When Wal-Mart and the city team up to fight the unions and the
lawsuit filed against them, it will be America’s retail giant who
will have to foot the lawyers’ bills.
GILROY –– When Wal-Mart and the city team up to fight the unions and the lawsuit filed against them, it will be America’s retail giant who will have to foot the lawyers’ bills.
City Administrator Jay Baksa made it clear Monday that Gilroy would not spend one dime on the lawsuit filed with Santa Clara County Superior Court last week. Baksa said the potentially tens to hundreds of thousands of dollars associated with defending the city would be tacked on to Wal-Mart’s development impact fees.
“Our expectation is the applicant (Wal-Mart) will pay all the costs,” Baksa said. “Any cost above and beyond the regular development fees will get picked up by Wal-Mart. It’s a cost of the planning process.”
However, the city’s economic development director, Bill Lindsteadt, says the city should pick up the tab.
“In my opinion, the city should reimburse Wal-Mart with the money it will get from the increase in sales taxes it’s going to see,” Lindsteadt said.
Wal-Mart, which has a 67,000-square-foot store on Arroyo Circle, is projecting an increase in annual sales tax revenue when it opens a 220,000-square-foot Supercenter in one of Gilroy’s new big-box retail centers. The super-sized version of the regular store will sell groceries in addition to its regular discount items.
“People forget Wal-Mart is paying nearly $3 million in development fees to relocate,” Lindsteadt said. “That’s not even including the cost of a business permit.”
Unlike many big-box retailers, Wal-Mart received no financial incentives to open a Supercenter in Gilroy. This was largely due to the fact it already had a store in Gilroy, so political leaders did not feel the need to lure a larger version of the store here.
Mayor Al Pinheiro outright rejected the notion of paying Wal-Mart’s way.
“No way,” Pinheiro said. “Wal-Mart knew from day one they would have an uphill battle with the unions here. If anyone can afford this, it’s Wal-Mart, not the city of Gilroy.”
Wal-Mart and city officials spent Monday digesting the news of a union lawsuit against them.
The lawsuit is challenging the city’s adherence to California’s stringent environmental laws. Plaintiffs allege the city neglected to adequately study the impacts a Wal-Mart Supercenter would have on the local economy and environment.
Wal-Mart spokeswoman Amy Hill staunchly denied any wrongdoing by the company or the city.
“We think this is a frivolous lawsuit. The city spent considerable time addressing all the issues,” Hill said. “This is nothing more than a front to delay the project.”
Hill would not speculate how much the project would be delayed. The company had set a mid-2005 grand opening date for the Supercenter, Northern California’s first.
“We’ll just have to see how things shake out. Lawsuits can take some time and we need to determine whether to start construction while there’s a lawsuit on the table,” Hill said.
William Kopper, the Davis-based attorney who filed the lawsuit, rejected Hill’s claims that the lawsuit was frivolous.
“I think the allegations in the suit that Wal-Mart (Supercenter) will cause further blight and decay in Gilroy are serious allegations and they weren’t discussed in the (environmental impact report),” Kopper said. “Therefore, the allegations are not frivolous, they are well-founded.”
What remains to be seen is how long and drawn out the court challenge will be. Gilroy City Attorney Linda Callon said this particular type of lawsuit – where the suing party requests a court order – tend to wrap up quickly.
Callon said a judge would review all the items on record that reveal what the city did and did not do during the environmental review process. Attorneys for both sides would then argue their cases and await a ruling from the judge.
If a judge determines Gilroy did not adhere to the state’s environmental laws, the project could be delayed until a second environmental impact report was done.
Kopper said the Gilroy case was one of several Wal-Mart suits he has filed. Kopper has an ongoing case against the city of Redding, Calif.
Kopper said he was not part of the three-year-long, two-part lawsuit against the city of Fremont. Fremont lost one case and won the other, according to Fremont City Attorney Harvey Levine.
In the Fremont case, the city initially bypassed the environmental impact report process in favor of a less stringent environmental review.
A judge made the city do the full environmental impact report, which union interests also fought. The city won the second case after the judge determined the environmental study was done adequately.
