San Diego enacted, in 2007 and 2010, two separate ordinances that require the city to review the economic and community impact of large-scale retail development proposals before deciding whether to approve them.
Large Retail Ordinance
In 2007, the city adopted a Large Retail Ordinance. It requires that proposed stores over 50,000 square feet obtain a Neighborhood Development Permit, and those over 100,000 square feet obtain a Site Development Permit. (The measure also applies to expansions of existing retail that would result in a store larger than these size thresholds.)
A Neighborhood Development Permit cannot be approved unless the city determines that the project is consistent with the its General Plan and would not adversely affect the public welfare. The decision is made by city staff with the opportunity for the decision to be appealed to the planning commission.
A Site Development Permit likewise cannot be approved unless the city determines that the project is consistent with the its General Plan and would not adversely affect the public welfare. In this case, the decision is made by the planning commission, which must hold a public hearing, and the decision can be appealed to the city council. A market and fiscal impact analysis must be prepared as well.
These permits are discretionary and a finding of inconsistency with any element of the city’s General Plan can provide a basis for denying the project. (More on San Diego’s discretionary review process can be found here.) The Economic Prosperity Element of San Diego’s General Plan calls for, among other things, promoting “economically vital neighborhood commercial districts that foster small business enterprises and entrepreneurship” and development that results in “a higher standard of living through self-sufficient wages and an increase in citywide real median income per capita.” It also notes the problem of excessive retail development and the potential for commercial blight, and favors limiting the amount of land designated for commercial development.
The General Plan itself establishes the need for a review process for large-scale development. It notes the importance of “an informed public decision-making process providing economic information to the public and decision-makers” and specifically calls for economic impact review for retail development projects over 100,000 square feet.
UPDATE: In February 2011, the San Diego City Council repealed this ordinance, after Wal-Mart gathered the 42,000 signatures needed to place a referendum on the measure before voters. We’ve kept the information below as it may be useful to other cities that are devising similiar laws. The repeal prompted San Diego Senator Juan Vargas to introduce statewide legislation, which passed the California legislature but was vetoed by the governor.
In November 2010, the city of San Diego enacted a second ordinance the requires any proposed superstore — defined as a retail establishment of 90,000 square feet or more that devotes 10 percent or more of its floor area to nontaxable merchandise (i.e., groceries) — to obtain a Site Development Permit (SDP). The measure creates additional review criteria for these stores and requires a more extensive study.
An SDP for a superstore cannot be approved unless the relevant government body makes a finding that the proposed store will not:
- increase neighborhood blight;
- adversely affect the city’s neighborhood and small businesses;
- negatively impact the city’s Business Improvement Districts, Redevelopment Areas, or Micro Business Districts; or
- adversely affect the character of the surrounding area.
To help the city make this determination, the ordinance requires that the developer pay for an economic and community impact analysis conducted by a consultant approved by the city. This analysis must include, at a minimum, an assessment of:
- the extent to which the proposed superstore will capture a share of retail sales in the economic and community impact area.
- how the construction and operation of the proposed superstore will affect the supply and demand for retail space in the economic and community impact area.
- the number of persons employed in existing retail stores in the economic and community impact area, an estimate of the number of persons who will likely be employed by the proposed superstore, and an analysis of whether the proposed superstore will result in a net increase or decrease in employment in the economic and community impact area.
- the costs of public services and public facilities resulting from the construction and operation of the proposed superstore and a description of how those services and facilities will be financed.
- the public revenues resulting from the construction and operation of the proposed superstore.
- the effect that the construction and operation of the proposed superstore will have on retail operations, including grocery or retail shopping centers, in the same economic and community impact area, including the potential for blight resulting from retail business closures.
- how the development of the proposed superstore conforms to the Guiding Principles of the General Plan, and the goals and policies in the City’s General Plan Economic Prosperity Element.
- the effect that the construction and operation of the proposed superstore will have on average total vehicle miles travelled by retail customers in the same economic and community impact area.
- whether there will be any restrictions on the subsequent use of the proposed superstore project site, including, but not limited to, any lease provisions that would require the project site to remain vacant for any amount of time.
- whether the proposed superstore would require the demolition of housing, or any other action or change that results in a decrease or negative impact on the creation of extremely low-, very low-, low- or moderate-income housing in the City.
- whether the proposed superstore would result in the destruction or demolition of park and other open green space, playground, childcare facility, or community center.
- whether the proposed superstore would result in any other adverse or positive impacts to neighborhood and small businesses.
- whether any measures are available which would mitigate any materially adverse impacts of the proposed superstore to neighborhood and small businesses.
The primary purpose of the ordinance is to protect the economic viability of the city’s neighborhood commercial districts, which could be negatively impacted by large-scale retailers. The ordinance also aims to protect the community from blight, increased traffic, reduced air quality, and a decline in the city’s financial health that could undermine the provision of public services.
The ordinance closely aligns with the goals of San Diego’s General Plan, which includes a “City of Villages Strategy” aimed at steering growth to mixed use centers that are pedestrian-friendly.
San Diego’s general plan also calls for promoting “economically vital neighborhood commercial districts that foster small business enterprises and entrepreneurship” and retaining “the City’s existing neighborhood commercial activities and develop new commercial activities within walking distance of residential areas.”
The San Diego City Attorney evaluated the ordinance and concluded in this memo that it is within the city’s authority and does not violate the due process, equal protection and commerce clauses of the US Constitution.