimous (II 69:15 60:7.1261:362:7,10.10
under"1 16:2420:J4 64:5
::2:723:: l.t.; 68:3 ward 19) 3:2J 63:18.23
UNDERSIGNED (II 64:5,7,8.9.16,21
71:6 warm [II 27:10
understand (I) 11:8 Washington [II 49:4
understood III 10:22 wastell51 19:623:23
undetermined (I) 42:21 25:11.1345:1.3.4 53:12
. 54:18.21.2255:156:3.4-
units [II 41:5 58:6
University 141 3:165:13 watef[20! J8:18.25 19:4
~:IS 33:1 I 19:5.2425:7,1739:16,17
unless PI 49:22 39:J9 44:J3.25 45:JO.J4
unravel II] 29:11 46:12.25.25 55:13.J6 58:4
unstable [21 43:1:,12 Wearl2) 25:161:17
up 1101 13:8 19:929:4 weighing PI 38:9
35:2237:13 46:9,23 60:4 well-discussed [I) 60:6
62:6,13 west [31 33:8 40:IS 54:1
uphold [21 9:568:25 wetlands [II 23:17
urban PI 52:24 whatsoever [41 15:13
used [101 19:1921:11 19:325:1440:24
:9:2435:240:3,4,850:S WHEREOF IlJ 7):14
)1:J966:18 h J '1-'03
W 0 C(21 .) :)) :
uses {1'1 19:1622:2431:3 .
31:4.16.22,23,24 33:3,6,7 ~ler~IJ 44:20
33:7,S 39:21 40:IS,18 Wlldhfe P) 23:17
56:2259:1367::5 wipe [II 50:23
usmgp! 12:13 49:7 52:9 wish[11 67:17
utilities [21 25:455:11 wishing 121 65:768.:19
within (61 18:J723:23.
44:956:21 58:::!2 62:9
without (5) 24:13 50:4
58:1 161:362:9
withstand PI 43:1 I
WITNESS [II 71:14
woefully [I I 57:3
wondered (21 13:1 I 64:6
words (21 17:13 e2:6
Works [41 5:238:11.13
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world [II 46:6
writing PI 46:4
written III 66:3
wrong [II 44:i
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years [I I 62:9
yesterday P[ 9:25 10:1
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-z-
YOUNGER REPORTING SERVICES - RIVERSIDE - (909) 276-1333
Index Page 9
I
GRESHAM, SAVAGE, NOLAN & TILDEN, LLP
A REGISTERED LIMITED LIABILITY PARTNERSHIP
LAWYERS. FOUNDED 1910
FOR TilE FIRM
J..hnC.Nolan
600 N. ARROWHEAD A VENUE, SUITE 300
SAN BERNARDINO, CALIFORNIA 92401.1148
(909) 884-2171 . FACSIMILE (909) 888-2120
WILLIAM GlITHRlE (1886-1941)
OONALDW. JORDAN (1907-1989)
JOHN B. LONERGAN (RETlllED 1976)
July 6, 2001
Mayor Judith Valles
Members of the Common Council of San Bernardino
City of San Bernardino - City Hall
300 North "D" Street
San Bernardino, CA 92418
Re: Appeal Relating to Development Permit II No. 01-05
Hearing: July 9, 2001
Honorable Mayor and Council Members:
The purpose of this letter is to express, on behalf of our client, W AL-MART STORES,
INC., its concern that the referenced appeal may be motivated by business competition rather
than the result of good faith environmental concerns.
The California Environmental Quality Act ("CEQA") sets out that it is the policy of the
State to provide a high quality environment (Public Resources Code, section 21000) and a
method to insure that such environmental quality is provided. CEQA is not, however, to be used
as a business "weapon" by someone opposed to a project applicant.
Indeed, last year, the California Court of Appeals, in the case of Waste Mana\;!ement of
Alameda County v, County of Alameda (2000) 79 Cal.App.4th 1223, concluded that, if a project
opponent was objecting to the project because of business or competitive reasons, then that
objector did not have "standing" to pursue the objections. According to the Appeals Court,
CEQA objections are to be advanced, in good faith, by someone who would likely suffer
environmental detriment if the project were approved,
The instant project is located near the intersection of the 215 Freeway at University
Parkway in the Sixth Ward. Interestingly, however, the first person to object to it was Kathleen
Franks, who resides on 1974 East Lynwood Drive, in the Fourth Ward. In a telephone
conversation with Mark Boen, one of the current owners of the project property, Ms. Franks
acknowledged that she had been requested by the United Food and Commercial Workers Union
("UFCW") to object to the Project.
W AL-MART sales associates are not affiliated with the UFCW; however, the UFCW, of
course, would like to expand its membership to include the sales associates. In furtherance of
UFCW's desire to have W AL-MART agree to UFCW's representation of its sales associates,
UFCW has interposed environmental objections at various locations where W AL-MART is
contemplating building stores hoping to delay, or frustrate, those projects.
Riverside Office' 3403 Tenth Street, Suite 518, Riverside, CA 92501 . (909) 684.2171 . Facsimile (909) 684-2150
Victorville Office' 14350 Civic Drive, Suite 120, Victorville, CA 92392. (760) 243-2889. Facsimile (760) 243-0467
7-9-01
=ff3J-
J GRESHAM, SAVAGE, NOLAN & TILDEN. LLP
John C. Nolan
Mayor Judith Valles
Members of the Common Council
of San Bernardino
July 6, 2001
Page 2
Interestingly, Ms. Franks is no longer the official opponent to this Project. Instead, that
position is now occupied by Carol Gold. Ms. Gold, who resides in the Fifth Ward, has been
observed on the premises ofUFCW's facility in Bloomington and is now represented by Andrew
Kahn, an attorney whose offices are in San Francisco. Mr. Kahn has been involved as an
attorney opposing other W AL-MART projects, including most recently, a lawsuit against the
W AL-MART in Palmdale, which involved the UFCW as one of the parties in the settlement.
Although Ms, Gold has not acknowledged that she is acting on behalf of the UFCW, the
Union's Attorney is representing her, so at the very least, we believe she is having her legal
advice and fees supplied by the UFCW,
The proposed W AL-MART store in North San Bernardino, like every other project, is
one that should be evaluated on its own environmental merits. Because CEQA is not a tool to
advance business objectives, we urge you to determine for yourself, whether you believe Ms.
Gold's environmental objections are being advanced in good faith.
We strongly believe that the presentation that will be made at the hearing of July 9, 2001
will clearly indicate that this Project is in compliance with CEQA.
Very truly yours,
C .?1~#et .oJ
J C. Nolan of
GRESHAM, SA V AGE,
NOLAN & TILDEN, LLP
JCN:tdg
cc: James F. Penman, Esq. - City Attorney
Mark A. Ostoich, Esq,
07/05/01 16:33 FAX 19099821516
~02
~ PR.OWESTER.N DEVELOPMENT COMPANY ..m
July 5, 2001
, Mark Ostoich
Gresham, Savage, Nolan & Tilden, LLP
600 N. Arrowhead Avenuc, Suite 300
San Bernardino, CA 92401-1148
Re: University Business Park/Wal-Mart/Appeal
Dear Mark:
PnTfinRnt tn ynm rr:IJIIf'.~1 tnrlRY. ynn hRrl RRKI',n mr. tn mmnoriRlizr. R tr:Jr.phonr. convCTsation T hall
with the original appcllant Kathleen Flanks on June II, 200!.
On June 11, 2001, at approximately 11 :30 a.m., I placed a call to Kathleen Franks to see if!
,could dise\l3s her eofteems lIftd CftCllU1'agc a ftIcctiftg with Dctty A.Il.dcraon QIId myoolf. Whon
Specifically questioning her pertaining to some of the issues she raised in her appeal presented by
Jennifer Buchman ofDest, Best and Krieger at the Planning Commission Meeting, she shared
with me that she had no knowledge about any of the specific issues.
When discussing with her the many benefits Wal,Mart and other related business and services to
f91l~' "''9~IO i'M\;dc tc tho OOftlft'dlftity, Dko quisldy diDoloooo that hGl' offorto "~ro not dirootod
against the development ofthe site, the City or the land ownership, but directly against Wal-Mart
since they did not hire union workers. She shared that as a resident of San Bernardino, she had
been asked to assist the union and cooperate in blocking Wal-Marl's efforls to establish this
store.
The conversation was terminated shortly thereafter.
I hope this information will assist the Mayor and City Council Members to clearly recognize that
the original appellant, Kathleen Franks, was nothing more than a representative of the United
Food and COInmerical Workers Union. Kathleen Franks was not personally concerned regarding
the suitability of the Wal-Mart Store being constructed in the University Business Park. Her
only objection was that Wal-Mart will not hire union workers.
In can be of any further assistance, please do not hesitate to call.
Sincerely,
~~
Mark Boen
President
7-9-0(
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July 5, 2001
A1iccn Wong
Oresham, Savage, Nolan & Tnd~n. LLP
600 N. Arrowhead A venue, Suite 300
San Bernardino, California 9240l-1 148
Subject:
Noise Analysis for North San Bernardino Wal-Mart
Dear Alicen;
As requested, LSA Associates, Inc. (LSA) h~ rcvi..-d the City of San Bemardino's Initial Study
alllllys!s of potential noise impacts associated with the construction and operation of the North San
Bernardino Wal-Mart, located on Hallmark Parkway west ofInterstate 215 (1,215), in the City of San
Bernardino, California. Based upon our review of this proposed project, we concur with the
conclusions of the City's Initial Study that the potential noise impacts will be less than significant.
Our analysis, wbich verifies the City's conclusions, is contained herein.
SENSITIVE LAND USES IN 'flU; PROJECf VICINITY
ThC1'\l arc existing sensilive ~identialland uses 400 feet to the northeast, 1,350 feet to the southwest,
and 3,500 to the northwest. The closest resiclcnces to the northeast are located on the opposite .ide of
the 1.215, The primary source of noise in the vicinity of the project site is noise generated by traffic
on the ].215. The City's General Plan, pages 14-11 to 14-12, concludes that noise levels along the I-
215 range from 77 to 80 dBA in 1979, with the projected increases in traffic raising the noise levels
to 80-81 dBA in future years.
THRESHOLD OF SIGNIFICANCE
A projcel will normally have a significant effect 00 the ct\vironmcot related to noise if it will
SUbstantially increase the ambient noise levels for adjoining areas or conflict with a.dnrted
environmental plans and goals of the community where It is located. The applicable Daise standards
governing the project site arc the criteria in the City of San Bernardino Noise Element of the General
Plan.
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teA. "UOCIATas, INC.
City of San Bernardino Nolsll GllldeUnes
The City of Son Bernardino adopted a Noise Element (December, 1993) in its General Plan. One of
the general goals of the San Bernardino City NoiS(; Element is to develop an4 adopt specific policies
and an effective implementation program to abate an4 avoid excessive noi,c exposures in the City by
requiring that effective noise mitigation measures be incorporated into tbe design ofnew noise
generating an4 new noise sensitive land uses.
Specific policies have been adopted by the City to accomplish the goals of the Noise Element,
including the following:
I. Areas \\ithin San Bernardino City shall be designated as "noise-impacted" if exposed to existing
or projected future exterior noise levels from mobile or stationary sources exceeding the
sbmdatds listed in Tables A and B.
Table A: Hourly Noise Levell'erfonnance Standa"'. Locally Rccu1atcd Soan:a
1 LIIl. - 10 p.... I 10 p.m. - 7 a.m.
Land Use Catq:ory Leq L..u I Leq L,.g
-- .-. - . ... ..... .-...
Residential or other noise sensitive receivers 55 75 45 65
Soww: City of San Bernardino, Noiae Elemant, 1993.
Table B: InteriorlExterlor Noise Level Standards - Mobile Noise Soun:es CNEL or L..
Land Use Categories Land Uaea Intenor Exterior
Residential Single and multiflllllily, <Iuplox, mobile homC$ 45 60'
,,- . .... 'M' _...
Commercial Hotel. mOle!, transient lodging 4S 60'
-..-- Commercial retail, bank, IBstauraDl SO nI.
.. -
Office building, re,.1U'Ch and development, I 45 65
profe"ional offices
.. ._.~._-
Arnpbilhe81er, concert hal~ audltorlum. movie !healer 4S nl.
Institutional Hospital, nursing !>orne, school cla$srooms. chun;h, 45 ~S -
Ilbrary ..,-
--. ....
Open Space Park nle 65
Soul'te: City of San Bernardino. Noise EI.m""~ 1993,
All exterior nol..level orup 10 65 dBA CNEL (orT,..) will be allowed provided eKterior noise
levels have been substantially mitigated througb a reasonable application of the best available
noise reduction technology and interior noise exposure does not exceed 45 dBA CNEL (or L",)
with win<lows and doors closed. Requiring that windows and doors remain closed to achieve an
acceptable interior noise level will necessitate the use ohir conditioning or mechanical
ve1\tlladon,
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2. The City shall enforce me State Noise Insulation Standard. (California Code ofRegulalions, Title
24) and Chapter 35 of me Uniform Building Code (UBC),
3. Sub<livlsion approval adjacent to any developed/occupied noise sensitive land uses shall r~uire
mat me developer submit a construction related noise mitigation plan to the City for review and
approval prior to issuance of a grading pennit. The plan must depict tbe localion of CIllLStructlon
equipment and how tbe noise from this equipment wlll be mitigated during construction of this
project, tiu'ougb the use of such methods as the following:
. Temporary noise attenuation fences
. Preferential location of equipment
. Use of cummt technology and noise suppression llquipmcnt
The operation or URe between the hours of ten p.m and seven a,m. of any pile driver, steam shove~
pneumatic hammer, derrick, steam or electric hoist, power driven saw, or any other tool or apparatus
the use of which is attended by loud and excessive noise is prohibited, except with the approval of the
Mayor and Common Council.
IMPACTS
Implementation of the proposed projecl would result in short-tenn construction and long-tonn
operational noise impaots. The following focuses on the jnCNaJe in noise associated with the
conslruction of the propollCd project and the on-site operational noise source impacts.
Construction Activities
Two types of short-term noise impacts would occur during project construction. The first is the
increase in traffic flow on (ooal streets associated with the transport of workers, equipment, and
materials to and ftom tile project site, The pieces of heavy equipment for demolition, grading, and
consltuctioJ\ will be moved to the site and remain for the duration of each construction phase. The
increase in traffic flow (In tlte surrounding roads due to constructiOll traffic is expected to be small.
The associated increase in long-tenn traffic noise will not be perceptible. However, there will be
short-tenn, intermittent high noise levels asSQciated with truck pass by from the project site,
The second type of short-term Doise impact is related to the noise generated by heavy equipment
operating on the project site. Construction is completed in discrete steps, each of which has its own
mix of equipment and, consequently, its own noise characteristics, These various sequential phases
would change me character of the noise generated on me site and, therefore, the noise levels
surrounding the site as construction progresses. Despite the variety in the type and size of
construction equipment, similarities in the dominant noise sources and panerns of operation allow
construction related noi.e r~s to be categorized by work phase, Tabl. C lists typical construction
equipment noise levels recommended for noise impact assessments, based on a distance of 50 feet
between me equipment and a noise receptor.
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Table C: Maximum CODltrlletloD Equipment NoillC Levels
Range of Sound Levelo S'l""'~ SoUlld
Meuured Levek fnr Anal}'lis
Type of Equipment (dBA at 50 feet) (dBA at 50 feet)
Pile Drivers, 12,000 to 18,000 ft.lblblow 81 to 96 93
.. .-.--. .. _w"_','
Rock Drills 83 to 99 96
....- .. .. ..
Jack Hammers 75 to 85 82
," ..... '.. -.,-
Pneumatic Tools 78 to 88 85
.. ' ..,- ,., --'
Pumps 68 to 80 77
, ,.. ,.., - -----. -
Dozers 85 to 90 88
.-. .-.-- ....... _.-.- ,-
TTllCtors 170082 80
----... ,., ...
Front-End Loaders 86 to 90 88
.... - .. -
HYdraulic Backhoe 81 to 90 86
... .. -..- ..-.--- .. , -
Hydraulic Excavators 81 to 90 86
".--'-'-- .., ,--
Graders 79 to 119 86
...~.. ----- ,-
Air Compressors 76 to 86 86
.., .... -
Tl\ICks 81 to 87 i 86
Source: Noise Control for Building.' and Mallufaclurllli Pllllts, BoI~ Beranek & Newl1lMI. 1987,
Typical noise levels range up to 91 dBA L",.. at SO reetduring the noisiest COl)struction phases, The
~it. preparation phase, which includes excavation and grading: of the site, tends to generate the
highest noise levels, because tj1e noisiest construction equipment is earthmoving equipment.
Earthmoving equipment includes excavating machinery such as backfillers, bulldoZCT'S, draglines, and
flQnt loaders. Earthmoving and compacting equipment includes compactors, scrapers, and graders,
Typical operating cycles for these types of construction equipment may involve one or two minutes
ofMI power opeJlllion followed by three to four minutes at lower power settings.
Cons1roction of the proposed project is expected to require the use of earthmovers, bulldozers, and
water lI!ld pickup trucks, Noise typically associ~ted with the use of construction equipment is
estimated between 79 and 89 dBA at a distance of 50 feel rrum the construction effort for the grading
phllSe. Thi> equipment would be u8ed on the project .ite. AJ; seen in Table C, the maximum noi.e
level generated hy each earthmover on the proposed project site Is assumed to be 88 dBA at 50 feet
from the earthmover. Each bulldozer would also generate 88 dBA at 50 feet. The mllXimum noise
level generated by water and pickup trucks is "Pl'roximately 86 dBA ~t 50 feet from these vehicles.
Each doubling of the sound sources with equal strength increases the noise level by 3 dBA,
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Assuming tbat eacb piece of constrUCtion equipment operate. a. an individual noise source, the worst
case compo.ite noise level durin& this phase of construotion would be 91 dBA T '"'.. at a distance of SO
feet from an active con~ln1ction area. The nearesl sensitive receptors to the project sites are localed
al a distance of approximately 400 feet, and may be subjected 10 short-term noise reaching 73 dBA
L.,.. generated by constnlction activities. The other rcsidcnliallocations In the general vicinity of the
proposed projecl are at a distance of 1,350 feet and 3,500 feet; tbe constrUCtion noise levels at these
locations would be 62 dBA L.... and 54 dBA L,..., respectively.
Construction related noise impacts of the proposed project would not eltceed the maximum noise
level permitted for locally regulated sources, and the impact would be less than significant However,
to minimize the impact of the constnlction noise on existing buildings on the project site and
residences adjacent to the project area, compliance with lb. City's Noise Control Ordinance would be
reqllired.
During construction, the project shall implement the following measures:
. The operation or use of any pile "river, steam shovel, pneumatic hammer. derrick, steam or
electric hoist, power driven saw, or any other tool or apparatus, the use of which Is attended by
loud and excessive Daise shall be restricted to tho hours between seven a.m. and ten p.m., except
with the approval of the Mayor and Common Council.
Lonl-Term No;'" Impa~
The long-Ienn noise impacts at the project site would be associated primarily with stationary or
mobile equipment used within the proposed project ;lle, Proposed nn,site commercial uses an:
expected to generale little or very low noise levels excepl at individual loading docks, where
loading/unloading activities would generate moderale noise levels.
Traek Delivery "nil LoolillnglUnloading. The on-site noise generating activities olosest to an)' off.
site sensitive uses would be from the loading/unloading activities associated with the retail store.
There will be a loading dock at the northwest comer of the retail store, approximately 400 feet from
the nearest residences. Based on noise readings from loading and unloading activities for other
siInillll' projects, a noi.e level of 75 dBA Lmu at 50 feet was used in this analysis. The noise
attenualion of loading/unloading activities, provided by distance divergence at 400 feet, i.
approximately 18 dBA compan:d to the level at 50 feet. Therefore, resideuces to the northeast would
be exposed to Ioadlng/unloadinlt noise levels of up to 57 dBA Lmu. The other residential locations in
the general vicinity of the proposed project are at a distance of 1 ,350 feet and 3,500 feet; lhe
loading/unloading noise levels at these locations would be up to 46 dBA Lmu and 38 dBA Lm..,
respectively, These noise levels are much lower than the City's ~riot noise standard of 75 dBA
J...,." during tbe day (7 a,m. to 10 p,m.) or 65 dBA L,.." during the night (10 p,m, to 7 a.m.).
Therefore, it is not anticipated that noise associated with the truck delivery and loading/unloading
activities will have any significant impact on the residences adjacent to the projecI site.
Parking Lot Activiti.., Representative parking activities, such as customer conversing or dOOf
Closing, would genel'llte intermittent, maximum noise level. of approximately 60 dBA L.... at SO feet.
7/S/OI<<P:IGVS033\n,vu.d Nouc.wpd>>
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The Jloise attenuation of parkin; lot activities, provided by distance divergCl\ce at 400 feet, i.
approximately 18 dBA compared to the level at SO feel TherefDr", residences to the northeast would
be exposed to parking lot activity noise level. of up to 42 dBA L..... This level of noise is much
lower than that of the traffic on tbe area roads, including the 1-21 S, or the loading/unloading of
trucks. Therefore, it is not anticipated that noise associated with the parking lot activities will have
any significant impact on the residences adjacent to the project site.
Traffie Nolle. The proposed project will generate additional traffic trips within the ~iect vicinity.
However, these trips would add a small, less than significant amount of noise along roadway links in
the project vicinity.
CONCLUSION
Construction of the proposed project would not result in any significant Inorease in long-term
stationary or mobile noise in the sUll'Oundlng areas, Construction activities are localized noise
sources and would affect only land uses immediately adjacent to the project site with direct line of
sight. None oftbe pO$$jble stationary noise sources on the project site will have the potential to
affect nearby sensitive land useS.
If you have any questions please contact me or Tony Chung at (949) 553-0666,
:lrc
Keith Lay
Assistant Project Engineer
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VAN BLARCOM
LEIBOLD
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A PROFESSIONAL CORPORATION
The Royer Mansion
307 East Chapman Avenue
Orange, California 92866
E-mail: lawfirm@CEQA.com
CALIFORNIA ENVIRONMENTAL QUALITY ACT ("CEQA") MATERIALS
[presented by the appellant to the
City of San Bernardino Common Council on
July 9, 2001, in connection with the appeal ofthe
City Planning Commission's adoption of the
Mitigated Negative Declaration prepared for
Development Permit II No. 01-05]
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NOTICE
RECENT COURT DECISION INV ALIDA TES CEQA GUIDELINES SECTIONS
COMMUNITIES FOR A BETTER ENVIRONMENT V CALIFORNIA RESOURCES AGENCY
[Sacramento County Superior Court Case No. 00CS00300]
A recent court ruling has held that certain State CEQA Guidelines are invalid. Even
though the ruling was by a superior court, the California Resources A!!encv has stated that public
a!!encies and oroiect prooonents should not relv on the invalidated sections (see attached CEOA
Uodate notice from the A!!ency's website) and has indicated that it intends to revise and amend
the affected sections to comport with the iud!!e's ruling.
Subdivision (h) ofCEQA Guidelines Section 15064 (see copy attached) directs the lead
agency to determine that an environmental impact caused by a project is not a significant
environmental effect if the impact is consistent with a standard applicable to that effect, provided
the standard applies to the jurisdiction where the project is located and the standard was adopted
by means of a public review process and for the purpose of environmental protection. This
provision was held to violate CEQA because it could lead an agency to abrogate the "fair
argument" standard for purposes of determining whether to prepare an EIR or a negative
declaration. The provision directs the agency to consider merely whether the project complies
with the standard, and whether the standard is "appropriate." Under the "fair argument"
standard, however, the agency must consider whether a fair argument exists that the project may
have a significant environmental effect, notwithstanding compliance with the standard - a
broader inquiry than the one called for by Subdivision (h).
CEQA Guidelines Section 15130 (a)(4) and Section 15064(i)(4) were also invalidated.
These section authorize the lead agency to determine that the project's contribution to a
cumulatively significant impact is "de minim us" and therefore insignificant if conditions would
be essentially the same regardless of whether the agency approved the project. The court
ruled: "the de minimus approach is contrary to established case law holding that a contribution
by a proposed project to an existing cumulative impact may be cumulatively considerable even
if it is relatively minor and could be characterized as insignificant."
Finally, CEQA Guidelines Section 15064(i)(3) was invalidated. This section authorizes
agencies to find that a project's incremental contribution is not cumulatively considerable if the
project complies with the requirements of a previously approved plan or mitigation program
designed to address the cumulative condition. The court held that this section contravenes
CEQA case law holding that a project may have significant cumulative effects even ifit complies
with significance thresholds in an approved plan or mitigation program.
CEQA Update
Page 1 of2
~90W~~~~ENCY
CAUp'ofRNYJ\ ~~
RESOURCLS HOMEPACE . CALIFORNIA HOMEP...C( . COVDtNOR'S 1I0MlP.I
CEaA UPDATE:.. June, 2001
!-egal Decision:
In Communities for a Better Environment...e.Lal. v. California Resources AgencY
(Sacramento Superior Court: Case No. OOCS 00300), the petitioners challenged
certain sections of the CEOA Guidelines that were revised in 1998. Following a
hearing held on April 13, 2001, Judge Ronald B. Robie issued a decision
invalidating the following Guideline sections:
15064(h); 15130(b)(1)(B)(2); 15130(a)(4); 15064(i)(4); 15152(f)(2) to
the extent that it incorporates 15064(i)(3) and (i)(4); 15152(f)(3)(c);
15064(i)(3); 15378(b)(5).
The parties have until July 30, 2001 to appeal Judge Robie's decision. The
Resources Agency advises that the invalidated sections should not be relied
upon, Instead, agencies and project proponents should utilize the CEOA statute
and the interpreting cases.
CE1JA Guidelines Review Process UJ)date:
Unrelated to the lawsuit, the Resources Agency began its statutorily mandated
biennial CEOA Guidelines review process in March 2000. The rule making
process is divided into two parts, one for technical changes and one for
substantive changes. Technical changes became effective February 1, 2001.
Based upon the ongoing review of the substantive changes, the Secretary for
Resources has decided to initiate rule making proceedings to propose
amendments to the CEOA Guidelines.
The Resources Agency has identified several substantive issues to be
considered in this rulemaking. In order to encourage greater public participation
and to allow for careful consideration of each revision, the Resources Agency
has separated the substantive process into two phases. All of the sections
invalidated by Judge Robie's decision are addressed during the first phase. The
Resources Agency is in the process of finalizing the proposed draft language for
the first phase amendments and plans to have the Notice of Proposed
Rulemaking to the Office of Administrative Law in the fall. Public hearings on the
revisions will follow. The rulemaking process for the second phase amendments
will begin early in 2002.
In the meantime, the Resources Agency anticipates sCheduling several informal
hltp://resources.ca.gov/CBE_notice.html
7/7/01
CEQA Update
Page 2 of2
pre-rulemaking workshops in Sacramento in the coming months. The Resources
Agency looks forward to your comments and suggestions, If you have any
questions, please contact Assistant Counsel, Nathan Goedde at
nCithan,goedde@lresources.ca,gov.
http://resources.ca.gov/CBE_notice.html
7/7/01
"I
TITLE 14, CALIFORNIA CODE OF REGULATIONS, SECTION 15064
[Determining the Significance of the Environmental Effects Caused by a Project]
(a) Determining whether a project may have a significant effect plays a critical role in the CEQA process,
(I) If there is substantial evidence, in light of the whole record before a lead agency, that a project may have a
significant effect on the environment, the agency shall prepare a draft ElK
(2) When a final EIR identifies one or more significant effects, the Lead Agency and each Responsible Agency
shall make a finding under Section 15091 for each significant effect and may need to make a statement of
overriding considerations under Section 15093 for the project.
(b) The determination of whether a project may have a significant effect on the environment calls for careful
judgment on the part of the public agency involved, based to the extent possible on scientific and factual data, An
ironclad definition of significant effect is not always possible because the significance of an activity may vary with
the setting, For example, an activity which may not be significant in an urban area may be significant in a rural
area.
( c) In determining whether an effect will be adverse or beneficial, the Lead Agency shall consider the views held
by members of the public in all areas affected as expressed in the whole record before the lead agency, Before
requiring the preparation of an EIR, the Lead Agency must still determine whether environmental change itself
might be substantial.
(d) In evaluating the significance of the environmental effect of a project, the Lead Agency shall consider direct
physical changes in the environment which may be caused by the project and reasonably foreseeable indirect
physical changes in the environment which may be caused by the project.
(I) A direct physical change in the environment is a physical change in the environment which is caused by and
immediately related to the project. Examples of direct physical changes in the environment are the dust, noise, and
traffic of heavy equipment that would result from construction of a sewage treatment plant and possible odors from
operation of the plant.
(2) An indirect physical change in the environment is a physical change in the environment which is not
immediately related to the project, but which is caused indirectly by the project. If a direct physical change in the
environment in turn causes another change in the environment, then the other change is an indirect physical change
in the environment. For example, the construction of a new sewage treatment plant may facilitate population
growth in the service area due to the increase in sewage treatment capacity and may lead to an increase in air
pollution,
(3) An indirect physical change is to be considered only if that change is a reasonably foreseeable impact which
may be caused by the project, A change which is speculative or unlikely to occur is not reasonably foreseeable,
(e) Economic and social changes resulting from a project shall not be treated as significant effects on the
environment. Economic or social changes may be used, however, to determine that a physical change shall be
regarded as a significant effect on the environment. Where a physical change is caused by economic or social
effects of a project, the physical change may be regarded as a significant effect in the same manner as any other
physical change resulting from the project. Alternatively, economic and social effects of a physical change may
be used to determine that the physical change is a significant effect on the environment. If the physical change
causes adverse economic or social effects on people, those adverse effects may be used as a factor in determining
whether the physical change is significant. For example, if a project would cause overcrowding of a public facility
and the overcrowding causes an adverse effect on people, the overcrowding would be regarded as a significant
effect.
(I) The decision as to whether a project may have one or more significant effects shall be based on substantial
evidence in the record of the lead agency,
-1-
(I) If the lead agency determines there is substantial evidence in the record that the project may have a significant
effect on the environment, the lead agency shall prepare an EIR (Friends ofB Street v, City of Hayward (1980)
106 Cal.App.3d 988). Said another way, if a lead agency is presented with a fair argument that a project may have
a significant effect on the environment, the lead agency shall prepare an EIR even though it may also be presented
with other substantial evidence that the project will not have a significant effect (No Oil, Inc. v. City of Los
Angeles (1974) 13 Ca1.3d 68),
(2) If the lead agency determines there is substantial evidence in the record that the project may have a significant
effect on the environment but the lead agency determines that revisions in the project plans or proposals made by,
or agreed to by, the applicant would avoid the effects or mitigate the effects to a point where clearly no significant
effect on the environment would occur and there is no substantial evidence in light of the whole record before the
public agency that the project, as revised, may have a significant effect on the environment then a mitigated
negative declaration shall be prepared,
(3) If the lead agency determines there is no substantial evidence that the project may have a significant effect on
the environment, the lead agency shall prepare a negative declaration (Friends of B Street v. City of Hayward
(1980) 106 Cal.App. 3d 988),
(4) The existence of public controversy over the environmental effects of a project will not require preparation of
an EIR if there is no substantial evidence before the agency that the project may have a significant effect on the
environment.
(5) Argument, speculation, unsubstantiated opinion or narrative, or evidence that is clearly inaccurate or erroneous,
or evidence that is not credible, shall not constitute substantial evidence. Substantial evidence shall include facts,
reasonable assumptions predicated upon facts, and expert opinion support by facts.
(6) Evidence of economic and social impacts that do not contribute to or are not caused by physical changes in the
environment is not substantial evidence that the project may have a significant effect on the environment.
(7) The provisions of sections 15162, 15163, and 15164 apply when the project being analyzed is a change to, or
further approval for, a project for which an EIR or negative declaration was previously certified or adopted (e.g.
a tentative subdivision, conditional use permit). Under case law, the fair argument standard does not apply to
determinations of significance pursuant to sections 15162, 15163, and 15164,
(g) After application of the principles set forth above in Section 15064fllig}, and in marginal cases where it is not
clear whether there is substantial evidence that a project may have a significant effect on the environment, the lead
agency shall be guided by the following principle: If there is disagreement among expert opinion supported by facts
over the significance of an effect on the environment, the Lead Agency shall treat the effect as significant and shall
prepare an ElR,
(h)(I)(A) Except as otherwise required by Section 15065, a change in the environment is not a significant effect
if the change complies with a standard that meets the definition in subsection illlffl(3),
(B) If there is a conflict between standards, the lead agency shall determine which standard is appropriate for
purposes of this subsection based upon substantial evidence in light of the whole record,
(C) Notwithstanding subsection illlffl( I )(A), if the lead agency determines on the basis of substantial evidence in
light of the whole record that a standard is inappropriate to determine the significance ofan effect for a particular
project, the lead agency shall determine whether the effect may be significant as otherwise required by this section,
Section 15065, and the Guidelines.
(2) In the absence of a standard that satisfies subsection illlffl( 1 )fAlta}, the lead agency shall determine whether
the effect may be significant as otherwise required by this section, Section 15065, and the Guidelines,
,2-
'1
(3) For the purposes of this subsection a "standard" means a standard of general application that is all of the
following:
(A) a quantitative, qualitative orperfonnance requirement found in a statute, ordinance, resolution, rule, regulation,
order, or other standard of general application;
(B) adopted for the purpose of environmental protection;
(C) adopted by a public agency through a public review process to implement, interpret, or make specific the law
enforced or administered by the public agency;
(D) one that governs the same environmental effect which the change in the environment is impacting; and,
(E) one that governs within the jurisdiction where the project is located.
(4) This definition includes thresholds of significance adopted by lead agencies which meet the requirements of
this subsection.
(i)(l) When assessing whether a cumulative effect requires an EIR, the lead agency shall consider whether the
cumulative impact is significant and whether the effects of the project are cumulatively considerable. An EIR must
be prepared if the cumulative impact may be significant and the project's incremental effect, though individually
limited, is cumulatively considerable. "Cumulatively considerable" means that the incremental effects of an
individual project are considerable when viewed in connection with the effects of past projects, the effects of other
current projects, and the effects of probable future projects. "Probable future projects" are defined in Section
15130,
(2) A lead agency may determine in an initial study that a project's contribution to a significant cumulative impact
will be rendered less than cumulatively considerable and thus is not significant. When a project might contribute
to a significant cumulative impact, but the contribution will be rendered less than cumulatively considerable
through mitigation measures set forth in a mitigated negative declaration, the initial study shall briefly indicate and
explain how the contribution has been rendered less than cumulatively considerable.
(3) A lead agency may determine that a project's incremental contribution to a cumulative effect is not cumulatively
considerable if the project will comply with the requirements in a previously approved plan or mitigation program
which provides specific requirements that will avoid or substantially lessen the cumulative problem (e,g, water
quality control plan, air quality plan, integrated waste management plan) within the geographic area in which the
project is located, Such plans or programs must be specified in law or adopted by the public agency with
jurisdiction over the affected resources through a public review process to implement, interpret, or make specific
the law enforced or administered by the public agency. '
(4) A lead agency may determine that the incremental impacts of a project are not cumulatively considerable when
they are so small that they make only a de minimis contribution to a significant cumulative impact caused by other
projects that would exist in the absence of the proposed project. Such de minimus incremental impacts, by
themselves, do not trigger the obligation to prepare an EIR. A de minimus contribution means that the
environmental conditions would essentially be the same whether or not the proposed project is implemented,
(5) The mere existence of significant cumulative impacts caused by other projects alone shall not constitute
substantial evidence that the proposed project's incremental effects are cumulatively considerable,
Note: Authority cited: Sections 21083 and 21087, Public Resources Code, Reference: Sections 21003, 21065,
21068,21080,21082,21082.1,21082,2,21083 and 21100; No Oil, Inc. v. City of Los Angeles (1974) 13 CaL3d
68,
-3-
"q
INTRODUCTION
The 6th Edition ofITE's (Institute ofTransportation Engineers) Trip Generation, published in
1997, is the subject of empirical analysis in the May, 1999, Case Study published by the ITE Journal
on the Web (the "Case Study").
BACKGROUND
In response to very few reported studies for the Free Standing Discount Store land use category
("FSDS") (including supercenters and warehouse clubs such as Wal Mart) in the 6th Edition of Trip
Generation, the Case Study performed its own analysis of 18 stores in Maryland. The Case Study
analyzed the correlation between several independent variables and their efficacy in predicting true trip
generation - utilizing both single variable and multivariate statistical models. The Case Study then
provides a comparison between true and estimated trip generation values and values obtained by using
current ITE data for FSDS,
CONCLUSION
The significant number of trips generated by Wal Mart (FSDS) stores is not accurately
predicted by the equations for FSDS obtained from Trip Generation (6th Edition). Figure 2 of the
Case Study illustrates that ITE trip generation values for a 90,000 to 160,000 square feet FSDS (the
proposed Wal Mart is 155,900 square feet) are underestimated between 25% and 50%. Based upon
the proposed Wal Mart square footage alone, ITE values would result in a trip generation estimate that
is approximately 28% below true values, predicted single variable values, and predicted multivariable
values as set forth in the Case Study. More important. given the AADT 000.000+ vehicles) for the
immediatelv adiacent 1-215 freewav and the artificiallv narrowed (I Y, mile radius) DODulation derived
for the oroiect's traffic studv, the Deak hour trios for the Wal Mart will easilvexceed 1.000. therebv
requiring comoliance with the Congestion Management Plan standards.
ADDITIONAL STATISTICAL INFORMATION
Of the independent variables chosen by the Case Study (size of store, parking, annual average
daily traffic of adjacent streets, nurnber of employees, population of the market area, population
density, catchment area), size had the highest correlation with trips. Accordingly, size was used for
the single variable analysis. Based on a 95% level of significance, size was determined to be the only
statistically significant variable. Additionally, however, the multivariate analysis resulted in a slightly
higher correlation coefficient than that obtained by the single variable analysis of size. In plain english,
while not supported statistically, the multvariable analysis predicted true trip generation slightly better
than the use of size alone as a variable. Regardless, these two approaches are very similar and equally
illustrate the shortcomings of the current ITE formulas used in Trip Generation.
Of the 18 stores analyzed by the Case Study, Table I shows that five were between 155,000
and 156,500 square feet, with corresponding trips I between 820 and 900. Figure 2 shows that the ITE
trip value for a 155,000 square feet FSDS is approximately 650. This number is significantlv lower
than the actual numbers for the FSDS as demonstrated bv the Case Studv.
I"Trips", as used herein, means p.m. Peak Hour Trips (ins and outs).
.'
Trip Generation Characteristics of Free-
Standing Discount Stores: A Case Study
THE RETAIL CHAIN THE INST1TVTt:: OFTMNSPORTA.
,ion F.n~in..m UTE)' "crnd)' published
CHOSEN fOR THIS STUDY ,h..;,dwlirion of Trip G<nmri.,,1 0,(;1
fcolO 750 new studies wer(: 1dded to th~
WAS FAIRLY DISTINCT IN ...i,,;ng dJ,:!I",.. for. co",hined ro,,] of
mOl'C thiln 3,750 individ\l1l trip sene-c;,l-
URMS of ANNUAL SALES, tion,\ludiCS, LJ,,,, colkctiOll.nd ""ini"'"
annl).,;s dfom resuhed in ,h. .ddi,;on of
EXPANSION OF EXISTING 19 newbnd u,..',
A review of ehe dati for the rree-Stand.
STORES, SIGNIFICANT ing D;<<ol1nt Store (FSDS) in the ITE
lnilJ'11111 indic3(CS ch:a for some [illl~ peri-
INCREASE IN NEW STORES ad" ,he nUI1lhcr of$ludi", reponed i. very
slllall-a, fe"" 15 thu:c. In rho.;c C;\se~. no
AND VARIETY OF reg,<,'ione<\u.lionsarcdevdopcd,
The ITE m.nl1,,1 eb"ir.e,\ Jll FSDS "
MERCHANDISE SOLD. . Ii-cc-mnding ;[Ore wi,h otT.meet p,rk-
ing. These stores offer a v;tricry of cus.
THE AUTHORS PRESENT tomel "rvices. ccncr,lizcd c:uhicril1G .nd
:I \..id~ flngc of proJucu. The)' C)'piCilUy
THE COLLECTED 'AND ,,,,in,,in long Sto'e hout> ".en d,ll" ·
.....eek. The ~HO~S inclulli!d in [h~ nudy :r.rc
ANALYZED DATA FIl.OM of"n ,he only c,ne.; on the ,ice. bu, ,her
;Ilso C1I1 be t~.IIUld in lll11w:II oper:uiol1
18 MAIl.YLAND STORES. wi,h , rd..cd N un <<bred g,,,dcn (<Iller
or s;:'f't"icc ccnr<:r. 'fbe JIl:mu:\l further i111lS~
(rJ[CS rku (he FSDS :\r~ somctimo f('lund
,\$ SCp:LC,HC p~,ds within a rcl:til ccompte:(
~\'i[h their own dedic.ucd parkin~.
B"scd on dl~ ITE dcfinidoll,ln: rc{ail
,h:J.in c!,OSl"n for [hr:: smd)' l113,Y be c1as$i-
fied as fSDS. This is consistent with :l
Stud)' by TRC Rarll10nd Key" AlSoc;-
:1((:1 (RKA).2 These ~(on:~ offer .t v.;dc:
v.uiccy of r1ll.~rch,1I1disc. maint:tin ions
510f( hours :\nd :1.(( norm:t1ly op:::n sevell
d:lrs ~ week. A UH\'cy of sites j;, Mar)'.
bnd. USA, ,how, Ih.. ,hey ore "orm,lI)'
the ollly sell!''! 1( the
BY MAIlDI K. JHA AND DAVID I. LOVELL ,ire. ,nd ,h.y h.".
their own i.!dic:uc:d.
p.1Jkiog. A sinsle rc:cail ch:.in w:s cho~'=J1
for the: purposc~ of rhi, C:h: stud)'
hCC:~ll)e d. sigl1ific<\nt amO\IIH or informJ-
tion wJ..~ n.::\Jily Olvaib.blc for thn~ stores
J.nd beeJuse lI1C focu.\ on one ;;miC\lbr
retailer shuuld help (cd\lc~ d,t;'efF~cr 011
1tI10U;NOl ON THI \>In I MAT ""
nip selll;~fJtion of vOlri~)U5 dissilllibrirics
bcrwccll competing rct:tilcrs.
BACKGROUND INFORMATION
In th~ p1.~( dcc:\dc. cht: numbel' of neW
reuil slOteS in the United $1;1((:5 Ius
~rown f~pidl)'. These stol'es COlu he: c1ilssi..
fied into ;H )C~[ dut:e different tilt::-
gorics: din:ount ~torc:s. S\lpcrccntcrs aud
mClllbcrship witfchouse clubs_ The
growth trcl\d for the p:lrticlllar rct:lil
ch:;.in in thi~ stud)" can b~ seen ill Figlu'e
1. While !>ii'C 1:13Y be: considen.-d:1$ one ('If
th<:: f..cwrs: tll1t dif(cn.:nti;lte bel\vCcn the
Cl,)l1ycntiun..l dhcounr score:!: :lnd the
S\lperccnt('rs, the biggest dirfcrencc
bct.....ccn them, is the n..ridt:~ of mcrchi\l1-
di<< they ,ell. The ,upereente..' ,dl r."
more \";tri~ries of mcrch;lI)disc I h:m the
di~count srore~. Tll~ ~torcS (h<lt wefe l\scd
in ,he p,""nr "udy "-ould .ll be eon,id.
cn:d di~eount s(On.:5 31\d w~~rc. vcry simibr
in n:l(ur<:, C\'~1l d10llgh [h~ir .~iz.cs !'';In!;cd
from 92,000 ''1''.He fe<< (''1- ft,) '0
156,500 'q, [t,
Such il si~llitici\lH Srowrh of FSDS j~
of intelest t('J ciry. fount)' :md stale tr&lffic
cngincen hcc;!us:e of the signific:ant
arnOullt or tfil.f}1c scncr:ul"ll br tl\l,~_~c
stor'.~J ".."ieh furdle! (:lX'CS t.he: :J.bilil)' of
c:;.;i~(ing j'('I;1ds alht lItrc:l.:[S to serve: If:lffic.
The .~igllifie~nt. number of rrips gt~ncr-
atcd br such stor(.~ may l10t be: accllt;l[c1y
predicted by the eqllation' for FSDS
uh[lincd from 1;.ip (."lJJ(T(l/iQlI. III {hI.:
cmn.:r.t study. :\ !i::p:l~;l(C n.:gr~!i!iiol1 ~qll"-
(iOll h:l-i been dcvdtlpcd fe)" this rl't;lil
fnn<:hiic USillg :le(llal data from 18 ...[on~S
in ~hrfl.nd,
LITERATURE REVIEW
In rt:eclH ,,'c;lrsl thcl'c hJ\'~ heen sc:vt.'ci,1
studies n:g:a.rding tril' gcncr:ltion f~)C
some blld lIH'S for which .ldcqu.\le dJ[,1
~re not :lYJilJble in lh.: ITE m:mm.l.
D:\u. ct :tP tl",'clopcd trip !;ent"f3tion
models for multil!~e hiGhway conlltlcl"ci-,\1
85
qnl7n 'rl
r nRRqqR 'ON X\!-1
~IIUS nl~I~N~"! U,.! In:~n ~nl RRRI-12-d~S
UD~
lQCll
~ 15D~
.
.'
-.
:1 Icoe
___,--I
~tO --- t
or-.----~~ -~l
1981 1918 17" uta 19t1 19'1 1n1 19n un 19n 1191
YtllSf
E'p'I~.~0!G!-: .:~s~up~u..i:.~. -~..~~i~"'~~. ~~'~!G,'SllOI~lcca,.:II.l;' ~ul1lb,jO~~:"J~
1101.: I. 1,'J. II"'..! I"" ~.,..... ......, ","<",...114 '" ...,..lC."~. T\....~.lft. ...."'"', ,r ,r:......c "....r. '" I'" klr.~ It..:" \In,
figure 1. Relngnt dol a IDllhe nlG~er.
devdopmCll'~' Patel e' ,1.4 pro,'ided trip
generation chlracrcrjnks of economy
nlord,. A simil" ",,<ly w,IS done by Slipp
~nlt HumtncrJ~ \l,,'hich provided :'l nip
~ener:\tion r;lte upd:Ltc: for public high
school.., The ""dy reported th" ,he
sm:tllllumbc-r of ~{lIdics in the ITE. "})11.
u2l a~!iociat,d with public high schools,
in e.{lnjunnion with their ::l.gt', warr:\Iucd
further study in the :Ira. The stuel)' b)'
PC)'lc:hn.lueG in...estigated tht:: trip gfnera-
tion ch~lr;!.c:tcriHics of shopping c.en[crs.
Tho study w;u done for the lTE l1\,"u,1
:md inycstig:\tcd lhf following:
. The relationship bet\olo'cl'n [rip gener-
alion alllt :\ (on,bin:\[ion of sc....cr3\
in,1cpem:lc'}t ''';lri3blc.~;
. Th~ definicion :md cb.ssificJ.don of
shopping een,.r, ",cd b)' IT!:;
. The dTt:ccs of [he :\[!C of the d;IU in
lhe ITE trip ~C\lC;.riOIl &J.t:tbase;
,nd
. Th: rclntiomhip bet'r\'ccn p15s-Ly
(rips :-tnd a combin-:\tjCln of several
indc:pc:ndcll[ v3.rbhlcs.
Tho: ronclusions of [h;: 5luJy wcn~
sllInm>1ril.cd :I.S rollows:
. Addi,;on,1 d", ,ho"ld b. collee"d
In further .<I',nd the 1TE daraba;e;
. Con,idemrinn sho"ld be givon to
collc:~[ing d1t3. fl)l" :ldditional inde-
pendent v,rjabl<< for bo,h rr p gen.
86
entiou 2nd p;Usrb}' [rips; :ll1d
. Considcl'ltiol1 should be sh'en [0
,ppIying [h. methodology ,nd pro'
cedures devclop~d for [hi~ :In;lly~is to
other 12ml uses lh:J.( In].y benefit
from lHultiV';uhble 2n3Iv)i~,
RKA condul:ccd 2. ~[udy for fi\'\~ retail
stures loc:ued throughout New Jersey,
USA, to derc:utline nip gr.::nerc[ion .lntl
p:l$s.b)" information.
The Pe)'rebrune "udy de,r1y indi-
cltC'd a m:ed to upd:1te the r1'l: tl:UJb3.se
i\lld th3l infoufl3[ion 01\ other significanc
v;tri:thlcs tnun be: explorfd. Th~ sixth edi-
tion of [he ITE lO~nual certaillly pro\'idc~
better informa.tion on sever:l! nc..... b.nd
us\.'s ;'lnd has 2 richer J:atchuc. Ilowc:n:r,
[he:: dJ.tab.ls~ for some hod lues is still
poor, including FSDS.
STUDY OBJECTIVE
This !itudy invesrir.:ucs (he trip Sc(lc.r~
;lCion ch;uJecerhti,~ of :l. major ret.1il
c1lJin. which may [,II in II" ''''r-ory of
FSOS, The ohjmi,'<< of this stud)' e," be
~umm:tritcJ :15 follows:
. Di~cuss thc rorrchajon belwe:en se".
('r;ll indepeml(IH \':Hi:Lbles usinG
:tC[llll d;uJ from exis[illg norc.li;
. AnCllyte rhe dlie>ey of ,,,,,.d inde.
pendent pl"cdi,mu of uip &ener:'t~
dOLl by escimating [he: coefficient of
detcrmil1lciol1, }<2, for sill~1c \,,;lTl.
~lblc rcgl'e..~~jO(l;
. Develop a sr.pu:nc: 1n1llriv""iiHC
regrcs}ion modd o:.nc.l compJrc in....jch
rhe best singl~-\..1I"i~b!c modelj ;ll\d
. Provide :l l'omp:tri~cm between the:
[fue :\1\0. csti&uJt\:d v:1.lucs ;!'l1l1 \';tlu~s
obr:ained ur usin:; [he ITE. lbu. fUr
FSDS.
The f"Unwinb il'ldcpe:l1dcnr vari,lbks
\,,'::'.C chosen flu the swd)'; .liilC of the
score: (~q. fc,). parking. ilnl'lll;!.1 :\....c,..ragc
.bil)' m(fie (A;\DT) of [h. ,dj,et'll[
snec[, number of l'llIplo)'cc~. population
of [he m:uket lreJ. popubtion dcnsity
(pOpllbrion/llni[ Stl\.l:\n: 1l1i1e) OInd die
c;llchment are;\ (!"qll;lrc. milc.~). C:ttch~
n1el'lt an::1 \loOtS c1cfinct{ :1..' the ~UC;J of [h~
rt"gion from .....hich ~hoppcrs would nor.
II'l:1.tly be: :J.tt1~lc.[cd co :\ p;,rdcubr nore,
c.iidnutcd qUJIi(;][h'c1y using ~\ circk of
hrgc: enough radius to capture the
emireLY of the nC'..;Hby CilY or rnunicip:LI-
it)'. Admit[edly, [his proc.e~!i t~ 5uhjt."\:t [0
gross frror. but morc aCC\Ir::lte: estim;lrcs
~olllJ no[ be pOisihle wilho.uc ,he us~ of
\ien.i1c~.:l Burkel n..st'arch. jnclLl\1ing per.
h:liU ~urvr.:ys of exisling (H p'lICn[ial
p:tUons. The pop1.:l:ition density was
comp\.1'::e::d by dividing [hc popubdon of
[he markt:[ are:\ hy the c:l.Cchment :lrC:1,
STUDY METHODOlOGY
The 1tud)' WilS done usillg da[J
obu.inffi from 18 srorc~ in Muybnd. for
;1n r:5DS, H'PMJ.[C [imc periods \oJ::re <J11:a.
I)'led for WCd\O;l)'S illld wc~kclHls in the
ITE m:U'lUll. Sep:l.r.ll~ rcgre~~ion Illodd~
were dc:vclopc:,{ for tWO indC"peIHh'.llt
\'arilbh.'~: gross nDOr ;;.n::\ ((;r:A) of r!H:
store: ;1nd n1.ll'"bcr of cmp!oyecs.. I Il)\\'~
c...cr, the numb:r of srudies rfponcd
lI~il'lg the number of cmpIOrl'~'i is "'t:1Y
limi[cd..-as fe:w ~5 (hn:C".
The: PC)"l.cbl"ull~ swdy imlic.;.tc~ due
for !lhnpping cc"~cr ucvclrJpmems. the
1\'cr;lgc: wcekd~y c\'eninr: f'cilk hom i~ the
mo~t cridc:ll time pcriCld. The 53me Jrgu-
m.,l[ m,y be ""lid for ,50S, ""sliming
simihr trip.making (endencics. Tho=
stuJ)' further illl.l:ttratcs du[ for sboppiflg
(cnt~rSI GFA do::s not necc~!'i.lriJy c;\pbiu
;111 of lhe v;lfiJbili()' in Hip g(:l1eratinn
ute, Thereforl::, Cl,nsidcr~Him'l $hould be
Slvcn [0 collee[il1f; Jddirion:11 data for
1lf JCURHAl OK lHl '(IU I MAll 999
on/m 'J
r nQpQQp 'm) YH"
~IIU~ nl~r"N~~ U~ In:vn ~nr hhhl-'?-~~~
"
\'ariou" in"tcpcncknc vJ.ri3.bles suc.:h as
adj:\c:cnc strcet crAffic, popubtion. hous:~
[",)Id income, ~hor?ing oppNcunities
~nd otl\cr socioeconomic vAriables,
Datil Col/ett;!",
The following dw were obtJincd for
thcall;\I~is:
. Trips in and ouc of d\c :store during
the p.Ol. p"'~lk hour of che 3dj<lccl\t
street on :\0 ;l\'cng~ weekday;
. Site "f ,he "orc, in 'q, f,. (GFA);
. P.uking sp2ce5 :wJibblc at cJeh
store;
. p.l1l. pcak hom uaffic of the ddj;t~
cem ~ucec based 011 AA DT;
. Nlln\bcr of employees working in
e:tch score:;
. The popul:\tion of [he: m~Hkcr .uca.;
2nd
. The c:Hclllnenc :\TC2 for [he swrc.
An in.(pc.::ccion of the m~'nchl)' cranie
v:uiation1 n:Aecced tln,c)uly W;l$ the: pe:\k
cf:lflic mond" Addition;\lly, the g:trJcn
cenccU rh:tt wcre VJ.IC of the HOfCS .....l.':l"C
norm;!.lly opell ani)' during spring :lI\d
~ummer monchs. 11,ereforc. che monch
(If July ....'3..\ cho~cll fl,)r the 311J.ly~i~.
While July is (he highest rrip'nl2king
month. it i; noC che highot rccail ~ho?
ping month. A monthly fJetor for tlte
retilil ~hoppins v:ariation is noC I'ro....ided
for ,h, r-SOS (Land Use Cod, 815) in
,h, ITE nlJnuJI. For shopping centers
(L,nd Use Cod, 820). howe"<<. ·
mOllthly rcr1il shopping \'Jriilfi(ln is ~'ro~
\'id,J in the Inanu,l. rhis V;ui3tion 1l1:\)'
be used for the discount 5tord since rhe
,,"dcncy for rct,i1 ,hopping nur b. lhe
s:Ulle for both' shoppjub CCl'ltt.fS ilnd di5~
COUllt $(o[es. Thus even though the
",Jlr,is included d,,, for July. i1Pl'ropri-
ate f.t<:m{S nl:lY be used co transbtc che:
trip~nl:lkin~ ce:lldency for other months
using the \'3rtHion t;\!;.Ic.
The trip' in 2nd our were obtained by
actu:J.l COUlltS at e;lich of the sites uuring
July 1997, A1,hough in m<'S< ems ,he
rtn,il fWllehisc W1S the only score ;'1( che
site:, in some. C;lSC5 chere wctC other scores
in (he: vicinity. However, C'ver)' effort .....;1~
made: LO CO\lllt onl)' the uame chu used
the reuil scorc:'s p;uking I(lt and W;tS d~.
tin<<! 'peeific21l)' for ,he rmilcr. In .ddi.
tion. in so",e c.~eS there. were muhiplc
accesS :1l1d egrcs; points:. 111 chose case~,
(he tr~rnC W:lS cmmn:d ;'It c:\eh ;1CCl'~S
poi'l\( :md th,,~n coml.Jincd LO giv~ the:
loull'lumber of in :md out [rips, 111ft> r-
11l1tion on MDT .....;!.s obCilim:d from die
file. of ,he l'vhr)'bnd S':He Hieh""a)'
Auministr;llion (SHA).7 lnforttl:ldon nn
che poputl1ion of che Ol:\\'kxt J.rc-.l .....:1.;
obc;.incd by di~cl1s~iclll wirh loc~11 :lU[h(')r~
ides. The cOlllp!ctC: d~ca for the 5C0f1:~ i.~
,hown in T,bl. \.
S!tJtirrkall1na&',:;il
Afu:r colkctinG the d:lC;I, ~[:ttisckj,l
\lnJ.l)"sC's were l'cl'forn)ed, wllich included
.i11 cxarninJclOn of the cond:uio~ tn:m.j,;.
,lnd single and n\uhjv:ni"te rq;res~jons.
Tht possihle r<;;rmioll modd, 'p~,licable
to the pl'e~Cl1{ sLudy 111:1)' br: Iincolr, loga-
rithmic. invcrlOC', lim:u.log:trithmic, or
log;lI'ichmic.lin~.\r. For 3. singlc-varil.blc
l"C'gfc$!iion, the deci!iion of wl,ich c.:"p!;tn:t-
tOry v;l.ri;lblc to me w:u b:lsed on m:\Xi.
Inizing the co~mcieut of determination
1l2. which is e'1l1i\"i\I~l\t to IIlJXin1i7.ing, tile
eOHebtion (in ;].b~olucc v;\ll1t:) bC(Y.'C'Cl\
the illdepc:nckl\t :J!lrt d"-p('.ndcnt "Jrii'lblcli.
Dcpilrrun:s from J. ~triccly lin~;H model
\I,'ouh.11u\'c bc:cl1 con.~id<.'n.-d onl" if they
\ TripI \ Trips T.I.!lrlp.. ' Sin
r~-' \ Ii.) ,(oul) intt~IS hq, II.! POlk..! AlDT E"'~'I'" f,
I 320 3~0 \ 670 95.000 4)0 21.000 20U 3
435 ,llS &~o I ~~.01)0 !l~O 20,000 215 I
137 443 sso 1j6,500 (,00 33,)7; 2.\0 1
400 310 780 110,000 550 8.000 207 I,
10S 415 820 I ~~,OOO ~OO ~3.0~0 215 4
3)0 320 650 91,000 600 7,000 liD 2'
195 305 I 600 110,000 %U 20,000 215 1
3GO 510 7UO 9~,OUO (.00 31:115 l~O 3
120 4~0 .70 155,000 SOO 18,000 2l~ 4
389 414 5U) 120,000 300 29.1~0 2\0 1
368 310 638 9~,OOO .00 21.B~0 190 l~
410 .\;0 900 155,OnO 760 6,250 2~O 3
420 41U 8'.0 145,000 700 7.979 103 2
337 4(,2 8-19 92,OUO ~IO 26,;!7S In l2
l09 311 1.40 110,000 4.S0 29,775 211 35
330 370 7~0 124,300 625 lO,OOO I 12-1 30
.~65 l3S 700 110,OUO ~OO 7.UOO 210 22
480 440 920 l-~S,aOo 600 42,OUO 240 .:'i0
II.
2
5
4
5
6
7
8
9
10
11
12
13
H
1 ~
16
117
IS
L-,
It[ lOUR~Al OH tilE YIEt I ru11i19
Table 1. Key dala lor the retail slares in Maryland.
pol.n..
;,000
0.000
;,000
-.000
~,"OO
J.OOO
0,000
0,000
5,000
O,noo
,noo
5,000
0,000
,000
,000
,000
,!lOa
,UOO
I P'p. (Olthmen,t
dEnsity or.. Radius
(p.p,f,,,,) (.q. ",0,,) (","os)
],27 ':'6 153.94 7
63,(.(' 31'1,16 10
35"i 706,56 15
18,72 907,92 17
143.21 314,16 10
19.~)l 1.256,64 20
32,1'- (.15,75 14
;\)0,1 ~07 .92 1'1
(j,;.GG 70("S6 15
259,.~ 15;.9,1 7
41~(.3 78.54 5
18'),00 201.0[. R
31,13 (,15,75 14
-1:;;.63 ,~i2.39 11
6;,91 530,93 n
9~.4') 314,16 t<)
11.1;4 ,530,93 13
157,19 2j4.1i 9
.__--1
87
r."" II..'" ..
,n('}0nnc '('\~I VU J
UITlle nTJT",r:U 1.1~ ?n~bn 'Jnl ~~~l-I?-A'J<;
"
otf.::rcd sit;l\ific;:111t improvt'111Cnt in the R'l
...:ducs. No such improvcmcnu .....cre
noted; hence ("Inly strictly lin~~a.in~p:1f:l-
meters m.odels arC' included he-re.
The correlation m;urix indicates the
,dative significan,"c of dle indcp(t'ldcot
vorbhks, a,' shown in Tobie 2. Th' fir>,
column of this ,":lah: shows dlC c,)f[cb.
ciOIl cocrrlcicnu between the dcpcnd<:tH
v1Ci,bl. (srip' gcneC1[ed) ,nd each of ,he
Table 2. Correlation motrix obtained Irom the regression analysis.
Pop'" Pop. (aI",,",",
Tr'fs Siu P..king !ACT EmP/'JM I,~... &!oftsilJ ,,,a Rl
Trips 1.00
Si~ 0,75 1.00 056
r~..kinr. 0,33 0,10 \,00 0,11
,\ADT 0,16 0.17 .0,31 1.00 OOl
Emplop:e 0.57 0,85 0,22 0,27 1.00 U,32
PlJ~lub.tiun o,n 0,27 .0.06 0,52 0.40 LOU 005
rOi" d':lljiry -0.02 -U,12 O,O~ 0,20 0,03 0,51 I.UO 0.00
C.'Uchmc:'Ir J,n:l .0,2-1 -u,21 O.O~ .0,35 -0.41 -0.4; -0,71 I.UO 0,06
Tobie 3. Results 01 regression analysis.
"1)'i1c ofRc~r('Jsio~: Si'ig1:= V~iiilhlc
Rr,uuioR Slalislitf
HZ
Stand.HJ l"rror
O\.J~CfYJtiOIU
0.56
68,87
15
ll\lcrcc}>c
Size
(otllicienlS
406,66
2.?6E-3
Standard trror
82,85
6561'.-4
!-SIal
4,91
4,52
p."luo
u,ooa 16
0.00035
J&1Illtin! .8tgrmiM E'Illllrirm: T. 406.66 ... (1.96 y. lO')} (Si:u)
Type of ~t.esc~.uiOl,l: Mu'tiv;H.br..:
R.grenionSlalisliu
r-
Sr.lIllbroJ F.unr
OI,,$(:r\',1tiOIH
u.64
78.6e
18
CoeHitienl1 Slondord tHor Htat
IUl<;rr.cr' ail.?5 366,20 2.38
Si'L( 0,0049 0.0019 2.60
l'~rk;n!; O,OU,O 0,1785 0,0'\
MDl' 0,0002 0.00 19 0,11
EOlpltl}''';c .3,2136 2,3005 .1.40
I'up\lb~io\' 0,0007 0,00)4 0.21
l'",p, t!~n1jry -0,1059 0,38;1 .0,27
C:lrdllllCIH Ja';'l _0,0970 0,1261 .0,77
p,ya!lIe
0,04
0.03
U,97
0,92
0,19
0,84
0.79
0.46
ROII/ting Jlrg~r'.I!;"m f:fJ/llfriofJ: r., ~71.'J5 ... (4.lJ ^ IO'])(Siz.-) T (7,0:0; lO'J)(ftukir.t)'"
(2,0 X IO,1)(AAVn -1J.2)(Empl'J"';) . (7.1 X 10"')(f'J',t-.,i,,,) -11,1 X 10,I)(V",ilj)-
(9,7 X lO,Z)(C.,rdJ1lll'fJJl
88
intltepcrulclH ....;ui:il.blc:~_ The squ:uc:s (If
the~c concl:llion coefficienr.; i1r~ l"h~ }?2
,,:\Iuc~ ,Iu[ WUllld ha....e resulted (l'om ~in-
~k.V;Hi:1blc r~~rcs~ioll~ on e<lel. of these:
vari:lblcs; hence ,he v.ui:ablr.: 'with tbe;
hi~hest corre:Lnian coefficient (in
absolute ....;I\UI:) is [he best choite for 1-
~in};le pn:dictoc, in the )cllse of nl.1"ilniz.-
ing [he Rl "Iue,
Became size 11;15 the: hit~H:'$t concb..
don with trips, it \\""l' used :I,~ [h~ indc:-
pendent vJ.ri:\blc for the: single: \'Jfi<1ulc::
an;,Iysis. The m,Jltiv:J.ri;ltc lq;n:s~i('ln w;.u
pcrformed mins; the indcpcndl"..nt \';.16..
,bks: si'"" parkin:.;, AADT of th, ,dj:t,
CC:JH snett, elllplo)'ec, papl1hdtJl\1
catchmellt a:\'" :\l1d ~'1oplli;!rion dcmity.
The t-stUislic and P-v:dtu,'s we rc:
olnlincd for t:.lch of the il\depcnc.lcllt
v"ri:blc~ in order co :1~5CSS rheir siljnifi..
C;lIlCC, The rcsuk~ of these rcgi'cssjolU arc
shown in ",ble 3, The "uc and predicted
v:\lucs for single: and 11111lrh,'.uhltc ICbCCS"
sion :1S well :I~ the sin~lc v;lciable: r<:grc:s-
~ion \.ISinS ITE. values: ;lfC shown in
Fi;urc 2, NOlt: th"'t beco\tlSe: figure 2 ill; a
line plot, muhiplt: sires wirll the s:\me sile
are eOluidl,,'rcd !iepilr:atcl)' on tne: :tbsds_~:\,
RESUlTS AND DISCUSSION
The correbtion nUU'j" indie:ues Lhat
(he si7,e of the store Ius :\ \'<.:ry hi!;h (.or.
"b,ion (-075) "ith ,he nllmber of
trips g.,;:ner;l(e:d, The nl:~t hi~hcn co He-
b.tion is observed between UUI\1U(I' of
employees ,"d ,rip' (-0,57) ;md rhen
bctw('e:n pHking and rrip:- (-0.33),
Ikei\lI.it. there:: iii ;l, vcr)' hiGh ('.orrcbtion
Oh5Cr'it.d bet.....een number of c:mployees
.nd ,i" (.O,8~), Ihi; slIggem thnc the
l1umber of r:llIployct:~ is jl('lt a ~I'lod sup.
plcmr:I1D.1 predictor of trip5, as corroho-
r:m:J by the: llluhin.ri:1tc: an;11rsis. 'I'he
other \'.riablcs have 11~~ligiulc imp:J.ct
on uip-nulil\t; tt'l1dency,
Th~ rnuldvari:\tc an;tl)'sis rcs\.llu in
'" Rl "dlle of 0,64. '['his i, ,lightly
higher ,h,,,, [hot ob':tined by , single
"Jri3hlc ;Il,;!'lpis for sile:. The t-n:~t
"ho,,"' [hot [he oull hYl'otlI<.,is em be
rcjeered for the size ;H [he 95 p..l'cl'nt
In'd (If ,.ibnifi::lI'lec, Thl'rl"(o:'e, !iize i~
siglliflCJnr:rhis is lis" obvious by look-
in:; 3.t the: P.....illue. which, when ,mL-
'f,elCd flom 1.0, richh ,he high"" bd
In JOURHAl O~ lH( WEB I MAl 19"
an/en '~
I nQ~qq~ 'mJ ~H ~
HIIUo; (1111 ~N1rl Url f'11:t>n 1(11. 6861-1?,-,11S
'""1
~-
,
--
. of $i(:.nitlc1nc~ 1t which dle null
hypothe.~is (:tn ~:lfcl)' be rcjc(rc:d. Th~ ,~
${adsdcS Jnd p-values for the other vui.
abl., ,ho'" ,hat ,he nllll h)'po,hcsi,
C..3.nnor b~ rejected at the 95 percent
kvel of ,i~nificance fot ,h.,. v>liabl.s,
Si7< is ,h:refoc. ,he only ,,,,,isdeally
signific;\11[ ....;lrial,le char contrihutes to
the trip.nu,king tendency.
A comparison or pl'cdicreJ ...:llllCS for
the: singl;: and nluhi\'ari;ue rc:grc!sions
rcvc:1h Iinle significant difference
br:twccn {he mode I.... :!.s SllbScSCC'll by [he
only .~ligh( improven\cnc in R2 (FiGure
2), Addi,ioll,lIy. Figllre 2 ,how, dl>t in
f!1(lS[ (but noe itlll (:m:s, muldvui.:l.cc
.:millysis i~ a bew,:r predictor chan single
v>li,ble .nalysis. Qu.li,a,inly. ,his
OblCr\':lCion is consiS{CIH with [he ~Iigh[
improvcm<.:nt in the R2 value oFFered by
the: rllultivarhcc motlel. The: plot of (fUt
"al\lo" pr..,Jicced ducs and [he lTF. val,
uc:..~ for $illCIc vI1riablc lee-cession jndi~
<"es ,h" th. lTE data c1ead!
\.lndercnit1l:HCi [h~ trips (Fj~urc 2).
CONCLUSIONS
Ihsl.:d 01\ che swdy, [h~ r\')llowins con~
c1l1Sioll!i ma)' be drawn:
1. For the FSDS .hwcsrig:HCd in thii
study, SilC is the most signiHcanc trip prc~
dictor. which :1ecollnts for 56 percenr of
the: \'~lfi:1ncC in trip-l11:tking tcndt'[1cy, In
~lcr. the :)ignific:l!lce testS show th:tt size
is rhe only HJtistiolly signifICant \';uiable
in thc i.lIlalysiJ.
2. The ocher v;HiJblcs lh:1t somcwhat
(;(lnnlbuc~ to the ccip.m:'iking rCl1dcncy
~rc:: number of l.:l1lplop.:cs and p:.rking.
lIow:\'cr. bcC:llUC numher Qf employees
is highly corrr:becd to the site. it ofTc::rs
little aJdition:t1 c:xphnarion for ...:uianc<:,
The cfFcc.;t of p:trking is much Ie..,s thiln
si1.e, whetl considered scpariltely. and
offers lilcle: mi'lrginal improvemcnt, "".he:ll
ehe t......O :l.rc conliiderc:tl jointl)".
3. The AA DT. population, popula.
tioll densit)' Jnd {he C2tchmem aralud
the: ,'\,;rr least imp:l.ct on the: trip-m~king
(CnJellCY :Ind. lhcrc:rore, may b~ ignol.ed
in thc'lI'ip gener:ltion ;lnJlysis.
4. 1'h: pn..Jictcd ,.,)11I:~ for rnulriviui:.Hc
;'lI1J!Y'i.~ Jrc t,.!o,cr to thl:: true \'JJucs dun
tho: predicted \'";I.h.:c:~ for sinSlc vari:lblC
:m:llysi~. Thc."r~forcl die muhi";\fi:uc an~l)'.
III JOlIllHAl ON THr wn I "''''T In,
r.'" "...., . I
T""",.,,,,..,
~
I 1&0 1- a
- .
'"
d
.
.___t.":
----. .
. :_--
.-----..--.
. ~------. .
-. .
. .
1e0
e 100
..
'"
.
,.:! 100
~
" ,oD
...
...
--
.-
---------
---
~~----
.
'"
'QClCC:
lOCOOQ
HCono
110000
lJ~~I)~
,
lmoo
l5OCUO
160iJOQ
~iu t;" fl.)
L~. l.Iut - :~r.~il;.4 ISl;,g" iY~k1Mtl'~'_i'D"';;'l ... ,,,Ji;lrJ l-"'~hi.;,;.,~, Rr'!I';::i'~I- ....jof':~I.U
F1iun 2. PI,' o( If"', predi(ltd and In valves.
----.
si~ Si....cs:l hetter fit of the: d3tJ. IfinfonnO\~
tion on other \'O\rb.bk.-s suc.h ;u cmplo}"c;c$,
p:ukinS 3nd population i~ known. a m\llti~
,.,rbt< ."alysi.. should be: performed. O,h.
crwise a single ,.ariablc J.ClJlysis fur size
mitY he pc:rfUnncd. with Il[d~ slcriucc in
stacistiClII)" J~rensible accuracy.
5. The ,qulCion d,velop.d in ,he IT!:
milll",1 for FSDS is no', ~uod predictor
of [tips fot FSDS, Th. ITE ,qu..ion nor.
m;dly llnden:scimltcs.the number of new
trips geI1Cr;1tL-J.
6. The: dJU used in lhis swJy may be:
addo.! '0 ,b, 11'11 d""lme fur FSDS, ·
Re:fi.-ratal
\. 1'1'1:. TrIp CrMrtHil1l/, 6dltd. \X::I~hi:,,;zroll
D,C" USA. 1997,
2. RKA. Tri! GrMfJri,m Swd; N....... Jcncy
',);':J.""bn Slorc~. O:.:~\:mt>cr 19c.J5.
3. D.m21 T.K., S. D:ur.\ :ulll P. N:\nll;I~'~.
1~C:lli. .'Trip GC'Il::rHinn Moc\ch for f.-tu:tiusc
Hi~h""':.r C"mrrll:rcbl Oc~c1OJ'mcllu." ITE.
}UlIrr.4I(Fcbru:lry 1998): 24-30.
4. l';l.[d. M.I., F.]. \'(fcl:J'n:J.I~11 :md A. Ch:lttcr-
jee. "Trip Gcn~r.uiVI1 (.huJ.clI:rhricl ofEc.nnOlRY
Motd~: ITEjuurfllll(M:J.1199tl): 21-26.
5. Slirp, I~R.M.. :lI1d J.r... H\lmrr.cr. -Trip
Gtl\cr:lfinn R.tfc Upduc rcr Public Hi~h
$",oo!,: I1'EJO"".IUO"' 19%): 34-40,
6. l'qrl:hulIlC'1 J.C. NTcip (:em:n(iQI1 eli;u.
~([:rj:Hi,s of .showing Cr.:IHCH." ITE jOltlff/rl/
U"", 199(.): 46-50,
7. ~hrybnJ O..:p.mmI.'IH Clrrr:1iurom.:ilJn.
rrllffi~ Tr..//{I! 19:15. St;\:::- Highw;.I.)'^Jminhir:t.
fion, 1'.195.
.......,...........,............................,...
MANDl K. IHA,
RE.. is If 1irllu/,fJrrAtif1n
E"~~lIur fur ,!It Sf/A in
[ldll!",tlrt. "M. H( "lrn
iill.'(lr:.j"ttolrwdl,!;
Ph.fJ. i"I~JlJJP""T"",lt'l"
t'1I~(i'l(m.nf lit t"~ U",1-
'.'c.",sil)' fI! /.{rlf/'II1I1I.
Cnlltf( J~frk.p,tt !'nU! If B.E. ill mn.)frlfti~tfl cllgi-
I!r~rjIl3frQ'" U!girm,d 1:.".r:illl.(TilIJ [,,(/'';..'<:. D/lr.
~f{(lp"f. [lIdi". tl'lJ (1!l1\1.S. ;lIlilr..";'t:lljcfI{
",:~i1!".,jjjtl;'rJ'" Old DrJ,jlil,;nlJ U"iWfiil); f,'/JT-
fJ!{., V:.. Ui..f.IILUffllA.;:r.cilf{r.\follhulJ/17r.:.
DAVID J. LOVELL
iI4I1A!i;!MJIt/',Tlj..S!(Jr
bl rlJC [)r/,.tI/PIurt:"r
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89
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GENTR Y V. CITY OF MURRIETA
(1995) 36 Cal.AppAth 1359, 1414-1418 [4'" District, Division 2]
"1. Effects on Traffic,
Gentry's contention that EA No, 34807 failed to consider cumulative traffic effects is factually
unfounded. A cumulative effects analysis requires consideration of "reasonably foreseeable probable future
projects, if any," (Citizens Assn, for Sensible Development of Bishop Area v, County ofInyo, supra, 172
Cal.App.3d at p. 168,217 Cal.Rptr. 893.) The traffic impact report upon which EA No. 34807 was based,
however, specifically compared existing traffic to the traffic that would result not only from the Project, but
also from other projects planned in the vicinity, It also compared existing traffic to the traffic that would result
from full buildout of the area pursuant to the Community Plan, This necessarily included "even projects
anticipated beyond the near future." (Id,)
Gentry's further contention that EA No, 34807 and the traffic report upon which it was based
considered only impacts on urban roads and ignored impacts on the "rural road system" is likewise factually
unfounded. She indicates that by "urban" roads, she means those one mile or more away from the Project. The
traffic report, however, considered not only the Project's impact on existing intersections (which appear to
be a mile or more from the Project, giving rise to Gentry's contention), but also on existing roads in the
immediate vicinity of the Project. We find no substantial evidence that the traffic report failed to consider any
relevant road.
Finally, Gentry contends that there was evidence that the Project as mitigated would still have
significant adverse effects on the rural road system, Under the Guidelines, "[a] project will normally have a
significant effect on the environment if it will ... [c ]ause an increase in traffic which is substantial in relation
to the existing traffic load and capacity of the street system." (Guidelines, appen, G, subd. (I ).)
The traffic report showed that the Project would degrade levels of service at three nearby
intersections, and would increase traffic on Los Alamos Road by at least 73 percent. Gentry claims there is
evidence that the Project would increase traffic on Los Alamos Road by more than 100 percent, which she
contends is, in itself, a significant environmental effect. We believe this figure is, ifanything, too low; there
was evidence that the increase could be as great as 129 percent. [FN29]
FN29. Gentry calculates as follows: First, for existing traffic volume, in place ofthe 2,200
ADT's given in the County's traffic report she uses 1,244 ADT's, which she derives from a
different traffic report, done in 1992. She points out that the figure in the County's report
appears to apply to a different stretch of Los Alamos Road than the one closest to the Project.
Next, for the traffic volume the Project would add, she uses a figure of 1,980 additional
ADT's for the Project as a whole, which she purports to derive from the traffic report, then
multiplies by 70 percent, the percentage of total trips which the traffic report found would
involve Los Alamos Road, She anives at 1,380 additional ADT's. This is an increase of a
little more than 100 percent. Her figure of 1,244 ADT's for existing traffic volume is fairly
arguable from the evidence, as is her figure of70% for trips involving Los Alamos Road. The
traffic report, however, found that the Project would generate not 1,980 additional ADT's,
but 2,300. When multiplied by 70 percent, this gives 1,610 ADT's on Los Alamos Road, an
increase of 129 percent.
These were matters of fair argument, supported by substantial evidence in the record; indeed,
respondents do not contend othelWise. Their central contention is that the Project's effects on traffic were
consistent with the Community Plan, and therefore had already been considered in the Plan ElR. As we have
held in parts V,B. and V.c., ante, however, the City did not take advantage of any of the "piggy-backing"
provisions ofCEQA--an SElR, tiering, or section 21083.3--that would have permitted it to rely on the Plan
EIR. Moreover, it did not comply with the procedural requirements applicable under either tiering or section
21083.3,
In the absence of some form of "piggy-backing," the Project's effects on traffic could be "significant"
even though they were consistent with the Community Plan, "When assessing whether an EIR is required ...,
the local agency is required to compare the newly authorized land use with the actually existing conditions;
comparison of potential impacts ... with potential impacts under the existing general plan is insufficient."
(Christward Ministry v, Superior Court, supra, 184 CaLApp.3d at p, 190,228 CaLRptr, 868; accord City of
Antioch v. City Council (I 986) 187 CaLApp.3d 1325, 1332,232 CaLRptr, 507 ["conformity with the general
plan for the area... does not insulate a project from the EIR requirement, where it may be fairly argued that
the project will generate significant environmental effects"]; City of Carmel-by-the-Sea v, Board of
Supervisors, supra, 183 CaLApp.3d at pp, 246-247, 227 CaLRptr. 899 [effects of rezoning had to be judged
against existing conditions, not against conditions permitted under land use plan]; Environmental Planning
& Information Council v. County of ElDora do (I 982) I3 I CaLApp.3d 350, 354, 182 CaLRptr, 317 ["CEQA
nowhere calls for evaluation ofthe impacts of a proposed project on an existing general plan; it concerns itself
with the impacts of the project on the environment, defined as the existing physical conditions in the affected
area"]; cf. Benton v, Board of Supervisors, supra, 226 CaLApp.3d at p. 1477, lb. 10,277 Cal.Rptr. 481 [rule
that project's effects must be measured against existing conditions rather than against conditions permitted
under existing plans does not apply where issue is whether to prepare an SEIR].) Certainly a project's impacts
may be significant if they are greater than those deemed acceptable in a general plan, (Oro Fino Gold Mining
Corp, v, County of El Dorado, supra, 225 CaLApp.3d at pp. 881-882, 274 CaLRptr. 720 [lead agency's
finding that project would have significant noise effects was supported by substantial evidence that project
would generate more noise than maximum permitted under general plan].) We do not agree, however, that
a project's effects cannot be significant as long as they are not greater than those deemed acceptable in a
general plan,
Respondents contend that the City was entitled to evaluate the significance of the Project's traffic
impacts against "legislatively adopted standards of service," by which they mean the Community Plan. In
support ofthis proposition, they cite Citizen Action to Serve All Students v. Thornley, supra, 222 Cal.App.3d
748,272 CaLRptr, 83 and Schaeffer Land Trust v. San Jose City Council, supra, 215 CaLApp,3d 612, 263
CaLRptr, 813. We do not agree, however, that the Community Plan constituted such a "standard ofservice."
In each ofthe cases upon which respondents rely, the lead agency used predetermined engineering standards
to judge the significance of a traffic impact. (Citizen Action to Serve All Students v, Thornley, supra, 222
CaLApp.3d at p, 756, 272 CaLRptr. 83 [10 percent increase in delay at intersection would be significant];
Schaeffer Land Trust v, San Jose City Council, supra, 215 CaLApp.3d at p, 623, 263 CaLRptr, 813 [reduction
ofIevel of service below D, or, if existing level of service was E or F, increase in traffic volume of I percent
or more, would be significant],) The Community Plan, by contrast, did not purport to be a ruler against which
the significance of a traffic impact could be measured, To the contrary: it provided for traffic levels which
were, as the Plan EIR concluded, both significant and not susceptible to reasonably feasible mitigation.
The traffic report and EA No. 34807, which relied on it, concluded that the traffic impact of the
Project, as mitigated, would not be significant because it would be no greater than the impacts already
contemplated in the Plan EIR as a result of the Community Plan. This was a non sequitur. This very defect
in the initial study, together with the substantial evidence in the record that the Project's traffic impact might
be even greater than the initial study found, gives rise to a fair argument that the Project, even as mitigated,
would have a significant impact on traffic.
We conclude that the County abused its discretion in adopting a negative declaration for the Project
despite the existence in the record of substantial evidence supporting a fair argument that the Project, even
as mitigated, would have significant adverse environmental effects on traffic, The City further abused its
discretion by adding mitigation conditions 31-32, 122, and 125, to the extent that they related to traffic
effects, without recirculating its proposed negative declaration."
2
EXPERIENCE:
'<::i
PROFESSIONAL RESUME
OF
JOHN G. McCLENDON
John G. McClendon bas extensive experience in the
preparation and review of legally defensible Environmental
Impact Reports, Negative Declarations, project exemptions,
and other environmental documents for public agencies to
assure compliance with CEQA and State and local CEQA
guidelines. John is also an experienced CEQA litigator at
both the trial court and appellate court level, baving
successfully argued four CEQA cases before the California
Court of Appeal in the last five years. Earlier this year, John
successfully defended the City of Orange in a CEQA lawsuit
challenging the expansion of a private high schooL Last fall,
John obtained a favorable decision for the City of
Lake Elsinore in a higb-profile CEQA lawsuit against the
Riverside County Local Agency Formation Commission, In
1991-92, he was extensively involved, at both the trial and
appellate level, in a CEQA lawsuit filed against the City of
Anaheim regarding the Arrowhead Pond. In 1993-94, be was
extensively involved in the successful settlement of a CEQA
lawsuit filed against Anaheim by a neighboring city.
I
EMPLOYMENT:
Van Blarcom, Leibold, McClendon & Mann, p,e.
Orange, California
1994 to Present
Stradling, Yocca, Carlson & Rauth, P.e.
Newport Beach, California
1990 to 1994
PUBLIC OFFICES:
Assistant City Attorney, City of Lake Elsinore (I 997-present)
Deputy City Attorney, City of La Quinta (1990-94)
Deputy City Attorney, City of Lancaster (1990-91)
Deputy City Attorney (interim), City of Norco (1990,91)
Assistant City Attorney (interim),
City of San Juan Capistrano (1991-92)
Assistant General Counsel,
Coastal Municipal Water District (I 994-present)
Assistant General Counsel,
Capistrano Beach Water District (1994,1995)
General Counsel to the City of Lake Elsinore Redevelopment
Agency (1997 -present) and the Redevelopment Agency of the
City of Santa Clarita (2001).
Special Legal Counsel to the Cities of Anaheim, Orange
(I 995-present), and Sierra Madre (200 I).
Special Legal Counsel to the Redevelopment Agencies of the
Cities of Anaheim (I 990-present), Calimesa (2000-present)
Dana Point (1991), La Puente (1990-91), La Quinta (I 990,
94), Ontario (1990-1999), Orange (I 996-present), Pasadena
(1990-91), San Juan Capistrano (1991-94), Victorville (1990-
91), West Covina (1992-94), and Yucaipa (1992-93).
PROFESSIONAL:
Co-instructor of the California Redevelopment Association's
November 4-5, 1998, "Introduction to Redevelopment"
seminar for staff and officials of the City of Long Beach.
Taught "The Powers of Redevelopment" course at the
California Redevelopment Association's October 4-5, 2000,
Redevelopment Institute in Marina del Rey.
A member of the State Bar's Environmental Law Section, he
has presented continuing education courses on CEQA to other
attorneys, including two seminars that were approved for
MCLE credit.
2
EDUCATION:
PUBLICATIONS:
ADMITTED TO PRACTICE:
AFFILIATIONS:
University of Southern California Law Center
Los Angeles, California
Juris Doctorate, May, 1989
Editorial Board Member (1987-88),
Harvard Journal of Law & Public Policy
University of California at Irvine
B.A. Degree, cum laude, 1986
Fuller Theological Seminary, Pasadena, California
M.Div. Program, 1976-77
Westmont College, Santa Barbara, California
B.A. Degree, 1976
(with Ronald A. Van Blarcom) "Stay Tuned for the Next
Exciting Episode of "We 'Gotch'-Ya" or, "Don't Make Us
LAF(CO)"" California Water Law and Policy Reporter,
August, 1994.
"Don't Let Tigard Scare You! Cities Can Shoulder the
Burden Placed Upon Them by This NewU.S, Supreme Court
Decision" Western City, October, 1994.
Book Review: DISCLOSING TILT: Law. Belief. and
Criticism by David S. Caudill Antithesis, March! April, 1990.
Book Review: LIABILITY: The Lel!:al Revolution and its
Conseauences by Peter W. Huber Antithesis, JanlFeb, 1990.
All Courts of the State of California, 1989
United States Court of Appeals for the Ninth Circuit, 1989
United States District Court for the
Central District of California, 1989
State Bar of California (Public Law Section and
Environmental Law Section)
3
REPRESENTATIVE LIST OF
CLIENTS / PROJECTS
City of Anaheim / Anaheim Redevelooment Al!encv
CEQA litigation:
. The Pond / Phoenix Club Relocation;
. City of Fullerton v, Anaheim Redevelopment
Agency re: Anaheim Commercial/Industrial
Redevelopment Plan adoption
CEQAlNEPA and environmental compliance on:
. Anaheim Plaza redevelopment project;
. Brookhurst Commercial Corridor Redevelop-
ment Plan;
. CommerciallIndustrial Redevelopment Plan;
. City of Fullerton's General Plan Update;
. Jeffrey-Lynne housing project;
. Kaufman & Broad "Area 5" housing project;
. Northeast Area Specific Plan No. 94-1;
. South Anaheim Boulevard Overlay Zone;
. West Anaheim Commercial Corridors
Redevelopment Plan
Banninl! Bench Community ofInterest Association
CEQA litigation: Banning Bench Community of
Interest Association v. City of Banning (Lorna Linda
University property)
Banning Heil!hts Mutual Water Companv
General Counsel
Cherry Vallev Environmental Planninl! Grouo
CEQA litigation:
. CVEPG v. San Gorgonio Pass Water Agency
re: State Water Project Importation Project;
. CVEPG v. All Persons Interested (Riverside
County LAFCO and City of Cali mesa)
re: Sphere ofInfluence and Annexation;
. CVEPG v. City of Cali mesa re: Pre,Annexa,
tion and Development Agreement
City of HuntiOlrton Beach
CEQA / PUC proceedings re: Bolsa Chica wetlands
City of Lake Elsinore and Redevelopment Agencv
City Attorney / Agency General Counsel
CEQA litigation:
. Sphere ofInfluence / Annexation-two matters
CEQA and entitlement work on over 12,000 homes
4
REPRESENT A T/VE LIST OF
CLIENTS / PROJECTS (continued)
-
City of La Ouinta and Redevelooment Aeency
CEQA litigation - Redevelopment Project Area
City of Lancaster
CEQA litigation - State Prison site
Lee v, City of LomCJoc - CEQA litigation:
represented Real Party in Interest
McDowell v, County of Riverside- CEQA litigation:
represented Real Party in Interest subdivider
City of Ontario / Ontario Redevelooment Aeencv
Major projects include:
. Ontario Mills [1990-1999];
. Ontario Auto Center;
. Ontario Convention Center;
. Ontario Plaza redevelopment;
. Edwards Ontario West
City of Ora nee / Oranee Redevelooment Aeencv
CEQA litigation:
. Jobe v. City of Oranf!e [real party in interest
was Lutheran High School of Orange County]
Recent projects include:
. Chapman University expansion;
. Main & La Veta redevelopment project;
. Merger of Redevelopment Project Areas;
. Stadium Promenade/Century 25 Theatres
Ontario Convention Center Corooration
General Counsel, 1998
City of Riverside Redevelopment Al!encv
Agency Special Counsel
CEQAlNEPA on affordable housing matters
Southland Comoanies
Recent proj ects:
. El'Paseo/Edwards Theatres 20
(City of South Gate)
. Jurupa Valley Spectrum/Edwards Theatres 14
(Riverside County)
5
07/05/01 111U 14:12 FAX 1 415 626 2860
D.,G. .&.8..
o A V I 5 ,
COWELL
L L P
Reply to:
&
BOW E .
'Counselors"and Attorneys at Law
~OO? .
- it;. ...~
":. .\ .,. ..."1,'..,.....-.:
l00V"'8.Aft"...,2Oth"~ :By fax 909-384-5080
San FrmKD. c~rilorni~ 91102 i
415.625.1880 i
,,,415""'" ,Valerie Ross
,Principal Planner
B.lnys.Jeaison(CA)!. f d'
J Tho ; C~ ty 0 San Bernar ~no
. IfIiSBowfn(CA.NV) I
'''''''U''''''''''..ICA,N'/) :San Bernardino CA 92418
Ridwlrd G. McCr~ken leA, NV)
w. tmoid Hobbeny lCA. NV) ,
'''''''''An''''''''''''{CA.N'/) IRE: Appeal of Development Permit II No. 01-05 (July 9th
And,owI.Koh.lCA,NV,A2) ,Council hearing)
JchnlDavts-.Jf.((AJ ,
FIomu E. Culp leA, NY) :
MidlielT.Andenon(CA,NV.oc.MAl I Dear Ms. Ross:
TirnothySran(CA,NV,DQ'
KristinL.Milrtirl(~ ~
, Enclosed please find additional information
""IiPP'"::;;;:; ! supporting our appeal for you to distribute to the
",,,""""'(TM) Council, an expert opinion from retail management
jconsultant Peter Whelan. It supports our claim that this
;Un.M'.tDt1 't '11 l-k 1 bl' ht h '1
I1SS;'th'......w.,,"..., proJec w~ ~ e y ~g ot er reta~ stores.
W"""glon,oe,lIOO5 : The enclosed opinion refers to a study by Wharton
202.2232'" IProfessor Edward Shils: by overnight mail you will receive
Fu:202.223.86S1
:six copies of that study, along with six copies of another
....,..,...ophy~ i study of WalMart's impact by DC Professors Boarnet &
JenniferMatisroC,NY.UD) 1 d' 1 h f
' Crane. These stu ~es are too engt y to ax.
i Under separate cover you will be faxed an expert
,
;_...tt~"_1l~:opinion letter on this subject from William Lathrop,
a8elConSt1~4tt1f100f:
_"'....."". ihopefully by the end of today.
"",227,'120 ! Thank you for your consideration.
F.u611.1Z1.5767
,
,
Mid\iel T. Andeoon ItA. NV, DC. MAl !
i
Rob8tP.CoweI\(l!111.198&1) ~
,
I
~\\~
..... ".;lMa......1.
1630S.C0Im"lI:'te5trrel,SulteA.1 j fax cc:
lasVt(las.NeY~.n102 .
702.38&.5107 i
fa.. 102.386.9848
....0
July 5, 2001
John McClendon
Carol Gold
Sincerely,
~~
Attorney for Carol Gold
+32-
7-9-01
""I
07/05/01 TIIU 14:13 FAX 1 415 626 2860
D.C, & I),
~003
PETER M, WHELAN
9479 ViCtoria Lane
Windsor, CA 95492
May 7, 1999
Clerk of the Bowd
Board of Supervisors
COUNTY OF RIVERSIDE
4080 Lemon Street, 14'" Floor
P.O. Box 1147
River;lde, CA 92502-1147
Re:' Appeal of Penny Newman re: Wal-MBrt Warehouse, Plot Plan No,
15861 (FfA 99-4), Environmental Anesl!ITIllIlt No, 37602
Honorable Board MembC<'t:
I am a m3Jlagement advisor/consultant whn is very 6uniliar with general merclwJdise ilnd
fuod retailing including the unique procurement, warehousing and distn'bution characteristics
associated therewith, In addition, I have e'Xtensi~ly studied the economic, social and
environment impact ofWal-Mart's corpor!tc phil~sophy and retail ~tratcgy in numerous
conununities within California, Attached is a brief summary of my professional experiences, skills,
and quaWlcations,
It is my undersianding WaI-Man is proposing to build Il dismbution center in Riverside'
CoWlty, I have been aslced for my opinion on the econnmic impact such a development will have
and the environmental impact associated therewith.
Construction of a Wal-Mart distnbution center in Riverside County win act as a catalyst to
dl:VClopment ofWal,Mart stores in Southern California and activate its move into the gro<<ry
business through its Supercenter format. This in turn will create disruptive and possibly costly
changes to traffic; patterns in many wmmunities. '
Wal-Mart's plans were summarized by its quefExealtive Officer David D. Glass at the
June 7, 1996 IIUIlI8l stockholden' meeting. In cfucussina Wal-Mart'5 future el<Jlansion plana, Mr.
Glua said: "We're going to dominate Nonh AmerieL" Wharton Business School Professor
Edward Shib conducted discussions with retailers in California, city pllUlJ'l~. San Diego City
Council member! and San Diego city financial officials, These are micwed in hill 1997 report,
"MC83Uring the Economic and Sm:iolo2ical Impact of the Mega-Retail Discount Chains on Small
EnterPrise in Urban, Suburban and Rural Communities." Professor Shits concluded Wal-Mart'.
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obj~ive miiht be to build over 500 stores In CllIifomia alone. Compare this to the latest dati
&om Wal-Mart: there are onlyl00 WIlI.Man stores in the 61lte. All are discount stORI, none are
Supcreenton.
The cloSCIt Wal-Mart distribution center. are ~rrently located in Portervil1c, CalifornIa
and New Mexico, which allows the company to competently service general merchandise stores In
California. However, the loeation of tile.. distribution centers precludes the company from
introducing the Supercenter fonnat in Southern California because of the complel( tum-arouncl
sehedule required to service a grocery operation with the larger lRlmw of deliveries requited and
the expanded variety and perishability of the product mix.
However, with a distnoution center located in Riverside County, Wal-Man is likely to
lllIpOnentially expand in Southern California, panicularly with Supercenters, The eaent to which
it would do SO is evident by the fact Wal-Mart hu not introduced this format in California. while
it has installed 441 Supercent~ in the fest of the counlly.' Jonathllll Laing, in a May, 1996
article in Barron's, confumed the growth plans ofWaI-Mart by reporting projections by Wal-Mart
CEO David Olaas that by the year 2000, the grocay business to be Cl\ioyed by Wal-Man's new
Supercenten "will blow past the $24 billion business volume ofKrogcr, the dominant
supemwket chain."
Wal-Man tends to 10Cllte its new stores on undeveloped land,often on the outskirts of
existing towns/cities rather than in already-urbanized areas, This encourages conversion of
agriculluralland near the new Wal.Mart to non-agricultural uses,
Development of new Wal-Man storts and eutl)' of existing Wal-Mart stores into the
grocery busineu has frequently had a dev2Statins impact on the economic, social and
environmental characteristics ofsUlTounding communities, Its huge discount stores especially
impact the traditional depllrUnent storland the ''Main Street" retailer, but also have begun to
transform fonnerly-prosperous retail malls into rCllUeu of city ghettos, On visits to California,
New York, Dlinois and Pennsylvania, Professor Shils and his italf'witnessed what I also have
seen: t.... inC1'e8Jling decay of smaller stores and their environment in rna1ls when hit with
competition &om discount mCjlaslofCs, Typically, these malls might have had a nonna!-,izod
discount store (60,000 square feet) 8.!1 an anchor. A major rival such u Wal-Mart would then
construct a Supercenter (125,000 to 200,000 square feet) perhaps ol\&ohalf mile aWllY from the
older mall, with a new parkIng area and an invitation for new stores to open in the area. Aite:!' 6
'These Supen:eoters im:ludc 72 ill Texas, 33 in Florida, and 3D in Missouri (Source: Wal.Mm
lIIIIW&! report to .bu.::botders lOr cnd of FY 1991, a\'llilablo at wwwwalnwt com), Florida also has 102
regular WaI-Mart discount stores, ml Texas has 169. WaI-Mart has much ~ OOl1$ity in _ which
are far smaller1han Califumla in Ilze Ill4 popullliOD: for CXlIlIlple, Missouri has 79 WaI.Mart disCOllllt
~. aIIl130 SUp=atlers, Kentucky has 4.5 diSCOUDt store. and 23 Supen:e.atenl. IIDd Georgia has 62
discount stores and 25 Supcrccntcrs. '
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month. to a year, the smaller discounter surrenders, and the store becomes vacant. Traflic density
in the older mall begins 10 die a.s shoppers go to the newer and larger mega-retail dil!COunt store.
Within a year, e:vety second or third retail store is cJosoci. These stom than take on a pttoized
boarded-up appearance. Graffiti, iron griDs and unsightly siaus then appear, and what 5 to 10
yean earlier was a handsome mall now resembles an urban ghetto.
Strip IItOres within a rmle or two DCa new Wal-Man llrO likewise endangered. Owners of
florist shops, apparel storea, pet food stores, automotive storea, pharmacies and others typically
ended their interview with Shils' researchers with a statement like: "No matter how effectively I
can compete, If the store next door becomes vacant, traffic denaity diminishes, and my store will
have to clolO as well as the one next door." These retailers eoopente in securing new tenants for
the Vacan! stores, but it is largely a losing light. In some of the huge maUs visited. as much a.s a
33% vacancy rate was observed within 6 month. to 1 year of the arrival of a big box discount
.tore nearby,
Not only are small and medium-sized retailers being hammered by WaJ-Man and the like,
but even larger dillCOWlt chains are fa1ling by the wayside, a.s attested to the bankruptcy
applications ofCaldor and Brad1ees. Charming Shoppes, with over 1,400 retail storet, is reported
to be in real trouble, while sno', has closed all storcs.
Analysts trace the tmid to a redrawing of battle lines, The expansion into nearly wecy
market of the so-called Big Three -- WaI-Man Stores, K-Man Corp. and Dayton Hudson Corp.'s
TIfIICl chain - has pitied diKOUnter against discounter in a competition that (avon Jize, "The
5lllaller chains are getting caught in a battle between the Big.," says Linda KristillllSCll, a New
York retail analyst with Wertheim Schroder, A diSlentina opinion by 3 Arkansas Supreme Court
Justices in the 1995 Conway Wal-Mart predatory pricing case included these remarks, which
tueclnctly state the problem and a basic reason for concern - the corporate philosophy:
We also find tllat tho Chancellor could have found an intent to injure competitors from the
eviden\:41 in the record and panieularly from the testimony otDavid Glass, Pre~ent of
WaI-Mart Stores, Inc., who used language such as "aggressive. " "do whatever it takes. "
"/rI/J the competition's momentum" and "war zones. ..
Senior retail analyst Walter Loeb of Loeb and Associates IlaYs the larger firms such as Will-Mart
are gaining Increasing control over the competitive environment and suppliers, When Wal,Mart'is
growing at 18.20% a year, with the economy Irowing only about 3%, somebody is aiving up
business.
Retaill!ll'l responding to Shils' qlU:stlonnairc saw the reduc:tion in the number of
wholesalers and middlemen willini to sell to small retailers as atTecting their business negatively.
Ovw 50% saw the direct selling 10 mega-retail discounl chains by suppliers as being "negative" or
'very negative."
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65:60 6661/91/58
07/05/01 TIIU 14:15 FAX 1 415 626 2860
D.C, & B,
141006
Paae 4
May 7, 1999
WaI-Mart's recant ventUre into groceI}' depar1mlBlU through its SUplll'ceruers creates
devutatlng competition f~r the small grocer and more traditional supermarket. The ability of
WaI-Mart to buy direct from food processors and supplien provides better margin, than arc
available to small retailers. Further, wholesalers are di...ppearing, since the giant disc:ount chains
III'll buyina "direct" where possible,
In a separate study of the impact of mega-discount retailers, the National Trust for
Historic Preservation notes that the scale, location and desi~ of these new stores create major
problems in both subuman and rural communities, These include:
displacing mining businesses, especially indepcndcntly-owned small buainclles
who contnllUte significantly to local civil life, by building stores vastly out of scale
with a town's ability to aboom them.
. setting the stage for higher property and state income taxes by creating
developments that are costly to SaYI and require new roads, water and sewer
Ilnes, police protection and other public services.
. causing the wute or abandonment of previous public and private InveJtmentJ in
cxi:ltina buildinp, streeu, parks and otha community wets.
homogenizing America by building stores that have no reluion to their
surroundings.
New or expanded WaI-Mart stores in Southern California would si&nlf!cantly injure existing
department stores and gen~ merchandise, drug, toy and grocery slores, and lilcely cause a
number to dose or otherwise beaJme run-down in appearance.
In my experience, once a department, genenJ merchandise, drug, toy or grocery store
closes, h usually i$ vel}' difficult to find an new tenant for it. II becomes a lingering ll)'1l8Ore. The
lad:: ofa l'lllldy market fur closed stores is ilIumlled by Wal-Mart'. own problems in this regard:
for 111 least several months WaI.Mart's websile has been advmising for sale or lease over 300 of
Its own stores which are aIllllIIlIy clo!ed.
IfWaI-Man i. allowed to build the proposed distribution center, my experience and
research lead me to believe this will cause Wal-Mart to introduea Supercenters into Califomil.,
This will not only destroy a healthy segment of the currently-viable smaD and medium- s~
SJVCCrY retailers and eliminate the jobs linked thereto, but would ultimately result in the loss of
many bigh-pl.ylngjob s now fuund in chain supermarkets. WaI-Mart's increasing push into the
food industry is motivated by the drive to increue total retail sales. According to company
statement.. total retail sales should increase some 30% due to the synergies established at
combination store.. Furthennore, it has been suggested thaI WaI-Mart will use food as a loss
~~ 39'ttd
::>13 S3XOS lI'ttW
'31ll8E8L~L
65:6~ 6661/8t/58
07/05/01 1'1111 14:16 FAX 1 415 626 2860
D.C, & 8,
1i!I007
Paie 5
May 7, 1999
leader in order to increase store traffic. The impact of Supereente13 on the food indusuy will
parallel the e1fect WaI.MaJt has had on the traditional retail industry described above.
Supc:lIlllllket. worlc: on very thin margins, The I:QI11bination ofWaI-Man'. cheaper labor and low
prices will haw murderous impact on traditional food slores, large or small. Company-paid health
benefits IIId retirement plans now preVJ.lent in supermarkets might disappear, WaI.Mart provides
heahh benefit. to a far smaner JCjlI1ent of its workforce than mo.t supermarket chains. The abift
in health bencf!t costs will go directly to the taxpayer, while laid-off supermarket workers are
likely to IleCk benefits ftom federal, local, and statllJovemments.
Thank you for the opportunity to provide the Board with my observations and inlighu
into the CCOIIIlmic, social and environmental impacts ofthc development oca Wal-Mart
distribution center in Riverside County.
Sincerely,
~ J11 jJ~
Peter M Whelan
~R '19\1d
::>13 53XOg lI\1W
9t~Z:8E8LeL
5S:6e 666r/et/Se
UUUS/UI TItU 14:10 FAX I 415 026 2M60
D.C, & 8.
1aI008
P.:2
7-17-1998 :2,18PM
FRa-t OFF I DE DEPOT 941 1 707 54:2 2338
',--"
Peter M. Whelan
'--'
84711 VICtoria Lane I Windsor. CA 1154&2 I (707) 838-82117
OBJECrlVE: Fully utilize proven leadership skills, business acumen and management expertise to make a
positive contribution to a customer responsive, progressive business.
STRENGTHS: Enthusiastic, people-oriented, hands-on, professional manager with:
(I Broad experience in P&L administration and capital allocation strategies.
(> Goal-oriented, with consistent success in profitably "growing" a business and controlling expenses.
(> First-hand knowledge of issues, opportunities and challenges facing business today.
(I Solid and successful track record in the development and execution of diverse business strategies.
(I Extensive experience in motivating and directing people to strengthen/improve organizational
performance.
(I Innate ability to quickly recognize potential roadblocks and promptly resolving the Issue(s) to ensure
attainment of business objective(s).
SUMMARY OF EXPERIENCE
Provi&o Corp.. San Rafael, California - General Manager with lotal P&L responsibility for Warehouse Store
Division of this large Northern California food distributor/retailer, The profit center was a ground-up project,
and the units were operated both corporately and under a definitive licensing agreement. Responsibilities
included:
(> Establishment of division's goals and objectives.
(I Development, Implementation and administration of businesslfinancial plan, including ancillary support
programs.
(> Organizational design. recruitment, training and leadership.
(> Chairman of Licensee Committee, whose primary function was to monitor group performance and
prudently fine-tune, strengthen and broaden markellng programs.
(> Site selection, lease negotiations, design of store spec package, supervision of construction activity and
facility management.
(> Member of Provigo Corp. Executive and Finance Committees. The Executive Committee established
overall company priorities/strategy, while the Finance Committee determined capital
strateg(/allocatlons.
McLanejPaclfic Inc., Merced. California _ President of this California start-up corporation. The parent company
is headquartered i,n Texas and is a major supplier of products and services to the convenience store and food
service segment of the food market. Primary responsibilities basically mirrored those of my prior position, as
the business was also a start-up project requiring a focused, aggressively executed commercial strategy.
Colonial/Grand Union, Paramus, New Jersey. Regional Vice President with tolal P&l responsibility for various
conventional and warehouse store divisions.
Red Owl Food Stores, Hopkins, Minnesota, Vice President of Retail Operations, with total P&L responsibility
for multidivislon, multifo(maned stores. '
EDUCATION: Graduate, Michigan State Universily's School of Business and was President of Food
Dist~ibution Program.
PROFESSIONALClVlC AC11V1T1ES:
Director of several retail food companies
Director of San Mateo County Cancer Society
Director of several state Food Councils.
,
Jul 06 01 10:56a
UFCW LOCAL 1167
9098775986
UFCW LOCAL 1167, AFL-CIO-CLC
UNITED r-OOD AND COMMERCIAL WORKERS UNION
855 WCSI San 8ernardino Avenue Insurance
1',0, Box 1167, Bloomington. CA 92316-0030 Food & M"'tt - (909) 877-1110
Business Office - (909) 877-5000 Drug & General Sales - (909) 877-2331
Bill Saunol. President BiIIl..atluup, Secretary-Treasurer
July 6, 200]
Common Council
cia Valerie Ross, Senior Planner
City of San Bernardino
Re: Appeal of Carol Gold of Development Penn it II 01-05 (hearing 7/9)
Honorable Councilmembers,
I have been in the grocery business for 30 years, in the last 20 within the Inland Empire. I follow trade publications in
the retail business and observe and hear about retail conditions in other parts of the country, In my professional opinion
a new Wal-Mart Supercenter at the State College Business Park will cause other stores to close and become run-down in
appearance.
The Council has already seen this problem when Ralphs shut down a store several years ago, Other tenants in the same
shopping center also closed, and new tenants were hard to find, the vacancies lasting for years. When stores sit vacant,
they often become eyesores, especially from graffiti and lack of maintenance and landscaping. Those new tenants which
can be found often do not keep up their stores as well as previous ones, All of this brings down property value.s in the
area,
Here, the Ralphs store about one mile cast of the proposed Wal-Mart is already struggling, which we see from it having
reduced staffing to minimal levels, It will likely close if a Wal-Mart Supercenter opens here, This Ralphs might close
even from just a conventional Wal,Mart because of the overlap in general sales, which provide grocery stores with a higher
profit margin than grocery items and make up about a third of all sales in grocery stores.
Wal,Mart's impact stems from its enormous size and from its refusal to compete fairly: Ralphs pays a living wage and
provides its entire workforce with fanlily health benefits and pensions; Wal-Mart pays less and as of its last report to the
Labor Department, it provides health benefits to less than one,third of its workforce (most are either ineligible or cannot
afTord the premium charged them, so they end up receiving medical care from public facilities attaxpaycr expense),
Wal-Mart's size and ability to charge less than its competitors mean it also has a devastating imp"et on non-grocery
rctailers, who have sometimes reacted to Wal-Mart by closing, hnt even without closing, usually have reacted by spending
less on upkeep and thcreby blighting the area. I have attached a list of retailers at particular risk here of becoming
blighted other than the Ralphs.
Please obtain an Environmental Impact Rcport to look at this problem,
~,
BIll Lathrop, President
UFCW Local 1167
#32-
7_1-0/
@~
.
Jul 06 01 10:56a
UFCW LOCAL 1167
Store
Al bcrtsons
Rite Aid
Stater Bros
Stater Bros
Radio Shack
University Town Center Cleaners
#6501
#5711
#36
#107
Address
140 W, 40th S1.
949 Kendall Dr.
16\ East 40th S1.
977 Kendall Dr
4434 N. University Parkway
4434 N. University Parkway
-
9098775986
p.3
City
San Bernardino
San Bernardino
San Bernardino
San Bernardino
San Bernardino
San Bernardino
. --- - - - .- .......-
'.. .
Pacific Retail Partners
July 6, 2001
Honorable Mayor Valles and Members of the Conunoo Council
City of San Bernardino
300 North "D" Street
San Bernardino, CA 92418-0001
Re: Fiscal Impacts of the PropoSt:d Retail Store Development at
University Park-way and Ga.'IJ1ett Drive, City of San Bernardino
Dear Mayor Valles and Members of the Conunon COWIcil:
The purpose of this letter is to identify and evaluate the fiscal impacts of developing a
retail store in the northwestern area of me City of San Bernardino,
I have sixteen-years of experience analyzing and selling commercial real estate and I
specialize in community shopping centers, Before working in real estate, I worked as a tinancial
analyst for Hughes Aircraft lIIld I have a B.A in Business Administration with an emphasis in
Economics.
Primary Market Area
This analysis identifies the primll1)' market area for the proposed WaI-Mart store, The
primary market 3lW. is the geographic area which defines the customer base, The size of the
primary market area varies depending, in part, on the type of merchandise and the size of the
store, For example, some stores, such as Outlet Malls and large auto dealerships draw a large
percentage of customers from long distances with more of a regional mllIket draw, The size of
the primary market area is also defined, in part, by the average distance people will travel to shop
for general retail mercha.:ldise in II convenient location. In this case, the primary and extended
market areas are initially shown as concentric circles around the proposed store site with
distances of 1.5 miles and 3,0 miles (see the attached map mllIked Exhibit "A"), However,
population densities and physical barriers must be taken into account because they determine
what store location is convenient.
Demographic data confirms that an estimated 22,833 people reside ",ithin the 1.5 mile
radius of the proposed WaI-Man. In addition to local residents, there are currently an estimated
16,600 students, faculty and staff at the California State University at San Bernardino, and that
number is anticipated to increase by approximately 40% by the end of the decade to an estimated
23,000 people,
The geographic area around the proposed WaI-Mart contains physical barriers which
influence customer convenience, Customers living to the west of Lytle Creek wash and to the
south east of Shandin Hills would frod it inconvenient to shop at the proposed WaI-Mart, For
C.otor.~do, 1..,~.l.Jk~,hr-:r~C:::~::..'. :=~. I:l~tl:fb \::),.;l:-;'::~, TcL.'~"", ~""'>"")' ;':.1.,'( ":'''>~ ~" 7-9-0(
I. .\./Ot".lngc C.)unt...: ;,,) i 1 .';;[,,:d-:h;.tk:::- Rd. ",.:c,,:, .!,)~. L,H\.t! H~.l"::-:. '..::\ ",~,..;;.; . Td. ~.;.:. 15: .~... ':'1 . ;:~l:' .~., ~
In!:lnd Empir~: ;~~'1 (~.l:'1~'()l". ~:(::....t :,r. S,~:~-: V.", l\l':~:.;.(.~e;: l;.\ .)..!~<- . To::;: '~I"\~ .:. 1;"';_: : . r.1" :( " . ..-.' '1.
,. -~"l
these reasons, the primary market area extends from the proposed Wal-Mart site an average of
I. 5 miles.
DemOl!raDhic Population Data
We have gathered demographic data, a copy of which is attached as Exhibit "Bu, to
detemtine the number of residents in the area ~urrounding the Gannett Parkway and University
Parkway intersection (the site of the proposed WaI-Mart), According to the data an estimated
2,219 people live within a one-half mile radius from the site, 12,317 people live within a I-mile
radius from the site, 22,833 people live within a 1.5 mile radius from the site, and 77,462 people
live within a 3 mile radius from the site. By the year 2006, the population is projected to
increase by 5%,
California State Universitv San Bernardino
The proposed Wal-Mart is located in a developing area within the City which has already
undergone, and is anticipated to continue to undergo, increased residential growth, In addition to
the residential growth, California State University San Bernardino is anticipating an increase
from the current 16,600 combined student, faculty and staff population to approximately 23,000
by the end of the decade, This significant increase in student enrollment over the next eight
years is necessary to match the growing educational needs in the City and the State. The
University Business Park Specific Plan, within which the WaI-Mart is proposed for development,
was approved by the City with these growth factors in mind,
Geogr.whic Location
Two factors that determine customer choices among various retail options include the
location of convenient or competing stores and value, Assuming that the customers perceive two
competing retailers as offering similar values, then location will be the deciding factor.
Physical barriers, natural and man.made, can alter a store's primary market area, There
are several existing physical barriers within the 3-mile radius of the proposed WaI-Man which
reduce the size of the primary market area to less than 3 miles and show that the customer base is
not located within a well defined concentric circle, The first is the Lytle Creek floodway to the
west of the proposed site and the second i,s Shandin Hills, 1bese two natural barriers are located
within the 3-mile radius of the proposed Wal-Mart and reduce the primary market area as
described beiow,
Lytle Creek
Generally, there are no residents in the Lytle Creek wash area west of the site, and the
residents located directly to the west of the wash in the northern part of the City of Rialto would
have to traverse the wash area to shop at the proposed Wal-Mart, Because crossing the wash
area takes more time and effort, residents living to the west of Lytle Creek will probably
continue to shop in Riaho or areas to the west and south. Because of the impact of the wash area
on customer convenience, tm wash area reduces to approximately 1.5 miles the western half of
the primary market area for the proposed Wal-Mart, The area within the western half of the 1,5-
mile radius includes portions ofMuscoy.
Shandin Hills
The primary market area for the proposed Wal-Man is also reduced by a natural physical
barrier on the east side: the Shandin Hills, The Shandin Hills divide the University area from
northern San Bernardino, acting as an obstacle which restricts travel from the south, This
reduces the primary market area east of the ]-215 to slightly more than I mile. Within the 1.5-
mile radius are residents living to the northwest of the Shandin Hills who may (or may not)
choose to shop at the proposed Wal-Mart.
Establishment of a New Market Place
This will be the flJ'St Wal-Mart (mId the first major general merchandize store) in the
northwestern area of the City of San Bernardino, and the only such store in the
UniversitylMuscoy area, As a result, it ",i1I aeate a new marketplace for northwestern San
Bernardino residents. There is another existing Wal-Mart in the City located at the cross-town
highway (Highway 30) at the intersection of Highland Avenue, However, this store is located
approximately 10 miles away and services residents in the northeastern part of the City,
The proposed Wal-Mart will also serve some regional customers who commute on 1-215,
who will see the store from the freeway and interrupt a trip to another destination to shop, In
their traffic analysis for this proposed project, the City of San Bemardino traffic engineers
concluded that approximately 27% of the vehicles travelling to the new Wal-Mart will already be
travelling on the 1-215 freeway and will stop and shop as a diversion, The remaining 73 percent
of the trips will use surface streets, and will originate from within the area surrounding the store,
This 73 percent of projected trips will originate from within the primary market area, so the
development of the proposed Wal-Mart will provide a convenient location for residents in the
northeastern portion of the City to purchase general merchandize,
Field Audit Data
We performed a field audit of existing retailers in the primary market area (the 1.5 mile
radius surrounding the proposed WaI-Mart) to identify the supply and distribution of retail space
in the northwestern area of the City of San Bernardino, The field audit includes all existing
retailers, including small retail centers containing "Mom and Pop" businesses, which typically
include restaurants, a bar or liquor store, dry cleaners, Laundromat. small grocery and
convenience stores, fast food restaurants and other services providers. The majority of these
stores are small neighborhood stores, providing convenient shopping and services to nearby
residents, Although we have included these stores in the field audit for purposes of
completeness, they do not directly compete with Wal,Mart due to their convenience orientation,
and due to the high concentration of service businesses, such as hair salons, insurance providers,
dry cleaners, tanning salon, florist and restaurants. These types of restaurants-services are not
provided by WaI-Man,
I
2
3
---
FIELD AUDIT OF RETAIL ANCHORS IN WAL-MART PRIMARY MARKET
AREA
Sau Bernardino, California
Home ImDrovement
Highland Lumber
Best Wood Products
Home Depot
NWC Highland and Medical Center
NWC Highland and Macy
SEC Muscupiabe and 21" Street
Grocery Stores
4
5
6
7
Stater Brothen;
Albertson's
Ralphs
Marshall's Market
SEC Kendall and 40lh
NWC Wall and 401h
4434 University Parkway
SWC "En Street and Marshall
Convenience Stores
8 Chevron Food Mart NWC University Parkway and 1-215
9 Circle K University Parkway and 1-215
10 Shell Food Mart NEC Hallmark Parkway and University Parkway
11 AM/PM NWC Hallmark Parkway and University Park-way
12 Shop and Go Market 3512 Cajon Boulevard
13 Harold's Market 2790 State Street
14 7 - 11 1395 Kendall Drive
15 Jimmy's Mkt/Liquor 2926 Duffy
16 FoodJMea1 MId Darby and DuftY (VACANT)
17 MJs Mkt and Gas Darby and Macy
18 Victoria Market 2392 Augdon
19 Carniceria MId 2397 First Street
Droll Stores
20
21
Rite Aid
Walgreen's
SEC Kendall and 40'"
NEC Wall and 40th
Auto Parts
22 Kragen SEC Kendall and 40lh
23 Auto Zone NWC Kragen and 401h
24 Venado Tires Cajon Boulevard and State Street
25 Rodriguez Tire Darby and State Street
26 &ano Lube and Tune 1685 Kendall Drive
27 Acosta's Body Repair 3280 Cajon Boulevard
.
......... "-'-''-' "j ,-,_r,.
,r.....,. ,.............,...... I"',l....,..........
.;:J.;...-=.; ~...::> ,.:;...."-'
~,"
28
29
Phillipes Tire Shop
Empire Auto Body
Cajon Bouiev2l'd
3930 Cajon Boulevard
Restaurant..
30 Peking Inn 4434 University Parkway
31 Papa John's Pizza 4434 University Parkway
32 Donut Shop 4434 University Parkway
33 Hoagie Yogi 4434 University Parkway
34 Dahlia's Pizza 1689 Kendall Drive
35 Inland Kabob 1689 Kendall Drive
36 Thai Place 1689 Kendall Drive
37 Rainbow Wok 1331-1357 Kendall Drive
38 Domy'sSub 1331-1357 Kendall Drive
39 Tommy's Btrrger #10 1331-1357 Kendall Drive
40 El Rancho Bar &. Grill 3920 Cajon Boulevard (VACANT)
Video Stores
41 Hollywood Video 4235 University Parkway
42 Video World 4434University Parkway VACA.'<T
Service Provider
43 State Farm Insurance 4434 University Parkway
44 Dry Cleaners 4434 University Parkway
45 Mail Mart 4434 University Parkway
46 Hair Cuts 4434 University Parkway
47 Bamer Shop 2775 State Street
48 Inland Valley Roofing2760 State Street (previously U-Haul)
49 Copy Plus 1689 "D" Kendall Drive
50 Tanning Salon 1689 Kendall Drive
51 Florist 1689 Kendall Drive
52 Hairstylist 1689 Kendall Drive
53 Farmer's Insurance 1331-1357 Kendall Drive (V ACAl'.i)
54 Miracle Hair Design 1331-1357 Kendall Drive
55 S Pro Check Cash 1331-1357 Kendall Drive
56 Hair Salon 1331-1357 Kendall Drive
57 Nail Salon 1331-1357 Kendall Drive
58 El Dorado Cleaners 1331-1357 Kendall Drive
59 Campus Copy &. Print 1331-1357 Kendall Drive
60 Family Karate Studio 1331-1357 Kendall Drive
61 C &. J Lawn Care Cajon Boulevard
62 Suzette Hair Salon Blake and Macy
............... - ._~".
. r--........ r ...._....;- ..._ r....... ......_.....
Electronics/Computers
63
Bank
64
Radio Shack
Downey Savings
Small Stores
65
66
67
68
69
70
7]
72
73
74
75
Motel
Varjas Feed & Supply
University Book Exchange
Super $,99 Plus
Schwin Bicycles
Sister's Precious Piece
Satellite Dish
Smoke Shop Plus
Kendall Drive Feed
Media Furniture
Rebel Feed Store
Calif. Casual Sport
76
77
Palms Motel
Cajon Motel
-
.,;..0,-,.,:,. "-_..... ,""-'....
"-.0
Liauor Stores
78
Norms Liquor Store
4434 University Park-way
4434 University Parl....,-ay
3170 State Street
] 689 Kendall Drive
1331-1357 Kendall Drive
1331-1357 Kendall Drive
1331-1357 Kendall Drive
1331-1357 Kendall Drive
1331-1357 Kendall Drive
2340 Kendall Drive
3030 Cajon Blvd, rv ACANf)
Cajon Boulevard near State Street
3940 Cajon Boulevard
3424 Cajon Boulevard
3436 Cajon Boulevard (VACANT)
3795 Duffy Street
T)-pe of Retail Stores Witbin the 1.5 Mile Radius Primary Market Area
The large retail establishments located in the primary market area fall into two categories,
large major chain competitors and smaller convenience stores, The smaller and convenience
stores generally do not compete with Wal-Mart because they offer a' different type of
merchandize in a small scale and with a service oriented atmosphere. Between the specialized
merchandize and the convenience of the location, these stores cater to a local clientele and do not
compete with WaI-Mart,
The demographic data confirms that the number of residents living within the 1.5 mile
radius will support the operation of the proposed Wal-Mart and Dr, Ross Moran, Director of
Institutional Research at California University at San Bernardino, projects combined enrollment,
faculty and staffwill inl:fea5e by more than 50% to an estimated 23,000 people at the University
by 2009-2010. These California State University students and. staff will study and work within
the 1.5 mile primary market area of the proposed Wa\-Mart,
Wal-Mart MerchlWdize Categories Compared to Sto~ in the Primary Market
Area
Typical Wal-Mart products include merchandize from the following categories:
. Apparel and accessories
. Building materials and garden supplies
. Packaged food
. Automotive supplie,; and service
. Furniture and home furnishings
. Food service
. Drugs
. Miscellaneous retail items
Comparison to Merchandize Sold By Existing Retailers in Primary Market Area
Neill:hborhood Convenience Centers Wal-Mart's potential entry into the market place
wil! not havc an impact on smaller neighborhood stores and convenience centers because these
types of stores operate on a smaller scale, offer a unique merchandise type which is not available
from larger stores, and provide convenient neighborhood locations.
GrOCery Stores There are four grocery stores operating within the market area, including
an independent store, Marshall's Market, which operates out of a store of a similar scale to a
grocery store chains. At this time, other than packaged food, Wal-Mart does not sell groceries
in California, and no firm plan now exists regardil'.g a change in that concept Therefore, the
proposed Wal-Mart will not compete with grocery stores fur grocery sales, Even if a change
were to occur in the future, the expanding population of the area would eliminate the possibility
of there being too many large grocery facilities.
General Merchandize The sales generated by a typical Wal.Mart are grouped into major
categories for comparison with the types of merchandize offered by retail anchors in the primary
market area, Wal-Mart's largest sales are generated in apparel and accessories, with expected
sales of approximately $9,44 million. Other key categories in order of importance include
furniturelhome fashions/appliances ($3.98 million); household/personal supplies ($3,90 million);
and garden (S2,24 million).
Aooarel and Accessories At the present time, there are no retailers in the Plimary market
area that offer the same type of merchandize and on the same scale as the Wal-Mart, However,
there is adequate population to support a Wal-Man in the northwestern area of the City,
According to the demographic data and infurmation from the California State University, the
existing population within the 1.5 mile average primary market area is 22,833 plus an additional
16,600 people (students and staff) currently enrolled and working at California Stale University.
San Bernardino,
Household and Personal Supplies Wal-Man's household and personal supplies category
may compete with a percentage of the merchandize offered at the two drug stores in the
northeastern San Bernardino. However, the drug stores are located close to California State
University at San Bernardino; and, are located on the opposite side of the 1-215 freeway from the
proposed Wal-Man. Common sense suggests that people choose the most convenient retail
location which provides the setVices t111:y require. In this case, different pharmacies offer
different levels of customer service. The two drug stores on the east side of the 1-215 offer full-
service pharmacies, In this case residential and University customers are located on the same
side of the 1-215 freeway as the existing pharmacies and the level of service otrered at those
locations differs from the level of service offered at the proposed Wal-Mart. Based on location.
the existing drug stores are arguably more convenient than the proposed Wal,Mart in terms of
proximity to the residents on the east side of the 1-215, ,
Automotive Repair Auto repair sClVices are a quasi-retail use that predominates on the
west side: of Lytle Creek in north Fontana, The proposed Wal-Mart wilI Dot compete with these
stores because there is no current plan for a Tire, Lube and Express facility at the proposed Wal-
Mart, This' will eliminate the potential for competition with the existing tire stores and auto
service centers. If, at a later time, this concept were to change, the increasing population of the
area would avoid any danger of over-samration, Wal-Mart does sell convenience automotive
items but on a scale that does not compete ~..ith the inventory offered at the existing auto pans
store,
SumDl.8.ry and Conclusions
1, The demographic data identifies an estimated 22,833 people reside within the 1,5
mile radius which represents the primary market area for the proposed Wal-Man, In addition,
there are currently approximately 16,600 combined students, faculty and staff at the California
State University, San Bernardino, and that number is ~xpected to increase to 23,000 by the year
2009-10, This represents an increase of approximately 40% of the students and staff in the next
decade, The combined total of residents, students and staff amounts to 39,433 people within the
1.5 mile primary market area for the proposed Wal,Mart. This data confirms that the population
(resident and student) within the 1.5 mile radius of the proposed Wal-Mart is sufficient to
support the Wal-Mart in that k>cation.
2. The development and occupaucy of the proposed Wal-Mart store represents a
significant net fiscal benefit for the City General Fund operating budget, The development of a
store approximately 155,900 square feet store in si.o.e on approximately 14.5 acres will generate
approximately $300,000 per year in sales tax revenue for the City General Fund.
Please call me if you have any questions or request clarification regarding the
information contained in this letter.
Sinca-ely,
EXHIBIT "A"
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EXHIBIT "8"
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Man JuJ 02, 200 1
CUSTOM SUMMARY REPORT
POP-FACfS: FULL DEMOGRAPHIC DATA
PREPARED FOR Paoilio R.ctai.I Partners
HALLMARK PKWY AT GANNEn PKWY Hallmari: &; Gannett (962093608)
SAN BERNARDINO, CA 92407 COORD: 34,1647 -117,3358
.50 MILE 1.00 MILE 1.50 MILE 3.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS RADIUS
POPULATION
2006 PROJECTION 2,309 13.136 24,544 81,508
2001 ESTIMATE Z,219 12,317 22,833 77,462
1m ceNSUS 1,917 10,128 18,196 65,623
1980 CENSUS 724 4,531 8,628 43,411
OROWTIll980 . 1990 164.63% 123.52% 110.90% 5l.1M'.
HOUSEHOLDS
2006 PROJECTION 868 4,287 7,923 26,603
2001 ESTIMATE 83S 4,038 7,372 25,228
1990 CENSUS 732 3,394 5,933 21,465
1980 CENSUS 220 1,390 2,636 14,716
OROWTIlI980-lm 233.10% 144.09'10 12S.09"'" 45,86%
2001 ESTIMATED POPULATION BY RACE 2.219 12,317 22,833 77,462
WHITE 53,31% 53.17% SO,21 % 51.74%
BLACK 18.69% 16,58% 16,27% 18,93%
ASIAN ANI> PACI1'IC ISLANDER. 8.10% S.27% 5.17% 4.\4'10
OnmR RACES 19,91'10 24.98% 28.35% 25.19%
2001 ESTIMATEDPOYOLAnON 2.219 12.317 22,833 77,462
HISPANIC ORIGIN 35.75% 43,1'7"'" 46.25% 42,5'7"/0
OCCUPIED UN1TS 740 3,382 5,893 21.523
OWNER OCCUPIED 27,93% 50,62% 49.81'10 61.09%
RENTER OCCUPIED 72.07% 49.38% 50,19% 38.91%
1 m A VERAOE PERSONS PER HH 2.61 2,96 3.01 3,00
ZOOI EST HOUSEHOLDS BY INCOME 835 4,038 7,372 25,228
SI 50,000 OR MORl! 0.01% 0,70% 1.07% 1.080/.
$100,000 TO $149.999 0,89% 1.76% 1.78% 2.93%
$ 75,000 TO $ 99,999 4.23'10 5,69"10 5,20'10 7,07%
$ 50,000 TO $ 74,999 24,63% 24,75% 22,50% 21.37%
$ 35,000 TO $ 49,999 22,Z8'10 23,S'7"I. 23.19% 20,06%
, S 25,000 TO S 34,999 17,58% 15,02% 14.58% 14.27%
$ 15,000 TO $ 24,999 16,95% IS,07% 16.82% 16,56%
$ 5,000 TO $ 15,000 1UO% 11.16% 11.64% 13.63%
UNDER $ 5,000 1.93% 2,29% 3.22% 3.03%
2001 EST. AVERAGE HOUSEHOLD INCOME $39,676 $43,595 $42,924 $43,851
2001 EST, MEDIAN HOUSEHOLD INCOME S36,364 $39,124 $37,417 $36,880
2001 EST. PER CAPITA INCOME $14,959 $14,331 $13,996 $14,451
WWW.SITEREPORT8.COM
e2OO1 CLARITAS INC.
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EXHIBIT "e"
From:
Sent:
To:
Subject:
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TIm
CSUSB_Enrl_EsCCVC
&Main.ll.ls
Ross Moran [rmoran@csusb,edu]
Thursday, July 05,2001 4:38 PM
ROSS _ V A@cLsan-bernardino,ca,us
North S8 Retail Projects
~
CSUSB_Enrl_EsCCVC
&Main.ll.ls
Attached are projected Fulltime Equivalent and Headcount
enrollments for
CSUSB, main campus and Coachella Valley Campus through 2010, This is
subject to change and renegotiation with the CSU system office.
Ross T. Moran, Ph.D. <rmoran@csllsb.edu>
Director of Institutional Research
California State university, San Bernardino
http://ir,csusb.edu
Phone: (909) 880-5052
Fax: (909)880-7069
Realizing that we have a moving target, here is the current best guess for the
FTES and HC by College Year (which includes summers):
College Year
2001,2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007.2008
2008-2009
2009-2010
Total
12,300
12,915
13,530
14,145
14,760
15,426
16,143
16,860
17,618
FTES
CVC
440
475
510
545
580
615
650
685
720
Main
11,860
12,440
13,020
13,600
14,180
14,811
15,493
16,175
16,898
Total
15,806
16,596
17 ,386
18,176
18,967
19,822
20,744
21,665
22,639
Headcount
CVC
872
941
1,010
1,080
1,149
1,218
1,288
1,357
1,426
Main'
15,108
15,843
16,578
17,313
18,047
18,848
19,714
20,580
21,498
. Assumes that 20% of CVC students enroll at the Main Campus as well as CVC,
HC:FTES Ratios
Total 1.285
CVC 1.981
-
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CITY OF SAN BERNARDINO
Development Services Department - Planning Division
Interoffice Memorandum f<ECr:I'j' ') f~i j '( ',:: i'j, 0
001 JUL -5 AlO:51
TO:
Mayor and Common Council
Valerie C. Rj!fPrinCipal Planner
FROM:
SUBJECT:
Appeal of Development Permit II No, 01-05 - Wal-Mart Project
DATE:
July 6, 2001
COPIES:
James Penman, City Attorney; Fred Wilson, City Administrator; Rachel
Clark, City Clerk; James Funk Director, Development Services
Attached are copies of The Impact of Big Box Grocers on Southern California and The
Shils Report related to the appeal of the Planning Commission's approval of the Wal-
Mart project, item No, 32 on the July 9, 2001 Council Agenda.
Since only five sets were received and The Shils Report is copyrighted, distribution was
as follows:
. Mayor*
. Council Office*
. City Attorney
. Project Applicant
. Planning
* After the meeting, I would appreciate it if you could provide a copy to the City Clerk to
keep with the official record.
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This may be creating an interesting phenomenon when a retailer's wholesale resotlrces disappear,
and he often is redllced to bllying from a Sam's CllIb, et al. As a proponent inllnderstanding the plight of
small business which traditionally represents an overwhelming proportion of national economic activity and
currently as one who observes the trend in corporate downsizing where more and more jobs are vanishing
at an alarming rate, 1 decided to lIndertake a stlldy of what impact the mega-discollnt retail chains are having
on communities, both economically and sociologically,
In the Spring of 1994, I began to raise funds for a national sllrvey of this problem, concentrating in
the states of California, Illinois, New York and Pennsylvania, I needed fllnds for clerical help,
computerization, travel, printing and research assistance. In addition to the lIse of a considerable amollnt
of my own financial resources, I was aided by my family (my wife, Mrs. Shirley R. Shils and my sister, Mrs.
Charles Marshak of Atlantic City, New Jersey); by the United Food and Commercial Workers; by the Knitted
Ollterwear Manllfactllrers' Association of Pennsylvania and the Fashion Apparel Manllfactllrers Association
of Pennsylvania and other individllaIs.
The study was launched in the Spring of 1994, when 6,000 qllestionnaires were sent to retailers in
four states: California; Pennsylvania, Illinois and New York. There was a 9% retllrn, with these returns
providing both quantitative data (see Chapter Ill) and qllalitative narrative data (see Chapter IV). Also, I
traveled frequently to the four states and interviewed sllrviving retailers on the "Main Street," and in the
sllburban or rllral malls and the strip centers,
My recommendations, in part, apply to city, state and the federal governments with respect to their
present practice of providing "public fllnds" or "corporate welfare" to help finance capital outlays and debt
service for the infrastructure construction of "Big Boxes" cllrrently being erected throughollt the United
States, Many of the development packages provide that a new "Big Box" will be able to retain all sales taxes
collected for a given number of years in order to help finance the construction and debt costs of the new
facility, When this happens the local government and the school districts which depend on sales and real
estate tax revenues find themselves in desperate financial condition since the small retailers which have been
displaced are not providing revenlles throllgh and sales tax to the schools and property and real estate taxes
to the commllnity.
Congress shollld not only review the "corporate welfare" benefits not so broadly lInderstood and in
addition shollld review whether or not a more rigorolls enforcement of the Sherman, Clayton, Robinson-
Patman and Federal Trade Commission Acts would or would not be applicable with respect to determine the
existence of possible predatory behavior on the part of the mega-retail discount chains and other
overwhelming retail conglomerates,
The study and interviews with small and medium sized retailers confirms the fact that intense price
competition has closed and is closing hllndreds, if not thousands of small retailers? Ironically, it is now
affecting the large discount chains themselves? Bradlees, Ames, Jamesway, Hills, Caldor and Boston Stores
are in or near bankruptcy. Kmart reeled from a string of quarterly losses. Wal-Mart, the behemoth of retail
recently reported for the first time, a decline in earnings, Charming Shoppes has been in serious financial
difficulty. Where will it all end?
Finally, Congress and state governments need to examine the effect mega-discount chains have on
small bllsiness. A comparative analysis needs to be explored concerning those cities which acqllire the new
"Big Boxes" and the economic fallollt which occllrs to the losing city. What happens to the consllmer in a
town or medium sized city, which lost all of its "Main Street" retailers lIpon the arrival of a neighboring "Big
Box," when the mega-retail discollnt chain decides to close because of the now weakened buying power of
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Table 13
Table & Chart 13A
Table & Chartl3B
Table & Chart14A
Table & Chart 14B
Table 15
Table 16
A National SlImmary of Those Prodllcts Sold By Small Retailers which
Parallel Prodllcts Available in the Mega-Retail Discollnt Chains
Comprehensive Reslllts of Indllstry Breakdown
National Distribution of Industry Responses by State Breakdown
Percentages
Competitive Strategies and Alternatives
Competitive Strategies and Alternatives by State Breakdown
Percentages
HlIntington Beach Mall
U,S. Retail Employment Share: Large vs. Small Retailers
1985- 1993
x
65
66
67
70
71
206
213
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I 1I3.LdYH:)
Edward 0, Wells reported on a study by Kenneth Stone, Professor of Economics at Iowa State
University and a Wal-Mart guru, that the revenlles generaled by major discollnt chains sllch as WaI-Mart
(or Kmart) and others, have actllally been revenues lost by local merchants, His hypothesis appears based
on the assumption that these areas consisted of static populations where the retail market had largely
remained unchanged, When major discounters enter, therefore, sales tend to be taken from those originally
destined for local stores, This is actllally a shifting of market shares, and not necessarily newly generated
sales through an increase in the market or its demography, In fact, between 1980 and 1990, total retail sales
increased only 8% while total retail space soared by 40%2 This re-allocating of sales from one area to
another has been extreme enough to be detrimental to local economies, And sales were not the only area
affected: jobs as well shifted and not even jobs with as mllch to offer were the result. FlIrther concern arises
as Wal-Mart and Kmart move aggressively into the food indllstry with their "Supercenter" facilities, Both
chains have developed 100,000 - 200,000 square foot "Boxes" which sell a fllllline of food as well as general
merchandise, Additionally, Kenneth Stone's early studies found that towns olltside of Wal-Marts had lost
sales on an average of25% becallse of the attracting of consumers to these new centers,'
More recent data on retail square footage shows that the United States is in a condition of being
'''over-stored' with 19 sqllare feet of retail space per capita compared with just half that level a decade ago,'"
The following chapters in this stlldy are concerned as mllch with the "desocialization" of traditional
family communities, sometime ethnic, religious, racial, bllle or white collar, or socialized by national origin
or with the economic impact of the mega-discollnt chain on the small retailer. As the retailers fail to survive,
so do the neighborhoods fail, with resultant urban crime, drugs, gangs and blight,
The writer's interest in the impact of the giant retail discollnters lIpon small retailers was arollsed
because of his long-time exposure as a professor teaching the values of small business entreprenellrship and
as well as an expert in a number of trade associations in the dental, sweater, women's apparel and carpet
retail industries' small bllsinesses,
FlIrther, in 1973, as Chairman of the Department of Management at the Wharton School of the
University of Pennsylvania, the writer founded and became the fOllnding Director of the Wharton
Entrepreneurial Center, which became a prototype for hundreds of such centers at colleges and universities
throughout the world, The writer is no longer associated with the center except as one who holds Director-
Emeritus rank, The center and its teaching program in Entreprenellrial Studies were designed to explore the
entreprenellrial spirit in America's YOllth and to instill in both lIndergradllate and gradllate stlldents both
special skills and an intense desire to create and grow small bllsinesses in America, The concern is not only
with the establishment of small retail bllsinesses, but also with depriving the creative entreprenellr of
developing new products and getting shelf space, FlIrther thirteen Small BlIsiness Development Centers
(SBDe's) were set up in colleges and lIniversities throllghout Pennsylvania, Stlldents and faclllty assisted
small entrepreneurs, many of them retailers to sharpen their skills to be more competitive, This program was
funded in part by the V,S, Small BlIsiness Administration (SBA) and SBDC's became a model for other
states and lIniversities,
It was apparent in 1973, that for America's largest corporations to compete globally, they wOllld
'''What Happened to Main Street," Historic Preservation, MayiJune 1996, p, M4,
'Edward 0, Welles, "When Wal-Mart Comes to Town," Inc" July 1993, pp, 76-88,
'Jonathan R, Laing, "Super-Saviors," Barron's, 6 May 1996, p,I7,
2
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of the entire non-agricultural work force of 94,807,076, Of the total of 19,777,219 retail employees,
6,953,455 or 35% worked for small retailers with less than 19 employees,
For small retailers with 29 to 49 employees, there were 4,825,666 retail employees, In other words
11,778,000 retail employees worked for firms with under 50 employees; or 60% of the total.
Despite the developing dominance of the mega-retail discount chains, retailers who are relatively
large have a combined total retail employment of only 40% or abollt 8 million jobs in the category of 50
employees and greater.
To insure the dominance of "small business" in retail activities the COllnty Dalton report of the U,S,
Department of Commerce for 1993 showed a grand total of 1 ,551 ,51 0 retail estabIishments--large and small,
The ultimate possible impact of more and more powerflll mega-retail discount chains will be to displace tens
ofthollsands of small business entities and make millions of retail employees "redundant," something that
alltomation failed to accomplish, In the job category of 0-10 employees, there were 1.317,122 retail
establishments or 85% of the total.
The SBA also lauded the new job creation of small businesses as follows:
"During the entire 1976-1990 period, small finns provided 53 percent of total employment
and 65 percent of net new jobs, From 1989-1991, the latest Censlls data available prodllced
under contract for SBA, indicated that small firms with 0-4 employees created 95 percent
of the new jobs. Of the 2,6 million new jobs created, 1,5 million came from expansions of
new small firms with 0-4 employees which moved into the 5-19 firm size category, The
remaining jobs came from births of new small firms,'"
While small retailers struggle to stay in business against major odds both with national competitors
who buy direct with mass purchasing and resllltant discollnts, small and large manllfacturers appear to be
giving liP, The U ,S, employment sector showing the greatest decrease is the manllfactllring sector.
Joblessness in this sector has to be made lip in service or retail indllstries,
In 1985, there were 19.2 million manufactllringjobs in the United States, By 1995, this had dropped
to 18,2 million, a loss of one million jobs dllring a time in which pop"lation had grown by 22 million and
the civilian work force by 18 million,'
Small manufacturers have been put out ofbllsiness as the US free trade policy encollraged imports
first from Japan, then later from Taiwan, Hong Kong, India, Pakistan, SOllth Korea, China, Singapore and
numerous other nations, This policy also negatively affected the American small retailers who did not have
the ability to contract for mass pllrchases from overseas, low-labor cost areas as did major retail chains and
mega-retail discollnt chains (as evidenced by the media's preoccllpation with Kathy Lee Gifford and Michael
Jordan and their association, no matter how remote, problems with child labor in manllfaclllring plants
where products with their names on them are prodllced),
Small businesses appeared to be most successful in the past 22 years in creating jobs in service and
"Op, cit., U,S, House of Representatives Small Business Committee WWWebsite,
'Special Report of the U,S, Department of Commerce from Office of the Under Secretary of Commerce for
Economic Planning.
4
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abatements and other incentives to build and grow which are not available to small businesses, Communities
have attempted to maintain their traditional social and economic cultures, Nevertheless, the force of these
mega chain stores continues to influence and dominate the "Main Street" culture, The strength of these mega
chains has made 'it difficult for local merchants and less strong competitors to confront and restrain the
inevitable construction ofthe "Big Boxes," Restraining the rise ofthe mega-stores by protests or setting lip
opposition groups is a difficlllt task indeed; there have been some faiIlIres, nevertheless, there have also been
considerable successes where communities and community groups have organized effectively. Opposing
the giant mega-retail chains with their huge financial resources is often cost prohibitive for neighborhood
groups, A desire to survive requires new marketing strategies to be formed and implemented by local and
regional store owners, Many of these strategies have been selected by hundreds of respondents fOllnd in the
tables and charts in Chapter III ofthis study,
This portrait of the "free" retail market is not a happy picture, However, one can say, "The cities
of the United States are tuming into ghettos, so what's the difference?" Things are expected to be better in
suburbia, in rural areas and in America's small towns located in New England, the So lith, the Midwest and
the Far West. However, urban decay, stimulated in part by the movement into "Main Street" avenlles and
to the suburban and rural malls, has now spread throughout America in almost every state and region and
has created cemetery-like sprawls in towns and malls, once pleasant and inviting to local citizens and
travelers,
Earlier entrance of the mega-discollnt chains into mid-town America (the small towns) struck a
cheery note with promises of jobs and services by the new retail discollnt "giants," However soon the "Main
Streets" of these towns were decimated, by repeated small store closings, lInable to compete with the new
American retail "giants," Moreover the effect on the remaining retailers by the "moving Ollt" of a mega-
discount store after several years, becomes particlllarly destructive to the sllrvival of the remaining small
retailers in malls formerly dominated by a retail "giant."
The free wheeling race between mega-retail discollnt chains sllch as Wal-Mart, Target, Kmart and
others is best exemplified by Wal-Mart's planning strategy promlllgated by its Chairman at the JlIne 7, 1996
annual stockholders' meeting, In discussing Wal-Mar:t:s future growth and expansion plans, David 0, Glass,
Chief Executive Officer, said: "We're going to dominate North America,"" (Emphasis added,)
Obviously, conquering the retail market in North America is Wal-Mart's agenda and this is further
evidenced by the strategy of placing urban stores in a manner which creates a 10 mile radills and rural stores
with a 35 mile radius, In a 1993 New York Times article quoting Kenneth Stone, a noted academician who
has become an expert on WaI-Mart, he said:
"What happens is that Wal-Mart has a saturation strategy, They come in with stores 60
miles apart and then they are 10 to 12 miles apart, Abollt three years after a Wal-Mart
opens, stores near it begin to close,"" ~
=-=--------
What chance could a smaller, less aggressive enterprise, sllccessflll in the "Main Street" tradition,
have against a multi-billion dollar company proudly advocating dominance, The chances for a free market
on a level playing field is disappearing year by year, month by month,
"Louise Lee, "WaI-Mart Says It's Comfortable With Estimate," The Wall Street Journal, 10 JlIne 1996, p,
A3,
"Louis Uchitelle, "Do Chains Cost Jobs?," The New York Times, 3 October 1993, p, C I,
6
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entrance of behemoth retailers into their "Main Street" cllItllres, Towns throughout the nation have
expressed their discord with the invasion of these "Big Boxes," the large warehollse-Iike structures which
threaten the sllrvival of the small retailers, Commllnity groups have developed conferences and seminars
throllghollt the United States on how to confront the almost daily arrival of these mega-stores, Often citizen
groups, by petitioning their elected officials have prevented the major retail discount chains from beginning
warehollse-like shopping sites, However, closer analysis of the retail industry, its strategies, and the trends
that perpetuate the indllstry's growth sllggest that the inevitable will occllr; lInless small. less leveraged
retailers and "Mom-and-Pop" stores can create new strategies to survive against the new competition,
Enlightened overnmentaIIeadershi ,both local and national should provide SllppOrt and encollragement
for small business leadershi to execllte sllrvivaI strategies, Tle menc Y WI reqllire a alance
o arge and small retail businesses in order to provide millions of well paid positions necessary to provide
goods and services in a growing national economy,
As the history of retailing in America was studied, the writer noted that from the traditional small
size retail chain there emerged the department stores, These examples of grandeur were generally fOllnd in
mllnicipalities with sllbstantial populations, sllch as the large city, Later, as retail discollnt chains came into
existence, the department store had hard sailing, and despite the development of branch stores in sllburban
areas, the record of the department stores sllffered along with the small retailer. Employment in the
department stores also became downsized as personnel costs were cut in the face of competition from the
Kmarts, Wal-Marts, Targets and J,C, Penney's,
Althollgh discollnt retail chains were first noticed in the 1950's, America watched one crealive and
fantastically managed company develop from a five-and-ten store into a company with $82 billion in sales
in fiscal 1995 and fiscal 1996 sales over $93 billion and projected sales over $105 billion in fiscal 1997,
(Most of these major retailers have fiscal years ending January 31 st or very close to Ihat date), Wal-Mart
Stores, Inc" this formidable retail chain in one year opened 147 new Wal-Marts, and 163 Sam's CllIbs in the
United States alone," Althollgh Wal-Mart was not the first in the market, it inflllenced the marketing and
planning of its competitors and exercised a major impact lIpon the growth of the entire discount retail chain
business,
According to Edward 0, Welles, "From 1960 to 1985, annllal sales by discount stores in the United
States exploded from $2 billion to $68 billion, with Wal-Mart responsible for igniting mllch of that
growth."16
Discollnt retail chain stores, sllch as Kmarts and WaI-Marts have recognized the need for sites which
supply a variety of brands and products at a reasonable vallie, Wal-Mart achieved success by first providing
prodllcts that "were lip to 15% cheaper than those available in 'Mom-and-Pop' stores," according to the
Harvard Business Review," Its competitors also followed with similar marketing strategies,
Large discollnt retail chains and similar mega-stores have continlled to grow and expand in the
United States, In addition, barriers of entry have developed, preventing increased competition, Their
strategies and decisions have been able to influence the entire nation's economy, basically becallse of their
"Op, cit., Sylvia Lewis, pp, 14-19,
'"Op, cit., Edward 0, Welles, pp, 76-88,
I7"The Evolution of Wal-Mart: Savvy Expansion and Leadership," Harvard Business Review, May/June
1993, pp, 82-83,
8
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These mega-retail discount chains, in their race for demographic and marketing sllpremacy in each
region, after influencing the closing of small retailers in the area, then compete over the leftover consllmer
"bones," Ultimately, one major chain opening in an adjacent area destroys the competition, leaving the
formerly sllccessful mall appearing like a giant, desolate unkept cemetery,
Factors determining consumer buying clearly favor large retailers, since they have been able to
maintain the consllmers' needs for low prices and convenience by having "one-stop shopping," In addition,
these giants with stronger leverage have been able to maintain lower prices because of lower costs, Price
competition still remains in the indllstry, despite the nllmerOllS closings of the small retailer, bllt the large
discollnters among themselves continue to fight price wars, A recent example was Dallas, Texas where Wal-
Mart, Kmart and Target competed head-on with energetic promotions while maintaining costs so low that
products were priced so competitively that the differences were lIsllally within pennies,'"
As the price wars go on between the large and small retailer and indeed among the major discollnters
themselves, not only do retail jobs disappear, bllt also the traditional harmony of the rllral and sllburban areas
is invaded and the resllIts are lIgly both from an economic and a sociological point of view,
One recalls a powerflll Latin phrase by Plalltlls, which when translated is "The soldiers laid waste
to the town," This is certainly an apt description of the continlling decimation of the "Main Streets" of
historic towns, cities and yes, rllral malls,
Were one fortllnate enough to be alive in the United States, say in the year 2100, he or she and fellow
survivors would wonder what call sed the entreprenellrs of the late twentieth century to beqlleath to
sllbsequent generations, these rapidly developing monstrolls national "cemeteries," formerly grandiose malls
and attractive "Main Streets,"
With present prospects facing developers these days in the United States, these destroyed and
abandoned malls will be with LIS for many generations, since the financial challenge for their correction
seems impossible to meet.
During travels on this stlldy, the staff also visited many formerly prosperolls "strip centers," These
were generally the work of small developers and attracted the bOlltiqlle or lIniqlle retailer, also traditionally
found in the old "Main Street" stores,
Strip stores within a mile or two of a new SlIpercenter, constructed by a major discollnt chain
appeared likewise to be endangered by the newest major competition, Even when a florist, indicated to ollr
interviewers that becallse of her long experience, "superior knowledge" and the fact that her store Pllrchased
merchandise more frequently than did the SlIpercenters, that she wOllld sllrvive; nevertheless she evidenced
concern abollt the vacancies on her left or right. Interviews with cOllrageolls owners of florist shops, apparel
stores, pet food stores, automotive stores, pharmacies and others all ended with a typically sad statement:
"No matter how effectively I can compete, ifthe store next door becomes vacant, traffic density diminishes,
and my store will have to close as well as the one next door."21 These cOllrageous retailers cooperate in
securing new tenants for the vacant stores, but it is a sad and losing fight. In some ofthe hllge malls visited,
as mllch as a 33% vacancy rate within six months to one year of a new "mega box" being completed in the
2O"Discounter Price Wars Descend on Dallas as WaI-Mart Looks to Stay on Top," Discount Store News, 5
December 1994, pp, 78,
21 Personal interview made in Kankee, Illinois in May 29, 1994,
10
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r
.
As retail giants rllle the marketplace, they have the buying power to negotiate the lowest prices with
their sllppliers, In a sense, suppliers become part of a "partnering" network in which their principal capacity
is contracted for by the major retail discollnt chains,
"It all adds lip to a power shift to a privileged circle of merchants," state Zellner and Benedict."
Suppliers and manufacturers work diligently to secure the right to sllpply the large bulk retailers, in hopes
that the low profit margins in the bllsiness can be countered by larger sales volumes, The retail "giants" in
the discount field have been able to develop a barrier to entry for other less intlllential retailers, reslllting in
a reduction in competition, Manufactllrers and sllppliers to the chains, in hope of selling more, unfortllnately
have not realized the unceasing barrage of demands from retailers, who want everything from discollnts for
new-store openings to penalties for shipment errors, to an increasing vol lime of reqllests for free samples,
As the retailers gain more leverage, they become more demanding in the manllfactllring of specific goods,
deciding on colors, and sizes, how mllch to ship, when to ship and where to "drop ship,"
Althollgh low prices do benefit consumers, sllppliers and manllfactllrers are being sqlleezed to be
leaner and more tlexible with respect to chain retailers' demands, In addition, smaller sllppliers are less
likely to have the ability to accommodate, increasing the likelihood of being removed from the market.
Chains utilize interactive information systems (EDI) in a most dominant way throllgh "partnering" with
sllppliers and manllfacturers, Regional wholesalers are less likely to possess sophisticated bllsiness and
information systems reqllired to meet the needs of the mega-retail discollnt chains, hence wholesalers are
apt to disappear and harm the remaining small retailers,
While the allthor believes in a free market and is a devoted supporter of the free entreprenellrial
system, the "free" market means different things to different people, Inasmllch as the principal method of
the mega-discount retail chains in competing with the smaller retail store and the traditional department store
is pricing; this pricing pressure could very well include possibilities of predatory pricing, as defined in both
state and federal laws, Concern over the likelihood of predatory pricing as defined by the Robinson-Patman
Act as well as variolls state laws will be reviewed in Chapter V,
The economic and social impact made by the mega-retail discollnt chains needs to be measured by
a large variety of criteria, (nthe next decade the nation, state, cities, towns and villages will be able to see
whether the promises made by the mega-discount retailers have materialized, Did the mllnicipality make
mistakes injlldgement by encollraging the free entries of these giant discollnt retailers into the areas? Did
the promised additional employment take place? How long were these jobs viable? Were there sllbseqllent
redllctions in personnel in the chains? Did the new chain discounter close and move away? What was the
impact on the viability of the "Main Street" stores? Was polllltion increasing by the presence of the "Big
Box?" Did traffic congestion increase highways ablllling on Pllblic schools? Were the chains subsidized
by tax abatements, right to retain sales taxes to payoff the new bllilding and given other incentives not
available to the small retailer? Did the surviving "Main Street" retailer learn new techniqlles in marketing,
inventory control, and other modern business practices in order to sllrvive? In the economic jllngle where
"sllrvival of the fittest" can almost be analogous to economic and social viability, prey might still remain
alive by developing skills that protect it from predators,
Equally important as a contributor to the lack of social and economic planning is the real estate
developer. The developer, often in concert with the mega-retail discollnt chain, comes lip with ideas for new
"Wendy Zellner and Marte Benedict, "Clollt! More and More Retail Giants Rule the Marketplace,"
Business Week, 21 December 1992, pp, 66-73,
12
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indicate that the loss to the City was over $5 million, this aside from the cost to the State of Pennsylvania
for road construction, etc, The vacated mega-retail discollnt firm shollld retain a continlling financial
responsibility for specific plans sllch as converting the newly vacated warehollse-Iike stores into another
more acceptable form of shopping area, Plans should be made by the lIrban authority ahead of time on the
disposing or recycling of the vacated strllctllres,
Kenneth Stone, previollsly mentioned, a specialist in retail trade and Wal-Mart activities, has
realized that "the only hope small merchants had [is] to niche arollnd them,"" By specializing inllniqlle
prodllcts, local merchants can separate themselves from the uSllal discollnt prodllcts sold in retail chains,
Local merchants need to prevent themselves from entering in a perfectly competitive situation, competing
solely on price and marginal cost. The low pricing strategies mllst be left to the mega-discount retail chains,
The small retailers, to survive, must create their own image and differentiate themselves as lInique, rather
than "me-too," There is a very slim chance that lIniqlle boutiqlle type retailers, not depending on price
rivalry bllt on service and prodllct differentiation might sllrvive in the presence of the major discount "Big
Box."
With lIniqlle, individllalistic strategies and by maintaining less inventory, the sllrviving smaller
retailers mllsttake advantage of flexibility in rapidly changing inventories; an advantage not generally
available to the large corporate retailers with more complicated sllPplier-retailer distribution methods,
In later chapters, this stlldy will attempt to balance and explore the experiences of the many
commllnities who battled the entry of the mega-retail discollnt chains as compared to those states and
communities who offered tax abatements, bllilding sllbsidies, redllction of sales taxes to defray costs of
capital olltlay and debt service and variolls types of what recently has been described as state and federal
"Corporate Welfare,"
One state that has refllsed to accept the large "mega-boxes" has been Vermont. The state has
maintained a "keep Vermont green" force which has kept Wal-Mart and other major chains from easy entry,
The state has made enollgh noise that the anti-sprawl National Trust for Historic Preservation placed the
entire state on its JlIne 1993 "America's J I Most Endangered Historic Places" List which is prepared
annually," More recently, Vermont has modified its anti-Wal-Mart position by permitting their entrance
by capping the size of the building,
The National Trllst for Historic Preservation has led the fight to prevent "SlIperstore Sprawl." In
a major book released in May, 1994 the Trustlallnched an attack on the latest phase in America's retail race,
The Trllst does not appear to oppose job creation, It is against job forecasts that do not materialize and is
against negative impacts on the environment; increased traffic congestion and the sapping of the viability
of traditional businesses which lead to weakening civic vitality, The following statement is taken from the
"Preface" of the recent Trllst Pllblication entitled, How SlIoerstore Sprawl Can Harm Communities........"
"( I) The American retailing indllstry entered a new phase at some point dllring the last
decade, Whereas the sixties and seventies had witnessed an proliferation of regional
"Op, cit., Edward 0, Welles,
25Constance E. Beaumont, How Suoerstore Sorawl Can Harm Communities. . . And What Citizens Can Do
About It, (Washington: National Trust for Historic Preservation, 1994), p, v,
"Ibid" pp, I-ii,
14
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"And communities have choices, They can encourage or discollrage certain types of
development. If a community doesn't want superstore sprawl, it can take steps to prevent
it, If a community wants a superstore, it faces a whole host of other qllestions relating to
whether the store comes in on the commllnity's terms, Where should the store be located?
How big should it be? How mllch new retail space can the local economy absorb without
sllffering the negative fiscal and economic impacts created by a commercial glut? Can the
store be designed to help preserve the commllnity's livability and attractiveness? How can
the store minimize negative environmental, cllltural, scenic, fiscal and economic effects?
Above all, what is the long-term impact of the decision?""
One of the major recommendations of the 1995 White HOllse Conference on Small BlIsiness was
designed to a reverse the financial plight of the declining "Main Street" establishments, The
recommendation follows:
"139, Congress should legislate the creation of a Small BlIsiness Relief FlInd to
economically assist small bllsinesses that are displaced by the establishment of a big
business in their localities where the big bllsiness will contribllte an annllal fee for the
fund."29
This author will attempt to analyze, in sllcceeding chapters, the responses to the challenges posed
to both the mega-retail discollnt chains and the commllnities they wish to enter.
"Ibid" p, iii,
""Final Recommendations From the 1995 White House Conference on Small Business," Foundation for a
New Centurv, (Washington: 1995), p, 25,
16
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The Early Part of the 20th Century Featured Department Stores and Giant Retail Chains
Each metropolitan area of the United States saw the rise of the aristocratic department stores, sllch
as John Wanamaker's in Philadelphia, Macy's in New York, Filene's in Boston, etc, These stores, were
built in a grandiose style similar to the moving pictllre theaters of that period, The department stores were
architectural gems, often featuring organs, art, and catering to family culture of a rising middle class, They
provided a tremendous variety of goods and services, Most prodllcts were nationally branded, Shopping
and dining in fabulous restaurants in the department store was a pleasllre for the entire family, Children had
the toy department; men had a sports department and a rich offering of men's apparel. Women had a range
of popular priced merchandise to the exclusive designer lines, Personnel served the cllstomer almost on a
one-to-one basis, Soon department stores chains sllch as Federated, Filene's and Hechingers followed,
These stores were so designed that they complemented the smaller stores in the large cities as well as the
stores on the typical "Main Street" in the smaller towns and urban areas, The small retailer was not
pressured by serious discount price competition and for the most part, large and small retailers dwelled in
harmony,
Also the first half of the 20th Century saw the rise of three major retail giants: j,c. Penney,
Montgomery Ward and Sears, Roebuck, These stores rapidly developed into mature chains rivaling each
other on price and product, and in a sense were the forerunners of the cllrrent mega-retail discollnt chains,
Also during the period such chains that harmonized withollt creating chaos on "Main Street." were
Woolworth's, Grant's, S,S, Kresge, Mattingly's, etc, They were earlier referred to as "Five-and-Dime"
stores, but evolved into more sophisticated types of merchandisers, Their prices were generally lower than
in the department stores, However, they seemed to harmonize with the rest of "Main Street," and the
competitive environment had little in common with today's competitive "attack and destroy" environment,
1966 - 1995 The Rise ofthe Retail Chains
The 1960's were impacted competition-wise in retail by the entry of chains who wOllId become the
ultimate discounters; i,e" S,S, Kresge's, Kmart, Dayton-HlIdson's Target, Wal-Mart, Woolworth's,
"Woolco" among others, These stores began to emphasize discollnting, broader inventories and advertised
and promoted unusual values,
All experienced steady growth from the sixties to the eighties, While Wal-Mart had a strong start
in the Midwest, it opened only about 500 stores in the sixties and seventies,
These discounters had vigorous rivalries over price competition, bllt more on a regional basis than
national one, Sears continued to maintain a very strong national position, In the early eighties Wal-Mart
was still best known in the small towns and cities in the Midwest.
In the 1970's, there were a nllmber of specialized or "category" retailers who entered the retail
market. They inclllded Toys "R" Us, Walgreen's Drugs and Home Depot.
Rise ofthe Wholesale "Clubs" in the 1970's
In the 1970's, the wholesale clubs began to make an impact. The first was the Price CllIb
Wholesalers in 1976, Then, in 1983 the Costco Wholesale Corporation opened, The two were later to merge
in 1993,
18
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savings and benefit items for the major mega-discollnt retailers, Significant market share formerly possessed
by small retailers collectively began to be lost to the mega-discount retailers,
Aside from the history of improved highways and the mobility of shoppers and the desire for a one-
stop shopping location, WaI-Mart, Super Kmart and others employ a current strategy of "destination" stores,
The "enveloping" area is a strategy to locate within a 5 mile radills in urban areas and 25 mile radius in rural
areas, The objective ofthese stores is to attract customers directly and purposely to their location as a "one-
stop," sole destination, The ability of the traditional retailer to survive is seriously threatened lInless there
is reasonable zoning regllIation by state and local governments to protect the traditional "Main Street."
A later chapter in this stlldy will describe the history of the Fair Trade legislation in the United States
with the Sherman Act going on to the Federal Trade Commission Act, the Clayton Act and the Robinson-
Patman Act. These pro-competitive acts will be discussed as to whether the "enveloping" theory is an
intrusion in a free and fair market and what needs to be done to counteract it.
Mobility in driving to the "Big Box" to or from work has become a way of life for many conSllmers,
Also driving to the "Big Box" at night or on Sundays when the small retailers might be closed fllrther directs
sales away from "Main Street,"
The Rise and Increased Impact of the Meea-Discount Retailers on the Small Retailer (as well
as the "Bie Box" Approach)
Starting in 1962 no one could have foreseen the startling developments in retailing to take place
during the next 30 years, In 1995, combined sales of Kmart, Target and Wal-Mart were over $150 billion,
Discllssions of these major discount retail chains follow:
(1) Wal-Mart
Wal-Mart has had the most meteoric growth during the past] 5 years growing from abollt 275 stores
in 1980 to 2,157 stores in January 1995, with] 60 more scheduled to be built by Janllary ] 996,3 Actllally in
1995, 117 new stores were bllilt giving them a totalnllmber of stores of 2.330 in January] 996, In ] 990,
Wal-Mart became the Number] retailer passing both Sears and Kmart that year.
Wal-Mart was the initiator of the concept of SlIpercenters, It first introdllced this concept which
includes groceries, special services and food courts in ] 988. It was planning almost 150 SlIpercenters, of
which 80 were to be bllilt in 1993.' As of Janllary 1996, ] 54 Supercenters were operated by Wal-Mart,
Their high quality management, modern business systems and inspired executive leadership helped total
operations reach a sales volume of approximately $93 billion in fiscal 1996 with double-digit increases in
growth expected during the next decade,
3Keith Morris (WaI-Mart spokesperson) cited by Steve Lopez, "An old store closes; a small town suffers,"
The Philadelphia Inquirer, 23 July 1995, P A-I2,
'Ibid,
20
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protection in the bankruptcy court saying some suppliers refused to ship merchandise because they feared
the struggling retailer would be unable to pay them, Since the filing, they have closed 12 stores and in
August 1996, Bradlee's received approval to close an additional 14 stores which will leave them with 124
stores in operation,
Filing for Chapter ] I protection, Bradlees became the hardest hit of Northeastern regional
discounters, These retailers have felt the pinch as the national mega-retail discollnt chains became stronger
factors in their regional markets, In addition to the strong entry ofWal-Mart, Kmart slashed prices in the
Brad]ees' area and consumers grew more and more price conscious in their bllying,
"They have a Kmart in basically every one of their backyards, Wal-Mart has moved into their
territory in a very big way," said KlIrt Barnard, Pllblisher of Barnard's Retail Marketing Report,
Bradlees opened 16 stores in the greater Philadelphia area in ]985 and ]986, It's 17th area store,
at Franklin Mills in Northeast Philadelphia, opened in ]994, In all, there were 136 Bradlees stores in the
Northeast and Mid-Atlantic states,
The company annollnced that its stores wOllld continlle normal operations, and that employees'
wages, salaries and benefits would not be interrupted, Bradlees also announced the resignation of its
President, Samuel Mandell, as well as two key vice presidents, Peter Thorner, vice chairman, was then
named to succeed Mandell as President and Chief Operating Officer.
Analysts agree that the worries of suppliers and factors - who pay sllppliers lip front and collect from
the retailer -triggered the Bradlees bankruptcy filing, "]f not for the factors pulling the plug, the company
seemed to be in decent shape," said Jack Hersch, a bankruptcy analyst with Donaldson, LlIfkin & Jenrette
Securities Corp, "This is the sort of thing that's selfflllfilling," according to KlIrt Barnard, of Barnard's
Retail Marketing:
The Bradlees debacle illllstrates the point that jobs are being lost and firms are going Ollt ofbllsiness-
-not only the small retailers but also the regional chains all are threatened by the formidable financial and
buying powers of the mega-retail discount chains,
Recently Kmart's decision to close nllmerolls stores and to shake up its management, as well as sharp
declines in profits indicate that no firm, large or small, is immllne to the results of the feverish desire by
mega-retail discount chains to cover every acre in America with a "Big Box," Ultimately as stores get older
and populations shift, the nation is left with lIrban and rllral sprawl, boarded up stores and terrain that looks
like the "bombed out" area in Italy after the Battle of Cassino in World War II,
Rise of Specialty Chains: Home Improvement: Dru~s: Tovs: etc.
(1) Home Depot, Inc.
Home Depot, Inc, competes with many products that appear in Supercenters and more specifically
with Kmart's Builders' Sqllare, Today, Home Depot is the largest and most powerflll player in home
improvement retail activities, Their sales in fiscal ]995 were over $15 billion, Their staff appears to be
much more highly professional than that generally found in most of the mega-retail discollnt chains,
hardware retailers and lumberyards, Home Depot has approximately 300 stores and plans to bllild a great
many more. Its average square foot building runs in excess of 100,000 square feet and many of the newer
22
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(3) Tovs "R" Us, IDe,
Toys "R" Us, Inc, went public in 1979 and has had phenomenal growth, opening abollt 100 stores
in 1993, There are now over 1,000 stores in the chain principally selling children's toys, Sales volume
soared to over $9 billion in 1995,
The chain has diversified its prodllctline and several hundred of the newer stores now sell children's
clothing as well as children's books, In fact, separate facilities known as Kids "R" Us are often built directly
adjacent to the toy store, This firm is exporting its merchandising philosophy internationally having opened
up abollt 175 locations in Asia and ElIrope in the past few years,
The phenomenal growth of Toys "R" Us has stimlllated an FTC investigation of the toy indllstry and
according to a recent article in The Wall Street Journal, the FTC is accusing Toys "R" Us, Inc, of illegally
boosting prices by pressuring manufacturers into harming other discount retailers' ability to compete, The
impact of this anti-trust action should provide precedent for a similar review by the FTC of other alleged
influences by mega-retail discollnt chains on the pricing practices of suppliers and manllfacturers, See
further discllssion of the Toys "R" Us case in Chapter VII-A on Predatory Pricing,
The Principal Advantages that Mega-Retail Discount Chains Possess as Compared to the
Small Retailers
The chains have many advantages and services that are difficult for the small retailers to match, with
their limited capital, smaller staffs and other limited resources, The strengths of these mega-retail discount
chains may be observed by viewing the following characteristics:
(I) Lower prices, reslllting in great part, from direct mass purchasing of the manlltactllrers'
or sllppIiers' products, This is the epitome of direct buying, It ultimately leads to the
elimination of the small wholesaler and the consolidation of national wholesalers who
traditionally sllpplied the small retailer, Small wholesalers have been forced Ollt ofbllsiness
or have been Pllrchased by national wholesalers, There appears to be a gradllal
disappearance in America of the middleman fllnction, Low prices for good prodllcts create
vallie in the minds of the shoppers, This is a strong point, indeed,
In the short term, the customer wins with lower prices but in the long term, they will lose,
While the obvious advantage in the short rlln is lower prices, this market control can lead
toward monopolistic practices, ifunreglllated, Plltting the conSllmer at risk and eliminating
price advantages, QlIality and selection will decrease because there will be only a few large
corporations controlling selection and price,
(2) Aggressive pricing policies in which small retailers lack sophistication and information,
The major discollnters quickly alter prices by lowering or raising them as the circllmstances
dictate,
(3) Strong promotion and advertising blldgets managed by professionals that can plltthe
small retailer out of the game,
(4) A tremendous line of products, which, ofcollrse, widens consllmerchoices,
24
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The Suoermarket Chains (Kro~er) versus Kmart and Wal-Mart
On May 26,1994, newspaper readers in Buffalo, New York were told that Wal-Mart planned to
locate its first New York State discollnt store and SlIpercenter in Springville, New York, going head to head
with Erie COllnty's dominant supermarket chain, Tops Friendly Market,'
Banking on their sllccessful experiences with SlIpercenter concepts in the Midwest. Wal-Mart
appeared ready to apply the same sllccessflll concepts in the Northeast according to newsman Rick Stauffer,
who reported his interview with Don Spindel, a retail analyst with the national brokerage firm, A,G, Edwards
& Son, in St. Louis, who stated: "People on average, shop for food two to four times per week, They (Wal-
Mart) use food to drive their general merchandise bllsiness, and, lInIike a regular supermarket. Wal-Mart
does not have to make money on food--butthey do, '"
In the same article, Wal-Mart spokesperson Betsy Reithermeyer said: "Most of Ollr SlIpercenters
will be in relocated or expanded in existing Wal-Marts,""
Stauffer also interviewed Janet J, Mangano, a retail analyst employed at BlIrnham Secllrities in New
York City who added: "It (the Supercenter) is the most profitable store they have and when a SlIpercenter
replaces a regular WaI-Mart, it does much better (from a sales standpoint),""
The Buffalo News also reported that from 1988 to 1994, Wal-Mart had opened 79 sllch SlIpercenters
and that the company announced in Janllary 1994, that 65 additional SlIpercenters would be opened dllring
the year," Actually in 1994, one new Supercenter was opened and 37 Wal-Marts were relocated or expanded
to Supercenters, In 1995, 6 new Supercenters were opened and 69 were relocated or expanded to
SlIpercenters, In their 1995 Annual Report, Wal-Mart annollnced their plan to accelerate SlIpercenter
growth, opening 90 to 100 in each year, 1996 and 1997,"
The major concern these Supercenters, both those of WaI-Mart and Kmart, bring to the traditional
grocery chain is the use of an entire industry, food, as a "loss leader." David Rogers, a sllpermarket
consultant with DSR Marketing Systems (Deerfield, IL) stated: "The danger for sllpermarkets is that Wal-
Mart is tuming their business virtually into a loss leader."" Rogers questions how traditional sllpermarkets
can compete with Wal-Mart which can sell groceries at close to cost and recoup on general merchandise with
higher margins,
Wal-Mart's "dominance" strategy certainly applies to the food industry, At the Annllal
'Rick Stauffer, "Wal-Mart plans superstore with groceries in Springville." Buffalo News, 26 May 1994, p,
A-16,
'Ibid,
"Ibid,
"Ibid,
"Ibid,
12Annllal ReDort 1995, Wal-Mart Stores, Inc" p, 4,
"Zina Moukheiber, "The great Wal-Mart massacre, part II," Forbes, 22 January 1996, p, 45,
26
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store."
In the same 1994 study, PaineWebber stlldy described several major disadvantages that Kmart wOllld
have with Supercenters, PaineWebber stated: "Kmart's well-known corporate problems give it a negative
image among consumers as well as developers,"'"
The PaineWebber study also reported that Kmart's decision to use third party food wholesalers saved
much needed capital by lowering overhead, but put Super Kmart at a sllbstantial disadvantage in fulfilling
Supercenters' low price positioning, If Kmart continlles lIsing third party wholesalers, it will put them at
a sllbstantial disadvantage to Wal-Mart and Target,
The author of this study does not accept the premise that Wal-Mart will have similar problems as
did Kmart in executing the SlIpercenter program, Wal-Mart's national management and store management
appears quite strong, Wal-Mart, unlike several major sllpermarket chains, is unconstrained by corporate
problems and appears to be going with 100% self-distribution thus minimizing overhead,
Most supermarket chains self-procllre and self-distribllte, Apparently, when Kmart opened new
SlIper Kmart's, lItilization of olltside food wholesalers strained Kmart's staff resOllrces in opening new
locations, with intense travel reqllired as well as essential staff training reqllirements,
A major advantage for Wal-Mart's Supercenters, generally is its lower labor costs as compared to
both the lInionized and non-unionized supermarkets, WaI-Mart is presently non-lInion, Kroger, the
dominant sllpermarket chain, is unionized, bllt, nevertheless, it, lInlike many sllpermarkets, continlles to be
strongly managed, effective and highly profitable,
The excellent management of Kroger is illllstrated by a PaineWebber sllrvey done dllring March,
1994 in Rosenberg, Texas, where Kroger's lInion labor gap would be wide relative to other regions,
Nevertheless, Kroger came within 4% of the SlIper Kmart's pricing which was enollgh to neutralize price
as a shopper issue, This, despite the fact that Kroger was lInionized, The total pricing on a 46 item "market
basket" was $83,]9 or ]04 indexed to Super Kmart, where the price was $80,04 indexed at 100,'"
Kroger, among all supermarket operators has experienced the heaviest overlap with Supercenters
and, normally, wOllld be expected to be most vulnerable becallse of its mature (seniority) unionized labor
force,
Kroger is the largest and most powerflll U,S, sllpermarket chain and retains lInllsllal flexibility to
subsidize tough competitive regions with easier ones, Further, PaineWebber reported in March] 994, that;
"In total, Kroger's reslllts have not been substantially impacted by Supercenter competition,""
Kroger combats low price SlIpercenters in the following manner:"
"Ibid" p, 7,
"Ibid" p, 8,
"Ibid" p, 9,
"Ibid,
28
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30
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a3:~::>3:........V....O '::>~3 'A~rIUlVU""Olld '~N3:WAO'IdW3 'S3~VM
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'VINVA'IASNN3d NI S1I3'IIV~3:1I 'I'IVWS NO SNIVH::> ~N[lo::>sm
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III 1I3J.dVH:J
Supplies; Auto Equipment and Supplies; Jewelry; Books; Professional Activities sllch as Pharmacy;
Optometry; etc, These categories and the statistical responses will be found in Tables and Charts 13A and
13B of this chapter, as well as in Question] 5 of Appendix I,
Statistical sampling was based on mailings to approximately 20% to 40% of the lIniverse in the
various communities, Copies of the completed qllestionnaires from each state studied are available in the
research files,
Not only did the researchers compllte opinions from retailers by computerization of the retllrns from
fOllr states; but also the staff visited and interviewed retailers in each state, as well as visiting malls, strip
shopping centers and major retailers and discollnt chains, Data was compiled from the hundreds of
interviews which are lIseflll in the presenting of overall opinions by the staff with respect to how small
retailers see their future in view of the potential impact of the arrival of mega-retail discount chains,
Table 1
Summary ofthe Response Rates for All Four States
Table ], which follows, shows that the staff mailed Ollt 60]4 questionnaires to prospective retail
respondents in Pennsylvania, California, Illinois and New York, Of this total, 570 were returned in
completed good order or 9.4 percent.
Additionally, 32] were returned by the U,S, Post Office indicating that the addressees were no longer
at the designated address, In a side stlldy, the staff learned that the usual reasons generally for the retllrns
were liquidation, bankruptcy or moving to an area away from a threatening mega-retail discollnt chain, Since
Dalton and the other directories are lIpdated annually, it can be presllmed that there is a dynamic loss of
small retail business firms, owing in great part to the arrival and price competition of the invading mega-
discollnt chains,
Tabular data in Chapter III describes the fears and apprehensions of the respondents by means of
quantitative data, Chapter IV will describe their fears and concerns in a narrative way detailing specific
qllotes made by the respondents,
A]though it is early in this chapter to reveal the data, the writer points out that concerns and fears
of small retailers in America about their inability to sllrvive are almost lIniform in the fOllr states sllrveyed,
Completely usable returns, as indicated in Table] were ]4% for New York State; ] 1% for
Pennsylvania; ]0% for California and 7% for Illinois,
A retum of approximately] 0% on a mailing of over 6,000 questionnaires provides sllbstantial data
to measure the small retailers' discouraging view of the prospective impact of the mega-discount retail chain
upon chances for a business to survive and grow in a healthy fashion,
32
EE
eaN a~e11a6u!::1 sapnpUI ....
aa~eue)t pue SaU!eld sao '06e:>!4:J sapnpul ...
esaV>J el!V>J pue els!^ eln4:J 'ap!sueaJQ 'heMad '06a!0 ues sapnpul ..
eal'" 6uIPunollnS pue U!4dlapel'4d sapnpul .
%6 OL9 1>'~09 IS1V.10.L
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39\f.LN3:::>~3d ~3a~0 0311VII\I
0009 NI 03~3811\1nN
a3N~n.L3~
31~ 3SNOdS3~:l0 A~"INWnS
~ 318"1
Table and Chart 2A and Table and Chart 2B
Distribution of Types of Business Entities From
Pennsylvania, California, Illinois and New York
Table and Chart 2A, which follow, show clearly that the 570 completed responses came primarily
from sole proprietorships, Nationally, there were 465 returns or 86% of all retllrns who were identified as
"sole proprietors," This was a response to Question 1 in the qllestionnaires provided as Appendix I, Seven
percent were franchisers; 3% were regional chain units, Three percent represented national chain lInits and
1% retail concessionaires, In using Dalton's Directories, it was impossible to know in advance whether a
given location might turn out to be a chain unit.
Table and Chart 2B, which also follow, show graphically that the retllrns from Pennsylvania,
California, Illinois and New York that were sole proprietorships (the essence of small bllsiness) represented
between 80% and 91 % of the respondents from four states, Typically, these were family-operated
businesses, with children and other relatives working for decent wages (not near minimllm wages), YOllng
persons were able to save monies to prepare for college careers and enriched lifetimes,
Table and Chart 3A and Table and Chart 3B
Number of Years Respondents Have Been in Business
Contrary to the general impression that business "tllrn-over" among small retailers is freqllent and
excessive, it appears that the responding retailers who, in the main, consider their companies threatened by
the arrival of mega-retail chains in their areas, have been in bllsiness a long time and are "solid" bllsiness
citizens in their communities, regllIarly paying property, income and sales taxes to the state, cOllnty, city,
town and school district, They do not receive tax abatements or governmental sllbsidies, "corporate welfare"
of the sort often enjoyed by many of the retail chains who build the "Big Boxes" which eventllally lead to
the destrllction of the traditional "Main Street," bringing on urban, sllburban and often rural sprawl.
Table and Chart 3A which follow, provide an impressive national pictllre of longevity, Sixty-two
percent of the respondents have been in business for more than 10 years, In fact, 33% of the respondents
have been in business more than 20 years, The data also discloses the fact that, all in all, 82% of the
respondents have been in bllsiness for more than 5 years, As their bllsinesses begin to close on accollnt of
inability, in great part, to meet the price competition ofthe mega-chains; an observer can begin to see social
as well as economic destruction in cities, towns, villages and in sllburban areas, Small retail bllsinesses have
always served as cornerstones in the neighborhood enclave, Once the grocery store, candy store, bookstore,
shoe store and pharmacy close along with the loss of jobs; then social disintegration occurs and ghettoization
appears with all the usual costs of crime, violence, drugs, welfare and lInemployment. With it arrives the
conseqllent bitterness leading to racial, religiolls and ethnic disharmony as the unemployed strllggle for the
fewer remaining job opportllnities,
Table and Chart 3B provides a more visllal presentation of the differences in bllsiness longevity
among the respondents in each ofthe fOllr states under stlldy,
In Pennsylvania, 58% of the respondents were in business over 20 years, Illinois was in second
place, with 40% over 20 years, while New York State was in third position with 30%; and California was
in fourth place with only 22% ofthe respondents in bllsiness over 20 years,
34
SE
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TABLE AND CHART 2B
NATIONAL DISTRIBUTION OF TYPES OF BUSINESS ENTITIES
BY STATE BREAKDOWN
DISTRIBUTION OF TYPES OF BUSINESS ENTITIES
(QUESTION 1)
%OF
CA IL NY PA TOTAL TOTAL
SOLE PROPRIETORSHIP 228 111 53 73 465 85,79%
FRANCHISEE 23 13 2 1 39 7.20%
CHAIN UNIT, REGIONAL 6 5 0 4 15 2.77%
CHAIN UNIT- NATIONAL 5 9 2 1 17 3,14%
RETAIL CONCESSIONAIRE 4 1 0 1 6 1.11%
TOTAL 266 139 57 80 542
DISTRIBUTION OF TYPES OF BUSINESS ENTITIES
250
50
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ONY
OPA
200
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FRANCHISEE
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TYPE OF BUSINESS
36
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TABLE AND CHART 3B
YEARS IN BUSINESS
(QUESTION 2)
CA IL NY PA
0-2 YEARS 7,52% 1.42% 3,57% 4,11%
2-5 YEARS 18.42% 6,38% 8,93% 10,96%
5-10 YEARS 24,06% 17,73% 21.43% 6,85%
10-20 YEARS 27,82% 34,04% 35,71% 20,55%
OVER 20 YEARS 22,18% 40.43% 30,36% 57,53%
TOTAL 100,00% 100,00% 100,00% 100,00%
PERCENTAGE BREAKDOWN OF YEARS IN BUSINESS
60.00%
50.00%
-40.00%
w
~
iii 30.00%
Iii
~
20.00%
10.00%
0.00%
0-2 YEARS
2-5 YEARS
S-10YEARS
YEARS
1G-20YEARS OVER 20 YEARS
38
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-
CHART 4
II
PHYSICAL BUSINESS SIZE
(QUESTION 3)
CALIFORNIA AREA PER SQUARE FEET
"-
Ow 150
i11~H
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SQ,FT,
.
501-
1000
SQ,FT,
1001,
5000
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5001-
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SQ,FT.
OVER
100,000
AREA, SQUARE FEET
ILLINOIS AREA PER SQUARE FEET
"-
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::!'" 0
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SQ,FT, 1000 5000 10,000 50,000 100,000 100,000
SQ,FT, SQ,FT, SQ,FT, SQ,FT. SQ,FT,
AREA, SQUARE FEET
NEW YORK AREA PER SQUARE FEET
"-
Ow
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:J",
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"-
150 ~."'"
100
50 .
o '
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5000
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5001,
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10,001,
50,000
SQ,FT,
50,001-
100,000
SQ,FT,
OVER
100,000
AREA, SQUARE FEET
PENNSYLVANIA AREA PER SQUARE FEET
"-
Ow 30
>-", ~ : 11II I I
Uz 20
Zo
w,,- 10
:J",
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::!'" 0,500 501, 1001, 5001, 10,001- 50,001, OVER
"-
SQ,FT, 1000 5000 10,000 50,000 100,000 100,000
SQ,FT, SQ,FT, SQ,FT. SQ,FT, SQ,FT,
AREA, SQUARE FEET
40
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TABLE AND CHART 5B
---
ANTICIPATED EFFECT ON ECONOMIC HEALTH
(QUESTION 4)
CA IL NY PA
VERY NEGATIVE 34.47% 29,50% 27,27% 40,79%
NEGATIVE 39,02% 41,01% 36,36% 40,79%
NO EFFECT 17,80% 24.46% 18,18% 14.47%
POSITIVE 6,06% 5,04% 12,73% 2,63%
VERY POSITIVE 2,65% 0,00% 5.45% 1,32%
ANTICIPATED EFFECT ON ECONOMIC HEALTH BY PERCENTAGE BREAKDOWN
"00%
40.00%
3500%
30,00%
25,00%
20,00%
15.00'10
1000%
500%
000%
VERY NEGATlVE NO
NEGATlVE EFFECT
EFFECT
POSITIVE VERY
POSITIVE
42
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Table and Chart 6A and Table and Chart 6B
Responding Firms by Size Of Employment
The response to this national attitude survey, with respect to Table and Chart 6A which follow,
concerned the impact of the mega-retail discollnt chains on the destiny and flltllre health of the very small
retail businesses, These small businesses generally have less than 20 employees,
The answers were derived from responses to QlIestion 5 in Appendix I, Fifty-two percent of the
national respondents employed 5 persons or less, Seventy-four percent of the respondents had 10 employees
or less, Only 26% of the respondents had more than 10 employees, Chart 6A shows that 402 employers,
representing 74% of the total responses of 540 firms responding to this questionnaire were in the
classification of "1 0 employees or less,"
Table and Chart6B which follow provides a more graphic review of the size of firms reporting in
the fOllr states stlldied; i,e" California, Illinois, New York and Pennsylvania,
Almost 60% of the respondents in California and New York had "5 employees or less"; with Illinois
showing the average return to be somewhat larger with more retllrns in the "6-] 0" category than the other
three states, Pennsylvania's returns were abollt 50% in the "0-5" category while their retllrns in the "6-10"
category were also greater than California and New York,
The explanation as to why small retailers in Illinois and Pennsylvania had more employees on the
average than California and New York can be clarified somewhat by once again reviewing Table and Chart
3B which showed an overwhelming preponderance of older firms in Pennsylvania (Philadelphia area), and
Illinois (Chicago) compared to SOllthern California (San Diego area) and lIpper New York State, (the Finger
Lakes area, with Syracuse, AlIbllrn and Geneva, etc,)
For example, 57% of the respondents from Pennsylvania (the Philadelphia area) were in bllsiness
over 20 years; and the same was trlle in Illinois with 40% of the returns, Compare this to SOllthern California
with only 22% of the firms older than 20 years, and lIpper New York State with 30% in this category,
Table and Chart 7 A and Table and Chart 7B
Pending Impact on Respondent Employment by Virtue
of a National Retail Discount Chain Opening Near the Respondent's Location
QlIestion 6 in Appendix I provided the responses presented in Table and Chart 7 A by respondents
of estimates of losses or gains in employment by virtlle of having a new mega-discollnt retailer selling
similar products in their area,
This type of 'I"est ion reqllires more than an edllcated glless - - it reqllires some seriolls qllantitative
modeling, Hence, it's not sllrprising that 37% of the respondents were not able to report an opinion as to a
gain or loss in employment. However, again the writer views this indecision as being "negative." Certainly
they do not see the arrival of a "Big Box" mega-retail discollnt chain store as being "positive,"
Only 4% ofthe respondents saw their employment rising as a result ofa new "chain" neighbor; while
59% predicted seriolls losses in employment after a mega-chainllnit moved in selling similar prodllCtS,
44
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TABLE AND CHART 6B
NUMBER OF EMPLOYEES
(QUESTION 5)
CA IL NY PA
0-5 PEOPLE
6-10 PEOPLE 20,97% 27.34% 18,18% 22,78%
11-20 PEOPLE 9,36% 19.42% 14,55% 8,86%
21-30 PEOPLE 3,37% 2,88% 3,64% 5,06%
31-40 PEOPLE 2,25% 2,88% 0,00% 1,27%
41-50 PEOPLE 1,12% 1.44% 0,00% 3,80%
51-75 PEOPLE 2,25% 3,60% 3,64% 2,53%
76-100 PEOPLE 0,75% 0,00% 1,82% 1,27%
101-200 PEOPLE 0,75% 1.44% 0,00% 1,27%
OVER 200 PEOPLE 0,75% 3,60% 0,00% 2,53%
NUMBER OF EMPLOYEES BY STATE PERCENTAGE BREAKDOWN
60.00%
.CA
n
ONY
DPA
50.00%
~ 40,00%
1!
ffi 30.00%
Ii
w 20.00%
~
10.00%
0.00%
~
"
~
o
~
~
~
8
~
~
NUMBER OF EMPLOYEES
46
Lv
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TABLE AND CHART 7B
ANTICIPATED EFFECT ON TOTAL EMPLOYMENT
(QUESTION 6)
CA
+50% OR MORE 0,37%
+35% 0,00%
+30% 0,00%
+25% 0,74%
+20% 0,00%
+15% 0,00%
+10% 1.86%
+5% 1.49%
0% 35,69%
-5% 5.58%
-10% 7.43%
-15% 3,72%
-20% 8,18%
-25% 5,95%
-30% 4,09%
-35% 3,72%
-50% OR MORE 21,19%
IL
0,00%
0,00%
0,00%
0,00%
0,00%
0,00%
1,79%
3,57%
46,43%
5,36%
12,50%
3,57%
5,36%
3,57%
5,36%
0,00%
12,50%
NY
0,00%
0,00%
0,00%
0,74%
0,74%
0,74%
1,48%
0,74%
38,52%
4.44%
10,37%
4,44%
10,37%
7.41%
2,22%
2,22%
15,56%
PA
2,56%
0,00%
0,00%
0,00%
0,00%
1,28%
0,00%
0,00%
34,62%
6.41%
10,26%
3,85%
3,85%
6,41%
8,97%
3,85%
17,95%
ANTICIPATED EFFECT ON TOTAL EMPLOYMENT BY STATE PERCENTAGE BREAKDOWN
50.00%
45.00%
4ll00%
35.00%
w 30,00%
0
~
~ 25.00%
u
ffi
~ 20.00%
15.00%
10.00%
5,00%
0,00%
w ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ , ~
~ ~
0 " " .
2 . . . .
~
0
~
.
EFFECT
48
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617
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TABLE AND CHART SA
ANNUAL SALES VOLUME
(QUESTION 7)
%
TOTAL
8,02%
8,97%
20,61%
19,85%
19,66%
14,12%
4,96%
3,82%
100,00%
CA
23
24
65
62
46
30
11
4
265
IL
5
12
21
26
33
21
9
11
138
NY
4
8
9
1
10
8
1
2
43
PA
10
3
13
15
14
15
5
3
78
TOTAL
42
47
108
104
103
74
26
20
524
$0 - $50,000
$50,001 - $100,000
$100,001 - $250,000
$250,001 - $500,000
$500,001 - $1,000,000
$1,000,001 - $3,000,000
$3,000,001 - $10,000,000
OVER $10,000,000
TOTAL
ANNUAL SALES VOLUME
120 -______
100
80
60
40
20
o
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g
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0
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.
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0
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disclosed in Table and Chart 8A show 77% of the respondents with sales volumes of $1 ,000,000 or less,
Fourteen percent of the respondents report volllme of $1,000,000 to $3,000,000, Five percent reported
volumes of $3,000,000 to $10,000,000, Only 4% reported volllmes of $1 0,000,000 or over. Approximately
20% are found in the category of $250,000 to $500,000; and finally abollt 20% are fOllnd in the category
$500,000 to $1,000,000, Only 38% had sales vol limes of$250,000 or less,
Table and Chart 8B which follow, reveals a vast majority of the respondent firms; namely 77%,
report sales volumes in the 70% categories from $0 to $1,000,000, California has 83% of its retllrns in this
category; Pennsylvania, 71%; New York State, 74% and Illinois, 69%, In the $1,000,000 to $3,000,000
category, Pennsylvania led with 19,2%; New York, 18,6%; Illinois 15,2%; and California 11.3%, Illinois
had 8% of its respondents with over $10,000,000 compared to an average of only 2% to 4% in the other three
states,
Table and Chart 9A and Table and Chart 9B
Anticipated Effect on Sales Volume by Entry Into The Respondents' Location
By a Mega-Retail Discount Chain Selling Competitive Products
Generally Sold By The Small Retailers
The data in this analysis was secllred by virtlle to answers to qllestion 8 in Appendix I,
Table and chart 9A provide a dramatic visllalization of the pessimistic views of Ihe sllrvey
respondents with respect to diminished sales to be expected by incoming competition of the mega-retail
discount chains,
Seventy-nine percent of the respondents nationally anticipate drastic redllctions in sales volllme,
while only 14% anticipate no changes in sales vol lime, Nineteen percent anticipate a drastic redllction in
sales vol lime of 50% or more, Only 6% see the possibility of increasing volllme by having a sllperstore in
the neighborhood,
Again, the writer believes that the 14% voting "no effect" are certainly not "positive" votes abOlll
having a new giant neighbor. They simply don't have strong numbers to rely on - - bllt we can assllme that
they are more pessimistic than optimistic abollttheir company's flltllre, otherwise they wOllld have reported
in a more positive frame of mind, Furthermore, "no effect" means no anticipated growth - which ultimately
has a regressive effect.
Table and Chart 9B which follow, clearly show the opinion of respondents by states, Eighty-three
percent of Pennsylvania's respondents see volllme falling sharply, In California, it is 79%; New York, it is
80% and in Illinois, it is 78%, States showing greatest concern are California with 21 % of the respondents
expecting sales to drop by 50% or more and Pennsylvania with 20% of the respondents expecting a redllction
in sales of 50% or more, New York followed with 16% of the respondents predicting a loss in sales of 50%
or more; while Illinois was the lowest with only 15% estimating sales to drop by 50% or more,
As indicated, Charts 9A and 9B are 'Illite dramatic showing strong pessimism for retaining sales
vol lime, As is noted later, lower volumes means redllced profits and redllced employment.
52
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TABLE AND CHART 9B
ANTICIPATED EFFECT ON SALES VOLUME
(QUESTION 8)
+50% OR MORE
+35%
+30%
+25%
+20%
+15%
+10%
+5%
NO EFFECT
-5%
-10%
-15%
-20%
~25%
-30%
,35%
-50% OR MORE
CA
0.37%
0.00%
0.00%
0.00%
0.37%
0.75%
3.73%
1,87%
13,81%
4.10%
6.72%
8.21%
9.70%
11.57%
9,70%
7,84%
21,27%
IL
0,00%
0,00%
0,76%
0.76%
0,76%
0.00%
3.03%
0.76%
15,91%
9.09%
12.88%
3.79%
12,88%
12.88%
8,33%
3,03%
15,15%
NY
0.00%
0.00%
0,00%
0.00%
0,00%
0,00%
3,28%
3,28%
11.48%
8,20%
11.48%
11.48%
9.84%
8.20%
8,20%
8,20%
16,39%
PA
0,00%
0,00%
0.00%
1.32%
0,00%
1.32%
0.00%
1.32%
14.47%
6.58%
5.26%
11.84%
17.11%
6.58%
6,58%
7,89%
19,74%
~-
ANTICIPATED EFFECT ON SALES VOLUME BY STATE BREAKDOWN PERCENTAGES
"'-
15.00'llo
1000%
5.00%
o-
w ~ . ~ ~ ~ ~ ~ ~ ~ ~ t ~ ~ ~ w
" . "
0 " " " " 0
. . . . . .
" "
0 0
~ ~
PERCENTAGE CHANGE
54
OCA
n
0",
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TABLE AND CHART 10A
ANTICIPATED EFFECT ON PROFITABILITY
(QUESTION 9)
%
CA IL NY PA TOTAL TOTAL
+50% OR MORE 1 0 0 0 1 0,18%
+35% 0 1 0 0 1 0,18%
+30% 0 0 0 0 0 0,00%
+25% 0 0 0 1 1 0,18%
+20% 0 1 0 0 1 0,18%
+15% 1 1 0 0 2 0,36%
+10% 6 10 3 0 19 3.44%
+5% 7 10 1 1 19 3,44%
NO EFFECT 41 25 9 12 87 15,73%
-5% 17 9 7 5 38 6,87%
-10% 24 25 4 6 59 10,67%
-15% 11 7 4 8 30 5.42%
-20% 22 8 4 13 47 8,50%
-25% 23 11 6 5 45 8,14%
-30% 23 12 2 4 41 7.41%
-35% 18 8 2 4 32 5,79%
-50% OR MORE 73 26 13 18 130 23,51%
TOTAL 267 154 55 77 553 100%
ANTICIPATED EFFECT ON PROFITABILITY
140
120
w
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o
~ 80
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~ 60
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downtllrn in profits reported in California was 79%; in New York, 76% and in Illinois, 69%,
Twenty-seven percent of the California respondents expected a downtllrn of 50% or more, with New
York showing 24%; Pennsylvania, 23% and Illinois only 17%,
Table and Chart I1A and Table and Chart I1B
Rise of the Mega-Retail Discount Chains Has Adversely Affected the Ease with Which
Small Retailers were Formerly Able to Buy from Wholesalers
QlIestion lOin Appendix I asked the following qllestions:
'There appears to be a trend on the part ofthe large, national discount retail chains to bllY directly
from manufacturers, As a reslllt, middlemen or intermediate distributors seem to be disappearing, How will
this affect YOllr purchasing practices?"
The summary results as noted in Tables and Charts II A and II B for the fOllr states collectively were
as follows:
How are Retailers Affected by the Reduction in the Number of Wholesalers?
Description Respondents
Very Positive 2.48%
Positive 3.44%
No Effect 43,70%
Negative 26,34%
Very Negative 24,05%
100,00%
[t shollld be kept in mind that 50% of the respondents reported that the continuing redllction in the
unavailability of wholesalers wOllld affect their bllsiness flltures adversely, Twenty-six percent saw it as
"negative" while an additional 24% viewed it as "very negative,"
Only 6% of the respondents saw it as "positive" or "very positive," Perhaps this small number of
respondents (31) for the fOllr states believe that their lIniqlle prodllct lines wOllld continlle to permit them to
buy "direct" from manufacturers or sllppliers,
Forty-follr percent voted "no effect." This vote often reflects the small retailer's lack of knowledge
of what is happening in the national market. Chapter IV will qllote verbatim the disenchantment of the small
retailers who are aggravated by the fact that the giant mega-retail discollnt chains are generally bllying
"direct" from sllppliers and manllfactllrers,
In a number of regions in the United States, small grocers are bllying products from Sam's CllIbs,
58
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TABLE AND CHART 11B
IMPACT ON PURCHASING PRACTICES
(QUESTION 10)
CA IL NY PA
VERY POSITIVE 3.46% 0,72% 3,57% 1.43%
POSITIVE 3,08% 1.45% 8,93% 4,29%
NO EFFECT 45,77% 42,75% 42,86% 38,57%
NEGATIVE 25,38% 28,99% 23,21% 27,14%
VERY NEGATIVE 22,31% 26,09% 21.43% 28,57%
IMPACT ON PURCHASING PRACTICES BY STATE BREAKDOWN PERCENTAGES
50.00%
45.00%
25.00%
20.00%
15.00%
10.00%
5.00%
000%
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"Wal-Mart still is in the process of experimenting with the supercenter concept," said Don
Spindel, a retail analyst who follows the Bentonville, Arkansas, retailer for A,G, Edwards
& Son in St. LOllis, 'They know they have been very sllccessful in the Midwest, bllt they
want to put a few stores in the Northeast to see how they do, It sOllnds like the Springville
area is ideal."2
Under the sllpercenter concept, Spindel said, Wal-Mart lIses to food to entice people to its adjacent
discollnt store,
'" People on average shop for food two to fOllr times per week,' the analyst said,
'They (Wal-Mart) lIse food to drive their general merchandise business, And,
lInlike a regular sllpermarket, Wal-Mart does not have to make money on food-- bllt
they do' ."3
Wal-Mart certainly is convinced the sllpercenter concept is a winner,
"'(think the SlIpercenter is the wave of the fllture for Wal-Mart'," said Janet J,
Mangano, a retail analyst for BlIrnham Secllrities in New York City, 'It's the most
profitable store they have and when a Supercenter replaces a regular Wal-Mart, it
does mllch better (from a sales standpoint)','"
Table 12
How Does Small Retail Business Generally Promote Its Products and Its Business?
Part of the problem encollntered by small retail bllsinesses in their competition with the major retail
discount chains is the lack of financial ability to devote sllbstantial slims in their blldgets for promotion,
Table 12, which follows, is derived from the answers to QlIestion II in Appendix I: "What methods
do YOllllse to promote YOllr business?" "Please check off the methods that YOll rely on most." A review of
the question shows there can be more than one response giving a total over 100%, National data for the four
states studied follows:
A-I6,
'Rick Stauffer, "WaI-Mart plans superstore with groceries in Springville," Buffalo News, 26 May 1994, p,
'Ibid,
'Ibid,
62
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have to compete with the hOllrs that the large mega-retail discollnt chains follow; namely
making themselves available day or night to meet the needs of the local consllmer market.
Table 13, Table and Chart 13A and Table and Chart 138
A National Summary of Those Products Sold by Small Retailers Which Parallel Products
Available in the Mega-Retail Discount Chains
Question IS in Table 13 identifies the variety of trades, prodllcts and services of which the sample
population is composed ninety-two percent of the respondents returning their data and provided detailed
breakdowns of what they sold,
Table 13, and Tables and Charts 13A and 138 provide a national total of the data received from the
four states and reveal that 570 of the completed retllrns, which represented 9.4% of the mailing were trllly
representative of retail business,
This qllestion allowed the sllrveyors to analyze the heterogeneolls nature of the variety ofbllsinesses
evidenced in the respondent retllrns, When the sample was selected, great efforts were made to make sllre
there would be no heavy concentration of mailings to a particlllar sector of retail activities, This was done
to keep the reslllts as lInbiased and objective as possible within the retail industry as a whole,
Table 13 and Tables and Charts 13A and 138 shows the heterogenolls nature of the responding retail
firms, As in the case of the mega-retail chains, smaller retailers also sell more than one prodllctline, For
example, a retailer might sell women's, men's and children's apparel. Another retailer might sell sports
products as well as electronics, i,e" video/equipment and alldio/stereo, QlIestion 15 was designed to procure
where possible retail sales in every product line which might be fOllnd in a mega-retail chain, Hence the
nllmber of responses by categories far outweighed the nllmber of respondents,
Table 13 provides prodllct analyses for all four states as a whole, while Table 13A and Chart I3A
provides a breakdown of the 570 respondent retailers in each of the fOllr states under stlldy, Table I3A
showed total choices amounting to 1341 selections of retail activity by the 570 respondents in the fOllr state
study,
As might be expected, Table 13A shows heavy concentrations in "food prodllcts," 18%; "home
improvement products," 15%; "other prodllcts," mainly jewelry and related items, II %; "other services,"
such as Optometry, photography, 9%, and combined apparel, men's, women's and children's, 12%, The
nature of these categories are such that the respondents in these bllsinesses may have more seriolls concerns
about survival than the other categories,
The subjective answers in Chapter IV which follow indicate concern and fear of the pnce
competition from such chains such as Kmart, Wal-Mart, Home Depot, Target and Sam's CllIbs,
As noted in Table 13A, the retum from food prodllct retailers overall was 18%, However, in Table
138, the return from New York was 22%; from California, 19%; from Pennsylvania, 17%; and from Illinois,
13%,
With respect to home improvements and bllilding supplies; Pennsylvania showed a retllrn of28%;
Illinois 17%, California II % and New York only 9% for an overall average of 15%,
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TABLE AND CHART 13A
COMPREHENSIVE RESULTS OF INDUSTRY BREAKDOWN
(QUESTION 15)
%
CA IL NY PA TOTAL TOTAL
MEN'S WARDROBE 40 4 4 7 55 4,10%
WOMEN'S WARDROBE 60 5 5 2 72 5,37%
INFANT/CHILDREN 22 4 0 8 34 2,54%
PETS 21 0 0 15 36 2,68%
FOOD PRODUCTS 153 25 14 49 241 17,97%
ELECTRONICS 50 13 4 15 82 6,11% .
GAMES AND HOBBIES 24 4 0 8 36 2,68%
SPORTS PRODUCTS 27 4 1 2 34 2,54%
PAPER PRODUCTS 54 8 1 17 80 5,97%
HEALTH AND BEAUTY 36 7 2 17 62 4,62%
DOMESTIC PRODUCTS 30 5 1 24 60 4.47%
HOME IMPROVl BUILD, SUPPL. 86 31 6 81 204 15,21%
AUTO EQUIP/SERVICES 39 19 8 5 71 5.29% .
OTHER PRODUCTS 83 28 10 27 148 11,04%
OTHER SERVICES 74 29 8 15 126 9.40%
TOTAL 186 .
799 64 292 1341 100%
NATIONAL DISTRIBUTION OF INDUSTRY RESPONSES
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In apparel with an overall response of 12%, California's combined total for men's, women's and
children's was 15%; New York was second with 14%; Illinois was third with 7% and Pennsylvania lagged
with 5%, The nature of the area often dictated the characteristics of the responses, For example,
Philadelphia and Chicago which are 'Illite metropolitan and urban; and less inclined to bllY fashionable
"casual wear" appropriate to the warmer climate of the sllbllrban and rural San Diego area, The Finger Lakes
region of New Yark State was more rural than the Pennsylvania and Illinois experiences,
Retail Product Catel:ories Selected by Respondents from the Four States
The retail prodllct returns from each of the fOllr states are categorized by product into sllbdivisions,
There is quite a differentiation between the prodllct mix in one state compared to another, as might be
expected based on climate, environment, age of the average residents and style of life,
Table 13A covers 799 selections from SOllthern California (San Diego, Mira Mesa, Poway, Chllla
Vista and Oceanside,
Table 13A covers 186 selections from Illinois which includes Chicago, Kanakee and Des Plaines
areas.
Table 13A covers 64 selections from the Finger Lakes region of New York State inclllding such
areas as Geneva, AlIbllrn and Syracllse,
Table 13A includes 292 selections from the metropolitan area of Greater Philadelphia, Pennsylvania
(South Philadelphia, Center City, Society Hill" Northeast Philadelphia, Northwest Philadelphia and West
Philadelphia),
California's response unlike the other three states stlldied, were nllmerolls in apparel categories,
Most of the retail stores selling men's and women's apparel classified as "casual wear" are fOllnd in the
California retllrns, There were few retllrns in these categories from Illinois, New York and Pennsylvania,
California, Illinois and Pennsylvania are 'Illite representative on Home Improvement and bllilding sllpplies,
New York and Pennsylvania showed a substantial percentage of food retail responses, California
and Pennsylvania were strong on pets and pet sllpplies, California was strong in the sports products areas,
California and Pennsylvania also had nllmerous returns in jewelry, watches and related prodllcts,
Where Do the Customers Come From? The Rise of Multi-Discount Retail Chains has
Benefitted Immensely by the Infrastructure Changes Provided by the Taxpayer (Ouestion 16)
Data received from all four states studied showed the influence that automobiles have on shopping
habits, The retail responses showed that their cllstomers came from difTerenttowns and cOllnties depending
on convenient highway facilities and parking availability,
Obviously the dependence on the alltomobile tends to favor the mega-retail discollnt chains, The
mega-discount chains and "Big Boxes" have capitalized highways and alltomobiles to shift the retail center
of gravity away from the smaller retailers in the neighborhoods, the enclaves and the traditional "Main
Street." The mega centers have huge parking lots, while it has become more and more costly to park in the
central city withollt being "ticketed," Obviollsly, the "Big Boxes" have benefitted from tremendolls
68
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TABLE AND CHART 14A
COMPETITIVE STRATEGIES AND AL TERNA TIVES
(QUESTION 17)
%
CA IL NY PA TOTAL TOTAL
RAISE PRICES 8 13 3 3 27 1.52%
LOWER PRICES 108 50 19 30 207 11,62%
INCREASE WORK HOURS 52 41 15 22 130 7.30%
DECREASE WORK HOURS 10 4 0 6 20 1,12%
INCREASE STAFF 16 10 2 2 30 1.68%
DECREASE STAFF 79 32 11 22 144 8,08%
INCREASE VISIBILITY 127 77 25 33 262 14,70%
PROVIDE FULLER SERVICES 154 93 27 33 307 17,23%
EXPAND PROD, L1NE/SERV, 85 40 10 16 151 8.47%
NARROW PROD, L1NE/SERV, 65 48 21 26 160 8.98%
CONSOLIDATE BUSINESS 13 13 3 3 32 1.80%
LIQUIDATE BUSINESS 38 9 5 9 61 3.42%
BANKRUPTCY 18 6 1 4 29 1.63%
MOVE BUSINESS 39 17 9 14 79 4.43%
SELL BUSINESS 60 23 11 20 114 6.40%
MERGE BUSINESS 14 9 2 4 29 1,63%
TOTAL 886 485 164 247 1782 100%
COMPETlTVE STRATEGIES AND ALTERNATIVES
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Data Provides National Results of A Fra2mented Nature Into Both "Positive" (More
Optimistic) and "Defensive" (More Pessimistic) -- Ouestion 17
"Positive" Stratel!ies
% or Total Responses on
Each Alternative Stratel!v
Increase Work Hours
Increase Staff
Increase Visibility
Provide Fuller Service
Expand Product Line/Services
Consolidate BlIsiness
Move Business
7.30%
1,68%
14,70%
17.23%
8.47%
1,80%
4.42%
55,60%
"Defensive" Strategies
% or Total Responses on
Each Alternative Strate\;!v
Raise prices
Lower prices
Decrease work hours
Decrease staff
Narrow Product level/services
Liquidate bllsiness
BankrllPtcy
Sell business
Merge bllsiness
1,52%
11,62%
1.12%
8,08%
8,98%
3.42%
1,63%
6.40%
1.63%
44.40%
TOTAL
100 %
The respondents to Question 17 nlllnbered 479 firms on QlIestion 17 or 84% of the 570 total
respondents, The 479 firms answering the strategy qllestion selected a total of 1782 alternative choices,
Fifty-six percent were "positive" strategies, while 44% were "defensive" strategies,
The major aggressive "positive" strategies were as follows: "Provide Fuller Service," 17%; "Increase
Visibility," 15%; "Expand Prodllct Line and Services," 8%; and "Increase Work HOllrs," 7%,
Obviously, in view of the mega-retail discollnt chains being open day and night to accommodate the
mobile shopper; increasing staff and the work hOllrs wOllld be a forward move for the small retailer. Since
the mega-discollnt chain's large "Boxes" limit salesperson cllstomer contacts; "Providing Fuller Service"
creates a retail uniqlleness to bring cllstomers into the store, "Increased Visibility" means plltting more
money into advertising sllch as hand OlltS and radio advertising, "Expanding the Product Line and Services"
is to create customer interest and provide an innovative sollltion to the present inability to compete on price
alone, "Positive" selections, as stated previously, represented 56% of the choices,
According to the allthor's classifications, 44% of the choices were "defensive," negative or mildly
negative, Twelve percent of the choices were to "lower prices," In view of "direct" mass purchasing by
chains from sllppliers and manllfactllrers, can a small retailer meet these lower prices? Obviously not,
72
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(2) Over 6,000 qllestionnaires were mailed out to small retailers in fOllr states, The 9.4% completed
retllrns provides substantial information and meaningflll validity with respect to the fears of small retailers
and their concerns and expectations with respect to a possibility of a viable and profitable firm sllrvival.
(3) The statistical reslllts would have been well over 10% had it not been for the 321 or 5% of the
questionnaires that were returned unopened becallse the intended recipients had already gone Ollt of business,
This was shocking information since the Dalton directory lIsed in the survey is published annllally for each
region, The staff visited malls in Illinois; New York and California and noted that in dozens of cases, the
addressees whose questionnaire had been returned by the United States Post Office, had signs on boarded
up properties stating, "Ollt of Business," These retailers had suffered to a great extent, because normal sized
"anchor" stores in the mall had closed down unable to compete with the super "Boxes" bllilt by some of the
mega-retail discollnt chains in the area,
(4) President Bill Clinton in an address at the 1995 White HOllse Conference on Small BlIsiness on
June 12,1995, stated that while more new small bllsinesses had sprung up in 1993 and 1994 than in any
previolls year since World War II; that, nevertheless, he was concerned abollttheir ability to stay alive, He
expressed concern abollt the high rate of failures and bankruptcies among small bllsiness, Contribllting to
the increasing failllre statistics among small retailers has been their inability to compete with the mega-retail
discollnt chains,
(5) As to the new starts in small bllsiness allllded to by President Clinton, the enormolls downsizing
(millions) of employees working for America's large corporations has contribllted to the desire of the
redllndant employee to become self-employed, Retail employment at near minimllm wage cannot satisfy
the family reqllirements of the former corporate employee; hence a desire for self-employment. Retail
employment in most of the major chains canllsually lead to a wage near the federal minimllm or slightly
above it. Many of these chains reqllire that the hourly rate employee payor contribllte to his/her own health
benefits, Thus, the opportllnities in retail ownership appear rosy compared to a low minimllm wage job: bllt
the competition of the mega-discollnt chains makes survival and profit making speclllative, indeed,
(6) As might have been expected, 86% of the returns were identified as "sole proprietors,"
(7) Surprisingly, 62% of the respondents had been in bllsiness for more than 10 years, Closing a
business like this is trallmatic and has terrible social impact on the family and the commllnity, Eighty-two
percent of the respondents were in bllsiness at least 5 years,
(8) To prove that the respondents were in fact "small business," the typical retail respondent
occupied only between 1,000 and 5,000 sqllare feet of retail space, Think of the average retailer's inability
to stock inventory to compete with the national chains who have stores with 45,000, 90,000 and even
160,000 sqllare feet.
(9) When the respondents were qlleried as to what the anticipated effect upon the firms's economic
health might be if a mega-retail chain were to locate nearby, the answers were overwhelming "negative" and
"very negative," Forty percent anticipated the results as "negative" and an additional 33% answered "very
negative," ThllS, 73% viewed their flltures in a most despondent, negative manner. Even the 19% voting
"no effect" were certainly not "positive," bllt it si possible that in many cases, they decided not to answer
the qllestion positively or affirmatively becallse of a lack of hard data to make a judgement.
(10) To fllrther validate the fact that opinions came from small bllsinesses, it appeared that 74% of
the firms employed 10 employees or less, Only 26% of the firms had more than 10 employees, These
74
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photography, etc,), These vary greatly among the four states, For example, California shows heavy
responses in "casual apparel"; while this is not as important in Pennsylvania and Illinois,
(20) The cllstomer base of these retail respondents depends greatly on highways and parking,
Naturally, the major chains locating outside "Main Street" have the advantage of parking lots; ease of access,
freedom from parking meters and downtown traffic congestion, Add to that the fear of crime and violence
in downtown evening shopping which creates a major disadvantage for the small "Main Street" retailer.
(21) A major question addressed to the small retailers related to strategies they might apply in
competing more effectively with the major discount chains, While the staff received an 84% response rate;
it was lower than the answers to other qllestions, The respondents appear fragmented in their choices;
frustrated, confused and pessimistic,
(22) Fifty-six percent selected alternative strategies that cOllld be defined as somewhat "positive";
sllch as "increase staff," "increase visibility," "provide fuller service" and "expand product lines," Forty-follr
percent of the choices were "defensive" strategies; "going from raising or lowering prices." "decreasing
staff," "liquidating or selling the business" or "going into bankrllptcy,"
There was not a great deal of difference among the fOllr states as to "positive" strategies, Illinois was
the most positive with 60%; New York with 56%; California 55% and Pennsylvania with 50%,
(23) The staff believe that the profile of small retail business as portrayed in Chapter III shows
consistency and validity; not only nationally bllt among the fOllr states stlldied, Surprisingly, respondents
generally have been in bllsiness longer than might be the popular notion, Small retailers show concern abollt
their future viability, and evidence fear of job loss, liquidation and bankrllPtcy; they become less competitive
when compared to the mega-retail discount chains,
76
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The writer has visited many strip centers, "Main Streets" and malls, in a number of states and has
interviewed a number of valiant survivors, In Part II of this chapter, the reader will certainly recognize their
discouragement and disillusionment about the end of their "American Dream,"
Taylor and Archer, while truly attempting to encourage small retailers to survive; nevertheless do
recognize and observe the present devastation going on in malls, strip malls and the former "Main Streets"
of Middle America. Furthermore, it is easy to see observers are shocked by the decline and elimination of
most small retail stores in the ethnic and minority enclaves of our very large cities, in the East, Midwest and
the West. The elimination of small retail store in the neighborhoods results in job loss and contributes to
the ultimate conversion of a formerly socially stable neighborhood into a ghetto, beset by violence, crime,
drugs and an underground economy.
This view is clearly expressed in the following quote from Taylor and Archer's opening statement
in their book:
"'Main Street' Is Chanllim!"
"'Bowman's Hardware is closing!' The rumor had spread like wildfire through the small
Georgia town just weeks ago, Now the store building stands quietly empty, The auction
is over and the owner is gone."
"The 'for sale or rent' sign dominates the right-side display window, A hand-lettered poster
board is taped up in the left hand window, Its message expresses the bitterness of the
former store owner and the area's other failed merchants, It reads:
YOU WANTED W AL-MART. SOON THEY'LL
BE ALL YOU GOT. GOOD LUCK THEN!"
"Bowman's is the eighth 'Main Street' business to close since Wal-Mart came to town, The
owners are quick to blame the giant retailer for the failures, However, signs 'of neglect.
apathy, and decline were evident on 'Main Street' long before the discounter located at the
edge of town,"
"Bowman's had been the only full-line hardware store in town, Its closing is a blow to the
remaining independent owners, For the first time in seventy-three years the big corner store
is empty,"
"'Main Street' is changing.'"
While it is true that all of the troubles of the small retailer can not be attributed to mega-retail
discount chains; nevertheless, the pricing power of these chains makes recovery on the part of the small
retailer well nigh impossible.
A lack of foresight on the part of local governmental authority in failing to back downtown
improvements; to make parking readily available; to control traffic congestion; and to provide fiscal stability
have all contributed to the plight of the small retailer in America,
'Ibid., p. I.
80
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3, Gather and analyze management information regularly,
4, Sharpen marketing skills,
5, Increase the customer's perception of value,
6, Position the business uniquely,
7, EIim inate waste,
8, Find something to improve every day,
9, Embrace change with a positive attitude,
10, Pull the trigger and start the battle,'"
Their work appears to be more appropriate in helping a retailer in planning a new venture, starting
a new business, or selecting a new location, The book provides sound business advice for all retailers, large
and small, of every type and description, However, the "generic" type of advice so generously offered
cannot help most of the nation's small retailers who are under-capitalized; possibly deep in debt, unable to
afford sophisticated information systems, costly advertising and promotion, and who are presently located
in what appears to be "disadvantaged," "ghetto-like" locations, Here, the formerly lovely "Main Street" is
loaded with vacant real estate, The historic neighborhood enclaves in large cities now exhibit abandoned
stores and residential decline. Even malls constructed within the past five or ten years now suffer vacancies
and reduced traffic as the "Big Boxes" of Target, Kmart or Wal-Mart open, perhaps a half mile to three miles
from the former bustling commercial center.
The responses to our study show hopelessness, frustration and inability to respond to Taylor and
Archer's ten strategies for survival, albeit, the advice is good, At a certain point the small retailer becomes
a dying breed, unless the nation and Congress realizes what the impact of these failures will be on
communities, joblessness and social disorganization,
Generally, wages in the mega.retail discount chains do not match the earnings of employees who
worked in family-owned small businesses. Not only has the economic impact of the mega-chains been
negative; but also the sociological impact, as communities lose their small stores, the lllega-stores will
become socially unstable influences, resulting in increases in violence, crime and joblessness,
'Ibid,
82
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PART II - A
CALIFORNIA
[San Diego Area]
Sl . LUfle-ae-e/Bags:
"Our store primarily deals with bags and luggage, One block away there is another luggage store, None of
them are (including ours) large stores, Yet, there is enough competition to really drive the retail price down,
even between two small stores. We can imagine what it will be like if a national chain store is placed near
our store. This reminds us ofa game ofMonopoly@! But perhaps this is an inevitable trend everyone wants
to make the most 'bang' for the most buck, So, it is only natural there will be the predominance of nation
wide chain-stores in which they may bypass wholesalers and purchase goods directly from manufacturers,
We are aware of the diminishing wholesalers (from L.A,), We sense economy of scale at work everywhere,
but in a more overt form."
S27 - Men's and Women's Resort Wear:
"The wording of your questionnaire makes an accurate answer difficult. We operate specialty resort wear
stores in resorts, A large store opening Y, mile away would have no impact but an operation across the street
would, Also a large discount store would not offer similar products, It is highly unlikely a discount
operation would want to pay $60-$100 per square foot rent and could discount the upscale merchandise we
offer."
S26 - Books and Magazines:
"Information regarding publishers and other suppliers offering preferential terms for 'mega stores' would
be helpful."
"Research regarding possible trade violations by mega stores helpful. Also their influence on making 'best
sellers' simply by their purchases - what is their influence on a book's success?"
"Cultural influence of chain/mega stores purchase pattern (de facto censorship) - less profitability of some
books - also their negative impact on small publishers - (high purchase and high return),"
S25 - Security EqniDment:
"In our experience, the large mega-retailers carry the low end of product lines which appeal to 'do-it-
yourselfers' and handymen. Therefore we have shifted our emphasis to commercial customers and the Navy,
The large retailers buy directly from the manufacturer and eliminate the distributors, We can not compete
under those circumstances, If we do not have distributors to supply us with merchandise, and we can not
buy from the manufacturers, that doesn't hold much ofa future for small businesses,"
S22 - Men's Casual Wear:
"I am located in Seaport Village, which is tourist/convention orientated, This may not suit your survey
objective, as many of our customers wouldn't have the option of visiting a discounter because of time
restraints or wouldn't want to, as they would feel they could do that in their hometown, I currently make a
strong effort not to carry same labels available in the discount stores you named, Many manufacturers use
a different label for discounters - same goods, or they manufacture a lighter weight garment (less quality)
same look,"
S20 - "Other":
"It seems a little late in the game to be trying to come to terms with the destructive aspects of mega stores,
Perhaps some time should be spent anticipating the impact of electronic shopping and other emerging
84
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S14 - Beveraees. Snacks:
"We are a small coffee vending (retail) operation which enjoys a good location in the business district and
long standing track record, Our 'edge' on the market is quality and service and very low overhead, The
disadvantage is that we rent our locations; and, if a large company comes into the area, they could well afford
to offer our landlord a deal they couldn't refuse or one that we couldn't match, If we did pay the 'increased
market rent' one of our largest advantages would be lost (low overhead),"
CALIFORNIA
[Oceanside Areal
07 - Electric Equinment!Kitchen Equipment:
"The large retail stores have nothing but a negative effect on the small business, especially in California,
There is only so much business to go around and the increase in the number of stores only means that each
one's slice of the economic pie is only that much smaller."
02 - Picture Frames:
"Thank you for the opportunity to be included in this survey. As a young small business man I feel that some
of the large chain stores do a greater deal of bad than good, If the United States wants to become an
unfriendly discount warehouse then so be it. But being a 'service' business I don't believe that is what's
happening, I honestly feel that someone forgot the most important thing about being a small business - 'the
customer.' Without service to the customer it is just a matter of time before all the big stores are gone and
the smaller 'Mom-and-Pop' shops come back (I hope)."
021 - Specialty Shop:
"We are a specialty business with very little competition from large chain business, We provide products
and customer service on use of products not found in large chain stores,"
0105 - Snorts Products:
"Large discounters will move in with lower prices, Independents will be forced out and then when
competition's gone, prices will go up again until the cycle starts again, Service is the only way the small guy
can compete, We have just liquidated due to discount competition!"
0101 - Bikes/Equipment:
"I will close my business by July I, 1994, No tax concessions were offered to bring my business into town
or to keep it in town, Many products which were sold in my store and made available from the manufacturer
solely for' independent' stores now have appeared in the discount stores via gray market trading, My
customers were always quick to tell me about the great deals they got."
"The American public will always pay in the long run for the services they get and expect and perhaps
service and quality are after-thoughts soon forgotten, Many cities have over built re: shopping malls,
especially those anchored by discounts firms, only to have the mall become a picture of blight when it cannot
be filled with small tenants or the discount firm packs up and leaves,"
099 - Nutrition Store:
"Mega-chain stores buy or discount wholesale, because of high volume then sell or discounts to attract
consumers, Smaller margin of profit is offset by higher sales volumes, Tax breaks and other incentives from
all levels of government (local, state, federal) favor big business unfairly to the detriment of the small
business who gets no break even though small businesses are the national economy's backbone. If this trend
86
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small business 'out of town'; provide inadequate jobs and are only concerned about the bottom line! Prices
that they charge for similar products that I have, are at times below my cost or at a level that I cannot
compete with, There are only so many tax dollars, By adding another store, how can the tax revenue be
increased? This is the big lie of the discount chain stores"
073 . Shoe Store:
"I have two views about national discounters, I) Our town already has I Target, 2 Kmarts, 2 Long's and
now we are getting a Wal-Mart, All of these retailers sell 'some' similar products to mine and they get them
much cheaper than 1 do - thus this is bad for my business, 2) Our town is in terrible need of businesses who
can bring employment opportunities and tax dollars to us. 1 personally would rather see more upscale larger
retailers come,"
068 - Food Products:
"The big question is what are local merchants and centers doing to compete with the national discount
centers, For example, uplifting stores and malls that are looking so worn and are not as attractive to shop
in as are new stores,"
063 - Audio Stereo:
"It is my opinion that the U,S, Government PX's are engaged in unfair business practices which present the
most adverse impact on my business, They sell the same product at an average mark up of 20%, They do
not charge sales taxes and in addition they now offer financing, I feel this has been a major impact causing
about a 40% decline in business for the last 3 years, I feel the Exchange and PX should be limited to selling
necessary items such as food only, not luxury items such as car stereos and electronics. We as business
people and taxpayers are financing the government to operate at a loss and extending the time ofrecession."
061 . Furniture:
"I am a sales representative in the home furnishings field, [also offer warranty services as an addition to
the products I sell. I currently sell to Price\Costco, so I can't say it would be bad for me personally for their
expansion, However, the other large discount chain retailers do take away from my customer base on a retail
level."
059 - Computer Equipment/Electronic Equipment:
"We are a family business in existence for over 20 years, Two locations (I - Escondido; 1 - Oceanside),
When we opened typewriter shops, we sold typewriters, Now Price Club, Sam's, Wal-Mart. Kmart, Silo,
Circuit City, Sears, Montgomery Wards, all sell typewriters, word processors, etc, They sell at prices less
than we can purchase from the manufacturer as a dealer. As a dealer we have quotas to meet in order to stay
a dealer and be able to buy machines, supplies and parts, We are now a service oriented business."
058 - Ootometry:
"I am personally against retailers such as Wal-Mart, etc, They do not offer good jobs to the local public and
do take away from jobs provided by the smaller business, Thus, their promise to add the 'so called' revenues
to the city coffers is untrue, since these big retailers put many others out of business, Then the profits leave
the local areas and go to the big corporate guys,"
056 - Paper Products:
"In 'general' there is already too much retail space now available and the giants are killing off the small
retailers, While some of us hope to grow big enough to compete, most of us will not survive, Community
planners and local and state governments put too much emphasis on tax revenue and not enough on quality
of life, and plan too much commercial and not enough desirable housing, which leads to too many instant
88
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038 Buildinl! Supplies:
"The Home Depot has been here for 10 years. We can offer more for less on a service and personal level.
They, on the other hand, can purchase certain goods at a substantial saving usually under my price. They
buy direct; we cannot. How can we compete?! The government thinks that these companies are small
business, They are wrong - we are!"
037. Lawn and Garden:
"When Home Depot opened its doors several years ago, my sales dropped 15-20%, With a slow economy,
people assume Home Depot and Home Base are cheaper, therefore my sales have continued to drop,"
"On a positive note, many customers are returning to the service that we provide, The 'circus' atmosphere
is costing them sales as well. Thank you for asking our opinions,"
034 - General Store:
"Predatory pricing by large retailing chains should be controlled,"
030 - Florist:
"No one said it would be easy to compete in any venue,"
027 - Photo Processina::
"We already have a tough time surviving in Oceanside, The city's business has decreased, Businesses in my
center have moved or gone out of business, accounting for a 40% vacancy in the center."
"Selling my firm is probably out of the question because of Oceanside's reputation for poor business as of
late. Wish me luck!"
026 - Doors/Windows/Kitchen Cabinets:
"If the manufacturer sells direct to the large chains, then why not sell direct to the small businesses?"
039 - Home Improvement/Lawn & Garden:
"I love the big guys - they sell the cheap products that break down, and I repair, or replace with quality
products, "
024 - Furniture:
"Give small business same breaks that are offered to large chains, particularly tax breaks,"
023. Auto Equipment and Services:
"There is no question that big chains, who have such buying power, are putting small and medium size
business out of business, I did not know that anyone out there cared about small businesses going out,
These big stores carry everything, The Price Club even has a travel agency inside, I think this is absolutely
disgusting,"
020 - Women's Work Apparel:
"Uniform sales are generally a more service oriented and group sales type of retailing, It requires a more
knowledgeable type of selling and marketing. I would only expect a moderate decrease in sales. Most
uniform locations require male/female garments in all sizes. ranges and colors, National discount retailers
do not have the space nor qualified personnel to handle our type of products,"
90
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.
ClO - Ice Cream:
"Large businesses can afford lower prices by allocating or prorating profit margins among several different
products, Economy of scale,"
C8 - Office Products:
"I do not like the City helping major stores open with tax breaks/land deals, etc., when the effect is to put
many small business people out of business. Unless they are bringing new buyers into the city, they are only
moving sales tax dollars from one place in their city to another."
C4 - PaRer Products:
"A large competitor that handled the same or similar services would put me out of business,"
C2 - Jewelry:
"It is necessary to stop irresponsible opening of new businesses in the areas already filled up with similar
businesses."
C58 - JeweIrv:
"I) Restrict to some areas all national discount retailer stores, 2) If local government waives taxes five or
more years, than obligate the mega-retailer to stay five extra years after the five years waiver, 3) Tax extra
for the number of stores they have, 4) Obligate manufacturers to give same prices to small business, 5)
Waive some taxes to small business, 6) Lower Workman's Compensation insurance to small business, 7)
Special loans to small business at lower rates,"
C55 - Reupholsterer of Furniture:
"Small business can compete with large business providing government entities do not tax and or regulate
us to death and offer incentives to large business that are not available to small. Small business worst
problems include above and excessive insurance premiums, especially Workman's COlllpensation, health
care cost of employees, unions, Small business is only surviving now because it gives better service and
quality and is accepting less payor rewards for its efforts,"
C51 - Kitchen Products:
"Fedco, llliJitary base are 'not for profit.' It's very hard to compete with this type operation, I think if they
are not for profit, they should not be allowed to sell the same products I do. People will often come in and
see products I sell (and stock) then once they have all the information on the product they will go to a
warehouse club or military base and purchase it cheaper."
C48 - Food Products:
"I have found that the large mega store customers have a negative impact because their business is one stop
shopping. After an hour in Wal-Mart, etc. the last thing you want is to stop some place else for ice cream,
etc."
C47 - Sewin~ Fabrics:
"Chula Vista, CA is unique, The Mexican border is five minutes south, San Diego proper is ten minutes
north, There are now 3 and very soon 4 Klllart stores within 8 minutes of my store, There are 3 Home Depot
centers, I Home Base, 2 Targets, 3 Major Malls, I Office Depot as well as a multitude of other strip
shopping centers, , , all within 8- I 0 minutes, Drive for 20 minutes and easily triple these figures,"
"Originally, these mega stores offered depth and low prices, , , very cOlllpetitive prices, Price/Costco has
zero profit prices, , , (net) margin. They are selling at cost only, , , deriving their 'profit' from quick selling
92
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C37. Food Products:
"At the present time it seems to me we have more stores than customers, With more stores all we do is keep
dividing business"
C36 - Men and Women's Clothinl!:
"We are owned by a corporation (Me[ville) so I don't know if I should even be releasing these figures, The
reason I am is that I am an entrepreneur and currently opening a small business of my own, The hardest
thing about this whole business venture is lack of support, Communities need to get together and work
together in order to keep the money flowing, I am interested in any ideas on how to pull people together.
Please contact me!"
C34 - Food Products:
"How can a small business compete when my purchasing of some products are more expensive than their
retail prices?"
C30 - Variety Store:
"I feel that the slllall business lllanagers must somehow lllake cities that give your Wal-Marts & Kmarts non-
tax status for years should be held accountable, as the cities lose revenue whenever the small businesses are
forced to close due to the excessive competition, Also one should check-out the methods that Kmarts and
Wal-Marts use to keep their cost down as far as employee wages & benefits. Do they give their employees
the total package that my company offers?"
C28 - Pine and Cigarette Shop:
"Predatory pricing also affects manufacturers in a negative way, Suppose you manufactured a great quality
washing machine and had agreements with lots of independent stores to sell and service your product at
reasonable prices. A big discounter moves in and demands that you sell him your product. He discounts the
hell out of it, probably offers no service, All of your independent outlets drop your product. Now the
discounter wants to buy more but at large discounts, The manufacturer has no choice but to discount to the
discounter. He cheapens his product in materials and by possibly moving production to another country,
I firmly believe that manufacturers have the right to decide who they will and will not sell to, After all they
may have generations invested in their product's good name, We see some of the collective items that we
sell and have a lot of our money invested in, being discounted by Costco/Price Club,"
C25 - Men's Clothing:
"If the present trend continues of the mega-stores, numerous small merchants will not be able to survive with
such competition; as is already evidenced in many areas, Bankruptcies are and will continue to be a common
OCCurrence amongst small business."
"The 'impact' is and will continue to be devastating, It is the strangulation of the small business segment
in generaL"
"After 32 years in my business, never have I been lllore discouraged by trends in the large corporate invasion
and the ultimate break up of small business,"
C22 - Health and Beauty:
"It is a difficult environment for small business. Unfair pricing from manufacturers is a major concern.
Contract lock outs is another. Changes in those may help lead to a more level playing field,"
94
,6
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P20 . Flowers/Gifts:
"In Poway and surrounding areas, there are too many businesses competing for the same thing,
I) Why does the city allow similar business to open?
2) Population remains same and grocery stores increased from 2 stores to 6 stores in 10 years,"
PI8 - "Other":
"Cities should strongly weight the needs of the small business owners, who are solid establishments over
the prospects of luring a national chain mega store,"
P33 . Toys/Games:
"We no longer carry a large variety of nationally advertised merchandise, We no longer carry bicycles, only
on special order. Wal-Mart opened 2 years ago,"
P48 - Liquor:
"Comments below will be hard to change in my geographic area (I 0 mile radius), Rancho Bernardo is the
best place to own a small business (retail), Why? Because it is a very small business area compared to
population,"
"Poway in comparison is the worst place to own a business because the business area is much too large
compared to the population, The City of Poway derives its income from retail dealers. The more small
businesses (retail) the more income for the city of Poway."
P46 - Retail Auto Sales:
"We are a franchised new car dealership, In general, a mega-chain outlet will not harm our business,
However, they do provide a threat to our low end automotive service business, We can compete given our
name recognition with the factory, An independent garage would have a more difficult time surviving,"
P40: Art:
"Although I am in Poway, my business does not depend on this community for business, [have an art
business that deals with a wide range of clients and quality of art work. However, I am impacted by these
mega stores because they attract the client with a limited budget and there is no way I can compete with the
buying power they have in purchasing low cost art and framing which they then transfer to their pricing.
Often a poster framed is sold for less than it costs me wholesale,"
P37 - Pet Food/Supplies:
"I am a small pet store. There is a Petco pet supply store that has been almost directly across the street from
us for a number of years, Recently (May '93) a Pet Supply Warehouse opened down the street, several
blocks away. As they came in with the aspect of lower prices, Petco dropped theirs (particularly the pet food,
which is already a low profit margin), To maintain my customers I had to lower my prices as well. I
experienced a 30% drop in sales from a very good year in \991. The recession hit us in 1992, and the Pet
Supply Warehouse opened in \993; we are hoping for some recovery,"
"Further, a Wal-Mart and Home Depot opened in or near our community, also Price Club, Theoretically they
should bring more business to our community, but Wal-Mart also sells fish and the supplies I carry,
Customer service, however remains our real asset as well as the need to keep our prices competitive, if at
all possible,"
96
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:llaUo!lIlIS/luawd,nb:>I ~alndwo:) - ZW
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:aolJd aWlls a'll III pasIl401nd Aa'lIJ! UOAa alodwoo 01 olq!ssodw! aq PlnoM II 'oO"ld >fOOl I! alallM AUIl wa41
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paJJa ou SI ala'll 'OS 'Sa!lIUnOO IS"a-P!w la410 pu" UIlIS'U"lIllJV 'U"IS!>flld 'U1puI 10J Alu",w SI ssalllsnq mo"
:spnpo~d pOO,ol - Sfd
,"S>f"alq ou loll l"'\l sassalllsnq
llu!IS!Xa llu!llnOlapun U! wa41 llu,p!" laMol AIIU"O~!ull!s aq u"o ,Iual, 1!al(II"1I1 Os parold " OIUI llllloll
SISOO 40nUl SIl aAIl410u op SU!Il'lo-llllaw a'll aou!s OS 'ola 'Sp"Ol 'allBll"'lp 'SlaMas 10J saaJ IInJ A"d 01 aA"4
sladolaAap 1Ill0lawwoo la410 IIV 'onuaAal XIlI sal"s a411all 01 51al!"lal lllq a'\l 01 40nw Os A"M" aA!ll sail!:)"
:llIOWOldO - Zfd
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:O~OIS iln~a . 9fd
r
"Home Depot is our largest competitor locally in flooring. However, customer perception that Home Depot
has better prices (not true) is being discovered, Further, HOME DEPOT does not provide the personal
helpfulness, as well as professional installation, that I do,"
M19 . General:
"We are a family owned corporation, I have been in retail several years and experienced a decline in
business when large chain stores carried the same'!Jroduct line (western wear) at lower prices, It seems
customers are willing to give up service and product knowledge for a lower price,"
M25 . Athletic Equipment:
"Unfortunately, at this time the superstores appear to be the future in retailing. In order for small businesses
to survive, they must be extremely specialized in their field of profession and offer services that can't be
offered by the discount retail giants. Small business can no longer rely on the basic retail sales, but must
pursue special services and orders that will enable them to be successful. The impact of the discount
superstore will be devastating to most small business that compete directly with the superstores who can not
differentiate their business from others."
M26 . Floorine/Counters:
"Their size (chains) lets them buy for less, They pay their help less money, consequently workmanship is
poor. Too late for customer, they have already signed contract. These large companies know exactly how
to stop people from backing out. Even when the product quality is bad,"
M32 - Carpetinl.'/Flooring:
"These types of clubs are hazardous to my business because of the margins they work on, We combat them
by smart selling and service they can't match,"
M31 - Home ImprovementJDomestic Products:
"We are a very service oriented business specializing in designing and coordinating living spaces. Our main
mega chain competition would be Home Depot. We cannot buy as well as well although we also buy from
manufacturers - therefore we must impress our clients with our oersonal care and talents as designers,"
PART II - B
PENNSYLVANIA
[Philadelphia Area]
4N - Pharmacist:
"Part of the biggest problem in our Industry today is multi-tier pricing by Drug Manufacturers, They sell to
different classes of trade at different levels, If they have one standard price for everyone with volume
discounts available to everyone it would place competition on a level playing field, Discriminatory pricing
must be eliminated, Once the price factors are gone, then the consumer will look for service and this is where
we as small businesses can prevaiL"
UN - Furniture Importer:
"Personally, I resent mega-chains who receive significant tax-breaks. They usually provide no relief to the
community's economic dilemma. CARREFOUR was a primary example, Soon after their 5-year tax break,
they took their profits home, Although I shopped there, I was not impressed with their company and usually
went elsewhere for more knowledgeable salespeople, If mega-companies want a parcel of land, they should
not be catered to; rather, provide a good communitv economic plan, I am confident that small towns don't
98
66
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,,'llllllunOOSlp pu" llu!oud lallaq SalOIS U!"40 al(l ll',!lOJJO Aq AOldnl>fu"q
ul sassou!snq lalIllws a'll Ind saJOIS U!1l40 a'll llUldla4 alll sJOlnq!llSIP pu" Slalnp"Jnu"w Ill'll 10aJ I"
:~ad"dll" M. - SO 1
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:UOIllS ~!llH . Sf
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uo UIellS snolJas " Ind SIl4 MOll pas"oJOu! a'll 01a4M SPo04JOql(ll!ou 10410 uaas M"4 I 'o~Jlllllnoq" Ulaouoo
"s114lln041 ssalllsnq-uou '10410 AW 'JOplll:) 41!M S!41 uaas AP"Oll" aA,1 'AOUOUl aw OA"S II'M saloIs OSOl(1
>fU141 I 'lawnsuoo 11 s" 'puIl4 la410 a'll uo 'a401ll1uolOJJ!P 11 llu!l"aJO 'sap!llllnsnun Iual pu" 1I0s oSI" OM
'OOIAJas laUlOlsno SI alllllUeApll 10rllW lno 'aA!!Ij~dUlOO A"IS olldwallll u" U! sasll'lomd ,PiA P!)!, palooloS
41!M sl"lual aalJ aa141Jo UO!IOWOld 11 paJl"IS Isnf aA"4 aM 'ISOO lno III SOap!A asa41IIas ualjo Aa4.1 'Mol
AlaA alll salllS lno 'SOap!A s,ualpl'40 a>fll 'lias su"'40 lallllll pu" aM 410'1 11141 SUllY a41UO '%OZ: 01 pallldwoo
%to - saJOIS mo JO aA~ II" JO allll 4JMOlllISOMOIS a'll S"'I ('IS 4117 's L I ,) lalsnq>foolS 11 Isalllau alOIS Oap!A
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:a~oIS oap!A - SI
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JO aJOo a'll al" Aa41 'sassau!snq as a'll U! pa>fJOM aA"'1 04M 'aldoad ss"p alPp!w 'aldoad ssolllsnq POUMO
-AI!W"d 'AlasuowUI' aldoad ssaUlsnq IIIlUls a'll pal!IlJ aA"'IluaWUlaAolll"lapaJ O'll pu" U1alsAs Illllal al(.1"
:luawaAo~dwI owoH/~aqwn'l - ~;lS
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"Jo lallpnq llUISIJlaApll a'll "^"4 I, usaop AlsnOlAqo ssau!snq IIllwS Y 'llll!SIJlaAp" 1II Aauow JO I"ap I"olll
11 puads 01 S! aAlllladwoo lII"Wal UIlO I AIlM AluO a'll pu" "al" AUI UI ,laluao-"llaw, '14 toZ" pauado Apuaoal
S,O)!NI)! 'ssau!snq alll"l JO plldw! a'll II oJ II!IS aAIl4 I Inq 'ssau!snq aO!AJas 11 AI!lllWpd S! ssau!snq AW"
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:ua.aM.Or - NOZ
,,' AII"alll ssau!snq AW Jln4 pUll po0410q4ll!au
aletpaWwl AW JO ap!SlnO 14llu II!nq uaaq Alluaoal OA"4 11llll SU!lllp Alaoolll JOrllw a'll 'Alq"llIapun
Ins 'Mol sa Ills a'll pUll 41114 Sl UO!I!ladwoo a'll 'op I SIl spnpOJd l"I!W!S lIas 001 Aa41 osnlloas "
:la)JJ"W - N61
"i,aw 10J JJo lallaq aq II!M
UMOI a'll llu!A"al 10 AOldnl>fu"q >fU!l(1 nOA I,Uoa 'ouo llulSOI a'll U1.I MOU>f [asnlloas 'aladwoo 01 alq" aq II!M
10lluOj OU I 'sassaulsnq Mau dn uado pu" UMOI 01 awoo salOls-u"'40 alOW J! 'Ill'll JO dOl uo 'alOlS U!1ll10 a'll
01 slawOlsno awos llu!SOI w" 10 ISO I Apllallll I 1"41 SUllaWII 'SlA , JOJ paS"alOU! IOU aA"4 sal"s ssaUlsllq AW
'Allualln:) 'JlasAw a>f!1 lal!lllal lI"wS a'll IOU Inq 'laWOlsno a'll ssassll PlnOlls I! 'alOIS U!1l40 ll!q 0'11 llUIlIOdO"
:a~llM.p~llH . Nn
i s>f"alq XIlI ou 'aJO]"la41 - wa41lu"M
"Currently have Wal-Mart for anchor store in our S, Jersey location, Has definitely shown to have negative
affect on our business volume,"
17S - Market:
"I think it is very bad for the government to allow these types of businesses to come into areas and operate,
Too much burden has already been put on small business without the giant companies coming in and putting
a lot of small businesses out."
"Small business is the heart of this country employing the majority of the workers, They keep getting
knocked down by taxes and now these types of business practices,"
21S . Jeweler:
"I believe that if you offer good service & quality you will have very little to lose to a discount store,"
24S - Clothing-:
"My company also manufactures men's neckwear, vests, and robe/boxer short sets which we sell to retailers,
Large discount operations have a deleterious effect on our business on two fronts, They tend to drive small
retailers out of business (our main customer base); and, two, they are ruinous to our bottom line by their very
nature of being a mass discounter. In other words, it is not profitable business with them, They source the
world looking for cheap labor which makes me non-competitive,"
26S . ElectricaI/Home Imnrovement:
"Our main concern is Home Depot, not that we can't compete; but, when a Home Depot comes into an area,
we believe that they lower prices below cost to get their foot in the door because consumers are creatures
of habit. Then we've heard that when they put everybody out of business they raise their prices,"
27S- Auto:
"The area of South Philadelphia is heavily saturated with auto repair shops and would be hurt economically
with the addition of discount service facilities coming into the area, This would cause a number of shops that
are on the verge of closing to do so causing more people on the unemployment lines, The economy is very
fragile in this area and should not be subjected to anymore mega-chain business openings until the economy
becomes more stable,"
29S . Hair Salons:
"The large chains should NOT be given any type of tax deferments because the responsibility of paying the
taxes and/or increases will again fall upon the small businesses who cannot afford it and who will be forced
to close."
"With the economy the way it is people want to pay cheaper prices for almost everything even if the
community in the main loses jobs. These large chains can do nothing, but hurt small businesses, [f a new
business wants to be in an area, then the government and the community should decide whether that chain
will help or harm the community,"
33S - Jeweler:
"Jewelry business is rather personal/individual - consequently, some of your questions were not relative to
our particular company, Ours is an 80 year old business and lots of our sales are by word of mouth, our
proven honesty, and our employees who continue to enjoy their positions working for a small family type
of business,"
100
101
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UaAaun u" 41!M Inq 'A"IS 01 01a4 aq OIIU"M aM 'pua a'll 01 (alaldllloo) aOIAlas pu" ISalO)ll! UO!paI"S pnpold
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alaluallo l"Aol AW s" AIMols dOJp 01 paJl"IS sal"s AW '(AIlMIl 10aJ OO[ Inoq") la,uoo a'll punol" pauado s>fooS
laMo.1 alln4 11 '1101" AWU! alOIS>fooq ,Mau, AIUO 0l(1 s" Sl"OA 'i,Z lalJV 'OlOIS>fooq Iuopuadaplllllllws" LIMO I"
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:~"IOMOr - S8E
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a'll 1"41 aAO!loq I ,,'llU!O!ld AlOlllpald"Jo SW!llp JO asn"oaq ssau!snqJo Ino salOIS llnlp llUIA'lP Alpallall" 10J
's"su"vv 'al"IS aUlol( lla41Jo s)Jnoo 111001 a41U! sa!ollwl"'ld oal'll OII!nS Mill 11 ISOIISnrJl"W-I"M"
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,,'llllOlM 01" sl"ap
allllsa I"al pu" S>f"alq X"I a411aoJ op I '"alll u" llU!lalUa UI01J 101!"IOl AU" dOls oll"uOIlnlllsuooun SI I' laaJ I.,
:"~OIS 10d - SSE
'i
I
CH85 - Women's Casual Clothing:
"We started in Des Plaines in 1897 and have never had any special favors or help from our city fathers, Our
money has stayed here in town and we have helped hundreds of local people earn a living, Why an
established discount retailer has to have help is beyond me, If they can't stand on their own two feet, they
should be told to move on. Their profit goes to headquarters, ours pays taxes for the town,"
CH77 - Stationery:
"Events that have hurt our business in the office supply industry are:
(a) Predatory pricing and 'loss leaders' items and (b) Manufacturers giving better prices to upstart
superstores based on the size of the total business versus actual stationery sales, Then superstores use this
to gain market share,"
CH73 - Health and Beauty/Rx Drul!s:
"My situation is unique in that I have an ethical pharmacy which is surviving only because I value the quality
of my workplace more than I value a large paycheck, Consumers aren't aware of the fact that small
businesses are quickly disappearing, The service and personal service given will be a thing ofthe past unless
something is done, It will be like the 'service stations' and no one will even miss having a service attendant
pump their gas for them because they weren't from that generation."
CH72 - Paint/Walloaocr:
"I'm hopeful that the independent dealer will survive. It takes a lot of people, sales and profit to keep these
big chain stores going, Let them fight each other! In the interim, we will continue to offer above par service,
and product knowledge with the thought of out living the big store image,"
CH71 - Optometry:
"Tax breaks are given to mass retailers to move into an area, I get no tax breaks - totally unfair."
CH68 - Office Supplies:
"We have Super Kmart, Wal-Mart and Eagle about 3 blocks apart in Elk Grove, What's the point??
Woodfield is 5 minutes from them and now Office Max is 5 minutes from there, It's not fun anymore, 50%
or more of office supply dealers have gone out in Chicago area,"
CH67 - Snacks. Sodas. Cil!arettes:
"Low select prices on select items such as sodas hurts the vending business,"
CH62 - General:
"Don't give tax breaks!"
CH61 . Restaurant Equipment:
"Redevelopment, industrial revenue bonds and tax abatements should only be used for manufacturing or
distribution businesses; not retail. Jobs are not created, only transferred by retail."
CH59 - Food:
"The large chains run so many 'loss leaders' that it is almost impossible to survive, much less grow your
business, They sell many items well below my cost."
CH47 - Eqnipment Rental:
"Simplify government regulation and paperwork both nationally and locally to allow more time to focus on
102
1:01
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they will be missing when all the small business people of America are gone, Their children will not find
their first jobs, the little leagues and churches and bowling leagues will not have sponsors, Our country is
losing its soul - corporate America is like a bad virus!"
CH9 - Greetinl! Cards. Stationerv:
"My business distributes greeting cards, etc, to non-chain accounts, Our business has been strongly affected
in addition to our customers, A significant number of 'Mom-and-Pop' locations have fallen by the wayside,
unable to compete. In addition, the number of party outlets has also diminished our sales as well, Our
highest year in sales occurred in \991."
CH8 . Software:
"I certainly agree with what you are surveying, however my answers and survey are probably meaningless
as I am in the proprietary software market and the companies you speak of have little or no impact on me
other than to possibly pull some of my business if they sell some of the supplies I need,"
CH91 . Auto Equipment:
"Big retailers have definitely decreased our sales in tires and exhaust parts and shocks, Difficult to compete
with Kmart prices on above items - also tires sold at Sam's Club in area,"
CH96 - Party Sunnlies:
"The larger discount houses hurt the small retailer. Consumers do not understand that their claims to have
lower prices are not alwavs true, They can afford T,Y, and radio advertising while we can only rely on
reputation and service, Grocery stores are getting out of hand; they should sell groceries and leave the
greeting cards, gift items, flowers to the small retailer. I feel soon there will be no room for the small retailer
because of rent, taxes and discount stores,"
CH98 - Lawn/Gardens:
"We handle premium lines of mechanical equipment that have traditionally been marketed through certified
independent dealer networks, outlets created by manufacturers to assure the availability of professional
expertise in the sales, service and maintenance of their product lines, This 'value added' support cost is
rarely provided by mass merchants and thus this savings in their cost of sales plus their buying power,
provides them with their retail price advantage, In the long run its the consumer who will suffer overtime
as mass merchants force out 'value added' dealers, This type of product eventually needs service, Few
manufacturers of top end products provide for service only dealerships, Sales have always been and still are
the prime requisites of a dealer franchise, As sales through 'value added' dealers diminish and those dealers
become competition victims to the low prices of mass merchants, then sources of professional service and
maintenance will become a problem for custolllers, and too late we will understand that the lowest price was
not the best price in the long run,"
CH97 - Jewelry:
"I think the large corporations will dominate our economy, The true craftsmen will sell out or go bankrupt,
The jobs created in the large corporate stores are low wage and often part-time, There are not as many
management positions in the large corporate stores, The youth in America are not studying the right subjects
to compete in our global economy, Technology is also taking jobs away, What took the U,S, 50 years to
learn up to World War II now takes less than 5 years to learn, I think the strongest entrepreneurs will
survive, Many less motivated people will work at Kmart and spend their checks hoping to win LOTTO or
gamble at the Casinos! Plus, big firms take over other firms and then they scale down help, etc, - laying off
many people."
104
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K39 - Health and Beauty:
"We have already experienced Super Kmart, Wal-Mart and soon Target. When I purchase products for my
business I have been forced to look harder at price and quality, Consumers right now are only concerned
with price; they are not looking for quality, When in a discussion with clients we try to point out the value
of personalized service and that the mega-retailer really doesn't care, as to what will happen if they spend
all their money there in terms of jobs, families, communities, etc,"
K - 38 Food:
"In our local area (Kankakee, Bradley, Bourbonais) TlF[Tax Incentive Funding] Money has been used by
Bradley & Bourbonais to develop large retai I areas in the last 10 years, They used the Tl F money to develop
farm ground (not blighted areas as originally proposed), During this time they have raped the tax base of
the City of Kankakee, Many Kankakee business have moved from Kankakee to Bradley and Bourbonais,"
"Now that retail business has left Kankakee, Bradley and Bourbonais and county officials have decided to
end TlF money for retail business, Kankakee has lost the weapon (used against them) to recoup retail
business, T[F money was misused here and a warning should go out to other communities."
K37 . Games. Hobbies. Books:
"I live in Bourbonais, IL and have my radio controlled hobby business in Bradley, IL. When we started
seven years ago, we had no help from the village as far as tax incentives; in fact never gave it a thought to
inquire, We have worked hard to keep our business intact, but find our taxes going higher each year both
personally and business-wise to maintain these large retailers that come in under the TlF Programs and then
leave in seven years or less, We little people are getting the shaft."
K33 - Optometrv:
"We need to get rid ofthe one hour labs that draw people, They don't do the service that they say and prices
are high, We need to get back to the old ways, Ifwe have to have them I would try to limit only one per
town, In so many towns there just too many of them,"
Kl5 -Doors and Windows:
"The tax abatements provided chains are an unfair practice; I know that helps mega chain competition, This
alone allows thelll to reduce prices to hurt other small businesses,"
"A free market to all, giving large and small businesses the same local advantages in taxes, land, etc, is most
important to the survival of the small retailer."
Kl4 - Electronic Equioment:
"I have experienced several times in my career what happens when a major chain leaves. The buildings are
left vacant. Their restrictions to buyers because of competition are contributing to why these large buildings
are left empty. In our area TIF increments have led stores to move a mile or two at most to be in another
town and receive tax breaks, I have also got to see local schools and police forces suffer through problems
because no tax money comes from TlF."
Kll - Audio Stereo Equipment:
"With a lower overhead I have been able to compete favorably with the large discounters; however, if one
moves close to me I may lose a handful of customers but the increase in traffic would also increase new
customers.~' .
106
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K7 - Home Improvement/Buildinl! SnDDlies:
"There should be some kind of truth in advertising when quoting such as 50%, 60% or 70% off. or 'Special
Sale,' But what was the original price?"
K4 - Foods:
"There should be government regulations that super or big business locations be limited to certain areas,
because most or almost all of those big businesses get a tax break from the state or city that they go to, Small
businesses don't get that privilege,"
Kl - Gift Shop:
"We try not to carry the same products you find in discount stores, Our gift shop carries the finer crystal,
bronze, pewter and other specialty items, The Rai lroad Shop, located on the second level, also carries items
not found in discount stores,"
K61 - Water Conditioninl!:
"We have to meet a customer on service and personalized greetings since we do not have the buying power
to attain the 'best' price as the large chains do. We are able to meet an individual customer's needs
personally; they are not just a number."
K58 - Jewelrv:
"I mainly feel that mass merchandisers serve large numbers of people but lack quality merchandise in our
field, We, on the other hand, have to present a quality picture or image to attract those who are more
discerning. This includes educating the market we go after, while still maintaining an edge on fair
competitive prices, We belong to trade groups that help us compete. The Kmarts, Wal-Marts, etc. don't
seem to help the communities they do business in,"
K62 - Home Improvement Supplies:
"I, Reduce trading area to 3 mile radius, 2, Advertising locally, 3, Chains steal employees to hurt your
effectiveness, 4, Chains steal employees to hurt traditional experience, 5, Chains then release employees
after two years to reduce their payroll after competition has been knocked out,"
PART II - D
NEW YORK
(Finger Lakes Region (Geneva, Auburn, Syracuse)]
NY48 - Athletic Wear. Tovs. Athletic Equipment:
"Geneva is an area in need of development, and Geneva already has Kmart and Wal-Mart, The damage
from their development was not major at best, There wasn't much available that they created too much
competition for. The area that needs to be reviewed here is the definition of what we have in small
businesses and then attempt to attract businesses that are needed and wanted by the people, Geneva is too
much duplication which is so counterproductive, Same old-same old doesn't sell."
NY 44 - Office Products:
"We operate an office products business, At the present time we are still not greatly affected by the new
Wal-Mart store, What the greatest influence is the prices published by discount stores operating out of
Syracuse and Rochester and the 'Paper Cutter' (Fays Drugs) in Auburn and the catalogue they distribute,
My concern is the fact the discount stores sell, at the same or lower prices what I pay for the sallle
merchandise, The manufacturer offers these products at prices that are not available to me because of a
108
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not affect them personally, My business is a small 'blue collar' tavern, I pay $2,140 every three years for
a state license to sell on premise liquor and beer and off premise beer. Large food and discount stores (i,e,
Newmans, P&C, Fays Drugs) pay $75 per year for a license to sell off-premise beer. These large stores use
beer as a 'loss leader' to get the public in the door. They sell my only product to take out for less than I can
purchase it wholesale, In my opinion, N,Y, State requires license fees for the money only,"
NY6 - Restaurant:
"It is extremely difficult at the present time to compete with larger competing restaurants, especially
franchises, because in a tourist area, it's the franchises that are the first draw, Taxes and insurance and
Workman's Compensation costs continue to rise, Suppliers continue to raise their prices and yet if we do,
everyone becomes upset and stays away, It's basically a 'no-win' situation,"
NY5 - Auto Supplies/Service:
"The way things are right now, if a chain came here in Geneva it would probably force us out of business,"
NY4- Men's Wardrobe:
"We are a better men's specialty store, Chances are, a customer who wants a better quality in men's wear
will come to us or a similar type store, I feel a Wal-Mart type store hurts a store like us by taking away
traffic from our 'Main Street.' We lose window shoppers who might stroll in just looking, and possibly
make a major purchase, The mega-chains compete with so many types of stores (hardware, electronics, etc,)
that people will tend to go there first before checking 'Main Street',"
NY2 - Jewelry:
"The Geneva market was already affected by introduction ofKmart, Wal-Mart (2 locations), Wegmans and
Tops (Superstore), Market surveys for this area do not support this amount of retail space and now three
major outlet strip plazas of over 150 stores are planned for Geneva development within 12 months,"
NYl - Men's Casual Clothina::
"One of the biggest negative impacts is the reduced downtown traffic caused by these mega stores, It is hard
to draw customers to a downtown location, These chain stores, by being situated on the out-skirt of the city
further erode customer traffic, A positive impact is that you have to become a better merchant in order to
compete, You cannot remain stagnant."
NY54 - Bikes/Eouipment:
"It's a free enterprise society so they have every right, but these 'mega stores' are putting us small guys out
of business and ruining downtowns,"
NY55 - Bar and Grill:
"I don't understand why I was sent this survey, My business is a floundering bar and grill, In the nine years
that I've owned it, I have seen business dwindle to nearly nothing because of laws, rules and regulations and
the economy,"
NY57 - Lumber:
"We currently have Builders Square locations in Syracuse and Rochester. Although they are approximately
40 miles from us we still realize their impact. Home Depot is currently building and/or planning stores
within both of those market areas, To further complicate our rural market, the Depot is developing a strategy
to penetrate the rural/smaller market areas, It goes without saying that it is tough as hell out here and getting
worse, We are doing everything possible to survive, Our business plan is not designed for 3 to 5 years, it
is based on daily survival. Without help, I believe most independents will not survive,"
no
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.....
The conclusions at law warranting the decision against Wal-Mart follow:'
"Conclusions of Law"
"Act 253 of 1937, 'The Unfair Trade Practices Act,' Ark, Code Ann, ~~-75-201 through
-75-2 11, ('the Act') specifically sets out the legislative intent of 'the Act':"
"The General Assembly declares that the purpose of this subsection is to
, , , foster and encourage competition by prohibiting unfair and
discriminatory prices by which fair and honest competition is destroyed or
prevented,"
"The Arkansas Supreme Court recognized 'the Act's' purpose in Beam Brothers v,
Monsanto [1976- I Trade Cases '1[60,720],259 Ark, 233, 532 S,W, 2d 175 (1976):"
"This subsection (of the Act) is intended for the primary benefit of the
public by protecting dealers, especially small dealers, from unfair
competition by large dealers,"
"The purpose of 'the Act' is not to protect small business from large business, downtown
from malls, or to guarantee any business a share of the market, but to encourage 'fair and
honest competition.' The protection afforded by 'the Act' is from 'unfair competition'."
"'The Act' makes it unlawful for a business to sell, or advertise for sale 'any article or
product' at less than the 'cost thereof,' 'Cost' in this instance is defined as:"
", , , all costs of doing business incurred in the conduct of the business and
must include without limitation the following items of expense: labor,
which includes salaries of the executives and officers, rent, interest on
borrowed capital, depreciation, selling cost, maintenance of equipment,
delivery cost, credit losses, all types of licenses, taxes, insurance, and
advertising, Ark, Code Ann, ~4,75.209(2)(b)(3)"
"The prohibition against sales below costs does not apply to the sale below cost of seasonal,
damaged, deteriorated and perishable items; good faith closing business sales; and court
ordered sales."
"Wal-Mart contends that the court should look at 'market-basket' cost rather than single
product or article cost. While the Court can find no Arkansas judicial decision construing
this issue the Court finds that Ark, Code Ann, ~4,75,209 is clear -- 'the Act' applies to 'any
article or product' and not 'market-basket' or 'overall product line' cost."
"The burden of proof is on Plaintiffs to establish three essential elements: that Conway Wal-
Mart sold, offered to sell or advertised to sell products (I) at less than the cost to Conway
Wal-Mart, (2) for the purpose of injuring competitors, and (3) for the purpose of destroying
4Wal-MartStoresv, American Drues/nc, 319Ark,214, 891 S,W,2d(Ark 1995),
112
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....
"Plaintiffs' request for attorney's fees is denied due to the lack of statutory authority for
such allowance,"
Wal-Mart immediately announced that it would appeal Judge Reynold's predatory-pricing decision
to the Arkansas Supreme Court, Wal-Mart subsequently appealed the decision and had it reversed by the
Arkansas Supreme Court; but not without dissent.'
In Chapter VI on Predatory Pricing, the writer will discuss in more detail some of the data, expressed
by the lower court as well as the majority and minority views ofthe Supreme Court in the appeals case won
by Wal-Mart,
The tendency to litigate continued to grow when a large number of independent drug store
owner/operators, from the traditional proprietorships to small chains, decided that pricing differentials were
not fair and decided to take legal action not against the large chains, but against drug manufacturers and
wholesalers, The issue in what was to become a class action suit was whether the price differences for
prescription drugs at the retail level were based upon economies of scale present in large drug chains and
generally justifiable,
The small drug stores saw the enemy as the drug manufacturers, and not always the retail chains,
The proposed class action suit wanted the manufacturers to prove not only how they can justify selling at
lower prices to higher volume customers, but additionally how they could justify selling at lower prices to
lower volume customers, such as buying groups who purchase drugs for hospitals, HMO's, nursing hOllles
and clinics,
However, there were a number of these lawsuits involving price discrimination in pharmaceuticals,
one of which included large and small drugstore chains that challenged primarily the high discounts offered
to HMOs and buying groups,
The plaintiffs (pharmacists), numbering in the hundreds, filed a class action suit in federal court in
Chicago in November, 1994' against at least thirty drug manufacturers and wholesalers, The suit was an
antitrust suit, alleging specific violations of the Sherman Antitrust Act and the Clayton Act. The suit related
to pricing, variable discounts, combinations and conspiracy in unreasonable restraint of trade and concerted
action,
Later in this text, the author will detail various cases and precedents which might have relevance
with respect to protecting the nation's small retailers against possible monopolization, predatory pricing,
restraint of trade and various antitrust activities by the nation's major retail chains as well as the mega-retail
discount giants,
Nowhere in this text will the author recommend company versus company litigation, but he hopes
to make his observations available to Congress, State Legislators and federal and state regulatory agencies
with the recommendation that fair trade practice laws be reviewed and where more surveillance is necessary
to protect the small retai ler, that it be done,
'[bid,
'No, 94-C-6398 (N,D, III. 1994),
114
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substantial market power.'o In some cases, that power was enhanced by the formation of trusts, cartels, and
other monopolies, Such market power was subject, or thought to be subject, to various abuses, among which
were high prices and predatory pricing,
The Sherman Act
In the United States, concerns about monopoly abuses resulted in the passage of a series of antitrust
laws, The first such law was the Sherman Act, passed in 1890,"
The Sherman Act prohibited "every contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the several states, or with foreign nations,"" It also
made it illegal to "monopolize, or attempt to monopolize, or combine to conspire with any other person or
persons, to monopolize any part of the trade or commerce among the several states, or with foreign
nations,"" Violations of those provisions were misdemeanors punishable by fines, imprisonment, or both,
U,S, attorneys could obtain injunctions to prevent or restrain violations, Furthermore, private parties injured
by violations could bring suit against the perpetrators and recover treble damages," However, violations of
the Sherlllan Act are now deemed to be felonies, Furthermore, private parties can now sue for injunctions,
The courts have long interpreted the Sherman Act to prohibit predatory pricing, Without a showing
of predatory intent, price discrimination and selling below cost are not held to be violations of the law,"
Predatory intent is an element of proof in some violations of the Sherman Act, i,e" monopolization
and attempted monopolization, but not in conspiracy cases,
In the past two decades, the courts and the Federal Trade commission have become more skeptical
of claims of predatory pricing than they were previously, They tend to look for evidence of such factors as
prices below average variable cost (not merely below average total cost), large enough market share and
sufficient barriers to other firms' entering the market to make monopoly and subseq,uent price increases
feasible, and local price cutting in particular markets rather than general price cutting in all markets,'" Mere
IOF, M, Scherer and David Ross, [ndustrial Market Structure and Economic Performance, 3rd ed, (Boston:
Houghton Mifflin Company, 1990), pp, 449-472 and 508-5[6; George Thompson and Gerald P, Brady, Text. Cases
and Material on Antitrust Fundamentals, 3rd ed, (St. Paul: West Publishing Company, 1979), pp, 11- [6,
"15 U,S,C, I, 26 Stat. 209,
"[bid,
13 [5 U,S,C 2, 26 5tat.209,
1426 Stat. 209, Sec, 1,2, and 7,
"Op, Cit" Scherer and Ross, pp.449-472 for a discussion of the history of predatory pricing and other
related jurisprudence under the Sherman Act, and pp, 508-516 for a discussion of antitrust policies toward price
discrimination.
"Not all economists are satisfied that the courts have kept completely up to date with the econolllics
literature on predatory pricing, See Alvin K, Klevorick, "The Current State of the Law and Economics of Predatory
Pricing," American Economic Association Pavers and Proceedin~s (1993), pp, 162-167,
116
L11
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injured by violations of the antitrust laws the right to sue for treble damages,23 Finally, it made individual
directors, officers, or agents of corporations violating penal provisions of the antitrust laws guilty of
misdemeanor violations, if they directed, ordered, or carried out the corporate violation," In addition, it
subjected them to punishment by fines and imprisonment,
The Robinson-Patman Act
In the 1920's and 1930's, the large chain retail stores rose to prominence, The market power of some
of these chains enabled them to negotiate lower prices from manufacturers than the traditional small
independent retailers could obtain, For that and other reasons, the small retailers found it difficult to
compete leading to pressure for the Congress to do something to help them, That pressure and dissatisfaction
with the lack of success of the Clayton Act in preventing price discrimination led to passage in 1936 of the
Robinson-Patman Act,"
The Robinson-Patman Act amended the Clayton Act to make it unlawful "to discriminate in price
between different purchasers of commodities of like grade and quality" where the effect "may be
substantially to lessen competition or tend to create monopoly in any line of commerce, or to injure, destroy,
or prevent competition [emphasis added] with any person who either grants or knowingly receives the benefit
of such discrimination, or with customers of either of them,"" Exceptions were made for price differences
resulting from differences in cost, charging low prices to meet those of a competitor, disposing of
deteriorating perishable goods or obsolete goods, and disposing of goods in a closeout or bankruptcy sale,
The act also prohibited buyers from knowingly inducing or receiving a prohibited discrimination in price,
The act made some violations criminal offenses punishable by fines and imprisonment. However, the
criminal provision of the Robinson-Patman Act has not been used in decades and is unlikely to be used,
"A key issue relates to the phrase emphasized above: 'or to injure, destroy, or prevent
competition.' Does 'competition' refer to competitors of the firm engaging in price
discrimination or to the vigor of competition between and among the price-discriminating
firm and its competitors? The former could make almost all price discrimination illegal.
depending on the standard of injury, The latter is a much more demanding standard, If the
price-discriminating firm takes away 10 percent of the market, each competitor is injured,
Yet the loss does not affect the vigor of competition between and among the competitors
and the price-discriminating firm,"27
"The courts have decided this question differently depending on the relation of the injured
firms to the participants in the low-price sale, The injured firms might be competitors of
the price-discriminating firm, competitors of the firm receiving the lower price, or
competitors of the customers of the firm receiving the lower price, Injury to the first of
23[5 U,S,c. [5(a), 38 Stat. 731.
"[5 U,S,c. 24, 38 Stat. 736,
"15 U .s.C, [3, 2 [ (a); 49 Stat. [526, 1527; and Op, cit., Scherer and Ross, p, 509,
"IS U,S,C, 13(a), 49 Stat. [526,
270p, cit., Congressional Budget Office Study, p, 18,
118
611
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"
MEMORANDUM
The Basics of Federal Laws on Monopolization and Predatory Pricing
To: Dr, Edward B, Shils
From: Davis, Cowell & Bowe
Counselors and Attorneys at Law
100 Van Ness Avenue
San Francisco, CA 94102
Date: August I, 1994
This memorandum sets out a brief overview of basic federal antitrust law on monopolization and
predatory pricing,
I. Basic Definition of Monopolization
Section 2 of the Sherman Act makes it a crime to monopolize or attempt to monopolize commerce,
See 15 U,S,c. ~2, Unlawful monopolization is typically defined as the possession of monopoly power plus
some element of deliberateness, i,e" conduct intended to acquire, use or preserve that power. As was stated
by the Supreme Court:
The offense of monopoly under Section 2 of the Shennan Act has two elements: ( I) the
possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance
of that power, as distinguished from growth or development as a consequence of a superior product,
business acumen, or historic accident.
See us. v, Grinnell, 384 U,S, 563, 570-71 (1966) [emphasis supplied]. The principal dilemllla faced
in making the analysis is that the same conduct used to obtain and/or maintain monopoly power (e,g.. low
pricing, customer discrimination, integrating into different markets, introducing new products) are also often
seen as generally beneficial competitive strategies which ought to be encouraged, See, u" Matsushita Elee,
lnd. Co, v, Zenith Radio COrD., 475 U,S, 574, 594 (1986),
A, The Relevant Market
Monopoly power has been generally defined as "the power to control prices or to exclude
competition," See American Tobacco Co, v, Us., 328 U,S, 78 I (1946), The power to exclude competition
may derive from any number of unfair practices that make it difficult for existing competitors to survive or
to enter the market, such as predatory pricing, In order to determine whether monopoly power exists (or is
dangerously likely), first the relevant market in which to evaluate this power must be defined, See Walker
Process Equivment v, Food Mach. & Chern, COrD., 382 U,S, 172, 177 (1965) ["without a definition ofthat
market there is no way to measure ability to lessen or destroy competition,"].
The notion of the relevant market is usually defined in terms of two aspects: The products or services
involved ("the relevant product market") and the geographic area involved ("the relevant geographic
market"), See Brown Shoe Co, v, Us., 370 U,S, 294, 324 (1962), The question of what constitutes the
relevant market is one of fact, typically involving complicated concepts from neoclassical economic theory
120
III
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typically conceded that direct proofthrough use of reconstructed supply and demand curves is best, it is (or
should be) recognized that such proof is virtually impossible to establish accurately since data simply does
not exist in the form necessary to match the constraints of necessary neoclassical economic assumptions,
Therefore, the notion of market share is used, Although there is no hard and fast rule as to what market share
establishes monopoly power, a market share in excess of 70% has almost always been deemed sufficient to
support the inference, while a market share of less than 40% virtually precludes a finding of the existence
of monopoly power.
Market share is not the only determination of the use of market power. Other factors to be
considered include consideration of whether market share declines or increases over time, the extent to which
the alleged monopolizer is forced to lower prices in response to the pricing practices of competitors, the
extent to which new competitors are able to enter the market, the degree of product innovation, and so on,
A defendant may have a huge market share but avoid liability by successfully arguing the one or more of
these other pro-competitive conditions exists, Again, this analysis would involve a costly battle of experts,
Of course, proofoflllonopoly power is not by itself enough to show an antitrust violation, One must
also demonstrate deliberate or intentional anti-competitive conduct. To persuade a governlllent agency to
investigate, evidence of such deliberateness would be important.
II, Predatory Pricing
A demonstration of predatory pricing practices may be one way to establish the deliberateness prong
of the test. Predatory pricing has been defined as "pricing below an appropriate measure of cost for the
purpose of eliminating competitors in the short run and reducing competition in the long run," See Carrdll,
Inc, v, Monfort of Cola.. Inc" 479 U,S, 104, 117(1986),
One of the complaints frequently heard about the "Big Box" warehouse stores is that they
aggressively price in order to put the local competition out of business, As the above discussion implies,
however, one should bear in mind that aggressive pricing is not tJer se unlawful under the Sherman Act. It
is important to show use and abuse of monopoly power in the relevant market,
In addition to Section 2 of the Sherman Act, the Robinson-Patman Act regulates pricing policies,
Section 2(a) of the Clayton Act as alllended by the Robinson-Patman Act provides:
It shall be unlawful for any person engaged in commerce, in the course of such
commerce, either directly or indirectly, to discriminate in price between different
purchasers of commodities of like grade and quality, , , where the effect of such
discrimination may be substantially to lessen competition or tend to create a monopoly in
any line of commerce, or to injure, destroy or prevent competition with any person who
either grants or knowingly receives benefit of such discrimination, or with customers of
either of them,
See 15 U ,S,c. S I3(a), Actions for predatory pricing have often involved claims under both provisions,
In 1993, the Supreme Court issued its decision entitled Brook Group Ltd. v, Brown and Williamson
Tobacco Corp" 113 S,Ct, 2578, 61 L,W, 4699 (1993), which substantially undermines the availability ofa
predatory pricing action based on federal law, either under the Sherman Act or the Robinson-Patman Act,
The Supreme Court indicated that the appropriate legal analysis in a predatory pricing case is substantially
the same whether the action is brought under the Sherman Act or the Robinson-Patman Act.
122
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For example, Section 2(b) of the Act creates a defense when the seller acts "in good faith
to llleet an equally low price of a competitor." This "meeting the competition" defense is an
absolute defense to other prohibited price discrilllination, See Standard Oil Co, v, FTC, 340 U,S,
231,251 (1951),
Section 2(a) of the Act permits price differentials that make "due allowance in cost of
manufacture, sale or delivery resulting from the differing methods or quantities" in which goods are
sold, Thus, there is the so-called "cost justification defense" under which the seller shows that the
actual cost savings in dealing with one buyer is equal to or greater than the price reduction offered,
based upon the factors enumerated in the statute, See Morton Salt Co" 334 U,S, 37, 48 (1948),
Pricing differentials are also allowed when they represent functional discounts, that is, when the
buyer assumes all the risk, investment and cost involved in connection with actually perform ing a
certain function related to the sale, See Texaco, lnc, v, Hasbrouck, i 10 S,Ct, 2535, 58 L.W, 4807,
4811 (1990),
In part because the price discrimination action depends upon actual injury to a specific
buyer, it makes less sense to seek government investigation of such issues,
IV, Other Issues
Apart from predatory pricing, one might argue for an investigation to determine whether
"leveraging," that is, the use of monopoly power in one market to gain an advantage in another
lllarket, has been used in violation of Section 2 of the Sherman Act. This notion stems from remarks
lllade by the Supreme Court that monopoly power cannot be used "to beget monopoly," See U.S,
v, Grifjith. 334 U,S, 100, 108 (1948),
The notion of illegal "leveraging," however, is an extremely controversial one, The question
is whether one violates the Sherman Act when it uses monopoly power in one market to achieve a
competitive advantage in another, even though there is no attempt to monopolize the second market.
TJ>e Second Circuit has said that such a violation exists so long as an actual abuse of monopoly
power is shown, See Berkev Photo, lnc, v, Eastman Kodak Co" 603 F,2d 263, 275 (2d Cir. 1979),
Using this notion, one might argue that "Big Box" warehouse stores violate Section 2 in
unfairly "leveraging" monopoly power enjoyed in the Southern U,S, market to gain advantage in the
Western U,S, market. However, apart from the difficulties in establishing the existence of monopoly
power in the Southern U,S" or the "abuse" of such power to leverage into the Western market, the
Ninth Circuit has made such an argument much more difficult by expressly rejecting the leveraging
notion, After noting that antitrust laws tolerate monopolies arising from efficiencies, the Court of
Appeals in Alaska Airlines v, Us., 948 F,2d 536 (9th Cir, 1991) stated:
[T]he elements of the established actions for "monopolization" and "attempted"
monopolization" are vital to differentiate between efficient and natural monopolies on the
one hand, and unlawful monopolies on the other. Berkev Photo's monopoly leveraging
doctrine fails to differentiate properly among monopolies, The anti-competitive dangers
that implicate the Sherman Act are not present when a monopolist has a lawful monopoly
in one market and uses its power to gain a competitive advantage in the second market. By
definition, the monopolist has failed to gain, or attempt to gain, a monopoly in the second
market, Thus, such activity fails to meet the second element n~cessary to establish a
violation of Section 2, (948 F,2d at 548),
124
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~
A REVIEW
I, Many states (24) according to the research division of the Library of Congress had state "Below-
Cost Sales Statutes," This list included Oklahoma, where Wal-Mart was sued, and additionally such large
states as California, Massachusetts, Pennsylvania, Wisconsin and others (See Chapter VI for more details),
2, As a result of the case of American Drufls lnc, v, Waf-Mart Stores lnc" where at least in the lower
court the plaintiffs won, there has been engendered an increased interest in the law of predatory pricing,
generally with concurrent interest in state below-cost pricing statutes,
3, The reader should understand from the Congressional Budget materials as well as the legal
analysis provided the author by the law firm of Davis, Cowell & Bowe of San Francisco, California, that
while predatory pricing comes under the purview of the Sherman, Clayton, Federal Trade Commission and
Robinson-Patman Acts at the federal level; that nevertheless it should not be construed that any "below cost
sales," at least at the federal level are not necessarily to be interpreted in the same way as would be the case
of litigating in the twenty-four state jurisdictions having "below-cost" pricing statutes,
4, Nevertheless, the Wal-Mart opinions, both at the Chancery level (when Wal-Mart lost) and at the
Arkansas Supreme Court level (when Wal-Mart won) do create interest in the subject of predatory pricing
and should stimulate the Federal Trade Commission and possibly the U,S, Justice Department to review
appropriate federal regulatory statutes which might result in greater protection for the small retailer.
5, Further, most states have enacted "baby" Sherman Acts which track the federal statute, and the
below-costs sales provisions, themselves are often contained in the more general pricing statutes that are
similar to the federal Robinson-Patman price discrimination law--either of which may be used
advantageously to challenge truly predatory pricing behavior.
6, Chapter V also mentioned that a group of retailers took a different tack on pricing differentials
by suing both manufacturers and wholesalers, The author's study shows that more and more of the chain's
ability to lower prices is due to the massive discounts available to them for large volume purchases, Not
only are these unit prices not available to small retailers, but wholesalers, who used to sell the small retailer
are disappearing as the chains buy "direct" from the manufacturer.
7, In August 1994, the House Small Business Committee met and listened to witnesses who were
concerned about the survival of the small retailer in the face of the growing power of the mega-retail
discount chains, Although the 1995 and 1996 Small Business Committees of both the House and Senate
have continued this type of public hearing, the outcomes or results are minimal with practically no legislation
passed to protect the small business,
8, In order to open the question in public forums and elsewhere as to which regulatory statutes
available at the federal level might pertain to the behavior and growing power of chain stores, materials
obtained from the U,S, Congressional Budget Office were included in this chapter. Their interpretative
comments and analyses of the Robinson-Patman Act were particularly valuable, CBO describes "how in the
20's and 30's, large chain retail stores rose to prominence," The market power of some of these chains
enabled them to negotiate lower prices from manufacturers than the traditional small independent retailer
could obtain, For that and other reasons, the small retailers found it difficult to compete, leading to
pressuring Congress to do something to help them, The pressure and dissatisfaction with the lack of success
of the Clayton Act to prevent price discrimination led to the passage in 1936 of the Robinson-Patman Act."
'''Op, cit., Congressional Budget Office Study, p, [7,
126
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1-
The second element to be considered under state laws is whether there was an "intent" to injure
competition, and whether in fact the result of such malice was to injure the competition, The third element
was "recoupment." Were the prices ultimately raised, once the competition was put out of business?
At issue in the case was whether Wal-Mart, which had built the nation's largest retail chain with its
everyday-low-price strategy, went beyond the legally recognized retail practice of promotional pricing and
intended to destroy its competition,
Although Chancery Court, Judge Reynolds said there was not any direct evidence tying Wal-Mart's
pricing policies to such a plot, he did say circumstantial evidence existed,
"The court finds that purpose to injure competitors and destroy competition cannot be interred from
below-cost advertising and sales alone, There must be other proof,'" the judge wrote, citing Wal-Mart's
policy of allowing store managers to unilaterally cut prices on goods below that of local competitors as part
of the evidence,
Attorneys for Wal-Mart in the Chancery Court also argued that "federal antitrust law should pre-
empt the Arkansas law, , , and seek not to protect businesses from the workings of the market, but to protect
the retailer from the failure of the market.'"
This was not the first time that Wal-Mart had been in litigation involving pricing, In 1986, it was
found to have violated an Oklahoma state law that required retailers to sell products at least 6,75% above
cost, unless the store is having a sale or matching a competitors price, Wal-Mart settled out of court during
an appeal and agreed to raise prices at all of its stores in the state, 7
Wal-Mart became the number one major retail discount chain by obviously offering value and the
lower prices possible, Pricing is the essential advantage that the mega-stores have over the small retailers
who have few options to buy direct and who are attempting to buy merchandise from a reduced number of
regional wholesalers, Even the major wholesalers have begun to consolidate their operations as was the case
in June 1994, when the number two and number three United States food wholesalers, Fleming Company,
Inc, and Scrivners, Inc" began discussions to merge, The contemplated merger would have resulted in
combined total sales of$I9 billion, making Fleming the nation's largest food distributor. Fleming's rival
is Supervalue with $16 billion in sales, The trend towards consolidation continued to threaten the ability of
the small retailer to survive, In October 1992, Supervalue had acquired Wetterau, Inc, of St. Louis for $1,1
billion,
While the continued consolidation of wholesaler and distribution into fewer hands raised possible
antitrust concerns; nevertheless the argument employed by the mega-retailers is that distributors would cut
their own duplicative operations and hopefully provide cost savings to consumers,'
'Joanna Ramey, "Judge finds Wal-Mart guilty in pricing suit," Supermarket News, 18 October 1993, p, 4,
'Op, cil., Ortega, 24 August 1993, p, A2,
'Bob Ortega, "Suit Over Wal-Mart's Pricing Practices Goes to Trial Today in Arkansas Court," The Wall
Street Journal, 23 August [993, p, A3,
'''Rival food suppliers agree to major merger," The Philadelphia Inquirer, I June 1994, p, Cl,
128
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prices, The signs sometimes compared items of different sizes and were not fair
comparisons, state officials charged,"
"The old slogan has been in use since 1988,"
"Retail consultant Alan Millstein says it may have worked for Wal-Mart in its early years,
when it frequented smaller markets and easily beat competitor's prices, 'Now they are well
into the most competitive metro markets, It's much more difficult for them to make that
claim and have it be true,' he says,"1O
In a related matter, but in a governmental involvement in Michigan, Wal-Mart agreed to modify its
pricing rules after negotiations with Michigan's Attorney General."
"Wal-Mart Stores agreed not to use unfair or deceptive practices in comparative price
advertising at it Wal-Mart and Sam's Club stores in Michigan,"
"The agreement with the Michigan state attorney general's office came as response to a
complaint filed by Kmart Corp" Troy, Mich,; Target Stores, Minneapolis, and Meijer Inc"
Grand Rapids, Mich,"
"The three retailers claimed Wal-Mart's comparisons were misleading, In signing the
agreement, Wal-Mart did not admit to any violations,"
"Wal-Mart agreed to identify the date on which comparisons were made; not to lower an
item's price solely to achieve a favorable price comparison; not to use market-basket
comparisons unless the Wal-Mart employees responsible for pricing do not know which
items have been selected for the survey; and not to compare multiple-item package prices
with individual item prices when the multiple package is not available to others in the
market. "
The growing power of the mega-retail discount chains is in part a matter of mass purchasing at
discounts from manufacturers and major wholesalers, which provide merchandise at very low costs to
consumers; often below costs as "loss leaders," Also, the reduced overhead per store as the corporations
grow in accelerated fashion and introduce formidable powers to confront City Councils, zoning boards, etc,
to accomplish their real estate objectives is contributing to their power.
Scholars such as Kenneth Stone, Professor of Economics at Iowa State University, a Wal-Mart
analytical observer and Thomas Muller, a Fairfax, Virginia economist and the author of a report on the
impact that three proposed Wal-Mart stores would have on Northeastern Vermont communities, both
previously mentioned, might have a somewhat similar point of view on the major impact resulting from the
growth of the Kmarts and Wal-Marts on small retailers, "Main Street" and community stability,
The writer will point out Muller's testimony before the House Small Business Committee in 1994
at a later point in this chapter. Seven years ago, Kenneth Stone, began to study the Wal-Mart phenomenon
IOEllen Neuborne, "Wal-Mart modifies its slogan," USA Today, 26 May 1994, p, 28,
""Wal-Mart agrees to pricing ruling; will not use unfair or deceptive practices at Michigan stores,"
Supermarket News, 28 March 1994, p, 7,
130
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(Wal-Mart) against "them" (downtown merchants) attitude, and the modest involvement in
public affairs and charities by store officers are building resentment.""
Wal-Mart's Successful Appeals from the Faulkner County Chancery Court, Opinion
Delivered by Judge Robert L, Brown of the Arkansas Supreme Court on Januarv 9. 1995
judge David L. Reynolds' earlier decision in the case of American Druf!s Inc, v, Waf-Mart Stores,
filed on October 12, 199316 was reversed and dism issed by the Arkansas Supreme Court on January 9, 1995,"
This appeal is classic in that hundreds of lawyers in various states in which mega-retail discount
chains are located are reviewing the majority and minority opinions to determine whether additional state
litigation on various predatory pricing and selling below cost cases are worth exploring; and whether any
of the data provided in both the majority and dissenting opinions might throw light on whether similar
predatory pricing cases may be in the purview and plans by either the U,S, Department of Justice and the
Federal Trade Commission,
"Appellant Wal-Mart Stores, lnc, appealed from an order of the Chancery enjoining it from
engaging in below-cost sales and assessing damages against it for violation of the Arkansas
Unfair Practices Act, Wal-Mart argued on appeal: (I) that the Chancery Court erred as a
matter of law in finding that it sold products below cost for the purpose of injuring
competitors and destroying competition; (2) that the Chancery Court erred in considering
individual articles to determine cost and profit rather than the entire product lines, or
"market basket"; and (3) that the Chancery Court's interpretation of the Arkansas Unfair
Trade Practices Act violated the Arkansas Constitution and the United States
Constitution."18
The Supreme Court of Arkansas agreed with Wal-Mart, on their first point and hence reversed the
Chancery Court order and dismissed the case,"
The Chancery Court had earlier ascertained certain findings among others in coming to its decision
against Wal-Mart,20 These findings should be kept in mind when reviewing the successful appeal later in
this chapter.
"That Wal-Mart determined the 'every day price' for its products at its headquarters in
Bentonville, that store managers could not raise the price for a product above that set price,
"Ibid,
lOOp, Cit" American Druf!s Inc, et, ai, v, Waf-Mart Stores Inc, ~pO, 382, Faulkner County, Arkansas
Chancery Court, (October 12, [993),
"Wal-Mart Stores v, American Druf!s, Inc, No, 94-235; 3 [9 Arkansas 2 [4; 891 S,W, 2nd 30; [995
Arkansas (January 9, 1995),
"Ibid" p, I.
"Ibid,
2OIbid" pp, 3-6,
132
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2,
The extent of below costs sales,
3,
WaI-Mart's stated pricing policy - "meet or beat the competition without regard to
cost."
4,
Wal-Mart's stated purpose of below cost sales - to attract a disproportionate number
of customers to W al- Mart,
5,
The in-store price comparison of products sold by competitors, including Plaintiffs,
6,
The disparity in prices between Faulkner County prices of the relevant product-lines
and other markets with more and less competition,
The Chancery Court then granted the injunction against below-cost sales, The chancellor also
assessed treble damages as a penalty,
Majority Opinion of the Court Hearing the Wal-Mart Successful Appeal
Several items stand out in the Supreme Court's opinion:
"It is clear that mere proof of below-cost sales is not sufficient to prove a violation of the
Act, The Chancery Court agreed with this but found an intent to destroy competition based
on the extent, frequency, and number of those sales, Despite this finding, the Chancery
Court failed to present details ofWal-Mart's practice regarding specific articles which led
to the (alleged) violation, The individual items sold below cost, the frequency of those
sales, the duration of those sales, and the extent of such sales were not revealed in the
Chancery Court's opinion, And that is a critical point in this case,"
"We discern no proof in the record of this case that Wal-Mart specifically intended to
destroy competition with regard to anyone article like Crest Toothpaste or Bayer Aspirin
or Dilantin by selling below cost for a sustained period oftime, What is evidenced is that
Wal-Mart regularly would sell varying items below cost as loss leaders to entice people into
its store and increase traffic, The loss-leader items would change on a regular basis, That
strategy of selling below the competitors' price and even below W ai-Mart' s own cost, which
Wal-Mart admits to, is markedly different from a sustained effort to destroy competition in
one article by selling below cost over a prolonged period oftime, Our statute does not make
loss leaders illegal, and for that reason the Chancery Court erred in inferring a purpose to
destroy competition from a loss-leader strategy,"
"We observe further that if the Chancery Court's statutory interpretation was correct, any
business using the loss-leader approach to attract customers on a regular basis would be in
violation of the Act. That kind of expansive interpretation runs directly counter to our oft-
stated policy of strict construction of penal statutes in favor of those upon whom the burden
will fall. Our statute plainly does not contemplate a prima facie case of predation based on
loss-leader sales, and we are not willing to invalidate, and indeed render illegal, the
technique of using loss-leader products or services without a clear directive from the
General Assembly that is now the public policy ofthe State of Arkansas,"
134
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1.
The lower court's standard of review,
"We (the dissenters) review Chancery cases de Novo and will not reverse a finding of fact.
unless it is clearly erroneous, We consider the evidence in the light most favorable to the
appellee (the pharmacists), The burden is upon the appellant to show the findings are
erroneous. "
2, Did the lower court's rulinl,: suooort an inference of intent to destroy comoetition?
"For its first point of error, Appellant argues that the Chancellor used an improper legal
standard to find the inference of intent to destroy competition, The analysis advanced by
Appellant required Appellees to establish two factors (a) conduct inconsistent with a lawful
purpose; and (b) knowing conduct that creates a dangerous probability of achieving a
monopoly, Appellant stated the Appellees did not establish these two factors, and any
inference of unlawful purpose by the Trial Court is, therefore, improper and legally
erroneous. "
"Appellees responded to this argument by stating that the Chancellor not only used the
proper standard but evaluated the evidence and reached the only permissible conclusion,
The evidence showed that up to thirty percent (30%) ofWal-Mart's pharmaceutical sales
were below cost; that Wal-Mart posted negative profit margins on their most competitive
items in over one-half of the period under examination; and that many of the prices were
below invoice or replacement cost without consideration of the additional factors mandated
by Arkansas Code Ann,"
3, Did the Chancerv Court fail to employ the proper standard?
"Appellant's contention is unpersuasive on two points, First Appellant fails to identify the
legal standard used and how the legal standard was improperly applied, Appellant also
failed to articulate the alleged "proper legal standard" for this Court to use when interpreting
the Arkansas Act, Second, Appellant provides this Court with a potential fralllework for
analysis but provides no authority or source for this framework, If Appellant does not like
the statute as it is written, its remedy is in the legislature not the courts, However this
question, , , is not a matter to be addressed by the court but is within the province of the
legislature, " This is a matter which must be left to the sound discretion of the General
Assembly,"
4, Was there intent to destrov competition?
"Appellant's second argument concerns the inference of intent to destroy competition and
that the enumerated factors identified by the Chancellor could not possibly support an
unlawful inference, The burden is upon the appellant to show that the findings are
erroneous, Despite their analysis of each factor, Appellants fail to articulate a legal basis
to reverse the findings and conclusions of the Chancellor."
5, Was the Chancery Court's interpretation of the Arkansas Act inconsistent with
legislative intent?
"Appellant argues that the interpretation of the Arkansas Act given by the Chancellor is
136
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company, or other association engaged in business within this state to sell, offer for sale, or
advertise for sale any article or product, or service or output of a service trade, at less than
the cost thereof to the vendor, or to give, offer to give, or advertise the intent to give away
any article or product, or service or output of a service trade, for the purpose of injuring
competitors and destroying competition,"
"The first rule in considering the meaning of a statute is to construe it just as it reads, giving
the words their ordinary and usually accepted meaning in common language,"
"When a statute is clear, it is given its plain meaning and we do not search for legislative
intent, That intent must be gathered from the plain meaning of the language used,"
"A literal reading of Arkansas Code Ann, @ 4-75-209 supports the Trial Court's use of a
'single product' cost comparison to determine if Appellant has engaged in below cost sales
in violation of the Arkansas Act. The language of @ 4-75-209 refers to any article or
product' and does not include consideration of the atmosphere of the store, the parking lot,
air conditioning, and a whole group of services that surround the purchase of an item, We
should reject Appellant's market basket approach for establishing the price benchmarks,"
7, Does the Arkansas Act violate the Arkansas Constitution?
"Appellant argues that the Chancery Trial Court's construction of the Arkansas Act bears
no rational relation to legislative purpose and violates the Arkansas Constitution, Article 2.
Section 2, which states:"
"All men are created equally free and independent. and have certain
inherent and inalienable rights, amongst which are those of enjoying and
defending life and liberty; of acquiring, possessing and protecting property
and reputation, and of pursuing their own happiness, To secure these rights
governments are instituted among men, deriving their just powers from the
consent of the governed,"
"Appellant cites Union Carbide & Carbon Cornoration v, White River Distributors, lne"
224 Ark, 558,275 S,W, 2d 455 (1955) in which this Court ruled that the Arkansas Fair
Trade Act was unconstitutional, as it established minimum prices, This Court said that 'the
right to sell is a valuable property [that] cannot be denied.' Id, At 561, Appellant also cites
Noble v, Davis, 204 Ark, 156. 161 S,W, 2d 189 (1942), in which a statute establishing
minimum prices, commissions and hours of operations for barbers failed a constitutional
challenge, Appellant states that this Court found that 'statute had no rational relation to the
public safety, health or welfare.' Id, At 152-63, The same result should attain here,
Appellant states 'that these cases establish that the Arkansas Constitution recognizes that
each person has a right to sell his property and services at the price at which he chooses,
That right should not be abridged except upon a compelling showing of public harm' ,"
"We review challenges to the constitutionality of statutes under the principle that statutes
are presumed to be constitutional."
"The burden of proving a statute unconstitutional is upon the party challenging it."
138
60
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...
Concluding Comments in the Dissent
"We would hold that the Appellant has failed to prove that the Chancellor used an improper
legal standard with respect to the inference of intent to injure competitors and to destroy or
substantially lessen competition, We also find that the Chancellor could have found an
intent to injure competitors from the evidence in the record and particularly from the
testimony of David Glass, President of Wal-Mart Stores, Inc" who used language such as
'aggressive,' 'do whatever it takes,' 'kill the competition's momentum,' and 'war zones.'
Appellant failed to establish that the Arkansas Act violates rights guaranteed by the
Arkansas Constitution, Article 2, Section 2, Appellant also failed to establish that the
Arkansas Act was preempted by federal law,"
"For the foregoing reasons, I would affirm the trial judge's decision, Opinion written by
Walter Niblock, Special justice and Special Justices A, Watson Bell and Barbara P, Bonds
join."
Author's Comment
The Supreme Court, despite the strongly worded dissenting opinion reversed the Chancery Court's
victory for American Drugs Inc" dismissed the original plaintiff's case and awarded in favor of Wal-Mart,
the Appellant,
The author has provided great detail in the dissenting opinion because of references to the predatory
pricing features of the Robinson-Patman Act; particularly with respect to the several different approaches
to calculating below cost sales on (a) the "market-basket" approach or (b) the "single product" approach,
The majority opinion in the Supreme Court reversal also acknowledged that: "Admittedly, there is a point
where competitive pricing ends and predatory pricing begins," Further, justice Robert L. Brown's lllajority
decision in favor ofWal-Mart also pointed out that the Eighth U,S, Circuit Court of Appeals had discussed
the difficulty in distinguishing the two in the context of the Sherman Act; i,e, "Competitive pricing" vs,
"Predatory pricing," Moreover, while a finding that a defendant has engaged in selling below cost is not the
equivalent of finding specific predatory intent; nevertheless, it could be a basis from which such intent might
be inferred,
140
1171
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pragmatic chief of the antitrust division of the Justice Department.' However, Ms, Bingaman suddenly
resigned effective November 1996, and for the present it doesn't appear that enforcement policies with
regards to the Justice Department are not likely to change in the near future,
Had Ms, Bingaman remained she would have been strong company for Robert Pitofsky, a leading
antitrust scholar and author of several papers in the early 1990's, which called for the re-invigoration of
antitrust law, Pitofsky has been confirmed by the U,S, Senate as Chairman of the Federal Trade
Commission,' Antitrust lawyers say that Mr, Pitofsky, a former Federal Trade Commission Commissioner
and the agency's former Director of the Bureau of Consumer Protection, should be regarded as a powerful
chairman, In his writings, Mr. Pitofsky, a former Law Dean at Georgetown University Law Center, has
called Federal Trade Commission enforcement of the Robinson-Patman Act, which prohibits price
discrimination, as "exceedingly modest, during the Republican years," Mr, Pitofsky was formerly of
Counsel to the Washington, DC firm, Arnold and Porter.4 It is this author's belief that predatory pricing lllay
soon be reviewed in the near future by such an aggressive appointee as Mr. Pitofsky,
Recently, Charles P, Kocoras, U,S, District Judge for the Northern District of Illinois has had before
him a class action involving manufacturers of brand name prescription drugs,' This case, which was referred
to in Chapter Y, has become very complicated due to the inability to have all plaintiffs agree to be part of
the certified class, while others are involved in pending actions as individual plaintiffs,
Specifically, the individual plaintiffs argued that the class notice must disclose the following:
A, "That the class actions allege only violations of the Sherman Antitrust Act."
B, "That there are also pending individual actions alleging price discrimination in
violation of the Robinson-Patman Act, as well as violation of the Sherman Act,"
and
C, "That the Robinson-Patman Act claim is not being pursued in the class action and
would have to be pursued, if at all, in an individual action,"
Judge Kocoras, dismissed the individual plaintiffs motions and granted the class plaintiffs proposed
motion, "as the best notice practicable under the circumstances,"" (F,R, Civ, p 23(c)(2))
It may be observed that small drug stores see the enemy as the drug manufacturer, rather than the
big retail chains, They may have a compelling case against the manufacturers, In an antitrust case the
manufacturers may have to prove not only how they can justify selling at lower prices to higher volullle
customers, but, even more difficult, is how they can justify selling at lower prices to lower volume customers
-- HMO's, hospitals, etc, Legal victories may come too late or even after-the-fact for many sole proprietor
'Karen Donovan, "Move Over, Ms, Bingalllan; New Trustbuster is in D,C.." The Nationa/ Law Journa/, 24
April 1995, see, B, p, I,
'Ibid,
4Ibid" p, 2,
1.. re: Brand Name Preseriotion DruQS Antitrust LitiQation, 94 C 897, MDL 997, [995 U,S, Dist. 446,
142
f171
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Congressional Research Service. Library of Congress Report on Predatory Pricing and State
Below Cost Statutes'
After reviewing the Chancery Court opinion favoring the plaintiffs, in American Drufls, lnc, v, Waf-
Mart Stores, Inc,lO, and before the eventual reversal in Wal-Mart's favor upon appeal to the Arkansas
Supreme Court, the Congressional Research Service(CRS) researched the question of predatory pricing on
"the basis for predatory action," Were the standards different on a state basis versus a federal basis?
CRS made the distinction very clear between the state objective and the federal objective in the
following statement:
"That difference in emphasis -- between 'competition' (the Wal-Mart court) and
'competitors' (the other courts cited) reflects precisely the distinction usually made between
the federal concept of predatory pricing and state below-cost sales statutes, Whereas the
federal antitrust laws are directed at competition and maintaining a competitive
marketplace, the state statutes, which are variously denominated as Unfair Sales Acts or
Unfair Practices Acts, were for the most part enacted during the Depression in an attempt
to stem the tide of small business failures, Federal courts that have construed state law
claims have often done so by emphasizing the federal considerations,""
"As for example, the Wisconsin Unfair Sales Act was enacted in 1939 to prevent large
retailers from selling below cost, an 'act of unfair competition' which was seen as one of
the primary causes of small business failures, ' , [It] is very similar to most unfair sales acts
passed in the 1930's,""
The federal courts when involved in state pricing statistics still emphasize federal consideration,
Note the court's statement in the Seventh U,S, Circuit in 1989:
"Competition is a ruthless process, A firm that reduces costs and expands sa.les injures
rivals -- sometimes fatally, ", These injuries to rivals are by-products of vigorous
competition, and the antitrust laws are not balm for rivals' wounds,""
j,E, Rubin, Esq, ofthe Library of Congress research staff also points out the rationalization behind
the state and federal interpretations of predatory pricing:
"Another way to differentiate between the federal and state unfair competition emphasis is
'Janice E, Rubin, Predatorv Pricin, and State Below-Cost Pricin~ Statutes: Brief Discussion,
(Congressiona[ Research Service: Washington, 24 January 1994), pp, CRS [-9,
IOArkansas Chancery Court, Faulkner County, No, E-92-[ [58 (October 11, [993) Antitrust & Trade
Re~ulation Report (ATRR) 541 (10-21-93),
\lOp, cit., Rubin, p, CRS 2,
"[bid,
])Indiana Grocerv. Inc, v, SUDer Valu Stores, 864 F, 2nd [409, 1413 (7th Cir. [989) and Ball Memoria/
NosD/tal Inc, v, Mulual NosD/lallnsurance Inc" 784 F, 2nd 1325, 1328,
144
,171
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It is obvious that pricing on the part of several mega-retail discount chains has contributed to the
failures, bankruptcies and disappearance of many competing "Main Street" stores, as well as, the increasing
vacancy and abandonment rate in many formerly prosperous and attractive malls and strip centers, It is
certainly not the competition of the small retailer that is putting the other small retailers out of business, It
is the formidable buying and pricing power of the mega-chains -- that often creates a situation where a
legitimate retailer, losing his wholesale resource, has to buy at the lowest price at a warehouse club --
generally associated with a mega-retail discount chain, Can it be inferred that the "Main Street" failures
result from the growing power of the mega-chains, Is this power a form of monopolization?
Rubin in the CRS Study raises an umbrella over predatory conduct which might fit into the federal
jurisdictions, i,e", Sherman, Clayton and/or Robinson-Patman Acts, Rubin states:
"The fact that predatory pricing at the federal level is subsumed under the 'monopolization'
rubric has one other significant consequence -- inasmuch as there is no 'no fault'
monopolization, and legitimately realized monopoly positions are not punished, market
participants must specifically intend that their behavior injure competitors, Intent will not
be lightly inferred, and pricing policy is extremely unlikely to produce such an inference in
the absence of other, strong evidence, Many state below-cost pricing statutes permit the
inference that advertisements to sell below cost, or sales -- even one -. below cost, constitute
evidence of an intent to injure competitors or destroy competition,""
Although the court in the lower Arkansas Wal-Mart Chancery Court case stated that it could not infer
either a purpose to injure competitors or to destroy competition from the fact that the defendant store
'engaged in below cost advertising and sales,' it did infer such intent from, inter alia, the fact that there was
a "disparity in prices between Faulkner County prices of the relevant product lines and other markets with
more and less competition,""
Price variation which is dependent upon market competition is generally considered evidence that
markets are functioning properly, Similarly, no inference of harlll (injury) flows from even a proven
violation ofthe Robinson-Patman Act, the federal statute that is specifically addressed to price, and which
prohibits price discrimination,2J
Pavne v, Chrvsler cited in Footnote 22 held that the Robinson-Patman Act did not allow for
automatic damages upon proofofa violation: A plaintiff must prove the violation damaged him, It appears
that were a company prosecuted under the Sherman Act, that monopoly and pricing would be directed
against "competition"; but under Robinson-Patman, it might involve damage to the "individua[ competitor."
Should Complaints Against Predatory Pricing Be Filed under State Laws or Federal Laws?
Rubin provides a balanced analysis as to the way to go:
"Just as there were studies to indicate that state Fair Trade (resale price maintenance) laws
"Op, cit" Rubin, p, CRS 4,
"American Druf!s lnc, (note [0), 65 A TRR at 542,
2J1. Truett Pavne Co, v, Chrvs/er Motor Cora" 451 U,S, 557, 561-3 (I98[),
146
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mergers through,""
Bingaman had testified at her confirmation hearings that the Supreme Court should reverse its I980s
decision involving the Japanese electronic giant Matsushita, a decision that made it very difficult "to prove
predatory pricing,""
As the author pointed out in this chapter and Chapter VI, the Wal-Mart case based on predatory
pricing has aroused national interest in the subject and the state cases on predatory pricing may yet stimulate
further review of the federal regulatory powers provided in the Sherman, Clayton, Federal Trade
Commission and Robinson-Patman Acts,
The Stein article also stated that, "Some antitrust experts note that companies can bring predatory
pricing suits against others as a means of "back-door protectionism',"29
Some economists now endorse recent and relatively expansive theories of price predation," despite
the theorists who provide the traditional economic analysis that "predatory pricing schemes are rarely tried,
and even more rarely successfuL")' Nevertheless the condition of this nation based upon the disruption of
"Main Street" and of the malls and the neighborhood infrastructure, deserves a review and update of what
is predatory pricing?
Predatory pricing was certainly on the minds of the delegates at the 1995 White House Conference
on Small Business when one of the top recommendations addressed this very issue, Small businesspeople
were particularly concerned with the large retailers' ability to demand favorable pricing from manufacturers
and service providers, They call for stronger laws action by the President in this area, Their
recommendation follows:
141. "Small business cannot compete with large businesses who use their economic power
to extract unfair competitive pricing from manufacturers and service providers, Antitrust
laws should be strengthened and enforced to prohibit abuses including unfair vertical
integration, tying of pricing and product purchases, and predatory pricing tactics, The
President should appoint a presidential commission on competition to study the enforcement
and impact of the federal antitrust laws ensuring the survival and diversity of small
businesses."32
Finally, in the predatory pricing area, the Supreme Court has steadfastly refused to resolve the debate
"[bid,
'"Ibid,
"[bid,
30 Alvin K. Klevorick, "The Current State of Law and Economics of Predatory Pricing," American
Economic Review (Princeton: American Economic Association, 1993), p. 162.
31 Richard A, Posner, "The Chicago School of Antitrust Analyses," University a/Pennsylvania Law Review
(1979), pp, 925, 928,
J2"Final Recommendations From the [995 White House Conference on Small Business," Foundation for a
New Centurv, (Washington: 1995), p, 26,
148
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correct the failure in the Clayton Act and is a vehicle for reviewing possible predatory
pncmg cases,
3, There appears to be some doubt legally as to whether "location based" price
discrimination is or is not prohibited by the Robinson-Patman Act. There is some legal
thought that price discrimination is unlawful as Robinson-Patman makes price
discrimination unlawful as between different purchasers of same commodity (i,e, chain X
has one price in Atlanta and a lower price for the same product in Atlantic City) , , ' does
this justify the charge of "discrimination!"? Under the Robinson-Patman Act, the illegality
is a purpose to "injure, destroy or prevent competition, Do the failures of hundreds of small
businesses in the United States warrant a review under Robinson-Patman? Are we
discussing a "competitor's" failure or "'competitionsm failure? How much of a market. say
in groceries or home improvements, must a discount chain have to be reviewed by FTC and
Robinson-Patman? First, the plaintiff must establish that the company is pricing below
average variable cost, and second, that the company has a reasonable prospect to recoup the
investment below cost prices, It's tougher, therefore, for a private litigant to bring and
prove predatory action under the federal law, but a government agency has the staff and
resources to make these complex investigations possible, On the other hand, there are legal
theorists who believe Robinson-Patman does not require a market share floor as a
monopolization charge does, and the predatory pricing issues apply only to charges by a
seller that its competitor has harmed the plaintiff by discriminating among the competitors'
customers,
The issue here is who is the consumer that is being discriminated against. Is it the mega-
retail discount chain that is discriminating against buyers in one location or another? Or,
is it the manufacturer or food distributors that is discriminating against such competing
chains as Wal-Mart, Target, Kmart or other smaller retailers,
4, In persuading any government agency to investigate antitrust implications of '''Big Box"
warehouse operations, a market definition is very important (see advice from Davis, Cowell
& Bowe) in Chapter V, A more narrow market definition is easier to support a monopoly
power presumption, Certainly a market share of 60% or 70% should be a strong indicator
that the market is no longer free for small retailer viability, particularly when large chains
buy "direct" from manufacturers and small retailers are unable to do so, Can a new
businesses enter the market strongly under the influence of a mega-retail discount chain?
Could he survive? Could he buy merchandise from a wholesaler or manufacturer?
5, Chapter V also pointed out that aggressive pricing was not necessarily indicative of
monopoly power. It is the abuse of power that should be reviewed,
6, In Chapter V, the author reviewed the Brook GrouD LId. cases and the Suprellle Court
indicated that whether a claim alleges predatory pricing under Section 2 of the Shennan Act
or price discrimination under Robinson-Patman, the essential prerequisites to recover
remain the same, This is correct where the discrimination charge is brought by the seller's
competitor rather than its customer.
7, Manufacturers can also be targets of pricing suits, Increasingly there have been charges
that pricing arrangements between manufacturers and distributors have been unchallenged,
For example, while vertical price fixing has not been a significant problem in the grocery
150
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over 4,500 separate members operating general interest bookstores across the country, The vast majority
of ABA's members were independently owned businesses operating individual bookstores, As they have
done for generations, these bookstores provide books and services to meet the needs of the general reading
public in communities where they were located, Many of these independent bookstores offer broad or
specialized selection and services that are not generally available in larger chains of bookstores,
According to American Booksellers:
"The ability of these bookstores to compete had been increasingly harmed by unlawfully
favorable deals, prices, and promotional allowances that certain book publishers, including
defendants, had given to a limited number of large chains of bookstores and discount outlets
in the country, By depriving independent bookstores of discounts and promotions made
available to large chains and discount outlets, defendants damaged independent bookstores
and threatened their capacity to compete in the marketplace, These threats to independent
bookstores in turn threatened the richness and selection of reading material that was
available to the American reading public, Through the complaint, plaintiff ABA sought to
obtain for its members the level playing field required by antitrust laws of the United
States."42
Specifically mentioned in the lawsuit were major retail book chains as well as warehouse clubs:
"The two largest chains of retail bookstores in the country are Walden book/Borders and
Barnes & Noble, which together operate over 2,000 retail bookstores under various trade
names (collectively referred to herein as 'the Chains'),""
"The two largest chains of discount outlets known as 'membership warehouse clubs' or
'buying clubs' are Price Club/Costco and Sam's Club (collectively referred to herein as 'the
Buying Clubs'),""
The complaint also alleged among other things, that the defendants routinely made payments to
bookstore chains so that the chains would advertise the defendants' books; would place the defendants'
books in favorable places within the stores; and would aggressively promote the sale of defendants' books,
without making such payments proportionally available to all booksellers,"
The complaint also alleged that the defendants sold certain books to "warehouse buying clubs" or
their suppliers at wholesale discounts far beyond those offered to retail bookstores, The discriminatory
discount granted by defendants enabled warehouse clubs to sell the books to the public at prices lower than
the lowest wholesale prices defendants offered to retail bookstores,4"
420p, cit., American Bookseller,
"Ibid,
"Ibid,
"Ibid" p, 40,
"Ibid,
152
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designed to put them out of business,"'o On the other hand, Home Depot defended its pricing practices,
saying its policy was to compete based on price,
"It's not a very complicated policy," said Home Depot spokesman, Jerry Shields, "We have the
lowest prices in every market we do business in, Or we'll beat someone's prices if it comes to our attention,
We're not saying you won't find a lower price; we'll just have to adjust our prices,"" Shields also said that
prices may also vary between markets because of fluctuations in transportation and other overhead costs,
Roush further stated in his article that in November 1994, Home Depot was accused of violating
Utah's Unfair Trade Practice Act. Standard Plumbing company Inc" which operated [4 stores, filed two
suits alleging that Home Depot was selling supplies below its cost. Roush further reported that Home Depot
quickly settled the lawsuit in an out-of-court agreement in which it admitted no wrongdoing, And, according
to Roush, the chain agreed to stop selling plumbing supplies in Utah below its invoice price,"
The At/anta Journa/ also quoted Kenneth Smith, an analyst from Interstate/Johnson Lane, who had
conducted a study in 1994 comparing prices of35 products at a Home Depot in Atlanta with those at a store
in Greensboro, NC, where it competed head-to-head with Lowe's, another chain, Smith, pointed out that
in Atlanta, the 35 items totaled $625,37, or were 9,7% higher than the $568,96 they cost in Greensboro,
"They don't have uniform prices," said Kenneth Smith, He believed that it was not Home Depot's intention
to kill competitors; however, he was convinced that Home Depot could buy in a lot bigger volume than the
small firms,"
Big Customers' Late Bills Choke Small Suppliers
Previous comments by the author in this study indicated that small retailers were having trouble
buying from national or regional wholesalers and manufacturers because of the mass discounts offered to
the mega-chains by both large and small suppliers, If, as reported, wholesalers and manufacturers were in
fact being paid later than traditionally, it would contribute to having a negative impact upon the small
retailer, Eventually there will be less suppliers available to sell to small retailers,
A Dun and Bradstreet Corporation Survey" released in 1994 indicated trends portraying continued
weaknesses in the bill paying capacity of small retailers, Dun and Bradstreet has been tracking such behavior
for over four years, The survey canvassed mostly small suppliers -- recipients oflate payments and the firms
that can least afford delays,
Lawrence Winters, a Dun and Bradstreet assistant vice president, stated that some large companies
were routinely paying their bills as much as 90 days after receiving invoices routinely due in 30 days,
"Ibid,
"Ibid,
"Ibid,
"Ibid,
"Michael Selz, "Big Customers' Late Bills Choke Small Suppliers," The Wall Street Journal, 22 June
[994, p, BI.
154
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elements of unconscionability (i,e" unequal bargaining position) are sufficiently present so
as to bar enforcement of this clause for unconscionability,""
This issue, the court said would have to be determined at trial. Merchandise involved in the action
was ordered from June through October 1990, and later refused for various reasons including late deliveries
and failure of the merchandise to conform with specifications, (Kenneth A. Schulman of Kreindler & Relkin
represents the plaintiff.)
The author of this study has not yet seen the results of the trial ordered by Judge Shainswit.
Obviously Wal-Mart may have had strong reasons for refusing shipment of the merchandise from Cass, such
as lateness in delivery or lack of conformity to requisite specifications, Nevertheless, the Judge in the pre-
trial activity in the Cass v, Wal-Mart case was concerned about whether or not unequal bargaining power
may be sufficiently present to bar enforcement ofa cancellation clause for "unconscionability," In this case
the buyer is possibly one of the largest corporations in the United States in terms of volume and number of
employees, Wal-Mart's motion for summary judgement was denied by the court (1, Shainswit),
Wal-Mart appealed almost imlllediately to the appellate Division of the New York Supreme Court,
On June 6, 1995, the five judge panel unanimously affirmed the lower court's decision in denying the
defendant's motion for summary judgement discussing the complaint, the case will therefore go back to trial.
In the Au~ust 1994. V.S, House of Representatives Small Business Committee Public Hearings.
the Committee Lashed out at the Mega-Discount Super Store for Hurtin~ Small Businesses
and Entire Communities with Predatorv Pricin~. {!nfair Labor Practices and Market
Saturation -=.,
In Joyce Barrett's article on August II, 1994, in Women's Wear Daily', she reported on the first
Congressional probe of the retailing phenomenon that was changing local markets nationwide, The mega-
stores were derided of everything from crushing local competition to altering the traditional product
distribution chain,
As the largest retailer in the nation, according to Barrett, Wal-Mart Stores, Inc, drew most of the
criticism, although Rep, John LaFalce (D" NY), Chairman of the House Small Business Committee, said
he had hoped the discussion would not target specific retailers, Wal-Mart's actual volume for 1995 was $8 J
billion, but currently it projected to be over $106 billion in 1996,
Representative LaFalce said he aimed to explore three ways of protecting small business from the
super-chains:
v.
/.
Increase publicity about expansion of the mega-stores,
Curb federal money, such as industrial revenue bonds, that goes toward retail
development.
W[bid,
6'Joyce Barrett, "Discount Superstores Take Heavy Pounding in House Hearings," Women's Wear Daily,
II August 1994, pp, [, 8,
156
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boards, supporters oflocal arts, etc, live here and have their businesses here, Wal-Mart will
not replace these local leaders,""
These are the effects that can not be put into numbers; but are at the basis of the concern raised in
many communities when a large corporate chain is entering the market.
Jonathan Laing, in a May 1996 article in Barron's, confirmed the growth strategy of Wal-Mart by
reporting on CEO David Glass's predictions for the future, Laing accepts Glass's projections that by the year
2000, the grocery business to be enjoyed by Wal-Mart's new Supercenters will blow past the $24 Billion
business volume of the Kroger supermarket chain, By adding groceries to the stores and often using the
lower prices to entice shoppers, the overall business of the Kmarts and Wal-Marts are increased, Laing goes
on to say:
"The synergy of the supercenter concept is best grasped by a simple calculus, By merely
adding 35% - 40% to the floor s ace of a tra itional discount store to create a supercenter,
sa es essentially double once the supercenter reaches maturity in four to Ive years, ro I s
won't rise quite as sharply because of the inclusion of lower-profit food items, Maybe
they'll jump only 80%, Nonetheless, the supercenters will yield a higher return on
investment than most ofWal-Mart's existing discount stores and provide a substantial boost
to sales and earnings down the road,""
This is indeed substantial growth, both in sales and profits, Examples ofthis are evident from Muller
where he cites expansion already occurring in New York State,
Muller pointed to Wal-Mart's expansion in upstate New York as an example of its growth potential.
A few years ago there were essentially no Wal-Marts in the region, As of 1993, there were 28 Wal-Marts
and 14 Sam's Clubs, Because the economy of the region is not growing or growing slowly, virtually all sales
represent losses to existing merchants, Also, the evolution of Wal-Mart supercenters means that its new
stores, with about 175,000 or more square feet of retail space, will be equal to more than 100 typical small
businesses.67
In fairness, it should be mentioned that there were only few proponents of the mega-retail discount
chain present at the La Falce committee hearings, Morrison Cain, Vice President of the International Mass
Retail Association, was the sole voice testifying in defense of the burgeoning mass industry,
After the hearings, in a telephone interview from Kmart's Troy, Michigan headquarters, Don
Morford, Director of Employee Benefits, said he could understand smaller retailers complaining that the
bigger stores hurt their business, He noted, however, that smaller retailers liked the increased traffic the big
stores generate, Cain said the mass stores provide greater choices for consumers, employment and income
growth and an improved economy, Mass retailers can offer the low prices that have made them famous
because, early on, they embraced technological advances in distribution and logistics, such as checkout
scanning, sophisticated inventory processing systems, direct store-to-warehouse and store-to-vendor
communications and Just-In-Time delivery,
"Personal letter from the Honorable Jean Ankeny, Vermont State Senator, dated [ May [995,
"Jonathan R, Laing, "Super Savior," Barron's, 6 May 1996, p, [9,
"Op, cit., Barrett, pp [, 8,
158
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enforcement over the last few years, Enforcement policies depend so much on who is fonnulating them, but
one should hope that investigation of anticompetitive activity by dominant firms is likely to continue,
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California's Experience with Respect to Incentives Provided Developers and Mega-Retail
Discount Chains ("Big Boxes" and Redevelopment)
California, a state which characteristically is one of first to start new initiatives has had considerable
experience in offering a "candy store" of incentives for the mega-retail discount chains, Redevelopment
agencies in California gained substantial strength and influence during the 1980's, Their power was created
because Proposition 13 (Jarvis Amendment) in California froze property values, thereby, making it
exceedingly difficult for municipalities to generate revenues, Due to this short-fall, redevelopment agencies
became the new economic engine, The original intent was simply the revitalization of areas blighted by
economic and social decay, Cities and local townships were literally coming apart at the seams;
redevelopment was the thread used for resurgence, needed repair and necessary economic stimulus,
Historically, the last couple of decades have witnessed a myriad of cities and townships designating
large sections of real estate into redevelopment zones, Some of these locations had little chance of recovery
without the proper financial incentives needed to "push-start" their dying economies, The redevelopment
agencies were established to ameliorate this problem; however, either through clever design or total disregard
for original intent, large portions of redevelopment zones are now simply raw land,
This contamination of original intent, having positive value on the one hand, exacerbated the
problem relating to urban blight and economic decay, As interest increased. the criteria for Redevelopment
Agencies' (RDA's) zones gave little concern to proximity or economic merit within the parameters of any
given municipality, Simply stated, RDA zones were spread throughout entire communities and, in many
cities created several redevelopment sites, This resulted in an interesting paradox, competition now existed
not only between cities but within the same cities,
The most salient aspect of the paradox was the competition created within separate RDA's in a
given city, The developers, seeing an absolute "win-win" formula, took on Darwinian characteristics in their
demands and "natural selection" became rule of thumb, The least attractive zones (economically and
downtown areas) were now in direct competition with raw land with all its inherent adyantages, Original
intent was now a document for historians and considered innocuous by modern municipal standards,
Underdeveloped land being more attractive due to economic realties and propinquity to freeways,
throughways, interstates, et. ai, were now the major objective, Social decay and blighted downtown sections
constituted an anathema to new construction, The very structure ofRDA'S was going through a complete
metamorphosis; what would finally spin out would be complete absolute change and direction,
Downtowns were left to cascade into an economic "black hole" paradigm; like most major cities
throughout America, economically blighted sections were a secondary consideration while raw land attained
primacy, Small downtown emporiums were becoming an endangered species! All would agree this was
never a redevelopment objective,
Revitalization
In the past few decades, the destruction of our downtown urban areas across America have
unquestionably become one of the major concerns of modern society, It has bred social disorganization,
crime, violence, poverty, and rates of illegitimacy to unbelievable proportions, By not addressing these
problems in earnest, one can expect that in the next several years, America will become a cauldron of racial
fervor, discontent, anger and hatred, Many pundits believe the process has already started, Our 16th
President, Abraham Lincoln, stated, "We cannot live for long in a house divided,"
162
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Cadillac, Chevrolet, Honda and Toyota) on a single block within redevelopment zones and getting enormous
financial consideration as the "carrot" to finalize the deal. Ostensibly this was okay in the beginning;
however, once the dealership's incentives ran out, or came close to expiration, dealers began renegotiating
with the municipalities to extend the deal (RDA can "rollover" any deal for approximately 60 years without
interference), Furthermore, while negotiating with one city to extend the contract, some dealerships actually
negotiated with other cities for the same economic package, thereby, putting enormous economic leverage
on both cities to capitulate to demands, To State Senator Bergeson's credit, she saw this for what it was-
a blatant tax shelter structured for perpetuity benefiting no one except the avarice of a few, The economic
dynamism relating to this type of behavior is interesting, The question is: how does a municipality regain
the economic and moral authority within its own RDA agency - if the pre-existing tenant can renegotiate a
new contract once the economic incentives expire? This could become a Pandora's Box with societal
implications which are profound and which require detailed examination,
Tax Incentives
A major component ofRDA projects are their abilities to orchestrate the distribution of taxes, This
is a very effective tool and in many instances can be used to ameliorate economic and social dislocation,
An important application that tax incentives have within agencies is their ability to use tax dollars to lure new
business into communities.
The original objective was a mutually ideal investment in which both parties (city and corporate
partners) create prosperity for community and business, Tax incentives grant cities a considerable ability
to negotiate or structure very attractive deals in order to entice future partners, Incorporated into
redevelopment agencies are a series of powerful inducements which coalesce into a catalyst to promote
business, Their power is unprecedented with taxes and condemnation topping the list. It is apparent that
because ofthis power, many restrictions have been established ostensibly to monitor and maintain control
over the agencies: However, the attempts at constraint through legal measures have been weak and reluctant.
According to testimony at the Bergeson Hearings, most agencies proceed with impunity and quite a few
knowledgeable critics allege that these RDA's frankly, disregarded the rules with little concern since they
are rarely challenged,
The lllega-retail discount chains, such as Kmart and Wal.Mart and others, have also been the
recipients of generous treatments, both with respect to tax incentives and other financial benefits or tax
abatements in California, as well as in other states studied by the author; such as Illinois and New York (see
respondent comments in Chapter IV),
Schools and Tax Distribution and Redistribution
Within Redevelopment Agencies there is a little known fact that had a "Leviathan impact" on how
schools received needed tax dollars, The RDA has had almost complete power to circumvent the normal
distributions of taxes, It could actually stop the tax dollars generated by sales revenues within a city from
ever going back to the schools, The school's only recourse is "pass-through" agreements or lawsuits, If the
school fails to challenge the RDA within 60 days of approval it has theoretically lost revenues forever.
By way of "pass-through" agreements, school districts can negotiate with redevelopment agencies
for the right to obtain revenues for any new commercial enterprise, In California, a school district may be
mandated a certain percentage of income through commercial development based on the square footage or
164
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shortly, However, it does appear to infonned observers that RDA's have legally been open to direct monies
to developers, who in turn are then legally able to redistribute such funds to reimburse these national firms
for capital outlay and construction, Such finns as Super Kmarts, Target, Costco, Sam's Clubs, Price Clubs,
and Wal-Mart have been the recipients of RDA funds,
Short-falls in school revenues take place where a mega-retail discount chain receives an RDA
agreement which penn its it to retain sales taxes to pay for construction and debt service, If as a result of the
new mega-retail chain activities in the area, the "Main Street" stores have their business volume decline, or
they go out of business altogether, then their former collection of sales taxes is reduced substantially as is
revenues to the schools,
One example is an RDA deal between the City Council ofChula Vista, California and Wal-Mart,
reported on August 26, 1994,8 The Wal-Mart was proposed to open in late 1995,
"Wal-Mart Offered $1.9 Million Deal. ChuIa Vista"
"Wal-Mart would get $1,9 million over 15 years from the city as an inducement to build a
store in a proposed shopping center at the northwest intersection of Fifth A venue and C
Street under a plan approved by the City Council, this week, The money would come from
sales taxes the city collects from Wal-Mart and other stores in the 2 I-acre shopping center,
planned by Chula Vista Center Associates, said Community Development Director
Salomone, As part of the deal, the developer would build a $1.2 million bridge over the
Sweetwater River to connect the shopping center to Broadway, The developer would also
install traffic signals at Fifth Avenue and C Street and on Fourth Avenue and Dixieline
Lumber Co, The store is projected to open in late 1995,'"
Subsequently, the award of $1,9 million was disallowed by the appeal of several citizens to the
Superior Court of the County of San Diego, (See discussion later in this chapter.)
Typical RDA Deals Which are Pending or Have Been Finally Consummated with Developers
and Mega-Retail Discount Chains in Recent Years in California
The following RDA "packages" are entirely legal but are typical of advantages that are provided in
California to large retail firms and developers and which are generally not available to small businesses, The
information has been voluntarily provided by a prominent California law firm,'O
Summary of California Taxpayer Aid to Box Store Development
(The author does not take responsibility for the complete details of the narrated "packages," but
believes that essentially they do describe a picture of what has been made available by the RDA's to
'''Wal-Mart offered $[,9 million deal," The San Diego Union-Tribune, 26 August [994, p, B2,
'Ibid,
IOMemorandum from Davis, Cowell and Bowe, Attorneys at Law, San Francisco, California, dated 8
September [995,
166
L91
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over the period,"
ChuIa Vista, California
Redevelopment Agency buys land for $8,50 per square foot (cap $4,98 million) and to sell to a major chain
for $6,50 per square foot (cap $3,8 million), Agency to assist the chain in getting a community facilities
district forllled which would use the taxes received for $9 million worth of infrastructure improvements in
the area,
Impact on Small Businesses by These Pending Real Estate Packal!es Arranged by RDA's in
California
A number of the nation's largest corporations, both retail and non-retail with annual gross revenues
of almost $100 billion and upward are in effect being subsidized by municipalities, school districts and
taxpayers with the employment of millions in redevelopment funds to build their stores in California and in
other states with similar programs, What chance does the small retailer have for survival? Has he or she
been given the opportunity to improve their downtown facilities with a similar use of funds? This is
certainly "corporate welfare" at the retail level.
Return to the Bergeson Committee Report of 1989
At the Bergeson Hearing on Redevelopment, Mr. Chris Norby of Fullington, California, Co-
Chairman of the Municipal Agenda for Redevelopment Reform in his comments which follow, made clear
his disillusionment with the abuses in redevelopment powers, He also made certain constructive
recommendations which should be enacted,
Statement of Chris Norby"
I. "Purpose of Redevelopment is to alleviate serious urban blight and originally a
good one, In doing so, however, the Legislature granted to cities extraordinary
powers that have now become subject to such widespread abuse that they must be
curtailed,"
II, Redevelooment Powers Abused:
A, "Eminent Domain: Property rights are abused when CitIes
condemn the property of one private interest for the benefit of
another. "
B, "Tax Increment Financing: In theory the tax increment is created
by redevelopment efforts themselves, In reality, most of it is due
to inflation and development that would have occurred even
"Deborah Yu, "Wal-Mart center rises in Porterville," Visalea Times-Delta, 6 March] 99 [, p, D [,
"Op, cit" Bergeson Hearings, p, A-72,
168
691
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speedily phased out and no new ones be created,"
B, "Limits on Land Acquisitions: The Legislature should prohibit
cities from becoming land acquisition agents for private
developers, The power to condemn property for private
development should be ended, as well as land 'write-downs' at
public expense."
C, "Sales Tax Aooortionment: Sales tax to city government should
be apportioned on a per-capita basis, rather than on how much is
actually raised in specific cities, This would end ruinous inner-city
competition for sales tax dollars,"
It is obvious from Norby's remarks at the Bergeson public hearings that the unchecked powers in
development have become subject to widespread abuse and that favoring certain projects has created an anti-
competitive environment "granting favors to select businesses at the expense of others enjoying no such
benefits," Further, that "redevelopment does not increase statewide economic activity, but only shifts it
around, It becomes, as Norby states "a shell game,"
It is also clear from the foregoing discussion that when Redevelopment Agencies divert property
(and other tax revenues) from school districts and community college districts, the state must ultimately
replace the diverted revenue,
The Bergeson Report made a strong statement on Competition for Business,"
"We have found situations in which cities are using their redevelopment agency's funds
(and other revenues such as sales tax) for subsidies to influence the location of businesses
that serve a regional market but generate significant local revenues, Auto dealers and
warehouse type retailers such as Price Club are typical beneficiaries of these subsidies
because ofthe large amounts of local sales tax revenues that they generate, We doubt that
these subsidies provide any net economic benefit to the state because they merely change
the location of businesses within a region, sometimes to the detriment of neighboring
communities."
Statement at the Bergeson Hearings by Los Angeles County (Testimony of Amanda Susskind
and Diane Shamhart)15
While the County has supported numerous redevelopment projects over the years, speakers frolll Los
Angeles evidenced frustration that present redevelopment attitudes had ignored the original purpose of the
statutes, namely to redevelop "blighted areas," so that the blighted area would have a healthier economic
base, Instead, "blight" and the dying "Main Street" have been ignored and developers are creating a new
kind of sprawl outside the traditional business areas,
"[bid" p, A-74,
"[bid" pp, A-50 - 53,
170
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expressed by witnesses in the Bergeson Hearings of 1989, when the purpose of RDA activities was fully
explored, Also fully presented is the final judgment which gives a fairly full account of the results,
The petitioners not only wanted an injunction against Wal-Mart's building a new store on the
particular site in question; but also wanted the $1,9 million subsidy to Wal-Mart reviewed as being possibly
in conflict with the California AB 1290 statute, codified as Health and Safety Code ~33426,5,
Details of the suit and final judgment follow:
172
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1. Petitioners are residents and taxpayers of the City of
Chula Vista. On November 15, 1994, the Redevelopment Agency of the City
of Chu1a Vista approved a government subsidy of $1.9 million to Wal-Mart
Stores, Inc. for putting up a new store. This subsidy will violate the
Legislature's recent enactment designed to prevent redevelopment agencies
from giving away tax dollars to new retail developments, AB 1290, now
codified at Health & Safety Code S33426.5. This provides that an agency
may not give away tax dollars to retail projects of more than 5 acres on
land not previously developed for urban uses (with exceptions not
applicable here). Respondents' financial assistance to the Wal-Mart
project violates AB 1290. Accordingly, the court must prevent the loss
to taxpayers and the community.
JURISDICTION
2.
Procedure
mandate) .
This court has jurisdiction under California Code of Civil
sections 526a (taxpayers' suits), and/or 1085 (writ of
GENERAL ALLEGATIONS
3. Respondent-Defendant Redevelopment Agency for the City of Chula
Vista (hereafter "the Agency") is a redevelopment agency governed by the
California Redevelopment Law, contained in Cal. Health and Safety Code
S33000 et sea. The agency's members are the members of Respondent-
Defendant City Council of the City of Chula Vista, who are sued in their
official capacity (hereafter collectively "respondents") .
4.
Vista.
Petitioners are residents and taxpayers of the City of Chula
5. Petitioners will be affected by the tax subsidy and by the
construction and operation of a Wal-Mart store in their city, including
effects on traffic, air quality and environmental values.
6. On or about August 23, 1994, Respondents voted to authorize
their staff to enter into a Disposition and Development Agreement ("DDA")
with Wal-Mart Stores, Inc. And Chula Vista Town Center Associates, L.P.,
concerning construction of a Wal-Mart store in Chula Vista. (A "true and
correct" copy of the DDA was attached to the filing as Exhibit A.)
7. Section 2 of the DDA provided that the DDA was not effective
until the City Council and Agency later decided to approve the
construction project via plan amendments and conditional use permit.
This entailed complying with the California Environmental Quality Act,
which gave Respon~ents discretion to disapprove the project.
8. Prior to Respondents' vote
representatives urged Respondents not to
on August 23, Petitioners'
offer this project a subsidy,
174
SL1
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.11~ ~~ p~eM~o~ 06 PlnoM paz,p,sqns aq o~ ~oa~o~d aq~
~aq~aqM s6u,~eaq o,lqnd ~a~~e pap,oap p~q s~uapuodsaH 1,~un un~ o~ u,6aq
~ou PlnoM Ap,SqnS aq~ o~ a6ualleqo Aue uo suo,~e~,m,1 ~o a~n~~~s aq~ ~eq~
6u,Aa,laq u, ~a~~al ,s~uapuodsaH uo pa,la~ lasunoo ,s~auo,~,~ad .11
(';) ~,q,qx:!! se paqoe~~e seM ~a~~al s,q~ ~o Adoo "~oa~~oo pue an~~" '<()
u~o suol~oa~qo hUE ssa~dxa
o~ A~,un~~oddo Iln~ uaA,6 a~e suos~ad pa~sa~a~u, lIe ~eq~ ~ap~o u,
(a~,sap os nOA ~, nOA pue) uoqewoW .~w o~ pap~eM~o~ pue paqs,lqnd
aq os Ie II,M s.6u,paaoo~d asaq~ ~o ao,~oN . sq~uom Ma~ ~xau aq~
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~eq~ su~aouoo leo,~oe~d pue le.6al lIe pu~ Aue ~uasa~d o~ anu,~uoo
o~ A~~ed pa~sa~a~u, ~aq~o Aue pue 'uoqewoW .~w 'noA a.6e~nooua aM
. . . '~oa~o~d ~~eW-leM pasodo~d aq~ ~o~ s~uamal~,~ua pasodo~d
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o~ uo,~a~os,p ~uapuadapu, pue I1n~ s~, A~,;) aq~ ~o~ su,e~a~
Alssa~dxa E.~ uo,~oas .paAo~dde uaaq aAeq s~uamal~,~ua pa~,nDa~
~aq~o lIe pue A~,;) aq~ Aq pa,~,~~ao uaaq seq HI:!! leu,~ e 'pa~aldmoo
uaaq seq Ma,Aa~ '<(O:!!;) A~essaoau lIe 1,~un pu~ ssalun 'aoue~s,sse
Aue ap,Ao~d o~ uo,~e.6,lqo ou aAeq 11,M Aoua.6'<( aq~ pu~ aA,~oa~~a
Alle.6al aq ~ou 11,M '<(aa aq~ ~eq~ ap,Ao~d Al~ealo suo,s,Ao~d asaq~"
:.6u,~e~s ''<(aa
aq~ ~o E.~ q.6no~q~ 1.~ uo,~oas o~ lasunoo ,s~auo,~,~ad ~o uo,~ua~~e aq~
.6u,~oa~,p ~oeq a~o~ lasunoo ,s~uapuodsaH 'v661 'L ~aqma~das uo .01
.S ~,q,qx:!! se o~a~aq paqoe~~e Al~ua~edde seM
a~nsotoua pue ~a~~at STq~ ~o Adoo u~oa~~oo pue an~~" ~ ".a~et OO~ 5ulns
a~e Aaq~ PlO~ .6u,aq ~o ~s,~ aq~ o~ s~ua,lo Am asodxa ~ou 11,M I asneoaq
~aMsue sno,~,padxa ue" .6u,~sanba~ pue Alda~ ~dmo~d e .6u,.6~n 'Ap,sqns
aq~ ~su,e.6e Auom,~sa~ o,lqnd ~o Adoo e .6u,soloua lasunoo ,s~uapuodsaH o~
~a~~al e pa,dooala~ lasunoo ,s~auo,~,~ad 'v661 '~ ~aqma~das UO .6
.06~1 S'<( uo 6u,Ala~
I.
significant. (A true and correct copy of the letter sent by petitioners'
counsel as Exhibit D.)
15. Respondents did not certify the environmental impact report or
approve the necessary plan amendments until November 15, 1994.
16. Prior to November 15, 1994, Respondents had not committed
themselves to extending a subsidy to retail development at this site.
17. The statute of limitations on petitioners bringing this action
was tolled until November 15, 1994.
18. Real Parties in Interest Chula Vista Town Center Associates,
Gatlin Development Co., Inc. And KRB Enterprises, Inc. Are the owners of
an unimproved parcel of approximately 12.94 acres of property at the
northwest quadrant of Fifth and C Streets in their City of Chula Vista,
County of San Diego, State of California which was formerly owned by
Metropolitan Shopping Square Ltd. And others ("Metropolitan property") .
19.
property.
The Wal-Mart development requires use of the Metropolitan
20. Prior to the filing of this action, there were never any
improvements on the Metropolitan property.
21. Immediately adjacent to the Metropolitan property is an
unimproved parcel of approximately 17.22 acres owned in the past by
Dixieline Lumber Company ("Dixieline property"), but now owned by the
Real Parties-In-Interest other than Wal-Mart.
22.
property.
The Wal-Mart development requires use of the Dixieline
23. Prior to the filing of this action, there were never any
improvements on the Dixieline property.
FIRST CAUSE OF ACTION:
VIOLATION OF CAL. HEALTH & SAFETY CODE ~33426.5
24.
through 23
Petitioners reallege
of the foregoing.
as though fully set forth paragraphs 1
25. In 1993, the California Legislature enacted A.B. 1290,
legislation intended to restrict financial support for certain
redevelopment projects by redevelopment agencies. That statute became
effective January 1, 1994, and was codJ.fied at California Health and
Safety Code 533426.5. This provides, in relevant
part:
176
LLI
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.a~aq ~a,la~ aA,~oun~u, ~o aou~nss,
aq~ ~oAe~ ~sa~a~u, o,lqnd aq~ pue sd,qsp~eq ~o aou~l~q aq~ .EE
.a~~lnoleo o~ alq,ssodm, ~o ~lno,~~,p a~e sassol A~e,unoed
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.A~np ~eq~ 6u,~elo,A a~e s~uepuodsaH olE
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.S'9~vEE5 apo;) A~a~es ~ q~leaH
sa~elo,A ...aa aq~ u, puno~ ~~eW-leM o~ aoue~s,sse ~oa~,p aq~ .6~
'asn ueq~n ~o~ padolaAap uaaq Alsno,Aa~d ~ou seq qO,qM a~om ~o sa~oe
aA,~ ~o puel ~o lao~ed auo ~s~al ~e apnlou, II,M ~oa~o~d aq~ 08~
OAoua.6... aq~ mo~~ se,p,sqns u, uo,ll,m
601$ Ala~em,xo~dde aA,aoa~ o~ ~~eW-leM ~o~ sap,Ao~d ...aa aq~ .L~
'S'9~vEE5 apo;) A~a~es ~ q~leaH ~o .6u,ueam aq~ U,q~,M Aoua.6...
aq~ mo~~ aoue~s,ss~ ~oa~,p ~o~ sep,Ao~d ...aa eq~ ~o E.E uo,~oes .9~
u"peQOt9Aap aq o~
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~uamaa~oe ue ~o aseal e 'O~ pa~,m,1 ~ou ~nq 'ou,pnlou, opuel
aq~ u, ~sa~a~u, ue ~o ~o puel aq~ ~o aseqo~na aq~ ~o~ '~uamaa~oe
alqeao~o~ua ue o~u, pa~a~ua seq ~o puel aq~ SUMO ~aq~ ,a Aouaoe
aq~ 'uo,~oas s,q~ sppe ~eq~ ~o~ aq~ ~o a~ep aA,~oa~~a aq~ o~ ~o,~a
'ssalun ~o 1~,~~snpu, ~o .6u,~n~oe~nuem 'la~oq 'ao,~~o s, ~uamdolaAap
aq~ ~o asn pa~~,~ed led,ou,~d aq~ ssalun 'apo;) uo,~exe~ pue enuaAaH
aq~ ~o ~ UO,S,A,a ~o (OO~L uo,~oas q~,M .6u,ouammoo) SOl ~~ed o~
~uens~nd xe~ asn ~o seles a~e~auao 'paaolaAap uaqM oll,M ~eq~ pue
asn ueq~n ~o~ paaolaAap Alsno,Aa~a uaaq ~ou seq qO,qM e~om ~o se~oe
aA,~ ~o puel ~o lao~ea e uo s, ~o eq 11,M ~eq~ ~uemaolaAap ... (1) (q)
. . .
:04 aouE481sse 4~a~lP ~o m~o~ hue aplAo~a
~ou lleqs Aouao~ ue 'A~~ed s,q~ ~o uo,s,Ao~d ~aq~o Aue ~o 'SvvEE
pue 'EEvEE 'OEvEE '16EEE suo,~oas ~o suo,s,Ao~d aq~ .6u,pue~sq~,M~ON"
35. There is currently a live dispute between Petitioners and
Respondents, in that Petitioners claim that the Agency's subsidy of the
Wal-Mart project violates the Health and Safety Code, while Respondents
and real parties in interest contend the subsidy is lawful.
WHEREFORE, Petitioners pray:
1. For a temporary restraining order and/or preliminary injunction
during the pendency of this action barring Respondents-Defendants from
providing any direct assistance towards a development on the subj ect
properties of a store selling taxable items, absent the recipient (s)
providing sufficient security to reimburse such assistance if it is
subsequently found unlawful.
3. For a judicial declaration that Respondents' financial
assistance to a development at this site of a store selling taxable items
is void, invalid and unenforceable as violative of Health & Safety Code
533426.5.
4. For a writ of mandate and/or permanent injunction compelling
Respondents not to provide any financial assistance to any development
of this land of a store selling taxable item.
5. For Petitioners' reasonable attorneys' fees, pursuant to Cal.
Code Civ. Pro. 51021.5.
6. For costs of suit herein;
/ / /
/ / /
/ / /
7. For such other and further relief as the Court deems just and
proper.
Dated: March 27, 1995
DAVIS, COWELL & BOWE
By: Andrew J. Kahn #129776
Marjorie M. Alvord #135868
Attorneys for Petitioners-Plaintiffs
178
6LI
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I
confirming its ruling on October 20, 1995 that:
1. A peremptory writ of mandate shall issue to prevent Respondents
from financially assisting Real Party in Interest Wal-Mart. Such
assistance is prohibited by California Health and Safety Code section
333426.5(b) (1). This statute is applicable and no exemption applies.
2. Petitioners are taxpayers with standing to bring this action.
3. Petitioners did not personally need to exhaust any available
administrative remedies because there were no administrative procedures
in place to address claims of illegal subsidy under H & S 333426.5.
There is nothing requiring findings on any subj ect in the statutes
concerning Disposition and Development Agreements (H & S 334433), let
alone findi~gs on whether the Disposition and Development Agreement is
extending direct assistance to a retail development on land not
previously developed for urban use. Since there was no administrative
procedure to address claims of illegal subsidy under H & S 33426.5, there
was no exhaustion requirement.
4. Even if there were administrative procedures in place to
address claims of illegal subsidy under H & S 33426.5, Petitioners could
rely on the efforts of William McMahon (McMahon) before the Agency since
a public interest claim was involved. Friends of Mammoth v. Board
S~Dervisors County of Mono (1972) 8 Ca1.3d 247.
5. The sixty (60) day statute of limitations in California Cod of
Civil Procedure section 860 et sea was also equitably tolled as McMahon,
a member of the public, pursued a remedy in front of the City Council by
arguing the whole project should be denied for failure to comply with
CEQA concerns.
6. Even if no equitable tolling exists based on the efforts before
the City Council, Respondents are estopped from arguing the statute of
limitations in light of the letter from the Chula Vista City Attorney to
Petitioners' counsel dated September 7, 1994. Estoppel requires
knowledge of the facts by the party to be estopped, intent his conduct
be acted upon, or so act that the party asserting the estoppel has a
right to believe it was so intended. The other party must be ignorant
of the true facts, and must rely on the conduct to his detriment. Strona
v. City of Santa Cruz (1975) 15 Cal.3d 720, 725. The letter reasonably
implies Petitioners would not be precluded by CCP 863 while the City
Council considered the CEQA issues prior to authorizing the whole
project.
7. The Semi-Exclusive Negotiating and Covenants Agreement (SENA)
between Respondents and Real Party in Interest did not "grandfather" this
project for purposes of H & S 33426.5 (b) (1). The SENA did not grant the
City an interest in these parcels and it did not require their
180
I8T
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'asn ueq~n ~o~ padolaAap Alsno,Aa~d ~ou sa~oe (S) aA,~ ~aAO
lao~ed e o~ 0.6 Al~ado~dm, PlnoM aoue~s,sse le,oueu,~ aq~ .~uamdolaAap
Submitted By:
Dated:
DAVIS, COWELL & BOWE
By
Andrew Kahn, Attorney for
Petitioners
APPROVED AS TO FORM AND CONFORMITY WITH COURT'S RULING,
Dated:
BRUCE M. BOOGAARD
Attorney for Redevelopment Agency
of the City of Chula Vista and
City Council of the City of Chula
Vista
Dated:
GRESHAM, VARNER, SAVAGE, NOLAN &
TILDEN
By:
John
Mart
Town
C. Nolan, Attorneys for Wal-
Stores, Inc.; Chula Vista
Center Associates, L.P.
182
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particularly, Southern California. These decisions have been arrived at through careful planning and
analysis. Through their analysis, real estate and construction costs have been a major consideration. as well
as the demographic planning.
In a sense, professionals on the staffs of these mega-retail discount chains have been doing their jobs
well; while City Council personnel, RDA officials and other public sector personnel have not been able to
cope with the ever increasing sophisticated challenges of public and private finance. As a result: the
expected job creation often fails to materialize; sales taxes are lost to schools; traffic congestion, pollution
and other environmental problems occur; and projects get renewed with final termination many years later
than visualized in the original projects. The Bergeson Hearings of ] 989 have not been followed up with
conscientiousness by public officials and RDA personnel.
What About Meeting the Needs of Already Established Stores?
In February ]995, incentives offered by Chula Vista, California to Wal-Mart were challenged by an
important competitor -- Target. The San Diego Union story stated: "'Target Stores say this City (Chula
Vista) is offering big incentives to lure its competitor, Wal-Mart, to town while overlooking the needs here
of Target' s two established stores. Some ofthe incentives could hurt Target's store on Fourth Avenue which
stands to lose business by having Wal-Mart open next door,' Mark Johnson, a Target administrator stated
to City officials."'"
Community Development Director, Chris Salomone responded by saying:
~
"Target has a point. If the roles were reversed and Target were coming to town. we would
help them. Chula Vista is eager to attract Wal-Mart as a source of sales and property taxes
while Target, as an established business, already pays such taxes and, therefore. gets less
a!lention from the Cltv. It is not f;:tir and thp.re.'", no pre.tense that it's fair," Salomone said.
"We're all in the competitive mode to generate business."19
However, as pointed out previously, new business is not "generated," a shift in retail dollars merely
occurs from the small "Main Street" retailers in many communities to a single "Big Box" mega-store in one
"lucky" community. ]n fact, Mark Johnson, of Target, also stated that 25-30% of Target's business would
be ]OSt.2O
According to the articles, the development package was to have included an almost $2.0 million
dollar give away in sales tax rebates that could last for fifteen years, to simply build a bridge connecting
Wal-Mart with Broadway."
Previously discussed in this chapter was the fact that Chula Vista was being sued because the public
"Ray Huard, "Wal-Mart incentives criticized by Target," The San Diego Union-Tribune, 23 February
1995, p. 8\
"Ibid.
2Olbid.
" Bozek et. at (note] 7).
184
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based on the subsidy package, Disney would not have paid a single dime in salary to its employees for 10
years; at the $3,700 level, Disney would have been freed of labor cost for approximately 16 years.
The article continued, "Virginia taxpayers were actually looking at a much bigger subsidy package
for Disney. There would have been massive 'hidden costs' of a poverty level work force, including
Medicaid, unemployment compensation, food stamps and earned income tax credit."'"
In the Disney example, in retrospect, if the employment created were truly full-time and paid
$30,000 per year with benefits, a salient economic argument could have been made for strong subsidies. The
economic dynamism for Disney, community and employees would have existed and been beneficial in a
myriad of applications. However, subsidies for low paying, high turnover employees are a losing proposition
and the taxpayers realized it. The billions of dollars given away to financially sound, healthy corporations
in terms of subsidies, both nationally and state by state are staggering. The comments by respondents in
Chapter IV from businesses in Illinois and New York support the California view.
Small business respondents resist the use of state and federal funds to remove traffic from the
traditional downtown area and to subsidize the "Big Boxes" on the interstate highways. Relatively few
taxpayers know they are subsidizing some of the wealthiest corporations in America, but the competitive
small retailer is very well informed about these inequities.
The Role of Redevelopment Law in "Box Store" EXDansion
Commercial development has received millions of dollars in taxpayer subsidies from redevelopment
agencies in California and in such states as Illinois, New York and in some instances in Pennsylvania.
Typically these redevelopment agencies are set up by an individual city and influenced by members of its
City Council. While intended to cure urban "blight," these agencies have often been set up in growing areas
- hence the subsidies offered may not have been necessary to attract business to locate there. Moreover,
these agencies often have simply attracted businesses which by their nature strip clients and customers from
other businesses nearby, such as retail stores and hotels.
These subsidies are generally obtained by means of "tax-increment" financing n meaning that the
agency is allowed to step in and siphon off the taxes from an area which heretofore would have been paid
to the City, County, School District and State. This gives the agency the funds to buy land and then sell or
rent it at a discount to developers and end-users. To illustrate the concerns about "corporate welfare," the
following case discussion is set forth.
RelJus v. Cifv of Baldwin Park. California (1977)27
A major legal precedent for instructing Redevelopment Agencies that they should stay away trom
"commercialism" and concentrate on eliminating "urban blight" was the case of Ref!us Y. City of Baldwin
Park California in 1977. Kmart was involved in this case.
"Ibid.
"Ref!us Y. CiIV of Baldwin Park, (1977) 70 California Appellate, 3d 968, 982, 83.
186
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strategy assumes the absence of effective counter-measurers by rival communities targeted
for displacement."'"
In summary, the author concludes that there is little in the redevelopment law to stop agencies from
currently abusing their powers. First, as a practical matter, there appears to be no one to enforce these
California laws. The tax burden these agencies (RDNs) redistribute to other taxpayers does not hit anyone
taxpayer hard enough to justify him or her spending tens of thousands on litigation to challenge the subsidy.
Apparently, state administrative agencies fail to monitor what the local redevelopment agencies are doing.
City attorneys are not aggressive in telling the city council which employs them that they may be acting
either unlawfully or immorally in grabbing added revenues.
Second, the agencies succeeded in convincing the California Legislature to impose a short statute
of limitations (60 days) on many redevelopment law claims by citizens -- meaning that by the time most
citizens learned about what the agency was up to and hired counsel competent to deal with the matter, it was
too late.
Third, the standards governing these agencies have historically been loose. Courts generally have
applied their usual rules of complete deference to "legislative" decisions and extreme deference to
"administrative" decisions.
Comments from Illinois. New York and Pennsylvania
Previous chapters indicated both quantitative and narrative comments from Illinois, New York State
and Pennsylvania as well as California. California has been treated in great detail and the subsidy program
there with its apparent abuse became quite clear. A word about other states in the survey follows:
Illinois
Chapter IV described many critical comments from small retailers about Illinois' subsidy program
for the major chains. Apparently this resentment has reached the governor's office and the following
statement by Jim Edgar, Governor of Illinois in 1993, admits damage to resident retailers by favoring the
incoming "giants." In a State Government News article entitled, "Are Economic Development Incentives
Smart?"20 he summarizes his concern about oversupport of the "giants" and undersupport of the small
businesses in Illinois:
"State leaders have no greater charge than to promote and preserve the economic security
of those they serve and the generations that will follow; yet, I am convinced that we can
meet that responsibility more responsibly and more effectively by calling a truce to the
bidding wars that became the centerpiece of economic development efforts in the 1980's."
"The battles have been intense and well-publicized. State after state has tried to outdo its
competitors in wooing new commerce by fashioning glittery giveaways that feature tax
28Ibid.
"Jim Edgar, "Are Economic Development Incentives Smart?," State Government News. 14 March 1993. p.
14.
188
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sUUIJlllIod lU'll panilJu all "~uI 'lUaUIUJaAOD 'lal~ooq 8861 SI'l uI ,:SlSOJ uappl'l" asopslp Ol palUUM pUU
Al!llqulUnOJ~U Ap!sqns JOj JapUsnJJ U SUM 'alUlS ~JO A MaNjo JallOJldwoJ JaulJoj 'lmila~ PJUMp3
'u!uilu aJUO pasops!p
'lUaWlUaSaJ S!OU!1I1 puu U!UJOj!luJ a'll SUM 1I 'SJalmlaJ lIuWS lUap!SaJ Ol padsaJ 'lllM WUJiloJd Aplsqns
alUlS ~JOA MaN a'lUo ssauJmjun a'lUo IU~!lIJ~ almb aJaM AI JaldmlJ U! SluaWUlm luapuodsaJ alll
SlnawdolaA3{J '1~o ^ MaN
,:aA!l!ladwo~ Alilu!suaJJu! ilu!UloJaq SllU'll AUlOUOJa Iuqolil U UI aAIJ'll
puu aA!AJnS alUls mo UI sassaUlsnq dla'l 11'M lU'll s~lsuq a'll ilUlplAOJd PJUMOl puu saA!lua~lII
~ljl~ads-Auudwo~ 'lllM sassau!snq Mau ilulJnllllOJj AUM~ s!suqdwa a'll ilulljllls aJU aM."
,:slJOjja lUawdolaAap J!wouo~a Jno palOOlaJ aAulI aM 'J~A~MOH
'a~UJ SUlJU Juapnu a'll WOJj AIIUJalUI!un UMUJPlll!M aAu'l Ol salulS pal!Un a'll JOj aq PlnoM
I! su J!ls!luaJun su lsnf aq PlnoM os op ol 'AlluJalullUn iluliluiluaslP lOU aJU aM 'slOllllll U["
,:u!uil UlJal-lJOlls U 1lI0Jj anJJJ~ UUJ IUln 'l!paD IUJIIllOd UO!lUaW
OllOU 'UO!lU~Ij!lUJillUUlSU! aql jO JOAUj U! pa'lJllp UaAa sdulpad pUU pamolap aJU wJal iluol
a'll U! Al!l!qmA J!wouoJa s,aluls U aJuuqua Ol as!woJd lU'll spafoJd puu sa!J!lod 'JaAoaJow
'AUMU sal!UI Maj U alu~ol Ol sa!P!sqns aUlospuu'l aAla~aJ sJOl!ladUlo~ su -- pallJadwl
'laA aSJOM puu -- papalilau uaaq aAU'l sapuJap JOj Sa~IAJaS lUaWUJaAOil IUllA lJoddns
padla'l aAu'l puu AUlOUOJa s,aluls U paJalsloq aAmlluql sassau!sns i,lSOJ lU'lM lU lns"
"Jjou!ds puu paJlp qloq 'sqor
Mau jO UO!lUaJ~ Ol -- sa!JOlS ssaJ~ns OllU!od uu~ sn jO IIV 'sluawamllu Ja'110 puu s>fuaJq
an evaluation of the expenditure's effectiveness, and whether or not the program has caused jobs to shift
from one part of the state to another, resulting in dislocation,
The Senate Bill in New York which began to list requirements for the behavior of subsidy recipients
follows:
New York Senate Assemblv Bill A. 6068-A. 1993-1994 Session"
"~163-B Recoupment of Financial Incentives to Certain Businesses,"
"J, , , , Each contract, agreement or understanding by which a person, firm, partnership,
company, association or corporation within the State receives an award, grant, loan, tax
abatement or other business incentive from the state, any of its political subdivisions, or any
department, bureau, board, commission, authority, or other agency or instrumentality of the
State or its political subdivisions. , , shall contain the following provisions:"
"(a) A stated period of time within which the terms of the contract, agreement or
understanding are to be fully executed and completed,"
"(b) A stated purpose and the amount of the award, grant, loan, tax abatement or other
business incentive."
"(c) Where applicable, the number of persons to be trained pursuant to the terms of the
contract, agreement or understanding,"
"(d) Where applicable, the number of jobs to be created or retained pursuant to the terms
of the contract, agreement or understanding,"
"(e) Where applicable, the extent of the operations or facilities to be developed pursuant
to the terms of the contract, agreement or understanding."
"(f) Notice to the recipient that the full amount of the award, grant, loan, tax abatement or
other business incentive awarded shall be payable with interest, upon a finding that the
recipient has not executed or completed the stated purpose of the project within the stated
time period,"
The New York Econom ic Development Zone Law passed in 1990 further provides restrictions on
the behavior of recipients,
"Section 959; Responsibilities of the Commissioner."J2
"The Commissioner shall:"
"(I)(a) ." promulgate regulations governing (I) criteria of eligibility for economic
"Ibid., pp, 64-65.
"New York Economic Develooment Zone Law, 1990 c, 264, Section 959.
190
161
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Alluilal aq Ilu'ls as!UloJd Lpns AUY 'SUO!lUJOI alUlS-U! Ja'110 UlOJj sqof jO SJajSUUJl
AlaJaw JO sqof Mau AlnJl aJU sqor 'l~ns lOU JO Ja'llg'lM pUU ~pglUaJ~ aq Ol pas!woJd sqor
AUU jO sgilll'" pUU J~qUlnu '~JnlllU 'adAl a'll :paJnpoJd spnpOJd a'll jO gJnlllU pUll adAl ~l[l
~sa!l!I!~UjjO aJnlUU puu gdAl g'll Ol ilu!lUlaJ apuUI Sgs!ulOJd Ol PIg'l aq II!M SlUUJ!lddy (Z)"
,:P!U IU!~UIlulj JOj pgau U gAOJd Ol paJmbgJ gJU SlUIl~!lddy (ll"
,,:spJUpUIllS ilU!MOIIOj
a'll Ol pgrqns aJU S~!l!Jo'llnu JO sa!~uailu luawdolaAap Sl! jO AlIU JO 'llluaMuoulUlOJ
a'll WOJj a~uUlS!SSU IU!Juuulj JOj ilUlAlddu aJU O'lM puu 'llluaMuowwoJ S!'ll U!'ll!M sa!l'l,~uj
luplSnpU! JO IUI~Jawwo~ puudxa JO pnJlSlIO~ Ol ilu!~gas SlIOllUJodJO~ puu SUlJIj 'suosJad"
,:PIU IU!~uuulj JOj sp1UpUUlS 'I UO!l~as"
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sluawalllqv Xlll, ll!nllAIASnuad
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a'll 'JaA!lgp Ol palmj AuudwOJ U j! puu 'sJaqwnu a'll illl!Aa!'l~U JOj alqulaulIl a'll Ajl~ads oSlu PlnoM Aa'll
'm~~o Ol aJaM SluawdolaMp IU~!SA'ld q~!'IM JO paU!~laJ JO pawaJ~ aq Ol aJaM sqof AUUW MOll 10 pallmJl
aq Ol aJaM aldoad AUUUI MO'l Aj!Jgds PlnoM SPUJlUOJ a'll 'wUJiloJd luallldolOAap alulS alilllls AJaM Aq
la[ SPUJlUO~ Ol ailuniluu[ ">f~UqMUp,, j~JJlS ppu oll'lilnos ,dl'S AlqUlassy glUUgS ~JOA MgN Il oSIY
"
paJJn~~o SU'l UO!lu~lj!lJa~ap 'l~ns lU'll a~unulj puu UOllUXUljO Jauo!ss!UlUlO~ a'll A]!lOll Ilu'ls
JgUO!SSIUlUlO~ a'll !J! '" :UO!lU~Ij!lJg~ap jO glUP aA!pajp alll aq Ilu'ls UO!lu~lj!lJaJ ilU!~OAaJ
JOj spunoJil ilu!ll1l!lSUOJ lUaAa lsa!1JUa a'll aq Ol paUIWJalap awp a'll (V) - . . ~IOJlUO~ Sl!
puoAaq aJgM 'l~I'lM 10 alud!J!lUU IOU Plnm ssau!snq 'lJns 'l~I'lM SUOll!PUO~ JO sa~UUlSWnJJ!~
~IUlOUO~g Ol anp lOU SUM aml!Uj 'l~ns lU'll 'JaAgMOlI ~pap!AoJd auoz luaUldolaAap
~!wouo~a a'll UI lUgWAOldwa jO ssol U IUaMJd JO luawAoldUla Mau alUaJ~ Ol palmj
su'l as!JdJalUa ssau!snq a'll (C) ~UOllu~lj!lJa~ JOj UO!lU~!lddu Sll U! paU!UlUO~ SUOIlUjuasgJdaJ
al(l 'll!M g~UUpJOJJU U! AIlUlluulsqns Al!JI~Uj Sl! gluJado JO glUlll'qu'laJ 'puudxa 'pnJlsuo~
Ol pal!Uj su'l as!JdJalUa ssau!snq a'll (Z) , . , lU'll ilu!pulj U uodn ' , , slljauaq JOj saS!JdJalUa
ssau!snq jO UO!lu~lj!lJa~ a'll a>foAaJ Ol su os . , , (A!) , . . lIO!lUuil!sgp auoz lugwdolaMp
i
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"(3) If an applicant has had operations within this Commonwealth within the past ten years,
it shall be required to prepare a preferential hiring list and offer new jobs to former
employees wishing to relocate and to assist financially in their relocation within a radius of
500 miles."
"(5)(ii) There shall be no discrimination in hiring based on previous union membership."
"(6) Wage rates and minimum job levels shall be negotiated in advance and shall be
enforced,."
As described earlier there are varying types of corporate welfare found in the sates under study. One
unique example took place in Philadelphia where mega-retail discount chains such as Home Depot, Sam's
Clubs and Wal-Mart wanted to open their "Big Box" stores on land abutting the Delaware River, to create
a "Power Center," An influential interstate government authority, the Delaware River Port Authority
(DRPA), with jurisdiction over bridges, piers, marine and related facilities was involved. This authority in
1993 was requested by real estate developers to consider financing the purchase of water front land for the
mega-retail discount chains to build upon, The land was to be purchased by the DRP A rezoned and sold for
development. The land in question is now occupied by Home Depot and Wal-Mart. The unique
characteristics of this form of corporate welfare is that the package was created by a port authority and not
a local municipality,
A New Civil War is Brewinl:
According to Greg LeRoy, author of No More Candv Store": "Whether or not the federal
government ought to practice industrial policy is a much-debated issue, Industrial policy critics often
characterize the debate as whether or not government can or should 'pick winners and losers'."
LeRoy states further:
"The fact is, however, the federal government's laissez-faire attitude towards the ruinous
civil war over jobs is actively contributing to the problem of capital mobility and thereby
producing lots of 'losers' ,"
"The biggest job subsidy programs such as Industrial Revenue Bonds (enabled under the
federal tax code) and Community Development Block Grants (Department of Housing and
Urban Development) and other Department of Commerce titles, have no anti-relocation
rules at all."
"Only two current federal job subsidy programs have anti-relocation regulations: the Job
Training Partnership Act (JTPA), (Department of Labor) and the Public Works title of the
Economic Development."
"In any case, states routinely evade the JTP A and EDA anti-relocation rules by simply
substituting state funds for the training and infrastructure purposes served by the federal
funds, "
"Gp. cit., LeRoy, p. 17.
192
r--.
.....
E61
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'aluuq Apoolq a'lHo (ssau!snq lIuWS paouldslp a'll) SWIPIA a'll puu
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lU'll suo!luJodJOJ :lJ!nbaJ lU'll sluawaaJilu ,~OUqMUp, palUaJ~ suq 'aldwuxa JOj 'lnO!p:lUuoJ"
'pUU'l jO lno Alalaldwoo ilu!uail
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:SJa>fuw Iuap luaJ a'lllou aJU uo saladwo~ aUOAJaAa lU'll s>fU:lJq XUl a'lllu'll 'Al!SJaA!Un UUU!PUllU SJlUjjU
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salUlS pUll sa!l!O Aq :lpllW SIU:lP SnO!JUA ilu!q!JOsap alo!lJu aUJ!.L lUaJaJ U U! apuw S! uO!lusnJou JUI!W!S Y ,:mM
I!A!O snou!nJ" U su AO~a'1 Aq paqiJosap Allnjl'lillJ Sl salUlS puu sall!unwwo~ iluowu UO!l!ladwoo SI'll
,:sa!p!sqns AUMUUnJ dOlS uuo slUaw'lsiund :llUlS aA!ss:lJililu snld salnJ IUJ:lP:lj pUOJq 'lOIJIS
AluO 'aJOjaJa'll 'aw!l a'llllu sdo'ls AUMUUnJ az!p!sqns pajp U! sa!plsqns IUJapaj lmp suuaw
:lwllilll:l'ls :llll snld uO!lulnilaJ alU!! 'JUM I!A!J sqof a'll ilu!uaqu puu ilu!p!u S! lUaWUJaAOil
sn a'll 'A:lUOW IUJapaj 'lllM Jaqlo 'loua lsumilu salUlS AUld Ol sa!uudwo~ ilUlMOllu AS"
,:sluuJilIUJapaj Iunuuu illq JOj lnq lSlxa AlluaJ lOU
Plnoo SWUJiloJd aluls palUlnilaJ-uou a'lljO AUUW puu 'alquailumjOJalul JO ,alq!ilunj, SI AauoUl
a'll 'SlUllJilIUJ:lpaj uodn AI'Allaq AlaJ slailpnq alUlS asnu~aq 'aUluil ,lIa'ls, U lIu S,l! lOS"
or municipalities and at the peril of the strength of the entire economy. It should be the
interest of the Congress to benefit the economic security of all the citizens of the United
States by working to provide the resources to expand the economy nationwide, Therefore,
Congress should ban the direct or indirect utilization offederal funds of any kind, including
subsidies; grants bonds or tax exempt financing that funds, in whole or in part. any special
tax, infrastructure improvement and/or financing incentive by any state or municipality to
lure existing jobs and businesses from one location to another."'"
"139, Small Business Relief Fund: Congress should legislate the creation of a Small
Business Relief Fund to economically assist small businesses that are displaced by the
establishment ofa big business in their localities where the big business will contribute an
annual fee for the fund,""
Interestingly neither of these recommendations were in the leading recommendations of the two
previous White House Conferences on Small Business in 1980 and 1986. This speaks to the growing
concern of small businesses about the impact of mega-retail discount chains and the 'corporate welfare' they
receive, Unfortunately, no action has been taken by the Administration or Congress on either
recommendation at this time.
Recommendations to Con~ress for Federal Legislation to Combat and Restrict "Big Box"
Abuses
The following recommendations, hopefully would restrict "Big Box" abuses by mega-retail discount
chains, developers and Redevelopment Authorities operating under existing state redevelopment laws, by
taking away state and local tax giveaways; and provide a vehicle for Congressional Hearings,
The idea is to attach strings to federal monies given states and localities: for example, such strings
are often attached to highway monies. This would make sense here because these "Big Box" stores create
additional burdens on federal highways, as they are often built in areas accessible only by federal highways,
The legislation would say that highway money would be reduced to any state which allowed these
stores to go up in anv of the following circumstances:
(1) if the development received state or local tax incentives;
(2) ifit was within x miles ofa federal highway;
(3) ifthe developer/retailer did not pay the government for the full social costs of building
such a store (not just for repairing highways more often, but also cleanup of air pollution)
(a study to determine those costs should be required); or
(4) if a required "small business impact report" showed existing small businesses would be
J'''Final 60 Recommendations From the 1995 White House Conference on Small Business," Foundation for
a New CenturY, (Washington: 1995), p. 21,
"Ibid" p, 25.
194
.61
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196
L61
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no health benefits.'
In the past, full time employees working for major corporations had health care benefits and pension
funds, by out sourcing, corporations free up these costs, thereby, improving earnings per share and stock
prices, A number of the mega-retail discount chains as well fail to provide the usual health and other fringe
benefit packages provided by the displaced "Main Street" retailers, The societal implications of America
with a large percentage of its workforce going part-time is unthinkable in its impact. Ultimately these costs
for family security will have to be faced by the general taxpaying public,
Wages
Ravi Batra, author of The Myth of Free Trade, stated that the watershed year for the American
standard ofliving was 1973, It was the year when real wages started its long decline, family poverty rates
increased and rising inequality between rich and poor materialized. Batra clearly stated that "economists
concede that GNP and per capita income are not ideal measures of national prosperity,'" The President's
Economic Report for 1992, for instance, makes the statement that growth in real GNP or GDP cannot assure
an increase in the level of living, This is especially true when applied to real wages, A truer measurement,
Mr. Batra states, is the weekly earnings paradigm which is applicable to production and non-supervisory
workers, who according to the United States Bureau of Labor Statistics, constitute 80% of all employees,
Therefore the GDP and per capita figures fall flat or distort the real picture, These statistics exclude
executives, managers and professionals such as lawyers, doctors, etc, According to Batra's calculations, real
wages increased by 15% between 1950-55; 7% between 1955-60; and only 6% between 1970-73.
Since 1973, real wages have fallen steadily, More importantly, this decline has impacted at least
80% of the work force even before increases in Social Security and taxes are calculated into the equation,
Thus take home pay is seriously impacted in an adverse way thus requiring families to have multiple wage
earners. During the period between 1975-1995, the inflation rate rose 183%, while blue collar and white
collar workers earnings across all private industry increased a mere 142%. Average salaries in 1995 were
$20,559 dollars. This average earnings unfortunately will buy $3,500 less than could have been purchased
in 1975, Real wages for most workers in America are falling rapidly.' The change in lesser buying power
is not bringing the Third World closer to our standard ofliving but in fact is reducing our standard of living
in the direction of Second and Third World levels. Extensive competition among underdeveloped countries
guarantees future cheap labor markets, Many of these Second and Third World nations disregard
constructive environmental regulations and utilize child and prison labor, as well as paying wages which can
be as low as $ 1.00 per day,
As the quality jobs continue to decline at such giants as Ford, General Motors, Chrysler and AT&T,
new jobs are being created by the tens of thousands by mega-retail discount chains. However, when you do
a comparative analysis on the employment picture (GM vs. Wal-Mart), the facts become obvious and
startling, In a three week series in The Philadelphia Inquirer on "The American Dream," which ran in
September 1996, a clear picture of the future of American jobs was presented. From 1978 to 1995, the big
'Lester C. Thurow, The Future ofCaoitalism, (New York: William Morrow and Company, 1996), pp, 28-
29.
'Ravi Batra, Mvth of Free Trade, (New York: Simon & Schuster, 1993), pp. 24 - 32.
'Ibid" pp. 24 - 32, 51.
198
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(very rich) class doubled in size from 4% to 8%. Moreover, the top] % of households controlled over 1/3
of the nation's net worth, and the next 9% holds 36,8%, Summarizing these statistics, 10% of the population
controls over two-thirds of the wealth, while 90% holds the remaining one-third.'
The following quotation from a recent article in The Wall Street Journal, "Retail's Shrinking
Middle," confirms through consumer behavior what the Inquirer stated earlier in its series: "Traditionally,
the 'middle' was the power position in America business, They perfected the 'one-size fits all' business
model, offering moderate service, prices and information to customers who had fairly similar demands.'"
The major theme of the article points out that over the past 10 years consumers are moving to both extremes,
Businesses such as Price Club, Wal-Mart, Sam's, Dell Computer and discount brokerage firms have
flourished, satisfying consumers looking for no frills at low cost. At the other extreme, companies like Saks'
5th Avenue and Nordstroms thrive satisfying the affluent consumers for whom cost is not an issue. It is the
middle ofthe road corporations like J, C. Penneys, Broadway (now bankrupt), Sears, and Montgomery Ward
which have stagnated. The success of the mega-retail discount chains, such as is a direct manifestation of
the "shrinking middle,"
Thurow states in his book, The Future of Capitalism, that "When the distribution of income is
altered, who sells what to whom quickly adjusts, Marketing and production shift to focus on the groups that
have been gaining purchasing power,'" The others simply lose market share and eventually fade away. In
Mr. Thurow's opinion, the shifts have been occurring due to fewer numbers of customers with middle class
incomes, It would follow that the success ofthe mega-retail discount chains might possibly contribute to
the destruction of the middle class.
In Thurow's example, stores like Sears, J,c. Penney's et. al. were locked into a fixed formula
concentrating on middle class buyers; thus they exhibited an inability to adapt either upward or downward
which created economic problems and hardship for those companies, Thurow hypothesized that in the future
such mega-retail discount chains as Target, Kmart and Wal-Mart might have problems because their market
is the bottom 60% offamilies. With real earnings now falling for these families, their purchasing power will
also decline,'
Trade Policy
In the Inquirer series on "The American Dream," it was noted that from 1980- J 995 the United States
has compiled a perfect record - 16 straight deficits in 16 years, It is without equal, , , the worst performance
in the world, During the same period Germany achieved a $658 billion dollar surplus while Japan's surplus
exceeded $1 trillion dollars, Reiterating an earlier figure, the American trade balance with Mexico prior to
NAFT A acceptance was a surplus of $ 1,7 billion, Since the agreement incorporating lower tariffs with less
restrictions, the surplus has turned red to the tune of$15.4 billion, China's trade deficit was a mere $1.6
'Ibid,
'David 1. Morrison, "Retail's Shrinking Middle," The Wall Street Journal, 21 October 1996, p. A22.
'Op, cit., Thurow, p. 29,
'Ibid" p, 40,
200
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century, Japan, Taiwan, China, Indoncsia, Singapore, Korea, and Bangladesh among others, The one
significant economic commonality, with the exception of Japan, is cheap labor with few political and
economic restric\ions. How does the American worker compete? In the last twenty years attributable to
Amcrican tradc policy, millions of manufacturing jobs havc vanishcd, In 1970 along the Mexican border
there were sixty-five employers (Maguiladoras) with 22,000 workers; in 1991 more than 1,700 employers
hired over 500,000 workers. The incorporation ofNAFT A in 1994 was supposed to produce new jobs and
to be a gatcway to the future with the vehicle being free trade,ll)
An October 1996 article in Us. News and World Report reported upon earlier showed that the trade
balance with Mexico before NAFTA was a positive $1.7 billion and afterNAFTA, a negative $15.4 billion
with a negative trade balance continuing at one billion per month, Imports from Mexico before NAFTA
were $40 billion; after the agreement $61.7 billion." While the United States Trade Office estimates that
NAFT A has cost only 44,000 jobs, the number appears to be ridiculously low based on the writer's own
experiences with reports from American corporations going to Mexico after downsizing in the United States.
According to the article, the average starting hourly wage in Mexico is 69t compared to an average hourly
wage in similar plants in the United States of$15 or even the minimum wage of$4.35.
Two contradictory schools of thought have developed in America over the last 25 years, One school
of thought continues to argue for free trade, globalization, NAFTA, GATT and the World Trade
Organization, while the opposing school of thought cites a decline in real wages, downsizing by corporations,
greed, elimination of manufacturing jobs and the eventual extinction of the middle class, With a
disappearing middle class there will be a widening gap between two separate distinctive societies (the very
rich and the very poor), What complicates the debate is a political process that has been completely
polarized due to inherent differences in political philosophy,
In today' s pol itical arena, ideas are no longer analyzed but destroyed, along with its messenger.
These politicians and statesmen who warned of the dangers ofNAFT A, GAIT and the loss of American jobs
have been accused of backward thinking and put in the historical position of advocating a Hawley-Smoot
manifest picture going back to the Great Depression, Republicans and Democrats alike often respond by
killing the message with the messenger.
The J 996 presidential campaign never again revisited or brought to light the argument of how
contemporary trade policies affect the American worker. Furthermore, with political contributions coming
from abroad by the millions, both parties seem to view any discourse on the subject pure sophistry.
Concessions
The nation is not only losing jobs because of "free trade policies" which certainly do not result in
a level playing field but also lose the prospective economic dividends which come from innovation and
entrepreneurship, Helene Cooper, a staff reporter for The Wall Street Journal stated that: "for the first time
U,S. defense related subcontractors can quantify how much money they are losing when foreign governments
demand trade concessions and technology transfers in exchange for contracts." The United States
Department of Commerce reported: "U.S, defense contractors have entered into 49 offset transactions valued
lODan McGraw, "Happily Ever NAFTA," U. S. News & World Report, 24 October 1996, pp. 46 - 49.
"Ibid,
202
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economic spin masters who attempt to distort the issues and destroy the messenger. Moreover, if in fact free
trade is diminishing the middle class and jobs being created are just above the poverty line, what are the
societal implications? Hypothetically, what if American corporations become fond of exploiting cheap labor
worldwide? Would the next step be domestically? Many believe this is already happening and to some
degree statistical data agrees, The corporate response will be rather predictable, , , it will go something like
this: "As a corporation we can no longer compete successfully in a global economy when domestic wages
are 30-60% an hour higher." The Free Trade Economist (a powerful special interest group) and companies
will contrive the argument by postulating and clearly demonstrating how through free trade the global
standard of living is rising, in fact they are (as Adam Smith "Invisible Hand" states) actually humanitarian
in their efforts.
American Corporations are entitled to make billions in profits for shareholders, but if capital is going
overseas for the building of new facilities, and jobs are being created for foreign workers, while the
American middle is shrinking, we have a serious national problem, Up to this time there is a scarcity of
reliable positive data showing that America will gain in jobs by NAFT A and GATT, Free trade as it exists
is of the sort that leaves American producers operating on an unlevel playing field.
What are the real ramifications of free trade and what sector of society is truly the winner? What is
the future of small business when multi nationals have all the advantages economically? This is not a contest
between political philosophies, but a pragmatic decision about the future, Let's NOT continue to posture,
spin, and destroy; for once let's examine the issues. Economists are constantly discredited for theories that
crumbled in the face of reality. To go down a path led by dogmatism with individuals that have no
accountability for their decisions is a prescription for disaster,
204
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How Could This Hannen?
Suppose a Kmart or a Target was an anchor store opening in the mall 5- I 0 years before. The square
footage of the store ranged from 30,000 to 60,000 feet. Suppose several years later a Supercenter, such as
Wal-Mart, with perhaps 200,000 plus square feet were to be constructed one-half mile away, soon, the auto
traffic in the older mall lessened. The Target or Kmart with only 45,000 sq. feet closed and surrendered.
The anchor store then remained vacant and the decline of the mall accelerated, Throughout the United
States, formerly prosperous malls or strip centers have given up. The areas have become desolate and look
abandoned and the customers depart for the newest supercenters and their parking areas,
The Potential Negative Impact Considering the Multiplier Effect on a Regional Economy
Previously mentioned and described in this study is the new phenomena of the "Power Center"
which has been gaining momentum in the mid 1990's. The Power Centers have been described as "Big Box"
farms where there are a half-dozen or more mega-stores and smaller superstores set around vast (upwards
of 1200 spaces) parking lots with total retailing space nearing one-half million square feet.
The effect of the centers multiplies that of the single mega- or super-store, These stores and centers
draw customers from a radius of 10- to 15- miles in major metropolitan areas and even larger areas in rural
ones, By increasing their drawing range, these mega-retail discount chains are also increasing their negative
impact on "Main Street" retailers as well as the smaller retail discount chains that during the past year have
been plummeting into bankruptcy or dissolution,
In California, we have begun to see another approach, Wal-Mart, who has received opposition in
some communities to building new structures has begun to renovate empty mall department stores or attach
their new buildings to an existing mall. They are easily able to accomplish this since the community
infrastructure is already in place - parking, roadways, water, and sewers, Their economic argument is that
they will enhance the traffic to the mall; hence increasing overall business and the local GDP.
But how is this constructive result possible when Wal-Mart provides direct competition to at least
50% ofthe small businesses already in the mall. Look at the example of the Huntington Beach mall (stores
listed below in Table 15) where there are 31 relatively small stores in addition to three larger ones (anchors).
Table 15
Huntington Beach Mall
Spencer Gifts
Wet Seal
Music1and
Great Earth
Lechters
Sunglass Hut
GNC
Mon Ami
Claires
See's Candy
Burlington Coat Factory
Hudson Goodman Jewelers
Diamond Jewelers
Learhers Cloth
Kinney Shoes
KayBee Toys
Walden Books
GTE - Phones
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There will be a net effect on regional GDP from the competition presented by this mega-retail
discount chain and it believed that it will be negative for the reasons presented above, The "new" jobs
created by the mega-retail discount chain will not compensate for the jobs lost from the traditional retailers
who will close from direct competition, Added to this is the effect on the non-competitive mall stores and
the surrounding restaurants and businesses to the maiL
Superstore Sprawl and Its Potential Harm
The 1994 publication of the National Trust for Historic Preservation, entitled How Superstore Sprawl
Can Harm Communities....., (and what citizens can do about it) describes the fact that rosy promises of
increased revenues for cities, more jobs, affordable prices and good products don't always arrive as
promised, Were it true, there would not be the hundreds of citizen groups throughout the nation attempting
to hang on to the "land we love,"
Gene Davidson, a resident of Berea, Ohio wrote the following in a letter to the National Trust for
Historic Preservation:
"I believe that the 'land that we love' is literally vanishing before our eyes, The present new
construction rate of Wal-Mart, Super Kmarts, Meijers, and others of 'superstore' breed
guarantees others an inevitable destruction of much of what we hold dear. Add to the new
construction starts of the superstores all of the franchise operations, such as Sub-Way,
McDonalds, Taco Bell, etc" and you can project ten years down the road an intolerable
situation, This country would eventually be virtually unrecognizable from what we knew
as the United States just one generation ago,'"
While the sixties and seventies were replete with new regional shopping malls in the suburbs, the
eighties and nineties ushered in the "Big Boxes" ofWal-Mart and Kmart, Home Depot and other sprawling
discount stores located near the intersections of major highways,
The new discount stores were in many cases funded by redevelopment funds that were denied to
"Main Street" merchants struggling to survive the exodus from downtown. The economic vitality of the
downtown oozed out as the highway interchanges were the place to go.
As the downtown businesses closed, there was a desecration of civic and cultural life affecting
families, education, crime and violence, The new mega-store required municipal and state investments in
roads, water and sewer lines, police and fire protection and other governmental services,
As one travels through the towns and cities of America, it is easy to note negative change with
abandoned buildings, unsightly parks, declining majesty of public buildings and general malaise, Interviews
with surviving owners of retail stores disclose a hopelessness, They say "the traffic is gone"; the "future is
bleak" n_ "I may have to close,"
In the four states the author visited, he saw numerous instances of community groups fighting
'Constance E, Beaumont, How Superstore Sorawl Can Harm Communities...., with a Preface by Richard
Mae (Washington: National Trust for Historic Preservation, 1994), pp. I-iii.
208
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A 1994 study co-authored by David T, Kresge of Dun and Bradstreet Information Services and retail
consultant Gary A, Wright of Denver stated:
"Despite predictions that small retailers are doomed, specialty stores are thriving in some
important niches, says a new study of retailing, In those retail sectors where personal
service, location or expertise are valued such as the women's fashion, accessories and gifts,
smaller retailers are doing very well, said co-authors Kresge and Wright.'"
The study discounts predictions that at least half of all retailers in business in 1990 will be gone by
2000,
In the same Philadelphia Inquirer article the opposite position was taken by a Wall Street investment
expert following the retail chain picture:
"Senior retail analyst Walter Loeb of Loeb and Associates says the larger firms such as
Wal-Mart are gaining increasing sway, with enormous control over pricing, the competitive
environment and suppliers,"
"When Wal-Mart is growing at 18-20 percent a year with the (economy) growing only about
3 percent, somebody is giving up business," he added,'"
The study discussed in the article recommended personalized service as means by which small
retailers could survive, On the other hand, the authors warned that powerful chains such as Home Depot
were also offering personalized service,
The future of the small retailer is growing desperate, despite recommendations about personalized
service, unique product differentiation, and a move from the destroyed "Main Street" of America to more
appropriate locations, How can those small retailers, with less than a million in sales, finance a lease
termination and the expense of a move to a more desirable location?
The proof ofthe pudding that the major discounters will sooner or later eliminate most of the small
retailers is the fact that even the medium size firms are in trouble.
In their study, Kresge and Wright state that medium size firms with sales from $20 to $50 million
annually could suffer the most (in the next century,) "They neither have the buying power of large firms nor
the personalized approach ofthe small firms,'"
The bankruptcy of Bradlees and Caldor are perfect illustrations of which way the wind is blowing,
Someday a Wal-Mart may possibly have the entire retail market. As Mr. Loeb says, "if Wal-Mart grows at
20% a year and the economy only at 3%, somebody's giving up business."
Ifwe examine the "Main Street" malls and the strip centers we can note the devastation of former
'Jennifer Loven, "Kmart to close I I 0 stores, cut 6,000 workers," The Philadelphia Inquirer, 9 September
1994, p, Cl.
'Ibid,
'Ibid,
210
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such forward buying, The big discount deals would be cut sharply under ECR. And even if ECR eventually
brings Wal-Mart-Iike efficiency, nobody wants to give up today's profits first. That's a major reason why
progress toward this much needed streamlining has been slow,
Yes, the middleman is an endangered species because of the EDI hookups between manufacturers
and large discounters, But here again, the small retailers may become a thing ofthe past, lacking funds and
information to survive.
Retailing in Transition
tI
In a study several years ago, the following forecast was provided: "By the end of this decade, more
than half of to day's retailers will be out of business." They explained: "there is too much retail space for
the market, too much "copy cat" sameness among retailers, and far too much leverage on the books, These
conditions leave no room for marginal performers," They further predicted: "that by the end of the century,
some lines of trade will virtually be 'owned' by only four or five major players."" It now appears that this
prediction made in ] 990, is being corroborated by the retailing change of power in the mid-nineties.
In the retail discount field such performers as Wal-Mart, Kmart and Home Depot. among other
discount chain leaders, have set the pace which ultimately will eliminate thousands of smaller retailers in
drug stores, family clothing, general merchandising, hardware and lumber stores.
According to studies by consultants, G,A, Wright, Inc. of Denver Colorado, there at first glance
"does appear to be evidence to support the contention that the retail industry is
'consolidating.' The largest firms are in fact controlling a larger and larger share of the
industry, Large retail firms (those with sales over $]00 million) increased their share of
industry employment from 35% in 1985 to 39% in 1989 and to 45% in ] 993,""
"In ]985, small firms (sales under $ I million) employed 2 I % more workers than the large
firms; but by ] 993 the small firms employed 22% fewer workers than the large firms.""
".....it does indeed appear that the (retail) industry is increasingly falling under the control
ofa relatively small number of very large firms,""
As an example of the domination of the large retail firms, The Wright report cited that employment
growth in retail women's clothing and apparel in large firms increased by 18,000 employees between ]989
and 1993, while small firms cut employment by 19,000 and medium size firms cut by ] 6,000 employees,
The only light at the end of the tunnel was shown by small retailers in women's apparel with concentration
"RetailinQ 2000, cited by Gary A. Wright and David T. Kresge, RetailinQ In Transition (G. A. Wright, Inc,
and Dun and Bradstreet Information Services: 1994), p. 1.
"Gary A, Wright and David T, Kresge, RetailinQ In Transition, (G, A, Wright, Inc, and Dun and Bradstreet
Information Services: 1994), pp. 25, 31.
"Ibid., pp, 25-26,
"Ibid., pp. 39-40,
212
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national retail discount chains by year 2000 and
employment.
beyond will have a major negative impact on retail
The Wright study examined the closure or termination rate of retailers during the nineties. They
provide great concern with the following:
"Ifthe company closure rate for the industry of2.9% per year for the first four years of the
90's were extrapolated to the year 2000, it would yield a closure rate of29% for the 10-year
period of the 90's, It is important to note that this is not 29% of the retail companies that
start the decade, since many of the closures are likely to be businesses that were start-ups
during the 90's,"
"The major group of companies with the greatest closure rate is apparel stores. The 90's
is experiencing a 5.4% per year closure rate in this group that compares to an 8,0% rate for
the 80's. Extrapolating the 5.4% rate to the year 2000 would yield a 54,0% closure rate for
the decade. Again, this is not 54% of those starting the decade,""
Not only are the small and medium sized retailers being hammered by the major retail discount
chains but the medium sized discount chains are falling by the wayside as attested to the bankruptcy
applications of Caldor and Bradlees, and now even the giant Kmart appears to be suffering. Charm ing
Shoppes with over 1400 retail stores is reported to be in real trouble, while Silo's has closed all stores,
In retailing, analysts say, discount is no longer synonymous with success, 'The days are gone when
a discounter could be unique or alone in any market," says Allan L, Pennington, a Chicago retail consultant
with McMillan/Doolittle. "It's become a difficult business to be in."
Analysts trace the trend to a redrawing of battle lines, Until recently, discounters of every stripe
sought to steal customers from full-price independent, mass merchants such as J,c. Penney Co. and
department stores such as R.H. Macy & Co.
But the expansion into nearly every market of the so-called Big Three -- Wal-Mart Stores, Inc"
Kmart Corp. and Dayton Hudson Corp's Target chain -- has pitted discounter agamst discounter in a
competition that favors size, Wal-Mart and Target, in, particular are thriving, 'The smaller chains are
getting caught in a battle between the Bigs." says Linda Kristiansen, a New York retail analyst with
Wertheim Schroder,"
The Role of the National Trust for Historic Preservation
The author has endeavored to assess the contributions of the mega-retail discount chains as well as
the negative implications of their unprecedented growth.
It's important at this time as the writer comes to the end of his study to once again review the role
"Ibid" pp. 36-37.
"Kevin Helliker, "Discount Chains are Squeezed by Competition," The Wall Street Journal, 13 April 1994,
sec. B, p. I.
214
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How big should it be? How much new retail space can the local economy absorb without
suffering fiscal and economic impacts created by a commercial glut? Can the store be
designed to help preserve the communities livability and attractiveness? How can the store
minimize negative environmental, cultural, scenic, fiscal and economic effects? Above all,
what is the long term impact of the decision?""
Supercenters and Comparative Labor Costs
Earlier in this study, Paine Webber was quoted as having a negative opinion of "one stop" shopping.
They apparently did not care for alternative advertising and promotion with an additional example from
Kmart's ads as "We've got juice, jumper cables and jeans" and "Shop here for carrots and car mats,"
Paine Webber may have mistakenly believed that only a small minority of Supercenter customers would
"shop both sides of the store,"
PaineWebber earlier suspected that Kmart would have financial and management problems which
have come to the fore prior to the completion of this study, As the writer indicated in Chapter II.
PaineWebber had stated: "Kmart's well-known corporate problems give it a negative image among
consumers as well as developers,"lO As of late 1995, Kmart's per share price on the New York Stock
Exchange appeared to be dropping sharply while Wal-Mart's securities prices appeared to be relatively
stable.
The Paine Webber study also reported that Kmart's decision to use third party food wholesalers saved
much needed capital, but put Super Kmart at a substantial disadvantage in fulfilling the Supercenters' low
price position ing,
Furthermore, this author indicated in Chapter II that he did not accept the premise that Wal-Mart
would have similar problems to Kmart's in executing the supercenter program. Wal-Mart's national
management and store management appears quite strong, Wal-Mart, unlike several major supermarket
chains, is unconstrained by corporate problems and appears to be going with 100% self-distribution.
Most supermarket chains self-procure and self-distribute, Apparently, when Kmart opened new
Super Kmarts, utilization of outside food wholesalers strained Kmart's staff resources in opening new
locations with the intense travel required as well as essential staff training requirements.
A major advantage for Wal-Mart's Supercenter, generally, is its lower labor costs as compared to
both the unionized and non-unionized supermarkets, Wal-Mart is presently non-union, Kroger. the
dominant supermarket chain, is unionized; nevertheless, it, unlike many supermarkets, continues to be
strongly managed, effective and highly profitable, Wal-Mart's low labor costs, high productivity and control
of its managerial and inventory processes have weakened not only Kmart, but many regional discount chains
/ well as supermarkets,
This writer believes, however. that Wal-Mart's capitalization and managerial expertise, plus its mass
purchasing, advertising and promotion budget will prove it to be a formidable rival for Kroger and other
"Ibid,
lOPaine Webber, Food RetailinQ Industry: SUDercenters are no biQ threat, May 1994, p. 7.
216
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at both ends of the spectrum from a 109,000 square foot center in Arkansas to a 220,000 square foot center
in Tennessee, A 136,000 square foot model has all the same departments as a larger Supercenter, but it is
laid out in a smaller box and has a more compressed variety, Wal-Mart officials told Supermarket News,
"the decision to grow with a smaller size prototype is a clear indication that Wal-Mart plans to expand
Supercenters into smaller towns of 10,000 to 12,000 people where there is less population density and less
competition,""
In the near future Wal-Mart will probably enter the food business in California and several other
states and what may be at stake will be the additional loss of many quality high paying jobs now found in
supennarkets, Wal-Mart's increasing assimilation into the food industry is apparently motivated by the drive
to increase total retail sales. According to company statements, total retail sales should increase some 30%
~to the synergies established at combination stores. Furthermore, it has been suggested that Wal-Mart
, ht use food as a loss leader in order to increase store traffic, There will be a positive transfer effect i'n
th ale of general merchandise by having more visitors to the store, particularly if the sales of food are in
the "loss leader" category, The impact that this will have on the food industry will parallel the effect it has
had on the traditional retail industry. The problems created for em 10 ees within the traditional fQQd
industty could be nothing short of catastrop IC, Supermarkets work on very thin margins, and their shrinking
market share resultmg trom the combmatlOn of cheap labor and low prices will have murderous impact on
the traditional food stores, large or small, The fallout could be compared to that of GM, Chrysler and Ford;
not in overall job loss, but in weekly earnings, while company paid health benefits and retirement plans now
prevalent in supermarkets might disappear. The shift in health benefits costs will go directly to the taxpayer
while desperate worker who can't get jobs and retirees WIthout pensIOn tunds may be adversely Impacted -
and may have to be taken care of by federal, local and state governments. With a Social Security system
already in jeopardy, increased drains will only shorten its lifespan, The elderly will certainly become more
dependent on government subsidies as the shrinking "middle" will be further demonstrated.
The Supercenter's impact on the food industry will not be transparent to the causal observer. The
entry of mega-retail discount chains like Wal-Mart, Kmart and Target into the food business is to increase
their retail sales possibly by as much as an estimated 30% - in the case of Wal-Mart. However, there will
be a further negative impact upon the local. state and federal economies as jobs go from full time to part-time
and as wages drop and fringe benefits disappear.
Effects on the Community
The Midwest Center for Labor Research(MCLR) studied the tax revenues now generated at existing
supermarkets in San Jose, California which might well be lost if three super stores (combination retail/food)
were to locate in the city. According to the MCLR:
"The presence of three such non-union super stores would take away work from
supermarket workers already employed throughout the city, The grocery sections of the
new super stores would employ the equivalent of three hundred sixty supermarket workers,
Their presence would result in a decline in the hours of work of existing supermarket
workers. (MCLR) examined three areas of impact: (1) The higher wages of existing
supermarket workers, almost all of whom are unionized, and the wages of other workers
whose jobs are supported by the 'multiplier effect,' which result in increased consumption
"Elliot Zweibach, "Wal-Mart's concentrated solution," Supermarket News, I April 1996, p. I.
218
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additional 33% answered "very negative," Thus 73% viewed their future in a most despondent, negative
manner.
The respondents generally mixed pessimism with facts, Fifty-eight percent of the respondents
visualized serious losses in employment were a major chain to move into the area selling similar products.
Forty percent of the respondents saw their retail venture losing 5% to 35% of their employees. Eighteen
percent visualized losing more than 50% of their employees, Only 4% saw a gain in employment. Thirty-
seven percent anticipated "no effect." The author believes that the "no effect" data stemmed from a lack of
hard data on the part of the respondents -- but in no way expressed optimism about the future,
The respondents were then asked to rate the negative or positive impact on sales volume by the
imminent competition of a mega-retail discount chain, Eighty percent of the respondents anticipated "sharp"
to "drastic" reductions in sales volume; while only 14% saw "no effect." Only 6% saw a rise by virtue of
a new competitive entry of a major retail discount chain,
Data appeared consistent as to the expected reduction in sales volume as well as serious estimates
of future profitability, Twenty-four percent of the respondents visualized profits dropping by more than
50%, In fact, 76% anticipated serious reductions in profitability as a result of the imminent competition of
the mega-retail discount chains. Only 8% saw an increase in profitability, with these estimates being mostly
conservative i,e., 10% or less. Sixteen percent saw "no effect."
Respondent retailers saw the reduction in the number of wholesalers, or those middlemen willing
to sell to small retailers, as affecting their business negatively. Over 50% saw the direct selling to mega-
retail discount chains by suppliers as being "negative" of "very negative." Kmart's and Wal-Mart's recent
ventures into the Super Kmarts and Supercenters' food and grocery departments are creating new
competition for the small grocer and the more traditional supermarket. Small retailers see these ventures
as further threatening the survival of countless small food retailers, Many of whom (lacking wholesale
resources) are now buying from Sam's Clubs or other clubs,
Small retailers anxious to survive do not have the relative financial ability to compete with the mega-
discount chains in advertising, promotion, public relations or radio and television, They rely on the small
business techniques replete with flyers, leaflets, brochures, using the yellow pages of the telephone book and
the local newspaper. This, despite the fact that many proponents for the mega-retail discount chain
movement believe that small retailers can survive by employing specialization, improved marketing,
utilization of information and computerized systems and other MBA driven techniques, The average "Main
Street" retailer in general fails to have these resources or capabilities,
Small retailers sell most of the products sold by Kmart, Wal-Mart, Target and many other major
chains. Each store, however, was limited with respect to national brands, inventory and product lines; one
might specialize in apparel; another in food; another in auto mechanics and supplies and so on,
In his 1993 study, Kenneth E, Stone, Professor of Economics at Iowa State University, stated that
"businesses that sell the same goods as Wal-Mart sells tend to experience some reduction in sales after Wal-
Mart opens,"" The study used sales tax data to document changes in trade area size in 32 Iowa towns with
populations between 5,000 and 300,000 over a five year period,
"Kenneth E. Stone, "Executive Summary - The Impact of Wal-Mart Stores on Other Business and
Strategies for Co-existing," Iowa State University, 1993.
220
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The State of Mind of the Small Retailer in America: His Fears and Concerns about Survival
As was indicated in Chapters 11 and Ill, there was approximately a 10% return of questionnaires
mailed to Pennsylvania, California, New York and Illinois. The research staff had categorized these
responses which provide comments and suggestions on how to cope and prepare for the survival of the small
retailer. The categories were grouped by state returns and indicated the types of product lines or services
provided by the respondents,
Chapter IV revealed the depths of fear and discouragement of the small retailers who were
desperately concerned with their chances of survival in the face of mega-retail discount chain competition
of other powerful retail chains,
The narrative comments and quotes in Chapter IV have been compiled from retailers responding to
the 6,000 questionnaires sent by the author in 1994 to firms in Pennsylvania, California, New York, and
Illinois, They represented all of the subjective responses to the completed questionnaires returned which
were about 10% of the original addressees,
Part I of Chapter IV was a response to the excellent book authored by Taylor and Archer." Our staff
recognizes this serious work as well meaning -- but finds the "Ten Suggested Strategies to Survive" almost
impossible to implement atthe current stage offrustration, retail failure and stagnation. These small firms
simply do not have the financial resources, staff or leadership to snap back in the ways suggested by Taylor
and Archer. Were there a reason to start a new business with more than adequate management experience
and venture capital, their "Ten Strategies to Survive" would be both helpful and essential, It is possible that
some individual retailers might survive in the face of "Big Boxes" by following Taylor and Archer's "Ten
Commandments" or strategies, However, for the most part, the dying breed of "Main Street" merchants
require external and enormous help from their local, state and federal governments as well as specialized
agencies such as zoning boards, planning commissions and community development authorities who are
prepared to provide incentives and subsidies to small retailers currently available to the mega-retail discount
chains who generally build their "Big Boxes" on former agricultural or industrial land, For example, a mega-
retail discount chain store is given the right to retain sales taxes collected for a given number of years in
order to help finance construction of and debt service for the "Big Box." As small retailers close, the sales
taxes they formerly collected are no longer available to local government. These entrepreneurial subsidies
and dozens of other incentives as well as tax abatements are not generally available to the small retail
merchant.
Taylor and Archer are among those writers and journalists who attribute the failure of the traditional
"Main Street" retailer to other causes than the price competition ofthe mega-retail discount chains. Taylor
and Archer authored a provocative and interesting volume which appears well meaning in identifying ten
survival strategies to enable the small retailer to compete more effectively with a giant Wal-Mart or other
mega-chain retailers. Their book, published in 1994, Up Against The Wal-Marts (How Your Business Can
Prosper in the Shadow of the Retail Giants, was first cited in Chapter IV,
One cannot argue with time honored principles taught at the nation's illustrious business schools,
i.e., Wharton, Harvard, Stanford - but these schools prescriptions are far away from the financial constraints
of small businesses. Those principles being such as "satisfy your customers"; "study the success of others";
"Don Taylor and J. S, Archer, Uo A~ainst the Wal-Marts (How Your Business Can Prosoer in the Shade of
the Retail Giants), (New York: American Management Association, 1994), pp. 1-258.
222
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to the federal Robinson-Patman price discrimination law -- either of which may be used advantageously to
challenge truly predatory pricing behavior.
Chapter V, also mentioned that a group of retailers took a different tack on pricing differentials by
suing both manufacturers and wholesalers. This study shows that more and more of the chain's ability to
lower prices is due to the massive discounts available to them for large volume purchases. Not only are these
unit prices not available to small retailers, but wholesalers, who used to sell the small retailer are
disappearing, as the chains buy "direct" from the manufacturer.
In August 1994, the House Small Business Committee met and listened to witnesses who were
concerned about the survival of the small retailer in the face of growing power of the mega-retail discount
chains, Should not the 1995 and 1996 Small Business Committee of both the House and Senate continue
this type of public hearing?
Materials from the U ,S, Congressional Budget Office (CBO) were included in Chapter V for the
purpose of opening the question (in public forums) as to which regulatory statutes are available at the federal
level that might pertain to the behavior and growing power of chain stores. Their interpretative comments
and analyses of the Robinson-Patman Act were particularly valuable, CBO describes "how in the 20's and
30's, large chain retail stores rose to prominence, The market power of some of these chains enabled them
to negotiate lower prices from manufacturers than could be obtained by the traditional small independent
retailer. For that and other reasons, the small retailer found it difficult to compete, leading to pressure on
Congress to do something to help them, The dissatisfaction with the lack of success of the Clayton Act in
preventing price discrimination, led to the passage in 1936 of the Robinson-Patman Act."
There appears to be many similarities in the retail market today as was noted by CBO for the period
ofthe 20's and 30's, Then it was the large chain that threatened the small retailer; today it is the mega-retail
discount chain.
Predatory Pricing and What Was Learned from the Majority and Dissenting Opinions in Wal-
Mart's Victorious Appeal to the Arkansas Supreme Court
Chapter VI analyzed in some detail Wal-Mart's arguments to set aside the Chancery Court's decision
against it. Wal-Mart believed that there was no rational basis for the Arkansas Court to have ruled against
the company. Further, in the appeal, Wal-Mart believed the Arkansas Act was preempted by federal law by
the Robinson-Patman Amendments to the Clayton Act which specifically addressed the weapon of predatory
pricing by monopolies.
The discussions in Chapter V and Chapter VI do suggest that it would be appropriate for the Small
Business Committees of the House of Representatives and the U.S. Senate to hold hearings on the growing
power of the mega-retail discount chains,
The Court's concluding comment in the dissent is reproduced here:
"We would hold that the Appellant has failed to prove that the Chancellor used an improper
legal standard with respect to the inference of intent to injure competitors and to destroy or
substantially lessen competition, We also find that the Chancellor could have found an
intent to injure competitors from the evidence in the record and particularly from the
testimony of David Glass, President ofWal-Mart Stores, Inc. who used language such as
224
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3. Insure that federal antitrust and banking laws are tough enough and are enforced.
Lafalce acknowledged that the federal government can do little to affect the recent course of
retailing, but said he was concerned that superstore development was coming at the expense of smaller
merchants,
At the hearings, which were commented on in Chapter VII, there was a litany of complaints about
the superstores,30 Thomas Muller, a Fairfax, V A, economist and the author of a report on the impact that
three proposed Wal-Mart stores would have on northeastern Vermont communities, said Wal-Mart charged
hi~her prices in communities where it has eliminated the competition. Also, Wal-Mart and other mega-
stores don't increase the dollar volume of sales, but instead redistribute sales, Further he pointed out that
the claim that Wal-Mart creates 'obs also is wrong, Muller added that in communities with a Wal-Mart the
resu t could be fewer retail jobs, He also said that full-time jobs in the mega-retail were often based on a
28-hour work week, instead of the usual 40 hours, He also observed that based on its current marketing
strategy, Wal-Mart could open another 5,000 stores within the next 10 to 15 years, Muller further estimated:
"",that Wal-Mart had reached 'optimum penetration levels' in Arkansas, Mississippi and
Oklahoma, and now appears to be targeting urban and rural areas in other states, The new
Wal-Mart approach for areas close to saturation, as well as others. is to revamp the older
stores as supercenters," Muller said, "These combine the general merchandise store with
a full-line grocery store, using the checkout counters,""
Muller continued,
"The experience ofWal-Mart has been that these superstores have increased per-square-foot
general merchandise sales, With its superstores Wal-Mart sales could easily double, even
in states where current stores are close to saturation. In a few years, given that current
trends will continue, \t~e corporate entity may have a substantial share of all retail trade in
the United States,"32 -
The author recommends that the current Committees on Small Business in both the U.S, House of
Representatives and the U.S. Senate continue to hold hearings on the applicability of such regulatory statutes
as the Sherman, Clayton, Federal Trade Commission and Robinson-Patman Acts upon these mega-retail
discount chains and their effect on the weakening condition of small retailers in the United States, due in part
to the ever increasing power of the chains to procure the lowest of prices from manufacturers and suppliers,
While predatory pricing might have to be viewed differently in the federal area compared to state
litigation, nevertheless the increasing power of the chains requires federal review in terms of applicable
statutes and regulations designated to protect small business and to provide free market opportunities.
Further, the opportunities of the large chains to secure "corporate welfare" in terms of financial assistance
for building their huge stores should be re-examined by Congress, since many of the grants are basically part
offederal funding,
3OIbid,
"lbid,
J2Ibid.
226
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The mega-retail discount chains generally don't provide health insurance to employees, adding these
people to the governments' burden, These chains are quite profitable, so an excise tax would not put them
out of business,
Further, the environmentalists and preservationists should see the need to reduce the tax incentives
for "Big Box" development. Finally, those in favor of reducing the federal deficit should be eager to
embrace new sources of revenue,
Greg LeRoy, previously cited in Chapter VII, made it very clear that the state and federal
governments have been wasting large sums on "corporate welfare" for enormously powerful and rich retail
corporations, Whether it is a tax abatement or the right to retain sales tax revenues to pay for capital outlay
or debt service; these are funds, which based upon earlier objectives, should have been applied in great part
to rehabilitation of the "Main Streets" of the United States, Further, as Greg LeRoy pointed out, the grants
help build structures which are often abandoned while the companies receiving the financial assistance move
elsewhere,
The Need to Combat Urban Sprawl (The Work of the National Trust for Historic
Preservation)
It is clear that the cities and towns of America, are gradually succumbing to urban sprawl. Moreover
as described in many places in this study, the same type of sprawl is taking place in malls and strip centers
away from the downtown areas, All of the abandonments of stores that were a delight to see ten years ago
have taken place in great part due to the restless mobility of such competing giants as Kmart, Target, Wal-
Mart and other mega-retail discount chains, as they feverishly move from area to area building larger and
larger superboxes in a desire to kill off their competition, Soon the nation will appear to be scenes of
desecrated malls looking like ravaged cemeteries, abandoned, looted, boarded up and loaded with graffiti.
Can better planning on national, state and local levels help with respect to zoning and involving the
community and their citizenry?
The following long term strategy for combating sprawl may be found in the work of the National
Trust for Historic Preservation released in 1994,"
"One of the best long term strategies for combating sprawl is to revitalize the downtown,
the community's traditional center of commercial, cultural. and social activity, Making
downtown "the place to be" helps to attract businesses, shoppers, and appropriate
development to 'Main Street'."
"Sometimes a downtown's problems seem overwhelming to local citizens, By flooding the
community with more commercial space than can reasonably be supported and by diluting
the downtown's economic vitality, sprawl can add to those problems, Yet downtown's
problems are not insurmountable, Rebuilding the historic commercial district's economic
strength simply requires persistence, collaboration, and a clear vision of what you hope to
achieve."
"Op cit., Beaumont, with chap, 13, "Starting a Downtown Revitalization Program" written by Kennedy
Smith, pp. 85-86.
228
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"Recruit oarticioants. The downtown program must involve groups and individuals
throughout the community in order to be successful. Main Street revitalization requires the
cooperation and commitment of a broad-based coalition of public and private sector groups:
Business; civic groups; local government; financial institutions; the chamber of commerce;
consumers; and many others. It also involves mobilizing a large number of volunteers to
implement activities."
"Form an orflanization. Sometimes an existing organization or institution can take on the
downtown revitalization initiative, It is usually more effective, though. to create a new
organization that focuses exclusively on the revitalization process and that is unhampered
by an existing reputation or by the expectations and particular interest of existing members.
The new organization should include broad-based community representation,"
"Identify barriers to downtown develooment. Ultimately, it should be as easy for a new
business to locate downtown as it is to locate out on the strip. Examine your community's
planning and land-use policies, financial programs, building codes, and other tools to see
if there are regulatory or financial incentives that encourage sprawl instead of downtown
development. List other problems affecting the downtown as well."
"Develoo a realistic, incremental work olan, Articulate what the community wants the
downtown to achieve. Develop a written mission statement and three or four major goals.
Then identify some high-priority, but achievable activities the organization can do to meet
these goals, In the early years try to include highly visible physical improvements and
promotional events, Remember that you can't tackle all the downtown's problems in one
year. Some of the problems may take years to overcome. Take one step at a time."
"Measure vour orof!ress, Keep track of the amount of money invested in physical
improvements and of the number of new jobs created and new businesses that open. Track
the downtown's vacancy rate, Count the number of people who take part in prcJmotional
activities. Ask downtown businesses to let you know if their sales are increasing, Publicize
the progress the downtown revitalization is achieving"
"Be oersistent, Downtown revitalization doesn't happen overnight. It's a gradual,
incremental process, As your organization succeeds in mobilizing resources to tackle small
problems, it will strengthen its capacity to confront bigger challenges,"J'
Key Actions in Fighting Sprawl
The National Trust for Historic Preservation advises community groups as follows; "Don't let
anyone tell you that sprawl is inevitable...The biggest enemy is a sense of hopelessness.""
Small businesses must stress the idea that fighting sprawl or rebuilding the "Main Street" is anti-
competitive, The superstores spend a great deal of money to secure rezoning, win referenda and influence
"Ibid,
"Ibid., p, 36.
230
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CONCLUSION
The author concludes this extensive review of the impact of the mega-retail discount chains on the
economics and sociology of urban, suburban, "rurban" and rural areas with strong concern for the future of
Young Americans, Where will they work? Where will they live? Will we live in an economy of
hopelessness or one of opportunities and entrepreneurial growth? While intelligent government policy is
creative; nevertheless, the spirit of entrepreneurship should be enacted into our enterprises. from a private
as well as a public point of view,
232
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(4,) If a large, national discount retail chain that sells similar products/services opened near
your present business location, what would you estimate its ultimate impact to be on
the economic health of your business?
Very Positive (helpful)
Positive
Neutral or No Effect
Negative
Very Negative (not helpful)
(5.) Please indicate the number of employees that you currently employ:
_ 0 - 5 people
6 - 10
11 - 20
21 - 30
31 - 40
41 - 50
51 - 75
76 - 100
101 - 200
over 200
(6.) If a large, national discount retail chain that sells similar products/services opened near
your present business location, what would you estimate the percentage effect to be on
your TOTAL EMPLOYMENT after the national discount retail chain's arrival:
Increase(up to %)
+0%
+5%
+10%
+15%
+20 %
+25%
+30%
+35%
+50 %
more than 50%
Decrease(up to %)
-0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
-50 %
more than 50%
(7,) Please estimate your current annual SALES VOLUME:
$0 - $50,000
$50,001 - $100,000
$101,000 - $250,000
$250,001 - $500,000
$500,001 - $1,000,000
$1,000,001 - $3,000,000
$3,000,001 - $10,000,000
over $10,000,000
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(11.)
What methods do you use to promote your business? Please check off the methods that
you rely on the most:
flyers/leaflets/brochures
canvas personally
telemarketing
_ telephone book/yellow pages
_ local newspapers
_ national newspapers
magazines
radio
T,V,
(12,) Please rate the days of the week as to which are your busiest and which are your
slowest. Circle your responses.
o = closed on that day
1 to 3 = degrees of slow - 1 being the slowest
4 = moderately busy
5 to 7 = degrees of busy - 7 being the busiest
DAY SLOWEST BUSIEST
SUNDAY 0 1 2 3 4 5 6 7
MONDAY 0 1 2 3 4 5 6 7
TUESDAY 0 1 2 3 4 5 6 7
WEDNESDAY 0 1 2 3 4 5 6 7
THURSDAY 0 1 2 3 4 5 6 7
FRIDAY 0 1 2 3 4 5 6 7
SATURDAY 0 1 2 3 4 5 6 7
(13,) Please chart your store hours, Identify whether the hour is A,M, or P.M,
SUN MON TUE WED THU FRI SAT
OPEN
CLOSE
(14,) Please provide the following information on an average basis. Approximate to the best
of your knowledge:
a.) Average number of customers appearing in business daily
/DAY
b,) Average number of customers appearing in business monthly -
/MONTH
c,) Estimated total number of customers per year
/YEAR
238
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(16,) Please fill in the following lines with those geographic areas or neighborhoods where
your customers primarily come from. (Your numbers should add up to 100%):
For example: New York Illinois
:1!2%. Seneca Falls :1!2%. Des Plaines
~ Geneva 2.Q%. Streamwood
N%. Waterloo ill%. Schaumberg
~ Elk Grove Village
% of Customer Base
Geographic Area
100% Total Customer Base
(17,) What methods would you employ in order to compete more effectively with a large
retail discount chain that sells similar products/services; or, what decisions would you
make to alter, survive or terminate your business? Please check off your alternatives
from the list below, It is permissible to check off more than one,
_ raise prices
_ lower prices
_ increase working hours
_ decrease working hours
increase staff
decrease staff
_ increase visibility with better
marketing, advertising, and/or
promotions
_ provide a fuller, more
personalized service
expand product lines/services
_ narrow your product line/services to a
more specialized market
_ consolidate business (if you currently
have more than one operation)
liquidate business
_ bankruptcy, chapter 11 or chapter 7
move business to a more
geographically desirable location
sell business
_ merge business or take on a partner
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246
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/JOM "1f.L ,:ailJuq:) ilu!J!Jd AJOlUpaJd sa!uao ln8 'lSO:) MOla8 ilu!ll~S Sl!WPY lJUW-luM." 'q08 'uilalJO
Schiller, Zachary, "Clout! More and More Retail Giants Rule the Marketplace." Business Week,21
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&6,
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248
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',,-
JOINT REGULAR MEETING
MAYOR AND COMMON COUNCIL
AND THE
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO
PUBLIC HEARING
TRANSCRIPT OF PROCEEDINGS
DEVELOPMENT PERMIT TYPE II NO, 01-05
APPEAL OF APPROVAL
DATE AND TIME:
MONDAY, JULY 9, 2001
11:05 A,M, TO 12:30 P,M,
LOCATION:
CITY OF SAN BERNARDINO
COUNCIL CHAMBERS
CITY HALL
300 NORTH "D" STREET
SAN BERNARDINO, CA 92418
JOB NO,:
10970MR
REPORTED BY:
MARIA L, RENO, C,S,R,
(C,S.R. NO, 11367)
(Q) IRillCGr Ilf;J AlL
Y olID8er Report.ir18 &rvices
6m Ma,nolia Av....e
Riverside, CA 92S06
(909) 276-1333 PaX (909) 276-1788
1 REPRESENTATIVES FOR THE APPLICANT WAL-MART:
3
GRESHAM, SAVAGE, NOLAN & TILDEN, LLP
BY: JOHN NOLAN, PENELOPE ALEXANDER-KELLEY
600 NORTH ARROWHEAD AVENUE, SUITE 300
SAN BERNARDINO, CALIFORNIA 92401-1148
(909) 884-2171
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5 TOM DODSON, DODSON & ASSOCIATES
2150 NORTH ARROWHEAD AVENUE
6 SAN BERNARDINO, CALIFORNIA 92405
(909) 882-3612
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1 S PEA K E R S
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3 MEMBERS OF COUNCIL:
4 MAYOR JUDITH VALLES Throughout
5 FRANK E, SCHNETZ 4
6 GORDON McGINNIS 42
7 SUSAN LIEN 50
8 ESTHER ESTRADA 49
9 II JOE II V,C, SUAREZ, JR, 46
10 BETTY DEAN ANDERSEN 40
11 WENDY J, McCAMMACK 47
12
13 OTHERS:
C 14 MR, FUNK 4
15 MS, ROSS 9, 46, 51
16 MR. NOLAN 13, 37
17 MR, DODSON 19
18 MR, BOEN 21
19 MR, McCLENDON 24
20 MR, HALL 36
21 MR, EMPENO 40
22 MR, CASEY 52
23 MR, MOSELEY 55
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25
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1 MONDAY, JULY 9, 2001
SAN BERNARDINO, CALIFORNIA
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5 MAYOR JUDITH VALLES: No, 32. This is a public
6 hearing to be heard at 11:00 a,m, It's a little after
7 11:00, It concerns Development Permit Type II No,
8 01-05, It's the appeal of approval of 155,917 square
9 foot commercial use located northwest of University
10 Parkway and Hallmark Parkway in the University Business
11 Park land use district.
12
The hearing is now open, Mr. Funk, would you
13 like to proceed with this item?
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'- 14 MR, SCHNETZ: Mayor,
15 MAYOR JUDITH VALLES: Yes.
16 MR, SCHNETZ: I need to abstain on this particular
17 issue, My company manages one of the neighboring
18 shopping centers, and I was reviewing some of this
19 material and that shopping center is mentioned numerous
20 times as far as the different consultants that would be
21 affected by this development, I'd like to abstain, so
22 I'm not swayed one way or the other.
23 MAYOR JUDITH VALLES: So noted, Thank you.
24 Mr. Funk,
25 MR, FUNK: Madam Mayor, members of the Council,
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1 I'd like to give a little overview of this particular
~ 2 case, a little perspective,
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3
The Development Environmental Review Committee
4 reviewed the proposed project, including pounds of
5 documents and including a 50-page traffic study, The
6 DERC adopted a Mitigated Negative Declaration for the
7 project. The review process included traffic experts
8 from both the public and private sectors, including our
9 own staff, our own city engineer, our traffic engineer,
10 our senior engineer, who are very familiar with traffic
11 and traffic situations in this community, and have
12 reviewed dozens, if not hundreds, of issues and traffic
13 reports for various projects in our city,
14
The action was appealed to the Planning
15 Commission by a person living in the southern portion
16 of the city, The Planning Commission was unanimous
17 after reviewing the information that was delivered a
18 few hours before the Planning Commission case, and
19 reviewed item by item for a considerable time at the
20 Planning Commission. They were unanimous in their
21 confirmation of the adequacy of the Mitigated Negative
22 Declaration on this project,
23
Yet, we have another appeal by a new person
24 and a new attorney group of this particular project,
25 The appeal came in about ten days ago, and we received
YOUNGER REPORTING SERVICES
5
1 a batch of materials Friday, and just a few moments ago
r
~ 2 some additional documents about an hour ago with regard
3 to the appeal and traffic, Up until that time, we had
4 just two statements basically for the appeal,
5
One was a simple statement on the appeal
6 document that said, "An EIR is required for the
7 project," and also "The traffic study underestimates
8 traffic impact, and some mitigation will not be
9 sufficient," It referenced "ITE Engineers published a
10 study showing prior estimates of trip generation rates
11 significantly underestimate impact of such stores."
12
Now, there are going to be experts that are
13 going to be addressing that issue in a few minutes, but
C 14 I'd like to point out to you and put in perspective
15 what it means to place a store anywhere in a community;
16 what it means when you call with regard to an impact of
17 a particular facility on the road systems,
18
You're going to be hearing from the experts,
19 but please keep in mind that the proposed Wal-Mart in
20 this particular case is in the north end of the city,
21 in an area that is deficient in this type of service
22 and can certainly benefit from a facility such as a
23 Wal-Mart, It abuts the freeway, It's abutting an
24 arterial highway, It's surrounded by commercial and
25 industrial uses, 99 percent of the people, goods and
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1 services moving in California use roads for all or a
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"- 2 part of a trip, so to decrease the potential for
3 traffic congestion and increase the efficiency of
4 roadways most strategies use four techniques, four
5 approaches,
6
You either build more roads; you use
7 technology to better manage traffic flow, such as
8 synchronization, which you approved earlier today on
9 some of our arterials at signalized intersections; or
10 you commit additional resources to ensure that those
11 facilities are adequately maintained and repaired,
12 which you did earlier this morning on the other
13 arterials and other streets in this community; or the
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'- 14 fourth typically is to provide alternatives for
15 driving, so that more people can have additional travel
16 choices, and you're participating in that in your
17 involvement with Metrolink, in your bus system
18 supports, But a fifth approach, one not found in
19 traffic manuals, is simply a place where people want to
20 go, place these places closer to where they live. This
21 is what is happening in the case of the Wal-Mart in the
22 north end of the city,
23
Now people will be able to travel from areas
24 north of the city and in the northern portion of the
25 city, travel to an area that is closer to their home
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1 instead of having to travel to the south, travel
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, 2 farther down the 215 or arterial to facility
......... get to a
3 such as Wal-Mart which offers these types of goods,
4 these types of services.
5
What happens is when you wisely place a
6 shopping facility or a service closer to where the
7 residents are living and need it, you cut the length of
8 the trip and you cut the time of the trip, and you make
9 more efficient the travel on the roadways that we have
10 in our community,
11
I'm going to imagine in advance that you're
12 going to hear some criticisms of the study with regard
13 to the trips that are going to be generated because of
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~ 14 the placement. And I say the wise placement of this
15 facility, where else you have a Wal-Mart but adjacent
16 to the freeway on the arterial highway and not abutting
17 residential, but surrounded by commercial and
18 industrial, I can't think of a better location for it,
19
You're going to hear some criticisms of what
20 our people reviewed, and they thoroughly reviewed it,
21 And I feel very confident in their review, and I'm
22 supportive of and recommend supporting the Mitigated
23 Negative Declaration,
24
You're going to hear some criticisms, Please
25 keep in mind that if you are going to place a facility,
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1 place it where people can use it, cut down the length
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'- 2 of trip and the distance. That will save gas, That
3 saves energy. That saves pollution, and that saves
4 wear and tear on the freeways and arterials,
5
Valerie Ross is going to take you into the
6 details of this appeal along with experts that are
7 lined up on both sides of this audience, Thank you,
8 MAYOR JUDITH VALLES: Ms, Ross will give us a
9 brief chronology of the process and recommendations,
10 MS, ROSS: Thank you, Mayor, James Funk hit a lot
11 of the key points, but there a few other things I
12 wanted to make you aware of,
13
As you know, this is a request to establish a
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~ 14 155,000 square foot general retail merchandise store,
15 It has ancillary gasoline stations -- or gasoline
16 station with it,
17
If you've been to the Wal-Mart store on
18 Highland Avenue, it contain 154,000 square feet, In
19 that store, between about 550 and 600 square feet
20 contain prepackaged food items; and that's the chips
21 and dip and cookies and also the sodas and ice cream.
22
That amount represents less than 1 percent of
23 floor area of that existing Wal-Mart on Highland, and
24 it is staff's understanding that this Wal-Mart will be
25 basically similar to that one, The proposal does not
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1 include grocery sales, like a grocery store, or food
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.~ 2 sales in there,
3
The project is located in the University
4 Business Park Specific Plan, The Specific Plan
5 specifically accommodates retail commercial uses in
6 this location, Mr. Funk mentioned the environmental
7 process, Tom Dodson of Tom Dodson & Associates
8 prepared an additional study to address potential
9 impacts both from the construction of the project and
10 the operation of the proposed Wal-Mart,
11
Included in the initial study was a traffic
12 study prepared by LSA, Planning and Public Works staff
13 reviewed the initial study and the traffic study prior
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~ 14 to distribution to the Development and Environmental
15 Review Committee, At their meeting, the DERC also
16 independently reviewed the initial study and
17 recommended that a Mitigated Negative Declaration be
18 prepared.
19
I would like to note at this point, also, that
20 the City's checklist that we use when we prepare an
21 initial study has been modified to fit the City of San
22 Bernardino as is permitted in the California
23 Environmental Quality Act.
24
There are no thresholds in CEQA that we met or
25 exceeded with this project, and we are subject to the
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1 County's congestion management plan, And we were below
~ 2 the threshold for the preparation of the traffic impact
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3 analysis, However, we did a complete initial study for
4 this project,
5
The notice of intent to adopt the Mitigated
6 Negative Declaration was published in the paper and
7 sent to the state clearinghouse for review and
8 distribution, On this particular project, CalTrans is
9 a responsible agency because the project is adjacent to
10 a freeway offramp that necessitated a 30-day public
11 review period, We did receive responses from CalTrans,
12 and those are included in your backup, along with the
13 other comments and responses we received.
14
And the DERC considered all of the comments
15 and all of the responses to those comments and the
16 Mitigation Monitoring/Reporting Program prior to
17 adopting the Mitigated Negative Declaration -- adopting
18 the Mitigation Monitoring/Reporting program and then
19 improving the development permit.
20
As Mr, Funk mentioned, this was appealed at
21 the Planning Commission. The Planning Commission
22 upheld the DERC's approval, and then it was
23 subsequently appealed to you, which is what you are
24 considering today.
25
Several documents have been received Thursday
YOUNGER REPORTING SERVICES
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~ ~,
1 and today since the staff report packet went out, Some
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~ 2 of the documents pertain to grocery stores, which I do
3 not believe are applicable in this situation because we
4 are not talking about grocery stores,
5
One report, the Shils report, which we only
6 received a limited number of those; however, I did have
7 the opportunity to review that report, and it deals
8 with the impact of big box retail on urban and suburban
9 areas,
10
I found the report very interesting, somewhat
11 biased, and I'm not sure of its relevancy to the City
12 of San Bernardino or this project and this site in
13 particular.
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In conclusion, our recommendation still
15 stands, We believe that the mayor and council should
16 deny the appeal and uphold the Planning Commission's
17 adoption of the Mitigated Negative Declaration
18 Mitigation Monitoring/Reporting Program and approval of
19 Development Permit Type II No, 0105, And as Mr. Funk
20 mentioned, Ray Casey, our city engineer or I will be
21 happy to answer any questions, Thank you,
22 MAYOR JUDITH VALLES: Thank you, Ms. Ross, We're
23 going to have several speakers on this, I'll ask for
24 all the speakers and then open it up for questions on
25 that if that meets with your approval, Thank you. Our
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YOUNGER REPORTING SERVICES
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'n
1 next speaker is Mr, John Nolan.
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2
MR, NOLAN: Good morning. Thank you, Madam Mayor,
3 members of the council, My name is John Nolan. I'm
4 with the law firm of Gresham, Savage, Nolan & Tilden
5 here in town, We're here on behalf of the applicant,
6
I think it's important to point out again that
7 you are hearing this matter as the third public body
8 that is to review it. It has been approved twice
9 before, and it is here exclusively as a matter of an
10 appeal, The project is in an area that is already
11 zoned for its use, It is consistent with the general
12 plan, and indeed, it is consistent with the University
13 Business Park's Specific Plan, The property itself is
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~ 14 already in a graded condition. It is not something
15 that is far out in the distance from the city, and is
16 not something that has not been contemplated or planned
17 for over the years, The interesting thing also to bear
18 in mind, as was brought up briefly in the earlier
19 presentation, the current appellant is the second
20 appellant on this matter; and we will be hearing
21 apparently from the fourth succeeding set of attorneys
22 that have represented this matter.
23
It's interesting to note that neither of the
24 appellants are residents of the ward in which the
25 property is situated, The circumstances are such that
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1 we believe that the City, its environmental staff, its
~ 2 planning staff, has certainly done their homework in a
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3 complete fashion, and that there has been very
4 significant effort done and accomplished to conform to
5 the requirements of CEQA,
6
The things that I find that are of interest
7 are that the material that has been recently submitted
8 in opposition to the project first involves a letter
9 dated May of 1999 from a gentleman relative to a
10 Wal-Mart warehouse in Riverside County, Although
11 interesting, certainly that letter, simply because of
12 its age and also because of its lack of direction or
13 application to this proposal, is inappropriate,
14
The Shils report that was referred to is also
15 interesting, If you will note at page four of the
16 preface, he indicates that substantial funding for that
17 report was provided by the very same union which has
18 appeared to present some material to this body today,
19 and from whom you have a letter of opposition.
20
The other things that are of interest and of
21 import are the fact that what is occurring here, as was
22 touched upon earlier, is that Wal-Mart is going into an
23 expanding area, There have been various studies over
24 time; we believe quite biased, But there have been
25 various studies that talk about the potential of large
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1 retailers removing business from existing people. Most
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~ 2 of those stories allude to circumstances in the smaller
3 towns in the Midwest, and in particular where you have
4 a movement of the entire shopping trade out to the
5 outskirts of town.
6 What you have here, and as is specifically set
7 out, is that this is an area, perhaps the best area as
8 far as growth is concerned, of the City of San
9 Bernardino, and Wal-Mart is simply going out there to
10 conform to the desires and wishes of that population
11 and to provide them with the service that they want and
12 that they are now traveling further to obtain.
13
The circumstances also are such that we
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~ 14 believe that everything that is presented here by the
15 applicant has shown quite completely that the issues of
16 traffic, the issues of noise, the issues of air
17 quality, have been addressed,
18
They are all below the threshold. There is
19 absolutely nothing that would indicate in the least as
20 need for any further environmental review, The
21 interesting thing too to refer to the letter that was
22 submitted recently, the 1999 letter relating to the
23 Riverside County warehouse, there were all sorts of
24 dire predictions in that letter as to what would occur
25 if, indeed, that warehouse were allowed to go forward,
~
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1 Well, that warehouse has gone forward. It
,-.
'- 2 does exist, and certainly the dire results that were
3 opined about have not occurred. The object of CEQA is
4 simply to ask that the public agency here, this body,
5 review and involve itself with a dispassionate, good
6 faith review of true environmental impacts, It is not
7 something that requires or indeed even authorizes the
8 public body to engage in speculation,
9
Much of what has been presented thus far in
10 opposition to this project has talked about speculation
11 and is not supported by fact. It is equally
12 interesting to note that this morning as I came into
13 Council Chambers, I was handed some information from
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.~ 14 the attorney who, I believe, will be speaking to you
15 later who represents the opponent, And it talks about
16 several things,
17
One, it talks about a recent action in a
18 Sacramento court regarding some of the CEQA guidelines,
19 Well, I'm familiar with that activity, and it is a
20 trial court action, It is not anything that in any
21 regard is binding upon anyone, and, in my
22 understanding, has not yet been finalized in any
23 respect,
24
Additionally there is an article presented, an
25 article that has been presented previously in other
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16
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1 situations from the Journal of the Institute of Traffic
.~ 2 Engineers by two gentlemen saying that the methodology
:,.-
3 used for traffic counts is flawed and that there should
4 be changes regarding the method of counting for
5 freestanding discount retailers, The way to best
6 describe that to you is to ask you to look at the
7 bottom of the first page of that copy of the article;
8 and you will see that it, like the letter involving the
9 Riverside warehouse, is dated May 1999, Two years ago,
10 The Institute of Traffic Engineers has not modified,
11 has not adopted that concept, and that article is
12 simply those two gentlemen's opinion as to what should
13 be done, What was done here by the City's traffic
~ 14 experts and by independent traffic experts was in
.-
......
15 complete conformity with the accepted methodology of
16 the traffic engineers.
17
The other thing that is seemingly being
18 presented is that somehow, simply by being Wal-Mart,
19 there is going to be, by definition, a bad impact and
20 that there is going to be something that we all need
21 fear, I don't think that that is the situation at all,
22 What is actually presented by the opponents is
23 basically a concept of lack of their belief in the
24 unionization of Wal-Mart, Certainly we could spend
25 days here discussing the merits and demerits of
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1 unionization and which unions are more appropriate than
,,-
~ 2 others, That is, of course, not our duty here, That
3 is not something that is even appropriate for review.
4
CEQA is not to be used as a sword to kill
5 projects where there is some effort to destroy or to
6 diminish competition, CEQA is simply to ensure that
7 there has been appropriate environmental compliance,
8
What has occurred here is that everything that
9 CEQA requires has been complied with and that what is
10 appropriate, we suggest, for the Council to do is
11 exactly what the Planning Commission did, and that is
12 to deny the appeal and approve the project,
13
The circumstances are such that this meets all
..,-
~. 14 of the requirements, and we submit that you should
15 approve it, I thank you for your consideration, and I
16 certainly am more than willing to stand by and answer
17 questions as they may development,
18 MAYOR JUDITH VALLES: Thank you, Mr, Nolan. Yes,
19 Ms, Clark,
20 THE CLERK: Mayor, I didn't have the opportunity
21 to administer the oath to Mr, Nolan, so I wondered if I
22 might be able to administer it to him after the fact,
23 as well as any others that might want to testify on
24 this issue,
25 MAYOR JUDITH VALLES: Thank you for that reminder,
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1 Ms, Clark, Proceed,
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,
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2
THE CLERK: Is there anyone else here who is going
3 to testify on this item? If so, would you please stand
4 up and raise your right hand, please,
5 MAYOR JUDITH VALLES: Is there a Mr, Boen here?
6 Okay Jose, come forward. You will identify yourselves.
7 THE CLERK: Do you solemnly affirm that the
8 testimony you're about to give before this body will be
9 the truth, the whole truth and nothing but the truth?
10 AUDIENCE MEMBERS: I do,
11 MR, NOLAN: And the testimony I just gave,
12 THE CLERK: Thank you,
13 MAYOR JUDITH VALLES: Thank you, Ms. Clark,
.-
'-' 14 Mr, Nolan, Next speaker is Mr, Tom Dodson,
15 MR, DODSON: Madam Mayor, and members of Council,
16 I'm Tom Dodson, and I have prepared for you a document
17 that has been used, relying upon some technical studies
18 that were also provided to me by LSA and by a firm
19 called Parsons which did the air quality study. I've
20 had a chance to quickly peruse the materials that came
21 in this morning, And I don't want to spend a lot of
22 time on it, but I would like to point out a couple of
23 things,
24
What I see in this particular situation is
25 that there's been a lot of hurry-up to try and create a
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1 combination of doubt and what is called in CEQA
.~ 2 parlance or terminology a fair argument that there
-
3 might be an adverse impact,
4
One of the consequences of doing that is that
5 everybody tries to lay a set of facts, and you're
6 looking at differing facts to weigh in your mind what
7 is correct in a situation, I'd like to give you a
8 couple of thoughts to keep in mind,
9 One is that the basic traffic data has not
10 been questioned. Some of it, the information you
11 received in this most recent package, was simply a
12 re-evaluation looking at some specific issues, Also,
13 there's been no questioning of the basic air quality
~ 14 data that was used and generated for this particular
,-
--.
15 project.
16
This is a bit of an unusual project, There
17 was an extra effort spent to look at and determine
18 whether the traffic circumstances would cause a
19 localized carbon monoxide hot spot, The acronym for
20 that is CO hot spot. It's been very clearly
21 demonstrated that this project, based upon the traffic
22 generated, again not questioned at all in terms of
23 traffic impact, will not cause a CO hot spot, There's
24 two reasons for that,
25
One, the amount of traffic is not sufficient
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1 to cause it; and No, 2, more important than anything
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~ 2 else, is the carbon monoxide concentrations that are
3 the background are going down throughout this region
4 and have been for the last ten years. In a previous
5 set of comments it was claimed the southcoast air basin
6 was in violation of carbon monoxide standards. In
7 fact, the basin is divided in several components, and
8 the only portions of the basin that are in violation
9 are the coastal portion and downtown Los Angeles
10 portion, San Bernardino and the eastern position of
11 the southcoast air basin are not in violation of CO
12 standards, In fact, the CO quality is actually pretty
13 good here, Keep that in mind as you go forward, I'll
.'-
~ 14 be available to answer questions. You'll have some
15 other technical people. If you have any questions now,
16 I'll answer them, And again, I'll be available as we
17 go along.
18 MAYOR JUDITH VALLES: Thank you, Mr. Dodson, We
19 have the other speaker, Mr, Mark Boen, He has already
20 responded to the oath.
21 MR, BOEN: Mayor, Council members, I'm Mark Boen.
22 I'm with Pro Western Development Company. I have been
23 involved with the project since 1990 when we purchased
24 the remaining 89 acres from O'Donnell and the Union
25 Pacific, I've also been involved with the disposition
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1 or the sale of the property to San Bernardino Sun,
V'.
-
~ 2 ARCO, Farm Credit, Shearson Lehman (phonetic) and most
3 recently was Dome Products out in the park,
4
I first became aware of an appeal at the
5 Planning Commission level, I was contacted, It was
6 interesting because I had been involved with
7 development for 20 years, Usually when you have an
8 appeal, it's some issue you have with a community
9 member. And if you sit down and meet with them and
10 discuss it with the different staff members, usually
11 it's pretty easy to satisfy their concerns,
12
On this appeal, it was interesting because I
13 had heard some rumors about the appeal kind of being a
,-
~ 14 misdirected appeal, and there were some suspicions at
15 the time on the 5th, so I came just basically to hear
16 what the appellant had to say,
17
It was interesting that the appellant,
18 Kathleen Franks, did not appear, but instead sent a
19 representative from Best, Best & Krieger on her behalf,
20 After listening to what Council Member Betty Andersen
21 had said at the Planning Commission meeting stating,
22 "If somebody has a real concern, why don't they step
23 forward and come to me and let's talk about what the
24 issues are," I thought about that a few evenings and
25 took it upon myself to call Kathleen Franks just to see
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1 what the concerns are and to see if I could schedule a
,.-
~ 2 meeting with Betty Andersen myself and sit down and
3 find out what these issues are.
4
Upon reaching Kathleen Franks at her home, we
5 talked a few minutes; talked about the benefits of the
6 project as we would see it, the City, the members in
7 the community, the university, which I've kept very
8 close with, and the development of the park. It was
9 kind of interesting
and we discussed or started
10 discussing some of the issues, so I specifically
11 started talking about issues, Immediately she stopped
12 me in the conversation. She says, "I am not aware of
13 any of the issues, I don't know what you're talking
,,.-..
~ 14 about on these specific issues, I have nothing against
15 you as a person, against the development of the project
16 as it applies to the land you own. I have nothing
17 against the City, Specifically what I've been directed
18 to do, and I've been engaged to do, is to block the
19 Wal-Mart project because the Wal-Mart people it's not a
20 policy to hire union employees,"
21
So I further discussed that a little bit more
22 and kind of clarified it again, I said, "Basically you
23 have no problems with us. You have no problem with the
24 City?" She says, "No, I only have a problem with
25 Wal-Mart because they do not hire union employees."
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1 And then the conversation went on for a few minutes
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'- 2 more, and she was very uncomfortable. 'We terminated
3 the conversation, and that's basically what transpired,
4 And I memorialized that into a letter to - - I think
5 it's been distributed in your package dated July 5th.
-
6
I just wanted to have that on the record
7 because I think that's pretty germane in this
8 situation, If you have any questions, I'd be happy to
9 answer those,
10 MAYOR JUDITH VALLES: Thank you, Mr, Boen, Thank
11 you very much, Is there anyone else in the audience
12 that wishes to address this body? I've run out of
13 slips, Would you step forward and identify yourself,
~ 14 and he has taken the oath,
r-
.......
15 MR, MC CLENDON: Thank you, Madam Mayor and
16 members of the Council, My name is John McClendon, and
17 I'm with the firm McNamara, Van Blarcom, McClendon and
18 Leibold, We're known in the internet age as the CEQA
c./....
19 dot com law firm, We represent primarily government
20 bodies such as yourself, water districts, redevelopment
21 agencies and occasionally private developers,
22
In making sure that our public agency clients
23 prepare environmental documents that comply with CEQA,
24 the State's CEQA guidelines, NEPA and other state and
25 fed laws, I've heard a little bit of dirt kicking
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1 going on, and read some, on the appellants here, I
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'- 2 also refer to CEQA McCarthyism, Guilt by association.
3 I want you to know that I'm not here to represent
4 anything other than the issue of does this Mitigated
5 Negative Declaration comply with the requirements set
6 for in CEQA and the state CEQA guidelines, I've been
7 doing this for about a dozen years, So far no public
8 agency client of mine, city or county, that has used me
9 to prepare CEQA documentation has had that
10 documentation successfully challenged in court,
11
Moreover, to date, I have never lost a CEQA
12 case on a CEQA issue before either a trial court or
13 court of appeal. I'm not bragging on myself on that.
..-
\.r 14 What I am saying is what I do is I don't take a case
15 unless there's a valid CEQA issue in it,
16
I'm not looking at CEQA, which I believe this
17 is subverting it by using it for ulterior motives, I
18 will look over a case, as I did here, If there's a
19 legitimate problem with it from the standpoint of CEQA,
20 only then will I consider accepting it,
21
As I see this, and perhaps I am so used to the
22 role of sitting where your city attorney is in doing
23 this, Let me just give a key synopsis of where the hot
24 spots are here,
25
Some of the cities I represent and do this for
"-
~
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1 are the City of Anaheim for the last ten years. I've
--
'-
2 done it for Ontario, Orange County, currently City of
3 Sierra Madre, We're at the city attorney's in Lake
4 Elsinore, I handle CEQA there.
5 One of the things that first struck me on
6 this, it said on the cover of the initial study that it
7 was prepared for the law firm of the developer. I know
8 we had this in Anaheim some years back. It caused huge
9 heartburn when we discovered that the Planning
10 Commission was just letting initial studies be prepared
11 directly by the project applicant and brought forward.
12 I had huge problems with that, There's a CEQA statute
13 21082,1 which talks about CEQA documentation being
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'- 14 prepared either by or under contract with the City. So
15 we changed that. I just have a question here that I'll
16 layout here, I don't know the answer, and that's:
17 Was this actually prepared in accordance with the
18 statutory requirement?
19
Secondly, since the other side has brought in
20 all of the prior objections from the other meetings, I
21 want to incorporate by reference in the appeal that my
22 client presents those objections that were made, the
23 objections made by the Frank expert of Best, Best &
24 Krieger, Cummings and others in the lower tribunals
25 here, Primarily, as I understand those objections,
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,'-'
1 there were objections focusing on the issue of
~ 2 thresholds of significance, As luck would have it, or
,-
3 bad luck would have it, what I see as kind of a
4 misfortune here, as in the case that the attorney for
5 the proponent mentioned, is a couple of months ago in a
6 trial court challenging the Resources Agency, the State
7 Resources Agency, which promulgates the CEQA guidelines
8 the trial court judge invalidated certain specific
9 sections of the guidelines. You have that in my
10 materials. The resources agency has basically come
11 forward and said those were promulgated during the
12 prior Wilson administration, We're the Davis
13 administration, We're now recommending -- and you can
~ 14 see that in the paper -- we are recommending the public
-
'-
15 agencies don't rely on those guideline provisions, and
16 we are also in the process of revising them,
17
So there's a red flag currently out there that
18 was not out there at the time, I believe, at the
19 Planning Commission, which makes it pretty clear that
20 the Resources Agency is going to respond to this issue
21 on how much leeway we give public agencies on setting
22 thresholds of significance. And it's going to be
23 something less than like the queen in Alice in
24 Wonderland. A threshold is whatever I say the
25 threshold is.
YOUNGER REPORTING SERVICES
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1
At any rate, I want to say that I think the
~ 2 Resources Agency's admission on this is both admirable
~-
3 and validates the objections below, An example of this
4 would be how carbon monoxide was dealt with, What I
5 would call that, as a CEQA practitioner, it was fudged,
6 I mean, the document admits it goes over the 5CAQMD.
7 threshold, But not to worry; there's other thresholds
8 out there and we can use those, And I think it goes on
9 for two to three pages of listing all the good things
10 in this project, such as increased employment, all
11 these other things like that, It reads very much like
12 what's called a statement of overriding considerations
13 that you make in an EIR when you cannot mitigate an
~ 14 impact below level significance. That's fine in an
-
'-
15 EIR, It's not appropriate in this document, So that's
16 one that's out there,
17
I want to get in now to the issues, which I
18 believe if I were sitting where your city attorney is
19 sitting, These are the ones that any time I have a
20 public agency client that's doing a Negative
21 Declaration -- or an initial study followed with a
22 Mitigated Negative Declaration, And frankly, I was
23 holding my breath, Because the way the standard works
24 is the presumption, the deference goes to the
25 challenger on a Mitigated Negative Declaration or a
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1 Mitigated Declaration. All the challenger has to do is
~ 2 present a fair argument supported by substantial
-
l
~-
~,
3 evidence in order to trigger the evidence for an EIR to
4 be prepared,
5
On the other hand, by doing the Environmental
6 Impact Report the deference goes to the City. So the
7 City is allowed to pick and choose which expert it's
8 going to agree with and which expert it's going to
9 disagree with. The point of doing a Mitigated Negative
10 Declaration, the CEQA guidelines do not allow the
11 public agency to exercise that discretion, I'll get to
12 that in a moment,
13
15064F or the CEQA guidelines says, "The
15 significant effects shall be based on substantial
16 evidence in the record of the lead agency, If the lead
17 agency determines there is substantial evidence in the
18 record that the project may have a significant effect
19 on the environment, the lead agency shall prepare an
20 EIR, Said another way, if the lead agency is presented
21 with a fair argument that a project may have a
22 significant effect on the environment, the lead agency
23 shall prepare an EIR even though it may also be
24 presented with other substantial evidence the project
25 will have not a significant effect."
YOUNGER REPORTING SERVICES
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-
1
Now, you're still kind of in this test of what
~ 2 constitutes a substantial argument, and is it more than
.-
3 speculation or that kind of thing, And you go down to
4 subdivision G which says, "In marginal cases where it
5 is not clear whether there is substantial evidence that
6 a project may have a significant effect on the
7 environment the lead agency should be guided by the
8 following principle: If there is disagreement among
9 expert opinion, supported by facts over the
10 significance of an effect on the environment, the lead
11 agency shall treat the effect as significant and shall
12 prepare an EIR," It uses the word shall twice. The
13 CEQA guidelines 15504A say, "Must or shall identifies a
v
~ 14 mandatory element which all public agencies are
-
~
15 required to follow,"
16
So in this case, if you have expert opinion
17 supported by facts, even though they can marshal -- you
18 know, like Elijah and the prophets of Baal, hundreds of
19 counter-experts, it doesn't matter. You have that
20 expert disagreeing and you have to go to the next step
21 of producing the EIR.
22
You have that in two situations here, First,
23 you have it in the situation on the issue of blight, I
24 know you have received a lot of materials, and frankly,
25 I have not had a chance to fully digest, However, the
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1 experts I see here have a clear disagreement between on
'-- 2 the one hand, Ills this going to cause blight? Is this
3 going to cause an environmental impact of hollowing out
4 other commercial areas of the city given the fact that
5 those commercial areas have a perhaps 100 and sub-lOa
6 dollar per square foot annual sales off of their floor
7 area, and Wal-Mart has a multiple of that,
8 In other words, will~uilding 150,000 of
/
(,./",
- .-.~~
9 retail at Wal-Mart reduce by 400,000 or more retail at ~
10 smaller levels of retail, As a city attorney at Lake
11 Elsinore, when Wal-Mart went in, we lost our Kmart.
12 And we're sitting there in a world of hurt having to
13 subsidize it at 90,000 a year for 20 years, and it's
i~
\""... 14 gone,
15
Here the second issue, and this is the biggest
16 key issue of all, is this issue of a traffic study,
17 This is a very technical study, It was prepared by two
18 traffic engineers, one a college professor, And the
19 traffic engineers in this study went and looked at the
20 standard ITE manual that is used for predicting traffic
21 impacts on development.
22
What they concluded was it dramatically,,":under
(,.,/
23 the 1997 manual which is used by traffic engineers,
24 dramatically under-counts freestanding box retailers
25 such as Wal-mart, Best Buy, Target and these others by
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1 as much as 28 to 50 percent, If you want to follow
<-
~ 2 with me on the chart that's in there, and I'll admit
3 this analysis and all of this is extremely complicated,
4 but they have a table one of data where they said
5 there's only about three studies that have been done by
6 ITE, and here we've done a full-on study of 18 big box
7 stores. You can see, of the 18, you have square
8 footages ranging from the 95s to the 155,000s, Your
9 trip generations on these are in the mid-800s to over
10 900 peak hour trip generation, Now, you move over and
11 you go to this AADT; that's average annual daily
12 traffic. You can see that number never gets higher
13 than about 42,000. Well, your own data indicates that
-
~ 14 your AADT here is the 1-215 Freeway, That's why
15 Wal-Mart goes against the freeway, and that's 100,000
16 vehicles a day, Furthermore, what the -- you know,
17 computer say, "Garbage in garbage out." When you start
18 with bad data and bad assumptions, you end up with bad
19 results,
20
The traffic study artificially narrows the
21 radius for the draw for the store to a mile and a half
22 to come up with am extremely low population, In fact,
23 if it was something other than a mile and a half, as we
24 should more properly suggest given there's an
25 interstate freeway that runs along the front door of
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1 the store, you would have a population that would
,_.
~ 2 triple to quadruple what the population is being
3 claimed to be in this situation. So you're already at
4 say, 900 peak trips based upon this empirical data done
5 on the Wal-Mart-type big box stores by these traffic
6 engineers. You've got AADTs of a third to a quarter of
7 what you're going to have out here. You've got
8 population that's going -- out here, it's going to be
9 three to four times what you have here, and yet the
10 numbers are being -- I don't know what else to call it
11 except cooked. To come out below the trigger of a
12 thousand, peak hour thousand, which would trigger, as
13 you know, a congestion management plan.
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.........
14
Let me give you a little personal experience I
15 have on this. I worked in siting for the City of
16 Anaheim in siting the Wal-Mart at Anaheim Plaza in the
17 mid-'90s. We did that with an environment impact
18 report. We did the traffic analysis. We did a heck of
19 a lot of on-site mitigation work for infrastructure.
20 As it turned out, once the Wal-Mart went in, similar in
21 size, slightly smaller than this one here, we realized
22 we had just completely blown over our traffic model.
23 And we were trying to figure out why was it we'd blown
24 over the model, so we did a postmortem. The staff did.
25
In the postmortem, we identified two things.
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lOne, our model had not adequately taken into account
-
~ 2 that, just as this Wal-Mart is next to the I-215
3 Freeway, that one was next to the I-5 Freeway. That
4 skewed the model. The other thing, which I find
5 fascinating, that this study -- this was not one of the
6 variables that these two engineers and professor and
7 engineer studied. A variable completely left out was
8 the variable of median household income.
9
For example, I'm familiar with the Wal-Marts
10 in Orange County. The Wal-Mart in Brea in a more
11 affluent area does relatively poorly compared to the
12 Wal-Marts in Anaheim and Orange and other less affluent
13 areas. So consequently what really is another
-
'- 14 variable, I think, that needs to be looked at in any
15 model is the variable of what is the impact of the
16 median household income on the draw.
17
But the bottom line here on all of this is
18 your traffic model here is at least 50 percent to
19 perhaps double, given the limitation on the area that
20 is being proposed as the market area, which was
21 artificially constrained.
22
You can see in this there's nothing even
23 approaching, you know, one and a half mile radius on
24 the one in Maryland. The population here is three
25 times the size -- two to three times the size here.
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1 Your median household income -- when a big bunch of
-
"'- 2 your people are starving students and underpaid
3 professors by their own admission -- there's a lot of
4 Wal-Mart shopping there.
5 MAYOR JUDITH VALLES: Mr. McClendon, would you
6 please try to summarize your statement, please.
7 MR. MC CLENDON: So at any the rate, what I'm
8 saying is -- what I hope I've just shown you is this is
9 an example of what is a fair argument. Now, again,
10 they can bring a whole host of people up here to say
11 I'm wrong. I disagree with the data. I disagree with
12 the model. Point is, I have established under 15064
13 that expert opinion's supported by facts, and the
.-
'- 14 proper role for the City at this point is to back up
15 and do an EIR.
16
I'll conclude by saying this: In my years of
17 doing this, I'm enough of an idealist to always hope
18 that a public agency will do the right thing.
19 MAYOR JUDITH VALLES: Thank you.
20 MR. MC CLENDON: However, I'm enough of a realist
21 to know that when a staff gets together with an
22 applicant -- and we're talking about sales tax revenue,
23 the mother's milk of city government -- it's really
24 hard to stop that train and it comes down hard. So
25 just a free word of advice from my own experience here,
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1 and I say this perhaps to your city attorney.
-
'-
2
My experience has been you get as a condition
3 of approval that they will defend, indemnify and hold
4 the City harmless if there's litigation. However, it's
5 been my experience that you can have some bruising
6 litigation. The project applicant will defend the
7 City. In the end, the City loses. The documents under
8 which that condition was set in place is also
9 invalidated in association with the project, so
10 consequently what happens is, and I've seen it happen
11 more than once, the project applicant, when you come to
12 the project applicant and say, "You know, the City just
13 got hit by the judge for 150,000 in litigation cost,
.-
'- 14 these attorneys fees. Make good on it." They say,
15 "Under what?" So I would just urge you at the very
16 least, if you're going to plow ahead here and follow
17 staff and follow the applicant's representation, get
18 something more than that so you're protecting yourself.
19 That concludes my comments.
20 MAYOR JUDITH VALLES: Thank you. I suspect that
21 Mr. Empeno has been taking copious notes because
22 ultimately we're going to refer to him.
23
Is there anyone else that wishes to speak to
24 this item?
25 MR. HALL: I'm James T. Hall. I'm with the
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1 Northwest Pact, and I've been involved with the
,..-
'- 2 Building and Planning Committee. We have looked at the
3 various problems that seem to be part of the Wal-Mart
4 development, but we see that the City planning people
5 have worked around those problems and have come up with
6 solutions. We on the pact are people who live in the
7 sixth ward and work in the sixth ward, own property in
8 the sixth ward. We look forward to this development,
9 and we encourage that you deny the appeal and that you
10 go ahead and approve this development. Thank you very
11 much.
12 MAYOR JUDITH VALLES: Thank you, Mr. Hall.
13
Is there anyone else that wishes to speak to
-
......... 14 this item?
15 MR. NOLAN: May I respond to that?
16 MAYOR JUDITH VALLES: Yes, Mr. Nolan. And then
17 I'11 ask Mr. Casey or Mr. Ross to come to the lecterns
18 for any questions we may have.
19 Yes, Mr. Nolan?
20 MR. NOLAN: I found the comments of the counsel
21 for the appellant interesting. I, like him, have
22 practiced in the CEQA area for a number of years. I've
23 practiced in that area since 1986. I've practiced in
24 the practice of law for 32 years, so I think I have
25 some experience that I can bring to the table here.
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'-
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1
Unlike him, I have lost cases. I don't like
-
......... 2 to lose cases. And as a result, when I have a choice,
3 as I have here, to make recommendations to a client,
4 and if I think that that client is in a dangerous
5 circumstance, I'm not going to put myself out there and
6 say, "Oh, go ahead and take your best shot" if I think
7 that it's going to end up with mud on my face.
8
My circumstance here is that the situation has
9 not risen in any respect to a fair argument. Recall
10 what was said to you. The fair argument is if there is
11 disagreement between experts supported by substantial
12 evidence. You have here, first of all, you have two
13 people. I don't care that they are college professors
,,-
......... 14 or that they are members of MENSA or whatever they are
15 that have a disagreement with the traffic engineers'
16 methodology.
17
The fact is, that is a disagreement within
18 that organization. It is not a disagreement as to this
19 specific site. Insofar as the blighting is concerned,
20 there has been no presentation made to this body or to
21 the Planning Commission or to planning staff regarding
22 blighting for this project.
23 They have these big generalized concepts of
24 blighting. "Wal-Mart kills" basically is what their
25 mantra is. The circumstance is that Wal-Mart brings to
i'_
~
YOUNGER REPORTING SERVICES
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-
1 a city a number of substantial benefits. It serves the
'......... 2 population. In this instance you will have generated
-,............
3 $300,000 in sales tax every year. You will have a
4 benefit of increased property taxes. The circumstance
5 is there is no conflict of experts here. We now
6 apparently have counsel as his own self-proclaimed
7 expert as far as traffic generation.
8
In addition to what is said in the article, he
9 then brings his own experience to the floor, and
10 certainly he is not qualified as an expert. The
11 circumstances are that there has never been anything
12 that has been presented to you, has been presented to
13 this City, that rises to the nature of being a fair
~ 14 argument. And the circumstances are that in order to
.,-
'-
15 get a fair argument, it has to be more than opinion and
16 speculation and generalization. It has to be specific.
17
You look at the traffic critique that was
18 presented today by appellant, and all that does is it
19 doesn't present facts. It just takes facts and reaches
20 different evaluations. That is not a fair argument.
21 This city deserves this facility. It should have it.
22
And I also found it very interesting. Counsel
23 got up; he introduced himself. I didn't hear who's
24 paying his bill. Who he represents. I think that's
25 interesting. Thank you.
YOUNGER REPORTING SERVICES
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1 MAYOR JUDITH VALLES: Thank you, Mr. Nolan.
-
"-' 2 Is there anyone else in the audience that
3 wishes to present information to this body? Seeing
4 none, any question from members of the Council or we
5 may close the public hearing and then have questions.
6 Mr. Empeno, what do you recommend?
7 MR. EMPENO: Mayor, my suggestion is that you
8 return to City staff whether it is a city engineer,
9 Mr. Casey or planning, Valerie Ross to see if they have
10 any comments that they want to make prior to closing
11 the public hearing.
12 MAYOR JUDITH VALLES: Thank you. Ms. Andersen,
13 you wanted to question. Mr. Casey is at the lectern.
,-
'-
14
MS. ANDERSEN: Thank you, Mayor. I really wanted
15 to speak to this issue. And I'd like to speak to it
16 from a different angle than the legal verbiage that we
17 have heard. I find it very interesting what I have
18 listened to, and I'd like to not discuss -- I want to
19 approach it that I'm not going to discuss any of the
20 alphabet CEQA, EIR or any of the others.
21
I want to step outside the box and discuss it
22 from the viewpoint of the constituents and the people
23 who live in the sixth ward. I've been a resident of
24 the city of San Bernardino 40-plus years. And all of
25 this time I've lived in the same house in the same
-
.......
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1 area. And no one in the 41-plus years that I've lived
~~
,-. 2 have come to seek development in the sixth ward.
3
Now we have a developer who has come to
4 provide service to the constituents and the people
5 living there that they have not ever had. Now I am
6 really -- I'm amazed at the fact that the two people
7 who have protested against this, Ms. Kathleen Franks
8 and now Ms. Carol Gold, who do not live in the sixth
9 ward. who live in a ward where they have access to
10 retail businesses of this type. We do not. So I can't
11 understand how they are protecting and they're
12 providing any service to us by keeping the citizens in
13 the area where I live and my constituents from having
/,."...
'- 14 the same ability to have shopping access in a very
15 short distance that they have in the rest of the city
16 of San Bernardino.
17 We are experiencing a new climate here by
18 having Wal-Mart to come in and want to establish a
19 business in the sixth ward of the city of San
20 Bernardino. It will give equal access to this area of
21 the city to have shopping that is reasonable and
22 within - - you've already stated that when you go in the
23 economic level of people, you'll have a great advantage
24 and a great number of people shopping there. This will
25 be the case in the sixth ward. It will meet the needs
-
~
YOUNGER REPORTING SERVICES
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-
1 and the finances of those persons living in the sixth
"'- 2 ward.
.",-
"-'
-
'-
3
And I think that, you know, I don't see any of
4 these peoples coming to me. We need a bank on our side
5 of town. Come and as far away from San Francisco and
6 bring me a bank; bring me some way to get a bank. It
7 is not fair to our people in the city and the area that
8 I live for you to come here as far away as San
9 Francisco and Lake Elsinore to stop the people of the
10 sixth ward from having easy access to shopping that
11 would be convenient. Thank you, Mayor.
12 MAYOR JUDITH VALLES: Thank you, Ms. Andersen.
13 Any more comments? Mr. McGinnis.
14
MR. MC GINNIS: I have to say that I am pretty
15 much in a quandary over it. I don't think that enough
16 consideration probably has been taken in. Because I
17 can see -- I worked this area outdoors for over 20
18 years, and I've seen a lot of buildings, and I've seen
19 every Wal-Mart in the area come in, and a lot of them
20 are in the areas that Pacific Bell services. And I've
21 been able to notice some good things and I've been able
22 to notice some bad things happened to them.
23
I know that the Wal-Mart in Colton went in.
24 It was very popular. The Kmart across the street
25 eventually closed. The shopping supermarket, it was a
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1 huge supermarket, just attached to the same building
,,-
'-
2 around the corner
I mean around the parking space
3 from them closed up. They have two very large
4 buildings there that are now vacant having the
5 Wal-Marts in. And I'm not trying to say -- I mean, I
6 like competition. I like the businesses being able to
7 come in and offer value.
8
At the same time the City of Colton, and like
9 another mentioned, is paying for that Kmart building
10 because they also at that time sponsored that Kmart to
11 come into their city. And I think there still -- you
12 know, they're in debt trying to put something --
13 nothing else has been able to move into that Kmart
-
'- 14 building.
15
I've seen something similar happen to Rialto
16 on South Riverside Avenue. The Marshall's center
17 across the street went completely vacant. And the
18 other businesses that are in that little strip mall, I
19 think the only thing left there now is a Chinese
20 restaurant.
21
There's another Wal-Mart out in the city. I
22 mean out in San Bernardino, out near the city of
23 Highland. I don't see the same thing happening there.
24 Now there's a Wal-Mart off of the 10 Freeway and
25 California Street, but I don't know the conditions of
-
-
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1 what goes on around there. There's another one in
.-.
........ 2 Fontana off of Mango and Foothill. There was a
3 supermarket on the corner there. It went vacant. I
4 think now they're trying a Spanish market there now.
5 There is some collateral damage that happens
6 when a Wal-Mart comes in. I think there should be
7 given more weight and more consideration. And I agree
8 with Ms. Andersen; there is a clientele. I would
9 rather see a Wal-Mart put in on Mount Vernon or see a
10 Wal-Mart put on Medical Center Drive or put in on
11 Highland Avenue or put in, you know, on Baseline in
12 your ward. There is a great need.
13 MS. ANDERSEN: No acreage.
~~"
'- 14 MR. MC GINNIS: They can consolidate acreage. We
15 can help them consolidate acreage. The fact is, there
16 is a need for what Wal-Mart provides. One of the
17 things happens though in some cases, not every case,
18 because I can see some Wal-Marts do fine and don't hurt
19 some businesses around them, but I don't know if the
20 experiment for this is right for the area. Not just
21 the sixth ward, but the fifth ward over there that has
22 struggling businesses that are going on over there that
23 can possibly be hurt by it.
24
And I think we also had one other CEQA problem
25 up in that area that has cost the City a lot of
-
........
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1 turmoil. And then I don't think there's anything wrong
--
'- 2 with making sure that we're completely covered as far
3 as whether or not we should be or shouldn't be or if
4 that's the perfect spot for Wal-Mart to be developed in
5 our city. And there are a great number of them
6 already. I mean, I can count 1-2-3-4-5-6 Wal-Marts
7 that are local.
8
And I guess now they're going to come up like
9 McDonalds and be on every corner. I don't know if
10 that's good for every city to have as many of these
11 things as we could possibly have. There's certainly
12 great needs for Wal-Marts. Great needs for malls. But
13 if we had malls across the street from malls, we're
-
'- 14 going to wind up with some of them having to close as
15 they continue to fight with each other over the right
16 to get enough customers in those particular areas.
17
I don't think there's anything wrong with us
18 taking more time to consider whether or not this is the
19 most advantageous thing here we should do for our city.
20 Thank you.
21 MAYOR JUDITH VALLES: Thank you. Just for
22 clarification before I call on Mr. Suarez and
23 Ms. McCammack, Ms. Ross, you indicated in your
24 testimony that some of the findings, at least that's
25 how I understood it, would be that less than 1 percent
-
YOUNGER REPORTING SERVICES
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-,,-
1 of the proposed floor area would be for food. Is that
'- 2 what you said?
-
3 MS. ROSS: That is correct.
4 MAYOR JUDITH VALLES: And that also, based on the
5 information that you received, there was no indication
6 of any grocery sales being planned?
7 MS. ROSS: That is correct. That was an issue
8 that was raised at the Development Review Committee
9 level, and the representatives at that time said
10 they're not proposing a grocery store at this time at
11 this location. It's a general merchandise store only.
12 MAYOR JUDITH VALLES: At this time, at this
13 location. Thank you. Mr. Suarez, you wish to make a
~ 14 comment.
~-
"'-
15 MR. SUAREZ: Thank you. You took care of one of
16 the questions I was going to ask from Valerie: If
17 there was any planning later on to make it into one of
18 these super mega stores that they keep talking about;
19 but apparently not from what you answered. Am I
20 correct on that, Valerie?
21 MS. ROSS: That is correct. And I have a
22 condition of approval that we put on the project that
23 says something to the effect any changes in use will
24 require filing a new development permit application.
25 MR. SUAREZ: Thank you. And I was listening to
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1 Mr. McGinnis and his comments. He makes a lot of
-,
,-. 2 sense, but the economy is what dictates whether stores
3 open or close. I'm sure that Wal-Mart has done all of
4 their studies to see if they can make money. They're
5 not going to build something that they can't make
6 money, and they have invested heavily into those
7 studies. Just like I'm sure Monkey Wards did in the
8 past when they built their stores, but eventually
9 business has to cycle. The people say, "Hey, we don't
10 need a Montgomery Wards." So guess what? Boom. We
11 don't need a JC Penney. We don't need a Mills over in
12 Ontario. So the economy is dictated by a different
13 monster altogether. And whether the lawyers agree and
-
'- 14 bring in all of this other stuff, it's the people that
15 dictate their wants and dislikes. So having said that,
16 thank you very much for listening to me.
17 MAYOR JUDITH VALLES: Thank you, Mr. Suarez.
18 Ms. McCammack.
19 MS. MC CAMMACK: Based on the request for this
20 body to make, which is to close the public hearing and
21 to adopt a Mitigated Negative Declaration for this
22 particular project, I think the key question that I
23 formulated in listening to all of the proponents and
24 opponents of this project.
25
The one key factor that I got out of all of it
_.
-
YOUNGER REPORTING SERVICES
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,-
1 was from Mr. McClendon who, true, did not state to us
'- 2 who he was representing, which I also found
,-
3 interesting. I spent the first 10 minutes trying to
4 figure out who was paying his bill. I'm still not sure
5 I figured that out.
6
I can say his statement regarding the code
7 regarding 15064-F was that even if there is a
8 disagreement, it must be, and I underlined supported by
9 fact, which were your words precisely. I've made a
10 whole bunch of notes. I can see other council members
11 have also, and I have yet to hear the fact that
12 distinguishes between what our staff has given us and
13 what the opponents, or the appellants should call them,
......... 14 have listed in their documentation.
-
-
15
It's based on information in Maryland. It's
16 based on information in other states. It's not based
17 on information regarding this site, regarding this
18 piece of acreage regarding the retail locations around
19 it. And I was actually appalled at one of the
20 documents that said that if this store were to go in,
21 that the brand-new Stater Brothers on 40th Street would
22 become blighted. That appalled me. And to use that
23 kind of intimidation on this body, I was insulted.
24
I don't believe Stater Brothers would have
25 done what they did to help 40th Street revitalize
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,.....,
1 itself and spend all the money they did knowing full
~ 2 well that this project was coming down the pike
3 expecting to be blighted because of a Wal-Mart going
-
~
.-
........
4 in. I am prepared to close the public hearing. I
5 didn't see any hands, Mayor. I'm not sure.
6 MAYOR JUDITH VALLES: We have a motion to close
7 the public hearing. Do I have a second?
8 MS. ANDERSEN: Second.
9 MS. MC CAMMACK: And adopt the Mitigated Negative
10 Declaration.
11 MS. ANDERSEN: Second.
12 MAYOR JUDITH VALLES: We have a second. And now
13 discussion. Ms. Estrada.
14
MS. ESTRADA: Mayor, I think the thing that is so
15 startling is that usually when we have an appeal or
16 public hearing on any planning issue, if there is no
17 community consent, we get to hear it in chambers, and
18 we get phone calls and letters. I have not received
19 anything even though it's not about my district, but we
20 all vote for the issues, anything that shows that kind
21 of opposition from the community itself. I'm surprised
22 also that the area that is being discussed by the
23 opponents stretches all the way almost from E Street
24 all the way to the university. That's an enormous
25 area, I mean, to try to include in this issue.
YOUNGER REPORTING SERVICES
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"....""'"
1
So I think when we have the residents and
~ 2 business people from those areas come out and express
-,
3 their opinions, and then, you know, we listen very
4 attentively and we consider it in our vote. But at
5 this point in time, I just can't see how I could vote
6 against this if the community that it's going to go in
7 wants it and it meets all the legal requirements as set
8 by our city. Thank you.
9 MAYOR JUDITH VALLES: Ms. Lien. Then I'm going to
10 ask for Mr. Empeno's opinion. Be ready.
11 MS. LIEN: I found the arguments very good. I
12 compliment you all since I spent a lot of my time with
13 CEQA as well. Make no mistake. A Wal-Mart will have
'- 14 an impact on shift in sales in the economy. We all
,-
~
15 know that. The question is whether at this point in
16 time we should derail the Negative Dec and require an
17 EIR.
18
And while I personally, you know, may feel
19 that Wal-Marts have so much impact that they should
20 have EIRs, the question nonetheless is whether I think
21 this Negative Declaration has been done thoroughly and
22 at this point I have any reason to doubt that this
23 appeal should be granted. I don't have that doubt
24 right now. I do think that there will be challenges,
25 and actually I personally kind of applaud them, but
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,-
1 that's not the point here. The point is whether we are
'- 2 going to impact our city over our personal
-
'-
-
'-
3 philosophical feelings over what Wal-Marts do.
4
I've got to admit I really enjoyed being in
5 Europe last year and recognizing how the Europeans
6 really understand the economies of scale really destroy
7 communities. But it's a fact. We're a different
8 society. We have our free ways. We have our way of
9 life. It's what our people at this point are choosing.
10 I think when the history books are written, it won't be
11 all so pretty. But nonetheless, I mean, I've heard
12 some arguments, but not enough to convince me that we
13 should grant this appeal.
14
MAYOR JUDITH VALLES: Thank you. We do have a
15 motion to close and to adopt the recommendation, the
16 recommended motion.
17 UNIDENTIFIED VOICE: Mayor, you want to hear from
18 Valerie?
19 MAYOR JUDITH VALLES: Yes. Ms. Ross.
20 MS. ROSS: Mr. McClendon had several comments
21 related to fair argument, and he referenced different
22 sections of CEQA. A fair argument does not equal
23 opinion or speculation. A fair argument has to be
24 supported by substantial documentation in the file. We
25 have no specific data that contradicts the factual
YOUNGER REPORTING SERVICES
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,.."'......
'-
-,
~
"'-
1 information in the initial study. And one last point
2 that he made was that we
the initial study was
3 prepared by an outsider, if you will. That is correct,
4 and that was noted on the initial study. We are not
5 trying to hide that.
6
The cover of the initial study also notes that
7 it was independently reviewed and analyzed by the City
8 of San Bernardino and Development and Environmental
9 Review Committee before they made their determination
10 on that. We believe that this initial study is in
11 compliance with the requirements of CEQA. And if I
12 may, I'd asked Ray to provide a summary on that traffic
13 to confirm what I just told you. Thank you.
14
MAYOR JUDITH VALLES: Thank you, Ms. Ross.
15 Mr. Casey.
16 MR. CASEY: Madam Mayor, Members of the Council.
17 I would probably restrict my comments primarily to the
18 letter we received this morning dated July 9th, that
19 dealt with traffic issues.
20
First of all, I'd like to restate something
21 that others have said. Of course, this was
22 independently reviewed and approved by City staff.
23 Certainly it has showed there were impacts from this
24 proposal and certainly as a result of the approval
25 process, mitigation was derived to offset those
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1 impacts. Those included local improvements and also a
_.
'- 2 regional traffic system fee, which is meant to mitigate
3 regional-type impacts. In this particular case, it was
4 in excess of $190,000. And as you know from your CIP
5 or from the Capital Improvement Program budget approval
6 this morning, we have included some funding in that
7 budget for regional projects in this area including the
8 loop ramp and, of course, at the University I-215, of
9 course, a grade separation. That's University Cajon.
10 That project, as you know, is fully funded. The local
11 improvements associated with this project that this
12 project is required to do would be traffic signals at
13 the intersection at the main entrance at Hallmark and
.-
'- 14 Gannett, Hallmark University intersection improvements
15 and I-215 southbound ramp at University improvements, j,-"
16 and those are some.
17
In addition, I wanted to touch on a couple of
18 technical issues that were addressed in this letter;
19 more technical issues, one of which has to do with
20 queuing at a number of locations that was addressed
21 here. And that analysis or evaluation of the traffic
22 study analysis, if you will, does not include with and
23 without the project. We took a quick look at those
24 numbers, and there's little difference in most cases
25 between with project and without project. There is
-.......-
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--
1 some increases, of course, in some places; but the
"'- 2 areas that have the substantive queuing issues that
_.
3 were brought up in the letter are at westbound
4 University northbound ramp, also eastbound University
5 at Hallmark and at westbound University between the
6 ramps, and those have -- the first one is actually a
7 decrease with the project over without the project
8 because of signal improvements and interconnection plan
9 and also any others who have increases, although not
10 real significant increases. There are a couple of
11 other things in the letter itself. It talks about
12 queuing space required for vehicles. It talks about
13 four vehicles for 265 feet. We think that's more like
~ 14 10 or 11.
"',,~..""
15
One pretty important issue, I guess, in terms
16 of emergency access.
It doesn't.
It talks about
17 emergency access issues associated with the main access
18 to I-215 main line as it describes it. But, of course,
19 there are other alternative access points for emergency
20 vehicles, and they're obviously very familiar with the V'
21 other off ramps:
Industrial Parkway access, access
~.2' from the southbound State Street, so not all of the
(
23 the emergency access vehicles have alternatives is the
24 point.
I'd be happy to answer any questions.
25 Certainly technical staff is here if you have any
YOUNGER REPORTING SERVICES
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1 questions relative to the traffic issues I have not
.-
-
2 answered.
3 MAYOR JUDITH VALLES: Thank you, Mr. Casey. If
4 there are no other questions, no comments, I will call
5 for the previous question.
6
Would you come forward, please. And then I
7 apologize; I have a meeting that started at 12:30, and
8 I'm late to it, so I might have to leave.
9 MR. MOSELEY: My name is H. W. Moseley (phonetic).
10 I live at 3249 North California Street, San Bernardino.
11 I'm the last house on California on the east side of
12 the street. I've been living here in San Bernardino
13 for about 40 years.
;"...-",
'- 14 THE CLERK: Excuse me, Mr. Moseley. Were you
15 administered the oath earlier?
16 MR. MOSELEY: No, I'm no expert.
17 MAYOR JUDITH VALLES: Mr. Moseley, did you wish to
18 speak on this item?
19 MR. MOSELEY: Yes.
20 MAYOR JUDITH VALLES: I'm sorry. That didn't
21 indicate on here.
22 MR. MOSELEY: Yes.
23 MAYOR JUDITH VALLES: Would you please raise your
24 right hand, Mr. Moseley. This is a public hearing.
25 THE CLERK: Do you solemnly affirm the testimony
'''''-"'
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1 you're about to give before this body will be the
-
'~ 2 truth, the whole truth and nothing but the truth?
3 MR. MOSELEY: I do. Since I've lived on this side
4 of town now, or the west side, for 16 years - - I bought
5 a house here not too long ago, and we don't have
6 anything in the area really. Everything like
7 Ms. Andersen was saying is on the other side of the
8 freeway. Stater Brothers is about the closest one,
L_/
9 Ralphs Market. Here we have a chance to have a
10 Wal-Mart. And right now I got to go all the way to
11 Colton to shop at Wal-Mart. I shop at Wal-Mart quite a
12 bit because they've got some darned good bargains.
13 Ralphs, which is not too far form me, I don't shop
,~
',- 14 there too much because they're high. I go over to
15 Stater Brothers. But I go where I can get the best
16 bargains.
17
We need Wal-Mart over there. It gives us a
18 chance, poor people like I am, to have a place where we
19 can save some money and get some decent items. Because
20 they carry a few grocery items, though I don't see how
21 that's going to impact Ralph's and Stater Brothers like
22 some of these people have stated, some of these
23 attorneys. That's not going to impact us, because I
24 know when -- I think Alpha Beta had a store over on
25 Muscott and Baseline. It didn't go over. You know
"-
YOUNGER REPORTING SERVICES
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1 why? Because they jacked up the prices too high, so
--
~ 2 people went across the bridge and went to Stater
3 Brothers. And that's why that store failed, because I
4 know I walked in there several times. Their prices was
5 way too high. I said, "Oh, forget that." I went to
6 Stater Brothers or Food 4 Less. Food 4 Less is way
7 downtown, but that's where I went. People shop where
8 they can get the best items; and not only best items,
9 but reasonable items that fit their pocketbook. I wish
10 you'd take that into interests because we need a store
11 like Wal-Mart. It just really fits in our -- well, we
12 need it in our area. Forget about all this traffic and
13 environmental stuff. I mean, people will go where you
'- 14 can get the best bargains, and we need it. And I'm
15 tickled to death that they want to come over our way
16 because nobody else does. So I hope that they do come
17 in, and I hope you approve it.
18 MAYOR JUDITH VALLES: Thank you for your time. I
19 will now call for the previous question. So ordered.
20 We will now recess until 2:00 p.m. at which time we
21 will take up the remaining items on today's agenda.
22
(The hearing was concluded at 12:30 p.m.)
23
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24
25
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1
2
REPORTER'S CERTIFICATE
3
4 STATE OF CALIFORNIA)
) 55.
5 COUNTY OF RIVERSIDE)
6
7 I, MARIA L. RENO, a certified shorthand reporter
8 for the State of California, do hereby certify:
9 That the said hearing was taken down by me in
10 stenotype at the time and place therein stated and
11 thereafter reduced to typewriting under my direction
12 and that the hearing transcript is a true and correct
13 record of the proceedings here held.
14
I further certify that I am not of counselor
15 attorney of any of the parties hereto or in any way
16 interested in the event of this cause and that I am not
17 related to any of the parties thereto
.
18 Dated this 12th day o~
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MARIA L. RENO
cerqified Shorthand Reporter
License No. 11367
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YOUNGER REPORTING SERVICES
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