GILROY
– As city leaders prepare to decide whether to grant a
multi-million dollar financial incentive package to the developer
of a major regional shopping center – apparently the largest in the
city’s history – grocery unions are taking aim at a proposal to
build a Super Wal-Mart as one of the cent
er’s mainstay retailers.
GILROY – As city leaders prepare to decide whether to grant a multi-million dollar financial incentive package to the developer of a major regional shopping center – apparently the largest in the city’s history – grocery unions are taking aim at a proposal to build a Super Wal-Mart as one of the center’s mainstay retailers.
At least one city Planning Commissioner has questions about the incentives, and may want the city to wait on granting approvals until more information comes in on environmental and economic impacts.
Planning Commissioner Paul Correa said Wednesday he wants to ensure all impacts from the project are discussed and addressed before he approves a development agreement, noting that Wal-Mart officials have reportedly indicated a willingness to commission an environmental impact report on their new store.
“I don’t want to make any premature decisions before we see the whole picture,” he said.
Under a development agreement to be reviewed by the city’s Planning Commission Thursday night, the city could rebate up to $5.4 million in future sales tax income to San Francisco’s Newman Development Group, which is constructing a regional “power center” at the junction of state Highway 152 and U.S. 101.
Newman has asked the city to reimburse them for development impact fees – which cover off-site infrastructure costs such as road improvements and water and sewer lines – related to their Pacheco Pass regional shopping center at Camino Arroyo and Renz Lane. The center would feature chain retail stores such as Party City, Linens and Things and popular restaurants such as Chili’s. Under the city’s financial incentive program, companies move in without paying the impact fees the city usually charges. Instead, the fees are repaid through sales tax income generated from the new store or business during its first few years of operation.
City officials have argued the incentives are important to compete with neighboring cities for new businesses, especially in lieu of an active redevelopment agency here.
The overall Newman center is forecast to eventually bring in as much as $1.5 million a year in sales-tax revenue to the city, according to economic development officials. City leaders are counting on that money to help pay for expanded services citywide such as new paramedics and firefighters.
The city has already approved incentives for the Costco and Lowe’s Home Improvement stores that anchor the Newman center. And last year, the City Council conceptually approved a roughly $5 million incentive to developers of the Regency Shopping Center across state Highway 152 from the Newman development on a 4-2 vote.
To provide the two “power” centers with their incentives, the city has had to deviate from its traditional practices and policies.
The incentives are provided for the overall shopping centers, a departure over past incentives distributed only to individual businesses. Both also lack guarantees on the amount of sales tax that the centers will generate to cover the waived impact fees – something the city traditionally asks for.
However, the Newman agreement would require the developer to provide minimum five-year leases for each building pad. Businesses would have to be open and generating sales tax revenue within 240 days of receiving permission to occupy their buildings.
The developer will also have to make additional pedestrian improvements, provide fire equipment and conduct additional traffic studies and monitoring, officials said.
But news that Wal-Mart may move a super-sized version of its current, decade-old store with a new grocery operation into the regional shopping center has drawn protests from labor unions that represent workers at existing stores such as Nob Hill and Safeway.
Officials with United Food and Commercial Workers Local 428 have criticized the company’s labor practices and expressed fears about everything from quality-of-life impacts to concerns that a Wal-Mart grocery – which does not use union labor – will threaten the existence of Gilroy’s current grocery stores while creating downward pressure on the wages and benefits workers receive there.
Wednesday, they took aim at the legitimacy of forecasts of sales tax revenue expected from the Newman center. They said the firm that performed the studies, the Sedway Group, has recently performed economic impact studies on Wal-Mart’s behalf in other Bay Area cities.
“We think the city has an obligation to the taxpayers and local developers and merchants to perform an independent economic impact study to determine the true costs and benefits of this project,” said Local 428 President Roger Rivera.
Safeway customers are receiving flyers in their shopping bags urging them to avoid Wal-Mart and notifying them of Thursday’s hearing.
However, city officials have said the Newman development agreement would not provide incentives for businesses that relocate – like the Wal-Mart – if they don’t generate new sales-tax revenue, and any existing businesses relocating to the center would reduce the incentive credit accordingly.
Wal-Mart corporate officials have said they offer competitive wages and benefits, and said the new store will bring jobs, one-stop shopping and beneficial competition for Gilroy consumers.
The Planning Commission is also slated to consider a set of conceptual design standards for the shopping center. If approved by that group and the City Council, the designs of specific buildings could be approved by city staff in-house if they meet the standards, instead of going before the Council again.
Thursday’s meeting begins at 6 p.m. in the City Council Chambers at Gilroy City Hall, 7351 Rosanna St.
