Increase accountability for economic development subsidies

Spurred by news reports that Wal-Mart may be planning to expand into San Francisco, I asked The City's budget and legislative analyst to conduct a study on the economic impact of large formula-retail expansion in our city. The findings were alarming: 300 small businesses would close and up to 1,900 jobs would be lost within two years of one large chain store opening. The report recommended that The City conduct an economic impact analysis prior to approving formula-retail projects.

Assembly Bill 667, the California Accountable Tax Credit/Public Subsidy Act, would require this kind of economic impact analysis for big-box retail projects in “economic assistance areas” in California.

In recent years, economic assistance areas have cropped up all over California, including a large swath of eastern San Francisco. The California Chamber of Commerce and other pro-business interests have insisted that offering businesses incentives to develop in economically distressed areas will promote economic development, create good jobs, foster vibrant small-business communities and stimulate business investment in the area.

These are all good things — indeed, all things our communities desperately need — but the proof of these claims has yet to materialize. California economic assistance areas have so far been one grand experiment, to the tune of millions of dollars of state and local tax credits, and with no requirement on the beneficiaries to show that they are truly benefiting the public.

The majority of the public tax dollars that have been doled out in these zones have gone to big-box stores like Wal-Mart, the largest private employer in the world. According to a 2011 study from the UC Berkeley Center for Labor Research and Education, “The growth of big-box retail is a mixed blessing to local communities. There is strong evidence that jobs created by Walmart in metropolitan areas pay less and are less likely to offer benefits than those they replace. As a result of lower compensation, Walmart workers make greater use of public health and welfare programs compared to retail workers as a whole, transferring costs to taxpayers.”

It's not only the workers making less — thereby driving down wages in the surrounding areas and relying on public assistance to meet basic needs — that are hurt by stores like Wal-Mart. As The City's report found, small businesses suffer, too.

AB 667 would require an economic impact analysis for big-box retail projects in economic assistance areas, those receiving public subsidies like tax credits. The economic impact report would need to show that the superstore wouldn't have a negative affect on the immediate surrounding area of the new development. The bill would also require that an opportunity for public comment on the report and its findings be provided 30 days prior to a permit for the development being issued.

The bill would protect state, county and city investments by making sure the goals of the economic assistance areas were being met, and provide useful information for community planning committees. Most of all, it would give state and local taxpayers the ability to truly see what their tax dollars were going to fund — both in the costs of taxpayer subsidies toward development, the costs of public assistance for the low-wage-no benefit employees and the unemployed, and the social costs of neighborhood blight.

Yes, San Francisco and California need jobs, but we need good jobs. We need development and business investment, but not the kind that leads to neighborhood blight, an increased reliance on public assistance and further unemployment. Make Wal-Mart and other big-box stores accountable for the way they spend our tax dollars. Support AB 667, the Accountable Tax Credit/Public Subsidy Act.

Eric Mar is a member of the San Francisco Board of Supervisors representing District 1 covering the Richmond district.

California AssemblyCalifornia LegislatureEric Marop-edOpinion

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