GILROY
– City Council’s decision to grant up to $5.5 million in
financial incentives to a regional shopping center – a center that
could include a controversial new Wal-Mart – will officially face a
challenge from labor unions and others critical of the deal and the
store.
GILROY – City Council’s decision to grant up to $5.5 million in financial incentives to a regional shopping center – a center that could include a controversial new Wal-Mart – will officially face a challenge from labor unions and others critical of the deal and the store.
A coalition of labor unions, business, environmental and civic leaders called the Committee for Responsible Development will kick off efforts Monday to bring a referendum on the city’s development agreement with Newman Development Corp’s Pacheco Pass shopping center.
“We found that in our conversations with people around the community that there was a lot of outrage,” said Danny Beagle of United Food and Commercial Workers Local 428 Thursday. “People simply don’t buy the idea that (this) has nothing to do with Wal-Mart.”
Council approved the development agreement – which could be the largest in the city’s history – by a 5-2 vote in early March. It is likely to receive procedural final approval that’s necessary for the referendum attempt to begin at Monday’s Council meeting. The coalition is planning a rally and barbecue outside City Hall before the meeting.
To force the incentive deal to be reconsidered, they will need to secure a petition with the signatures of approximately 1,600 registered voters within 30 days of the meeting.
If the Council does not repeal the ordinance outright at that point, the Council would have to submit the matter to voters either at the next regular election in November or in a special election.
Beagle said organizers are confident they can get the signatures. He noted that approximately 550 people have already signed a newspaper ad urging the city to “take a closer look” at the agreement.
“Just from conversations with members, neighbors, friends and people in the small business community, we feel comfortable we’ll get it,” he said.
Notable signers of the ad, which appears in today’s Dispatch, include state Assemblyman Manny Diaz (D-San Jose), Gilroy Councilman Peter Arellano, former Councilmembers Connie Rogers and Lupe Arellano and current Planning Commissioner Paul Correa.
It was unclear at press time whether they supported the specific referendum attempt. The ad asks for independent environmental and economic impact studies on the project.
The Newman center, located at the junction of U.S. 101 and state Highway 152, would include a mix of chain stores such as Party City, Linens n’ Things and restaurants such as Chili’s. A Costco food warehouse store and Lowe’s home improvement center at the Newman site were granted separate incentive packages that aren’t in question.
The development agreement allows Newman to use up to $5.4 million in sales tax expected to originate from the new center to cover certain fees the city would charge for the project’s impacts to roads, sewers and other infrastructure.
Regency Corp’s regional shopping center across Highway 152 received a similar deal worth roughly $5 million last year. Both have drawn criticism and dissenting votes from Arellano and Councilman Charles Morales because they don’t contain guarantees that the project will generate enough sales tax revenue to cover the waived impact fees – although supporters generally say there’s little risk.
But Wal-Mart may also move its current store to the new center and expand it to include a grocery store – a move that’s drawn the ire of the unions, who argue it will have negative impacts both on quality of life, existing stores and area wages and benefits in general.
Wal-Mart does not use union labor, a fact company officials said results from employee choice but unions say results from intimidation tactics.
But in the case of Wal-Mart, city officials have stressed that Newman will not receive incentive credits for the Wal-Mart if it moves in because it’s an existing business that’s relocating within town. The city’s incentive policy generally targets new businesses that will attract additional sales tax revenue or jobs for Gilroy.
Supporters of the agreement such as Mayor Tom Springer have said targeting the overall shopping center’s agreement won’t necessarily stop Wal-Mart, but could complicate and potentially thwart the center – and at least $1.6 million a year in sales tax revenue the city is counting on for city services such as police and fire.
If successful, officials have warned a referendum could delay the incentive agreement for several months.
Newman Corp.’s George Akel was out of the office and could not immediately be reached for comment Friday. But in an opinion piece written for The Dispatch, he warned the referendum would have negative effects.
“The referendum would severely limit, if not scuttle entirely, the shopping center’s ability to entice other national retailers and restaurants to Gilroy,” he said. “The result could be that Pacheco Pass Center is no longer a viable business venture, and the city loses out on millions of dollars in annual sales tax revenues and other contributions to the community.”
