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US: States Target Big-Box Stores; Maine Is First to Require That Wal-Mart, Rivals Undergo Impact Studies

by Kris HudsonThe Wall Street Journal
June 29th, 2007

Opponents' efforts to thwart the expansion of Wal-Mart Stores Inc. and other big-box retailers have graduated from city-council chambers to the statehouse.

Maine Gov. John Baldacci last week signed into law a measure requiring developers of retail stores exceeding 75,000 square feet to conduct studies gauging the project's impact on municipal services, the environment and local businesses. The proposed store can't be approved if the studies find it is likely to cause a quantifiable, "undue adverse impact" on more than one of those fronts and is expected to have a harmful effect on the community overall.

The Maine legislation is the first state law of its kind in the U.S., but similar measures have been proposed in six other states in the past two years. A bill made it through the California State Legislature last year but was vetoed by Gov. Arnold Schwarzenegger. Another measure is under review in New Jersey.

The impact-study bills are the latest twist in efforts to use legislation to curtail the development of Wal-Mart and other chains, like Home Depot Inc. and Target Corp. , that commonly build large, stand-alone stores.

For decades, such retailers have contended with restrictions imposed by cities and towns on the size, appearance and number of their stores. A few municipalities have enacted bans on further development of big-box stores; San Diego's mayor this month vetoed a bill aimed at banning such stores that sell groceries, but the city council is scheduled to vote July 10 on an override.

Statewide legislation aimed at big-box retailers has proven largely unsuccessful. Maryland lawmakers last year overrode a gubernatorial veto to enact a law specifying how much money large employers -- namely Wal-Mart -- should spend on workers' health-care coverage. An AFL-CIO effort to replicate the law in three dozen other states failed, and a federal judge struck down the Maryland law as conflicting with federal law.

The Maine law and bills resembling it show that lawmakers remain leery of large-format retailers even as the largest -- Wal-Mart and Home Depot -- have reined in their U.S. expansion plans. Last year, the 10 largest U.S. retailers accounted for 25% of the nation's retail purchases, excluding cars, up from 18% in 1996.

Chain proliferation "really is changing the dynamic of the face of the country in a sense, with employment practices and buying habits at both the individual and [corporate level]," says New Jersey Assemblyman Jeff Van Drew, a Democratic co-sponsor of an impact-study bill in that state. "Part of that is the effect these stores have not only in your community but on neighboring communities."

The New Jersey bill would require an impact study for any proposed store exceeding 130,000 square feet.

The Maine law requires developers proposing any retail store that exceeds a 75,000-square-foot threshold to deposit $40,000 with the state for use by the governing city or town. That money is earmarked to pay for a study of the project's impact on municipal services, traffic, local employment and nearby bodies of water, among other things. If the study finds a quantifiable adverse impact in at least two cases, and also predicts the project will cause more general harm to the community, the project can't be approved.

The law's proponents -- including its chief architect, the Institute for Local Self-Reliance, an advocacy group for small local businesses -- say the statute gives municipal leaders a wide array of data to use in making their decisions and requires them to consider the regional impact of each project. Supporters acknowledge that some of the law's criteria are subjective, but they add that such is also the case with Maine's established standards for development of housing subdivisions and other real-estate projects.

Maine business groups attempted unsuccessfully to modify the bill to allow cities and towns to opt out of the requirements. They say they intend to revisit the law during Maine's next legislative session, which begins in January. "We have felt that some of the groups supporting the legislation probably will not end here and probably will go after even smaller development in the future," says Jim McGregor, executive vice president of the Maine Merchants Association.

The Maine law has attracted attention far beyond the state's boundaries. The Retail Industry Leaders Association, a trade group of large national retailers, blasts the law as "fundamentally anticompetitive, anticonsumer legislation."

A Montana measure mirroring the Maine law died in committee in the state's latest legislative session. It would have required stores exceeding 75,000 square feet to meet economic and environmental standards and provide minimum pay and benefits for their employees in the state.

The vetoed California bill aimed to require developers of stores exceeding 100,000 square feet to fund an economic-impact study. Sponsor Richard Alarcón, a former state senator now on the Los Angeles City Council, says despite the veto, the state bill served as a template for ordinances in Los Angeles, Sacramento and Alameda County, Calif.

"I am unable to support this bill that effectively sends a message to retailers and others that California is closed for business," Gov. Schwarzenegger said in announcing the veto.





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