GILROY
– The city’s Planning Commission approved a financial incentive
agreement for a major regional shopping center Thursday, rejecting
arguments from labor unions and environmental groups to wait and
commission new environmental and economic analyses.
GILROY – The city’s Planning Commission approved a financial incentive agreement for a major regional shopping center Thursday, rejecting arguments from labor unions and environmental groups to wait and commission new environmental and economic analyses.
After roughly an hour of debate and public comment, the commission voted 4-1 to recommend the City Council approve a development agreement that could grant up to $5.4 million in sales tax rebates for the Newman’s Pacheco Pass Center at the junction of U.S. 101 and state Highway 152.
“I don’t see where we’d lose,” said Commissioner Norman Thompson about the agreement, addressing concerns expressed by several speakers from a full audience in the City Council Chambers.
But dissenting Commissioner Paul Correa said there are too many unanswered questions still floating about the center to approve the agreement.
“There are a lot of assumptions out there,” he said.
Under the city’s financial incentive program, companies move in without paying fees the city usually charges for impacts to infrastructure such as roads and sewers. Instead, it allows companies to cover the fees with sales-tax income generated from the new store or business during its first few years of operation.
Like its new neighbor Regency Center across the highway, Newman has asked the city for a reimbursement to cover the fees associated with its new 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.
While the incentives have drawn debate and disagreement at the Council level, Newman’s has also drawn significant attention from labor unions since Wal-Mart expressed interest in relocating its existing Camino Arroyo store to a super-sized store – with a grocery store – at the new center.
Unions have protested the move, marching in front of the existing Wal-Mart and criticizing its labor practices, wages and benefits. Thursday, they switched gears into the city’s legal arena.
Mark Wolfe, a land-use lawyer commissioned by United Food and Commercial Workers Local 428, was among the several speakers who asked the commission to wait on the incentive decision.
Wolfe ask for a new, independent analysis of the center’s economic impact, questioning the validity of an analysis by the Sedway Group already performed on the center and cited in the incentive agreement.
That firm has done several studies for Wal-Mart in other cities and concluded the stores would have positive benefits on the community, Wolfe said. But while the Gilroy study isn’t necessarily wrong or improper, peer reviews of reports in other studies have produced different conclusions than Sedway’s, he said.
The city also needs to examine the environmental effects of individual stores in the center, Wolfe said. While a store may look attractive from a sales-tax standpoint, it could have negative environmental impacts, he said.
Several other speakers made similar points.
But Newman’s George Akel called Sedway “one of the most reputable firms in the area,” and said questions about the center’s economics mainly have to do with the potential Wal-Mart.
“The study has been around since August of last year, and quite frankly we’ve never had a question on it until tonight,” he said.
Meanwhile, the center’s location has always been designated as a regional commercial area, he said, and the company is taking care of many potential environmental impacts through its own construction – including millions of dollars in road improvements.
“At some point, you have to ask what’s fair when people want to come in,” he said.
And 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. Existing businesses relocating to the center would reduce the incentive credit accordingly, they said.
When discussion turned to the commission, Correa said the commission should wait to approve the agreement until all impacts from the project are discussed and commissioners could closely examine the economic analysis.
He noted that Wal-Mart officials have reportedly indicated a willingness to commission an environmental impact report on their new store. Meanwhile, commissioners and the public should get more time to review the economic analysis, which he said they received yesterday.
“This is a large amount of cash,” he said. “Is this project actually going to generate the $5.4 million to give to the developer?”
But Thompson said he didn’t see the risk.
“I can’t see the basis for waiting,” he said. “I can’t see an exposure to the city because we’re getting all of these infrastructure improvements …”
And there are provisions in the development agreement that would allow for changes if there are any new traffic impacts suggested by ongoing studies and monitoring, he said.
“Both the city and developer have agreed to address those issues,” he said.
The agreement now moves to the City Council on Monday for possible approval, and could see debate there as well.
Friday, Mayor Tom Springer characterized the incentive agreement as a no-risk venture that’s crucial to help bring the centers to town.
If the center developers had to write a check for the impact fees up-front, they would possibly go elsewhere, he said. But by landing the center, consumers get more variety while the city gets more revenue to help pay for services, he said. Meanwhile, because of the city’s financial assistance and a new state law the center is built with prevailing-wage labor.
“Everybody wins,” he said.
Although there aren’t straight guarantees about the amount of sales tax the center will generate, the city has used conservative estimates and has also added requirements that “significant” sales tax generators must be landed in the center in order for Newman to receive the incentive, Springer said.
And Gilroy is a popular enough retail hub now that people shouldn’t worry about empty buildings at the centers, Springer said. Businesses are “falling over” themselves to go in here because of the city’s location at the highway crossroads, he said.
“We’re a key spot people are demanding to be in,” he said.
But when Council approved Regency’s agreement last year, Councilmen Charlie Morales and Peter Arellano voted no over worries that without guarantees, the center could possibly fall short of generating the amount of tax needed to cover the fees and leave the city on the hook.
Friday, Morales said he’s still concerned about the lack of guarantees, and the economic downturn has given him even more reservations.
“When you have no guarantees, let them use their own finances and not put the city in any kind of unpredictable future situations,” he said. “My role as a councilmember is to protect the interests of the city and not (a company’s) marketing or business plan.”
