In a push to expand across California without interference, Wal-Mart is increasingly taking advantage of the state’s initiative system to threaten elected officials with costly special elections and to avoid environmental lawsuits.
The Arkansas-based retailer has hired paid signature gatherers to circulate petitions to build new superstores or repeal local restrictions on big-box stores. Once 15 percent of eligible voters sign the petitions, state election law puts cash-strapped cities in a bind: City councils must either approve the Wal-Mart-drafted measure without changes or put it to a special election.
While most development projects don’t attract much controversy, Wal-Mart has become a lightning rod almost everywhere it goes in California. Backers of organized labor have demonized the company for opposing unions and paying low wages, while other critics say its superstores cripple local businesses and increase sprawl.
Now, Wal-Mart’s use of the initiative process has angered elected officials who say the company’s political strategy effectively holds them hostage.
“They circumvented the system and blackmailed the town,” said Rick Roelle, a councilman in Apple Valley, where Wal-Mart pushed through a superstore proposal in April. “We’ve had controversial projects, but we were never bullied like Wal-Mart.”
Wal-Mart and its supporters argue that the strategy helps speed up development that can boost employment and tax revenue, as well as low-price shopping. The initiative process, according to the company, pressures cities only because it shows the strong community support for Wal-Mart.
“The initiative process was an opportunity that allowed voters to voice their support for the benefits that Wal-Mart would bring their community, including jobs, affordable groceries, increased tax revenue, and infrastructure improvements,” Wal-Mart spokeswoman Delia Garcia said in a statement.
The company has employed the same well-honed strategy across the state, from the Central Valley agricultural community of Kerman to the Silicon Valley suburb of Milpitas to the High Desert town of Apple Valley, where the main street has a special crosswalk button for horse riders.
Wal-Mart has ramped up the campaign in the last year, pushing through four new superstore projects and fighting big-box regulations in San Diego. The company spent $2 million on the effort, paying election lawyers, campaign consultants and public relations firms.
Wal-Mart often rallies a crowd of supporters at city council meetings to back up its position. Pastor Ray Smith, president of a group called Pastors on Point, asked his followers to support Wal-Mart in San Diego. He spoke passionately against an ordinance imposing new regulations on superstores, saying other stores don’t hire enough African Americans.
At one city meeting, he called on a group of young people to stand and told the city council, “You want to stop the violence? We need jobs.”
Wal-Mart paid Smith’s church to bus supporters to council meetings and shuttle young people who gathered signatures for a ballot initiative petition against the regulations. Wal-Mart’s local political committee also reported paying $13,400 in salary and consultant payments to Smith directly, in addition to $5,500 labeled “van/bus rental.”
Smith said the campaign filings were incorrect. “They did rent our buses … but I was never a consultant for them,” he said.
Wal-Mart uses the ballot initiative process in part to shield its superstores from lawsuits under the California Environmental Quality Act. The landmark 1970 law requires state and local agencies to review and mitigate the environmental and traffic impacts of development projects. Lawyers often sue Wal-Mart, contending that the review didn’t go far enough.
The company has found a loophole: Once it switches to a ballot initiative, the law doesn’t apply.
Other companies occasionally pursue ballot initiatives on development projects. But Wal-Mart is the main player, and California is the main battleground.
Wal-Mart’s successful strategy raises questions about whether California’s communities – dogged by economic woes – can afford an aggressive use of the state’s system of direct democracy. Other interest groups could use the same strategy to pressure elected officials, as medical marijuana advocates recently did to defeat pot club regulations in San Diego.
This year, four cities approved Wal-Mart’s initiative petition without an election. One of them, San Diego, repealed its own superstore regulations in the face of an election that could have cost $3.4 million. Only Menifee in Riverside County held a special election, costing taxpayers $79,000. Wal-Mart spent nearly $400,000 there − and won handily.
The strategy violates the spirit, if not the letter, of state environmental law, said Richard Frank, former California chief deputy attorney general for legal affairs.
“It is disturbing because it appears to be a fairly overt circumvention of the CEQA process,” said Frank, now director of the California Environmental Law & Policy Center at the UC Davis School of Law.
Wal-Mart argues that it closely adheres to California’s extensive regulations. The strategy is necessary, it says, to avoid spurious lawsuits targeting the company for political reasons. The retailer points out that it goes much of the way through a lengthy planning process, allowing for an environmental impact report and public input, before heading to the ballot box.
“In many places around the state,” Garcia said, “we often obtain store approvals but are subjected to special interests that attempt to use political and legal challenges to unfairly delay a store’s construction.”
Ironically, since the 1990s, activists often have used ballot initiatives to block Wal-Mart stores.
Wal-Mart turned that strategy on its head when it began proposing its own initiatives. The company suffered a sobering, nationally publicized loss in Inglewood in 2004. The company spent more than $1 million on a ballot measure to open a superstore there. Unions fought back, and voters shot it down.
But Wal-Mart hasn’t lost in California since.
In 2007, Wal-Mart used the initiative process to force Long Beach to repeal an ordinance banning certain superstores that sell groceries. The council, facing tough budgetary times, decided the city couldn’t afford an election, giving in to the company. In 2009, Wal-Mart defeated a big-box ban in Salinas the same way.
Last year, city councils approved Wal-Mart superstore initiatives without an election in the small Gold Country city of Sonora and the Mojave Desert military base community of Ridgecrest. This year, with five victories, has been Wal-Mart’s busiest.
Wal-Mart continues to see a big opportunity for growth in California. The company already has 212 stores and employs 67,525 people in the state.
Proposals start with planning commissions
On the road to a superstore ballot initiative, Wal-Mart starts out following the normal process: The local planning commission reviews the company’s detailed plans to address traffic and environmental impacts. Once the planning commission approves the project, lawyers working for environmental or other anti-Wal-Mart interests often challenge the decision, setting the stage for a lawsuit.
But before the city council gets a chance to weigh in, Wal-Mart pulls its proposal and starts circulating an initiative petition detailing the same project.
To Wal-Mart’s supporters, the planning commission’s public hearings and stamp of approval provide sufficient oversight. Some planning experts, however, argue that the city council’s review is an important part of the process. Councils normally can make their approval of big development projects conditional on certain changes, like requiring developers to widen a road for additional traffic or help pay for a nearby public park.
In Fresno County, Kerman Councilman Doug Wilcox, for example, wanted to weigh in on whether students at a nearby school were sufficiently protected from increased Wal-Mart traffic. The company’s strategy didn’t give him the opportunity.
“The strong-arm tactics and the way that they did it just left a bad taste in my mouth,” Wilcox said.
The city manager, on the other hand, argued in a strongly worded report to city council that the project had been rigorously reviewed, exceeded standards and would provide hundreds of thousands of dollars in tax revenue. The report opposed holding a special election, which it said, “could be viewed as simply a tactic to delay the project and reject the will of the citizens of Kerman.”
Other city officials blame Wal-Mart’s tactics on the handful of lawyers who routinely sue over big-box projects using the California Environmental Quality Act. They believe the lawyers are abusing the environmental regulations and blocking economic growth with frivolous lawsuits.
The lawyers maintain their claims have merit, pointing to court victories against Wal-Mart and settlements under which the company agreed to make environmental improvements.
Wal-Mart points to a news report by the Wall Street Journal last year that Safeway Inc. hired Massachusetts-based The Saint Consulting Group to run anti-Wal-Mart efforts throughout California. A Saint spokesman said the firm never sued Wal-Mart directly but declined to say whether Saint financially backed lawsuits. Wal-Mart tried to determine whether Saint was behind any California lawsuits, but hasn’t been able to identify any cases.
Either way, the legal wrangling takes time, and to Wal-Mart and its supporters, the initiative strategy is an effective and legitimate way to cut through such delays.
“I’m upset that there’s circumstances in California that would make it necessary to do that,” said Apple Valley Mayor Scott Nassif. “They’ve got a target on their back, apparently, so that’s just the reality of things.”
For each initiative, Wal-Mart creates and funds a political committee with the city’s name, like it did with Apple Valley Consumers for Choice. The company relies on a stable of prominent firms to handle legal filings and communications strategies.
The company looks for a local resident to formally propose the initiative. Attila Csikos offered to be that person in Menifee, a recently incorporated city whose growth has been driven by master planned communities. Csikos said he likes Wal-Mart’s low prices and supports the initiative process.
“It should be up to the will of the people, not the regulations of a city council,” he said.
Wal-Mart’s petitions, which can run longer than 60 pages, create special development rules for a specific area allowing for a superstore. They include language that bars appeals for future administrative approvals.
National Petition Management, which often handles Wal-Mart’s signature drives, works fast. In Milpitas, near San Jose, Councilwoman Althea Polanski was impressed that Wal-Mart garnered 6,000 signatures in 16 days. The county registrar found that 3,745 signatures were valid, more than 15 percent of Milpitas’ 24,000 registered voters.
“That speaks very, very clearly to me that a majority of the people in this city want an expanded Wal-Mart,” Polanski said at an April council meeting.
If the petition is signed by 10 percent of registered voters, it can go on the next regularly scheduled ballot. Fifteen percent triggers a special election that must be held between 88 and 103 days later, which can be much more costly. In Milpitas, it would have cost $436,000.
The only other option is to approve the initiative as Wal-Mart wrote it.
Councilwoman Debbie Giordano originally supported Wal-Mart but was alarmed by the initiative strategy. She worried it could be used by other activists to open marijuana dispensaries.
“I think that’s a dangerous formula for government,” Giordano said. “What does that say? Go use your money and your power, go get the signatures, and then we’re going to force you to do whatever.”
Giordano’s fear already has been realized in San Diego. On the heels of a successful Wal-Mart effort there, a group of medical marijuana supporters brought a ballot initiative to repeal regulations on pot clubs. Putting it on the next ballot would have cost up to $841,000. The council repealed its own marijuana ordinance, as council members bemoaned the costs of an election.
Money plays critical role
Sometimes, council members ask Wal-Mart to pay for the election. This year in the Bay Area city of Pittsburg, for example, another developer offered to pay for the election costs of its ballot initiative. But Wal-Mart always declines.
“We are not embarrassed by our decision to move to an initiative and to allow the electorate to overwhelmingly weigh in, but we are not prepared to cover any costs for an election,” Wal-Mart spokesman Aaron Rios said at an Apple Valley Town Council meeting in April.
Rios pointed out the council could avoid an election by approving the petition and asked his supporters in the audience if they supported that, eliciting a cheer.
Apple Valley Mayor pro tem Barb Stanton, a Tea Party Patriot member who told the audience “most all of us love Wal-Mart,” was surprised to hear the company wouldn’t pay.
“It’s your initiative, your process, and to bend us over for 180 − excuse me that term, but I mean, come on, $180,000 is a lot of money, and it’s just wrong,” Stanton said to Rios. “I’m fully in favor of going to the ballot, but at your cost.”
“And again,” Rios responded, “we’re not prepared to accept that cost.”
In the end, the council voted to approve Wal-Mart’s petition outright. Councils in Milpitas and Kerman did the same thing.
Wal-Mart’s Rios had urged the Menifee City Council to avoid a vote as well. But a split council opted to pay for a special election. Wal-Mart spent $397,000 on its political effort there. There was no official opposition. About 11,000 people voted, and Wal-Mart won 76 percent of the vote.
Cory Briggs and Brett Jolley, the same lawyers who challenged Wal-Mart’s projects, are now suing Apple Valley, Menifee, Milpitas and Sonora over the company’s use of the initiative process.
“It’s allowing a very small percentage of registered voters to essentially hijack the local land use process,” Jolley said. “A concept that is designed to allow the citizenry to have the ultimate say in legislative matters is really now being abused to keep the citizenry out of the process altogether.”
Jolley, who doesn’t disclose who finances his lawsuits, represents community groups like the Milpitas Coalition for a Better Community. Briggs, who represents a group called Citizens for Responsible Equitable Environmental Development, or CREED-21, said he works on a contingency basis.
Wal-Mart handles legal costs for the cities, as required by a provision in the superstore petitions.
In San Diego, Wal-Mart’s initiative battle was not over a specific superstore, but rather an ordinance requiring an economic impact study for new big-box stores. The regulation was favored by unions and strongly opposed by Wal-Mart.
Wal-Mart drafted a petition to repeal the ordinance. It needed signatures from 5 percent of registered voters to force a special election.
In all, Wal-Mart spent more than $1 million on campaign consultants, mailings and advertising on the political effort in San Diego. National Petition Management collected nearly 54,000 signatures in 18 days, forcing either a repeal or a special election that could have cost taxpayers up to $3.4 million.
In February, council members – including Todd Gloria, the ordinance’s main proponent – overwhelmingly voted to repeal the big-box regulations. With the city facing a budget deficit, Gloria said he had to worry about keeping libraries open, not spending on special elections.
“We had our hands tied,” Gloria said.
This story was edited by Robert Salladay. It was copy edited by Nikki Frick. California Watch, the state’s largest investigative reporting team, is part of the independent, nonprofit Center for Investigative Reporting. You can contact the writer at wevans@cironline.org. Learn more at californiawatch.org.
