Sacramento's recent decision to ease restrictions on big-box stores did more than put the city back in the mix for future Wal-Mart and Target stores.
The politically charged City Council vote last month appears to have rejuvenated the city's efforts to build Delta Shores, a community of 5,000 housing units with a regional shopping center long planned for empty land along Interstate 5 near the Meadowview neighborhood.
The Delta Shores developer, Merlone Geier Partners of San Diego, aims to attract up to four big-box retailers to its freeway center, a critical step to finance development of the 800-acre project.
Merlone Geier lobbied for the rules change. Representatives said their retail project could be delayed or even canceled without help competing for major retail tenants.
"Anchor tenant deals are not the easiest to put together, and limiting competition only makes it that much more difficult," Merlone Geier spokesman Gary Muljat wrote in an email to The Sacramento Bee.
He said his company is in talks with retailers but declined to say which ones. Several retail and land planning professionals said the eased rules should bring once-reluctant Wal-Mart into the mix.
The city ruling eliminated a requirement that retailers do additional economic-impact analyses, including a wage and benefits study, when proposing stores larger than 90,000 square feet with more than 10 percent of space dedicated to groceries.
City development officials concluded that the old policy, adopted in 2006 amid prodding by labor unions, amounted to a ban on the biggest big-box operators, like Wal-Mart, which is nonunion and builds 150,000-square-foot stores.
The relaxed policy goes into effect next year and will be reviewed by the city in three years.
It also makes it easier for existing big-box stores in the city to add grocery sections the "batteries to bananas" shift increasingly popular among megastores.
Allowing more big-box stores with grocery sections will give Sacramento a better chance to compete with surrounding cities for sales tax dollars, said Scot Mende, the city's new growth manager.
Critics of the change complain the city has given the green light to another freeway-oriented center for chain stores at the expense of small, locally owned retailers and traditional supermarket chains. Unionized grocers such as Raley's and Safeway have been increasingly squeezed by competition from nonunion big-box retailers, particularly Wal-Mart.
Marti Brown, head of the North Franklin District Business Association, said the city is protecting superstores that squelch small businesses, leaving locals to "fend for themselves."
Brenda Ruiz of Slow Food Sacramento, a group that advocates consumption of locally grown food from small farmers, also decried the newly opened path for megastores.
"We don't believe that superstores are (the best option for) healthy and local food," she told the council before its vote two weeks ago.
South area residents expressed mixed feelings about Delta Shores. Some residents of rural Freeport bristle at becoming urbanized. Other Meadowview and south area residents say they welcome more groceries in their vicinity, even in big-box format.
"We're talking about affordable food for Sacramento families," said Daniel Bryant of the 100 Black Men of Sacramento organization. "The city should encourage retailers that can do that for us."
Even as Sacramento moves to attract more megaretailers, the big-box era is probably past its peak, said Garrick Brown, research director at Cassidy Turley Real Estate Services.
Many big-box retailers whose stores sell a single category of goods, such as electronics, office supplies or books, are downsizing or going out of business in the face of competition from online sales. Casualties include Circuit City and Borders. Barnes & Noble and Best Buy have been struggling.
So far, though, Wal-Mart, Target and a few other cross-category retailers have bucked that trend, getting even bigger by adding groceries to their list of goods.
"It's been a genius move for Target and Wal-Mart," Brown said. "Landlords view them as bulletproof."
Wal-Mart officials declined to say whether they plan to build at Delta Shores or elsewhere in the city.
"We're encouraged by the city's vision and recent support for more economic development," Wal-Mart spokeswoman Rachel Wall said in an email to The Bee. "We don't have any new projects in Sacramento to announce, but we will continue to look for opportunities ... throughout the state."
Earlier this year, the city and the Delta Shores developer launched a $100 million road project to prepare Delta Shores for development. The work includes an I-5 interchange just north of Freeport, and an extension of Cosumnes River Boulevard. The interchange is set to open next year.
The city also plans soon to extend 24th Street south to connect with the new section of Cosumnes River Boulevard. Regional Transit is building a light-rail line between Meadowview and Cosumnes River College with a station just east of Delta Shores.
Although the big-box issue has made headlines, the bigger hurdle for Delta Shores has been the bad economy. That appears to be improving.
"All indications are that the retail market has bounced off of the bottom and is making a slow, but steady recovery," said Delta Shores spokesman Muljat. "From a residential perspective, it appears that home values have increased enough and inventory is low enough to entice home builders to return to the market.
"It will be interesting to see what the next few years bring."
Call The Bee's Tony Bizjak, (916) 321-1059. Follow him on Twitter @tonybizjak.