GILROY
– City Council’s decision to approve up to $5.5 million in
financial incentives for a major shopping center might face a
confrontation at the ballot box.
GILROY – City Council’s decision to approve up to $5.5 million in financial incentives for a major shopping center might face a confrontation at the ballot box.

Labor union organizers critical of the incentives – and a supersized Wal-Mart – destined for the Newman Development Group’s new Pacheco Pass Center are pondering a push for a voter referendum.

Since Council voted 5-2 last Monday to approve a development agreement for the regional shopping center, City Clerk Rhonda Pellin has received 10 to 12 telephone calls inquiring about the rules and process for a referendum.

While callers did not identify themselves or their affiliations – and the city does not require them to – officials with United Food and Commercial Workers Local 428 confirmed Thursday that they’re considering such a move.

“We’re actively exploring it,” said Danny Beagle, a Local 428 organizer. “We’re exploring it to see if it’s practical.”

To force the incentive deal to be reconsidered, a petition with the signatures of at least 10 percent of the city’s 16,000-plus registered voters would have to be certified once an ordinance concerning the incentives has passed, according to the California Elections Code.

If the City Council does not repeal the ordinance outright at that point, it would have to submit it to the voters for a majority approval either at the Nov. 4 regular municipal election or in a special election.

A final, formal vote on the ordinance that could allow a start to the referendum process would probably not come before Council until at least April, city officials said.

When complete, the Newman development is slated to include a mix of chain stores such as Party City, Linens n’ Things and restaurants such as Chili’s. A Costco food warehouse and a Lowe’s home improvement store are also part of the overall development but were given different incentive agreements.

But Local 428, which represents grocery workers at several existing Gilroy supermarkets, such as Safeway and Nob Hill Foods, has been highly critical of Wal-Mart’s proposal to move an expanded store – with a new grocery operation – from its existing Camino Arroyo location into the new shopping center.

The union’s arguments against the expanded Wal-Mart have ranged from negative quality-of-life impacts for Gilroy to the likelihood of downward pressure on area salaries and benefits. Wal-Mart does not currently use union labor in any stores nationwide, a fact that company officials say is the choice of employees. Union officials say it’s more a consequence of company policies and intimidation.

Beagle declined to comment much on the union’s reasons or goals with a possible referendum Thursday, saying merely the incentives would be “a major giveaway.”

“We’ve been talking to people in the community, walking up and down Monterey Street and talking to small-businesspeople … and we feel as a union and on behalf of our members here that we’re talking about a major giveaway at a tough time,” he said.

Newman’s George Akel said Friday that he’s disappointed in the talk of a referendum and believes there’s been miscommunication over the way the incentives work, their relationship to a relocated Wal-Mart and the overall shopping center’s positive benefits for the community.

“We’re obviously somewhat upset about it,” he said Friday of the referendum. “We think it has a lot to do with some miscommunication and misinformation being put forth in front of everyone …

“People are trying to tie this to Wal-Mart, and nothing could be farther from the truth,” he said. “They’re going to be there with or without us.”

Elected city officials have stressed that because Wal-Mart would be an existing city business that is relocating within town, Newman would not receive incentive money for the store if it moves into the new center – a potential knock of up to $2 million dollars off an estimated $5.5 million credit the developer could gain against its development fees.

But a referendum could potentially complicate matters for a Wal-Mart-anchored shopping center.

If enough signatures are secured to qualify the matter for the ballot, it would force the city to delay the development agreement that enables the incentives until a decision is cast by voters, said Gilroy Mayor Tom Springer.

The mayor – who has been heavily involved in bringing the two new shopping centers to town – has said an expanded Wal-Mart is not his first choice for the Newman center because it isn’t likely to generate new sales tax revenue for the city.

But Springer said Thursday that voting in support of a referendum over the incentives on account of a possible Wal-Mart at the new center is confusing the issue – and would be a big mistake.

Even if voters rejected the incentives, it wouldn’t necessarily stop Wal-Mart from following through with its expansion plans, Springer said. But it would threaten the Newman center in general and the city services that would come with the tax revenues it’s eventually expected to generate.

A referendum could also potentially impact a similar $5 million incentive agreement approved last year for the Regency Center across state Highway 152 – meaning potentially higher drops in city revenue, Springer said. That center broke ground last month.

“If the referendum goes forward, we wouldn’t have the income stream we’re counting on in future years to continue to cover the cost of police and fire services, support the new paramedic program we just started and find funds to operate the third fire station,” Springer said.

The view that Wal-Mart will build an expanded store here even if kept out of the Newman center contradicts past statements from a Wal-Mart spokeswoman, who has said it’s “impossible” for the company to expand the store at its current Camino Arroyo site. At roughly 220,000 square feet, the proposed Super Wal-Mart would be nearly twice as large as the existing store, which opened in the early 1990s.

But Springer and city economic development director Bill Lindsteadt maintain it’s not impossible for Wal-Mart to expand there, at least from a regulatory standpoint.

Springer said expansion could occur without special building permits or environmental studies. While parking would reportedly be the major issue for a 220,000 square-foot expanded store, the company could target adjacent vacant land for expansion or consider other solutions such as a second story or underground parking, he said.

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