The Sacramento City Council eased the city's restrictions on big-box superstores Tuesday night following a contentious two-hour debate that pitted some of the region's top business interests against influential labor leaders.
By a 6-2 vote, the council erased most of a 2006 ordinance that required superstore chains to conduct wage and benefit studies of nearby businesses before being permitted to build new facilities.
Complex economic impact studies will also be waived for stores seeking to expand, or open in "food deserts" and some major planned developments.
The City Council chambers were packed for the hearing, with those who opposed easing the restrictions outnumbering those who advocated for the change by a 2-1 ratio.
Labor leaders, small-business representatives and neighborhood activists urged the council to keep the 2006 ordinance in place. Building trades group and business organizations led the push to ease the restrictions.
Council members Kevin McCarty and Darrell Fong voted against repealing the ordinance. Councilwoman Bonnie Pannell abstained from the vote.
The council approved a scaled-down plan from the full repeal of the big-box ordinance initially proposed by city development officials.
Under the plan approved by the council, economic impact analyses would no longer be required in major developments for which the City Council has already approved large-scale retail projects.
Those studies require big-box chains such as Wal-Mart and Target to study the impact of new superstores on tax revenue and nearby businesses and would still be required for other parts of the city.
Developments where the economic studies would no longer be required include the massive Delta Shores project along Interstate 5 in south Sacramento and parts of North Natomas. The studies will also be waived in "food deserts" areas of the city with limited access to fresh produce and groceries.
Under the 2006 ordinance passed by a City Council with stronger allegiances to organized labor than the body that now sits at City Hall, superstore chains had been required to conduct complex economic impact analyses and wage studies when proposing all new stores.
The rules applied to projects larger than 90,000 square feet with more than 10 percent of the space dedicated to groceries.
City development officials contended that the ordinance amounted to a ban of big-box stores. Five superstores operate within city limits, but none meets the overall size and grocery thresholds of the law, officials said.
In the meantime, there are 35 big-box stores open in nearby cities and counties, according to a database compiled by Sacramento officials. Supporters of repealing the ban argued that the nearby competition has led to a bleeding of tax revenue to other jurisdictions.
Councilman Steve Hansen said "this ordinance, in many peoples' perspective, has not functioned." He said tax revenue that should be supporting city police, fire and park services is going to other jurisdictions.
"This policy causes harm to our city," he said.
Joshua Wood, the head of Region Builders, a building industry group that spearheaded the push to repeal the ordinance, said the regulation "stifles jobs and it stifles tax revenue for the city and its ability to provide essential services."
Gregory Thatch, an attorney representing Delta Shores, said the law would make it difficult for the development to attract an anchor retail tenant and could delay the project by two years or longer.
"The tentacles of this run far and they run deep," he said.
Opponents of the change expressed concern about the effect superstores would have on small businesses.
Neighborhood activist Efren Gutierrez said repealing the ordinance would shove "a knife into the heart of small business."
Marti Brown of the North Franklin Business District Association said she was concerned about the effect easing the rules would have on businesses outside the more affluent commercial districts of the central city and east Sacramento.
Some opponents questioned claims that easing the rules on superstores would have a positive economic effect on the city, arguing the money spent at the stores would simply come at the expense of other existing businesses.
Others expressed worry about the quality of the jobs created by the superstores.
"One of your considerations should be what kind of jobs you want to bring into the city," said Mario Guerrero, president of the Stonewall Democratic Club of Greater Sacramento.
The plan to repeal the ordinance has been in the works for months and has been met with extreme opposition by local labor organizations, which have feuded with Wal-Mart over salary and health care issues. The chain has said it has no immediate plans to open a store within city limits.
That scrutiny evolved into a political opposition last month, when The Bee revealed that Wal-Mart had donated nearly $800,000 since 2009 to nonprofits and charities affiliated with Mayor Kevin Johnson and members of the City Council. Most of that money went to education advocacy organizations on behalf of the mayor.
Eric Sunderland, a local Democratic Party activist, has asked that Johnson be investigated by the U.S. attorney's office and the state Fair Political Practices Commission for what Sunderland alleges is a conflict of interest in the big-box debate.