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Does Wal-Mart have a Plan B?

by   SUSAN WOOD

[photo of archetectural rendering of Wal-Mart]EUREKA'S SPECIAL ELECTION in August may open the door to a zoning change for a controversial waterfront development, but the real clash of the titans will come later. That's when the largest retailer in the nation, Wal-Mart, goes up against what's considered one of the most powerful agencies in the state, the California Coastal Commission.

To carry out its grand-scale plans on the 30-acre urban property called the balloon tract for its shape, Wal-Mart eventually needs a permit from the commission in conformance with Eureka's local coastal plan. The current LCP calls for public facilities on the property, not retail. For that to be changed, the LCP has to be amended by Eureka and approved by the Coastal Commission.

Created by the passage of the Coastal Act of 1972, this waterfront watchdog group, based in San Francisco, holds the power to drive or derail a project deemed inappropriate for the coast.

"If the commission went with that direction (to oppose it), it wouldn't preclude Wal-Mart (altogether) just at that site," said District Manager Bob Merrill, who is a commission staffer not a voting member.

The Coastal Commission has already said no to Eureka once. In September, along with a number of less controversial amendments to its local coastal plan, the council included a change in zoning for the balloon tract that would have allowed for a big box retailer. By an 11-0 vote, commissioners, including Eureka Mayor Nancy Flemming, rejected the request because it was inconsistent with the LCP.

[photo of Harvey Rose]City Manager Harvey Rose said that Wal-Mart has spent years examining different sites within the city limits including property by Mall 101 and a site at the Indianola cutoff.

Despite sometimes contemptuous public and private objections, Sam Walton's empire which started with one store in Rogers, Ark., and has grown to more than 3,000 around the world has remained dedicated to building on the site of the old railroad yard, once the key hub for the Northwestern Pacific Railroad. Southern Pacific bought it in the 1920s, and current owner, Union Pacific Railroad, took over when the two companies merged in 1996.

The sale to Wal-Mart is expected to close escrow in October, Union Pacific officials confirmed, but declined to release the property sale price.

Whether Wal-Mart has a plan B in mind remains to be seen. Spokeswoman Daphne Davis repeatedly refused to say whether or not there is an alternative site under consideration if the Coastal Commission proves to be a stumbing block.

"We're pretty committed to that site," Davis said in a telephone interview from Arkansas. She estimated the store would employ at least 250 locals at wages starting above minimum wage. The store brings in "hundreds of thousands of dollars" in sales tax revenues annually in communities similar to Eureka, adding that some large market stores bring in $1 million into city coffers, Davis said.

[photo of Harvey Rose touring balloon tract][map of balloon tract location in Eureka]

"It's a good project, good for retail (in the area)," she said.

Some would disagree, and their list of reasons is lengthy.

Some are pragmatic. Business activity would be drained from existing retail shops. A strategically located large parcel of land would be lost for future port and railroad related development.

Other objections are more emotional, such as the perceived way the company treats employees, turns its target areas into cookie-cutter communities, exemplifies mass commercialism, and damages or eliminates small businesses.

"Wal-Mart is the antithesis of small business," said Bruce Braly of Humboldt's Finest, an arts, crafts and jewelry shop in Old Town Eureka.

If it comes to town, Braly expects the mass merchandiser to cut into his customer base, and he balks at the notion the company would help the region's employment picture, since most of its jobs are low-paying.

Braly said he does not oppose all big-box retailing, just this project. The Old Town merchant has joined the Friends of Humboldt County Inc., a nonprofit group opposing Wal-Mart on the waterfront. The group sponsored a community forum in March and invited retail sprawlbuster Al Norman of Greenfield, Mass., to speak.

Norman equated Wal-Mart's rapid growth and expansion into towns across the United States with bad underwear: "It keeps creeping up on you," he said, prompting a rousing applause.

Sherry Adams, a Wal-Mart proponent, held up a sign declaring her support for the store in Eureka. After the meeting, she was flanked by a group eager to debate the issue.

Norman said Wal-Mart's attempt to build in a wetlands area of Lake Placid, N.Y. is an example of its tenacity. In January 1997, after a five-year effort, the project was withdrawn over community unrest and environmental concerns, a city official confirmed in a recent telephone conversation.

[photo of Al Norman]"What part of no (does Wal-Mart) not understand?" Norman asked the audience.

Controversy has followed Wal-Mart in other parts of the country, as well. In Fort Collins, Colo., a referendum allowing a zoning change that would accommodate the merchandiser passed last month, after failing a city council vote and a fierce citizen debate.

"Our community was really divided," City Manager John Fischbach said.

Closer to home, Crescent City area residents wrestled with the same issues years ago when Wal-Mart first unveiled its plan to build a store on Washington Boulevard northeast of town. The store was completed and opened in December 1992 on county property.

 

"In all reality, it's not the experience of the high-flying revenue booster," said Del North County Assessor Jerry Cochran.

According to Cochran, the gross retail sales trend "has shown a relative flatness" between 1993 to 1997 as figures hovered from $146 million the first year, dipped, then climbed again in 1997 to $147 million.

Sales tax revenue figures are more positive for the county. In fiscal year 1992-93, the county took in $1.7 million in sales tax revenue. In 1993-94, that figure climbed to $2.8. The county auditor had estimated $3.3 million, but the $1 million increase could be attributed to a number of factors, not just Wal-Mart.

The county added two half-cent sales taxes at about that time, Cochran said. Plus, Pelican Bay State Prison in Fort Dick opened December 1990, about a year before the revenue bump.

At the same time, May 1993 to May 1994, Crescent City experienced a drop of about $100,000 in gross sales tax collections.

Carol Leuthold, city finance director, said Wal-Mart did not cause an increase in tax revenue for the county, it was "just redistributed" out of city businesses.

"I think they sold the people a bill of goods," said Crescent City Councilman and former Mayor C. Ray Smith, referring to the merchandiser's plan to boost the economy. "They drain out of the economy what they can."

At first, Smith said he noticed a shift of retail business from the downtown area to Wal-Mart. Now the shift is more subtle, he said, and business is slow in the downtown area for more reasons than one.

"Maybe it's balanced out," he said, because Wal-Mart did come through on its promise of mitigation fees.

To the south, Fort Bragg City Manager Jim Murphy expects Wal-Mart's plan to build on the coast to divide that community as well. The property there may also need a zoning change and coastal commission approval.

"The impacts of big box retailing on any city differ," Rose said during a recent site tour.

Rose acknowledged that Eureka has endured some criticism for opening conditional windows of opportunity for the company to pursue development.

The council approved $33,000 for a consultant to evaluate the effects of a big-box retailer on the local economy. The report from Bay Area Economics Inc. is due in July,

Project Manager Ray Kennedy said from his Berkeley office.

Two weeks ago, after Wal-Mart supporters had successfully gathered signatures from 15 percent of registered voters in Eureka (2,067 people), the council approved between $20,000 and $30,000 for a special election. Voters will decide whether the general plan and zoning on the parcel should be changed from public to service commercial. If the initiative passes, the zoning reclassification would add another 34 acres to the city's 732 now designated as commercial. The city has recently proposed changing the designation to general industrial.

Vacant for years, the run-down property is considered a contaminated eyesore, marked between Waterfront Drive, Washington Street and Broadway at its narrow tip by overgrown bushes, dilapidated structures, and piles of trash and cement blocks. It's been a favorite spot for illegal trash dumpers.

Beyond the promise of hefty sales tax revenues, the city would like to get the mess cleaned up. Wal-Mart has agreed to absorb the cost of the cleanup, estimated to be about $2 million, Rose said.

"As far as this tract of land is concerned, the city has wanted to see the tract cleaned up and developed for 30 years," Rose said. No industrial developer has expressed interest before Wal-Mart, he added.

[photo of Kevin Hamblin]Responding to city requests, the discount chain plans to build a public park on the waterfront side of the property, to provide a shopping shuttle service to Eureka's downtown and to use a Victorian seaport theme as a design element to match the region's unique architectural flair. Specific site plans from the company for the proposed general merchandise store are still being developed, city planning Director Kevin Hamblin said.

"I think Wal-Mart is putting a lot of eggs in one basket," Hamblin said of the mega-store's apparent single choice in sites. Still, he's doing his job and treating the project near the waterfront as a go.

There are a number of agencies Wal-Mart needs to work with to get its plan in place, from the U.S. Army Corps of Engineers and California Department of Transportation to the state North Coast Regional Water Quality Control Board.

Eventually the city will schedule public hearings after the election and complete an environmental impact report to ensure the project meets California Environmental Quality Act guidelines. But Merrill said the EIR isn't necessarily required at the time an application for a coastal commission permit is filed, by far the biggest obstacle in the Wal-Mart plan.

As a rule, the commission is mainly interested in whether a project falls within its California Coastal Act guidelines, Merrill said.

The act encourages coastal-dependent development as a priority, a category Wal-Mart doesn't fit into. It also evaluates whether proposed development hinders the protection of coastal habitat and scenic views.

Of the dozen voting members on the California Coastal Commission's roster half are appointed "public members" and the other half consist of elected officials who come from specific coastal districts.

Flemming holds the North Coast District seat until May 2000. She sat in as an alternate between 1991 and 1993, when she took a permanent seat.

In order to avoid a conflict of interest, Flemming abstains from voting on a Wal-Mart issue when it comes before the City Council.

Even so, she said she's been accused, like other city officials, of going out of her way to get the store into the area. There was even a rumor she owned stock in Wal-Mart, which she denied.

She said she is happy about the prospect

of a significant sales tax generator and a place for low-income residents to shop. As far as objections from small business owners, she finds it ironic that's how Sam Walton started out in "the story of this country."

"We want local businesses of all sizes to be successful," she said, touting the idea of a mixed diversity of businesses in Eureka.

"Very unfortunate" is what she calls the controversy surrounding the plan.

"If we put this kind of energy into expanding into a global market, can you imagine?" she asked.


PHOTOS:
1. Generic artist rendering of a Wal-Mart Store
2. 'The impacts of big box retailing on any city differ,' said Eureka City Manager Harvey Rose.
3. Harvey Rose on a recent tour of the balloon tract.
4. 'What part of no (does Wal-Mart) not understand?' asked retail sprawlbuster Al Norman.
5. 'I think Wal-Mart is putting a lot of eggs in one basket,' said City Planning Director Kevin Hamblin.

MAP: Location of "balloon tract" in Eureka


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