Take Action, Ukiah: The hidden costs of Wal-Mart’s plans for expansion

Guest Opinion: Robert Eyler

[The Wal-Mart in Rohnert Park wants to expand by 35,000 square feet primarily for the purpose of selling groceries. On April 22, the plan was rejected by the Planning Commission on a 4-0 vote.]

On the surface, the expansion of Rohnert Park’s Wal-Mart into a supercenter is alluring.

This expansion adds a grocery component, and the Rohnert Park’s City Council, which will soon review the plan, will likely focus on the assumed sales tax generation and job creation such an expansion will provide.

It is important to recognize that an expansion of mainly grocery items will not generate a large amount of additional sales tax revenue, and the assumed loss of Pacific Market could lead to fewer jobs, reduced tax revenues, less consumer choice and create a significant vacancy problem at Mountain Shadows Plaza.

The issue for Rohnert Park decision makers is whether the environmental impact report has adequately assessed the cost/benefits of this expansion. Our evaluation shows there will be many hidden costs.

The EIR included an economic analysis of how such an expansion would affect existing grocery stores in Rohnert Park, Cotati and south Santa Rosa. The EIR concluded that Pacific Market would close when Wal-Mart adds groceries. At the request of Pacific Market, I was asked to look at the EIR to determine if their assumptions and perceived benefits were sound.

Since the EIR states the Wal-Mart expansion will add 85 new full-time and part-time jobs, we felt it was important to also consider the potential for job losses. Our analysis concludes that between 105 and 211 jobs will be lost by local employers, and the quality of these jobs, in terms of pay and benefits, will also decline.

On the issue of selection, our analysis found that, except for Wal-Mart’s private-label brands, almost all grocery products carried by Wal-Mart are available at existing grocery stores. However, because this expansion will close Pacific Market in Rohnert Park, and perhaps another grocery store, this will actually reduce product selection among Rohnert Park grocery stores as Pacific Market carries many unique products, including many locally produced goods.

Further, because Pacific Market is the only “anchor” tenant in the Mountain Shadows Plaza it is likely that other shops in the plaza will either fail or relocate to another center.

A key issue is whether there is currently an unmet demand (called “retail leakage”) of grocery sales from the defined trade area of Rohnert Park, Cotati and south Santa Rosa. The EIR estimates the unmet demand for groceries totals $8.8 million. In reviewing the methodology used to support this assumption, we found several errors; when corrected, the conclusion is reversed from a “leakage” into an “injection” of $3.5 million. This means that most, if not all, of Wal-Mart’s estimated increased sales following the expansion will come at the expense of existing local retailers, which will increase the potential for store closures.

Also, since food sales are typically non-taxable (except for cleaning aids and health and beauty products already carried at the existing Wal-Mart), and because the increase in Wal-Mart’s sales will come from a transfer of sales at existing grocery stores, the Wal-Mart expansion will not generate any new sales tax dollars. In fact, to the extent Wal-Mart forces other retailers to lower prices in order to compete, there may actually be a net reduction in sales taxes.

The city’s general plan has goals that call for Rohnert Park to “maintain land use patterns that maximize residents’ accessibility to … neighborhood shopping centers,” and to “ensure that … supermarkets are located close to where people live and facilitate access to these on foot or bicycle.” Pacific Market, for example, operates in a true neighborhood (as opposed to regional) shopping center at a location that has existed since 1985. The closure of Pacific Market is contrary to these policies, as it will significantly increase grocery shopping travel time for residents within one mile of the store and preclude travel on foot or bicycle.

It is also inconsistent with Rohnert Park’s general plan objectives that focus on preserving and protecting local firms and neighborhoods.

Wal-Mart’s expansion is not a “go-local” strategy. There is a general belief that most projects are beneficial and retailers such as Wal-Mart provide economic stability to a community. This project will clearly have many specific and unintended consequences that will cancel out the perceived benefits.

Elected officials need to be fully informed about the consequences of this project.

Robert Eyler is chairman of the Economics Department and director of the Center for Regional Economic Analysis at Sonoma State University.

One Comment

“EIR” – what’s that acronym mean? “Errors In Relief”? Who writes these things?

The predatory history and strategies of Wal-Mart and it’s catastrophic effects on local economies has, at this point, been documented out the yahzoo. They never bring in more than they will take out. It’s another sad step along the road from Citizen to Consumer to Wal-Mart Associate. We have enough of them already.