San Diego took a step toward a groundbreaking ordinance Monday that could limit the size of large retailers in the city.
The City Council voted 5-3 to look into the creation of Stock Keeping Unit, or SKU, ordinance, which would limit the amount of merchandise “big box retailers" like Wal-Mart (NYSE: WMT) could carry. Should a SKU ordinance be drafted and passed, it would essentially limit large retailers to 90,000-square-feet of floor space, ruling out super Wal-Marts, which can cover up to 150,000-square-feet of floor space.
The council also voted to accept proposals from Mayor Jerry Sanders to create design restrictions and room for more public input on stores with more than 50,000 square feet of floor space. Sanders had recommended against the passing of a SKU ordinance.
Councilman Ben Hueso, who made the motion for staff to draw up both the mayor’s recommended ordinance and the SKU ordinance, said he wanted to at least the discuss the issue further.
“My actions today are not intended to hurt an existing business, but to pre-empt the creation of something that could be very detrimental to the residents and the economy of our cherished city,” Hueso said.
Residents and business owners on both sides of the issue spoke for more than an hour Monday. Those in favor of the ordinance included many small business owners who argued big box retailers kill competition. Some accused Wal-Mart and similar stores of breaking anti-trust laws. Others were concerned about the traffic congestion and huge amounts of land taken up by these stores.
Wal-Mart itself had several representatives who trumpeted the charity work the Arkansas-based retail giant does for the communities it enters. They also pointed out that Wal-Mart employs thousands of San Diego County residents, often offering health benefits and paying an average of $11 an hour, several dollars above minimum wage. Restricting big box retailers from providing certain goods would limit consumer choice, anti-SKU speakers argued, adding it would violate free trade.
Councilmen Kevin Faulconer, Jim Madaffer and Brian Maienschein seemed to side with those speakers. While they accepted Mayor Sanders’ suggestions to enforce design ordinances, they were against the idea of a SKU ordinance.
“Businesses make choices where to locate and what products and services to offer, and consumers make choices on where they want to shop,” Maienschein said. “It certainly isn’t a black and white issue … It involves some fundamental economic principals that really cannot be effectively dealt with by an ordinance such as this that’s passed by a local government.”
Kevin McCall, a spokesperson for Wal-Mart in Southern California, said last week that if San Diego were to vote in a SKU ordinance, it would be the first city in the country to do so. Council President Scott Peters has asked staff to come up with written ordinances for a meeting to be scheduled about four weeks from now.
Hueso said his proposal wouldn’t affect existing stores, but it would protect neighborhoods and small businesses from possibly losing out to a super big box retailer in the future. Other inner-city council members Toni Atkins and Tony Young agreed, saying their districts in particular had not been able to support both small business and big box stores, and they wanted small businesses to thrive.
“When things go wrong with the economy, when things go wrong with housing availability, the quality of life, traffic congestion and issues with the environment -- the first to be held accountable are the government agencies, and I think that’s appropriate,” Hueso said. “I think that’s appropriate because it is the responsibility of government agencies to properly plan and to weigh the impacts of certain developments on the community.”
“We shouldn’t let the free market dictate how we raise our families," he said. "I think we have it within ourselves to create the communities that we want to live with.”
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