Loading...
HomeMy WebLinkAbout4/14/2004 - STAFF REPORTS (2) DATE: April 14, 2004 TO: City Council FROM: Director of Planning and Zoning TENTATIVE PARCEL MAP NO. 30745 - AN APPLICATION BY ROTHBART DEVELOPMENT, DESTINATION RAMON, LLC, FOR THE DESTINATION RAMON-WALMART PROJECT, FOR APPROVAL OF A TENTATIVE PARCEL MAP SUBDIVIDING THE 31.12 ACRE SITE INTO EIGHT PARCELS, FOR FUTURE DEVELOPMENT OF A 277,000 SQUARE FEET OF RETAIL DEVELOPMENT, AND FOR A FINDING THAT THE VACATION OF THE SKY POINT DRIVE EAST, WEST AND NORTH RIGHTS OF WAY IS CONSISTENT WITH THE GENERAL PLAN CIRCULATION ELEMENT, LOCATED AT 5601 RAMON ROAD EAST, ON APN # 680-170- 025, 680-170-026, 680-170-027, 680-170-028, 680-170-029, 680-170-030, 680-170-031, 680- 170-032, 680-170-048 AND 680-170-050, ZONE W.M-11.L., SECTION 20. RECOMMENDATION: The Planning Commission recommends that the City Council: • Adopt the Statement of Facts and Findings, Statement of Overriding Considerations, Mitigation Monitoring Program and Certify the Final Environmental Impact Report; • Approve Tentative Tract Map 30745, subject to conditions contained in the attached resolution, subject to conditions contained in the attached resolution; and • Vacate the right-of-way of Sky Point Drive East, West and North, consistent with the Circulation Element of the General Plan; and SUMMARY: At its March 24, 2004 meeting, the Planning Commission by a 5-1-1 vote, voted to recommend that the City Council: • Adopt the Statement of Facts and Findings, Statement of Overriding Considerations, Mitigation Monitoring Program and Certify the Final Environmental Impact Report; • Approve Tentative Tract Map 30745, subject to conditions contained in the attached resolution, subject to conditions contained in the attached resolution; and • Find that vacation of the right-of-way of Sky Point Drive East, West and North is consistent with the Circulation Element of the General Plan. The Planning Commission also voted to continue the public hearing on the Conditional Use Permit and architectural approval applications for Destination Ramon-WalMart (Walmart) until April 28, 2004. The Conditional Use Permit and architectural approval applications, included architectural, site plan, landscape and sign program review and approval; approval of free- standing light fixtures in excess of eighteen (18) feet to thirty (30) feet in height; a sign program and relief from the certain provisions of the sign ordinance; and drive through operations for rS A- various out-pad uses proposed within the project site, and an automobile service station, to include eight (8) pumps, (16 fueling positions). BACKGROUND: The project is an application by Destination Ramon, LLC, for a 277,000 square foot retail, WalMart-anchored shopping center. The principal is Stan Rothbart. The project includes a 225,000 square foot retail store, an associated free-standing gas station with 900 square foot office and convenience mart, and four additional retail commercial pads totaling up to 51,000 square feet. The proposed project also includes: • A tentative parcel map (TPM 30745) for the subdivision of approximately 31.12 acres into 8 parcels, ranging in size from 22.02 acres to 0.92 acres; and • A General Plan consistency finding that the vacation of the right-of-way of Sky Point Drive East, West and North, is consistent with Circulation Element of the General Plan; Destination Ramon, LLC. has entered into an agreement with American Realty Trust to purchase the lease-hold interest. American Realty Trust currently has a lease agreement for the 31.12 acre site with the current property owner, a member of the Agua Caliente Band of Cahuilla Indians. The BIA has approved the lease agreement in form and content. The BIA will not approve the lease until the project has been entitled and the transfer is ready. The WalMart site is generally bounded by Ramon Road, San Luis Rey Drive, Sunny Dunes Road and Crossley Road. The main tenant is WalMart, a 225,011 square feet general retail store, grocery store and an automobile repair shop. The building also includes an outdoor garden area of 22,775 square feet. Six additional pads include buildings ranging in size from 900 square feet to 15,570 square feet, for a total of 277,00 square feet of building area on the 31.12-acre site. The proposal includes 1,434 parking spaces on-site (1,239 are required), with a total of five vehicular ingress/egress points to serve the facility. Two additional driveways provide access for loading. The building is oriented toward the southern end of the property, to allow for easier access to the parking areas from Ramon Road, Crossley Road, and San Luis Rey Drive and to lessen the apparent bulk and height of the building from this scenic vehicular corridor. The majority of the building will be constructed at a height of approximately 22-28 feet above finished grade, with the architectural element over the main entrances reaching approximately 42 feet at the highest point. Truck wells and outdoor staging areas are located behind the building, screened from Ramon Road by the building and from other areas by eight-foot tall decorative screen walls that are integrated with the architecture of the building. The conditional use permit and related architecture approval will be final with the Planning Commission. As part of this project, the applicant has submitted an application for a Tentative Parcel Map to initiate the development of the project on the south side of Ramon Road, between Crossley Road and San Luis Rey Drive. The proposed subdivision is intended to create seven parcels, ranging in size from a 1.09-acre parcel to a 22.03-acre parcel, on 31.12 acres. On the southeast corner of the project site is a 3.7-acre parcel, identified on the Parcel Map as #8, which was previously approved for use as a mini-storage facility. Lot #7 will provide for on-site retention of storm flows. �! ' d� The site is currently void of any structures and consists of compacted dirt and native scrub vegetation, and street improvements (Sky Point Drive) and utility improvements. These improvements were installed as part of an auto dealership project, which did not proceed. The entire site has been previously graded. The site slopes minimally from northwest to southeast. Curb, gutter and sidewalk exist along Ramon Road and Crossley Road and curb and gutter exist along San Luis Rey Drive and Sunny Dunes Road. The Ramon Road/Crossley Road and Ramon Road/San Luis Rey Drive intersections currently have traffic signals located within the public rights-of-way adjacent to the site. GENERAL PLAN ANALYSIS: The site of the proposed project is designated IND (Business/Industrial) per the City of Palm Springs General Plan Land Use Map. The objective of the Business/Industrial General Plan Designation is to allow business and industrial development as an essential companion of population growth, through the development of planned business/industrial districts, small to medium-sized industries and corporate centers. The project is anticipated to add approximately 442 new jobs to the employment base for the City. Therefore, based upon a review of the General Plan, the proposed tentative parcel map does not conflict with any goals, objectives or policies pertaining to Business/Industrial land uses in the City's General Plan. ZONING ANALYSIS: The proposed tentative parcel map is contemplated on property zoned M-1 per the City of Palm Springs Zoning Ordinance. Pursuant to Section 92.17.01 of the Zoning Ordinance, the M-1 zone allows, by right of zone, all commercial uses permitted in the C-1, C-2, C-M and M-1-P zones. The purpose of the M-1 zone is to provide for the development of service industries for commercial and hotel uses and for industrial uses. The site has adequate vehicular access and is located in a manner, which would not create a land use transition impact to adjacent properties or uses. Pursuant to Section 92.17.03 of the Zoning Ordinance, the M-1 zone required 25' front setbacks, 20' side and rear setbacks. Minimum setbacks to buildings are proposed at 35' on Ramon Road, 21.2' on San Luis Rey Drive, 48' on Crossley Road and 20' to the edge of the loading docks on Sunny Dunes Road. Staff recommends that all buildings have a 25' minimum setback adjacent to streets, with the exception of the loading docks. The maximum building height ranges between 22'-8" and 32-8". Architectural elements of the building measure up to 41'-8", and comply with provisions of the code requiring a one foot setback to one foot of rise for portions of buildings over 30' in height and high-rise ordinance (Section 93.04.00) provisions which require 1.5 of setback for each foot of vertical rise. The architectural elements in excess of 30 feet in height are set back 720 feet from the front setback on Ramon Road. All portions of the buildings in excess of 30 feet in height are set back a minimum of 30 feet from the property lines. The project design provides for pedestrian access throughout and around the site. Landscape parkways are located on all four perimeters of the project site. The parking lot will include parking lot screen walls to shield the parking area from the view of passing motorists. The Design Review Committee has reviewed the site plan and architecture on several occasions. Revisions have been made to the project, such that both the site plan and tentative parcel map are consistent with community standards. As for the balance of the property within the boundaries of the Tentative Map area, the future uses and design considerations will be governed by the Business/Industrial General Plan provisions, and the development standards of the M-1 zone. The site is surrounded by lands zoned for commercial, industrial and multi-family land use. Potential future uses include office, retail and/or light industrial development, all of which can be integrated easily for a compatible land use transition between future uses and the home improvement center. Key site issues include outdoor storage through the use of an on-site cargo container storage area located in the southwest corner of the site. Containers also eight (8') feet in height This area will be adequately walled and screened by a combination decorative eight (8') foot block wall, gates and iron fencing and landscaped to minimize off-site visibility. The Planning Commission found that the tentative parcel map is consistent with the General Plan and that it complies with all codes and ordinances. PROPERTY DEVELOPMENT ANALYSIS: Tentative Parcel Map: The application includes a request to subdivide the 31.12-acre site into seven parcels for the development of the Destination Ramon-Walmart project. In reviewing the development standards for the M-1 zone, each lot shall have a minimum lot size of 20,000 square feet, except lots that front on major thoroughfares, which shall have a minimum lot size of 40,000 square feet and minimum lot width and depth dimensions of 200 feet. Parcels 4 and 5, which are located directly on Ramon Road, vary from the minimum lot depth and dimensional criteria of M-1 zone. The lots are approximately 40,075 and 47,480 square feet in area, are part of an overall site plan with common driveways, parking, landscaping and retention areas provided on site. The reduced lot size is, therefore, consistent with the intent of the code. Pursuant to Section 93.17.03 of the Zoning Ordinance, these standards may be altered where a specific development plan is approved as part of a master planned development. Because the entry driveway is curved and has been designed to moderate traffic speeds and evenly distribute traffic throughout the project, these two parcels do meet the minimum 200' required depth. Both lots do comply with minimum width and area requirements. However, lot sizes can vary from these standards through the approval of a master plan. The preliminary site plan indicates that buildings and parking are proposed on Parcels 4 and 5 in addition street side landscape and wall improvements are proposed on these parcels. Since these parcels are shown as an integrated part of the on-site improvements for the Destination Ramon project, the proposed site plan qualifies as a master plan and the minimum lot size and dimension standards can be waived in this situation. When specific buildings are proposed on Parcels 4 and 5, their development will be subject to consideration of the Planning Commission and, if required by the Zoning Ordinance, the City Council. In conclusion, the proposed subdivision will not create any substandard development conditions as it relates to the development of the home improvement center and will still allow for the future development of the remainder parcel in an orderly and efficient manner. Vehicular and pedestrian access will not be limited by the subdivision of the land in the manner proposed by the tentative parcel map. 3�1- `f ZONING / LAND USES: North: Planned Community Commercial, and Medium Density Residential (Cathedral City zone)/ Subway restaurant, multi family residential, retail and industrial uses South: M-1 zone/Vacant Land East: M-1 zone/Vacant Land West: M-1 zone/ Lowe's and vacant land ENVIRONMENTAL ANALYSIS AND NOTIFICATION: Pursuant to the California Environmental Quality Act, an Initial Study and Notice of Preparation (NOP) of an Environmental Impact Report were prepared (July 10, 2003) and the City received comments from the following entities: • Governors Office of Planning and Research - established the public comment period on the NOP; • Riverside County Flood Control and Water Conservation District (RCFCWD) —on-site retention of storm flows; • Airport Land Use Commission - referral of application for development review; • SCAQMD - referencing the Air Quality Handbook for evaluation of project impacts; • DWA - description of recycled water; • PSUSD - utilization rates of existing facilities; • City Engineering and Right of Way Divisions - no significant concerns regarding the parcel map; • Time Warner Cable - identified proximate cable locations; and • Gas Company - requested the reservation of an easement for an existing line on site. Staff has been in contact with the Airport Land Use Commission staff regarding comments provide by the agency on the NOP. The Airport Land Use Commission is only required to review legislative changes affecting properties with two miles of airports. The proposed project does not include any legislative actions. Riverside County is currently updating their Airport Land Use Plan, but the document has not been completed These comments were received in preparing the Draft Environmental Impact Report (Draft EIR) The Draft EIR focused on land use and planning, traffic, air quality, noise and aesthetics, light and glare. The Draft EIR was released for public comment on November 24, 2003 and the public comment period ended on January 7, 2004. The following agencies provide public comment on the Draft EIR: 3 A- ,7 • Governors Office of Planning and Research - established the public comment period; • SCAG - determined that project is not regionally significant; • ACBCI Tribal Planning - questions regarding project related improvements and bikeway; • Desert Water- water issues which were previously addressed in Initial Study; • Edison - relocation of utilities on site; and • Traffic Safety Engineers, Engineering Consultant for City of Cathedral City - questioned several areas of traffic study, which are evaluated in depth in the Final EIR. A Final EIR was prepared to address these comments. In addition, the Final EIR includes the Mitigation Monitoring Program. A Final Environmental Impact Report has been prepared for this project, dated March 11, 2004. In reviewing Final the Environmental Impact Report, the Planning Commission found that there could be a significant environmental impact in certain areas, such as land use and planning, traffic and circulation, air quality, noise, aesthetics, light and glare and cumulative impacts, if mitigation measures are not incorporated into the project design. However with the proposed environmental mitigation incorporated into the attached conditions by reference, most environmental issues will be reduced to a level of insignificance. However, despite the implementation of mitigation measures for air quality, it has been determined that impacts in this area can not be fully mitigated to a level of less than significant and therefore a Statement of Overriding Consideration has been prepared and would be in order. Pursuant to Section 21082 of the California Environmental Quality Act (CEQA), a lead agency may not approve a project if the project will have significant environmental impact, unless the lead agency finds that the benefits of the project outweigh the unavoidable significant adverse impacts. The Statement of Overriding Considerations is a written statement explaining why the lead agency is willing to override significant environmental impacts and approve the project. Prior to adoption of the Statement of Overriding Considerations, the City Council would be required to adopt a Statement of Facts and Findings on the project's environmental impacts. PROJECT BENEFITS Pursuant to Section 21082 of the California Environmental Quality Act (CEQA), a lead agency may not approve a project if the project will have significant environmental impact, unless the lead agency finds that the benefits of the project outweigh the unavoidable significant adverse impacts. The project benefits include: • Creation of a productive commercial/retail use, capitalizing on the project site's access and approximate location to major regional roadways including Ramon Road and Gene Autry Trail; • The Project will allow for productive use of currently vacant land within the City with a commercial/retail use to provide services to residents of the City and surrounding community; • The development of additional high quality commercial/retail uses will provide for increased economic benefits to the City of Palm Springs to increase sales taxes and additional employment opportunities. As described in the Market Impact Analysis for the Wal-Mart Palm Springs Project, prepared by The Natelson Company and attached as Appendix F to the Draft EIR, development of the proposed Project will lead to the creation of approximately 442 full-time-equivalent jobs, and generate an estimated $0.64 million in annual sales tax revenue; • The development of the Project will provide needed Commercial/Retail shopping in the area under-served by such business; • Implementation of Redevelopment Agency plan objectives; • The project implements General Plan policy; • The project implements Zoning development standards; • The project compliments existing commercial development, including Lowe's, in the project vicinity; and • The project will reduce travel time and distance for Palm Springs residents. All property owners within a 400-foot radius of the parcel considered for subdivision were notified. The application was forwarded to the City of Cathedral City due to potential project implications on their jurisdiction. Correspondence was received from Cathedral City as well as from a number of other agencies, and is included in the Draft and Final EIR. Director of,01anning and Zoning City Manager ATTACHMENTS: 1. Vicinity Map 2. Site Plan 3. Tentative Tract Map 4. Final Environmental Impact Report 5. Draft Environmental Impact Report (Provided under separate cover, April 1, 2004) 6. Draft Environmental Impact Report, Technical Appendices (Provided under separate cover, April 1, 2004) 7. Final Environmental Impact Report, (Provided under separate cover, April 1, 2004) 8. Resolution — CEQA a. Exhibit A- Statement of Facts and Findings b. Exhibit B - Statement of Overriding Considerations c. Exhibit C - Mitigation Monitoring Program 9. Resolution - TPM 10. Conditions uwx r�� 8 r M" n, ✓ .mot If (41�iv-4" bar Its §7f' Y� k ! v i a " Rzel, 11-7 h I71tt8LI$9TJ:. �0 C:11`.I LINT❑ %X F� H t ( r p0.'I FaW)4111 Nv sh OtS'`ESYATlOp i t✓' rl . Mrw d -V; n n a d /✓ �� r , r r IrVo§ II oo ( 5 l { � ri yeY a. td�t fc �rV, 4 r t f W [i-Iz a ve r a (( I n5xt ..o it. gil, +.cvnrt� r� tri m F.✓ } rr 1 r -a.r'"J i v, k A", v } r r Cofl„mrR 'd 1 'f t 2 t ` SAli - 'o 'Pocra shRI fh$ vnuirr€rrtdl �4q' Lf `p ig1'r 1 " 79 t GZna Nf yil's" r! p �C nkPAt dlsPrJar ruxl Ramon Road li fral " � PrjectSltejij { oat '2 .y}�"'y,e✓ I �"- Qdo aY-05a gal 'v.wi m I n r rl 8 —,,,@ � U o B`I rs 9ery SOW ra", y_F >< .o .+ti p^q r� I y > LInN'TE Tw PI ; . �L K �S v+ `�'� ` 3 �r '� '- - pi,IIP C GuA W p T-..... r d 'w Lsf k a ""�,is4rYd T(OT�1 u 7Wg31 Ixp'`t R.P bHRV i1?3O AI Jh 1 r L t 6S Ir i I4 E 'T E f ca�� r r gyp✓ d R P Per - r a -e Yw� f '� 31 ro L ta✓ s ltl" a11j hr . {tae - ! 4'll f)i�ya�°§ e * `ae ,"aYn�v`4t}�R..ada tft�l !r' y _ I itFL r -fa'xri.:dscrN ' ,.'" .� (' r Ir r.re .fit ,;Lrs vIi �s r t c qt aWr a rlk I t 'air P sF y r � r t, 1 � � � � r� �� >o a1 x � s y1` V '� '1+ ert' � 4 •' t;,rrkmttn+ AI d gjf—1 z• �� .��iC y�`�,��'�ro-•�r r.t� �f li�. �j�141Vt�vi7�� P p_ "rl?k `��r '�yt"; :: ,�✓��w' �3 @ � u...x '!� �F+. ,, f aa��Cp,%sit ' #'wu,� � rG ��I(�(' � � °�` _../� �j�,' >.�'^� � ��^ r ti `vC•"'�tP r� h.� w. 4>r rr,,z N 0 Num SGLE Source: Applied Planning,Inc. Base printed from:TOPOI O 2000 Wildflower Producllonsoor .lopo.conl Figure 31-2 44 Y `� � z Project Vicinity 3A � 0 ah„ z o fff o . .w.{1.—ad,,�...,,...:^kf'a,.�s^ .i.�h,,,y;•,,,�KG�L�[4,A.66..u,) I i SANLUISREY IIi 11W1-1 �`� f,l l'DIiTIFiI'IL II �_ �o Ij" Ii fff kNfl!'I{f1�j111f,11i4mjjjro (1• ; __-._', Uffl , �: 114111fdI21111IITHiwk IIIR � N I' ' I I -_ f•._'1 1 'f�T�17jfin1p�'ilal't;{U'IIIIIT RRU VA JITC1 p ill I ) U13 1.1,11 ml.i o n �"• Y' �� E �'��;il¢�r7�ll�!4l9"{{�{I��i�i��{f���'f�f�Y��i�l '� "g��i_� I��� � = `I. Cl >' Q; p1VITH lARI'lllfi!113iifll='4>G i'> l�_ 3y 41'N'IiEiiGd fl i77W,ID JU{I,L1; Il"Iflt} .Ffi ��k'IN�'U�ISriTf�f'n,T-r'n al"U1T;iiril ��MIA flli:'iI`IJnT�llill, - i !. �)..I r f�'M1 13i:::1141�111 V' dIff IIY " lj!�gl. 'I� �II�i�lll�iBi!IiQlll(fllkill.L� {�uQi?liter ��jJ?; �1� I - � Ij111[ ) � n�.hito.lkO:.JJ1t��Y1111a11J.:!.11.FI �p.�. I . ,.elt �J( u � I •.44'S7'17"-r-oil I � , VACANTLAND _ �-- f ( VACANTlANOt VACAMLAND i g IFORME@SWAP MEET) �I 13 s a`o ,� n � tq lj �Irt( I l�i' t �,. ��11 { t s:•+,p) � I I I Iul II' d III, xo II {.II E4 It I) S 1 ( 1 - tr -I'('f$ � � I w I -��s�It , xn u I 4 1 ,{ J .CIO CD _.��—..�._ pb G1 t { r � Y • sl f��I 5� - ii 1 il� n I m i 1 r 1 11•�� ^—i. aV►'.' d�C+ '� Tr�nilniriin➢ I • n I�• ; I~!��/ 11{I�� 11 ♦i ��' LJ Cr •IIIItl�Y IO �1 i ■�_��III I 1 ,, N in1M= � i6 ��- II{(�� S I eI11111f.1L': 111 1 ,lu I •'1 IM 'I v ♦ r�,� f� iliii 2y. .�e._� p• +.••—_.,��,��!��YiJI � } . riM AiM. MWr` RP � �' w �—en.Ai nfeeuAee:rke-ro n ,u ee:••q r u_—� 1 _ n '��Irj, i _.i ,. I��r���♦ h,fJll�,ll1 EIII,:ii11,11�1,,ri1����i���! � f I � ill n ,I�ji i,����\�\\\\\\\\\\\\\\\��`��\\\\\\\\\\\\\\ii" �'` �.• sir l ' y !I ail.:. „ li& �c.0 � I, I ,.+ / � ' . • 1 !� i ,� {�il'IF ` I I •min.-+� �l��lil `. � � Ilia, . I . ,, 411!lfffl ..�INI��!!Ili�llM. EXHIBIT A STATEMENT OF FACTS AND FINDINGS REGARDING ENVIRONMENTAL EFFECTS FROM APPROVAL OF TENTATIVE PARCEL MAP 30745 AND CASE NO. 5.0957-CUP (STATE CLEARINGHOUSE NO. 2003071074) DESTINATION RAMON PROJECT A. INTRODUCTION The City of City of Palm Springs, in approving the Destination Ramon Project (Tentative Parcel Map 30745 and Case No. 5.0957-CUP, makes the findings of fact listed hereinafter and adopts the Statement of Overriding Considerations which follows these Findings. These Findings are supported by the facts cited in this document pursuant to the California Environmental Quality Act ("CEQA") Public Resources Code Section 21000 et seq. and Section 15091 of the State CEQA Guidelines (14 Cal. Code of Regulations Section 15000 et seq.). CEQA Guidelines (Guidelines) Section 15091 provide: "(a) No public agency shall approve or carry out a project for which an EIR has been completed which identifies one or more significant environmental effects of the project unless the public agency makes one or more written findings for each of those significant effects accompanied by a brief explanation of the rationale for each finding. The possible findings are: (1) Changes or alterations have been required in, or incorporated into, the project which avoid or substantially lessen the significant environmental effect as identified in the Final EIR. (2) Such changes or alterations are within the responsibility and jurisdiction of another public agency and not the agency making the finding. Such changes have been adopted by such other agency, or can and should be adopted by such other agency. (3) Specific economic, social, or other considerations make infeasible the mitigation measures or project alternatives identified in the Final EIR." These Findings of Fact and Statement of Overriding Considerations Regarding the Final Environmental Impact Report (FIR) for the Destination Ramon Project, SCH# 2003071074 (Findings) have been prepared for and independently reviewed by the City of Palm Springs (City) in its capacity as the CEQA lead agency. These Findings set forth the environmental basis for the current discretionary action to be undertaken by the City for the approval and implementation of Tentative Parcel Map 30745 and Case No. 5.0957-CUP (Destination Ramon Statement of Facts and Findings Destination Ramon Project City of Palm Springs Pagel 30 project) on approximately 31.12 acres of property, as requested by the project proponent, Rothbart Development. Approval of the referenced entitlements will permit Rothbart Development to construct a new shopping center that will encompass approximately 277,000 square feet of gross floor area. These Findings have been divided into a number of sections in order to present a comprehensive overview of the information contained in the Destination Ramon EIR. These sections include: (A) Section A presents an introduction to these Findings and summarizes the organization of the document (B) Section B provides a summary of the proposed project and an overview of other discretionary actions, required for the proposed project, and a statement of objectives for the Destination Ramon Project. (C) Section C presents an independent judgment finding, notes that the City retained the independent consulting firm of Applied Planning, hie. to prepare the FIR for the Destination Ramon Project and states that the EIR reflects the City's independent judgment. (D) Section D presents a summary of those activities and events which have preceded the consideration of these Findings by the City, including the Palm Springs Planning Commission (Commission) and Palm Springs City Council (Council) as part of the environmental review and public participation process. (E) Section E sets forth findings regarding those environmental impacts which were identified in the Initial Study or project EIR which were determined to be nonsignificant, without any mitigation (F) Section F sets forth the potentially significant effects of the proposed project, which can feasibly be mitigated to a less-than-significant level through the imposition of those measures included in the proposed project's Mitigation Monitoring and Reporting Program(MMRP). (G) Section G sets forth findings regarding the significant or potentially significant enviromnental impacts which will or which may result from the construction and/or operation of the Project and which the City has determined cannot feasibly be mitigated to a less-than-significant level. (FI) Section H provides findings regarding those alternatives to the proposed project which were examined in the Final Environmental Impact Report (EIR) for the Destination Ramon Project, SCH# 2003071074, considered by the City as part of its deliberations on the proposed project and its environmental documentation, and not selected by the Commission for implementation. 3(4 Statement of Facts and Findings Destination Ramon Project City of Palm Springs Paget (I) Exhibit I, Exhibit B, contains a summary of the benefits that will accrue to the City from implementation of the proposed project. (J) Exhibit J, Exhibit B, consists of a Statement of Overriding Considerations which sets forth the City's rationale for finding that specific economic, legal, social, technological, and other considerations associated with the proposed project outweigh the project's potential unavoidable adverse environmental effects. It should be noted that Exhibit B, Sections I and J, are provided under separate cover. The findings set forth in each section herein are supported by findings and facts identified in the administrative record of the proposed project as developed and compiled by the CEQA lead agency, the City of Palm Springs. B. PROJECT SUMMARY B.1 Project Location The Destination Ramon project site is located in eastern Riverside County, in the City of Palm Springs. Specifically, the project is located on the south side of Ramon Road, between San Luis Rey Drive and Crossley Road. Sunny Dunes Road forms the site's southerly boundary. The Destination Ramon project site is a currently vacant, disturbed property. Previous unrealized development efforts are evidenced on the site by existing paved streets and underground utilities. B.2 Project Description The Enviroranental hmpact Report prepared for the Project considered potential environmental impacts associated with approval of the approximately 31 acre Destination Ramon Project together with resulting development that would occur pursuant to its adoption. The Destination Ramon Project proposes establishment of a new retail/commercial center, incorporating a 225,000 square foot major anchor tenant and associated gas station, and four smaller "outpad" uses totaling up to 51,000 square feet, and ranging in size from 3,000 to 20,000 square feet each. Site access, internal vehicular circulation, pedestrian access, parking, landscaping, and supporting infrastructure will be implemented and/or reconfigured to accommodate the proposal. A 1.19-acre Retention Basin will be located in the southeasterly portion of the project site, and on an interim basis (pending completion of areawide storm drain improvements) would retain project site storm water runoff. Before this project can be implemented, the City of Palm Springs must provide the developer of this project with the land use entitlements needed to construct the proposed commercial development and related infrastructure facilities. The following discretionary actions or approvals will be made by the City of Palm Springs before development can proceed and operate: • Certification of the Final EIR; 3413 Statement of Facts and Findings Destination Ramona Project City of Palm Springs Page3 • Architectural, site plan, landscape, and signage review of the project design; • A lot line adjustment may be required in order to create an adequate sized parcel to accommodate the "Not-a- Part" property located in the southeast portion of the project site; • Approval of a tentative parcel map (TPM) to create various legal commercial lots for lease properties; • City Council detennination of public convenience and necessity for liquor sales; • Fonnal right-of-way vacation of Sky Point Drive, if not incorporated in the TPM; • City Council findings to allow free-standing light standards in excess of eighteen (18) feet; and • A Conditional Use Permit (CUP) which addresses the following project elements: - Drive-through operations for various out-pad uses proposed within the project site; - An automobile service station, to include 8 gas pumps (16 fueling points) and 900 s.f. kiosk. hi addition to the above discretionary actions, this EIR may also be used by the following agencies for related reviews and approvals: • Bureau of Indian Affairs (BIA) approval of assignment of existing lease covering the subject site. The basic objective of the Destination Ramon project identified in the Project FIR is to develop an integrated shopping center on a four lot commercial subdivision of a 31.12-acre parcel. Specific objectives include: • Create a new mix of retail/connlercial uses responsive to City and regional markets; • Provide retail/commercial uses, related to the City's primary retail commercial and tourist-related uses, and to the service needs of the residents; • Increase economic benefits to the City through job creation; • Augment the City's economic base by providing a variety of tax-generating uses; • Provide retail/commercial development compatible with the natural desert surroundings; • Ensure that the visual image of the project is one of high quality, consistent with the City's Scenic Corridor policies; • Ensure development of the project site in a manner consistent with the policies, objectives, and requirements of the City General Plan and Zoning Code. C. INDEPENDENT JUDGMENT FINDING The City retained the independent consulting fine of Applied Planning, Inc. to prepare the FIR for the Destination Ramon Project. The EIR was prepared under the supervision and direction of the City of Palm Springs Planning Division Staff. The City Council is the final decision-making body for the Project. City Council has received and reviewed the EIR. Finding: The EIR reflects the City's independent judgment. The City has exercised independent judgment in accordance with Public Resources Code, Section 21082.1(c)(3) in Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page4 �A-1 L/ retaining its own environmental consultant, directing the consultant in preparation of the FIR as well as reviewing, analyzing, and revising material prepared by the consultant. D. CEQA REVIEW PROCESS The City of Palm Springs Planning Commission and City Council reviewed and certified the Final EIR for the proposed project and considered all written and verbal public testimony on the project. The public or administrative record for the Project FIR is composed of the following elements: A Notice of Preparation (NOP) and Initial Study identifying the scope of environmental issues were distributed to numerous state, federal, and local agencies and organizations on July 10, 2003. A total of six comment letters were received. Copies of those comment letters are included in Appendix A of the Draft EIR (under separate cover). Relevant comments received in response to the NOP/Initial Study were incorporated into the Draft EIR. The Draft EIR was distributed for public review on November 24, 2003, for a 45- day review period with the comment period expiring on January 7, 2004. Five comment letters were received at the close of the public comment period. The specific and general responses to comments are included in the Final EIR. A Notice of Completion (NOC) was sent with the Draft FIR to the State Clearinghouse on November 24, 2003. The Planning Commission held a public hearing to consider the Project the Draft EIR and staff recommendations on March 24, 2004. Notice of this Planning Commission hearing was provided through publication on March 10, 2004. Following public testimony, and staff recommendations, the Commission recommended to the Council that the Draft FIR is adequate and should be certified and that the Council adopt these Findings and Statement of Overriding Considerations and approve the Project. The Final FIR was distributed for a 10-day notification period beginning on March 10, 2004. On April 14, 2004, this Council held a hearing and certified the Destination Ramon Project EIR. E. POTENTIAL ENVIRONMENTAL EFFECTS IDENTIFIED IN THE PROJECT EIR AS NONSIGNIFICANT IMPACTS WITHOUT MITIGATION Presented below are the environmental findings made by the City of Palm Springs as a result of its review of the documents referenced above; and consideration of written and oral comments on the proposed project at public hearings, including all other information provided during the Statement of Facts and Findings Destination Ramon Project City of Palm Springs Pages ,)A- r �- decision- making process. These findings provide a summary of the information contained in the EIR, related technical documents, and the public hearing record that have been referenced by the City in making its decision to approve the proposed project. The EIR prepared for the proposed project evaluated five major environmental issue categories for potential significant adverse impacts. These major environmental issue categories, in the order presented in the EIR. are: land use and planning, traffic and circulation, air quality, noise, and aesthetics, light and glare. In addition to those issues considered in the EIR, the Initial Study prepared for the proposed project which was used to narrow the focus of issues that were considered in the EIR addressed the following issues (in the order presented in the Initial Study: population and housing, geologic problems, water, biological resources, energy and mineral resources, hazards, public services, utilities and service systems, cultural resources and recreation. Project-specific and cumulative impacts were included in the evaluation of potential enviromnental effects from implementing the proposed project. Of these major environmental categories and findings, the City concurs with the facts and findings in the EIR and Initial Study that the issues and sub-issues discussed in this section fall below a significant impact threshold without any mitigation. Those enviromnental issue categories identified in the EIR as having no potential for significant adverse impact, without mitigation, are described and summarized in the following text. Issues requiring mitigation to reduce impacts to a nonsignificant level and unavoidable (umnitigable) significant adverse impacts of the project are described in following sections of this document as outlined above. In the following presentation, each resource issue is identified; it is followed by a description of the potential significant adverse environmental affect and a short discussion of the findings and facts in the administrative record, as defined above. E.1 LAND USE E.La Potential Effect: Conflict with General Plan Designation or Zoning? MANDATORY CEQA FINDINGS: Finding: Potential impacts to land uses from conflicts with General Plan Designations or zoning are discussed in Section 4.1 of the Draft EIR. The analysis concluded that the project's potential to conflict with existing general plan designations or zoning is less-than-significant. No mitigation is required. Facts in Support of the Finding: As discussed in Section 4.1 of the Draft EIR, the project is consistent with the site's current general plan Business/Industrial ("IND") land use designation. Further, the commercial/retail components of the project are permitted under the site's current zoning designation of Water Course, Service/ Manufacturing, Indian Land, ("W- M-1, I.L.") and the proposed self-service gasoline station Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page6 �3A- I Cn and drive-through restaurant uses are conditionally permitted. As such, the project, as proposed to be implemented, would be consistent with the site's general plan land use designation and zoning. E.l.b Potential Effect: Consistency with Existing Environmental Plans or Policies Adopted by Agencies with Jurisdiction Over the Project? MANDATORY CEQA FINDINGS: Finding: Potential impacts with regard to land use policies and consistency are discussed in Section 4.1 of the Draft EIR. The analysis concluded that implementation and occupation of the Project would not create inconsistencies with the goals and policies of the City or other applicable land use regulations. Facts in Support of the Finding: As discussed in Section 4.1 of the Draft EIR, land uses implemented pursuant to the proposed project will not substantially alter environmental characteristics when compared to environmental effects of current land use entitlements for the project site. Currently, the project site is zoned for commercial use and certain infrastructure improvements, including roadways and underground utilities, have been developed in connection with a prior attempt to develop an auto park. As such, the implemented project would be consistent with the goals and policies of the City's General Plan in regard to the site's land use and zoning designations. The project site is located on Tribal Lands of the Agua Caliente Band of Cahuilla Indians. Agreements between the Palm Springs City Council and the Tribal Council are in place to ensure that cooperatively planled development of Tribal Lands occurs in a manner mutually benefiting the City and the Tribe. Tribal Planning Staff has generally supported development consistent with the City's General Plan, and further, has indicated their support for the proposed Destination Ramon project. As such, the project is considered consistent with the Tribe's land use goals and objectives. E.l.c Potential Effect: Incompatible with Existing or Proposed Vicinity Land Uses? MANDATORY CEQA FINDINGS: 3tq- *7 Statement of Facts and Findings Destination Ramon Project City of Palm Springs Pagel Finding: Potential impacts relevant to land use and plamung are discussed in Section 4.1 of the Draft EIR. Based upon the analysis contained in the Draft EIR, the Project will not be incompatible with surrounding existing or proposed vicinity land uses. No mitigation is required. Facts in Support of the Finding: The proposed Project site is south of Ramon Road within the jurisdiction of the City of Palm Springs. The Project site is currently designated for "Business/Industrial" uses. Existing commercial uses (a Lowe's home improvement center) are located to the west of the project site. Lands to the south and east are vacant, but similarly designated for eventual "Business/Industrial°' uses. Beyond the site's innnediate boundaries, to the north, across Ramon Road and within the jurisdiction of Cathedral City, existing uses consist of business, commercial/retail and multi-family residential; however, the Cathedral City zoning designation for these properties is "Planned Commmunity Commercial." Consequently, development of the proposed Project will be consistent with permitted and approved as well as future land uses in the vicinity. E.l.d Potential Effect: Affect Agricultural Resources or Operations? MANDATORY CEQA FINDINGS: Finding: Potential impacts relevant to agricultural resources are discussed in Section 4.1 of the Draft EIR. The analysis concludes that the proposed Project will not affect agricultural resources or operations. No mitigation is required. Facts in Support of the Finding: The proposed Project site is currently composed of vacant, undeveloped property. The proposed Project site has not historically been used for agricultural operations. Moreover, the proposed Project site is not currently considered valuable or viable for agricultural use. Further, land uses proposed by the Project would not affect any existing offsite agricultural resources. E.Le Potential Effect: Physical Division or Disruption of an Established Community? MANDATORY CEQA FINDINGS: Finding: Potential impacts relevant to established communities are discussed in Section 4.1 of the Draft EIR. Based upon the analysis in the EIR, the development of the proposed Project would not result in the physical disruption or division of an established community. No mitigation is required. Statement of Facts and Findings Destination Ramon. Project City of Palm Springs Page8 43A I Facts in Support of the Finding: The proposed Project site is currently vacant, and physical improvements proposed by the project will be located within the boundaries of the project site, or within adjacent improved rights-of-ways. Property to the south, southeast and east is currently vacant and undeveloped. Properties to the west and north are developed with commercial and multi-family residential uses. Moreover, the project does not propose improvements that would encroach on existing surrounding uses. As such, the project would not disrupt or divide existing neighborhoods or established communities. E.l.f Potential Effect: Impact Competing Commercial Land Uses Due to Economic Effects of Project? Potential Significant Impact: Within the context of the conununity's evolving economy and developing land uses, the proposed Project has the potential to result in adverse land use impacts resulting from its economic or market impacts. Finding: Potential impacts relevant to economic market impacts are discussed in Section 4.1 of the Draft EIR and in the Market Impact Analysis for the Wal-Mart Palm Springs Project contained in Appendix F of the Draft EIR. The analysis concludes that the potential for physical impacts due to economic effects of the proposed Project is less-than-significant. No mitigation is required. Facts in Support of the Finding: Economic effects of the proposed Project will potentially result in adverse physical effects through: (1) impacts to the long-tenn market shares of existing general merchandise stores in the trade area, (2) impacts to long-tern market shares of existing supermarkets merchandise stores in the trade area, or (3) blighting impacts to existing shopping centers in the market area. The potential demand for general merchandise sales in the project opening year is estimated in the project's Market Impact Analysis at approximately $88 to $90 million. Existing general merchandise sales within the trade area is estimated at $160 million. The estimate of existing demand, approximately $208 million, exceeds existing sales by $48 million. Adjustments for regional population growth and the anticipated closure of other nearby Wa1Mart stores increases the estimate of expected demand at project opening (late 2004) by another $40 to $42 million. Based Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page9 :;� 419 on the project's expected general merchandise sales of$48 million, no discernible physical impact on existing general merchandise retailers would result from economic effects of the proposed Project. As presented in the Project Market hlipact Analysis, the potential demand for grocery sales in the trade area in the Project opening year (late 2004) is approximately $477.2 million. Existing grocery sales within the trade area is estimated at $423.3 million, leaving approximately $53.9 million residual demand for grocery sales that could be supported within the trade area. The project's grocery component is estimated to generate opening year grocery sales of $24 million, or less than half of the anticipated demand for grocery sales. On this basis, no discernible long-term or physical impacts to existing supermarkets would result from economic effects of the proposed Project. The potential demand for specialty retail sales was also evaluated in the project Market Impact Analysis. It is estimated that the project's 41,000 square feet of specialty retail uses (including restaurant uses) would generate approximately $10.2 million per year in new sales. Total demand within the trade area for specialty retail/restaurant sales is projected to total $59.2 million by the project's opening in late 2004. On this basis, new specialty store sales resulting from the proposed project would be fully supportable within anticipated demand. Because the proposed project is not expected to significantly impact the market positions of existing general merchandise, grocery, or specialty/restaurant stores in the trade area, the proposed project will not have a significant impact on existing shopping centers. The Market Impact Analysis acknowledges the possibility that the project would have competitive impacts on smaller merchants; however, based on the existing shortfall of general merchandise, grocery, and specialty retail sales within the trade area, the Analysis concludes it is unlikely that these impacts would be substantial enough to result in the blighting of overall shopping districts. Therefore, the proposed Project would not result in or cause blighting effects at existing shopping centers, including those that are, or have been previously, anchored by general merchandise retail stores. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page10 3t+ao E.2 TRAFFIC AND CIRCULATION E.2.a Potential Effect: Inadequate Access or Emergency Site Access; Safety Hazards Due To Design Features? MANDATORY CEQA FINDINGS: Finding: Potential impacts relevant to traffic and circulation are discussed in Section 4.2 of the Draft EIR, Section 2.2 of the Final EIR, and in the Destination Ramon Project Traffic Impact Analysis included as Appendix B to the Draft EIR. Based on implementation of the proposed Project consistent with the Specific Plan and proposed Site Plan, the Project will have a less-than-significant impact on site circulation/site access. No mitigation is required. Facts in Support of the Finding: The Project includes five access driveways: one on Ramon Road, two on San Luis Rey Drive, and two on Crossley Road. Driveway and access improvements required for safe and appropriate access have been identified as part of the project's Traffic Impact Analysis, and will be fully funded and constructed by the project proponent. The Project design concept provides for adequate site access and internal circulation. Access and circulation elements reflected in the site plan concept will be incorporated into the Project, and will be reviewed and approved by the City Traffic Engineer to ensure consistency with adopted City standards. E.2.b Potential Effect: Inadequate Parking? MANDATORY CEQA FINDINGS: Finding: Potential impacts related to traffic and circulation are discussed in Section 4.2 of the Draft EIR, Section 2.2 of the Final EIR and in the Destination Rai-non Project Traffic Impact Analysis included as Appendix B to the Draft EIR. Based on the implementation of the project consistent with the Site Plan concept, the proposed project will result in less-than-significant impacts from inadequate parking. No mitigation is required. Facts in Support of the Finding: As indicated in the Project Site Plan concept, and consistent with the City's adopted development standards, parking will be provided within the Project area consistent with City Zoning Code Section 93.06.00 standards and requirements. Location, quantity, and configuration of commercial parking areas will be provided to the satisfaction of the City as verified through the final Site Statement of Facts and Findings Destination Ramon Project City of Palm Springs Pagel 34elkI Plan review process. Accordingly the proposed Project will not result in a significant impact due to inadequate parking. E.2.c Potential Effect: Impact Alternative Transportation Modes? MANDATORY CEQA FINDINGS: Finding: Potential impacts related to traffic and circulation are discussed in Section 4.2 of the Draft FIR, Section 2.2 of the Final EIR and in the Destination Ramon Project Traffic Impact Analysis included as Appendix B to the Draft EIR. Based on the implementation of the project consistent with the Site Plan concept, the proposed project will provide safe and adequate access to pedestrians and bicyclists, and will provide a bus turnout as part of project-related improvements. Impacts on alternative modes of transportation or related policies are less-than-significant. No mitigation is required. Facts in Support of the Finding: As indicated in the Project Site Plan concept, pedestrian and bikeway facilities consistent with City requirements will be provided as part of project implementation. Specifically, continuation of a meandering pedestrian walkway along the project site's Ramon Road frontage, and the installation of bicycle racks at appropriate locations within the project site will be provided. Further, a bus turnout/bus stop is planned on Ramon Road approximately 150 feet easterly of San Luis Rey Avenue. Proposed bus facilities (e.g., benches, enclosure) will be designed and implemented consistent with City and service provider (Sunline Transit Agency)requirements. E.3 NOISE E.3.a Potential Effect: Short-Term Construction-Related Noise Impacts? MANDATORY CEQA FINDINGS: Finding: Potential impacts related to noise are discussed in Section 4.4 of the Draft FIR, and in the Noise Impact Study included as Appendix D to the Draft EIR. Based on the analysis therein, and in the Noise Study prepared for the project and included in EIR Appendix D, the proposed Project will not result in significant short-term constriction-related noise impacts. No mitigation is required. Facts in Support of the Finding: Noise impacts due to construction will be regulated through the City of Palm Springs Construction Site Regulations and Noise Ordinance. Future grading and construction Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page12 activities will cause temporary localized increases in noise levels in the Project vicinity that may be audible at sensitive receptors northerly of the project site; however, construction activities are restricted by the City of Palm Springs Noise Ordinance (11.74.041) to hours when noise is less intrusive (construction activity is permitted between 7 a.m. and 8 p.m.). Further, the City's Constriction Site Regulations limit the operation of construction equipment (not allowed between the hours of 5 p.m. and 8 a.m.). E.3.b Potential Effect: Long-Term Operational Noise Impacts? MANDATORY CEQA FINDINGS: Finding: Potential impacts relevant to noise are discussed in Section 4.4 of the Draft EIR, and in the Noise Impact Study included as Appendix D to the Draft EIR. Based on the analysis therein, the proposed Project will not result in significant long- term operational noise impacts from incremental increases in traffic noise. No mitigation is required. Facts in Support of the Finding: Section 4.4 of the Draft EIR and the Noise Impact Study included as Appendix D to the Draft EIR analyzed the existing, projected 2004 with project, and projected 2020 with project noise levels adjacent to roadways carrying appreciable volumes of project-related traffic. The analysis shows that the proposed project will generate an audible noise increase along San Luis Rey Drive adjacent to the project site. Land uses in this area are designated for commercial uses, so this increase in noise will not affect any sensitive receiving land uses. The project is not expected to generate significant noise increases along any of the other roadway links analyzed. Operational noise is subject to the City's existing noise ordinance standards, and is similarly considered less-than-significant. EA AESTHETICS,LIGHT AND GLARE E.4.a Could the Project Degrade the Existing Visual Character or Quality of the Site and its Surroundings? MANDATORY CEQA FINDINGS: Finding: Potential impacts relevant to aesthetics are discussed in Section 4.5 of the Draft EIR. Based on implementation of the project consistent with the preliminary site Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page13 plan design, the proposed Project's effects on the existing visual character of the site are considered less-than-significant. No mitigation is required. Facts in Support of the Finding: Within the context of nearby existing and anticipated urban development, the overall visual qualities of the Project vicinity will be altered as permanent retail/commercial architecture replaces the existing vacant site. The most visible components of the proposed development will consist of buildings, signs and landscaping. Unless otherwise addressed within the Destination Ramon Project, the proposed project will comply with review and approval procedures, development standards, and design guidelines identified in the City Municipal Code. Compliance with these requirements will adequately address potential visual impacts of the Project. Also, given the context of existing and proposed neighboring commercial uses, development proposed by the project is considered compatible with vicinity land uses. E.4.b Project Effect: Could the Project Have a Substantial Effect on Scenic Vista? MANDATORY CEQA FINDINGS: Finding: The proposed Project's potential impacts on scenic vistas are analyzed in Section 4.5 of the Draft EIR. Based on the analysis contained in the Draft EIR, the effect on scenic vistas is considered less-than-significant. No mitigation is required. Facts in Support of the Finding: The project will implement enhanced aesthetic treatment along the project's Ramon Road ftontage, based on the City's designation of Ramon Road as a scenic corridor. The City will review and approve the final site plan and project design to ensure its consistency with City standards and vicinity development. The potential for the Project to have a substantial affect on scenic vista or substantial damage to scenic resources is considered less-than- significant. E.4.e Create a New Source of Substantial Light or Glare Which Would Adversely Affect Day or Nighttime Views in the Area? MANDATORY CEQA FINDINGS: Finding: Potential impacts relevant to light and glare are discussed in Section 4.5 of the Draft EIR. Based on the analysis therein, the proposed Project effect in creating Statement of Facts and Findings Destination Ramon Project City of Palm Springs ^^ Page14 r Ta- substantial light or glare is considered less-than-significant. No mitigation is required. Facts in Support of the Finding: The Project site is currently undeveloped and, as such, is not a source of light or glare. Existing sources of light include vehicular light from nighttime traffic along Ramon Road, and lighting of adjacent developed commercial properties to the west and north of the project area. Lighting of the Project will include street lighting, exterior night lighting of structures, and lighting necessary for safety and security. All Project lighting will be implemented consistent with City lighting and development standards, which require shielding and/or focusing of lights to minimize overspill from the Project site. F. POTENTIALLY SIGNIFICANT ENVIRONMENTAL EFFECTS IDENTIFIED IN THE PROJECT FIR WHICH CAN BE MITIGATED TO A LEVEL WHICH IS NOT SIGNIFICANT The following issues were identified in the Final EIR as having a potential to cause significant effect or impact, but were identified as being capable of having impacts reduced below a significant level by implernenting the identified mitigation measures. In the following presentation, each resource issue is identified; it is followed by a description of the potential significant adverse environmental effect and a short discussion of the findings and facts in the administrative record, as defined above. The City hereby finds that all mitigation measures identified in the Final FIR that will be implemented to mitigate the impacts of this project have been incorporated into, or required of, the project to avoid or substantially lessen significant enviromnental impacts to a level of insignificance. Public Resources Code Section 21081 states that no public agency shall approve or carry out a project for which an enviromnental impact report has been completed which identifies one or more significant effects unless the public agency makes one, or more, of the following findings: a. Changes or alterations have been required in, or incorporated into the project which mitigate or avoid the significant environmental effects thereof as identified in the completed environmental impact report; b. Such changes or alterations are within the responsibility and jurisdiction of another public agency and such changes have been adopted by such agency or can and should be adopted by such other agency; and/or C. Specific economic, social or other considerations make infeasible the mitigation measures or project alternatives identified in the environmental impact report. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page15 The City hereby finds, pursuant to Public Resources section 21081, that the following issues are nonsignificant impacts because mitigation measures will be implemented as outlined below. The City further finds that no additional mitigation measures or project changes are required to reduce the potential impacts discussed below to a level of nonsignificance. These issues and the measures adopted to mitigate them to a level of insignificance are as follows. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page16 F.I. WATER RESOURCES F.La Project Effect: Changes in Absorption Rates,Drainage Patterns, or Rate and Amount of Surface Runoff, or Water-related Hazards such as Flooding? MANDATORY CEQA FINDINGS: Finding: The proposed Project's potential impacts on water resources are analyzed in Section 4 of the Initial Study and in the Conceptual Hydrology Report included as Appendix E to the Draft EIR. Based on this analysis, the following mitigation measures will reduce project impacts to a less-than-significant level. Facts in Support of the Finding: The project will result in the development of 277,000 square feet of commercial/retail structures and associated parking areas, which will significantly decrease the penneable area currently found within the project site. On an interim basis, until the construction of Riverside County Flood Control District areawide, master-planned improvements, the project will provide a storm water retention area of 1.19 acres on-site. Further, the project is required to convey, to City and County standards, any project-related increased in storm water runoff so as not to adversely affect any upstream or downstream properties. Mitigation Measure WR-l: Final design of the project retention area shall be reviewed and approved by the City Engineer prior to the issuance of grading permits. Mitigation Measure WR-2: Upon completion of RCFCD master planned storm drain improvements, the project on-site retention basin may be filled and restored to the satisfaction of the City. The filled retention area shall be landscaped and maintained to the satisfaction of the Director of Planning and Zoning. Mitigation Measure WR-3: The project proponent shall prepare a maintenance plan for the proposed project site retention basin. This maintenance plan shall be incorporated in proponent prepared Conditions, Covenants and Restrictions (CC&R's) or comparable legal obligation acceptable to the City. These CC& R's, or equivalent, shall be reviewed and approved by the City prior to the issuance of the first Certificate of Occupancy (CO). Mitigation Measure WR-4: The project shall contribute to mitigation of area-wide drainage impacts through the payment of required Drainage Acreage fees. Fees shall be paid to the City prior to the issuance of the first building permit. Mitigation Measure WR-5: If treated wastewater becomes available to the site by extension of treated wastewater lines, the project should be required to connect for irrigation purpose. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Pagel? 3 f4a? F.2 BIOLOGICAL RESOURCES F.2.b Project Effect: Would the Project Result in Impacts to Endangered, Threatened, Rare or Locally Designated Species? MANDATORY CEQA FINDINGS: Finding: The proposed Project's potential impacts on biological resources are analyzed in Section 7 of the Project Initial Study, and further discussed in Section 1.4.1 of the Draft EIR. Based on this analysis, the payment of established development fees prior to the issuance of grading pennits, as specified in the following mitigation measures, will reduce project impacts to a less-than-significant level. Facts in Support of the Finding: The project site is vacant and heavily disturbed, due to previous development attempts and its location adjacent to a major roadway (Ramon Road) and existing development to the north and west. A biological survey dated February 11, 2002, was prepared by James W. Cornett, Ecological Consultants. This study found that the project site and vicinity properties are devoid of any sensitive, rare or endangered species of plants, or potentially endangered, threatened, or rare animal species or their habitats. Although not found on-site, the potential exists for the Coachella Milk Vetch, a federally listed endangered plant species, to be located on the project site. These conclusions were confinned in a subsequent site visit and biological survey performed by Hannsworlh and Associates. Because the project is located on Tribal lands, the project is required to comply with the requirements of the Final Draft Habitat Conservation Plan (HCP) for the Agua Caliente Indian Reservation, Palm Springs, CA dated November 12, 2002. The HCP provides for multiple species mitigation for the Coachella Milk Vetch. The project site is also located within the Coachella Valley Fringe-Toed Lizard Habitat Conservation Plan fee area. Development fees have been established for each of these habitat conservation areas, and payment of fees is the established method of mitigation. Mitigation Measure BR-1: The developer shall pay fees of $800.00 per acre, as required by the Habitat Conservation Plan far the Aqua Caliente Indian Reservation. Mitigation Measure BR-2: The project proponent shall remit.fees at the established rate of $600.00 per acre of disturbance for impacts to the Coachella Valley Fringe-Toed Lizard Habitat. Statement of Facts and Findings Destination Ramon Project City of Palm Springs n Page18 F.3 CULTURAL RESOURCES F.3.1 Project Effect: Would the Proposal Disturb Archaeological, Paleontological, or I3istorical Resources? MANDATORY CEQA FINDINGS: Finding: The proposed Project's potential impacts on cultural resources are analyzed in Section 14 of the Project Initial Study. Based on this analysis, the use of qualified monitors during project construction, as specified in the following mitigation measures, will reduce project impacts to a less-than-significant level. Facts in Support of the Finding: The project site is located on Tribal Lands of the Agua Caliente Band of Cahuilla Indians and therefore may contain historical and archaeological artifacts. A Historical/Archaeological Resources Survey Report, dated February 21, 2002, was prepared by CRM TECH. Research undertaken as part of this study included a cultural resource records review conducted through the Eastern Information Center at the University of California, Riverside, historical background research, and a walkover field survey of the project site. The Cultural Resources Survey found no evidence of historic or archaeological resources within or adjacent to the project area. However, cultural resources in a buried setting could be unearthed daring project-related construction activities. Mitigation Measure CR-1: A Native American Monitor shall be present during all trenching and excavation activities. Should buried deposits be encountered, the Monitor shall have the authority to halt destructive construction, and shall notify a qualified archaeologist to investigate and, if necessary, prepare a mitigation plan for submission to the State Historic Preservation Officer and the Agua Caliente Band of Cahuilla Indians. Mitigation Measure CR-2: In accordance with Public Resources Code 5097.94, if human remains are found, the Riverside County Coroner must be notified within 24 hours of the discovery. If the coroner determines that the remains are not recent, the coroner shall notify the Native American Heritage Commission in Sacramento to determine the most likely descendent for the area. The designated Native American representative then determines in consultation with the property owner the disposition of the human remains. Mitigation Measure CR-3: One copy of any cultural resource documentation generated in connection with this project, including report of investigations, records search results, and site records/updates shall be forwarded to the Tribal Planning, Building, and Engineering Department. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page19 3 4 aI FA TRAFFIC AND CIRCULATION F.4.a Potential Effect: Substantial Increase in Vehicle Trips and Traffic Congestion? MANDATORY CEQA FINDINGS: Finding: The proposed Project's potential impacts on area roadways are analyzed in Section 4.2 of the Draft EIR, Section 2.2 of the Final FIR and in the Destination Ramon Project Traffic Impact Study attached as Appendix S to the Draft FIR. The EIR analysis concluded that, with project-sponsored improvements, opening year (2004) project traffic would not result in adverse impacts. However, for future year 2020 conditions, project-related traffic will exceed adopted standards for performance at eleven study area intersections. The following measure will mitigate this impact to below a level of significance. Facts in Support of the Finding: The Draft EIR determined that development of the proposed Project would contribute to increased traffic volumes on roadways in the Project vicinity. Construction of the required opening year improvements as indicated in Table 4.2.10 of the FIR will avoid or substantially lessen the potentially significant enviromnental effects fiom increased project-related vehicular trips to less-than- significant levels for the project opening year (2004) scenario. In addition, the City of Palm Springs participates in the Transportation Uniform Mitigation Fee (TUMF) program. TUMF is designed to provide funding for the completion of identified improvements to regionally beneficial roadways. Ramon Road is identified as a regionally significant roadway. The project applicant will pay fees pursuant to the TUMF ordinance. These fees will be designated for use in construction of identified regional improvements. All improvements identified as necessary to maintain an acceptable level of service along the study roadways and at study intersections within the Ramon Road right-of-way will be completed with TUMF funds. The project proponent shall be required to pay fair share fees for other improvements necessary to maintain acceptable levels of service in Year 2020 which are not covered by the TUMF program. Payment of TUMF fees and fair share contributions will mitigate Year 2020 cumulative traffic impacts to less-than-significant levels. • Mitigation Measure 4.2.1: The project proponent shall install improvements and pay fair share fees toward construction of improvements as identified in Table 4.2.I0. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page20 �,4 tkn Table 4.2.10 is presented below for ease of reference. Table 4.2.10 Project-Related Traffic Improvements REQUIRED OPENING-YEAR IMPROVEMENTS (#)—hatersection/Location and Improvements per EIR Figure 4.2-3 (Improvements to be implemented by the project prior to the issuance of the first Certificate of Occupancy.) Location/Improvements Ramon Road at Site Access (20) The project proponent will implement the Ramon Road median at the central project entrance in a maimer ensuring appropriate left-turn storage for westbound project-related traffic. Design and implementation of proposed median is the responsibility of the project, and will be coordinated with/through the City. North Site Access at San Luis Rey Drive (21) -construct project westbound right-turn lane -construct project westbound through/left-turn lane -install STOP sign to control exiting traffic South Site Access at San Luis Rey Drive(22) -construct project westbound right-turn lane -construct project westbound left-tun lane -stripe souhbound left-tun lane (or continuous two-way left-turn median lane on San Luis Rey Drive) -install STOP sign to control exiting traffic North Site Access at Crossley Road(23) -construct project eastbound right-turn lane -construct project eastbound left-tun lane -install STOP sign to control exiting traffic South Site Access at Crossley Road (24) -construct project eastbound right-turn lane -constrict project eastbound left-tuna lane -install STOP sign to control exiting traffic -provide a smooth transition for the entering traffic lane past the refueling station Crossley Road Striping Adjacent to Project Site- Provide continuous two-way left-turn lane configuration within the adjacent Crossley Road right- of-way. IMPROVEMENTS REQUIRED TO MAINTAIN ACCEPTABLE YEAR 2020 LEVELS OF SERVICE (#) Intersection/Location per Draft FIR Figure 4.2-4. (Project will contribute fair share fees toward construction of improvements.) Vista Chino' at Gene Autry Trail°(1) Project Share of Traffic -add a northbound left-turn lane Increase =6.47% -add a westbound through lane -add an eastbound through lane Ramon Road b at Sunrise Way(2) Project Share of Traffic -add a westbound left-turn lane Increase =4.32% -add an eastbound left-turn lane Ramon Road b at Farrell Drive (3) Project Share of Traffic -add a sorthbound left-turn lane Increase =6.53% Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page21 Table 4.2.10 Project-Related Traffic Improvements Ramon Road b at San Luis Rey Drive (8) Project Share of Traffic -add a southbound left-turn lane(in conjunction with Increase =20.34% north-south left-turn signal phasing) -add a northbound left-turn lane Ramon Road b at Crossley Road (9) Project Share of Traffic -add a northbound right-turn lane` Increase = 10.09% - restripe northbound left and through/left lane and add signal phasing -add a westbound through lane -add an eastbound through lane Ramon Road b at Landau Boulevard(10) Project Share of Traffic -add a westbound through lane Increase = 10.17% - add an eastbound through lane Ramon Road b at Cathedral Canyon Drive(11) Project Share of Traffic -add a westbound left-turn lane Increase =9.59% -add an eastbound left-turn lane -add an eastbound right-turn lane Sunny Dunes Road at Crossley Road d (13) Project Share of Traffic -signalize intersection Increase = 11.87% -add a northbound left-turn lane -add a southbound left-turn lane -add an eastbound left-turn lane Mesquite Avenue at San Luis Rey Drive(15) Project Share of Traffic -signalize Intersection Increase = 18.37% -restripe Lanes Mesquite Avenue b at Crossley Road (16) Project Share of Traffic -add a northbound through/right-turn lane Increase = 14.15% -add a southbound left-turn lane -add a southbound through/right-turn lane Southerly Project Driveway at Crossley Road(24) Project Share of Traffic - signalize intersection Increase=27.44% - restripe lanes Notes: a. One leg of this roadway is a CMP facility; b. Both legs of this roadway are CMP facilities; c. This improvement is needed in conjunction with site development, and is not on a CMP roadway, nor is it covered by TUMF fees; d. Intersection modifications proposed by the MidValley Center Project. e.Restriping Crossley Road as a 5-lane roadway adjacent to the project site is included in project- sponsored improvements, and will be completed prior to project opening. Signalization will be required under future(2020)traffic conditions. The project will contribute fair-share fees toward this future signalization. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page22 F.5 AIR QUALITY F.5.a Potential Effect: Short-Term Construction-Related Emissions MANDATORY CEQA FINDINGS: Finding: Air quality issues are discussed in detail in Section 4.3 of the Draft EIR, and in the Air Quality Analysis included as Appendix C to the Draft EIR. The Draft EIR indicates that implementation of the mitigation measures stated below will reduce the criteria polluting emissions for NO, generated as a part of the construction phase of the proposed Project to a less-than-significant level. Facts In Support of Findings: Short-term impacts on air quality will occur during the constriction activities required to implement the proposed project. These adverse impacts include: exhaust emissions from construction equipment used as well as the vehicles used to transport the off-highway construction equipment, exhaust emissions from passenger vehicles of construction workers, and exhaust emissions from heavy vehicles used to transport building materials to the site. As reflected in the analysis in the EIR, "worst case" construction-related emissions are not estimated to exceed SCAQMD thresholds for any criteria pollutant. With implementation of the following mitigation measures, constriction-related air quality emissions will be farther reduced to the extent feasible. Mitigation Measure 4.3.1 Grading of the project site shall be limited to a maximum of 8 acres per day. Mitigation Measure 4.3.2 Adequate watering techniques shall be employed to partially mitigate the impacts of construction-related dust particulates. Portions of the project site that are undergoing earth moving operations shall be watered such that a crust will be formed on the ground surface and then watered again at the end of the day, as part of the construction specifications. Mitigation Measure 4.3.3 As part of the construction specifications, any vegetative groundcover to be utilized on-site shall be planted as soon as possible to reduce the disturbed area subject to wind erosion. Irrigation systems needed to water these plants shall be installed as soon as possible to maintain the ground cover and minimize wind erosion of the soil. Mitigation Measure 4.3.4 Cut and fill quantities shall be balanced on-site. 3to�33 Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page23 Mitigation Measure 4.3.5 The project proponents shall comply with all provisions of the Palm Springs Municipal Code including the Construction Site Regulations and the Fugitive Dust and Erosion Control Ordinance. The proposed project shall comply with the provisions of Chapter 8.50 of the Palm Springs Municipal Code which establishes minimum requirements for construction activities to reduce fugitive dust and PMI0 emissions. A plan to control fugitive dust through implementation of reasonably available dust control measures shall be prepared and submitted to the Cio) of Palm Springs far approval,prior to the issuance of any grading permits associated with the project. Mitigation Measure 4.3.6 The project proponent shall comply with all applicable SCAQMD rules and regulations including Rule 403, insuring the clean up of construction-related dirt on approach routes to the site. Rule 403 prohibits the release of fugitive dust emissions from any active operation, open storage pile, or disturbed surface area beyond the property line of the emission source. Mitigation Measure 4.3.7 Any construction access roads (other than temporary access roads) shall be paved as soon as possible and cleaned after each workday. The maximum vehicle speed limit on unpaved roads shall be 15 miles per hour. Mitigation Measure 4.3.8 Grading operations shall be suspended during first and second stage ozone episodes and when winds exceed 25 miles per hour,per the PM10 SIP. • Mitigation Measure 4.3.9 Construction equipment shall be properly maintained and serviced to minimize exhaust emissions. G. SIGNIFICANT UNAVOIDABLE ENVIRONMENTAL EFFECTS IDENTIFIED IN THE PROJECT EIR THAT CANNOT FEASIBLY BE MITIGATED TO A LEVEL WHICH IS NOT SIGNIFICANT The City finds that despite the incorporation of mitigation measures into the proposed project, approving the implementation of the Destination Ramon project will possibly allow adverse environmental impacts to remain unavoidably significant because these impacts cannot be mitigated to a nonsignificant level. These unavoidable significant adverse environmental impacts are related to air quality. These impacts and the measures identified to minimize them to the extent feasible are summarized below. The potentially significant air quality impacts were determined to be significant based on the whole record which demonstrated that these impacts could not be reduced below thresholds of significance by the proposed project changes (alternatives, mitigation measures, or design changes). Thus, despite the incorporation of all feasible changes or alterations available to avoid Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page24 3�q3 � significant effects of the proposed project outlined in the EIR, and summarized below, the following impacts caused by the proposed project cannot be fully mitigated to a level of insignificance and a statement of overriding consideration is thereby included (under separate cover) in which specific economic, legal, social, technological or other considerations make infeasible the reduction of project impacts to a nonsignificant level. G.1 AIR QUALITY G.I.a Significant Unavoidable Impact: Long-Term Operational Impacts, Stationary and Mobile Sources MANDATORY CEQA FINDINGS: Finding: Air quality issues are discussed in detail in Section 4.3 of the Draft EIR, and in the Air Quality Analysis included as Appendix C to the Draft EIR. The Draft EIR indicates that implementation of the mitigation measure stated below would not reduce the criteria pollutant emissions for CO, ROC, or NO, associated with the operation of the proposed Project to a less-than-significant level under current standards. Despite implementation of the stated mitigation measure, significant and unavoidable impacts remain. This impact is overridden by the Project benefits as set forth in the Statement of Overriding Considerations. Facts In Support of Findings: The primary generators of long-term operational emissions include vehicles, heating, ventilation, and air conditioning systems, and consumer products. As stated in the Draft EIR, SCAQMD thresholds are exceeded relative to emissions for criteria pollutants CO, ROC and NOx. Despite implementation of the following mitigation measure, a significant and unavoidable air quality impact remains. No other feasible mitigation or technology exists that would further substantially minimize, or eliminate these impacts. Mitigation Measure 4.3.10 To aid in the reduction of operational emissions, the project shall comply with all applicable emissions-reducing policies and regulations as outlined in EIR Section 4.3.3. These regulations and policies include, but are not limited to: regulatory requirements of the Federal Clean Air Act, statutes established tinder the California Clean Air Act, Air Quality Management Plan policies, SCAQMD rules, policies of the City of Palm Springs General Plan, and requirements of the City of Palm Springs Municipal Code. Mitigation Measure 4.3.11 Prior to the issuance of building permits, the project proponent shall prepare and submit to the SCAQMD an application for a Permit to Construct and Permit to Operate the gasoline refueling station proposed on site pursuant to Rules 201, 203, 212 and Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page25 3A3 S- 1401. Specifically, this new stationary source of benzene emissions shall install Best Available Control Technology for Taxies (T-BACT), and operate within the conditions specified by the SCAQMD. Copies of SCAQMD approval documentation and any conditions of approval shall be submitted to the City prior to the issuance of building permits. The project gasoline refueling station shall operate in compliance with SCAQMD requirements and regulations for the life of the project. Mitigation Measure 4.3.12 Building construction shall comply with the energy use guidelines in Title 24 of the California Administrative Code. • Mitigation Measure 4.3.13 The use of energy efficient street lighting and parking lot lighting (low pressure sodium vapor lights) shall be considered on-site to reduce emissions at the powerplant serving the site. Mitigation Measure 4.3.14 Consistent with the site plan concept, the project shall provide pedestrian walkways, thereby encouraging walking as a mode of transportation between related facilities on-site, and to adjacent uses. Additionally, the project shall provide for and/or participate in construction of bike/paths trails consistent with adopted City and regional plans. G.I.b Significant Unavoidable Impact: Cumulative Air Quality Impacts MANDATORY CEQA FINDINGS: Finding: Cumulative impacts to air quality issues are discussed in Section 4.3 of the Draft EIR, and in the Air Quality Analysis included as Appendix C to the Draft EIR. New development on the project site, combined with other anticipated future development in the region, will contribute to a cumulative annual increase in regional CO, ROC, and NOx air pollution emissions. Erriissions will be produced by daily traffic for future light industrial or commercial uses, which are expected to be located in the irmnediate vicinity of the Project. Emissions will also result from anticipated development in the surrounding region. As the Project's emissions impacts are considered significant and unavoidable in and of themselves, cumulative increases in air pollution emissions resulting from the Project are also considered significant and unavoidable. These impacts are overridden by Project benefits as set forth in the Statement of Overriding Considerations. Facts In Support of Findings: As discussed in Section 4.3.6 of the Draft EIR, the operational emissions for the project for CO, ROC, and NO, would exceed the daily thresholds established by the SCAQMD. Continued operations of the project will lead to local and regional air quality degradation which is significant and unavoidable. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page26 23A3 (c� The project will employ all feasible mitigation measures, and will comply with all applicable Federal, State, SCAQMD, and City rules and regulations addressing air quality and air pollutant emissions. No other feasible mitigation or technology is known to exist that would substantially minimize, or eliminate these impacts. H. PROJECT ALTERNATIVES The California Environmental Quality Act (CEQA) requires discussion of reasonable project alternatives that could feasibly attain the project's objectives (14 CCR §15126(d)). CEQA requires that an EIR evaluate a reasonable range of alternatives to the project, or to the location of the project that: (1) offers substantial environmental advantages over the proposed project, and (2) may be feasibly accomplished in a successful manner and within a reasonable period of time considering the economic, environmental, legal, social, and technological factors involved. The basic objectives of the proposed project are outlined on page 4 of this document. The fundamental objectives are: to create a new mix of retail/commercial uses responsive to City and regional markets; to increase economic benefits to the City through job creation; and to augment the City's tax base by providing a variety of tax-generating uses. The objectives identified in the EIR must be fulfilled in order for an alternative to provide a feasible and reasonable alternative to the proposed project. The FIR for the Destination Ramon project considered four alternatives to the proposed action. These included a "No Project" alternative, a "Big-Box Only" alternative, a "Reduced Retail/Commercial Intensity" alternative, and a "Light Industrial Reduced Intensity Alternative." These alternatives were defined based on mandatory requirements and alternatives designed to reduce the identified significant impacts of the project. Based on the project objectives referenced above, none of these alternatives was considered to be technically feasible and they were rejected from further consideration based on failure to meet the fundamental project objectives. The purpose in analyzing alternatives to a proposed project is to determine it an alternative is capable of eliminating or reducing potential significant adverse environmental effects, "even if these alternatives would impede to some degree the attainment of the project objectives, or would be more costly" (State CEQA Guidelines, Section 15126(d)(3)). The following discussion summarizes the EIR evaluation of each of these alternatives in determining whether they are feasible alternatives to the proposed action. H.1 No Project Alternative Under the No Project Alternative, the Project site would likely be developed consistent with permitted or conditionally permitted uses under the site's current M-1, or "Service Manufacturing" zoning designation, and in a manner consistent with the objectives and policies identified for the site's current General Plan "Business/Industrial" land use designation. For purposes of comparison with other alternatives, the 31-acre project site was assumed to be developed with light industrial uses over approximately 60 percent of the site, or 814,000 square feet of light industrial uses. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page27 SAY? Finding: The No Project Alternative was rejected as an alternative to the Project because it does not achieve the stated objectives of the Project, to (1) provide retail/commercial uses responsive to City and regional market forces that will serve the primary retail commercial needs of area residents; and (2) augment the City's economic base by providing tax-generating uses. H.2 "Big-Box Only" Alternative This alternative assumes development of the project site with the currently proposed 225,000 square foot Major-1 use only. This would allow for development of the project's primary and focal commercial tenant, and would represent an approximate reduction in development intensity of 52,000 square feet, or 19 percent. This reduction in development would incrementally reduce Project-generated traffic and related vehicle emissions and vehicular noise. It is assumed that traffic impacts could be successfully mitigated as with the proposed project; however, air quality impacts under this alternative would likely still exceed applicable SCAQMD thresholds, and would therefore be considered significant. Finding: The "Big-Box Only" Alternative was rejected as an alternative to the Project because it would curtail full attaimnent of the project's cormmercial objectives in that this alternative would provide for limited additional retail/corn nercial services available to City residents. Additionally, limited commercial development of the project site resulting from the "Big-Box Only" Alternative would diminish or eliminate additional employment venues and tax-generating potentials. Moreover, it is recognized that elimination of uses under the"Big-Box Only"Alternative would be economically untenable for the Project proponent. H.3 Retail/Commercial Reduced Intensity Alternative The Reduced Commercial Intensity Alternative assumes a development scenario wherein the commercial building is reduced in scale sufficient to reduce air emissions to less-than-significant levels. With the proposed project, due primarily to project-generated traffic, operational emissions are estimated to exceed SCAQMD daily CO, ROX, and NO, thresholds by approximately two-and-one half times significance levels. Accordingly, the Retail/Cornrnercial Reduced Intensity Alternative reduces development by two-thirds, equating to development of approximately 92,300 square feet of retail/commercial uses on the site. This reduction in development would likely reduce project-generated traffic and related vehicle emissions and vehicular noise to less-than-significant levels. Finding: The Retail/Commercial Reduced Commercial Intensity Alternative was rejected as an alternative to the Project because it would curtail full attainment of the project's commercial objectives in that this alternative would provide for limited additional retail/commercial services available to City residents. Additionally, limited commercial development of the project site resulting from the Reduced Commercial Intensity Alternative would diminish or eliminate additional employment venues and tax-generating potentials. Moreover, it is recognized that elimination of uses under the Reduced Commercial Intensity Alternative would be economically untenable for the Project proponent. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page28 3*4 :�li� H.4 Light Industrial Reduced Intensity Alternative This reduced intensity alternative assumes reduction of the maximum 814,000 square feet of light industrial uses that might be implemented under the No Project alternative. If developed with 814,000 square feet of light industrial uses, the project could generate approximately 6,400 new trips on vicinity roadways. In order to achieve SCAQMD thresholds, it is estimated that these trips would need to be reduced by approximately one-half. Accordingly, the Light Industrial Reduced Intensity alternative assumes a development scenario that would allow approximately 407,000 square feet of light industrial development. Finding: The Light Industrial Reduced Intensity Alternative was rejected as an alternative to the Project because it does not achieve the stated objectives of the Project, to (1) provide retail/commercial uses responsive to City and regional market forces that will serve the primary retail commercial needs of area residents; and (2) augment the City's economic base by providing tax-generating uses. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page29 3A -39 EXHIBIT B PROJECT BENEFITS AND STATEMENT OF OVERRIDING CONSIDERATIONS REGARDING ENVIRONMENTAL EFFECTS FROM APPROVAL OF TENTATIVE PARCEL MAP 30745 AND CASE NO. 5.0957-CUP (STATE CLEARINGHOUSE NO. 2003071074) DESTINATION RAMON PROJECT I. PROJECT BENEFITS Benefits fi-om the approval of the Destination Ramon Project will be derived from the establishment of a productive commercial/retail use for existing and future City and vicinity residents. The project benefits outlined below were considered by the City in performing the balancing test with those unavoidable significant adverse enviromnental impacts presented in Exhibit A, Statement of Facts and Findings. 1. Benefits of Implementing the Proposed Project: a) Creation of a productive commercial/retail use, capitalizing on the project site's access and approximate location to major regional roadways including Ramon Road and Gene Autry Trail. b) The Project will allow for productive use of currently vacant land within the City with a commercial/retail use to provide services to residents of the City and surrounding community. c) The development of additional high quality commercial/retail uses will provide for increased economic benefits to the City of Palm Springs to increase sales taxes and additional employment opportunities. As described in the Market Impact Analysis for the Wal-Mart Palm Springs Project, prepared by The Natelson Company and attached as Appendix F to the Draft EIR, development of the proposed Project will lead to the creation of approximately 442 full-time-equivalent jobs, and generate an estimated $0.64 million in annual sales tax revenue. d) The development of the Project will provide needed Commercial/Retail shopping in the area underserved by such business. J. OVERRIDING CONSIDERATIONS The City Council of the City of Palm Springs adopts this Statement of Overriding Considerations with respect to the significant unavoidable impacts identified in the EIR, specifically (1) air quality related to (a) increased local and regional air pollution emissions from construction of the proposed Project, (b) increased local and regional air pollutant emissions from the project and related traffic, and (c) contribution to local and regional cumulative air quality impacts. Statement of Facts and Findings Destination Ramon Project City of Palm Springs Pagel 3A %4d This section of findings specifically addresses the requirements of Section 15093 of the CEQA Guidelines, which require the lead agency to balance the benefits of a proposed project against its unavoidable significant impacts and to detennine whether the impacts are acceptably overridden by the project benefits. The Council finds that the previously stated major project benefits see Section I above, of the Destination Rai-non Project, outweigh the unavoidable significant adverse environmental impacts noted above. Each of the separate benefits of the proposed development to be governed by the planned development cited in Section I above is hereby determined to be, in itself and independent of the other Project benefits, a basis for overriding all unavoidable environmental impacts identified in the EIR and in these findings. The Council's findings set forth in the preceding sections have identified all of the adverse environmental impacts and the feasible mitigation measures which can reduce impacts to less- than-significant levels where feasible, or to the lowest feasible levels where significant impacts remain. The findings have also analyzed four alternatives to determine whether there are reasonable or feasible alternatives to the proposed action or whether they might reduce or eliminate the significant adverse impacts of the proposed Project. The EIR presents evidence that implementing the development pursuant to the Destination Ramon Project will cause significant adverse impacts, which cannot be substantially mitigated to non-significant levels. These significant impacts have been outlined above and the Council makes the following finding: Finding: Having considered the unavoidable adverse impacts of the Destination Rai-non Project to construct the planned development, the Council hereby determines that all feasible mitigation has been adopted to reduce or avoid the potentially significant impacts identified in the EIR, and that no additional feasible mitigation is available to fiuther reduce significant impacts. Further, the Council finds that economic, social, and other considerations of the Destination Ramon Project outweigh the unavoidable adverse impacts described above. The reasons for accepting these remaining unmitigated impacts are described below. In making this finding, the Council has balanced the benefits of the proposed Project against its unavoidable environmental impacts and has indicated its willingness to accept those risks. Furthennore, the Council has considered the alteratives to the Project, and makes the following finding: Finding: Feasible alteratives to the proposed Project which are capable of reducing identified impacts have been considered and rejected because the alternatives offer a reduced level of benefit when compared to the Project. Statement of Facts and Findings Destination Ramon Project City of Palm Springs d Page 2 � d � I The Council further finds that the Project's benefits are substantial and override each unavoidable impact of the Project, as follows: 1) Findings Regarding Air Quality Impacts A. Long-Tenn Operational Impacts. Long-tenu, stationary and mobile source emissions will exceed the SCQAMD thresholds for CO, ROC, and NO, despite the imposition of mitigation measures and implementation of best available control technology. The primary generators of long-terns operational emissions include vehicles, heating, ventilation, air conditioning equipment, and consurner products. As stated in the Draft EIR, SCQQMD thresholds are exceeded relative to emissions for criteria pollutants CO, ROC and NO.. However, benefits obtained from developing much needed Commercial/Retail uses necessary to meet the demands of a growing population within the City, are sufficient to justify approval of the Project. These impacts are overridden by Project benefits described in Section H of this document. B. Cumulative Impacts. As a source of stationary and vehicle emissions, on a long-term basis the Project and other projects in the region will cumulatively contribute increased levels of criteria pollutants. Despite implementation of mitigation measures and best available control technology, these impacts cannot be mitigated to a less-than-significant level. This impact is overridden by the Project benefits described in Section I of this document. As the CEQA Lead Agency for the proposed action, the City of Palm Springs has reviewed the Project description and the EIR and fully understands the Project proposed for development in accordance with the Destination Ramon Project. Further, the Council finds that all potential adverse environmental impacts and all feasible mitigation measures to reduce these impacts have been identified in the Draft EIR, the Final EIR and public testimony. These impacts and mitigation measures are discussed in Sections F and G, above. The Council also finds that a reasonable range of alternatives was considered in the EIR and this document, Section H above, and that no feasible alternatives which substantially lessen Project impacts are available for adoption. The Council has identified economic and social benefits and important public policy objectives, Section I above, which will result from implementing the proposed Project. The Council has balanced these substantial social and economic benefits against the unavoidable significant adverse effects of the Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page 3 3Ay � proposed Project. Given the substantial social and economic benefits that will accrue to the City of Palm Springs, and the region, from development proposed by the Destination Ramon Project, the Council finds that the benefits identified herein override the unavoidable environmental effects. California Public Resources Code 21002 provides: "In the event specific economic, social, and other conditions make unfeasible such Project alternatives or such mitigation measures, individual projects can be approved in spite of one or more significant effects thereof" Section 21002.1(c) provides: "hi the event that economic, social, or other conditions make it infeasible to mitigate one or more significant effects of a project on the environment, the project may nonetheless be approved or carried out at the discretion of a public agency...." Finally, California Administrative Code,Title 14, 15093(a) states: "If the benefits of a proposed project outweigh the unavoidable adverse enviromnental effects, the adverse environmental effects maybe considered `acceptable.' " Statement of Facts and Findings Destination Ramon Project City of Palm Springs Page 4 3hLFO� 4.0 MITIGATION MONITORING PLAN 4.1 INTRODUCTION To ensure that the mitigation measures contained in this EIR are properly implemented, a monitoring program has been developed pursuant to State law. This Mitigation Monitoring Plan (MMP) identifies measures incorporated in the project which reduce its potential environmental effects;the entities responsible for implementation and monitoring of mitigation measures;and the appropriate timing for implementation of mitigation measures. As described in CEQ-4§ 15097, this MMP employs both reporting on, and monitoring of, project mitigation measures. The objectives of the MMP are to: • Assign responsibility for,and ensure proper implementation of mitigation measures; • Assign responsibility for, and provide for monitoring and reporting of compliance with mitigation measures; • Provide the mechanism to identify areas of noncompliance and need for enforcement action before irreversible environmental damage occurs. Mitigation monitoring and reporting procedures incorporated in the project are presented in the following Section 4.2. Specific mitigation measures incorporated in the project, mitigation timing,and implementation and reporting/monitoring responsibilities are presented within this section in Table 4.2-1 Destination Ramon Project Mitigatiois Monitoring Plmx Final Environmental Impact Report Page 4-I ('� 3� qu 4.2 MITIGATION MONITORING AND REPORTING 4.2.1 Mitigation Monitoring and Responsibilities As the Lead Agency, the City of Palm Springs is responsible for ensuring full compliance with the mitigation measures adopted for the proposed project. The City will monitor and report on all mitigation and construction activities, and will require the project proponent and its contractors to implement this mitigation monitoring plan. Primary responsibility for compliance with project mitigation measures, and reporting the progress of that compliance through the mitigation monitoring plan, resides with the project proponent. Any proposed significant modifications to the mitigation measures presented herein will be reported immediately to the City of Palm Springs and any affected agencies. Prior to their implementation, the project proponent will ensure that any proposed significant modification of the mitigation measures or procedures identified within this mitigation monitoring plan are first approved by the City and any affected responsible agencies. If during the course of project implementation,any of the mitigation measures identified herein cannot be successfully implemented, the project proponent will immediately inform the City and any affected responsible agencies. The City in conjunction with any affected responsible agencies will then determine if modification to the project is required and/or whether alternative mitigation is appropriate. Destination Ramon Project Mitigation Monitoring Plan Final Environmental bnpact Report Page 4-2 3A4 Table 4.2-1 Destination Ramon Project Mitigation Monitoring Plan Mitigation Measures Mitigation Timing Implementation Monitoring/ Monitoring/ Entity Reporting Entity Reporting Frequency Biological Resources BR-1 The developer shallpayfees of$800.00per acre,as required by Prior to the issuance of Project City of Palm Springs Prior to the issuance of the Habitat Conservation Plan for the Aqua Caliente Indian grading permits Proponent Planning and Building & grading permits Reservation. Safety Departments BR-2 The project proponent shall remitfees at the established rate of Prior to the issuance of Project City of Palm Springs Prior to the issuance of $600.00 per acre of disturbance for impacts to the Coachella grading permits Proponent Planning and Building & grading permits Valley Fringe-Toed Lizard Habitat. Safety Departments Water Resources WR-1 Final design oftheproject retention area shall be reviewed and Plan check prior to the Project City of Palm Springs Plans verified at issuance approved by the City Engmeerprior to the issuance ofgrading issuance of the first grading Proponent Planning and Building& of the first grading permit permits. permit Safety Departments WR-2 Upon completion of RCFCD master planned storm drain Upon completion of Project City of Palm Springs Following reclamation of improvements, the project on-site retention basin may be flZed areawide drainage Proponent Planning and Public retention basins and restored to the satisfaction ofthe City. Thefilled retention improvements Works Departments area shall be landscaped and maintained to the satisfaction ofthe Director of Planning and Zoning. WR-3 The project proponent shallprepare a maintenance planfor the Approve CC&R's prior to Project City of Palm Springs CC&R's approved prior to proposed project site retention basin. This maintenance plan issuance of the project's Proponent Planning and Building& occupancy shall be incorporated in proponent-prepared Conditions, first Certificate of Safety Departments Covenants and Restrictions (CC&R's) or comparable legal Occupancy obligation acceptable to the City. These CC&R's,orequivalent, shall be reviewed and approved by the City prior to the issuance ofthefirst Certificate of Occupancy (CO). WR-4 Theproject shall contribute to mitigation ofarea-wide drainage Prior to the issuance of first Project Proponent City of Palm Springs Prior to the issuance of first impacts through thepayment ofiequiredDrainage Acreagefees. bufldmgpermit Planning and Building& building permit Fees shall be paid to the City prior to the issuance of the first Safety Departments r ,\ buildingpermit. W Destination Ramon Mitigation Monitoring Plan Final Environmental Impact Report Page 4-3 Table 4.2-1 Destination Ramon Project Mitigation Monitoring Plan Mitigation Measures Mitigation Timing Implementation Monitoring/ Monitoring/ Entity Reporting Entity Reporting Frequency Water Resources, cont'd WR-5 Iftreated wastewater becomes available to the site by extension of Throughout life of project Project City of Palm Springs Ongoing throughout life of treated wastewater lines,theprojectshouldberequiredto connect Proponent Planning and Public the project. for irrigation purpose Works Departments Cultural Resources CR-1 A NativeAmerican Monitorshall bepresentduriiigalltrenching Throughout project Project City of Palm Springs As applicable according to and excavation activities. Should buried deposits be encountered, construction activities Proponent Planning and Building& relevant regulations and the Monitor shall have the authority to halt destructive Safety Departments policies. construction, and shall notify a qualified archaeologist to investigate and, if necessary, prepare a mitigation plan for submission to the State Historic Preservation Officer and the Ague,Cafiente Band of Cahuilla Indians. CR-2 In accordance with Public Resources Code 509794, ifhuman Throughout project Project City of Palm Springs As applicable according to remains are found, the Riverside County Coroner must be construction activities Proponent Planning and Building& relevant regulations and notified within 24 hours of the discovery. If the coroner Safety Departments policies. determines that the remains are not recent, the coroner shall notify the Native American Heritage Comm ission in Sacramento to determine the most likely descendent for the area. The designated Native American representative then detenn Ines in consultation with the property owner the disposition of the human remains. CR-3 One copy of any cultural resource documentation generated in Throughout project Project City of Palm Springs As applicable according to connection with this project, including report of investigations, construction activities Proponent Planning and Building& relevant regulations and recordssearch results,andsiterecords/updatesshallbeforwarded Safety Departments policies. r •\ to the Tribal Planning,Building,andEngmeering Department W DestinationRanton Mitigation Monitoring Plan Final Environmental impact Report Page 4-4 Table 4.2-1 Destination Ramon Project Mitigation Monitoring Plan Mitigation Measures Mitigation Timing Implementation Monitoring/ Monitoring/ Entity Reporting Entity Reporting Frequency Traffic and Circulation 4.2.1 Theprojectprop intent shall install improvements,andpayfairshare Prior to the issuance of first Project City of Palm Springs Prior to the issuance of first fees toward construction ofimprovements as identified in Table 4.2- buildingpermit Proponent Planning,Traffic building permit 10.[Excerpted below.] Engineering and Building & Safety Departments REQUIRED OPENING-YEAR IMPROVEMENTS Intersection(#)and Improvements reference Draft EIR Figure 4.2-3. Ramon Road at Site Access(20) The project proponent will implement the Ramon Road median at the central project entrance in a manner ensuring appropriate left-turn storage forproject-related traffic. Design and implementation ofproposed median is the responsibility ofthe project,and will be coordinated with/through the City. North Site Access at San Luis Rey Drive(21) -construct project westbound right-turn lane -construct project westbound through/left-turn lane -install STOP sign to control exiting traffic South Site Access at San Luis Rey Drive(22) -construct project westbound right-turn lane -construct project westbound left-turn lane -stripe southbound left-turn lane(or continuous two-way left-turn median lane on San Luis Rey Drive) -install STOP sign to control exiting traffic W Destination Ramon Mitigation Monitoring Plan f� Final Environmental Impact Report Page 4-5 Table 4.2-1 - Destination Ramon Project Mitigation Monitoring Plan Mitigation Measures Mitigation Timing Implementation Monitoring/ Monitoring/ Entity Reporting Entity Reporting Frequency Traffic&Circulation, cont'd North Site Access at Crossley Road(23) -constuct project eastbound right-turn lane -construct project eastbound left-turn lane -install STOP sign to control exiting traffic South Site Access at Crossley Road(24) -construct project eastbound right-turn lane -construct project eastbound left-turn lane -install STOP sign to control exiting traffic -provide a smooth transition forthe entering traffic lane past the refueling station Crossley Road Striping Adjacent to Project Site- Provide continuous two-way left-turn lane configuration within the adjacent Crossley Road right-of-way. IMPROVEMENTS REQUIRED TO MAINTAIN ACCEPTABLE YEAR 2020 LEVELS OF SERVICE (Project will contribute fair share fees toward construction of improvements) Intersection(#)per Draft EIR Figure 4.2-4 Vista Chino°at Gene Autry Trail"(1) Project Share of Traffic -add a northbound left-turn lane Increase =6.47% -add a westbound through lane -add an eastbound through lane Ramon Road°at Sunrise Way(2) Project Share of Traffic -add a westbound left-turn lane Increase =4.32% r\\) -add a eastbound left-tum lane Destination Ramon Mitigation Monitoring Plan Final Environmental Impact Report Page 4-6 O Table 4.2-I Destination Ramon Project Mitigation Monitoring Plan Mitigation Measures Mitigation Timing Implementation Monitoring/ Monitoring/ Entity Reporting Entity Reporting Frequency Traffic& Circulation, cont'd Ramon Road"at Farrell Drive(3) Project Share of Traffic -add a southbound left-turn lane Increase =6.53% Ramon Road b at San Luis Rey Drive(8) Project Share of Traffic -add a sorthbound left-turn lane Increase =20.34% -add a northbound left-turn lane Ramon Road'at Crossley Road(9) Project Share of Traffic -add a northbound right-turn land Increase =10.09% -add a westbound through lane -add an eastbound through lane Ramon Road°at Landau Boulevard(10) Project Share of Traffic -add a westbound through lane Increase =10.17% -add an eastbound through lane Raman Road'at Cathedral Canyon Project Share of Traffic Drive(11) Increase =9.59% -add a westbound left-turn lane -add an eastbound left-turn lane -add an eastbound right-turn lane Sunny Dunes Road at Crossley Road d Project Share of Traffic (13) Increase = 11.87% -add a northbound left-turn lane -add a southbound left-turn lane -add an eastbound left-turn lane Mesquite Avenue at San Luis Rey Drive Project Share of Traffic (15) Increase = 18.37% -signalize Intersection W -restripe Lanes Destination Ramon Mitigation Monitoring Plan (/� Final Environmental Impact Report Page 4-7 Table 4.2-1 Destination Ramon Project Mitigation Monitoring Plan Mitigation Measures Mitigation Timing Implementation Monitoring/ Monitoring/ Entity Reporting Entity Reporting Frequency Traffic&Circulation. cont'd Mesquite Avenue bat Crossley Road(16) Project Share of Traffic -add a northbound through lane Increase =14.15% -add a southbound left-turn lane -add a southbound through lane Southerly ProjectDrivewayNat Crossley Project Share of Traffic Road(24) Increase=27.44% -signalize intersection Notes: a One leg of this roadway is a CMPfaalty, b. Both legs of this roadway are CMPfacilttes, c This improvement is needed in conjunction with site development,and is not on a CMP roadway,nor is it covered by T(JMFfers, - d. Intersection modifications proposed by the Mid Palley Center Project , e Restriping Crossley Road as a 5-lane roadway adjacent to the project site is included in project-sponsoredinuprovemmrts,aid will be completed prior to project opening. Signalization will be required underfuture(2020)hgFcconditions The project will contribute fair-share fees toward this funcre signalization. Air Quality 43.1 Grading oftheproject site shall be limitedto a maximum of8 acres Throughout project Project City of Palm Springs Ongoing thought project per day. grading activities Proponent Planning Department/ grading activities SCAQMD 4.3.2 Adequate watering techniques shall be employed topartially mitigate Throughout project grading Project Proponent City of Palm Springs Ongoing thought project the impacts ofconstruction-relaced dustparticulates. Portionsofthe activities Planning Department/ grading activities project site that are undergoing earth moving operations shall be SCAQMD watered such that a crust will be formed on the ground surface and then watered again at the end ofthe day, as part ofthe construction \� specifications. V' Destination Ramon Mitigation Monitoring Plan �} Final Environmental Impact Report Page 4-8 J Table 4.2-1 Destination Ramon Project Mitigation Monitoring Plan Mitigation Measures Mitigation Timing Implementation Monitoring/ Monitoring/ Entity Reporting Entity Reporting Frequency Air Quality, cont'd 4.3.3 Aspart ofthe construction specifications,any vegetativegroundcover Throughout project Project City of Palm Springs Ongoing thought project to be utilized on-site shallbeplanted as soon aspossible to reducethe construction activities Proponent Planning and Building& construction activities disturbed area subject to wind erosion. Irrigation systems needed to Safety Departments water these plants shall be installed as soon as possible to maintain the ground cover and minimize wind erosion ofthe soil. 4.3.4 Cut and fill quantities shall be balanced on-site. Throughout project Project City of Palm Springs Ongoing thought project construction activities Proponent Planning and Building & construction activities Safety Departments 4.3.5 Theprojectproponents shall comply with allprovisions ofthe Palm Compliance throughout Project City of Palm Springs Ongoing thought project Springs Municipal Code includingthe Construction Site Regulations project construction Proponent Planning and Building& construction activities and the Fugitive Dust and Erosion Control Ordinance. The activities; fugitive dust Safety Departments, proposed projectshall comply with theprovisions ofChapter8.50of control plan to be the Palm Springs Municipal Code which establishes minimum approved prior to issuance requirements for construction activities to reducefugitive dust and of grading permits PMIO emissions. A plan to control fugitive dust through implementation of reasonably available dust control measures shall be prepared and submitted to the City of Palm Springs for approval, prior to the issuance of any grading permits associated with the project. W Destination Ranion Mitigation Monitoring Plan cl Final Environmental Impact Report Page 4-9 W Table 4.2-1 Destination Ramon Project Mitigation Monitoring Plan Mitigation Measures Mitigation Timing Implementation Monitoring/ Monitoring/ Entity Reporting Entity Reporting Frequency Air Quality, cont'd 4.3.6 The project proponent shall comply with all applicable Throughout project Project Proponent City of Palm Springs Ongoing thought project SCAQMD rules and regulations including Rule 403,insuring construction activities Planning Department/ construction activities the clean up ofconstruction-related dirt on approach routes to the SCAQMD site. Rule 403 prohibits the release of fugitive dust emissions from any active operation,open storage pile, or disturbed surface area beyond the property line of the emission source. 4.3.7 Any construction access roads(otherthan temporary access roads) Throughout project Project City of Palm Springs Ongoing thought project shall bepavedas soon aspossible and cleaned aftereach work day. construction activities Proponent Planning and Building& construction activities The maximum vehicle speed limit on unpaved roads shall be 15 Safety Departments miles per hour. 4.3.8 Grading operations shall be suspended during first and second Throughout project Project City of Palm Springs - Ongoing thought project stage ozone episodes and when winds exceed 25 miles per hour, construction activities Proponent Planning and Building& construction activities per the PMI0 SIP. Safety Departments 4.39 Construction equipment shall be properly maintained and Throughout project Project City of Palm Springs Ongoing thought project serviced to minimize exhaust emissions construction activities Proponent Planning and Building& construction activities Safety Departments 4.3,10 Toaidinthereducaon ofoperationalemissions,theprojectshall Throughout project Project City of Palm Springs Ongoing thought project comply with all applicable emissions-reducing policies and construction activities Proponent Planning Department/ construction activities regulations as outlined in EIR Section 4.3 3. These regulations SCAQMD and policies include, but are not limited to: regulatory requirements of the Federal Clean Air Act,statutes established under the California Clean Air Act,Air Quality Management Plan policies, SCAQMD rules, policies of the City of Palm Springs General Plan, and requirements of the City of Patin r ,l Springs Municipal Code. vV Destination Ramon Mitigation Monitoring Plan Final Environmental Impact Report Page 440 Table 4.2-1 Destination Ramon Project Mitigation Monitoring Plan Mitigation Measures Mitigation Timing Implementation Monitoring/ Monitoring/ Entity Reporting Entity Reporting Frequency Air Quality, cont'd 4.3.11 Prior to the issuance of building permits, the project proponent Compliance throughout Project City of Palm Springs Ongoing thought project shall prepare and submit to the SCAQMD an application for a project construction Proponent Planning and Building& construction activities Permitto Construct and Permit to Operate thegasolinerefueling activities; fugitive dust Safety Departments station proposed on site pursuant to Rules 201, 203, 212 and control plan to be 1401. Specifically, this new stationary source of benzene approved prior to issuance of grading permits ....-. any conditions of approval shall be submitted to the City prior to the issuance of building permits. The project gasoline refueling station shall operate in compliance with SCAQMD requirements and regulations for the life of the project. 4.3.12 Buildingconstructionshallcomply with the energy useguidelines Prior to issuance of first Project City of Palm Springs During plan check and in Title 24 ofthe California Administrative Code. occupancy permit Proponent Planning and Building& ongoing thought project Safety Departments construction activities 4.3.13 The useofenergy efficient streetlightingand parking lotlighting Prior to issuance of first Project City of Palm Springs During plan check and (low pressure sodium vapor lights)shall be considered on-site to occupancypermit Proponent Planning and Building& ongoing thought project reduce emissions at thepowerplant serving the site. Safety Departments construction activities 4.3.14 Consistent with the site plan concept, the project shall provide Prior to issuance of first Project City of Palm Springs During plan check and pedestrian walkways,thereby encouraging walking as a mode of occupancy permit Proponent Planning and Building& ongoing thought project transportation between related facilities on-site,and to adjacent Safety Departments construction activities uses. Additionally, the project shall provide for and/or participate in construction of bike/paths trails consistent with adopted City and regional plans W (11 41 Destination Ramon Mitigation Monitoring Plan Final Environmental Impact Report Page 4-11 DATE: April , 2004 TO: ity Council FROM: Director of Planning and Zoning TENTATIVE PARCEL MAP NO. 30745 - AN APPLICATION BY ROTHBART DEVELOPMENT, DESTINATION RAMON, LLC, FOR THE DESTINATION RAMON PROJECT, FOR APPROVAL OF TENTATIVE PARCEL MAP 30745, THE SUBDIVISION OF A 31.12 ACRE SITE INTO EIGHT PARCELS, FOR VACATION OF THE SKY POINT DRIVE EAST, WEST AND NORTH RIGHTS OF WAY WITH THE FINDING THAT THE VACATION OF RIGHT OF WAY IS CONSISTENT WITH THE GENERAL PLAN CIRCULATION ELEMENT, LOCATED AT 5601 RAMON ROAD EAST,ON APN#680-170-025,680-170-026,680-170-027,680-170-028,680-170-029, 680-170- 030,680-170-031,680-170-032,680-170-048AND 680-170-050,ZONE W.M-1 I.L., SECTION 20. RECOMMENDATION: That the City Council continue this item to April 14, 2004, at the applicant's request. SUMMARY: At it's meeting of March 24, 2004, the Planning Commission voted to recommend that the City Council: • Adopt the Statement of Facts and Findings, Statement of Overriding Considerations, Mitigation Monitoring Program and Certify the Final Environmental Impact Report; • Approve Tentative Tract Map 30745, subject to conditions contained in the attached resolution; and • Find that vacation of the right-of-way of Sky Point Drive East, West and North is consistent with the Circulation Element of the General Plan; and The Planning Commission also voted to continue the Conditional Use Permit for an automobile service station,various drive-through uses,and related architectural approvals,which are final with approval of the Conditional Use Permit by the Planning Commission, to it's regularly scheduled April 28, 2004 meeting A complete staff report will be provided prior to the April 14, 2004 City Council meeting. BACKGROUND: The project is an application by Destination Ramon, LLC,for a 277,000 square foot retail shopping center. The principal is Stan Rothbart. The project includes a 225,000 square foot retail store, an associated free-standing gas station with 900 square foot office and convenience mart, and four additional retail commercial pads totaling up to 51,000 square feet. The proposed project also includes: A tentative parcel map (TPM 30745) for the subdivision of approximately 31.12 acres into 7 parcels, ranging in size from 22.02 acres to 0.92 acres; 3 �s� • Architectural, site plan, landscape and sign program review and approval; • A General Plan consistency finding that the vacation of the right-of-way of Sky Point Drive East, West and North, is consistent with Circulation Element of the General Plan; • Approval of free-standing light fixtures in excess of eighteen (18) feet to thirty (30) feet in height; • Sign program and relief from the certain provisions of the sign ordinance; and A conditional use permit which addresses drive through operations for various out-pad uses proposed within the project site, and an automobile service station, to include eight (8) pumps, (16 fueling positions) and a 900 square foot kiosk. Destination Ramon Development, LLC, has entered into an agreement with American Realty Trust to purchase the lease-hold interest.American Realty Trust currently has a lease agreement forthe 31.12 acre site with the current property owner, a member of the Agua Caliente Band of Cahuilla Indians. The BIA has approved the lease agreement in form and content. The BIA will not approve the lease until the project has been entitled and the transfer is ready. The Destination Ramon site is generally bounded by Ramon Road,San Luis Rey Drive,Sunny Dunes Road and Crossley Road. The Conditional Use Permit and related architectural approval application consists of a building footprint of 225,011 square feet, with a general retail store, a grocery store and an automobile repair shop. The project also includes an outdoor garden area of 22,775 square feet. Six additional pad include buildings ranging in size from 900 square feet to 15, 570 square feet, for a total of 277,00 square feet of building area on the 31.12 acre site. The proposal includes 1,434 parking spaces on-site (1,239 are required),with a total of five vehicular ingress/egress points to serve the facility. Two additional driveways provide access for loading. The building is oriented toward the southern end of the property, to allow for easier access to the parking areas from Ramon Road, Crossley Road, and San Luis Rey Drive and to lessen the apparent bulk and height of the building from this scenic vehicular corridor. The majority of the building will be constructed at a height of approximately 22-28 feet above finished grade, with the architectural element over the main entrances reaching approximately 42 feet at the highest point. �Sa,C �7 U ���Jd✓""�� Director of PIranning and Zoning City Manager Attachments: 1. Draft Environmental Impact Report —Provided to Council 4/1/04 2. Final Environmental Impact Report —Provided to Council 4/1104 3 HEARING CONTINUED TO 4-14-04 NOTICE OF INTENT TO CERTIFY AN ENVIRONMENTAL IMPACT REPORT NOTICE OF PUBLIC HEARING CITY COUNCIL CITY OF PALM SPRINGS CASE NO. 5.0957-CUP, TPM 30745, DESTINATION RAMON, LLC. 5601 RAMON ROAD EAST APPLICANT: ROTHBART DEVELOPMENT (WALMART) NOTICE IS HEREBY GIVEN that the City Council of the City of Palm Springs, California, will hold a public hearing at its meeting of April 7, 2004. The City Council meeting begins at 7:00 p.m. in the Council Chambers at City Hall, 3200 E. Tahquitz Canyon Way, Palm Springs. The project is an application by Rothbart Development for Destination Ramon, a 277,000 square foot retail shopping center. The project includes a 225,000 square foot retail store, an associated free-standing gas station with a 900 square foot office and convenience mart, drive- throughs, and four additional retail commercial pads totaling up to 51,000 square feet. The project includes: • A tentative parcel map (TPM 30745) for the subdivision of approximately 31.12 acres into 7 parcels, ranging in size from 22.02 acres to 0.92 acres; • A vacation of the right-of-way of Sky Point Drive; • A certificate of public convenience and necessity for sale of alcohol for off-site consumption for the Wal-Mart store only; and • A sign program and parking lot lighting in excess of eighteen (18) feet in height. The project is located at 5601 Ramon Road, on Assessors Parcel Number (APN) 680-170- 025, et.sec., at the southwest corner of Ramon Road and Crossley Road, Zone M-1, Section 20. Pursuant to the California Environmental Quality Act (CEQA), an Environmental Impact Report has been prepared for this project. The City Council may adopt a statement of facts and findings and statement of overriding considerations in support of this project, and certify the Environmental Impact Report at this meeting. Significant impacts include impacts to Air Quality. Potentially significant impacts include impacts to land use and planning, traffic and circulation, noise, aesthetics, light and glare. Members of the public may view this document in the Department of Planning and Zoning, City Hall, 3200 E. Tahquitz Canyon Way, Palm Springs. If any group challenges the action in court, issues raised may be limited to only those issues raised at the public hearing described in this notice or in written correspondence at, or prior to the Planning Commission hearing. An opportunity will be given at said hearing for all interested persons to be heard. Questions regarding this case may be directed to Alex Meyerhoff, Principal Planner, (760) 323-8245. PATRICIA A. SANDERS City Clerk 3 � s� RESOLUTION NO. EXHIBIT A TENTATIVE PARCEL MAP 30745 DESTINATION RAMON, LLC. 5601 RAMON ROAD APRIL 14, 2004 CONDITIONS OF APPROVAL Before final acceptance of the project, all conditions listed below shall be completed to the satisfaction of the City Engineer, the Director of Planning and Zoning, the Chief of Police, the Fire Chief or their designee, depending on which department recommended the condition. Any agreements, easements or covenants required to be entered into shall be in a form approved by the City Attorney. PROJECT SPECIFIC CONDITIONS Administrative 1. The proposed development of the premises shall conform to all applicable regulations of the Palm Springs Zoning Ordinance, Municipal Code, or any other City Codes, ordinances and resolutions which supplement the zoning district regulations. 2. The owner shall defend, indemnify, and hold harmless the City of Palm Springs, its agents, officers, and employees from any claim, action, or proceeding against the City of Palm Springs or its agents, officers or employees to attach, set aside, void or annul, an approval of the City of Palm Springs, its legislative body, advisory agencies, or administrative officers concerning Case 5.0957-CUP. The City of Palm Springs will promptly notify the applicant of any such claim, action, or proceeding against the City of Palm Springs and the applicant will either undertake defense of the matter and pay the City's associated legal costs or will advance funds to pay for defense of the matter by the City Attorney. If the City of Palm Springs fails to promptly notify the applicant of any such claim, action or proceeding or fails to cooperate fully in the defense, the applicant shall not, thereafter, be responsible to defend, indemnify, or hold harmless the City of Palm Springs. Notwithstanding the foregoing, the City retains the right to settle or abandon the matter without the applicant's consent but should it do so, the City shall waive the indemnification herein, except, the City's decision to settle or abandon a matter following an adverse judgment or failure to appeal, shall not cause a waiver of the indemnification rights herein. 3. That the property owner(s) and successors and assignees in interest shall maintain and repair the improvements including and without limitation sidewalks, bikeways, parking areas, landscape, irrigation, lighting, signs, walls, and fences between the curb and property line, including sidewalk or bikeway easement areas that extend onto private property, in a first class condition, free from waste and debris, and in accordance with all applicable law, rules, ordinances and regulations of all federal, state, and local bodies and agencies having jurisdiction at the property owner's sole expense. This condition shall be included in the recorded covenant agreement for the property if 3 /-,v �5 required by the City. 4. The project is located in an area defined as having an impact on fish and wildlife as defined in Section 711.4 of the Fish and Game Code and an Environmental Impact Report is being prepared on the project; therefore a fee of $914.00 plus an administrative fee of $50.00 shall be submitted by the applicant in the form of a money order or a cashier's check payable to the Riverside County Clerk prior to Council action on the project. This fee shall be submitted by the City to the County Clerk with the Notice of Determination. Action on this application shall not be final until such fee is paid. 5. Prior to issuance of a building permit, Fringe Toed Lizard Mitigation fees shall be paid to the Coachella Valley Association of Governments (CVAG). 6. This project shall be subject to Chapters 2.24 and 3.37 of the Municipal Code regarding public art. The project shall either provide public art or payment of an in lieu fee. In the case of the in-lieu fee, the fee shall be based upon the total building permit valuation as calculated pursuant to the valuation table in the Uniform Building Code, the feeing being 1/2% for commercial projects or 1/4% for residential projects with first $100,000 of total building permit valuation for individual single-family units exempt. Should the public art be located on the project site, said location shall be reviewed and approved by the Director of Planning and Zoning and the Public Arts Commission, and the property owner shall enter into a recorded agreement to maintain the art work and protect the public rights of access and viewing. 7. As the property is Indian trust land, fees as required by the Agua Caliente Band of Cahuilla Indians Tribal Council shall be paid prior to consideration of this project by the Indian Planning Commission. CEQA 8. The mitigation measures of the environmental impact report (EIR) shall apply. The applicant shall submit a signed agreement that the mitigation measures outlined as part of the EIR will be included in the plans prior to consideration of the environmental assessment. The Mitigation measures are contained in the Mitigation Monitoring Program, which is hereby incorporated by reference. Cultural Resources 9. Prior to any ground disturbing activity, including clearing and grubbing, installation of utilities, and/or any construction related excavation, an Archaeologist qualified according to the Secretary of the Interior's Standards and Guidelines, shall be employed to survey the area for the presence of cultural resources identifiable on the ground surface. 10. Given that portions of the project area are within an alluvial formation, the possibility of buried resources is increased. A Native American Monitor shall be present during all ground-disturbing activities. a). Experience has shown that there is always a possibility of buried cultural resources in a project area. Given that, a Native American Monitor(s) shall be present during all ground disturbing activities including clearing and grubbing, excavation, burial of utilities, planting of rooted plants, etc. Contact the Agua 3 AG Caliente Band of Cahuilla Indian Cultural Office for additional information on the use and availability of Cultural Resource Monitors. Should buried cultural deposits be encountered, the Monitor shall contact the Director of Planning and Zoning and after the consultation the Director shall have the authority to halt destructive construction and shall notify a Qualified Archaeologist to investigate and, if necessary, the Qualified Archaeologist shall prepare a treatment plan for submission to the State Historic Preservation Officer and Agua Caliente Cultural Resource Coordinator for approval. b). Two copies of any cultural resource documentation generated in connection with this project, including reports of investigations, record search results and site records/updates shall be forwarded to the Tribal Planning, Building, and Engineering Department and one copy to the City Planning and Zoning Department prior to issuance of a certificate of occupancy. Biological 11. The applicant shall ensure that all Burrowing Owls must be surveyed for in suitable habitat no later that 30 days prior to ground disturbance. If burrowing owls are detected during the nesting period (February 1 -August 31), the following must occur: a). A 75 meter buffer zone around active nests must occur; and b). Relocation of birds if no eggs/incubation occurring. 12. If relocation is to occur, every effort shall be made to relocate owls using a passive method of one-way traps and to comply with the requirements of the Draft Tribal Habitat Conservation Plan. Note: Recommendation 11 and 12 were received subsequent to Final EIR preparation and are recommended in the Tribal Multi-Species Habitat Conservation plan. GENERAL CONDITIONS/CODE REQUIREMENTS 13. The Tentative Tract Map approval shall be valid for a period of three (3) years. Time extensions may be granted by the Planning Commission upon demonstration of good cause. 14. Prior to issuance of a building permit, the applicant must provide a standard avigation easement and non-suit covenant in a form prescribed and approved by the City Attorney, with reference to present and future owners of the parcel. The avigation and non-suite covenant shall be recorded against all parcels. 15. The project is subject to the City of Palm Springs Water Efficient Landscape Ordinance. The applicant shall submit an application for Final Landscape Document Package to the Director of Planning and Zoning for review and approval prior to the issuance of a building permit. Refer to Chapter 8.60 of the Municipal Code for specific requirements. 16. Prior to issuance of a grading permit, a Fugitive Dust and Erosion Control Plan shall be submitted and approved by the Building Official. Refer to Chapter 8.50 of the Municipal Code for specific requirements. 17. The grading plan shall show the disposition of all cut and fill materials. Limits of site disturbance shall be shown and all disturbed areas shall be fully restored or landscaped. 18. The project shall comply with the City of Palm Springs Transportation Demand Management (TDM) Ordinance, which establishes transportation demand management requirements for the City of Palm Springs. Refer to Chapter 8.4 of the Municipal Code for specific requirements. This must be submitted for approval sixty a minimum of (60) days prior to issuance of the certificate of occupancy and must be approved prior to opening. POLICE DEPARTMENT 19. Developer shall comply with Section II of Chapter 8.04 of the Palm Springs Municipal Code. BUILDING DEPARTMENT 20. Prior to any construction on-site, all appropriate permits must be secured. ENGINEERING The Engineering Division recommends that if this application is approved, such approval be subject to the following conditions being completed in compliance with City standards and ordinances. Before final acceptance of the project, all conditions listed below shall be completed to the satisfaction of the City Engineer. STREETS 21, Any improvements within the public right-of-way require a City of Palm Springs Encroachment Permit. 22. Submit street improvement plans prepared by a Registered Civil Engineer to the Engineering Division. The plan(s) shall be approved by the City Engineer prior to issuance of any grading or building permits. 23. Abandonment of existing public rights-of-way and easements are required to facilitate the proposed Tentative Parcel Map. Abandonment of public right-of-way for Sky Point Drive North, Sky Point Drive West and Sky Point Drive East (shown as Lots D and E on Tract Map No. 19544) and a 50 feet wide landscape easement (shown as Lots A,and 6 on Tract Map No. 19544) will be necessary. The developer shall be responsible for coordinating approval of the abandonment of the public rights-of-way with all public utility agencies. Developer shall coordinate final relocation, adjustment or abandonment of all utilities with the respective utility agencies; and shall coordinate demolition of all existing improvements, reconstruction of affected intersecting streets, as appropriate, with the Engineering Division. RAMON ROAD 24. Dedicate additional right-of-way concentric with the back of sidewalk along the bus turnout to be located at the southeast corner of the intersection of Ramon Road and San Luis Rey Drive. 25. Construct a 160-feet long by 12-feet wide bus turn out at the southeast corner of the intersection of Ramon Road and San Luis Rey Drive. The configuration shall be approved by the City Engineer, in coordination with SunLine Transit Agency. Contact SunLine Transit Agency for details regarding bus stop furniture and bus shelter requirements. A bus stop shelter and required furniture, lighting, and other improvements required by SunLine Transit Agency shall be constructed. 26. The existing sidewalk and bicycle path shall be removed and a new 12 feet wide Class I meandering combination sidewalk and bicycle path (Caltrans Design Manual, Chapter 1000 - Bikeway Planning and Design) shall be constructed along the entire. The bicycle path shall be constructed of colored Portland cement concrete. The admixture shall be Desert Sand, Palm Springs Tan, or approved equal color by the Engineering Division. OR Protect the existing a 5 feet wide sidewalk in place the existing a 5 feet wide and construct a separate 8 feet wide Class I meandering bicycle path (Caltrans Design Manual, Chapter 1000 - Bikeway Planning and design) shall be constructed along the Ramon Road frontage. The bicycle path shall be constructed of colored Portland cement concrete. The admixture shall be Desert Sand, Palm Springs Tan, or approved equal color by the Engineering Division. The concrete shall receive a broom finish. 27. The existing curb and gutter shall remain in place except for a curb cut necessary for the proposed driveway approach and as necessary for construction of the required bus turn-out. 28. Construct a 14-feet wide raised, landscaped median island as specified by the City Engineer from San Luis Rey Drive to Crossley Road. Median landscaping shall be designed consistent with median landscaping within the existing Ramon Road medians, subject to the approval of the Director of Planning and Zoning. The median nose width shall be constructed 4 feet wide and have cobblestone paving. The left turn pockets shall be designed in accordance with Section 405 of the current edition of the Caltrans Highway Design Manual, in coordination with requirements included in the Destination Ramon Project Traffic Impact Study prepared by Endo Engineering, dated August 2003 (as amended), and as approved by the City Engineer. Design and construction of the landscaped median island shall be coordinated with the City of Cathedral City, as required. 29. All broken or off grade street improvements shall be repaired or replaced. CROSSLEY ROAD 30. Protect the existing sidewalk in place and construct a separate 8 feet wide Class I meandering bicycle path (Caltrans Design Manual, Chapter 1000 - Bikeway Planning and design) along the entire frontage. The bicycle path shall be constructed of colored Portland cement concrete. The admixture shall be Desert Sand, Palm Springs Tan, or approved equal color by the Engineering Division. The concrete shall receive a broom finish. 3A(� 3 OR at the developer's option, if a new meandering combination sidewalk and bicycle path is proposed, the existing sidewalk shall be removed and a new 12 feet wide Class I meandering combination sidewalk and bicycle path (Caltrans Design Manual, Chapter 1000 - Bikeway Planning and Design) shall be constructed along the entire frontage. The bicycle path shall be constructed of colored Portland cement concrete. The admixture shall be Desert Sand, Palm Springs Tan, or approved equal color by the Engineering Division. The concrete shall receive a broom finish. SKY POINT DRIVE (NORTH, EAST, AND WEST) 31. Remove all abandoned street improvements, underlying utilities, and other improvements in accordance with requirements of the affected utility companies and the City Engineer. Removals shall occur upon approval of a Parcel Map of the subject property, formally vacating and abandoning the existing public rights-of-way. PARCEL MAP 32. A Parcel Map shall be prepared by a California registered Land Surveyor or qualified Civil Engineer and submitted to the Engineering Division for review and approval. A Title Report prepared for subdivision guarantee for the subject property, the traverse closures for the existing parcel and all lots created therefrom, and copies of record documents shall be submitted with the Parcel Map to the Engineering Division as part of the review of the Map. The Parcel Map shall be approved by the City Council prior to issuance of building permits. 33. In accordance with Section 66445 (j) of the Government Code, the existing public rights-of-way for Sky Point Drive East, West, and North may be abandoned upon the filing of a Parcel Map identifying the abandonment of the easements granted to the City of Palm Springs. Prior to approval of a Parcel Map, the developer shall coordinate with each public utility company and determine specific requirements as to the abandonment and/or relocation of existing underground utilities that may exist within the public rights-of-way to be abandoned. Prior to approval of a Parcel Map, the developer shall provide to the City Engineer a letter of approval regarding the proposed abandonment of Sky Point Drive rights-of-way from each public utility agency. 34. The developer shall enter into an agreement that provides the City of Palm Springs with an exclusive right of entry onto the subject property with the right to remove all abandoned street improvements at the developer's expense, in the event removal of the abandoned street improvements is not completed within two (2) years following approval of a Parcel Map by the City Council. The agreement shall be secured with appropriate subdivision security, as approved by the City Attorney, and said security shall be available to the City upon notice from the City Engineer that the developer has failed to perform its obligations as required by the agreement. The developer shall provide written estimates of cost to remove all abandoned street improvements, abandon and/or relocate all existing underground utilities, and construct street improvements as necessary, subject to the approval of the City Engineer. Estimates of costs related to public utility abandonment and/or relocation shall be determined by the respective utility agency, as appropriate. The agreement shall executed by the developer prior to approval of a Parcel Map by the City Council. The developer shall submit a deposit of $2,000 3 `� for preparation of the agreement, and shall be subject to actual costs associated with its preparation by the City Attorney. 35. In accordance with Government Code Section 66411.1, the Tentative Parcel Map is a subdivision of five or more lots (parcels), and is subject to construction of all required public improvements. Prior to approval of a Parcel Map, all required public improvements shall be completed to the satisfaction of the City Engineer, or shall be secured by a construction agreement in accordance with Government Code Section 66462. 3prc�- .bZ No.7450 poll OF V4-TFN"T TO CECT;GO'All F['Jl°[COvJru16GN?1L OMG:C7 IBEPGOV h9r3TCCE OF PUBLIC HS/A6ING OF THE. PP.1t9'd VJVI'+7u"1 C401dlINDSsiold PROOF OF PUBLICATION T OF-I I IF c;rry M—_ PAI-ivl SPDI (2015.S.C.C.P) -1. 5,0i257-0fsi', T"N, ^o P46, pE,.Tp Aunofd RACION, 1.1-0. 5301 �'ABdJCIVI ❑opn aAC'tl' IAPILICAe1T: RC9THC� Tr Id-VE0.d'S6'IIA5,1C NOTICE IS IAERFF13Y GIVEN [hat the Planning Commission of the City of Palm Springs, Celina- " nit, will held a public healing at its meetng of March 24, 2004.The Planner Commission meet- hi begins at '1 30 pm. (publlic hearings begin at 200 p.ml in the Council Chamber at City Hall, 3200 C. 7ordure Canyon Way, Palm Springs. STATE OF CALIFORNIA the nt lot is on application a mo by Rothbtrt revel County of Riverside o of retail for Desling center Ramon, a aver r 0 roc uaoe fool retail shopping center The po eject ssociat a f225 iee.s r ing gas foot on ailw More, an associated free Standing gas station with four square feat to- tail and convenience mart, and four additi1,000 square re tail commercial project pads t noluc up to 51,000 square fee{ The protect also inclu��es. dA tentative parcel map(TPM 30745)for the sub- !vision of approximately 31 12 acres into 7 ppar- I am a citizen of the United States and a resident of cols, longing on size foam 22.02 acres to 0.92 acres; the County aforesaid; I am over the age of eighteen view end approval, site plan, landscape and signage years,and not a party to or interested in the review and approval, A vacation of the right-of-way of Slry Point Drive; above-entitled matter.I am the principal clerk of a Approver of 8) festanding right tenures In eucesa tinter of the DESERT SUN PUBLISHING of conditional (13) feet; and P , A conditional use permit which addresses drive COMPANY a newspaper of general circulation, thrf ugh oporations for various out-pad uses pro- g posed within the project site, and automobile Sal- printed and published in the city of Palm Springs, vice station, to Include eight (a) pumps, (ts fuel- ing positions) antl a 900 square foot klesl( County of Riverside,and which newspaper has been I --,-a_. adjudged a newspaper of general circulation by the Superior Court of the County of Riverside,State of ' California under the date of March 24, 1988.Case Number 191236;that the notice,of which the ', annexed is a printed copy(set in type not smaller - —i �- -. than non ariel,has been published in each regular P P a Jc_. and entire issue of said newspaper and not in any '�f )-Is�""-�,,;� supplement thereof on the following dates,to wit: March 12" All in the year 2004 e deC' at theRsout west co mo••f66a Harris n..o ---------------------------—------------------------------ The meet is located at 5601 Ramon Read, on �jul Number (APN) -170-026, one of Ramon Road I certify(or declare)under penalty of perjury that the M-f, Section 20 foregoing Is true and correct. Pursuant of the California Environmental Quality it r Act CEQA, an Environmental Impact Report has 16,h been prepaoed for this project. The Planning Dated at Palm Springs,Californiaommission may lake action and cede y the Envra this---------day oonmenlal Impact Report and oecommend that the Cry Council adopt a statement of facts and findings and statement of overriding consider- of----------March---------------------------,2004 ations in support of this project at the meeting. 7 SgimOcant oimparts include rm Acts to All(Duality Potentially significant impacts include impacts [o and use and planning, traffic and circulation, f y f l T"1 noise, aoslhetics, fight and glare. Members of the ��-""-- public may view this document In the Department ------- ----------------- ----------- ---------- of Planning and Zoning, City Hall, 3200 E. Tah- Signature quits Canyon Way, Palm Springs If any may heh limited toes honl ction in these issues raised at Issues Tile may Y In et the pcore hoofing correspondence , orl riot to, tile the Plan written wire sponde ari a. p nrng Commission hearing. An opportunity will be given at said hearing for all roosted persons tc be heard.Questions regaod- In this case may be directed to Alec Meyerhotf, f'inalas sI Planner, (760)323-3245. PLANNING COMMISSION /a/Douglas R Evans Director of Planning and Zoning PROOF OF PUBLICATION No 7630 (2015.5.C.C.P) NOTICE M INTAL IMP CERT REPORT l J J 1. 1. 1 J AN GN ICE OFi INTAL IMPFlCT Ny NOTICE OF PUBLIC HEARING CITY COUNCIL CITY OF PALM SPRINGS CASE NO. 5.0957-CUP, TPM 30745, DESTINATION RAMON, LLC. 5601 RAMON ROAD EAST STATE OF CALIFORNIA APPLICANT ROTI-ISART DEVELOPMENT County of Riverside NOTICE IS I IEREHY GIVEN Im it the Cry Council of the City of Palm Springs,California, will hold a public hearing m Jr.meeting r Apol 7, 2004.The Qty Council rnestng begins at 1.00 p.m. m the Council Chambers at City Flail, 3200 E. Tahgudz Canyon Way, Palm Springs. L The project is an application by Reinhart Devel- opment for Destinahon Ramon, a 277,000 sqquare foot Fetal shopping center,The prolecl includes a I am a citizen of the United States and a resident of 226,000 square foot retail store, an associated free standing gas station with a 900 square foot the County aforesaid;I am over the age of eighteen office and convenience man, drive-throughs, and four additional retal commercial pads totaling up years,and not a party to or interested in the to 5I,000 square feet The project raciness: above-entitled matter.I am the principal cleric of a -A tentative parcel map(TPM 30745)far the sub- division of aP in si7efro 22. acres into 7 p.92 p oils, ranging cr wine from .12 a acres to gal- COMPANY a newspaper of general circulation, acres; g A vacation of the right-cf-way of Sky Point printed and published in the city of Palm Springs, Drive; A certificate of public convenience and necossi- Comtty of Riverside,and which newspaper has been _f r for gale of alcohol for off-site consumption for tie Wal-Mar store only; and adjudged a newspaper of general circulation by the ^ A sign program and paring lot fighting in ex- Superior Comm of the County of Riverside,State of tees or eighteen (f a) feet In height. California under the date of March 24,1988.Case The project is located at 5601 Ramon Road, on Assessors Parcel Number (APN) 660-170- 025, Number 191236;that the notice,of which the of sec., at the southwest corner of Ramon Road annexed is a printed copy(set in type not smaller and Orossley Road, zone M-I, Section 20. than non ariel,has been published in each regular P P g and entire issue of said newspaper and not in any -- 1 supplement thereof on the following dates,to wit: March 27" - _ tyear -�l -=III All 'n he 2-- 4 0 Icertif or declare under penalty of perjury that the � � �—�� Y( ) P Y P J Y foregoing is true and correct. J-! Dated at Palm Springs,California this-----13th----day ^" .f "' Purs( o o 1I Envinonmental Quality OP----------April a------ - 2004 eta n pre f d for The cansitl Impact Report has __..___.._,.___ —___ qq not Re oI` o errs ing co c lire sCity Council 3� - y p n le and inchn_ta and l i� Act CEQA, an Environment- "F e been prepared for en pro„ mar adopt a s1alem,.n` or a orahons m support r of thisproject, and meea I'r" Environmental Irn- gg Slppmortal rmp sots _ __-_______ �___ include rm i cti to Poi m alitc to land F 1 P signlfl- �f• Signature cant Impacts include Imppacts to land use and planning, traffic and crr onalon, false, aesthetics, right and glare Ivlembers of the public may vreaf this document in the De erfruent of Plannlno and Zoning, City Hall, 3200 h. Tahgwtz Canyon Wary, Palm Springs. If any group challenges tiro action In court, Issues raised may be limited 20 only thus Issues raised I of the public hearing described n this notice or in wutten conespondenee ac, ei phor to the Plan- ning Commission hearing. An opportunity wAI be given at said hearing for all interested persons to be heard, Questions reqq�rd- ingg this case may be directed to Alex Meyerhoff, Pdnclpal Planner, (760) 323-8245 PATRICIA A. SANDERS RESOLUTION NO. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, CERTIFING THE FINAL ENVIRONMENTAL IMPACT REPORT AS COMPLETE, ADOPTING THE STATEMENT OF FACTS & FINDINGS, AND ADOPTING THE STATEMENT OF OVERRIDING CONSIDERATIONS, AND ADOPTION OF A MITIGATION MONITORING PROGRAM, FOR TENTATIVE PARCEL MAP 30745, AND CASE NO. 5.0957-CUP, DESTINATION RAMON, LLC., AN APPLICATION BY ROTHBART DEVELOPMENT, LOCATED AT 5601 RAMON ROAD EAST, APN #680-170-025, ET. SEQ., ZONE M-1, SECTION 20. -------------------------------- WHEREAS, the Rothbart Development (the "Applicant") has filed an application with the City pursuant to Section 9.60 of the Municipal Code, for Tentative Parcel Map 30745; and WHEREAS, the proposed Tentative Parcel Map is considered a "project" pursuant to the terms of the California Environmental Quality Act (CEQA), a Final Environmental Impact Report (Final EIR) has been prepared for this Project, and the Draft EIR has been distributed for public review and comment in accordance with CEQA. The Final EIR includes the Draft EIR, comments and responses to the Draft EIR, Technical Appendix (including Destination Ramon Air Quality and Noise Study, Phase I Environmental Site Assessment, Geotechnical Engineering Investigation, Hydrology Study, Destination Ramon Traffic Impact Study, Historical/Archeological Resources Survey Report, Biological Assessment and Impact Analysis) Notice of Preparation and comments, agency correspondence and other miscellaneous correspondence; and WHEREAS, notice of a public hearing of the Planning Commission of the City of Palm Springs to consider the applicant's applications for the project was given in accordance with applicable law; and WHEREAS, on March 24, 2004, public hearings on the Final EIR and project, respectively, for the project were held by the Planning Commission in accordance with applicable law; and WHEREAS, the Planning Commission carefully reviewed and considered all of the evidence presented in connection with the hearing on the project, including but not limited to the staff report, and all environmental data including the initial study, the Final EIR, and all written and oral testimony presented; and WHEREAS, at the conclusion of its public hearing on March 24, 2004, the Planning Commission recommended that the City Council certify the Final EIR as complete, and approve Tentative Parcel Map 30745, and that the City Council adopt the mitigation monitoring program relating to Tentative Parcel Map 30745; and WHEREAS, notice of a public hearing of the City Council of the City of Palm Springs to consider the applicant's applications for the project was given in accordance with applicable law; and �- WHEREAS, on April 14, 2004, public hearings on the Final EIR and project, respectively, for the project were held by the City Council in accordance with applicable law; and WHEREAS, the City Council Commission carefully reviewed and considered all of the evidence presented in connection with the hearing on the project, including but not limited to the staff report, and all environmental data including the initial study, the Final Environmental Impact Report, and all written and oral testimony presented. THE CITY COUNCIL HEREBY FINDS AS FOLLOWS: Sectionl: The City Council finds that the Final EIR has been prepared and completed in compliance with CEQA, and the State CEQA Guidelines, and the City's CEQA Guidelines. The Final EIR has been completed in compliance with CEQA and the Final EIR was presented to the Planning Commission and the Commission reviewed and considered the information contained in the Final EIR prior to recommending that the City Council approve the project. The Final EIR adequately addresses the general environmental setting of the proposed Project, its significant environmental impacts, and the project alternatives and mitigation measures related to each significant environmental effect for the proposed Project. The City retained the independent consulting firm of Applied Planning, Inc, to prepare the Final EIR for the Destination Ramon project. The Final EIR was prepared under the supervision and direction of the City of Palm Springs. The City Council is the final decision making body for the project. The City Council has received and reviewed the Final EIR. The Final EIR reflects the City's independent judgment in accordance with the Public Resources Code, Section 21082.1(c)(3) in retaining its own environmental consultant, directing the consultant in preparation of the EIR as well as reviewing, analyzing and revising material prepared by the consultant, The City Council has independently reviewed and considered the information contained in the Final EIR. Section 2: The City Council has reviewed and analyzed information contained in the Final EIR prior to taking action and certifies the Final EIR as complete, and in compliance with CEQA. The Final EIR reflects the independent judgment of the City Council. The City Council further adopts the Statement of Facts and Findings, which are attached as Exhibit A. The City Council finds that the mitigation measures identified in the Final EIR, are necessary and will reduce or avoid impacts identified as potentially significant and that certain impacts, as identified in the Final EIR, impacts to air quality even with implementation of all recommended mitigation measures impact to air quality will remain significant. The City Council finds that the benefits of the project out weight the significant unavoidable impacts to air quality. The City Council hereby adopts the Statement of Overriding Considerations, which are attached as Exhibit B. The City Council further approves, and adopts the Mitigation, Monitoring and Reporting Program attached as Exhibit C. Section 3: By adoption of this resolution the City Council adopts the mitigation measures identified in the Final EIR, and in Exhibit C, for Case No 5.0957-CUP and Tentative Parcel Map 30745. NOW, THEREFORE, BE IT RESOLVED that, based upon the foregoing, the City Council hereby certify the Final Environmental Impact Report as complete and in conformity with CEQA, adopts the Statement of Facts & Findings, and adopts the Statement of Overriding Considerations (Exhibits A & B), and adopts the Mitigation, Monitoring and Reporting Program (Exhibit C), in conjunction with approval of Tentative Parcel Map 30745. ADOPTED this 14th day of April 2004. AYES: NOES: ABSENT: ABSTAIN: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA City Clerk City Manager Reviewed and Approved as to Form: _ C rD rr� RESOLUTION NO. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AN APPLICATION BY ROTHBART DEVELOPMENT, DESTINATION RAMON, LLC, FOR THE DESTINATION RAMON PROJECT, FOR APPROVAL OF TENTATIVE PARCEL MAP 30745, FOR THE SUBDIVISION OF A 31.12-ACRE SITE INTO EIGHT PARCELS, FOR FUTURE DEVELOPMENT OF A 277,000 SQUARE FEET RETAIL DEVELOPMENT, AND INCLUDING THE VACATION OF THE SKY POINT DRIVE RIGHT OF WAY, LOCATED AT 5601 RAMON ROAD EAST, ON APN # 680-170-025, 680-170-026, 680-170-027, 680-170-028, 680-170-029, 680-170-030, 680-170-031, 680-170- 032, 680-170-048 AND 680-170-050, ZONE M-1, SECTION 20. WHEREAS, Rothbart Development, Destination Ramon LLC., (the "Applicant) has filed an application with the City pursuant to the City of Palm Springs Municipal Code, Section 9.62.015 for a Tentative Parcel Map (TPM 30745) for the subdivision of approximately 31.12 acres into 8 parcels, ranging in size from 22.02 acres to 0.92 acres, and for the vacation of the Sky Point Drive right-of-way, at 5601 Ramon Road, on Assessors Parcel Number (APN) #680-170- 025,680-170-026, 680-170-027, 680-170-028, 680-170-029, 680-170-030, 680-170-031, 680- 170-032, 680-170-048 and 680-170-050, located at the south-west corner of Ramon Road and Crossley Road, Zone M-1, Section 20; WHEREAS, the proposed project would allow the development of a 277,000 square foot retail shopping center, which includes a 225,000 square foot retail store, an associated free-standing gas station to include eight (8) pumps (16 fueling positions) with a 900 square foot office and convenience mart, and four additional retail commercial pads totaling up to 51,000 square feet WHEREAS, the Applicant has paid the required filing fees; and WHEREAS, said Tentative Parcel Map was submitted to appropriate agencies as required by the subdivision requirements of the Palm Springs Municipal Code, with the request for their review, comments, and requirements; and WHEREAS, Sky Point Drive is not a General Plan street and the Planning Commission has deemed Sky Point Drive as unnecessary for a local street: and WHEREAS, the proposed development is considered a "project' pursuant to the terms of the California Environmental Quality Act ("CEQA"), and a Final EIR has been prepared for this Project and has been distributed for public review and comment in accordance with CEQA; and WHEREAS, the project was previously reviewed by the Design Review Committee regarding project design, architecture, site plan, sign program and landscape design on July 8, 2003 and July 21, 2003 and March 22, 2004; and r4� WHEREAS, notice of a public hearing of the Planning Commission of the City of Palm Springs to consider Applicant's applications for the Project was given in accordance with applicable law; and WHEREAS, on March 24, 2004, the Planning Commission conducted a public hearing on said applications; and WHEREAS, the Planning Commission has carefully reviewed and considered all of the evidence presented in connection with the hearing on the Project, including but not limited to the tentative tract map, staff report, all environmental data, including the Final EIR, along with all written and oral testimony presented; and WHEREAS, at the conclusion of its public hearing on March 24, 2004, the Planning Commission recommended that the City Council certify the Final EIR as complete, and that the City Council adopt the mitigation monitoring program, and approve Tentative Parcel Map 30745; and WHEREAS, notice of a public hearing of the City Council of the City of Palm Springs to consider the applicant's applications for the project was given in accordance with applicable law; and WHEREAS, on April 14, 2004, public hearings on the Final EIR and project, including the tentative parcel map, and street right of way vacation request respectively, for the project were held by the City Council in accordance with applicable law; and WHEREAS, the City Council Commission carefully reviewed and considered all of the evidence presented in connection with the hearing on the project, including but not limited to the staff report, the tentative parcel map, street right of way vacation request, and all environmental data including the initial study, the Final EIR, and all written and oral testimony presented. THE CITY COUNCIL HEREBY FINDS AS FOLLOWS: Section 1: Pursuant to CEQA, the City Council finds as follows: The Final EIR has been completed in compliance with CEQA, the State CEQA Guidelines, and the City's CEQA Guidelines, analyzing the potential environmental impacts resulting from approval of the tentative parcel map. The City Council has independently reviewed and considered the information contained in the Final EIR and finds that it adequately discusses the significant environmental effects of the proposed project (including the proposed Tentative Parcel Map 30745, Case No 5.0957-CUP and Street Vacation). The Final EIR adequately covers the current project proposal such that no new additional impacts will result that were not previously identified, and the Statement of Facts and Findings and the Statement of Overriding Considerations for the project reflects its independent judgment. The City Council previously certified the Final EIR and adopted a Mitigation Monitoring and Reporting program by way of Resolution No . The City Council further finds that the Final EIR reflects its independent judgment. Section 2: A Mitigation Monitoring and Reporting Program was adopted for Tentative Parcel Map 30745 pursuant to Public Resources Code Section 21081.6 in order to assure compliance with the above referenced mitigation measures during project implementation. These mitigation measures are incorporated by reference into the Conditions of Approval of this project as outlined in Exhibit A of this Resolution. Section 3: Pursuant to Government Code Section 66474 (Subdivision Map Act), the City Council finds that with the incorporation of those conditions attached in Exhibit A: a. The proposed Tentative Parcel Map is consistent with applicable general and specific plans. The proposed project is consistent with the General Plan. The applicant is proposing the subdivision of 31.12 acres into eight (8) parcels for future development of 277,000 square feet of retail and commercial uses, and therefore, will be well within the parameters of the General Plan and will be consistent with Case No. 5.0957-CUP. b. The design of improvement of the proposed subdivision is consistent with the General Plan. Pursuant to Government Code Section 66473.5 the City Council finds that the proposed subdivision and the provisions for related right of way dedications are compatible with the objectives, polices, and general land uses and program provided in the City's General Plan. All street, drainage, and utilities improvements are subject to the standards of the General Plan and Conditions of Approval will be implemented as part of the Tentative Parcel Map. C. The site is physically suitable for the type and density of development contemplated by the proposed subdivision. In reviewing the development standards for the M-1 zone, each lot shall have a minimum lot size of 20,000 square feet, except lots that front on major thoroughfares, which shall have a minimum lot size of 40,000 square feet and minimum lot width and depth dimensions of 200 feet. Parcels 4 and 5, which are located directly on Ramon Road, do not meet the minimum lot depth and dimensional criteria of M-1 zone. Because the entry driveway is curved and has been designed to moderate traffic speeds and evenly distribute traffic throughout the project. Both lots do comply with minimum width and area requirements. The Zoning Ordinance includes a provision, which allows lot sizes to vary from these standards through the approval of a master plan. The preliminary site plan indicates that buildings and parking are proposed on Parcels 4 and 5 in addition street side landscape and wall improvements are proposed on these parcels. Since these parcels are shown as an integrated part of the on-site improvements for the Destination Ramon project, the proposed site plan qualifies as a Master Plan and the minimum lot size and dimension standards can be waived in this situation, When specific buildings are proposed on Parcels 4 and 5, their development will be subject to further consideration of the Planning Commission and, if required by the Zoning Ordinance, the City Council. The Tentative Parcel Map covers a site (31.12 acres) that is proposed for development of 277,000 square feet of retail uses. The Tentative Parcel Map illustrates parcels consistent with the proposed development. There will be no incompatibility issues as the subject property is surrounded by commercial and industrial uses and Ramon Road to the north, Crossley Road, vacant land and industrial uses to the east, the Sunny Dunes Road, vacant land and commercial and industrial uses to the south and San Luis Rey, and commercial uses to the west, Gene Autry Trail (Highway 111) further to the west, and the Palm Springs International Airport (PSP) located further to the north-west. d. The design of the proposed subdivision or the proposed improvements are not likely to cause substantial environmental damage or substantially and unavoidably injure fish or wildlife or their habitat. All potential environmental impacts as a result of developing the subject property are fully disclosed in the Final EIR. The incorporation of the mitigation measures, as part of the conditions of approval, as prescribed in the Final EIR will ensure that any potentially significant impacts will be reduced to a level of insignificance. A Statement of Overriding Considerations for Air Quality impacts, which result from the project, has been adopted by the City Council. Therefore, the design of the proposed subdivision or the proposed improvements are not likely to cause substantial environmental damage or substantially and unavoidably injure fish or wildlife or their habitat. e. The design of the subdivision or type of improvements is not likely to cause serious public health problems. The Tentative Parcel Map, and subsequent design of the proposed improvements will follow the conditions of approval, including, but not limited to, the application of the Uniform Building Code Seismic Safety Standards, and the City of Palm Springs Fugitive Dust Control Ordinance in order to ensure public health and safety. f. The design of the subdivision or the type of improvements will not conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision. Ramon Road is already improved to major thoroughfare standards including sidewalk, curb, and gutter. Crossley Road has been improved to Secondary thoroughfare standards including sidewalk, curb, and gutter. Bus turnouts will be provided on Ramon Road. Bicycle paths will be provided on Ramon Road. Bicycle paths will be provided along Crossley Road. Sunny Dunes and San Luis Rey Drive has previously been improved to City General Plan standards as a Collector road. The Tentative Parcel Map identifies all right of ways and easements affecting the property and provides for access to all parcels within the property and provides for dedication of easements for pedestrian and bicycle access way, where necessary. The project also provides for public improvements, which meet California State Accessibility standards. Section 4: Sky Point Drive is not a General Plan street; therefore, the proposed vacation of the Right of Way is consistent with the Circulation Element of the General Plan. NOW, THEREFORE, BE IT RESOLVED that, based upon the foregoing, the City Council hereby approves Tentative Parcel Map 30745, Destination Ramon, pursuant to the conditions of approval, and approves the vacation of the right of way of Sky Point Drive. ADOPTED this 141h Day of April 2004. AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA City Clerk City Manager Reviewed and Approved as to Form: _ yI� J1 Trisha Sanders From: Ginny Foat[gfinla@msn.com] Sent: Tuesday, April 13, 2004 3:45 PM To: Trisha Sanders Subject: FW: Wal-Mart Architectural Design g g -----Ori Original Message From: MikeE92103@aol.com [mailto:MikeE92103@aol.com] Sent: Monday, April 12, 2004 2 :54 PM To: ginnyf@ci.palm-springs.ca.us '' �y% �'" Subject: Wal-Mart Architectural Design Councilperson, I do understand the need for the additional tax revenue and shopping variety that a Super Wal-Mart will provide to Palm Springs. However, I'm not thrilled with the idea of having them as a neighbor. The small business owner and existing grocery/retail will suffer in the end. If there is no stopping Wal-Mart, then the City must insist on a building design that is appropriate in our village. PLEASE do not allow them to dump a cookie-cutter building in Palm Springs. Please work with Wal-Mart to ensure that the building is architecturally in tune with the rest of our desert community. Keeping a theme similar to the new Ralph' s shopping center at Sunrise and Ramon would make this a less offensive structure. Thank you for your efforts to maintain the charm of Palm Springs while encouraging economic growth. It is the balance of these two factors that will continue to challenge the city. Sincerely, Michael Ellis 2370 N. Pasec De Anza Palm Springs, CA 92262 �4 ter. Page I of I Trisha Sanders From: Ginny Foat [gfinla@msn.com] Sent: Tuesday, April 13, 2004 2:35 PM To: Trisha Sanders % Subject: FW: Wal-Mart Monster-- MAY WE VOTE? -----Original Message----- From: JChristensen@seawestwindpower.com [mailto:3Christensen@seawestwindpower.com] Sent; Friday, April 09, 2004 12:26 PM To: RonO@ci.palm-springs.ca.us; chrism @ci.pa Im-springs.ca.us; glnnyf@ci.palm-springs.ca.us; michaelm@ci.palm-springs.ca.us; stevep@ci.palm-springs.ca.us Subject: Wal-Mart Monster-- MAY WE VOTE? Hello, Mr. Mayor and Council Members: Regarding the Rothbart Development application..... PLEEEEEEZE TELL ME THAT THE CITIZENS OF PALM SPRINGS WILL GET TO VOTE ON WHETHER WE WANT TO HAVE AN ABOMINATION SUCH AS A SUPER WAL-MART IN OUR CITY.... EGAD >> the traffic !!! (...although I'm all in favor of Palm Hills, that's going to increase traffic in the area quite enough, thank you.) OH NO >> the potential demise of a plethora of existing smaller retail businesses OH PUHLEEZE >> the overall trashy stigma !!! (Yes, that's snooty; and we're all trying so desperately to maintain the last remaining bastions of our wonderful old snobbish city pride.) Even the City of Inglewood was able to keep the Wal-Mart Super Monster out of their neighborhood. Can WE? Thanks for listening, Jo Christensen Executive Assistant SeaWest WindPower,Inc. JC"RISTENSEN@SEAWESTWINDPOWER.COM ,5 4/13/2004 Page 1 of 1 Trisha Sanders From: Ginny Foat [gfinla@msn.com] Sent: Tuesday, April 13, 2004 2:36 PM To: Trisha Sanders 1 y ✓ 4 'p� Subject: FW: Say No to Walmart `,�y`fP @ .. -----Original Message----- �. ,. From: Terry House [mailto:THouse@weho.org] R �- �0 Sent: Wednesday, April 07, 2004 9:18 AM CV =,?„b_`. �` To: ginnyf@ci.palm-springs.ca.us Subject: Say No to Walmart Councilmember Foat- I hope you read the exhaustive investigative report the Los Angeles Times did on Wal-Mart and its effect on communities. This series won the Times a Pulitzer Prize this week. This is not the kind of development we need in Palm Springs. I have written to you earlier about this, pointing out the existence of several lawsuits charging discrimination of employees for their sexual orientation or for being women. Please have the courage of the residents of Inglewood to reject this business, which uses anti-competitive practices and discriminates in employment. Sincerely, Terry House 2138 Berne Dr. Palm Springs 92262 P.S. I am the producer of Sheila Kuehl's public affairs program, "Get Used to It." You appeared on our 2nd show, taped in late 1992. 1 was very pleased to see you run for Council, and am glad my vote counted. Terry House Film Liaison City of West Hollywood 8300 Santa Monica Boulevard West Hollywood CA 90069-4314 (323) 848-6489 Fax(323) 848-6561 4/13/2004 expense. This condition shall be included in the recorded covenant agreement for the property if required by the City. 4. The project is located in an area defined as having an impact on fish and wildlife as defined in Section 711.4 of the Fish and Game Code and an Environmental Impact Report is being prepared on the project; therefore a fee of $914.00 plus an administrative fee of $50.00 shall be submitted by the applicant in the form of a money order or a cashier's check payable to the Riverside County Clerk prior to Council action on the project. This fee shall be submitted by the City to the County Clerk with the Notice of Determination. Action on this application shall not be final until such fee is paid. 5. Prior to issuance of a building permit, Fringe Toed Lizard Mitigation fees shall be paid to the Coachella Valley Association of Governments (CVAG). 6. This project shall be subject to Chapters 2.24 and 3.37 of the Municipal Code regarding public art. The project shall either provide public art or payment of an in lieu fee. In the case of the in-lieu fee, the fee shall be based upon the total building permit valuation as calculated pursuant to the valuation table in the Uniform Building Code, the feeing being 1/2% for commercial projects or 1/4% for residential projects with first $100,000 of total building permit valuation for individual single-family units exempt. Should the public art be located on the project site, said location shall be reviewed and approved by the Director of Planning and Zoning and the Public Arts Commission, and the property owner shall enter into a recorded agreement to maintain the art work and protect the public rights of access and viewing. Any on-site art shall reflect the culture and traditions of the ACBCI. 7. As the property is Indian trust land, fees as required by the Agua Caliente Band of Cahuilla Indians Tribal Council shall be paid prior to consideration of this project by the Indian Planning Commission. CEQA 8. The mitigation measures of the environmental impact report (EIR) shall apply. The applicant shall submit a signed agreement that the mitigation measures outlined as part of the EIR will be included in the plans prior to consideration of the environmental assessment. The Mitigation measures are contained in the Mitigation Monitoring Program, which is hereby incorporated by reference. Cultural Resources 9. To ensure that cultural resource information is current, the Agua Caliente THPO requires that an archeologist qualified according to the Secretary of the Interior's Standards and Guidelines will perform a record search and a Phase 1 field survey of the area prior to initiation of construction. If the area has been previously surveyed and the survey report is up to date (January 2000), then no additional survey is required. The record search should include contacting the Eastern Information Center at the University of California, Riverside, and the Agua Caliente Register in Palm Springs, California. Prior to any ground disturbing activity, including clearing and grubbing, installation of utilities, and/or any construction related excavation, an Archaeologist qualified according to the Secretary of the Interior's Standards and Guidelines, shall be employed to survey the area for the presence of cultural resources identifiable on the ground surface. A/ C-1 9 Q pALM S,p City of Palm Springs h Z U to Department of Planning and Zoning * �, 9 � Y Y �'Q * 3200 E.Tals uitz Canyon Way Palm Springs,Cahm r fora 2262 �g RPOFA{EOp4OFORN TEL:(760)323-8245 •PAX(760)322-8360 • TDD(760)864-9527 April 14, 2004 ARI 14 9004 u) Mr. Thomas J. Davis, AICP Chief Planning Officer Agua Caliente Band of Cahuilla Indians 650 East Tahquitz Canyon Way a— Palm Springs, CA 92262 RE: Case No. TPM 30745 and 5.0957 Destination Ramon Dear Mr. Davis: Planning staff has received your letter regarding the Destination Ramon project. The action before the City Council is certification of the Final EIR,vacation of right-of-way, and approval of the Tentative Parcel Map. The following response is provided to your comments: 1. That adequate provisions be made to prohibit parking on Lot 8. Response: Lot 8 is under separate ownership and parking will be prohibited. 2. That public art for the project be designed to reflect the culture and traditions of the Tribe. Response: Condition #6 has been amended as follows: Any on-site public art shall reflect the culture and traditions of the ACBCI. 3. That the horizontal architectural elements of the main structure be used on the gas station canopy to streamline its visual appearance. Response: This comment will be considered by the Planning Commission at its April 28, 2004 meeting. 4. That standard conditions of approval shown on Attachment"A"be incorporated in the approval. Response: These conditions are currently in the recommended conditions of approval. Thank you for your cooperation on this project. If you have any questions, please give me a call. Sincerely, Douglas E. Evans Director of Planning and Zoning cc: Mayor City Council Members Post Office Box 2743 ° Palm Springs, California 92263-2743 e�q tit" 0 G."e 047> W-/Y-04/ expense. This condition shall be included in the recorded covenant agreement for the property if required by the City. 4. The project is located in an area defined as having an impact on fish and wildlife as defined in Section 711.4 of the Fish and Game Code and an Environmental Impact Report is being prepared on the project; therefore a fee of $914.00 plus an administrative fee of $50.00 shall be submitted by the applicant in the form of a money order or a cashier's check payable to the Riverside County Clerk prior to Council action on the project. This fee shall be submitted by the City to the County Clerk with the Notice of Determination. Action on this application shall not be final until such fee is paid. 5. Prior to issuance of a building permit, Fringe Toed Lizard Mitigation fees shall be paid to the Coachella Valley Association of Governments (CVAG). 6. This project shall be subject to Chapters 2.24 and 3.37 of the Municipal Code regarding public art. The project shall either provide public art or payment of an in lieu fee. In the case of the in-lieu fee, the fee shall be based upon the total building permit valuation as calculated pursuant to the valuation table in the Uniform Building Code, the feeing being 1/2% for commercial projects or 1/4% for residential projects with first $100,000 of total building permit valuation for individual single-family units exempt. Should the public art be located on the project site, said location shall be reviewed and approved by the Director of Planning and Zoning and the Public Arts Commission, and the property owner shall enter into a recorded agreement to maintain the art work and protect the public rights of access and viewing. Any on-site art shall reflect the culture and traditions of the ACBCI. 7. As the property is Indian trust land, fees as required by the Agua Caliente Band of Cahuilla Indians Tribal Council shall be paid prior to consideration of this project by the Indian Planning Commission. CEQA 8. The mitigation measures of the environmental impact report (EIR) shall apply. The applicant shall submit a signed agreement that the mitigation measures outlined as part of the EIR will be included in the plans prior to consideration of the environmental assessment. The Mitigation measures are contained in the Mitigation Monitoring Program, which is hereby incorporated by reference. Cultural Resources 9. To ensure that cultural resource information is current, the Agua Caliente THPO requires that an archeologist qualified according to the Secretary of the Interior's Standards and Guidelines will perform a record search and a Phase 1 field survey of the area prior to initiation of construction. If the area has been previously surveyed and the survey report is up to date (January 2000), then no additional survey is required. The record search should include contacting the Eastern Information Center at the University of California, Riverside, and the Agua Caliente Register in Palm Springs, California. Prior to any ground disturbing activity, including clearing and grubbing, installation of utilities, and/or any construction related excavation, an Archaeologist qualified according to the Secretary of the Interior's Standards and Guidelines, shall be employed to survey the area for the presence of cultural resources identifiable on the ground surface. CAL TRIBAL PLANNaHG. BUILDING fs ENGINEERING April 12, 2004 `��' `��,' HAND DELIVERED AND VIA FACSIMILE Mayor Ron Oden and City Council c/o Doug Evans,Director of Strategic Planning City of Palm Springs 3200 Tahquitz Canyon Way Palm Springs, California 92262 Re: Case No. PM 30745-5.0957 — Destination Ramon Dear Mayor and City Council, The Tribal Council of the Agua Caliente Band of Cahuilla Indians reviewed the above referenced project at its meeting of April 13, 2004, and recommends approval of the project to the City Council subject to the conditions of approval as recommended by the Indian Planning Commission: 1. That adequate provisions be made to prohibit parking on Lot 8; 2. That public art for the project be designed to reflect the culture and traditions of the Tribe; 3. That the horizontal architectural elements of the main structure be used on the gas station canopy to streamline its visual appearance; and 4. That standard conditions of approval shown on Attachment "A" be incorporated in the approval. Please contact me should you have any questions. *AGUCALIENiCITE ours, Days, AICP ning fficer BAND OF CAHUILLA INDIANS TJD/cy Attachment C: Tribal Council Margaret Park, Director of Construction P:\Pr1vate\Ltr-TJD\041304-Doug Evans Re PM30745.5.0957.doc r 650 E. TAHQUITZ CANYON WAY • PALM SPRINGS, CA 92262 (760) 3253400 FA& (760) 325-0593 OAF CCAA(/EST TRIBAL PLANNING, BUILDING, & ENGINEERING CAHN��P ATTACHMENT A Conditions of Approval 1 . The Applicant must ensure that all Burrowing Owls must be surveyed for in suitable habitat no later than 30 days prior to ground disturbance. If Burrowing Owls are detected during the nesting period (February 1- August 31 ), the following must occur: A. A 75 meter buffer zone around active nest must occur B. Relocation of birds if no eggs/incubation is occurring 2. If relocation is to occur, every effort should be made to relocate owls using a passive method of one way traps and to comply with the requirements of the Tribal Habit Conservation Plan. 3. The applicant shall pay to the Agua Caliente Band of Cahuilla Indians $800.00 per acre as required by the THCP prior to the issuance of a building permit. 4. To insure that cultural resource information is current, the Agua Caliente THPO requires that an Archaeologist qualified according to the Secretary of the Interior's Standards and Guidelines will perform a record search and a Phase I field survey of the area prior to initiation of construction. If the area has been previously surveyed and the survey report is up to date (January 2000), then no additional survey is required. The record search should include contacting the Eastern Information Center at the University of California, Riverside, and the Agua Caliente Register in Palm Springs, California. 5. Given that buried resources may be present beneath the ground surface, an Approved Cultural Resource Monitor(s) shall be present during all survey and/or ground disturbing activities. Should buried cultural deposits be encountered, the Monitor shall have the authority to halt destructive construction and shall notify a qualified archaeologist to investigate and, if necessary, to prepare a treatment plan, for submission to the State Historic Preservation Officer and/or the Agua Caliente THPO/Cultural Resource Coordinator for approval. 6. Two copies of all cultural resource documentation, including site records, survey reports (1 bound, 1 loose) generated in connection with this project, other reports of investigations, record search results, maps, and site records/updates, shall be forwarded to the THPO for permanent inclusion in the Agua Caliente Register. 0% Cat hedrat 14 April 2004 -��l r G�, Mr. Alex Meyerhoff, Principal Planner City of Palm Springs Dept. of Planning &Zoning 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 Re: Case No. 5.0957-CUP, Destination Ramon Project Response to EIR for City Council Record Dear Mr. Meyerhoff, After a thorough review of the EIR, our responses and your returned response, I am asking that this letter be read into or otherwise made part of the official record of the 14 April 2004 City Council meeting regarding the Destination Ramon Project. This letter will constitute the City of Cathedral City's final EIR comment and list of concerns on the Project. Most of our concerns deal with traffic impacts both adjacent to and in route to/from the Project. For the most part, impacts within the Project perimeter have been dealt with adequately. However, the routes to/from the Project impacts have not been properly addressed either by the applicant or the City of Palm Springs. The City of Cathedral City has expressed several concerns about the impacts of traffic by the project and especially by the project in year 2020 upon arterials, including Ramon Road. For the most part the applicant and the City of Palm Springs contend that Ramon Road and other arterials are TUMF fee roadways with the implication that these TUMF fees will be all the mitigation required now or in the future. However, TUMF fees are paid by all cities in the valley into a fund pool that does not address or prioritize individual projects. There are currently zero Ramon Road projects listed as approved for use of TUMF funds in either affected City, nor are there any applications for such projects as would mitigate the Destination Ramon Project, CVAG staff who administers the TUMF program confirmed that although the TUMF fees may be used for such projects as would mitigate the Destination Ramon Project traffic impacts, there are no such projects currently being considered nor is there any guarantee that such projects would ever be completed since TUMF funds require a competitive application process. Therefore, all assurances listed within your EIR traffic mitigation report regarding the use of TUMF fees are purely. The City of Cathedral City is still not ready to accept the EIR of the Destination Ramon Project without specific traffic mitigation construction requirements placed upon the applicant as previously outlined within our traffic analysis responses. I am also attaching a clarification letter from our contract traffic engineer for the record at the Cop cil meeting for this Project. (See attached letter from Mr. C. Hui Lai PE, TE) ILL 68-700 AVENIDA LALO GUERRERO - CATHEDRAL CITY, CA 92234 - 760/770-0340 - FAX: 760/202-1460 4�-/ 1/-r)V 1i 7,-"-- 2 Please add the following conditions of approval on the Project as the absolute minimum the City of Cathedral City will accept: 1. The City of Palm Springs will work with the City of Cathedral City staff to complete as soon as possible (using all haste) a joint application to CVAG for commitment of TUMF funding, to plan, design and construct the neessary improvement to Ramon Road and any other arterial negatively impacte by the Project. 2. Integral to the TUMF fee commitment for both Cities will be a project to widen the Ramon Road Bridge and its approaches over the Whitewater River to accommodate traffic and pedestrians projected in the year 2020. 3. The City of Cathedral City reiterates its position that at no time will it be responsible for any of the maintenance costs associated with the median island landscaping adjacent to the Project. 4. The City of Palm Springs will negotiate in good faith with the City of Cathedral City to provide a percentage of the sales tax from Wal-Mart to help defray the cost of adverse traffic and other associated impacts on Cathedral City and its infrastructure. Please include this letter and attachment as part of the Record of the Council meeting. Sincerely, JerryV. Jack Public Works Director City of Cathedral City cc: Cathedral City Administrative Staff and City Council Members files attachment: Letter from C. Hui Lai UZW TRAFFIC SAFETY ENGINEERS, INC. Date: April 6, 2004 �,•,,r To: Julie Baumer, Deputy City Manager From: C. Hui Lai, P.E., Traffic Engineering Consultant CC: Jerry Jack, Public Works Director .'-- William Bayne, P.E., Acting City Engineer Subject: Review of Final FIR for Destination Ramon Project I have reviewed the responses to my comment letter dated December 29, 2003 from the City of Palm Springs' Final EIR for the proposed Destination Ramon Project. My comments to the specific responses are as follows: Comment to Response 3-1 No matter if the City did or did not response to the Notice of Preparation, the City has subsequently identified 4 potentially impacted intersections that need to be considered for traffic impact assessment. The City of Palm Springs suggested that these intersections are too far from the project site for traffic impact analysis. The fact remains that these four intersections are critical because traffic generated from the PROJECT would adversely affect their operating level of service. The intent of an EIR is to respond to concerns of any affected persons, especially concerns raised by a professional traffic engineer from the affected neighboring city. The traffic analysis needs to take into account the traffic impact on the 4 intersections listed in my review comment letter, dated December 29, 2003. Just a reminder, the existing Walmart in Cathedral City will relocate to Palm Springs and will be expanded into a Super-Walmart by the PROJECT. The existing Walmart site draws customers from Cathedral City and neighboring cities from the east. With the new Super-Walmart, the same customers will need to travel through these same 4 intersections in order to reach the new project site. There is no justifiable traffic engineering finding for excluding these 4 intersections for traffic analysis. Response 3-1 spent almost two pages explaining TUMF fees. This response further stated that TUMF fees will provide necessary improvements to mitigate impacted intersections in Cathedral City. However, Response 3-1 has not provided sufficient explanation why Cathedral City should compete for TUMF fee funding request from CVAG to improve intersections and roadways im- pacted by the PROJECT that are not located in Cathedral City. It is fair that the PROJECT shall pay for improvements directly to Cathedral City for mitigating intersections impacted by traffic generated by the PROJECT instead of relying on future TUMF fee award. 3'100 UARYWOCJD Dnave ORANGE, CA 92067 TEL: 714.974.7863 l A)u 714.0,74.10,13 E-UAIL: BARD&Wi8N.00N1 Page 2 Comment to Response 3-2 As commented in the afore mentioned Cathedral City's comment letter, the traffic study needs to address the extent to which the project traffic would impact the existing poor level of service at the two closely-spaced T-intersections of Ramon Road/Cathedral Canyon/Avenida Maravilla. Palm Springs only responded to the overall intersection capacity based on general Planning Method and did not address how to mitigate the operational deficiencies of these two offset intersections. The traffic analysis will not be complete until mitigation of operational deficiencies is satisfactorily resolved. Comment to Response 3-4 The 8%truck traffic assumption, established by Riverside County, is an average percentage,taken County-wide. This may not be applicable on Ramon Road. The report stated that Cathedral City never provided Palm Springs with truck percentage information. I suggested in the meeting that the only accurate way was to set up traffic counters that can count vehicles by classifications, i.e. volumes of passenger vehicles and trucks by different axles. Palm Springs is doing the EIR for its PROJECT. So, why is Palm Springs relying on Cathedral City to provide truck percentage factor? This does not make sense. Is it not Palm Springs' responsibility to address Cathedral City's concern instead of simply assuming the 8% County-wide truck percentage? Comment to Response 3-5 The 25%pass-by trip reduction is excessive. With this reduction factor, an estimated 3,688 daily trips are considered as pass-by trips. We, consider this an excessively large volume given the existing circumstances. Besides, ITE's Trip Generation Handbook is only a guide. Since Wal-Mart is an existing facility in Cathedral City and proposes to be relocated by the PROJECT. Why not use the collected"Pass-by" trips from this existing facility instead of relying from ITE's guidelines or attempting to correlate the PROJECT with ITE's fitted curve equation or identified as appropriate by the City Engineer? Comment to Response 3-7 Palm Springs responded that"The Springs" Project was not included as a cumulative project in the traffic study because no application for "The Spring" Project was filed at the time the "Notice of Preparation of EIR"was filed for the Destination Ramon Project in July, 2003. This is understandable. However, as of today, "The Springs"project is on file with Palm Springs, so why is this project not included as a cumulative project in the PROJECT EIR? Page 3 Comment to Response 3-11 Palm Springs responded that all identified impacts will be mitigated through the PROJECT's payment of TUMF fees. At its face, this statement only appears valid, and it assumes that these TUMF fees go straight to Cathedral City. However, to receive TUMF fees, each city is required to competitively apply and qualify through an application process with CVAG. Therefore, there is no guarantee that Cathedral City will receive TUMF fees to mitigate roadways impacted by the PROJECT, until an application request for such fees have been selected under the TUMF Program through a competitive process that is not under the control of Cathedral City. If Cathedral City is not successful with in winning TUMF fees, it will end up having to use its preciously scarce General Funds account to pay for the improvements. The only way to assure appropriate payment for the benefits received by the developer as a result of this PROJECT is that fair-share impact project fees shall be paid directly to both Cathedral City and Palm Springs. Please be advised that the final approval of the PROJECT is the discretionary right of Cathedral City. SA�2 City of Palm Springs Office of the City Cleric (760) 323-8204 FAX (760) 322-8332 FoaN`� 1',:/ EM0.RUiNUUM Date: April 14, 2004 To: File From: City Clerk Re: Protect Palm Springs: The following information was given to each Member of the City Council on April 13, 2004 submitted by the above named group. 1 —"The Impact of Big Box Grocers on Southern California" Brochure 1 —"The Potential Economic and Fiscal Impact of Supercenters in San Diego" analysis. 1 — VHS tape edited from Bill Moyers' show `NOW" on 12/19/03 titled "What is the real cost of WalMart?" 1 — DVD or VHS take titled "Bigger$ Boxes" The Battle Over American's Superstores. Ms Foat— individually picked up at Council Office Mr. McCulloch — hand delivered Mr. Mills— hand delivered Mr. Pougnet— individually picked up in Office of the City Clerk Mayor Oden — hand delivered. PATRICIA A. SANDERS, MMC City Clerk cc: file To: Sp April 13, 2004 INN � City of Palm Springs, Ca. Apt 1c3��� City Clerk/City Manager Mayor/Council Members From; Protect Palm Springs Let it be known that these items are to be entered into the public record concerning the retail project'l'ocated at the southeast corner of San Luis Rey Drive and Ramon Road. These items are as follows; Seven (7),copies of',The Impact of Big Box Grocers on Souther California" published by the Orange County Business Council.. Seven (7) copies of"The Potential Economic and Fiscal Impact of SuperceAters in San Diego" A critical analysis published by the Sari Diego County Taxpayers Association. Seven (7) VHS't'oe' §edited from Bill Moyers' show"NOW' on 12/19J.03,.titled " What is the real cost of Wal-Mart" Five (5) DVD videos and Two (2) VHS tapes titled,"Bigger $ Boxes" The Battle Over America's Superstores produced by KPBS-TV. rrev+A 3 L The Potential Economic and Fiscal Impact of SUPERCENTERS, In San Diego A CRITICAL ANALYSIS The Potential Economic and Fiscal Impact of SUPERCENTFRS In San Diego A CRITICAL ANALYSIS Rea & Parker Research P.O. Box 421079 San Diego, CA 92142 (858) 279-5070 www.rea-parker.com This Executive Summery highlights the key findings from the research. Persons desiring a more complete description of the research are referred to the final report, available online at www.taxwotchdog.org. The opinions expressed in this report are those of Professors Rea and Parker. 0 U�� F September 15,2000 The San Diego County Taxpayers Association (SDCTA) is a non-profit,non-partisan organization,dedicated to promoting cost-effective and efficient government and oppos- ing unnecessary new taxes and fees. Founded 1945,SDCTA has spent the past five decades saving the region's taxpayers millions of dollars,as well as generating information to help educate the public. In a continuing effort to help educate the public,the SDCTA commissioned a critical analysis of the report entitled"The Impact of Big Box Grocers on Southern California: Jobs,Wages and Municipal Finances," by Marlon Boamet,Ph.D. and Randall Crane, Ph.D. Supercenter retail or"big box" development typically combines discount retail and gro- cery in one structure of approximately 250,000 square feet.Based on trends in the retail industry,the SDCTA undertook the study to provide data on potential impacts of such development occurring in the San Diego area. Specifically,the SDCTA engaged Rea& Parker Research to look at the impacts to San Diego County from potential Supercenter retail development. In analyzing the Boarnet/Crane study,Rea&Parker Research identified the following key findings: The report by Professors Boarnet and Crane is a very thorough analysis of the Southern California situation,with defensible conclusions • Wage and benefit impacts in San Diego County would be even greater than those in Los Angeles and Orange Counties,causing a decline in wages and benefits between $105 million and $221 million annually • Increased public health costs in San Diego may exceed $9 million per year due to reduced health benefits • Fiscal benefits from supercenter development frequently are less than expected and not likely to cover the cost of necessary public services • Increased instability in the discount retail sector,causing negative fiscal impacts and an increased potential of urban decay and blight. Following is the Executive Summery of the report by Rea&Parker research.The entire report can be viewed at www.taxwatchdog.org. cas 4Jue�,rn G anna;aG);y Sincerely, 10 West C Streel, �,! 1 709, San Diego, CA 2 101 hone (619)234-6423 ax (619)234-7403 Scott Barnett ,wwdaxwatchdog.org Executive Director I � I7ea &Parker Research was contracted by the San Diego County Taxpayers Association to evaluate the accuracy and applicability to San Diego of a report by Marlon Boarnet,Ph.D. and Randall Crane,Ph.D. entitled "The Impact of Big Box Grocers on Southern California: Jobs,Wages and Municipal Finances." Rea & Parker Research found the Boamet/Crane report to be a very thorough analysis with a good methodological component and defensible conclusions,particularly with regard to wage impacts. Richard A.Parker,Ph.D. and Louis M.Rea,Ph.D. of Rea& Parker Research applied the model from the Boarnet/Crane report to San Diego County in anticipation that super- center retail will seek to begin operations in San Diego. Supercenters combine discount retail with grocery items in one structure consisting of up to 250,000 square feet of retail space. Rea&Parker Research adapted the Boarnet/Crane methodology,where applicable,and added to their methodology those adjustments which address issues not fully analyzed by the Boarnet/Crane report, such as healthcare costs and pension impacts. The key findings from this analysis by Rea & Parker Research, in the event of - supercenters entering the San Diego market, are as follows: • Wages and benefits can be expected to • Fiscal benefits, in the form of sales and decline in San Diego County by $105 property taxes, are frequently less than million to $221 million annually. originally expected and are not likely to • cover the costs of traffic, police, fire pro- Application of the regional multiplier tection among others. Ultimately, the net could expand this negative impact on cost wages to $440 million per year. cost of these public services for super centers could exceed $700,000 per • The wage gap between grocery workers year. and supercenter employees is expected . There are negative impacts on land use to be approximately $.60 per hour more to be encountered as a result of the in San Diego County than in the Los greater level of instability in the discount - Angeles and Orange County study area retail sector and the more space con- utilized by Boarnet and Crane. This five nature of discount retailers vis- causes the wage impact to be propor" sum a-vi rgrocery stores. - tionately more detrimental in San Diego than Boarnet and Crane indicated for • At particular risk from this increased Southern California, as a whole. instability are the small, local stores j which surround supermarkets in neigh- Lost pension and retirement benefits will borhood shopping centers and depend impact the region negatively by an addi- upon the supermarkets' drawing power. _ tional $80 million - $170 million per Economic harm to or closure of super- year. markets in favor of supercenters will do • Health benefits will be reduced to significant financial damage to these employees resulting in poorer quality smaller, local stores, causing negative care for grocery employees and conse- fiscal impacts and an increased potential quent increased public costs which may for urban decay and blight. exceed $9 million per year. r /iaJI�= 71 dI nI al',I li i' In San Diego,starting employees at discount retail establishments earn less than the starting salary quoted by Boarnet and Crane for Orange County.Whereas Boarnet and Crane identified starting wages of$6-$7 per hour,Rea&Parker Research has found that starting pay in San Diego is $5.80-$6--approximately 10% less than the Boarnet/Crane — finding. Grocery workers at the large chains,however,are covered by the same contract and,therefore,earn the same in San Diego County as they do in Orange County.Benefit packages available to grocery chain employees and discount retail employees in San Diego parallel Orange County closely. This finding adds $0.60 to the $8.62 wage and benefit gap identified by Boarnet and Crane.Therefore,the wage and benefit gap in San Diego County is estimated to be $9.22 per hour per worker,indicating that discount retail employees earn wages and ben- efits equal to approximately one-half of the amount which grocery chain workers earn. (_)L;± a y;y;;117-,i F,', ii I I \ie'iii 7 I -- v t� Using market share per store data for Los Angeles,Dallas,and Atlanta,it has been esti- mated for San Diego that supercenters will initially penetrate the local market in the range of 12% on the lower end,up to 23% as the initial upper bound.Beyond this initial impact,further impacts can be expected in the form of wage and benefit competition for existing major grocery chains as they seek to meet the challenge of this significant new competition. Impact Upon Overall Wage Levels: San Diego County has 16.3% of Southern California's total major grocery chain employees,or approximately 13,000 such employ- ees.Applying the San Diego wage gap of$9.22 for the 35.5 average work hours per week produces an initial annual displacement impact upon wages and benefits of Csoo $27,000,000 -$51,000,000,depending upon the extent of the market penetration (12%- As the wage gap closes,another$68,000,000 - $117,000,000 per year would be lost if 40% - 60% of the$9.22 wage gap is closed in an effort to meet supercenter competition. Full closure of the wage gap would lead to another $68,000,000 -$116,000,000 per year ito in lost wages and benefits,for an annual total loss to the local economy of$221,000,000. The Boarnet/Crane model combined various of these scenarios into a range of potential impacts, starting on the low end with a model which included the lower bound of direct displacement(10% for Boamet and Crane-12% for Rea&Parker Research) plus a 40% gap closure and having as the high end the largest penetration (20% for Boarnet and Crane-23% for Rea&Parker Research) plus full closure of the gap.The Boarnet/Crane economic cost range of$500 million- $1.4 billion per year for all Southern California becomes$105 million-$221 million per year for San Diego.That is to say that the total wage impact upon grocery workers in major chains in the event of supercenters entering San Diego will fall somewhere between $105 million and$221 million amorally. Multiplier Effect: According to the San Diego Association of Governments,the regional Multiplier in San Diego varies between 1.5 and 2.5 depending upon the industry involved and the propensity for funds to leak out of the local economy. Using the mid- point Multiplier of 2,the full effect of the wage losses in the grocery industry would result in$210 million - $440 million of reduced economic activity in the region every year. Ramifications of a Low Wage Economy: Suggesting that the economy would be in a better condition were grocery workers to earn only one-half of what they currently earn, as is the case for discount retail workers,ignores the huge advantages of an economy having a work force capable of purchasing homes or renting decent housing--both of which problems would be greatly exacerbated by additional low-wage workers pursuing a limited supply of affordable housing--and when its working class can purchase cars, furniture,and appliances.The economy further benefits when its workers are able to send their children to college,pay for their own health care costs, and provide a decent standard of retirement living. Supercenters do not advance any of these societal benefits. Were low wages and low prices to be the goal,the ultimate models of successful economies would be underdeveloped nations rather than high-wage industrialized ones. An overall degradation of wages harms the economy. Good jobs,good pay,good bene- fits should be the goal of an economy,and supercenters are not consistent with that objective. � �(�)I',ll ( : )I,II_ ^�InI 1c,,I 1 L- -'— - -- -- -- -- Major grocery chains provide significant retirement benefits to their workers which large discount retailers do not. Applying the same range of possibilities as utilized in the wage gap closure analysis yields potential retirement pension losses to society of$40,000,000- $85.000,000 per year multiplied by 2 (Multiplier) to equal an additional cost applicable to supercenters of approximately $80,000,000 - $170,000,000 per year in lost pension and retirement bene- fits,which would otherwise be available to stimulate the local economy. Under the Boarmet/Crane assumption of 47-57 new stores,and allocating 16% to San Diego County at a minimum,based upon current employment data,7-9 supercenters may be built in San Diego County. Chances are very strong that these supercenters will not find all of their current facilities to be expandable and will open new stores nearby, closing the older ones and bringing about significant urban decay. A report by Edward B. Shils,Ph.D. from the Wharton School,University of Pennsylvania,found that these new stores replaced traditional "Main Street" retailers, eliminating thousands of jobs formerly in stores employing one to ten persons.These were family type enterprises in which 1_full-time jobs were ultimately lost for every one new part-time job in the discount retailer. "Traffic density in the older mall begins to die as shoppers go to the newer and larger mega-retail discount store,whether it be a Target,Kmart, or Wal-Mart.Within a year,every second or third retail store is closed. These stores then take on a ghettoized,boarded-up appearance. Graffiti,iron grills, unsightly signs then appear,and what five to ten years earlier was a handsome mall in harmony with the countryside,now resembles an urban ghetto. Land use planning currently seeks to encourage "smart growth" and "transit-oriented development." In this planning environment, a policy which turns away from Main Street retailers and toward large suburban sprawl types of retail developments which depend exclusively upon the automobile and which generate this type of decay in exist- ing neighborhoods,is antithetical to the vision and wisdom of the stated policies which seek to encourage the opposite. Public Service Costs. In the case of the supercenters,7-9 new or expanded stores would result in 500,000 - 650,000 new square feet of retail development.This footage will require approximately 45-60 acres of land,including parking,loading facilities,and out buildings.As such,there will be an annual public service costs (net of public revenues) equal to between $85,185 and$113,580 from these new supercenters. Factoring into the analysis that the sales tax revenue will be less than average (because of the grocery com- ponent),that property taxes will be reduced if redevelopment is used,and that the new rn business will be generated in large part by simply transferring it from elsewhere in the region,it is arguable that there is an even greater net cost in this case from the super- ; centers.Reducing sales taxes and secured property taxes by one-half increases the annu- al public cost to $161,910-$215,880.If the supercenters do not expand,and,instead, < build new structures and close older ones,the net fiscal cost for the required 160 - 200 new acres would be $575,680 -$719,600 per year. Public Health Care Costs. Public costs associated with persons without health insurance - are very significant.Inasmuch as it has been established that the number of uninsured workers can be expected to increase as supercenters enter a market and compete with major grocery chains,the cost of providing health care to the uninsured becomes a pub- lic cost in the form of direct government payments to hospitals and clinics and in the form of uncompensated care in all health facilities--the charges for which are paid by all the other insured persons and businesses through higher insurance premiums and med- ical fees.Uninsured persons cost the public between $250 and $1,300 per uninsured per year. It has been established by Boarnet and Crane that 77,540 employees at the major Southern California grocery stores and 103,388 of their dependents are covered by their employers' plans.This represents approximately 97% coverage.It has also been estab- lished that only 38% of Wal-Mart employees are covered,implying a 59% drop in coverage as jobs transfer from the chains to the supercenters. With San Diego's 16% employment proportion,it can be estimated that approximately 12,600 San Diego employees and 16,800 of their dependents are currently insured by grocery chain health plans.Between 2,100 and 18,200 workers and dependents could become uninsured for health care as supercenters penetrate the market and as the wage and benefit gap is closed,generating public costs of$1,050,000 to $9,100,000 per year for health care to grocery workers and their dependents who would not be covered by an employer health plan. -in e9AiA ;, It is clear that there is a significant cost associated with the degradation of job quality UL which would inevitably accompany the entry of supercenters into the San Diego market. That cost would approximate $290,000,000 -$610,000,000 per year in lost economic activity,consisting of: • $210,000,000 - $440,000,000 in annual lost wages,and • $80,000,000 - $170,000,000 in annual foregone pension benefits. Further,government budgets would suffer,with service costs in excess of revenues of between approximately$85,000 and$720,000 per year and the annual cost of providing health care to workers without health insurance and their dependents of$1,050,000 - $9,100,000--the magnitude of each depending upon the supercenter market penetration and the degree of wage and benefit gap closure.In sum,there could be not only the loss of$290,000,000 - $610,000,000 per year of economic activity and the fiscal losses attached thereto, but also direct public costs which may approach$10 million per year in public services and uninsured health care. .� ur Io G_rvp� i._yeMall�o'q'. ',p.e-{pra r:p_ri.iio--gar.,j'vaM1�w�, .�eoiii.- 0}'.;', IIIIII i„�� w �s i 4.� r 77 Xn� 4 �14w r�+'t\ ORANGE COUNT BUSINESS COUNCL The Impact of Big Box Grocers EXECUTIVE COMMITTEE CHAIRMAN OFTHE BOARD on Southern California Thomas Presidentsident Nielsen The Nielsen Company CHAIRMAN ELECT Jobs, Wages, and Municipal Finances Thomas P..Merrick President Strategic PlanningAssociates IMMEDIATE PAST CHAIRMAN E X E C U T I V E S U M M A R Y Dick Allen President DIMA Ventures,Inc. Prepared for the Orange County Business Council PRESIDENT, CEO & SECRETARY Stan Oftelie By President& CEO CICBC Marlon Boarnet, Ph.D. TREASURER Robert B.Grant Associate Professor Managing Partner Department of Urban and Regional Planning and Economics Deloitte & Touche LLP University of California at Irvine VICE CHAIR-BOARD DEVELOPMENT Wayne D.Wedin and President Wedin Enterprises Randall Crane,Ph.D. VICE CHAIR-ECONOMIC DEVELOPMEr Peter Case Associate Professor Senior DistrictVice President School of Public Policy and Social Research Merrill Lynch University of California at Los Angeles VICE CHAIR-LONG RANGE PLANNII� Bill Ross Vice President,Public Affairs Disneyland Resort VICE CHAIR-PUBLIC AFFAIRS Jo Ellen Allen,Ph.D. Director of Public Affairs Southern California Edison Company VICE CHAIR-STRATEGIC INITIATIVES Robert Hovee President RAH Consulting Group Inc. VICE CHAIR - SPECIAL PROJECTS Gary H.Hunt Executive Vice President The Irvine Company EXECUTIVE STAFF VICE PRESIDENT RESEARCH & COMMUNICATIONS Wallace Walrod VICE PRESIDENT This Executive Summary Highlights the key finding from the research.Persons desiring a more BUSINESS DEVELOPMENT complete description of the research are referred to the final report,available on-line at William Carney www.ocbc.org.The opinions expressed in this report are those of Professors Boarnet and Crane. VICE PRESIDENT DEVELOPMENT & INVESTOR RELATIC ORANGE COUNTY BUSINESS COUNCIL Mike Noonan 2 PARK PLAZA SUITE 100 IRVINE,CALIFORNIA 92614-5904 VICE PRESIDENT TEL.949.476.2242 FAX 949.476.2240 w .ocbc.org PUBLIC AFFAIRS A COMPLETE COPY OFTHIS REPORT BAVAIL BLE ONLINEATV ...00BC ORG Julie Puentes ������� ������� ��a*�*x�`xr^ r,rrroor� u c i�QT��|����� /�«� uym���nz��� ����W�*���� There iva revolution going unin your grocery store. It is a change that is in its earliest stages,but it is a change so profound that Goldman Sachs said earlier this year that itis"the biggest secular market share shift io American retailing today ^ bigger oo far than even the |n`er^et.` It is a megatrend that is both consumer-driven and a decision by the so-called big box discount retailers to sell groceries,produce,dairy, and other food products,promising benefits in the form of lower prices and greater choices for consumers.|tisornagotrond that will affect what vvo eat and where vvo buy it. And itiourooga1rend that isco!|6ing with un extraordi- narily cunop|ox |uru| ivsoe ' theGxcu|izo1ionuf|anduseby |ucu| governnoentJcddonrnakars. For more than 20 years,cities have been romancing big box retail stores - the sales tax generating land uses that bring tax dollars into city government to pay for police,fire,and other municipal services.However, as the report- The Impact of Big Box Grocers on Southern California - illuminates,the decision by big box discount retail stores to expand from taxable (and tax-generating) products to non-taxable (and non-tax generating) groceries could have a profound effect on municipal finances while generating significant community impacts. To place this national megatrend in a local decisionmaking context,the Orange County Business Council asked UCI Professor Marion Boarnet and UCLA Professor Randall Crane to explore the impact of big box discount retailers moving into the grocery business - and to develop x checklist that local government officials could use tn assess the expansion nr conversion of existing retailers into the new supercenters.OCBC believes that the relation- ship6em°een |nndusedecisivnound |nca| finunccec000noirsdrsorvesc|nsorexunoinotiun. The I i S-page report Drs.Boarnet and Crane developed is summarized in this document.It does not advocate nor oppose supercenters or big box retail centers,but does offer key questions an municipal finance and community impacts that local government officials should consider when confronted with local land use decisions which will shape their communities. We hope this study will provide context and assistance to the serious deliberations of decisionmakers who will help shape the revolution that is going on in our grocery stores and our big box retail discount stores. Sincerely, ��� � � � President and CEO Orange County Business Council sXscuT \ ve suMmAar KEY FINDINGS The research report,The Impact of Big Box Grocers on Southern Califor- nia:fobs, Wages, and Municipal Finances, was prepared for the The aggressive entry of supercenters such Orange County Business Council by Professors Marlon Boarnet(Uni- as those operated by Wal-Mart into the versity of California, Irvine) and Randall Crane (University of California, Southern California grocery business is ex- Los Angeles).The author is publish broadly in the areas of local eco- petted to depress industry wages and nomic development,land use,and municipal fiscal policy. The Orange benefiitsatan estimated impact ranging from a low of$500 million to a high of almost County Business Council also has a long-standing interest in both the $1.4 billion per year,potentially affecting fiscal impacts of local land use issues and the economic impacts of 250,000 grocery industry employees. government decision-making and the changing California business climate. The full economic impact of those lost In this report they examine the enormous, and ever-growing retail wages and benefits throughout Southern grocery business, and the many changes occurring this industry. California could approach$2.8 billion per One of the most important developments is the combination of big- year, box discount retail and grocery sales into a single store known as a supercenter. Several discount retailers, including K-Mart and Target, Discount retail chains that operate supercenters,including Wal-Mare,typically have experimented with the supercenter format, but Wal-Mart has offer much less comprehensive health care been the fastest growing developer of supercenters in the past de- coverage than major California grocery cade.While K-Mart and others have experimented with retail grocery chains.One negative economic impact of sales in recent years,Wal-Mart has quietly become the second largest Supercenters could be a dramatic reduction grocer in the country by adding large grocery stores to their retail in health coverage for most of the250,000 stores to form supercenters that are often as large as 220,000 square grocery employees in California.This can feet.For that reason,this research focuses on the potential impacts of lead to lower quality of care for grocery employees whose health insurance benefits the entry of Wal-Mart supercenters into the Southern California mar- are reduced. ket.Yet the analysis is intended to illustrate some of the impacts of supercenters more generally,while using the case of Wal-Mart as an The fiscal benefits of supercenters,and of example of a potential near-term entrant into the Southern California discount retail more generally,are often retail food business, much more complex, and lower,than they first appear.This is particularly true when big box retailers close existing stores to This study is designed as an aid to public decision-making regarding move into larger quarters elsewhere,when supercenters,which have negative as well as positive impacts.Neither they expand an existing store into food, are always and when retailers reconfigure an existing well understood,or POLICY QUESTIONS store to sell food without expansion. In carefully consid- each case the additional tax revenues gen- ered, in the The nature of the grocery business has changed erated will in part come from existing municipal race for dramatically in some areas,with conventional gro- businesses elsewhere in the city in the form sales tax revenue. cery stores having difficulty competing on wages. of lost market share. However,this report Cities, starved for sales tax revenue but also Supercenters, especially Wal-Mart clearlyshows that the protective of their existing retail base,are un- supercenters, are often conversions of ex- fiscal benefits of sure of how these big-boxes will affect either isting discount retail stores.Thus local of- supercenter, and of their economic structure of their fiscal bottom ficials should carefully consider the possibil- discount retail more Iine.This study is designed mainly as an aid to ity of a future conversion to a supercenter, generally, are much public decision-making regarding such projects, and any attendant negative economic,fis- cal,more complex, and or land use impacts,when approving p which have negative as well as positive impacts. big box discount retail projects,even when often lower, than Neither are always well understood, or consid- the proposes land use does not include they first appear, ered,in the municipal race for sales tax revenue. immediate plans for grocery sales. THE IMPACT OF BIG BOX GROCERS ON SO U T HER N CALIF OR N I A THE ECONOMIC IMPORTANCE OF THE GROCERY INDUSTRY WHAT DOESTHIS MEAN FOR ORANGE The grocery industry is an often unnoticed but vital part of COUNTYAND SOUTHERN CALIFORNIA? many local economies. In an era of increasing part-time em- ployment and reduced pay and benefits, grocery chains pro- Three sets of policy issues are important vide what is becoming increasingly rare - entry level lobs that pay living wages with good benefits. The retail food sector employs 250,000 persons in California; slightly more than I. Supercenters are often conversions of exist- half of those are in the Southern California region. Of the ing discount retail stores, and local 128,000 Southern California grocery employees,the 80,000 officials should be aware of that possibility. employees of the major chains are unionized and earn at- S erce Wal-Mart estimated that ver of all new Supercenters would be built by converting existing tractive wage and benefit packages.The average grocery Wal-Mart discount centers. Because the grocery employee at a major Southern California chain earns $32,385 and general retail industries differ dramatically in their on a full-time annual basis - virtually the same as the average pay scales, function within the community, and abil- statewide pay for all job sectors. ity to generate sales tax revenues,this is far from a simple expansion of an existing business. Local offi- It is also instructive to compare grocery employment and cials should be aware of the possibility for conversions wages with other industries that are commonly considered of existing discount centers into supercenters. an important part of the Southern California economy. Em- ployees of the major grocery chains earn wages that are es- 2. The grocery industry in Southern Califor- sendally the same as the average annual wage paid in the con- nia pays substantially higher wages, and struction industry, and the 80,000 unionized Southern Cali- offers better benefits, than many of the dis- fornia grocery workers number about one-third of the region's count retail chains that currently operate total construction employment. Few doubt the role that supercenters. By far the largest controllable cost construction plays in providing good wages and economic oppor- in the grocery industry is wages and benefits. Large tunity to persons with entry-level skills. Grocery employment labor cost differentials do not persist in the gro- serves a similarly important role in the economies of South- cery business. Should a discount retailer enter the ern California cities and for the entire region. Compared to Southern California grocery market and compete other industries that provide entry-level jobs, such as the tour- effectively while paying wages below the current Ism sector, wages at major grocery chains are close to double norm for the industry, the pressure on existing what can be earned in,for example,hotel and motel employ- chains to lower wages and benefits would be im- ment. Major Southern California grocery chains also pay, on mense.As an example, estimating that Wal-Mart average,more than twice as much as the pay earned by gen- supercenters could capture from 10% to 20% of eral merchandise employees.This is representative of the pay the Southern California grocery market, we calcu- gap between grocery stores and the discount retail firms that late the direct value of lost wages and benefits to have entered the grocery market in other states. range to nearly $1.4 billion per year.Accounting for the multiplier effect as those wage and ben- AVERAGE ANNUALWAGE COMPARISON efit cuts ripple through the economy,the total 35,000 economic impact on the Southern California 30,000 economy could approach$2.8 billion per year. 25,000 3. The fiscal benefits of supercenters,and of dis- 20,000 count retail more generally, are often complex. Supercenters in particular combine many 15,000 — non-taxable food items under one roof with general 10,000 merchandise. Furthermore, any discount retail out- let potentially shifts sales from existing local retail, 5,000 and the net impacts on local sales tax revenues are 0 far from certain. MAJOR ALL SOUTHERN SOUTHERN SOUTHERN SOUTHERN CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA EMPLOYEES CONSTRUC- HOTEL GENERAL GROCERY TION AND MOTEL MERCHANDISE CHAINS EMPLOYEES EMPLOYEES EMPLOYEES E X E C U T I V E S U M M A R Y ucrFwlw:ur.uub�. eery chains typically seek to close approximately one STUDY OVERVIEW half of the wage gap with major competitors. Over the long term,the grocery chains may seek to lower A brief synopsis of the research is given below.For wages to their workers to eliminate the entire differ- the full study,including citations for all information, ence between their pay and that of discount retail data sources,and a detailed description of the meth- employees an average difference of over $9 an hour ods, see the full report, available at www.ocbc.org. currently. The wage and benefit impacts of the entry of big box grocers into the region are estimated using a two Using data on current wages and benefits,we calcu- step process. First, we estimate the market share lated that the direct impact on workers in Southern that Wal-Mart supercenters are expected to capture in California would likely fall in the range of about$500 Southern California, based on current averages of million to$1.4 billion per year in lower pay,depending between 47 and 57 stores per distribution center. on the big box grocers'market share.Using the South- Using data on market share and number of stores in ern California Association of Governments estimates several urban areas, we conclude that one distribu- of how these lowered wages would impact the re- tion center roughly translates to a 10% market share gional economy, the total regional drop in spending of Wal-Mart supercenters in Southern California.The ranges from about $1 billion to over $2.8 billion per assumptions that let to that estimate were uniformly year.The numbers will rise the larger the market conservative,and so we also use an estimate of 20% share of big box grocers, and could well top even long-run market share for supercenters, comparable these figures overtime. to the major existing chains in Southern California. In addition, we find that the tax rev- enue impacts of big box grocers are ESTIMATES OF REGIONAL INCOME LOSSES(IN BMILUONS) uncertain.While big box retail does FROM LOWER WAGES PAID BY BIG BOX GROCERS typically capture taxable sales from out- 3,000 I O`,N ESTIMATE side the jurisdiction, it also captures L 2,50D business from local retail,thus hurting ■ MEDIUM ESTIMATE the local economic base of the com- 2,100D HIGH ESTIMATE munity.There is evidence as well that ■ 1,500 the initial growth in sales tax revenues 1,000 from the big boxes may not be either steady or sustained in some situations. 500 ! — 0 More to the point of this report,a much $7.97 $8.62 $9,26 larger share of food sales are not tax- WAGE GAP BETWEEN MAJOR GROCERY CHAINS AND DISCOUNT RETAILERS able at all. Most of the Wal-Mart supercenters result from the conver- sion of existing Wal-Marts into a combination of We then calculate the wage impacts of these market general merchandise and food sales. Thus, the share estimates. Even a 10% market share for floorspace devoted to taxable sales may actually fall supercenters is a substantial competitive threat to as these conversions continue. existing chains,and those chains are likely to respond aggressively. Case studies of similar competition be- There is also evidence that general merchandise stores tween low and high labor cost grocers illustrate that are far more vulnerable to market shifts than food grocery chains cannot tolerate large labor cost gaps. stores.ThLIS,this trade off presents itself.big box ret- This evidence indicates that in the short-term gro- ailers will most likely boost overall retail sales and tax THE IMPACT OF BIG BOX GROCERS ON SOUTHERN CALIFORNIA revenues on entry,only to be among the first to con- solidate or fold when conditions begin to change.If a big box were to include food sales in its operations, retail sites into supercenters and inquire about then free-standing food stores would likely yield mar- future plans for discount retail stores seeking lo- ket share and in some cases become vacant, while cal planning commission and city council approval. taxable sales from grocery operations would shift to locations that are much ore prone to the impacts of 2. How will the discount retail store affect the to regional business cycles. cal labor force? Discount retail chains traditionally NIGUEL pay substantially less than the grocery industry IN LAGUNA IGU GENERAL MERCHANDISE TAXABLE SALES PER PERMIT in Southern California.Local officials should care- 8,000 fully asses the possibility that a particular 7,000 Adiscount retail project might depress wages in other stores in the municipality. 6,000 5,000 3. What are the fiscal impacts of a discount retail store?At the most general level,local business 4,000 both require public services and have the poten- 3,000 tial to produce local tax revenues -a point often 2,000 Z missed when officials focus exclusively on the tax revenue side of the equation.Any land use,even 1,000 big box retail outlets that are perceived as mu- 0 nicipal cash "cows", must be carefully evaluated. 1990 1991 1992 1993 1994 1995 I996 1997 Some land uses do not generate tax revenue (NOTE:THEWAL-MART OPENED IN 1995) that outweighs municipal costs. In other in- HOW SHOULD LOCAL OFFICIALS PROCEED? stances, the data in the full report (particularly Chapter 3) suggest that discount retail stores These potential impacts are significant, with respect produce only short-term increases in local sales to both the vitality of the local economy and the pub- tax revenue.And the cyclical nature of retail lic budget bottom line.The transformations in the sales tax revenue suggests that the revenue grocery industry thus present local officials with some streams from supercenters might be highly vari- key policy considerations.The grocery business is a able over time. Local officials should carefully vital part of the economic and the community fabric evaluate these and related issue when they as- of most every municipality in the region.The changes sess the fiscal impact of a discount retail outlet occurring in that business have the potential to quickly orsupercenter. and adversely affect the economic health of localities, and officials should be aware of that potential as they For decades,grocery stores have been hidden but evaluate future discount retail projects. important parts of the health of many Southern Cali- fornia municipalities. Recent changes in the grocery In particular,the following questions are important in industry have the potential for catching local officials evaluating discount retail projects. unaware of the possible impacts in their communi- ties.The full report (available at www.ocbc.org) I. Is there potential for changes in the use of the highlights the potential for economic impacts as dis- property? Discount retail chains are increasingly count retail chains develop supercenters,while also taking on the functions of grocery stores,In light emphasizing the uncertain nature of any local fiscal of that trend,local officials should both be aware benefits. Local officials should carefully evaluate the of the potential for the conversion of discount implications for their communities. E X E C U T I V E S U M M A R Y A Checklist for Evaluating Big Box Retail Projects Overall,our analysis of these data illustrate the great complexity,and possibly unintended conse- quences,of the entry of large footprint discount retail into the grocery business.To help prepare local and regional official to review proposed big box projects generally,we suggest communities systematically assess the positive and negative local impacts of such projects.The following t_ checklist is one way to do so.It proposes a systematic review of the impacts on local workers, on municipal finances,and on other key community issues. �w ECONOMICAND EMPLOYMENT IMPACTS How much will the new big-box outlet cut into existing local retail market share? TASKS: Need to inventory the local retail base Assess market areas and market impacts What will happen to the local workforce? _ TASKS: Assess impact on existing local retail Calculate direct impact of job changes,lower wages _ Calculate impacts of less medical coverage and other fringe benefits Calculate ripple impacts of lower wages on local economy (multiplier impacts) Will the new big-box outlet lead to vacancies or changes in local land use? TASKS: Inventory vacant land and commercial properties Assess re-use or redevelopment possibilities for competing sites li Rr MUNICIPAL FINANCE IMPACTS ,,.- How much will the new development cost your municipality? TASKS: Services and capital expenditures:Calculate cost of infrastructure&utilities (i.e., streets,sewer connections,water lines,etc.) Traffic and other service impacts? «» Calculate the cost of associated economic development incentives (e.g.,tax credits) Assess the impact of redevelopment zone tax-increment financing How much will the new development really change local tax revenues? TASKS: Assess net changes in local retail sales (e.g.,including sales lost to the new big box) r, Calculate net changes in sales and property tax revenue Examine the stability of the retail sales tax revenue overtime COMMUNITY IMPACTS Will the big-box footprint possibly expand in the future?In the same line of business? TASKS: Ask about future plans up front Examine industry trends Plan for expansion contingencies What localities will benefit from and/or be disadvantaged by the big-box development? TASKS: Assess the differences between local and regional impacts Are local gains at the expense of losses in other cities? Must these be mitigated? How will the new retail outlet affect your community's quality of life?For example, will it reduce the appeal of a downtown core that you are trying to preserve or revitalize? .<, .,,,,--. TASKS: Inventory locations of competing retailers Assess impact on existing local retailers ------------ Wal-Mart Supercenters: What's in store for Southern California? E. .._......................_..._.___.._................._... ............. „..(:.(/ ..,....�........... ...,..:y ••`•::. /[. . .. 6 ......_.. ._. ............._......_........_...._..._.._.._.,........_. Y ..J.:.:.. .. ..-...�. Prepared by: Gregory Freeman Los Angeles County Economic Development Corporation January 2004 At, fr,10111001,e IMV110,9rar,vr h9r7 FNf AEGONSOFM 900AVTY LAEDC Wal-A4art Economic Impact Studp Editor's Note: The consulting practice of the Los Angeles County Economic Development Corporation (LAEDC) was commissioned by Wal-Mart Stores, Inc. to conduct an even-handed assessment of the potential impact of its Supercenters on Southern California. January 2004 Table of Contents Executive Summary............. ...... .............. ....................... ........................................... 1 Costsand SavinAu ................ ...................... ............ .................................. ..... ..... 1 Timing................................................................................................... ................ .... 3 Conclusion........................................................................... ...................................... 3 StudyHighlights............................................ .............. ........................ ........................ 4 Background........................................ ................ ................... ................. .................... 8 Section 1: The Benefits uf Every Day Low Prices............................ ............................ i0 Summary............... ..................... .............................. ................ ............................ 1O Introduction and Methodology...... ............................................................................ 10 Lower Prices On Groceries......................... .............................................................. 11 Spending aL Grocery Stores...... .............................................................................. 13 Spending at General Merchandise and Apparel Stores .....................,....... .......... l4 Potential Savings io the City of Los/\ngoleo....... ................ ....................... .......... 14 Potential Savings in Los Angeles County.............. ...... ............................................ 17 Potential Savings in Southern California................................................................... 18 Increased Buying Power..... ...... ....................... ............................................... ...... 28 JobCreation.............................. ...... ............................................... ................ ..... 21 Saotion2: Wages ....................... ......... ............................................................... ....... 22 Summary................................ ...... ........................ ...................... .......................... 22 Wal-Mart Benefits Wal-Mart...... .............................. ................ ............................................... ............ 24 Grocery Industry Wages............. ...................................................... ...................... 25 Union Wages in the Grocery Industry........................ ...... ....................................... 27 WageGap Analysis......................................................................................... ........ 28 Costto the Economy............... ...... ............................................... ......................... 31 Section 3: Weighing the Impacts ...................... ............................................... ........... 32 Upside................. .............................. ................ .................................................... 32 Assessment .....,..,,....., ....................... ............................................. 33 Downside........................... ............................... ...................... ........................... ... 33 Assessment .. ....................... ...... ................ ....................................................... 33 Conclusion............... ................................................................................................ 35 Section 4: City of Los Angeles Response......................................... ...... .................... 37 Summary.............. .............................. ............................................... .................... 37 Option #1: Ring around Los Angeles.................................. .......... .......................... 38 Option#2: Working Together..... ....................... ............................................... ...... 30 Conclusion................ ....................... ....................... ............. ......... ...... ................ 40 LAEDC Wal-Mart Economic Inquiet Sludi, Wal-Mart Supercenters: What's in store for Southern California? Executive Summary Wal-Mart Stores, Inc. is now the largest grocery retailer in the country based on sales. It is preparing to introduce its Supercenters, which combine a large general merchandise store with a full service market, into Southern California. The City of Los Angeles, in particular, with its 3.61 million people, 1.28 million households, and annual food store spending of approximately $5.65 billion, is a very attractive market. Wal-Mart's planned expansion into the local grocery business creates both a challenge to the major grocery store chains in the region, and an opportunity for cities to encourage strategic reinvestment in underserved neighborhoods. The LAEDC agreed to assess the economic implications of Wal-Mart's entry into the Southern California grocery market because existing studies, which tend to tally only the negative impacts of Wal-Mart's operations, miss half the story. Here we aim to provide a fair and balanced assessment of both the good and not so good impacts of Supercenters in Southern California. Thus, we include not only the potential effects on existing grocery chains and their employees, but also the potential savings to consumers, and the potential job creation outside the grocery industry. Costs and Savings Wal-Mart Supercenters have a substantial cost advantage relative to traditional supermarkets, based on careful supply chain and inventory management, volume discounts, and lower labor costs. Much of this can be attributed to Wal-Mart's willingness to invest in technology and business practices which make its operations more efficient. Wal-Mart passes the savings on to consumers, offering lower prices on groceries than traditional grocery market chains. If Wal-Mart Supercenters are introduced in Los Angeles, food prices should fall. Wal-Mart shoppers would immediately save an estimated average of 15 percent relative to what they would have paid under the current status quo. The savings could be higher, particularly in portions of the City of Los Angeles such as South Los Angeles and the northeast San Fernando Valley, which are underserved by traditional grocery stores. The corner stores where much of the food purchases in these areas take place offer uncompetitive prices relative to existing grocery stores, never mind Supercenters. As Wal-Mart gradually builds market share, major competitors will lower their prices as well, thus bringing additional savings to some consumers who will never set foot in a Wal- Mart store. Smaller stores will adjust by emphasizing specific market niches and specialty products which Wal-Mart does not provide. The LAEDC conservatively calculated the potential savings to consumers in the City of Los Angeles to be at least$668 million, or $524 per household, annually, once Wal-Mart reaches 20 percent market share. The savings could be much higher, though the savings will not materialize overnight, They will increase gradually over many years in step with WaI-Mart's market share. These savings add to a household's discretionary after tax dollars—the portion of the income actually available for spending. This "found" January 2004 1 LAEDC Wal-Mar!Econornic Impact Study money will be redirected to other items, including housing, savings, health, entertainment, and transportation. As households redeploy their savings, their spending will create jobs outside the grocery industry. In the City of Los Angeles, redirected grocery savings will create 6,500 additional jobs. The new jobs will be in a wide variety of occupations, reflecting the diverse spending patterns of Los Angeles households and the breadth of the regional economy. The LAEDC also looked at the potential impact of Wal-Mart Supercenters on the entire Southern California market. In Los Angeles County, the aggregate annual savings to consumers would be at least $1.78 billion. When the savings are redirected to other purchases, the county-wide job creation will total 17,300 jobs. For consumers in Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties, the combined total annual savings will be at least $3.76 billion. The seven- county Southern California job creation total is 36,400 jobs. Wal-Mart compensation, while lower than for the best-paid unionized grocery employees, is better than most people realize, particularly in its food business. Wal-Mart benefits include health care, a stakeholders' bonus, which is paid to employees at stores that perform well, profit-sharing, company contributions to 401(k) plans, which are the most common form of defined contribution retirement plan, a 15 percent discount on company stock, and a 10 percent discount on purchases of general merchandise. Wal- Mart's healthcare plan requires employees to share the upfront costs (Wal-Mart pays 2/3rtl; the associates pay 1/3rtl), but in return does not have single incident or lifetime caps on coverage. Two important factors make Wal-Mart's wages appear lower than they might otherwise. First, Supercenters are a relatively new phenomenon. Most Supercenters have simply not been open long enough to have accumulated many employees with lengthy service records, and thus higher rates of pay. Second, and perhaps most important, Wal-Mart's pay among its front line grocery workers is skewed downwards because it promotes from within. Wal-Mart recruits its management primarily from within the ranks of its own employees. This opens up career opportunities for associates, and crucially for wage comparisons, removes some of the most experienced and best paid Wal-Mart employees from the pool of workers typically being compared. In contrast to unionized grocery stores, where some of the most senior employees are cashiers, at Wal-Mart cashier is an entry level position. Unionized grocery workers earn $2.50-$3.50 per hour more, on average, than Supercenter employees in Southern California could expect. Some union grocery workers are very well compensated, but the wages of the most highly compensated among them are frequently mistaken for average union wages, which are lower. The widely-cited Orange County Business Council (OCBC) study calculated the potential wage loss if all union workers in the Southern California grocery industry were to earn the same wages as Wal-Mart employees. Using more realistic assumptions of Wal-Mart Supercenter employee pay (and hence a narrower wage gap), we find the potential cumulative wage loss in Los Angeles County is $150 million to $258 million annually. For the 7-county Southern California region (including Los Angeles), the range is $307 million to $529 million. If all current unionized grocery employees were to eventually earn the equivalent of Wal-Mart Supercenter employees, the lost spending due to eroded household income could cost Los Angeles County alone 1,500 to 2,500 jobs and the 7-county region 3,000 to 5,100 jobs. Should these losses materialize, they would be January 2004 2 LAEDC Wal-Mart Economic Impact Study offset by region-wide gains of 36,400 jobs, meaning that outside the grocery sector at least seven jobs would be added for every one lost. Timing Timing will be critical in determining the potential impact of Supercenters. Experience in other regions suggests that existing stores will have time to adjust. The potential benefits as well as the costs of Wal-Mart entering the Southern California grocery market described in this report assume that Wal-Mart will eventually gain a market share of 20 percent. Yet, gaining share will take a long time. Wal-Mart will struggle to find suitable locations for its stores in many areas of heavily urbanized, built-out Southern California, including most of the City of Los Angeles. By comparison, in Fort Worth, Texas, it took Wal-Mart six years to achieve a 6.5 percent share in a market where stores can be built quickly. Unlike California, permitting, environmental regulation, and community opposition are not generally a factor in Texas, where growth has nonetheless proceeded at only a modest pace. Wal-Mart appears to be proceeding cautiously in California, with plans to build just 40 Supercenters in the state over the next three to five years. This represents just 4 percent of the 1,000 new Supercenters that will be added nationwide during the same period. Based solely on the state's share of the national population and the potential size of its market, the expected number of new Supercenters in California should be in the range of 100 to 150. If the distribution of existing Supercenters were factored in, the California number would be higher still. Again, by comparison, Texas, which is the nation's second most populous state, already has many Supercenters while California, the most populous state, has none. The slow roll out of Supercenters in Southern California, compared to other regions, will delay the arrival of benefits for consumers, but it will also give Wal-Mart's competitors more time to adapt. With Southern California's rapidly growing population, Wal-Mart is likely to increase its presence by taking a greater share of overall market growth, rather than by luring existing customers from large supermarket chains. While a scenario in which Wal-Mart captures most of this growth may constitute a challenge for the major supermarket chains, their situation — aside from fierce price competition, which benefits consumers, and increased pressure on their balance sheets — is not likely to be significantly different than it is now. Conclusion All indicators suggest that Wal-Mart will gradually enter the grocery market in Southern California. A 20 percent market share may be achievable over time, but not in the near future. Unlike what has occurred in other parts of the country, Supercenters will be rolled out slowly here, delaying the arrival of benefits. Conversely, any negative impacts will also be delayed, and lessened, since competitors will have more time to adapt. Over the long term, Wal-Mart is likely to increase its market share by absorbing a larger share of overall market growth, rather than by attracting existing customers from the large grocery chains. The real choice facing the City of Los Angeles is whether Wal-Mart will serve residents from within the city's boundaries or from without. It Wal-Mart decides to open Supercenters to serve demand in the region, the stores could conveniently serve January 2004 3 LAEDC Waal-Mary Economic Impact Study customers residing in the City of Los Angeles from within the city, or from neighboring jurisdictions. In the former case, the city government would have the opportunity to influence Wal-Mart's presence. The City of Los Angeles could guide Wal-Mart and other large scale retailers to sites where their presence and spending would be a boon for local redevelopment. If, however, Wal-Mart builds in neighboring jurisdictions, the City of Los Angeles will have no control over the development. Wal-Mart customers in Los Angeles would leave the city to shop, taking their taxable spending (and any resulting local sales tax revenues)with them. Study Highlights Savings for Consumers and New Jobs outside the Grocery Industry ➢ Supercenter customers will save an average of 15 percent on their groceries. ➢ Price competition will lead to reduced prices at existing grocery chains, providing customers who shop at stores other than Wal-Mart average savings of 10 percent. F Increased competition in non-grocery items will lead to price reductions averaging 3 percent at general merchandise and apparel competitors. A Money that people save on groceries will be redirected to other items, including housing, savings, health, entertainment, and transportation. This new spending will, in turn, create jobs outside the grocery industry. Savings in the City of Los Angeles ➢ Consumers in the City of Los Angeles are conservatively estimated to save at least$668 million annually, or$524 per household, per year. ➢ Redirected grocery savings will create 6,500 additional full-time-equivalent jobs. Savings in Los Angeles County ➢ Consumers in Los Angeles County are conservatively estimated to save at least $1.78 billion annually, or$569 per household, per year. ➢ Redirected grocery savings will create 17,300 new jobs County-wide. Savings in Southern California ➢ Consumers in Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura counties are conservatively estimated to save at least $3.76 billion annually, or$589 per household, per year. A In these seven counties, 36,400 new jobs will be created. Potential impacts to Maior Grocery Chains ➢ Major grocery companies have used fear of intense competition to seek wage concessions from unionized employees, most likely by lowering the wages of new hires. ➢ Future foregone wages of unionized grocery employees in Los Angeles County could equal $150 million to $258 million annually, and could reach $307 to $529 million annually across the entire 7-county Southern California region. January 2004 4 LAEDC Wal-Mart Economic Impact Study Y These foregone wages would reduce overall household spending, potentially costing Los Angeles County 1,500 to 2,500 jobs and the 7-county region (including Los Angeles)3,000 to 5,100 jobs. Y These losses will be offset by region-wide gains of 36,400 jobs outside the grocery business, or a net gain of at least seven new jobs for every one lost. Catalyst for Redevelopment ➢ Wal-Mart can be used as a catalyst for redevelopment, particularly in areas saddled with struggling (or failed) retail centers. In Panorama City, Wal-Mart replaced the Broadway department store, creating new jobs and revitalizing the mall and the surrounding neighborhood. Wal-Mart will open stores in an abandoned K-Mart in Canoga Park and in an abandoned AutoNation site in Harbor Gateway. ➢ Wal-Mart has demonstrated a willingness to enter communities that other businesses appear uninterested in serving. In Baldwin Hills, Wal-Mart brought jobs and retail opportunities to an underserved community by opening a store in a former Macy's, which had sat vacant for five years. ➢ There are many parts of Los Angeles that are underserved by retail. The need is acute in the grocery sector and these communities stand to gain the most if Wal- Mart were to enter the market and offer lower prices. Sales Tax Leakage ➢ Jurisdictions without Supercenters will lose taxable sales when their residents shop elsewhere. Supercenters have become an issue because they sell groceries, which are non-taxable. Sixty to seventy percent of the sales at Supercenters, however, are taxable. The appeal of Supercenters, for both Wal- Mart and the consumer, is that they allow shoppers to combine trips and do all of their purchasing in one location. If city residents choose to buy their groceries at Supercenters outside of the city, the City of L.A. will lose out on the local share of any taxable purchases shoppers make on those trips. ➢ Cities without Supercenters will also lose out on sales tax revenue when their residents combine trips to Wal-Mart with shopping at nearby stores. ➢ Overall sales taxes will increase to the extent that customers spend their savings generated from lower-priced groceries (which are not taxable) on goods which are taxable. ➢ The modest increase in overall taxable sales should not obscure the key issue — the distribution of taxable sales (and hence tax revenues) among Southern California jurisdictions based on where consumers choose to shop. January 2004 5 LAEDC Wal-Mart Economic bnpact Study Background Wal-Mart is America's largest company, based on gross sales of$245 billion in the fiscal year ending January 31, 2003. Wal-Mart sells a limited selection of food items at its general merchandise stores, and operates Sam's Club, which sells food and general merchandise in a warehouse format. Wal-Mart moved into the traditional grocery business in 1988, when it rolled out the first of its 1,386 Supercenters. These stores combine a traditional Wal-Mart with a complete grocery operation in spaces ranging from 109,000 to 230,000 square feet. Groceries account for approximately 30 percent of sales at Supercenters, or$29.3 billion in 2002.' Wal-Mart is now the largest grocery retailer in the United States, having passed Kroger for the top spot in 2001! Wal-Mart began selling groceries both in response to customer demand for the increased convenience of one-stop shopping, and as a means of raising the average number of visits per month customers make to its general merchandise stores. The logic of increased customer visits is simple. Typical households visit grocery stores roughly three times as often as they visit mass merchandise stores such as traditional Wal-Marts.3 By expanding into groceries, Wal-Mart offers consumers increased convenience. Shoppers can combine trips, picking up items such as a DVD, a new toaster or school supplies while buying their groceries. Wal-Mart benefits as well because consumers have less incentive to shop elsewhere, which would require an additional trip. "Conscientious expense control" Although margins in the grocery sector of the retail industry tend to be low, they are still high enough that Wal-Mart can sell for less than the large chain grocery stores and still make a profit. Wal-Mart achieves lower prices through enormous economies of scale, efficiency, and what the company calls "conscientious expense control" in every aspect of its business. Four examples illustrate the company's commitment to cost control and efficiency. ➢ First, Wal-Mart produces far fewer advertising circulars than its competitors do. The savings of producing and distributing 12-13 fliers instead of 50-100 per year are passed on to consumers." ➢ Second, Wal-Mart invests heavily in supply chain management. CIO Magazine, a trade publication for chief information officers, observes that Wal-Mart's private exchange, known as RetailLink, provides suppliers with raw sales and inventory data - to better manage stocking decisions and reduce costs... RetailLink... has allowed the company to reduce the cost of transactions within the supply chain by providing daily scan-data to suppliers, creating a system in which items are rarely out of stock. By contrast, many grocery retailers have 8 percent to 12 percent out-of-stocks because partners can't see the demand levels...5 January 2004 6 LAEDC Wal-Mart Economic Impact Surdj, v Third, Wal-Mart eschews charges such as "slotting fees," the practice in which grocers charge manufacturers for prime shelf and display space Indeed, Fortune magazine describes a whole slew of fees retailers charge their suppliers, all of them eliminated at Wal-Mart: Slotting fees. Display fees. Damage allowances. Handling charges. Late penalties. Special sales and rebates. Super Bowl tickets. Each is a small inefficiency that benefits the retailer at the supplier's expense and, ultimately—since the supplier builds those costs into its prices—the consumer's. [With] Wal-Mart, by contrast ... "All the funny money ... isn't there. They'll negotiate hard to get the extra penny, but they'll pass it along to the customer."6 ➢ Fourth, Wal-Mart's corporate culture is steeped in frugality. Wal-Mart expects its executives to empty their own wastepaper baskets, refuses to spend money on lavish offices, and limits Wal-Mart related travel to economy car rentals and budget motels. Wal-Mart's emphasis on cost control in every aspect of its business underpins its success. Wal-Mart makes a point of always listening to its customers, and focuses on the consumer's bottom line. Millions of people shop at Wal-Mart stores every day because the company's savings are passed on to them. Wal-Mart will enter the grocery market in Southern California. Low prices on grocery items have made Wal-Mart Supercenters popular with consumers. The Supercenter format now accounts for about 40 percent of total corporate revenue at Wal-Mart Stores, Inc.' Wal-Mart plans to add 1,000 new Supercenters nationwide over the next five years, including 40 in Cal'rfornia 8 Wal-Mart's planned expansion into the Southern California grocery market has unnerved the major grocery store chains in the region. Not long ago, the major supermarkets displaced many local butchers, bakers, vegetable stands and neighborhood markets. Some of the supermarkets grew into enormous chains, with annual sales in tens of billions of dollars. Now, these chain supermarkets face competition from the "everyday low prices" of Wal- Mart Supercenters. The supermarkets, however, have already begun adapting to the changing retail environment in earnest, and will not be easily displaced. The chain supermarkets have been increasing the square footage of their stores and adding more general merchandise items such as toys, lawn furniture, and small appliances. They have entered alliances with pharmacy chains, banks, and coffee vendors to offer their customers greater convenience and meet the growing demand for one-stop shopping. The supermarkets have also taken steps to improve the efficiency of their distribution systems, and are seeking to control labor costs in their stores. At present, cost control has been focused on improving productivity, most notably through the adoption of automated self-check out stations and by switching to less labor intensive business practices. Here the supermarkets strive to emulate Costco and other January 2004 7 LAEDC Wal-Mart Econornic tntpacl Study wholesale membership warehouses, which combine their stores and storage areas in the same place. A pallet of goods is placed directly on the selling floor, the shipping materials are removed and the boxes are opened. The product is then ready for shoppers with little (if any) labor expended on labeling, sorting, and restocking. Most of the public commentary on Wal-Mart's pending move into Southern California's grocery industry has been negative. This trend is unsurprising for two reasons. First, the potential downside — intense competition, possible business failures, and downward pressure on wages— is largely concentrated in a single sector of the retail industry. This makes the potential negative impacts highly visible, and suggests they may be acutely felt. Second, the potential benefits, in contrast, are easy to overlook. Lower prices on the grocery sector will be shared among millions of households, meaning gains at the individual level will be relatively modest. And the job growth outside the grocery industry that will be induced by the cumulative impact of money once spent on groceries being redirected to other purchases is something that must be imputed rather than seen. (If a family saves$20 per week, the redirected spending has a miniscule employment impact. Multiplied over millions of families, the job impact of even these modest savings would be quite large. Even with tens of thousands of new jobs, however, identifying specific individuals whose jobs are sustained by the redirected spending would be all but impossible.) Just because the potential benefits are easily overlooked, however, does not make them any less real. The LAEDC agreed to assess the economic implications of Wal-Mart's entry into the Southern California grocery market because existing studies, which tend to tally only the negative impacts of Wal-Mart's operations, miss half the story. Here we aim to provide a fair and balanced assessment of both the good and not so good impacts of Supercenters in Southern California. Thus, we include not only the potential effects on existing grocery chains and their employees, but also the potential savings to consumers, and the potential job creation outside the grocery industry. We start with the premise that large-scale economic change, while frequently unpleasant for those caught in the turmoil, is a normal occurrence in a free market economy. Wal- Mart's entry into the Southern California grocery market will occasion at least some turmoil. Companies that compete directly with Wal-Mart may see their future growth curtailed, and some may lose a portion of their existing sales. A few direct competitors may go out of business if they do not adapt. The negative implications of Wal-Mart's entry into the Southern California Grocery market are examined in Section Two of this report. We begin, however, with an exploration of the potential benefits of Wal-Mart's presence, tracing the implications of "everyday low prices" in the grocery sector throughout the local economy. Lower prices will bring modest, widespread improvements in household purchasing power, which in turn will induce job growth beyond those working directly at Wal-Mart. In Section Three we compare the findings from the first two sections, before turning to the options available to the City of Los Angeles in Section Four. The potential impact of Wal-Mart's entry into the Southern California grocery business hinges on the timing and size of its market share. January 2004 8 LAEDC Wal-Mart ECOnolnic Impact Study The calculations in the first two sections of this report are based on the assumption that Wal-Mart will eventually control 20 percent of the grocery sector in Southern California. The LAEDC selected this threshold chiefly so that our findings can be compared directly with those of a widely cited study conducted for the Orange County Business Council (OCBC) in 1999. The OCBC study assumed Wal-Mart would control 10 to 20 percent of the Southern California grocery market based on the average number of Supercenters per distribution center. Looking at Wal-Mart's operations elsewhere in the country, the OCBC study concluded the company would enter Southern California expecting to eventually build 47 to 57 Supercenters, giving it enough capacity to contend for 20 percent market share in groceries. Whether Wal-Mart will eventually reach the 20 percent threshold is open to debate, but the LAEDC believes it is at least plausible. (The longer the time horizon, the more plausible the assumption becomes.) Note that Wal-Mart leapt from nowhere to first in the national grocery business in just over a decade. The more important question revolves around timing. Competitors care deeply about how rapidly (or slowly)Wal-Mart will gain market share, and policy makers should share their concern. The OCBC study leaves unstated how long it will take Wal-Mart to reach a 10 to 20 percent market share, though their discussion of the company converting general merchandise stores into Supercenters implies that Wal-Mart is poised for a rapid expansion into Southern California. This silent assumption is crucial. The nature of the economic implications of Wal-Mart's entry into the local grocery market hinge almost entirely on the rate at which Wal-Mart gains market share and the willingness of its competitors to adapt to meet consumer demands. If Wal-Mart were to open 50 to 60 Supercenters in Southern California over the next few years, its growth would necessarily have to come at the expense of the established supermarket chains. The grocery business is, after all, a slow growth industry, rising roughly in line with population and 'income growth. Most calculations of economic harm appear to be premised on this sort of scenario, in which Wal-Mart arrives all at once, leaving no time for growth in the size of the overall market. Yet, competitors will have time to adjust. Wal-Mart plans to build just 40 Supercenters statewide over the next three to five years. Even if half of these stores were built in the greater Los Angeles area, Wal-Mart could not conceivably capture 20 percent of the market. Given Wal-Mart's current plans, the company's initial share of the Southern California grocery market will be less than 5 percent. Southern California's population is also growing rapidly, adding an average of 330,000 people annually. Wal-Mart may well enter the grocery sector, capture virtually all of the growth, and get quite large without making serious inroads into the customer base of the major chains. Our calculations examine the economic conditions that will prevail once Wal-Mart reaches a 20 percent market share. Yet it is critical to remember that timing is almost as important as the market share itself. Whether the conditions we model take five or fifteen years to materialize will have comparatively little bearing on the beneficial impacts. (As the population of Southern California — and hence the size of the local grocery market— continues to grow, the potential savings will increase as well.) For the negative impacts, on the other hand, the timing will determine both the nature and the scale of the consequences. January 2004 9 LAEDC Wal-Mart Economic lnrpacl Slndy Section 1: The Benefits of"Every Day Low Prices" Summary Wal-Mart offers consumers lower prices on groceries than traditional grocery market chains. Surveys have repeatedly confirmed that Wal-Mart's grocery prices are substantially lower than those of its competitors. If Wal-Mart Supercenters are introduced in Los Angeles, we expect food prices will fall. Wal-Mart will offer lower prices at its stores, and grocery chains responding to this competition will reduce their prices as well. The LAEDC has conservatively calculated the potential savings to consumers in the City of Los Angeles to be at least$668 million, or $524 per household, annually once Wal-Mart reaches 20 percent market share. (In all likelihood, the savings will be much higher, though the savings will not materialize overnight. They will build gradually with Wal-Mart's market share.) Money that people save on groceries will be redirected to other items, including housing, savings, health, entertainment, and transportation. As households redeploy their savings, their spending will create jobs outside the grocery industry. In the City of Los Angeles, redirected grocery savings will create 6,500 additional full-time equivalent jobs. The LAEDC also looked at the impact of Wal-Mart Supercenters on the entire Southern California market. In Los Angeles County, the aggregate annual savings to consumers would be at least $1.78 billion. When the savings are redirected to other purchases, the county-wide job creation will total 17,300 jobs. For consumers in Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties, the combined total annual savings will be at least $3.76 billion. The seven-county Southern California job creation total is 36,400 jobs. Introduction and Methodology Wal-Mart plans to build 40 Supercenters in California over the next three to five years, including some in Southern California. We begin by examining the potential impact of Wal-Mart entering the grocery market within the City of Los Angeles. In this scenario, food prices would fall as Wal-Mart attempted to build market share. Prices would fall both for residents who shop at Wal-Mart, and for those who save when competitors respond by reducing their prices. To the extent that Los Angeles-based households have to spend less to purchase the same groceries each week, their real purchasing power will have increased. When these savings are reallocated within the household budget (i.e. when money that used to be spent on food is redirected to expenditures such as housing, transportation and entertainment) it will create additional jobs in a variety of industries. We begin by documenting Wal-Mart's lower prices. Next, we determine the size of the pool of spending that is likely to be affected by lower prices, looking in particular at spending in grocery, general merchandise and apparel stores. We calculate spending on grocery store items in two steps. First, we multiply the average spending per household on food consumed at home by the total number of households. This is a rough measure of the money spent on non-taxable items at food stores. Then we add the taxable sales at food stores. For general merchandise and apparel stores we look just at taxable sales, since taxable sales totals include almost all purchases at these stores. January 2004 10 LAEDC Wal-Mart Economic Impact Study Having determined the spending pool that could be affected by competition from Wal- Mart, we proceed to estimate the potential savings for consumers. We estimate the savings separately for grocery, general merchandise and apparel stores, further breaking out the savings at grocery stores for patrons of Wal-Mart Supercenters, major grocery chains, and niche players. After calculating the savings for consumers in the City of Los Angeles, we repeat the process to determine the savings for consumers in Los Angeles County and the rest of Southern California. Finally, we turn to job creation. By reducing the amount a household must spend to procure groceries each week, Wal-Mart's presence in Los Angeles will effectively increase real household spending. Thus, if a family that now buys $100 worth of groceries per week instead spends $80 for the same items, the family has gained $20 in buying power. We use a customized version of the RIMS II input-output model developed by the U.S. Bureau of Commerce to determine the number of jobs created by the cumulative increase in spending by all households in the City of Los Angeles, We also calculate the number of jobs associated with the potential savings in the County of Los Angeles, and in Southern California as a whole. The savings and job creation calculations are all based on the assumption that Wal-Mart gains a 20 percent share of the current grocery market. The market is, of course, growing, along with the population of Southern California. We have underestimated the impact, therefore, to the extent that the market increases in size during the time it takes Wal-Mart's presence in Southern California to reach these levels. Wal-Mart Supercenters offer lower prices on grocery store items. Wal-Mart Supercenters have a substantial cost advantage relative to traditional supermarkets, based on careful supply chain and inventory management, volume discounts, and lower labor costs. This cost control could translate into substantial savings for consumers in Los Angeles. Wal-Mart entered the grocery market to increase the average number of visits per month customers make to its general merchandise stores and because it saw an opportunity to make money selling groceries. Consolidation in the grocery industry reduced competition and increased margins. Nationwide, food prices "grew at twice the rate of the producer-price index from 1991-2001... (which means] ..,Wal-Mart could come in, cut prices 10% to 15% and still make a profit"9 Indeed, "studies show that the items at Wal-Mart cost 8% to 27% less than at Kroger, Albertsons or Safeway, including discounts from these competitors' loyalty cards and specials"70 Deutsche Bank found that Kroger, which owns Southern California Ralph's stores and is the nation's second largest supermarket chain, has prices"13% to 24% higher than Wal-Mart Superstores."" In some categories, particularly for high-margin snack items,Wal-Mart savings approach 50 percent. An informal local survey conducted by the Fort Collins Coloradoan found that for a typical 20-item grocery list, Wal-Mart offered the lowest total price. The same basket of groceries cost 17 percent less than at Safeway (parent of Vons), and 23 percent less than at Albertsons.12 A more detailed and comprehensive price survey was conducted in Las Vegas, Nevada by the equity research firm UBS Warburg in November, 2000. UBS Warburg found that Wal-Mart offered shoppers in Las Vegas savings of 20 percent January 2004 11 LAEDC Wal-Marl Economic Impact Snide to 40 percent for representative baskets of goods compared to traditional supermarkets including Raley's, Kroger, Albertsons and Safeway. 13 Wal-Mart was the lowest-priced retailer in every department surveyed. Purchasing the same bundle of goods at Wal-Mart offered savings relative to competitors on wines and spirits ranging from 2.53 percent to 8.74 percent. In drugs and pharmacy the savings ranged from 20.01 percent to 28.38 percent; in dairy, 21.91 percent to 26.75 percent; in meat, 8.84 percent to 41.46 percent; in perishables, 21.98 percent to 29.52 percent; in beverages, 26.63 percent to 37.81 percent; and in non-food items, 32.84 percent to 38.86 percent. The UBS Warburg study concludes: "Wal-Mart offers considerable savings over traditional supermarkets... [and it] ...will force prices to come down longer term."'" Observed Range of Wal-Mart Savings, By Department Compared to Supermarket Competitors 50 v 40 rn c in 30 Low a� m 0 High a� 20 10 0 aloft, Alcohol Dairy Perishables Non-Food Pharmacy Meat Beverages sa,r.ues Wg ,,(Nw.rtbr,z000) January 2004 12 LAEDC Wal-Mart Economic hnpmct Study Wal-Mart will increase competition for dollars spent at grocery, general merchandise and apparel stores. Grocery Stores We calculate spending on grocery store items in two steps. First, we multiply the average spending per household on food consumed at home by the total number of households. This is a rough rneasure of the money spent on non-taxable items, primarily food products, at food stores. Then we add the taxable sales at food stores. The Consumer Expenditure Survey, 2000-2001, from the U.S. Department of Labor, Bureau of Labor Statistics collects information from the nation's households and families on their buying habits (expenditures), income, and other characteristics. The Consumer Expenditure Survey covers "consumer units," a term that is used interchangeably with family and household. There are some technical differences between consumer units and households of interest to economists, but these do not have a material impact on the estimates presented here. The Consumer Expenditure Survey covers major metropolitan statistical areas and is the best available measure of household food purchases. The Los Angeles-Riverside-Orange County Consolidated Metropolitan Statistical Area (CMSA), which obviously includes people living outside the city of Los Angeles, consists of 5,047,000 consumer units (households), with an average of 2.9 persons per consumer unit. The average income per consumer unit was $53,514 during the 2000-2001 survey. Annual expenditures on food eaten at home per consumer unit were $3,207. The U.S. Census Bureau reports that as of April 1, 2000, there were 1,275,412 households in the City of Los Angeles, with an average of 2.83 persons per household. Multiplying the number of households in the City of Los Angeles by the average amount spent on food reveals that Los Angeles residents together spend $4.09 billion dollars annually on food eaten at home. This is a rough measure of total food purchases for the city. Yet, typical grocery stores also sell a range of products besides food. The non- food items are typically taxable, in contrast to food, which typically is not subject to sales taxes. The California Board of Equalization tracks taxable sales, including the type of establishments at which the sales take place. Taxable sales at food stores in the City of Los Angeles, 2001, were $1,562,989,000. In Table 1.1 we add taxable sales at food stores to our measure of food purchased for home consumption in the City of Los Angeles. City residents spend an aggregate annual average of$5.65 billion on food and taxable items at food stores. January 2004 13 LAEDC Wal-Mart Economic Impact Stud), Table 1.1 Average Annual Expenditures on Food and Taxable Items at Food Stores In the City of Los Angeles,2000-2001 Households in the City of Los Angeles 1,275,412 Avg.Annual Expenditure on Food Eaten at Home(Per Household) $3,207 Total Spent on Food Eaten at Home $4.09 billion Taxable Sales at Food Stores in the City of Los Angeles $1.56 billion Total Spending $5.65 billion Sources: U.S. Census Bureau, U.S. Department of Labor, Bureau of Labor Statistics; California Board of Equalization;LAEDC. General Merchandise and Apparel Stores The impact of Wal-Mart Supercenters would not be confined to the grocery industry, since Supercenters combine a large general merchandise store with a full service market. These stores offer some items offered at chain grocery stores (and which are therefore included in Table 1.1. above). They also offer items typically found at drugstores, general merchandise stores, and apparel stores. Thus, price competition from Wal-Mart will affect more than groceries. Annual taxable sales at general merchandise and apparel stores, recorded by the California Board of Equalization, are roughly equivalent to the annual spending at these establishments. Table 1.2 reveals that in 2001 consumers purchased $3.12 billion in taxable goods from general merchandise stores and $1.24 billion from apparel stores located in the City of Los Angeles. Table 1.2 Taxable Sales,2001,at Selected Non-Food Stores in the City of Los An eles Taxable Sales General Merchandise Stores $3.12 billion Apparel Stores $1.24 billion Total $4.36 billion Note:Numbers may not sum due to rounding. Source;California Board of Equalization. Wal-Mart offers the potential for enormous savings in the City of Los Angeles. Table 1.3 shows that consumers shopping at food stores in the City of Los Angeles could save more than one-half billion dollars annually, if Wal-Mart Supercenters captured 20 percent market share. This calculation is based on current annual spending of$5.65 billion at food stores in the City of Los Angeles, and would likely rise in the time it took Wal-Mart to increase its presence. We conservatively estimate Wal-Mart January 2004 14 LAEDC Wal-Mart Econornic Impact Study shoppers would save an average of 15 percent relative to what they would have paid under the current status quo. Wal-Mart shoppers could save even more, particularly if the price difference compared to the supermarkets matched those observed by UBS Warburg in its study of Las Vegas. Increasing the assumed savings from an average of 15 percent to 25 percent adds a further $113 million annually to the aggregate savings. Our estimate is also conservative because there are portions of the City of Los Angeles, such as the northeast San Fernando Valley, which are underserved by traditional grocery stores. The corner stores where much of the food purchases in these areas take place offer uncompetitive prices relative to regular grocery stores, never mind Supercenters. If Wal- Mart were to open stores in these areas, the savings for local consumers could be considerably higher than those assumed here. Table 1.3 What if Wal-Mart Were Here? Potential Aggregate Savings for Consumers Shopping at Food Stores in the City of Los Angeles Based on 2000-2001 Expenditures of$5.65 Billion Market Savings Aggregate Share I Offered Savings Wal-Mart Supercenters 20% 15% $170 million Competitors-Major Gro e Chains 65% 10% $367million Cometitors-NichePlaers 15% 0% - Total $537 million Note:Numbers may notsum due to rounding. Source:LAEDC Of course, people will continue to shop at food retailers besides Wal-Mart. We assume shoppers at food stores comprising 65 percent of the market will enjoy some price relief as the major grocery chains lower prices in response to increased competition. We estimate an average price reduction of 10 percent at these stores. Note that these savings would probably start out lower, rising only as Wal-Mart's growing market share created addition pressure on prices. (In practice, we would anticipate a wide variation in actual savings both among and within chains depending on the competitive strategies these companies were to adopt.) Some "competitors" would feel little pressure from Wal-Mart Supercenters, either early on or once it had completed its build out in Southern California. We estimate that firms comprising 15 percent of the total food store market would thus be unlikely to lower their prices much, if at all. Factors that might put a store in this position include greater convenience based on a prime location; general proximity to target market; and a niche product mix such as ethnic, organic, gourmet or bulk foods. Finally, discount stores such as Costco, which typically offer low prices, are unlikely to lower their prices much in response to a nearby Wal-Mart. Accordingly, we have assumed no additional savings among niche players owing to Wal-Mart's presence. The impact of Wal-Mart Supercenters would not be confined to the grocery industry, since the Supercenters include full Wal-Mart discount stores. The potential savings for January 2004 15 LAEDC Wal-Mart Economic Inquiet Stu4y consumers shopping at general merchandise and apparel stores in the City of Los Angeles consumers is conservatively estimated at 3 percent. This small reduction in price levels still produces large overall savings because of the scale of spending described in Table 1.2. Table 1.4 What if Wal-Mart Were Here? Total Potential Savings for Consumers Shopping at Selected Non-Food Stores in the City of Los Angeles Savings Aggregate Offered Savings General Merchandise Stores 3% $94 million Apparel Stores 3% $37 million Total $131 million Note:Numbers may not sum due to rounding. Source:LAEDC. Table 1.4 reveals potential annual savings of $94 million at general merchandise stores and $37 million at apparel stores. The potential savings are estimated at just 3 percent to reflect (1) the existence of aggressive price competition in some segments of this sector even without Wal-Mart; and (2) our anticipation of a negligible market share for Wal-Mart (and hence little or no price influence) in some segments. Combining the potential savings at all three types of stores reveals the potential for enormous aggregate savings for consumers shopping in the City of Los Angeles. Table 1.5 shows total savings for consumers in the City of Los Angeles of at least$668 million annually. This a conservative estimate, and should be considered a floor for potential savings. In particular, price surveys conducted by reputable firms suggest that the price savings offered by Wal-Mart Supercenters could be substantially higher than the 15 percent estimate used here. The aggregate savings are also likely to be higher because the estimates here are based on population counts from 2000, and spending estimates from 2000-2001. The population is growing, and along with it the amount spent each year on purchases at food stores. The potential savings will thus rise along with the size of the market. Table 1 L What if Wal-Mart Were Here? Potential Aggregate Savings for Consumers Shoppinginthe itvofLosAnqeles 2001 Aggregate Retail Sector Spending Savings Food Stares $5.65 billion $537 million General Merchandise Stores $3.12 billion $94 million Apparel Stores $1.24 billion $37 million Total $668 million Note:Numbers may not sum due to rounding. Sources:U.S.Census Bureau;U.S.Department of Labor,Bureau of Labor Statistics;California Board of Equalization,LAEDC. January 2004 16 LAEDC Wal-Marl Economic Impact Srua'p The $668 million in aggregate potential savings will have a considerable positive impact, averaging $524 per household per year, Note, of course, that the savings will not be immediate, and will reach these levels only after Wal-Mart has significantly expanded its grocery presence. Wal-Mart offers the potential for similar savings in the rest of Southern Califomia. Los Angeles County The 2000 Census recorded 9,519,338 people living in Los Angeles County, and 3,133,774 households. The average household size was 2.98 people, with a median annual income of $42,189 and a mean annual income of $61,373. The Consumer Expenditure Survey, 2000-2001, for the Los Angeles-Riverside-Orange County Consolidated Metropolitan Statistical Area (CMSA), revealed annual expenditures on food eaten at home per consumer unit were $3,207. Table 1.6 combines this information with the taxable sales at food, general merchandise, and apparel stores in Los Angeles County. Table 1.6 Aggregate Household Expenditures on Selected Items In Los Angeles County,2001 Expenditures Food Consumed at Home $10.05 billion Taxable Purchases at Food Stores $4.21 billion Taxable Purchases at General Merchandise Stores $10.58 billion Taxable Purchases at Apparel Stores $3.67 billion Total $28.51 billion Note;Numbers may not sum due to rounding. Sources,U.S.Census Bureau,US.Department of Labor,Bureau of Labor Statistics,California Board of Equalization;LAEDC. Next, we apply the same assumptions from the City of Los Angeles calculations to the Los Angeles County spending patterns in Table 1.6. Thus, we assume that Wal-Mart Supercenters achieve a 20 percent share of the grocery market. Wal-Mart shoppers in Los Angeles County are assumed to save 15 percent compared to the status quo; shoppers at large grocery chains (serving 65 percent of the market) save 10 percent compared to the status quo; and shoppers at niche players serving 15 percent of the market see no additional savings. Shoppers at general merchandise and apparel stores in the county are assumed to reap an additional 3 percent savings compared to the status quo owing to increased competition from Wal-Mart. The potential savings are reported in Table 1.7. January 2004 17 LAEDC Wal-Marl Economic lmpacl Said), Table 1.7 What If Wal-Mart Were Here? Potential Aggregate Annual Savings for Consumers Shopping in Los An eles Count 2001 Aggregate Retail Sector Spending Savings Food Stores $14.26 billion $1.35 billion General Merchandise Stores $10.58 billion $0.32 billion Apparel Stores $3.67 billion $0.11 billion Total $1.78 billion Note.Numbers may not sum due to rounding. Sources:U.S.Census Bureau;U.S.Department of Labor,Bureau of Labor Statistics,California Board of Equalization;LAEDC. The potential aggregate annual savings for shoppers in Los Angeles County related to competition from Wal-Mart Supercenters are $1.78 billion, or $569 per household per year. Southern California The 2000 Census recorded 19,329,839 people living in the seven counties of Southern California: Imperial (142,361), Los Angeles (9,519,338), Orange (2,846,289), Riverside (1,545,387), San Bernardino (1,709,434), San Diego (2,813,833), and Ventura (753,197). Information on the region's 6,381,168 households is presented in Table 1.8, including the number and average size of households in each county, the mean and median household income, and the average amount spent on food at home. Table 1.8 Southern California Households: Number,Size,Annual Income and Spendinp on Food Eaten at Home Avg.Size Median Mean Food at County Households (People) Income Income Home Imperial 39,384 3.33 $31,870 $43,991 $2,524 Los Angeles 3,133,774 2.98 $42,189 $61,373 $3,207 Orange 935,287 3.00 $58,820 $75.344 $3,207 Riverside 506,218 2.98 $42,887 $54,763 $3,207 San Bernardino 528,594 3.15 $42,066 $53,422 $3,207 San Diego 994,677 2.73 $47,067 $60,805 $2,524 Ventura 243,234 3.04 $59,666 1 $73,100 $3,207 Southern California 6,381,168 2.96 $46,035 1 $62,489 $3,096 Note:Household number and size from 2000;income data,1999;food expenditure estimates,2000-2001. Southern California estimates(besides number of households)are weighted averages. Sources.U.S.Census Bureau,U.S.Department of Labor,Bureau of Labor Statistics. The figures for average household spending on food eaten at home are from the U.S. Department of Labor, Bureau of Labor Statistics Consumer Expenditure Survey, 2000- 2001. The Los Angeles-Riverside-Orange County Consolidated Metropolitan Statistical Area (CMSA) includes San Bernardino and Ventura counties. The average spending January 2004 18 LAEDC Wal-Mart Economic lrnl)act Stadp per household on food eaten at home in the 5 counties covered by the Los Angeles CMSA was $3,207. The San Diego Metropolitan Statistical Area (MSA) covers San Diego County, where average spending per household on food eaten at home was $2,524. The Consumer Expenditure Survey only covers major metropolitan statistical areas: in California, the San Francisco CMSA, the Los Angeles CMSA, and the San Diego MSA. Imperial County, therefore, is not included. We have somewhat arbitrarily assumed that Imperial County households spend the same amount on food eaten at home ($2,524) as their counterparts in San Diego. (This assumption would not materially alter our results, even it was off by several hundred dollars per year in either direction. Imperial County contains just 0.62 percent of all households in Southern California.) With seven counties and more than 19 million people, Southern California is an enormous consumer market. Table 1.9 reveals that Southern Californians collectively spend almost $20 billion on food eaten at home each year. In addition, taxable sales at food stores in Southern California were $9.5 billion. A further $24.7 billion was spent at general merchandise stores, and $7.6 billion was spent at apparel stores. Table 1.9 Southern California Annual S ndinq on Selected Items,in Millions 2001 Taxable Sales General Food Merchandise Apparel County At Home Food Stores Stores Stores Imperial $99 $80 $266 $48 Los Angeles $10,050 $4,212 $10,577 $3,669 Orange $2,999 $1,509 $4,334 $1,364 Riverside $1,623 $889 $2,062 $538 San Bernardino $1,695 $914 $2,173 $492 San Diego $2,510 $1,557 $4,307 $1,182 Ventura $780 1 $385 $1,0148 $327 Total $19,758 $9,549 $24,771 $7,621 Sources:U.S.Census Bureau;U.S.Department of Labor,Bureau of Labor Statistics;California Board of Equalization;LAEDC. Even modest savings quickly reach astonishing levels when aggregated across such an enormous market. We repeated the potential savings calculations for Southern California using the same assumptions described for our City and County of Los Angeles estimates. Table 1.10 shows that consumers shopping at Southern California food stores could save $2.78 billion dollars annually if competition from Wal-Mart Supercenters lowered prices. When the savings at general merchandise and apparel stores are included, the seven-county potential savings grow to $3.76 billion annually. January 2004 19 LABDC Wal-Marl Economic l,npacr Study Table 1.10 What if Wal-Mart Were Here? Potential Aggregate Savings for Consumers Shopping in Southern California 2001 Aggregate Retail Sector Spending Savings Food Stores $29.31 billion $2.78 billion General Merchandise Stores $24.78 billion $0.74 billion Apparel Stores $7.62 billion $0.23 billion Total $3.76 billion Note:Numbers may not sum due to rounding. Sources:U.S.Census Bureau,U.S.Department of Labor,Bureau of Labor Statistics;California Board of Equalization,LAEDC. Total savings of$3.76 billion in Southern California suggests an average saving of$589 annually for each of the 6.38 million households in the 7-county region. Note, again, that the actual savings will start out much lower and gradually build over time as Wal-Mart increases its grocery presence. By the time Wal-Mart has finished its build out in Southern California, the size of the market (and thus the potential savings) will have increased. Thousands of jobs will be created after Wal-Mart moves in as households redirect their savings to other purchases. Lower prices on groceries will have an important job creation impact as households purchase additional items with their savings. By reducing the amount a household must spend to procure the same groceries each week, Wal-Mart will effectively increase real household purchasing power. Thus, if a family that now buys $100 worth of groceries per week instead spends $80 for the same items, the family has gained $20 in buying power. When millions of families save hundreds of dollars per year, the potential boost to regional spending quickly becomes quite large. We use a customized version of the RIMS II input-output model developed by the U.S. Department of Commerce to determine the number of jobs created by the cumulative increase in spending by households in the City of Los Angeles. We also calculate the number of jobs associated with the potential savings in the County of Los Angeles, and in Southern California as a whole. Increased Buying Power The average household shopping in the City of Los Angeles will eventually save $524 annually if competition from Wal-Mart lowers prices, as demonstrated above. This is the equivalent of giving an extra $524 in purchasing power to the average household, or 0.89 percent of the average household income of $58,641, and 1.43 percent of the median household income of $36,687. The real impact will be greater. The average and median household incomes are in gross (pretax) dollars. The savings, on the other hand, add to a household's after tax dollars—the portion of the income actually available for spending. January 2004 20 LAEDC WaI-Mart Economic Impact Snrdi, Individual households shopping in the City of Los Angeles would thus be able to redirect an average of$524 per year in spending. Freed from spending $524 on food and other items offered at Wal-Mart (since they have purchased the same basket of goods as before, just for less money), families in Los Angeles could use the money to meet other household needs. A portion of the money would likely go towards meeting the high cost of housing in Los Angeles. Some of it may be saved, or spent on transportation. Depending on their priorities, families may opt to spend their savings on sports equipment, continuing education classes, or restaurant meals. Undoubtedly, individual households will allocate their potential savings in myriad ways reflecting the incredible diversity of Los Angeles. Note that lower income families, which spend disproportionately more of their income on food, stand to benefit the most from lower food prices. Job Creation For its economic impact analysis work, the LAEDC uses a customized version of the RIMS II input/output model developed by the U.S. Bureau of Commerce. It should be noted that the RIMS II model measures the effect of adding to gross (pre-tax) incomes. Here we are observing a hypothetical shift in after-tax household income, since groceries are purchased with the money that is left after tax obligations have been paid. Since we have not adjusted for this tax effect, and we began with conservative estimates of the potential income effect (the savings in the previous section), LAEDC's jobs estimate almost certainly understates the actual impact. Table 1.11 reveals the impact of households redirecting average savings of$524 in annual savings. Table 1.11 What if Wal-Mart Were Here? Jobs Created by the Eventual Increase in Household(Real)Income Linked to Wal-Mart's Presence in the City of L.A. Total Increase in Household Purchasing Power(Real Income) $668 million Average Increase per Household $524 Jobs Per$1 Million of Household Income 9.7 Total Full-Time Equivalent Jobs Created 6,500 Sources:(1)U.S.Department of Commerce,Bureau of Economic Analysis;LAEDC. Even with our conservative methodology, we estimate that lower prices following the introduction of Wal-Mart Supercenters to the City of Los Angeles would generate new spending sufficient to create 6,500 full-time equivalent jobs." If we include the redirected savings of consumers in the rest of Southern California, the number of jobs created is even greater. Households in Los Angeles County will save an average of $569, for a combined annual savings of$1.78 billion. Adding $1.78 billion to household income will create 17,300 full-time equivalent jobs in L.A. County alone. Over all seven counties of Southern California, households will save an average of $589, for a combined annual savings of$3.76 billion. Adding $3.76 billion to household income will generate 36,400 full time-equivalent jobs in the 7-county region. January 2004 21 LAEDC Wal-Mary Economic Impact Study Section 2: Wages Summary Wal-Mart compensation, while lower than for the best-paid unionized grocery employees, is better than most people realize, particularly in its food business. Wal-Mart benefits include health care, a stakeholders' bonus, which is paid to employees at stores that perform well, profit-sharing, company contributions to 401(k) plans, which are the most common form of defined contribution retirement plan, a 15 percent discount on company stock, and a 10 percent discount on general merchandise. Wal-Mart's healthcare plan requires employees to share the upfront costs (Wal-Mart pays 2/3'd; the associates pay 1/3rd), but in return does not have single incident or lifetime caps on coverage. Two important factors make Wal-Mart's wages appear lower than they might otherwise. First, Supercenters are a relatively new phenomenon. Most Supercenters have simply not been open long enough to have accumulated many employees with lengthy service records, and thus higher rates of pay. High employee turnover also brings down the average length of service, and hence affects average wages as well. (Average employee turnover in the retail industry is 65 percent; Wal-Mart's turnover rate, though considerably lower, is still near 50 percent.) Second, and perhaps most important, Wal- Mart's pay among its front line grocery workers is skewed downwards because it promotes from within. Wal-Mart recruits its management primarily from within the ranks of its own employees, with 2/3`d of its management having started off as hourly workers. This opens up career opportunities for associates, and crucially for wage comparisons, removes some of the most experienced and best paid Wal-Mart employees from the pool of workers typically being compared. In contrast to unionized grocery stores, where some of the most senior employees are cashiers, at Wal-Mart cashier is an entry level position. Unionized grocery workers earn $2.50-$3.50 per hour more, on average, than Supercenter employees in Southern California could expect. Some union grocery workers are very well compensated, but the wages of the most highly compensated among them are frequently mistaken for average union wages, which are lower. Union cashiers make up to $17.90 per hour, journeymen clerks earn hourly wages in the $17 range, and some meat cutters earn more than $20 per hour. The people who bag groceries and round up shopping carts earn far less. The average wage among a// union grocery store employees is $14 per hour or less. The widely-cited Orange County Business Council (OCBC) study calculated the potential wage loss if all union workers in the Southern California grocery industry were to earn the same wages as Wal-Mart employees. Using more realistic assumptions of Wal-Mart Supercenter employee pay (and hence a narrower wage gap), we find the potential cumulative wage loss in Los Angeles County is $150 million to $258 million annually. For the 7-county Southern California region (including Los Angeles), the range is $307 million to $529 million. If all current unionized grocery employees were to eventually earn the equivalent of Wal-Mart Supercenter employees, the lost spending due to eroded household income could cost Los Angeles County alone 1,500 to 2,500 jobs and the 7-county region 3,000 to 5,100 jobs. Should these losses materialize, they would be offset by region-wide gains of 36,400 jobs, meaning that outside the grocery sector at least seven jobs would be added for every one lost. January 2004 22 LAEDC Ifral-Mary Economic lnrpacl Stud), Wal-Mart's compensation, while lower than for the best paid unionized grocers, is better than most people realize, particularly in its food business. Benefits Wal-Mart's employee benefits are widely perceived to be poor, particularly when set along side those offered to unionized grocery workers in Southern California. Wal-Mart insists that it offers an attractive package of employee benefits, while unionized grocery workers say they are being asked to accept cuts in their medical benefits so that their employers can compete with Wal-Mart. Wal-Mart benefits include: D Health care ➢ Sick days and personal and vacation time; ➢ Stakeholders' bonus (paid to employees at stores that perform well); A Profit-sharing; ➢ Company contributions to 401(k) plans (the most common form of defined contribution retirement plan); A 15% discount on company stock; and ➢ 10% discount on general merchandise. The value of these benefits varies, particularly for those related to the company's stock price. Some long-term employees have become wealthy by buying and holding company stock. Interestingly, the discount on merchandise is the most popular benefit among employees. Health care coverage, of course, is the most contentious issue. Health Benefits Union grocery workers have excellent health benefits, including some plans in which the employer covers both the health care premiums and the deductibles. Wal-Mart, in contrast, requires employees to share the cost of the monthly premiums, and has a relatively high deductible. (Wal-Mart pays two-thirds and associates pay one-third of the premium. This applies to family coverage as well.) As the Wall Street Journal notes, however, an important facet of the Wal-Mart health plan is frequently overlooked. Wal- Mart's philosophy is to share the routine costs — both for the medical insurance and services — but to protect its employees from catastrophic medical bills that could bankrupt them. Thus, Wal-Mart's medical coverage does not have single incident or lifetime caps on coverage. For the parents of a premature child or someone in need of an organ transplant—both medical events that routinely incur costs of one million dollars and more — catastrophic coverage is crucial. The union grocery workers' medical plan covers their routine expenses but the coverage is capped, leaving workers with extraordinary medical expenses exposed.16 Wal-Mart workers, of course, only enjoy their company's medical coverage if they agree to share the costs of the plan. (Part-time workers are eligible to join the plan after an initial waiting period.) Since they must pay some of the upfront costs of medical care, many Wal-Mart employees who are eligible for the coverage choose not to participate. This leads to much lower participation rates among Wal-Mart employees than among union workers, virtually all of whom participate since their up front costs are paid by their employer. It is worth noting that more than 90 percent of all Wal-Mart employees have health coverage from some source, including the company itself, a covered spouse, January 2004 23 LAEDC Wal-Mart Economic Impact Study parents, through retirement benefits (from another job), etc. The issue of participation rates may become moot in California, however. In October, Governor Davis signed S8 2 — Health Care for Working Families that mandates large employers to provide health care coverage to all of their employees. The structure of the grocery workers' union health plan may change as well, pending the outcome of labor negotiations. The grocery chains are seeking to alter their health coverage obligations in response to the continued upward spiral of health-care costs in the United States. As The Economist notes, American employers across industries are struggling with rising health-care costs that have driven the average cost of insurance premiums up 14 percent in 2003 alone." Wages Wal-Mart operates stores around the country, and pays competitive wage rates in each of the geographic markets and retail sectors in which they do business. Three key points are worth bearing in mind when comparing Wal-Mart's compensation with the wages of unionized grocery workers in California. First, a fair comparison ought to involve similar job categories. This means comparing union food workers with Wal-Mart food workers, not Wal-Mart general merchandise workers. Even among non-union workers, the average retail wages are higher in the grocery sector than in the general merchandise sector. This is true at Wal-Mart, too. Second, we need to consider what wages Wal-Mart would pay here in Southern California, rather than their average wage in rural Oklahoma. The cost of living varies from region to region, a fact reflected in differences in Wal-Mart's wages around the country. Third, it is important to compare average wage rates that reflect overall pay, rather than comparing the top end (or even the average) at one store with entry-level wages at another. Since Wal-Mart does not yet have any Supercenters in California, we gathered information on wages at one of the Supercenters in Las Vegas. Although not exactly the same as Southern California, Las Vegas is a major metropolitan area with a labor market that at least resembles the one in Los Angeles — more so than rural Oklahoma does, at any rate. Since the cost of living is higher in Southern California than in Las Vegas, workers here will probably be offered slightly higher rates. Table 2.2 Wal-Mart Las Vegas Supercenter Current Pay Ranges By Job Classification People Greeter/Cart Pusher $7.65 to$13.40 General Merchandise Cashier $7.65 to$11.45 General Merchandise Sales Associate $7.40 to$12.70 Overnight Stocker $8.40 to$15.30 Food Sales Associate $7.40 to$13.75 Food Stocker $8.40 to$14.40 Bakety $8.00 to$13.75 Source:Wal-Mart Stores,Inc. January 2004 24 LAEDC Wal-Marl Economic Impact Snrdj, Table 2.2 presents the actual pay range paid to current workers in each job classification at the Las Vegas store. The average pay among workers who have been at the Supercenter for one year or less is $8.62, with higher averages among more experienced workers. Note that unlike union shops, there is no predetermined pay scale or wage caps for workers at Wal-Mart. This leads to some oddities, such as the "people greeter" who earns $13.40 per hour. (Only one greeter earns this amount, most earn considerably less.) The lack of a wage cap allows associates to change positions within the company while maintaining the same wage level. If we look just at the grocery side of the business — covering about 20 percent of the workers at the store — we find that the average wage is $9.95/hour. This snapshot is a weighted average, which takes into account the total number of hours worked by employees at each pay level. The average wage reflects current conditions in Las Vegas, and will change over time. Critically, two factors make Wal-Mart's wages appear lower than they might otherwise. First, Supercenters are a relatively new phenomenon. Most Supercenters have simply not been open long enough to have accumulated many employees with lengthy service records, and thus higher rates of pay. Wal-Mart introduced its first Supercenter in 1988, and brought the concept to the Las Vegas market in mid-2000. Once the store has been open longer, presumably it will have more employees who have been there longer, and the top end of the pay ranges listed above will rise accordingly. High employee turnover is also a factor in lowering the average length of service, and hence the average wage rates as well. (Average employee turnover in the retail industry is 65 percent; Wal- Mart's turnover rate, though considerably lower, is still near 50 percent.) Second, and perhaps most important, Wal-Mart's pay among its front line grocery workers is skewed downwards because it promotes from within. At a union grocery store, a cashier who has been with the company for 15 years or more earns top of the scale, but is still a cashier. At Wal-Mart, in contrast, many of the employees who have been with the company for 15 years or more no longer work as food clerks or cashiers. Wal-Mart recruits its management primarily from within the ranks of its own employees, with 2/V of its management having started off as hourly workers. This opens up career opportunities for associates, and crucially for wage comparisons, removes some of the most experienced and best paid Wal-Mart employees from the pool of workers typically being compared. The number of employees involved is not trivial. Two-thirds of Wal- Mart's managers started as sales associates with the company, and Business Week reports that Wal-Mart's expansion plans will add 47,000 new management positions nationwide, 2004-2008.1e Indeed, some Wal-Mart associates cite the opportunity to move up the ranks as their primary motivation for joining the company. Union grocery workers are well compensated, but the wages of the most highly compensated among them are frequently mistaken for average union wages, which are lower. To help their audience understand complex economic issues, media organizations frequently try to "put a face" on the wage issue by focusing on a particular employee. The selected subject representing "typical" employees has often worked for one of the major chains for 15 years or more and earns the top pay scale in his or her job classification, often $20/hour or more. The wages of these "typical" workers, who earn January 2004 25 LAEDC Wal-Mart Economic Impact Study considerably more than the average wage of employees at their own stores, are contrasted with the $7-$8/hour paid to entry level Wal-Mart employees.19 The implication, of course, is that the union jobs pay$12-14/hour more than Wal-Mart. Grocery Industry Wages Examining the wage issue in the grocery industry is complicated by the dual nature of the business. The supermarket sector has bifurcated into major chains, many of which are the product of mergers, and smaller independent supermarkets, often specializing in niche markets such as ethnic and gourmet foods. All of the large chains are unionized and tend to pay higher wages than the majority of the independents, which are not unionized and tend to offer lower pay 20 The pay differential is masked when looking at statistics for the grocery sector as a whole. Wage issues are further complicated by the widespread use of part-time labor. (Wal-Mart classifies 70 to 80 percent of its employees as full-time, based on a work week of at least 34 hours; at union grocery chains as few as 25 percent of workers are full-time.) Even well-paid part-time grocery workers will dilute the average hourly wage when it is calculated based on annual earnings. With these caveats, we turn first to the 2001 County Business Patterns. The U.S. Census Bureau conducts an annual survey that provides subnational economic data by industry, as defined in the North American Industry Classification System: United States, 1997 (NAICS). County Business Patterns data for the grocery industry in Southern California, including number of businesses, number of workers, and total payroll, is presented in Table 2.1. Table 2.1 Southern California Grocery(Except Convenience)Stores Establishments, Employees&Pa roll by County,2001 County Establishments Employees Payroll 000s Imperial 45 1,233 $24,381 Los Angeles 2,127 63,239 $1,513,432 Orange 548 20,426 $517,744 Riverside 263 9,898 $245,834 San Bernardino 296 10,893 $269,011 San Diego 545 20,234 $468,574 Ventura 155 5,558 $139,223 Total 3,979 131,481 1 $3,178,199 U.S.Census Bureau,County Business Patterns,2001. Note that establishments are places of business, not necessarily companies. A single company — Albertsons or Ralph's for example — may have numerous establishments. Establishments in the Southern California grocery industry average 33 employees each, though this average masks great variation in size. For the industry as a whole, the average annual pay per employee is $24,172. On a full time basis (assuming 50 weeks per year at 40 hours per week), the average hourly wage in the industry is $12.09. The average among unionized grocery workers is higher. We can get more information on grocery wages by looking at occupational surveys from the California Employment Development Department (EDD) and the U.S. Bureau of January 2004 26 LAEDC Wal-Mart Economic Impact Shrdp Labor Statistics (BLS). Each year the EDD conducts the Occupational Employment Statistics (OES) survey to measure occupational employment and wage rates in nonfarm establishments, by industry. The 2001 OES survey is the most recent available, which has wage data updated by EDD (adjusting for inflation) to 2002. The survey of cashiers in the Los Angeles MSA found a mean hourly wage of $9.50, and a mean annual wage of $19,766. Yet, the occupational title "cashier" covers many, many workers who are not part of the grocery industry. Indeed, union grocery cashiers are among the highest paid workers in their occupation. The OES survey reports wages for the 251", 501" and 75'h percentiles. The average wage of cashiers in the 751h percentile is $10.77. (This means that 75 percent of all cashiers in the Los Angeles MSA earn less than $10.77 per hour.) The BLS survey of cashiers in the Los Angeles MSA is similar in most respects to the OES. (The 2001 BLS survey reported an hourly mean wage of $9.38, and an annual mean of $19,510, with both figures in unadjusted 2001 dollars.) Yet, the BLS survey also reports 901h percentile wages for cashiers, both hourly ($16.07) and annually ($33,430). Union Wages in the Grocery Industry While there is plenty of information on wage rates at the higher end of the union pay scale, pinning down the average union wage in the grocery industry is surprisingly difficult. A Ralph's spokesman told the Los Angeles Times that cashiers make up to $17.90 per hour. The Los Angeles Daily News reported that journeymen clerks protected by union contracts earn hourly wages in the $17 range." And the president of UFCW Local 1036 in Camarillo, CA, told The Morning News that members "who work in California grocery stores earn an average of $18/hour."21 Yet, these characterizations of union grocery wages are misleading. We consider multiple sources to get a more accurate estimate. California EDD Local Area Wage Survey A The California Cooperative Occupational Information System (CCOIS) is run jointly by the EDD and local employment and training agencies in all 58 California counties. Local agencies survey 15 to 50 occupations each year to determine wages, project demand and skill requirements. While grocery occupations have not been surveyed in the 7 counties of Southern California, the 2002 survey in Santa Barbara included grocery checkers. The Santa Barbara survey recorded union and non-union grocery checker wages separately. Entry level union grocery checkers with no experience earned $9.78/hour. (Their non-union counterparts earned wages that ranged from $6.75 to $8.00 per hour.) For experienced checkers with three years experience working for their firm, the hourly wage climbed to $17.50. (For experienced non-union checkers, the range was$7.00 to$12.00 per hour.) A These union wages provide an accurate, if incomplete, snapshot of the grocery industry because they focus on just one job category. Absent are the clerk's helpers and general merchandise clerks who also work at unionized grocery stores. The people who bag groceries and round up shopping carts earn far less than food clerks or journeymen meat cutters, typically less than $10/hour. Roughly half of the hourly January 2004 27 LAEDC Wal-Mart Economic Impact Study employees at union grocery stores in Southern California are neither food clerks nor meat cutters. Orange County Business Council Study ➢ The widely cited study conducted for the Orange County Business Council (OCBC), relying on an interview conducted with the Food Employers Council, reported "the average hourly wage at the major chains in southern California [was] $12.82, as of July, 1999." 22 The average wage took account of actual job classifications and experience, exclusive of benefits. ➢ After adjusting for contractual increases since 1999, the average of $12.82 reported by the OCBC study would be consistent with an average wage of not more than $14.00 per hour in 2003. An apparent increase in the use of part-timers, who typically earn less than their full- time counterparts, however, may have kept the overall average under $13.00 per hour. (The 1999 study reported an average work week of 35.5 hours; the UFCW today says the average is 30 hours per week.) Supermarket Chain Public Filings A Publicly traded companies have to report data on their operations, allowing us to create a rough estimate of a company's average wage as a share of revenues. BizStats.com, a provider of industry financial ratios and benchmarks, reports profitability, operating, balance sheet and financial ratios for grocery and specialty food stores. BizStats.com provides national averages based on all U.S. Corporations in industry sectors, classified by size of balance sheet assets. For companies with assets over $50 million in the grocery industry (i.e. the major chains), operating expenses averaged 26.8 percent of sales (revenues). Operating expenses are further broken down, with salaries and wages averaging 11.2 percent of sales. The employer cost of retirement plans averaged 0.5 percent of sales; employer cost of employee benefits averaged 1.4 percent. We can apply these figures to data from the Albertsons 2002 annual report. A Albertsons had sales in 2002 of $35.6 billion dollars, and employed 202,000 people. If Albertsons is similar to the average store in its industry, this suggests an average annual wage of $19,753. The annual average rises to $23,103 if benefits are included, though it is important to note that this includes money paid on behalf of and not necessarily to the employees. Assuming 50 weeks per year at 40 hours per week, this translates to an average wage of $9.88 per hour, exclusive of benefits. Allowing for part-time workers, and assuming a more realistic average of 30 hours per week suggests an average hourly wage of $13.17. (Note that 70 to 75 percent of union grocery workers in Southern California are part-timers.) ➢ Albertsons has stores in numerous states outside of California, and the company almost certainly pays wages commensurate with the prevailing conditions in each state. The average wage is thus a blend of rates that includes places with a much lower cost of living (and lower January 2004 28 LAEDC Wal-Marl Economic Impact Srudy average wages, across industries) than Southern California. Adjusting upwards to compensate suggests again that $14 per hour is a reasonable upper estimate of union grocery wages, allowing for the full mix of occupations and experience levels. Note, however, that the Albertsons estimate (admittedly a rough measure) includes some management level employees, whose higher earnings will skew the estimate upwards. UFCW Local 770 ➢ The United Food and Commercial Workers Union Local 770 provided information on its website at part of its public education efforts during the Southern California grocery workers labor dispute. A The UFCW describes a typical union member working at a Southern California grocery store as working an average of 30 hours per week, noting that between 70 and 75 percent of its members work part-time. The UFCW variously describes the average hourly wage of its members in Southern California as$12.30, $12.50, and $12.00 to $14.00.23 The gap between the overall average pay rate at unionized grocery stores in Southern California and what Wal-Mart would pay its Supercenter workers in this market is $2.50 to $3.50 per hour. Comparing the reported average wages of unionized grocery employees in Southern California ($12.00-$14.00 per hour) to a snapshot of Wal-Mart grocery workers in Las Vegas ($9.95) suggests a maximum wage gap in the range of $2.05 to $4.05 per hour. The actual range is probably closer to $2.50 to $3.50. According to Retail Traffic, an industry trade magazine, "Morgan Stanley Equity Research indicates that major grocers pay 20-30 percent more in wages and benefits to their workers than Wal-Mart.,24 And the United Food and Commercial Workers, in an update to its members, approvingly cited a study by the Institute for Women's Policy Research that "reported employees represented b� the UFCW earn thirty-one percent (31%) more than their non-union counterparts."2 Using the high end of average grocery union workers' wages ($14.00), these studies suggest a maximum wage gap of$3.23 per hour. This result is consistent with the position of the UFCW, which argues on its website that the wage gap is roughly $3 per hour.26 Our analysis suggests the $3 per hour figure Is probably correct. OCBC Study of Cumulative Wage Loss Next, we use the wage gap estimates to replicate the OCBC study. Wal-Mart opponents believe that competitive pressures will drive wages down in the grocery industry. The OCBC analysis of Wal-Mart's impact on wages in the grocery sector in Southern California is widely cited, but flawed. We begin by addressing these flaws, before replicating and extending the original analysis. We add calculations of the potential jobs impact of varying levels of household income loss. This will allow comparison with the job creation numbers from the section on the impact of lower prices. The OCBC study suggests that (a) Wal-Mart pays far less than the unionized grocery chains; (b) Wal-Mart's entry into the grocery market will lead employers to demand and January 2004 29 LAEDC Wal-Mart Economic Impact Study receive wage cuts from unionized workers, such that (c) all unionized workers will earn wages equivalent to what Wal-Mart pays, representing a massive wage loss. The first flaw in the OCBC study is that its calculated wage gap is much too large, mainly because the assumed Wal-Mart wage rate is unrealistically low. There are several problems with additional assumptions buried in the OCBC formulation of the wage gap issue, which we will address after correcting the OCBC calculations. The overall wage loss in Southern California was calculated by multiplying the wage gap number by the total number of hours worked each year by all union grocery employees. The OCBC study said 80,000 of '128,471 grocery workers in Southern California were union members in 1999. Assuming the percentage of union workers has remained constant suggests 81,874 of 131,481 grocery workers were union members in 2001. (These figures are based on 2001 industry employment data, the most recent available.) The OCBC study also said that union grocery workers averaged 35.5 hours per week. Yet, the extensive use of part time labor in unionized grocery stores — up to 75 percent of the employees are part time — the assumption of 35.5 hours per week seems unrealistically high. At 52 weeks per year, 35.5 hours per week, 81,874 union grocery workers would log more than 151 million hours annually. The aggregate number of hours worked annually is closer to 123 million if we assume a weekly average of 30 hours per worker. Table 2.3 shows the potential income loss if all union workers in the Southern California grocery industry were to earn the same wages as Wal-Mart pays its Supercenter employees. Table 2.3 What if Wal-Mart Were Here? Potential Loss If All Union Grocery Workers Earned the Same Wages As Wal-Mart Employees Cumulative Annual Wage Loss Los Angeles Count 7-County Southern California Low Range Estimate $150 million $307 million High Range Estimate $258 million $529 million Source:LAEDC The low range estimate assumes a $2.50/hr wage gap, and a weekly average of 30 hours worked per union employee. The high range estimate assumes a $3.50/hr wage gap, and a weekly average of 35.5 hours worked per union employee. The Los Angeles County total alone ranges from $150 million to $258 million. The 7-county Southern California total of $307 million to $529 million in lost annual wages, while far less than the $1.37 billion figure from the OCBC study, still represents a great deal of money. The first question, however, is whether the loss is real. By themselves, the OCBC study's wording and calculations create the impression that current workers in the grocery industry and their families will suddenly find their paychecks considerably smaller because Wal-Mart has entered the Southern California grocery business. The economic dislocation caused by a loss of up to roughly one half billion dollars, annually, in spending power would be substantial both for the families themselves, and for the indirect workers supported by their spending. (See below.) Yet, this situation is unlikely to materialize. January 2004 30 LAEDC Wal-Mar!Econornic Impact Study Missing from the OCBC study is any consideration of how the dynamics in the grocery industry are likely to unfold. Just as the price pressure described in Section 1 will take years to develop as Wal-Mart gradually rolls out Supercenters, any downward wage pressure will develop over time as well. (See Section Three for more on this issue.) A more likely scenario would be for the unionized grocery chains to seek a two-tier system in which newly hired workers start and remain on a lower wage scale than existing employees. Alternatively, the chains could keep future pay raises for current employees below the consumer price index. (This would keep nominal wages up while gradually eroding their real value over time.) Both of these scenarios eventually lead to lower average real wages in the grocery sector, but they suggest a situation more accurately described as "wages forgone" than "wages lost". And gradual declines in average real wages over time and lower pay scales for new hires (while certainly not a good thing) are less bad than a sudden, sharp drop in the wages of existing workers. Cost to the Economy In Section 1, we demonstrated the economic benefits of falling prices. Money previously spent on groceries could be redirected to other purchases, effectively raising real household income, boosting spending, and thus creating new jobs in the area. Setting aside the issue of timing, we apply the same logic in reverse to the forgone wages of unionized grocery workers assuming they eventually earn the same wages as their Wal- Mart Supercenter counterparts. If grocery workers as a group earn less money, their collective spending will be reduced which means they could sustain fewer jobs. Table 2.4 shows the potential cost to the Southern California economy. Table 2.4 What if Wal-Mart Were Here? Potential Jobs Lost due to the Decrease in Household Income If All Unionized Workers in the Southern California Grocery Industry Earned Wages Equivalent to those at Wal-Mart Su ercenters Los Angeles County 7-County So. California Total Decrease in Purchasing Power(millions) $150 to$258 $307 to$529 Total Full-Time Equivalent Jobs Lost 1,500 to 2,500 3,000 to 5,100 sources:U S.Department of Commerce,Bureau of Economic Analysis,LAEDC. If all current unionized grocery employees were to eventually earn the equivalent of Wal- Mart Supercenter employees, the lost spending due to eroded household income could cost Los Angeles County alone 1,500 to 2,500 jobs. The 7-county Southern California region could lose 3,000 to 5,100 jobs. Note that these jobs losses would be among the indirect workers — those people sustained by the spending of the direct workers — and not among the grocery workers themselves. We'll have more to say about the supermarket chains and their employees in the next section. January 2004 31 LAEDC Wal-Mart Economic Impact Study Section 3: Weighing the Impacts Wal-Mart is planning to enter the grocery sector in Southern California. The LAEDC has calculated both the potential upside and the downside, assuming Wal-Mart eventually gains a 20 percent market share. Upside Savings for Consumers and New Jobs outside the Grocery Industry ➢ Wal-Mart Supercenter customers will enjoy the benefits of "everyday low prices," saving an average of 15 percent on their groceries. ➢ Intense price competition will lead Wal-Mart's grocery competitors to reduce their prices, offering their customers average savings of 10 percent. ➢ Increased price competition in non-grocery items will lead to price reductions averaging 3 percent among general merchandise and apparel sector competitors. A Money that people save on groceries will be redirected to other items, including housing, savings, entertainment, and transportation. As households redeploy their savings, their spending will create jobs outside the grocery industry. These jobs do not include people who work for Wal-Mart or its suppliers. City of Los Angeles A Consumers in the City of Los Angeles are conservatively estimated to save at least$668 million annually, or$524 per household per year. A Redirected grocery savings will create 6,500 additional full-time equivalentjobs. Los Angeles County ➢ Consumers in the Los Angeles County are conservatively estimated to save at least$1.78 billion annually, or$569 per household per year. A When the savings are redirected to other purchases, the county-wide job creation will total 17,300 jobs. Southern California ➢ Consumers in Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura counties are conservatively estimated to save at least $3.76 billion annually, or $589 per household per year. A The seven-county Southern California job creation total is 36,400 jobs. January 2004 32 LAIEDC WaI-Mart Economic Impact Study Assessment The potential benefits of Wal-Mart's entry into the grocery market in Southern California are substantial and diffuse. Lower prices in the grocery sector will be shared among millions of households, meaning gains at the individual level will be relatively modest. Collectively, however, the savings are vast. Families in the City of Los Angeles together will save hundreds of millions of dollars per year. Across Southern California, the savings are in the billions of dollars per year. When all of this money is reallocated within household budgets, the increased spending will create new jobs. No one will be able to identify an individual outside of the grocery industry and say: "She owes her job to Wal-Mart's everyday low grocery prices." Nonetheless, the statement will be true of thousands of people in the City of Los Angeles, and tens of thousands of people throughout Southern California. Timing will affect the potential benefits in two respects, both of them positive. If Wal- Mart gains market share rapidly, consumers in the City of Los Angeles and the rest of Southern California will reap the benefits sooner rather than later. If, on the other hand, Wal-Mart expands its presence in the region cautiously, it may take ten or fifteen years or more before the benefits described in this report materialize. In such a scenario, our estimate of the total savings will be too low, because the size of the market on which it is based will have increased. Downside Major Grocery Chains Have Used Fear of Intense Competition to Seek Wage Concessions from their Unionized Employees ➢ Wal-Mart's cost-control ethos pervades every aspect of its operations, including wages. Supercenter employees will likely earn $2.50-$3.50 per hour less than unionized employees at major grocery chains. ➢ If the average wage among all current unionized employees at major grocery chains in Southern California were the same as the average wage at Supercenters, union workers in Los Angeles County would collectively earn $150 million to $258 million less than they do currently. For all of 7-county Southern California, (including Los Angeles), the range is $307 million to $529 million. ➢ These forgone wages would reduce overall household spending, potentially costing Los Angeles County alone the 7-county region 1,500 to 2,500 jobs and the 7-county region 3,000 to 5,100 jobs. Assessment Economic change is often accompanied by turmoil, from which some people benefit and some people lose. To compete with Wal-Mart major supermarket chains with union contracts will try to close the wage gap between their employees and Wal-Mart's. They will close the gap not through outright wage reductions for existing employees, but through lower starting rates for new employees and gradual erosion of real wages over time. Employees in a single sector of the retail industry will thus bear the brunt of competition with Wal-Mart. Even if offsetting gains in the rest of the economy are much January 2004 33 LAEDC Wal-Mart Economic Impact Study larger, the losses are not trivial. Since the costs are concentrated among a relative few, they will be acutely felt. On the other hand, the downside is unlikely to be as awful as previous studies have indicated. First, instead of the sharp, sudden reduction in wages forecast by some, major supermarkets will likely reduce their real average wages gradually. This reduction will matter, particularly to those affected: each $1 per hour represents at least $1,500 in annual income for grocery workers. Yet, the most likely mechanism of payroll reduction is some combination of a separate, lower pay scale for new hires, and future pay raises that are kept below the consumer price index. (The latter strategy keeps nominal wages up while gradually eroding their real value over time.) The typical unionized grocery store workforce may change over time as a result, with more people viewing the job as an entry into the workforce rather than as a career. The eventual reduction in real household income (and hence spending) from lower wages paid to grocery workers will also cost the region jobs outside the sector. As with the jobs created by lower prices, no one will be able to identify an individual and say "He lost his job because grocery workers earn less than they used to." Nonetheless, the statement will be true of as many as 5,100 workers across Southern California. These losses will be offset by region-wide gains of 36,400 jobs, meaning that outside the grocery sector at least 7 jobs will be added for every one lost. Next, we turn to the grocery stores themselves. Their competition with Wal-Mart will be shaped by the crucial issue of how quickly Wal-Mart adds market share. The potential benefits as well as the costs of Wal-Mart entering the Southern California grocery market are based on calculations that assume Wal-Mart gains a market share of 20 percent. This assumption is perfectly reasonable in the long run (i.e. any time frame longer than ten years), but strains credulity in the near to medium term. Critically for this discussion, the magnitude and type of Wal-Mart's negative impacts vary greatly depending on the rate with which it gains market share. To see why, consider two scenarios. In one, Wal-Mart plunges into Southern California with its Supercenters, rapidly gaining 20 percent of the market in the near term. Such explosive growth would virtually guarantee severe consequences for the major supermarket chains and their employees. One national estimate, which appears to presume no growth in market size, "predicts that for every new Supercenter Wal-Mart opens, two supermarkets will close."Z7 This prediction is excessively dire for the Southern California market. Still, at least some direct competitors in the local grocery industry will lose a portion of their existing sales to Wal-Mart if it grows quickly. Some competitors would probably have to close their hardest hit stores, which would have a further impact on neighboring tenants and real estate investors. In short, this "rapid market entry" scenario suggests layoffs and additional job losses at the traditional grocery chains, which would probably exceed the job gains at the new Wal-Mart stores. Fortunately, this gloom and doom scenario is not plausible since Wal-Mart only plans to open 40 Supercenters over the next 3-5 years throughout all of California. In the alternate "gradual market entry" scenario, Wal-Mart market share builds at a gradual pace following its initial foray into Southern California. This scenario is based on several assumptions. First, Wal-Mart appears to be proceeding cautiously in California. Of the 1,000 Supercenters planned for the next three to five years, only 4 percent (40 stores) will be built in California. Based solely on the state's share of the national January 2004 34 LAEDC lVal-Mart Economic fmpacl Study population (and potential market size), we would have expected the number of Supercenters in California to be in the 100 to 150 range. If we factor in the distribution of existing Supercenters we would have expected the California number to be higher still. (Texas, the nation's second most populous state, has many Supercenters while California, the most populous state, has none.) Second, the OCBC study arrived at a 20 percent market share estimate based on the number of Supercenters typically served by a Wal-Mart distribution center. Their estimate of 57 stores within a day's drive of a Southern California distribution center is reasonable. Yet, we can already account for the stores this distribution center will serve. All 40 planned stores in California will be within a single day's drive, and trucks returning from northern California will probably pick up produce in the Central Valley on the return trip. Reno, Las Vegas, Salt Lake City, Phoenix, and Tucson —all markets within a day's drive from Southern California — will probably account for the rest. (Supercenters now served by distribution centers to their east will be shifted west to the one in Southern California, making way for expansion in other markets,) Eventually, more distribution centers could be built, freeing capacity locally to serve additional stores in Southern California. Third, gaining a twenty percent market share will take time. The OCBC study notes that after six years in the market, Wal-Mart Supercenters in Fort Worth had gained a 6.5 percent share. In Texas, unlike Southern California, Wal-Mart can quickly build as many stores as it desires. Permitting, environmental regulation, and community opposition are not generally a factor in Texas. Nor is land availability an issue. Wal-Mart will struggle to find suitable locations for its stores in many areas of heavily urbanized, built-out Southern California. The unique high-density urban environment of Southern California will slow Wal-Mart's expansion here, and make it all but impossible in some areas. Thus, Wal-Mart could eventually gain 20 percent market share in the Southern California grocery market, but it will not happen overnight over even in the next five years. This is good news for Wal-Mart's competitors, since it will give them time to adapt. Furthermore, the local market is not static; it's growing. The 7-county Southern California region will add over 6 million people (more than twice the population of Chicago), 2000-2020. This means the region will need to add service capacity, across all sectors of the economy, equivalent to that which exists in Chicago today, twice,just to maintain the status quo. Wal-Mart may well enter the grocery sector, capture virtually all of the growth, and get quite large without making serious inroads into the customer base of the major chains. While a scenario in which Wal-Mart captures most of this growth may not be particularly appealing to the major supermarket chains, competing for growth has considerably different implications than competing for existing customers. Conclusion All indicators suggest that Wal-Mart will gradually enter the grocery market in Southern California. A 20 percent market share seems plausible, but is a long way off. The comparatively slow roll out of Supercenters (in relation to the rest of the country) will delay the arrival of the benefits described in Section 1 of this study. The negative impacts described in Section 2 will also be delayed, and critically, lessened by this slower build out. Wal-Mart's competitors in the grocery industry will have more time to January 2004 35 LAEDC If al-A4ar1 Economic Impact Srudi, adapt to direct competition. Over a longer time frame, Wal-Mart may be able to increase its presence by taking a disproportionate share of overall market growth, instead of competing directly for existing customers of the large supermarkets. January 2004 36 LAEDC Wal-Mat1 Economic Impact Snuti, Section 4: City of Los Angeles Response Sunnnary Wal-Mart Stores, Inc. is already the largest grocery retailer in the country by sales, and plans to build Supercenters, which combine a large general merchandise store with a full service grocery market, in Southern California. With 3.61 million people, 1.28 million households, and annual food store spending of approximately $5.65 billion, the City of Los Angeles is an enticing market. The company has announced plans to build 40 Supercenters in California, which presumably will include one or more stores in the City of Los Angeles. If Wal-Mart is unable to open Supercenters within the city, however, the logical response would be for the company to build Supercenters in neighboring jurisdictions just outside Los Angeles city limits. The real choice facing the City of Los Angeles is whether Wal-Mart will serve residents from within the city's boundaries or from without. If Wal-Mart decides to open Supercenters to serve demand in the region, the stores could conveniently serve customers residing in the City of Los Angeles from within the city, or from neighboring jurisdictions. In the former case, the city government would have the opportunity to influence Wal-Mart's presence. The City of Los Angeles could guide Wal-Mart and other large scale retailers to sites where their presence and spending would be a boon for local redevelopment. If, however, Wal-Mart builds in neighboring jurisdictions, the City of Los Angeles will have no control over the development. Wal-Mart customers in Los Angeles would leave the city to shop, taking their taxable spending (and any resulting local sales tax revenues) with them. Many cities throughout Southern California face the same questions. The results of this analysis apply to them as well. Wal-Mart will enter the Southern California grocery market. Southern California is a wealthy market that is simply too large and too important for Wal-Mart to ignore. There are 3.61 million people in the City of Los Angeles, 38 percent of the countywide total of 9.52 million. In Southern California — Imperial, Los Angeles, Orange, Riverside, San Diego, San Bernardino, and Ventura counties —there are 19.33 million people. Considered as a separate state, Southern California would rank third by population, ahead of New York and Florida, and trailing only (all of) California and Texas. Southern California will only become more attractive as a potential market because it is also growing rapidly. The region is forecast to add more than 6 million people, 2000-2025. The median household income in Southern California is approximately$46,000, which is higher than the overall U.S. median household income of $42,000. Consumers in the City of Los Angeles spend an estimated $5.65 billion at grocery stores annually. Regional grocery store spending (across the 7 counties of Southern California) is an estimated $29.3 billion dollars annually. Wal-Mart will enter this market as it continues its nationwide rollout of Supercenters. In the fall of 2003, there were almost 1,400 Wal-Mart Supercenters in the United States, yet none in Southern California. With Wal-Mart planning to add 1,000 Supercenters in the next five years, this region will eventually play a large role in the company's future growth. Nonetheless, Wal-Mart appears to be proceeding cautiously in California. Of January 2004 37 LAEDC Wal-Marl Economic Impact Study the 1,000 Supercenters planned for the next three to five years, only 4 percent (40 stores) will be built in California. Based solely on the state's share of the national population (and potential market size), we would have expected California's share of the new Supercenters to be in the 100 to 150 range. If we factor in the distribution of existing Supercenters we would have expected the California number to be higher still. Texas, the nation's second most populous state, has many Supercenters while California, the most populous state, has none. Indeed, even tiny Fayetteville, Arkansas, population 59,000, has more Supercenters (2) than all of California. Wal-Mart faces opposition in some California communities. Supercenters have proven enormously popular with the shoppers in communities across America. Wal-Mart will soon open its first California Supercenter in La Quinta. The City of Inglewood is considering a ban on stores larger than 155,000 square feet if 20,000 square feet or more is devoted to non-taxable items. In the City of Oakland, "big box" stores that also sell groceries cannot be larger than 100,000 square feet. Contra Costa County voters are considering a measure that would place restrictions on the percentage of floor space that can be devoted to non-taxable goods in stores of more than 90,000 square feet. Supporters claim these ordinances are not aimed at any one store. Yet, the measures were motivated by, and their impact is largely restricted to, Wal-Mart Supercenters. In Los Angeles, the city council is investigating the merits of adopting similar restrictions. Option#1; Bing around Los Angeles The City of Los Angeles could adopt an ordinance that precludes the development of Wal-Mart Supercenters within city limits. If Wal-Mart is unable to build within the City of Los Angeles, it will undoubtedly attempt to serve the city's residents from neighboring communities. There are 88 cities in Los Angeles County, plus the unincorporated areas. The borders between these cities are rarely obvious, since the cities tend to blend into one another. Traveling from one to the next is often a matter of crossing the street, or taking the next freeway exit. With so many communities nearby, including many which are adjacent to or even, as with the City of San Fernando, completely surrounded by the City of Los Angeles, Wal-Mart will have plenty of alternatives. If Los Angeles passes an ordinance that makes the city an unattractive place to do business, Wal-Mart will just surround the city with Supercenters. Los Angeles consumers will still shop at Wal-Mart; they will just do so outside the city's borders. The implications of a Los Angeles ringed by Wal-Mart Supercenters are clear. First, many residents of the City of Los Angeles will travel outside the city to shop. Consumers who live in the City of Los Angeles already spend tens of millions of dollars each year at traditional Wal-Mart discount stores located within the county but outside the city's political boundaries. The lure of inexpensive groceries—with potential savings of up to 20 percent compared to the large supermarket chains — available just outside the city limits would accelerate this trend. We expect that even more city residents would shop outside the city than do today. Second, the City of Los Angeles will lose substantial taxable sales. Supercenters have become the focus of union concerns because they compete with unionized grocery chains. Groceries, which are non-taxable, account for 30 to 40 percent of the sales at January 2004 38 LAEDC Wal-Mart Economic Impact Study Supercenters, meaning 60 to 70 percent of the sales are taxable. The appeal of Supercenters, for both Wal-Mart and the consumer, is that they allow shoppers to combine trips and do all of their purchasing in one location. If city residents choose to buy their groceries at Supercenters outside of the city, the City of L.A. will lose out on the local share of any taxable purchases shoppers make on those trips. Third, the forgone local share of sales tax revenue from L.A. residents shopping in other cities will not be limited to sales at Wal-Mart Supercenters. Wal-Mart stores act as powerful magnets for major retail developments, drawing in shoppers who also patronize other stores nearby. To the extent that city residents change their shopping patterns, Los Angeles will lose additional sales tax revenue. This would occur each time residents combine trips, and shop at the nearby Wal-Mart and adjacent stores, and purchase taxable items outside Los Angeles city limits. Thus, any perceived negative implications of Wal-Mart Supercenters will still occur if the City of Los Angeles makes doing business within the city too unappealing. City residents who prefer to shop at Wal-Mart will still be able to do so, potentially saving money in the process. Wal-Mart customers and their taxable spending will leave the city to shop, supporting WaI-Mart and other businesses outside city limits. The City of Los Angeles will forego any potential benefits from having the stores located within the city. Indeed, the city will have effectively exported money (in the form of the local share of sales tax revenue)to its neighbors. Option#2: Working Together Wal-Mart will build Supercenters to serve residents of the City of Los Angeles. The real choice, therefore, is not between Wal-Mart and no Wal-Mart. Rather, the choice is whether Wal-Mart will serve Los Angeles residents from within the city's boundaries or from without. Given that the scarcity of large parcels of land suitable for Supercenters and other big box retail stores will limit the number of such businesses within city limits, restrictions based on the size or merchandise mix of large stores may be moot. Realizing this, the City of Los Angeles could choose to work with Wal-Mart, guiding Wal- Mart to sites where its presence would be welcomed. For this type of partnership to work, Wal-Mart would need to be able to serve its customers under conditions similar to those available in neighboring jurisdictions. Several possibilities are described below. First, Wal-Mart could be used as a catalyst for redevelopment, particularly in areas saddled with struggling (or failed) retail centers. In Panorama City, the Panorama Mall lost its primary anchor tenant in 1996 when Federated Department Stores closed its Broadway store. Wal-Mart replaced the Broadway store in 1998, bringing local jobs and revitalizing the mall. Sales are up at other stores in the mall, which benefit from the increased foot traffic generated by Wal-Mart's presence. The locally owned grocery store in the neighborhood, La Curaco, expanded to meet the additional demand. Other stores such as Food 4 Less and Pep Boys have also opened nearby. And in the five years since Wal-Mart opened, the neighborhood has been revitalized, too. Crime rates have fallen and housing values have risen more rapidly than in the surrounding community.28 Second, Wal-Mart has demonstrated a willingness to enter communities that other businesses appear uninterested in serving. In Baldwin Hills, the Crenshaw Plaza mall January 2004 39 LAEDC Wed-Mart Economic Impact Stud), also had a Broadway store as an anchor tenant. Federated Department Stores converted the Broadway store into a Macy's in 1996, and then closed it two years later. Wal-Mart opened a store in the vacant space in early 2003, bringing jobs and retail opportunities to this under-served community.29 A local resident, describing her community prior to the opening of the Crenshaw Plaza Wal-Mart, said "We always felt like we had to go out of our neighborhood to shop — like our neighborhood wasn't good enough for a good store."30 Other parts of South Los Angeles and in the city as a whole continue to be underserved by retail. The need is acute in the grocery sector, and these communities stand to gain the most if Wal-Mart were to enter the market and offer lower prices. Third, Wal-Mart has also demonstrated a willingness to adapt to the urban environment of Los Angeles. The Panorama City store was the first ever multi-story Wal-Mart and the Baldwin Hills was the first three-story Wal-Mart. In both cases, Wal-Mart altered its traditional layout to work with existing structures. This flexibility suggests that Wal-Mart is willing to deviate from its usuaB pattern of operations in order to gain access to the City of Los Angeles market. Wal-Mart may therefore be willing to work with the City of Los Angeles to determine reasonable variations that suit both the company and the community. Conclusion The City of Los Angeles is a large, growing market, giving Wal-Mart a powerful incentive to expand here. Wal-Mart's eagerness to serve customers in L.A. gives the City of Los Angeles some leverage in dealing with the company. The city could use this opportunity to direct investment to communities that need it most. If the city asks too much, however, or attempts to shut Wal-Mart out altogether, the company will serve its customers in the City of Los Angeles from neighboring communities. Many cities throughout Southern California face the same questions. The results of this analysis apply to them as well. January 2004 40 LAEDC Wal-Mart Economic bnpaci Slud}, ' Information from Wal-Mart's annual report;"SN's Top 75,"a list of top grocery stores compiled by Supermarket News <www.supermarketnews.com>; Anthony Bianco,Wendy Zellner et al.,"Is Wal-Mart Too Powerful?" Business Week, October 6, 2003; Kristin Young,"Wal-Mart Faces Calif Roadblocks To Supercenters," Women's Wear Daily, September 17, 2003 2 www,supermarketnews.com; Bryan Roberts, "Wal-Mart Extending Grocery Markel Leadership in the US," M+M Planet Retail, February 25, 2003. Progressive Grocer, the sectors definitive trade publication, placed Wal-Mart at the top of its annual ranking of the country's largest supermarket chains for the first time in 2003. The discrepancy arises because PG only counts supermarket sales in its rankings, and excludes other formats such as discount stores and warehouse clubs that sell groceries. See Tom Weir, "Wal-Mart's the 1," Progressive Grocer, May 1, 2003. 3 www.acnielsen.com 4 www.wa(mart.com 5 Susannah Patton, "Food Fight," CID Magazine,October 15, 2002. 6 Jerry Useem, "One Nation Under Wal-Mart,"Fortune, February 18, 2003. www.suoermarketnews.com s Bianco, Zellner at al., op.cit. 9 Patricia Callahan and Ann Zimmerman, "Price War in Aisle 3," Wall Street Journal, May 27, 2003, 10 I bid. 11 Study cited in Andy Kish, "The Most Important Tenant," The Dismal Scientist(from Economy.com), September 23, 2003. 12 Kirsten Orsini,"Food Fight," Coloradoan,April 13,2003. 13 Neil Currie and Jennifer Justynski, "There Goes the Neighborhood Wal-Mart Expands in Vegas" (UBS Warburg, November 14, 2000). 14 Ibid. 15 Note that the RIMS It model is county-based. This means that the 6,500 jobs created by VS ending in the City of Los Angeles include jobs located throughout Los Angeles County. Bernard Wysocki Jr, and Ann Zimmerman,"Wal-Mart Cost-Cutting Finds A Big Target in Health Benefits," Wall Street Journal, September 30, 2003. "Employers'liability," The Economist, September 20, 2003. 8 Percentage of Wal-Mart mangers that started as sales associates from Wal-Mart Stores, Inc. Management positions to be created through expansion from Wal-Mart Vice-Chairman Thomas M. Coughlin, quoted in Anthony Bianco,Wendy Zel(ner at al., op. cit.. 19 See, for example, Frank Green, "Food Fight,"San Diego Union-Tribune, August 18,2002. 26 A good overview is offered by Dennis Farmer et al., "Dynamics of the LA Supermarket Industry," in a paper from the Center for Regional Employment Strategies. Z1 Nancy Cleeland and Melinda Fulmer, "Supermarkets, Clerks Gird for Possible Strike,"Los Angeles Times, September 29, 2003, "War on Wal-Mart?; Grocer Union Pledges to Resist Megastore Expansion)," Los Angeles Daily News, August 8, 2002. Anita French,"Local Merchants Find Ways to Compete," The Morning News of Northwest Arkansas,August 1, 2003. 22 Vacation and premium pay brought the average up to$15.57. Marlon Boarnet and Randall Crane, "The Impact of Big Box Grocers on Southern California: Jobs,Wages, and Municipal Finances,"(Orange County: Orange County Business Council, 1999). 23 For information attributed to the UFCW in this section, see www.ufcw.org and www.ufcw770,org. Similar information has been presented by union representatives and members quoted in various new articles related to the labor dispute in the Southern California grocery industry. See, for example, Jack Katzanek, "Union uneasy with grocers' proposals," The Press-Enterprise, September 23, 2003; and others articles in the San Diego Union Tribune (October 20, 2003); San Jose Mercury News(October 10, 2003); North County Times(December 28,2003); Ontario Daily Bulletin, (October 19,2003). 24 Brannon Boswell, "Grocers to get tough with unions," Retail Traffic, July 9,2003. January 2004 41 LAEDC Wal-Mart Economic bnpacl Study 25 UFCW Local 1426, "March 2003 Food Contract Negotiations Update," www.ufcwl428,org/master food contract update 30203.htm. 21 UFCW Local 770, "Say NO to Wal-Mart in your neighborhood!"www.ufcw770.orn/walmart.him 2' Retail Forward, cited in Bianco, Zellner el al., op.cit. 28 Brent Hopkins, "No. 1 retailer breathes life into blight area," Los Angeles Daily News, May 24, 2003. 29 Kristin Young, "Wal-Mart's New Look in L.A.," The Wave, January 29, 2003; and Lela Ward, "Baldwin Hills Wal-Mart Celebrates Grand Opening," Los Angeles Sentinel, January 16-22, 2003, 30 Quoted by Abigail Goldman in"Wal-Mart's Move into Urban Markets Reaches a New Level," Los Angeles Times, January 23, 2003. January 2004 42 t Los Angeles County Economic Development Corporation Page 1 of 4 ..�o � � Y = 2004 Press Releases FOR IMMEDIATE RELEASE: January 27, 2004 LAEDC WAL-MART STUDY HIGHLIGHTS i. . 2002 Savings for Consumers and New Jobs outside the Grocery Industry 2001 ►Savings for Consumers and New Jobs outside the Grocery Industry 2000 1999 Media Login Supercenter customers will save an average of 15 percent on their groceries. Contact Us Price competition will lead to reduced prices at existing grocery chains, providing E.D. Community Calendar customers who shop at stores other than Wal-Mart average savings of 10 percent. Site Help Site Map Increased competition in non-grocery items will lead to price reductions averaging three percent at general merchandise and apparel competitors. Money that people save on groceries will be redirected to other items, including housing, savings, health, entertainment, and transportation. This new spending will, in turn, create jobs in Southern California outside the grocery industry. ►Savings in the City of Los Angeles Consumers in the City of Los Angeles are conservatively estimated to save at least$668 million annually, or$524 per household, per year. Redirected grocery savings will create 6,500 additional full-time-equivalent jobs. ►Savings in Los Angeles County Consumers in Los Angeles County are conservatively estimated to save at least httn //wvfv+ l--dr ora/O-t-Inrp, /PP 101 chtml 4/5/2004 Los Angeles County Economic Development Corporation Page 2 of 4 $1.78 billion annually, or$569 per household, per year. Redirected grocery savings will create 17,300 new jobs County-wide. ►Savings in Southern California Consumers in Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura Counties are conservatively estimated to save at least$3.76 billion annually, or$589 per household, per year. In these seven counties, 36,400 new jobs will be created. ►Potential impacts to Major Grocery Chains Major grocery companies have used fear of intense competition to seek wage concessions from unionized employees, most likely by seeking a two-tier pay scale for new hires. Future foregone wages of unionized grocery employees in Los Angeles County could equal $150 million to $258 million annually, and could reach $307 to $529 million annually across the entire seven-county Southern California region. These foregone wages would reduce overall household spending, potentially costing Los Angeles County 1,500 to 2,500 jobs and the seven-county region (including Los Angeles) 3,000 to 5,100 jobs. These losses will be offset by region-wide gains of 36,400 jobs outside the grocery business or a net gain of at least seven new jobs for every one lost. ►Catalyst for Redevelopment htm // tivw l -dr orgM-t-/nr­ /PR 101 chtml A e Los Angeles County Economic Development Corporation Page 3 of 4 Wal-Mart can be used as a catalyst for redevelopment, particularly in areas saddled with struggling (or failed) retail centers. In Panorama City, Wal-Mart replaced the Broadway department store, creating newjobs and revitalizing the surrounding neighborhood. Wal-Mart will open stores in an abandoned K-Mart in Canoga Park and in an abandoned AutoNation site inHarbor Gateway. Wal-Mart has demonstrated a willingness to enter communities that other businesses appear uninterested in serving. In Baldwin Hills, Wal-Mart brought jobs and retail opportunities to an underserved community by opening a store in a former Macy's, which had sat vacant for five years. Again, this retail location was revitalized. There are many parts of Los Angeles that are underserved by retail. The need is acute in the grocery sector and these communities stand to gain the most if Wal-Mart were to enter the market and offer lower prices. No-Sales Tax Leakage Jurisdictions without Supercenters will lose taxable sales when their residents shop elsewhere. Supercenters have become an issue because they sell groceries, which are non-taxable. Sixty to seventy percent of the sales at Supercenters, however, are taxable. The appeal of Supercenters, for both Wal- Mart and the consumer, is that they allow shoppers to combine trips and do all of their purchasing in one location. If city residents choose to buy their groceries at Supercenters outside of the city, the City of L.A. will lose out on the local share of any taxable purchases shoppers make on those trips. Cities without Supercenters will also lose out on sales tax revenue when their http://www.laede.org/data/press/PR10Lshtml "' " " Los Angeles County Economic Development Corporation Page 4 of 4 residents combine trips to Wal-Mart with shopping at nearby stores. Overall sales taxes will increase to the extent that customers spend their savings generated from lower-priced groceries (which are not taxable) on goods which are taxable. The modest increase in overall taxable sales should not obscure the key issue — the re-distribution of taxable sales (and hence tax revenues) among Southern California jurisdictions based on where consumers choose to shop. The LAEDC is a private, non-profit organization whose mission is to attract, retain and expand business and jobs in the region. It provides economic and industry forecasts as well as strategic consulting in trade, infrastructure, logistic and land use. The LAEDC Business Assistance Program works one-on-one with businesses throughout the county Visit www.laedc.org . 994 LAEDC WAL-MART study highlights 1-23-04 Top About LAEDC IMembershipl About LA Countyl Business Assistance I Economic Rese I Events-I Press ©2003 Los Angeles County Economic Development Corporation. All rights Privacy Statement I Accessibility http://www.lacdc.oro,/dot-Ir /PR101 chtml a/S/?n04 Setting the Record Straight:A Quick Reference on Wal-Mart Policy and Proct6ces PAY AND BENEFITS plans, performance-based bonuses and Wages company paid fife insurance and career advancement opportunities. • Wal-Mart is committed pay good and At Wal-Mart, more than three-fourths of fair wages for every single e job. Wal-Mart • the jobs are full-time, while at most other couldn't operate a growing business if it weren't a desirable employer. retailers and union grocers, less than half • Many Wal-Mart jobs are held by students of the jobs are full-time. working through school, retirees who need • As the fastest growing company in the or want another career, and working world, Wal-Mart offers unlimited spouses in a two-income family. professional development and career opportunities. In the U.S., two-thirds of the • Any entry-level retail or service-oriented store management associates started their wage—at any company—generally would careers in hourly positions. not support a family. Regardless of the industry, new hires with no previous Healthcare experience or refined skills are likely to be More than 90% of Wal-Mart associates the lowest paid workers. have medical coverage—roughly 50% • Wal-Mart provides the opportunity for through Wal-Mart and another 40% employees with no experience to start as a through other sources (spouse, parents, part-time cashier and advance to senior retirement, Medicare, COBRA, etc.). management. Almost 40% of covered associates had no • In all locations the starting rate is always medical insurance at all prior to working higher than minimum wage, and in many for Wal-Mart. cases, higher than unionized competitors. At any given time, approximately 75% of For example, in Las Vegas, Wal-Mart Wal-Mart associates are eligible for Greeters make approximately$1.65 to benefits. The average eligibility $7.25 more than the UFCW contracted percentage for retail Is 52% (Kaiser wage cap. Examples of how Wal-Mart Survey). wages compare to the UFCW's wages in An associate can obtain health insurance Las Vegas are listed below: for as little as $15.25 per pay period; family rates (regardless of the number of Wal-Mart Wage Local 711 UFCW Contract children) start at $66.25 per pay period. Position Ranges Comparable starting wage Position and cap Wal-Mart will spend roughly $3,100 for Food Sales $740-$1375 Deli Clerk $6.47412.68 each associate on the healthcare plan in Associate 2004, which Is a far greater percentage of Bakery $6.00-$13.75 Bakery Clerk $7.10-$11.75 Associate profitability than is spent by most other People $7.65-$13A0 Courtesy Clerk $600-$6.15 companies. Greeter/Carts • Wal-Mart continues to pay about two- thirds of the cost of healthcare coverage Benefits for the Associates Medical Flan, even • In addition to competitive basic wages, though costs continue to rise. Wal-Mart provides 401(k) plans, profit • The Wal-Mart plan offers solid benefits for sharing, a Wal-Mart discount card or basic needs as well as catastrophic Sam's Club membership, stock purchase coverage. Once an associate's deductible 2 has been met, the plan generally pays In realizing such savings, they can then 80% of charges for all services included in spend the extra dollars on other the plan. necessities. (www.laedc.org) • Mammograms are covered for all women over 40 and also for younger women when Public Assistance Rumor requested by a doctor for diagnosis of a Wal-Mart does not in any way encourage medical condition. associates to apply for public assistance. • There is no lifetime cap on this coverage Upon a thorough review of all 134 Wal- after one year on the plan, even for long- Marts in the state, no evidence was found term illnesses. to support such claims. • Wal-Mart networks require no primary Like hundreds of California employers, as physician referrals; physicians and our well as many unionized competitors, Wal- associates are allowed to determine the Mart does give associates a number that most appropriate course of treatment. social services can use to verify • Through the network, associates have employment for a wide range of activities, access to world class healthcare in places such as child support enforcement or like the Mayo Clinic, Stanford University public assistance. Hospital, Johns Hopkins University Small Business Impact Hospital and many others —all without a referral. Wal-Mart started out as a small company competing against much larger COMMUNITY IMPACT companies. Wal-Mart was successful because of the ability to meet the needs of "Big Box"Ordinances customers. • Wal-Mart believes in choice, that it is Wal-Mart discovered that many retailers wrong for a government entity to tell welcome having a store in their people where they can shop and deny neighborhood because the increased consumers the opportunity to pay lower traffic generates more business. prices that are fostered by competition. In many communities, new businesses • To date, no government entity has proven establish themselves and existing that a single building with multiple product businesses relocate as close as possible lines (such as a Wal-Mart Supercenter) to a Wal-Mart store. has any different impact on a community . Wal-Mart believes competition is good for than a series of individual businesses customers as it helps keep prices low. located in a strip mall or shopping center. • Ultimately, it is the customers, not Wal- • Big Box ordinances ignore the beneficial Mart, that will decide which businesses are effects that competition will bring to all going to be successful. Californians. • A recent UBS Warburg study found that Community Benefits Wal-Mart's grocery prices are 17-39% Local Wal-Marts provide jobs and support lower than competitors. This means that communities financially through property state residents stand to save between $8 taxes, sales tax revenue and community billion and $18 billion annually from lower giving. prices. The average Supercenter collects • A large part of these savings will go to approximately$4.5 million in sales tax middle-class and low-income Californians, revenue each year. Generally half of this for whom supermarket purchases goes to the state, with the remainder used consume a larger share of family income. at the local level to support schools, police 3 and fire departments, libraries and other international factories it uses operate local government agencies. under standards established by the United • Each Supercenter brings 400-500 jobs Nations and country law. and more than three-fourths of these are Wal-Mart uses its influence to improve full-time. local working conditions, and terminates • Wal-Marts and Sam's Clubs contribute its business relationship with any supplier more than $200 million annually to local that does not comply with laws and/or community organizations. Wal-Mart standards. • According to the Chronicle of Philanthropy, "US Export"Office Wal-Mart is the largest corporate donor in country. In February 2003, Wal-Mart opened an the theMart raises the standard of living for office called "U.S. Export" to help increase • the number of American made goods that families by bringing affordable goods to areas that might not have access to them are sold in international markets. otherwise. Wal-Mart sold an estimated $500 million of American-made products outside of the MERCHANDISE SOURCING U.S. in 2002 with expectations for future sales growth. "Buying American" • Wal-Mart is proud to be an American ETHICAL ISSUES company with International business Treatment of Women operations. • Wal-Mart currently operates stores in 10 . Wal-Mart does not tolerate discrimination countries and merchandise buying offices against anyone. in 25 countries. • Wal-Mart continues to improve internal • Whenever viable, Wal-Mart buys locally, practices to ensure that pay and including in the Unites States. promotions are based on objective factors such as performance evaluations. • Some products are simply no longer . Wal-Mart promotes women at the same manufactured in the U.S. in the volumes Wal-Mart requires. For example, more rate they apply for jobs and provides more than 80% of the world's toys, bikes and opportunities for women than any other Christmas tree ornaments are employer. manufactured in China, • Any associate, male or female, who feel • China has emerged in recent years as one they have been treated unfairly, is of the leading manufacturing centers in the encouraged to use Wal-Mart's "open door" world. Virtually every retailer in the world policy. of any size, including unionized retailers, • Wal-Mart's multi-million dollar sponsorship sells a significant amount of Chinese- of the "Speaking of Women's Health" made merchandise. program promotes women's health, well being and personal safety. Child Labor • Wal-Mart wants all associates to feel they • Wal-Mart does not and would not are valued and treated with respect— no knowingly do business with anyone exceptions. involved in using child, forced or slave labor. Unpaid Work • Wal-Mart initiates over 300 inspections Wal-Mart's policy is to pay every associate every week to help ensure that the for every minute they work. 4 • Any manager who requires or tolerates Wal-Mart associates and customers "off-the-clock"work would be violating benefit when associates can deal directly company policy and is subject to with management without going through a disciplinary action, up to and including third party. termination. • Wal-Mart associates have consistently Illegal Workers recognized this and have chosen not to have union representation. • For three years, Wal-Mart worked with . Wal-Mart has never used scare tactics federal officials investigating cleaning against associates during a union contractors suspected of hiring illegal organizing campaign. workers. Wal-Mart was assured that they During organizing campaigns, a Wal-Mart were not the target of the investigation. support team provides factual information • At the request of these federal officials, to associates who often have questions Wal-Mart continued to employ the cleaning about promises or information they contractors while the investigation was received from union representatives. underway, even though Wal-Mart had In meeting specific requirements of the plans to bring the cleaning service in- Federal law, the support team educates house as acost-savings measure. the store managers to insure that they • Wal-Mart is conducting an internal understand the law and their investigation and has no reason to believe responsibilities so they don't inadvertently any Wal-Mart associates did anything violate the law in any way. illegal. If anyone at Wal-Mart has broken the law, they will be terminated. California Grocers vs. Wal-Mart • To rectify the situation and ensure it never Of the 40 Supercenters Wal-Mart hopes to happens again, Wal-Mart is (1) terminating open in the next four years, fewer than relationships with those contractors who 20% of store associates will work in are the subject of the government's grocery which totals about 80 or 90 investigation, (2) accelerating efforts to associates per store. In fact, Wal-Mart will bring the majority of floor cleaning employ fewer than 4,000 non-union operations in-house, and (3) in those grocery workers to compete with the more areas where outside contractors are still than 250,000 existing UFCW employees. needed, contractors will be required to Four years from now, it is likely that Wal- sign a written contract verifying that they Mart will only employ 2% of the total use only documented workers and that they are paying them appropriately. grocery work force in California. • Medical insurance costs for California LABOR UNIONS unionized grocers are more than double the costs in many other geographic areas Unionization of the country. That cost is not Wal-Mart's • Wal-Mart is not against unions. Many Wal- fault— it's the result of the union's contract Mart customers and associates' family negotiations over many years. members are union members. Although convenient, it's not credible to • Wal-Mart is pro-associate and does not blame Wal-Mart for problems unionized believe that third-party representation grocers are currently facing. would improve the relationship with associates.