Discounted Democracy

Photo by Keith MayStanding on the hot, dusty sidewalk along Talbert Avenue, staring through the chainlink fence at acres of parched-hard earth and huge cracked slabs of weed-clogged pavement and a distant huddle of low-slung bungalows with boarded-up windows and faded paint—well, out here, a man's eyes can play tricks on him.

"This is going to be the prettiest Wal-Mart ever built," Ralph Bauer insisted rhapsodically a few days ago. You can't shake the image of the flinty Huntington Beach city councilman's starched, arching eyebrows getting all dreamy as he envisioned it.

So you set out across what's left of the Crest View Elementary School. That's why you've come out to these 13-plus acres, which sit forlornly on the eastern ridge of Huntington Beach, just past Beach Boulevard and just before Talbert swoops down into Fountain Valley.

Lately, there's been a lot of commotion in these parts, and you wanted to see for yourself what it's all about. Turns out the pursuit of the prettiest Wal-Mart ever built has done some ugly things to local democracy. The Huntington Beach City Council has rammed the project through despite the objections of citizens, the recommendations of its own planning commission, better offers on the land, and a major report on the negative effects of big-box retail developments. Most disturbingly, the council has exploited loopholes in state election laws to short-circuit and dilute a special election that was demanded and earned by a petition of 22,000 of its own citizens.

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That's a lot to swallow, and after a few steps across this dry, doomed property, you pause for a big swig from your canteen. You take one long, last look back—and notice for the first time that there's a cemetery across the street. Involuntarily, you check the sky for circling buzzards.

Crest View Elementary was once lively and lush, the hub of the working-class neighborhood that borders it on three sides. But since the school closed in 1992, the site has steadily degenerated into a silent brown swatch of suburban desert. And, as deserts are apt to do, Crest View lends itself to a mirage or two.

Now, in place of Bauer's dreams, it's Bob Cronk's memories that come floating back to you. "I sent my kids to Crest View," Cronk reminisced a few days ago. He is 61 years old, a no-nonsense guy who has lived life pretty much by the rules, making a living as a local real-estate agent while his wife teaches at Golden West College. The Cronks have lived in the neighborhood for 28 years. They raised their children here. Now they've got six grandkids. "I used to lead the Boy Scout troop that met there," Cronk said. "I used to coach Little League and youth football teams out on those fields."

As you walk across the fields now, toward the playgrounds and the classrooms, brittle grass and loosened gravel crunch underfoot. Empty monkey bars hang poised like spider webs. Rusted shreds of chain nets dangle like nooses from bent basketball hoops. A peeling handball wall is pocked as if by firing squads. Further on, next to the abandoned buildings, beat-up desks and doorless lockers are stacked like sacrificial altars. Discarded textbooks are visible through the corners of the few windows that haven't been covered by thick plywood. For a moment, it feels like the dreadful fulfillment of some lost childhood curse, from a time when you wished somebody would do something like this to your school.

But then you remember that the destructive forces behind this decrepit scene are straight out of adulthood. Until recently, the Ocean View School District kept these grounds well-maintained and the site remained useful. "Now the school board and city officials want it to look as bad as it possibly can, hoping to sway public opinion," Cronk alleged. "They've shut off all the water and let the place fall into massive disrepair, hoping the public will think that anything would be better than what we've got—even a Wal-Mart."

Back on the sidewalk, you scan the school again and try to imagine it: the prettiest Wal-Mart ever built!Why, that would mean that out of all the Wal-Marts in all the world, Huntington Beach would have . . . um . . . well, it's hard to say exactly what Huntington Beach would have. A peek at the plans for this Wal-Mart—big brick box, big bright sign, big-ass parking lot, buncha stuff inside—mostly reminds you of the discount Goliath's 2,884 other stores.

But Bauer insists he sees something else. "This Wal-Mart is going to enhance the neighborhood and beautify the community," he asserted in a tone so earnest you begin to doubt your own eyes. "The City Council didn't just cave in. We put down, oh, 170 or 180 requirements—I tell you, it is the most stringent set of conditions Wal-Mart has ever faced—and the largest retailer in the world still wants to come to Huntington Beach. I think that says something about our city."


Whatever Wal-Mart is saying—and mostly, it has been talking about money—has mesmerized members of the Huntington Beach City Council and the Ocean View School District, who have ignored all manner of evidence and protests as they move to make this store happen.

"Between leasing fees and sales tax, the school district and the city each stand to make about $400,000 a year," Bauer declared. "This Wal-Mart is a matter of economics and the public good."

It has been a year now, and there is still no Wal-Mart. Instead, the nearby neighborhoods have wrapped themselves around Crest View more tightly than ever. Some residents express hope that the site might someday be needed again as a school, considering the astronomical population growth predicted for Orange County. Meanwhile, the land might help remedy Huntington Beach's current lack of open space and recreational facilities. Others propose residential, low-density homes. There are even those who say they might agree to a retail development—if the retailer were somebody other than Wal-Mart.

"We don't want a Wal-Mart in our neighborhood," Cronk said. "If it's just about money, why don't they go for the really big bucks and use the site for a nuclear power plant?"

The residents have formed an organization—Crest View United—dedicated to reversing the zoning change and thus repelling Wal-Mart. They have gathered more than 22,000 signatures on just such a petition. The Orange County Registrar of Voters stopped counting after verifying 15,445 of those signatures—enough to put the question before the voters in a special election that by California law should have been scheduled sometime in December or January.

But rather than accede to the will of its citizens, the Huntington Beach City Council is aligning itself with Arkansas-based Wal-Mart and Newport Beach resident George Argyros and his Costa Mesa-based Arnel Retail Group developers, who are building the store. After careful study, the council has implemented a strategy to exploit loopholes in the state election laws, hoping to improve the chances of defeating the measure.

The election has been pushed back to March 7, diluting the zoning issue's pre-eminence on the ballot by its inclusion in California's general primary. Its significance will be further undercut by an accompanying question emphasizing the benefits of the Wal-Mart deal to the city—a completely non-binding question—written by Bauer and placed on the ballot by the City Council.

And if that doesn't achieve the desired effect at the polls . . . well, Arnel has a lawsuit waiting that may do the trick in the courts.

The fight over Crest View began in April 1992, when, after years of declining enrollment, Ocean View School District trustees decided they no longer needed the school. City councilmen like Bauer—a former Ocean View trustee—immediately began speculating about leasing the site, which includes 34,000 square feet of buildings as well as parking lots and grass fields.

According to a 1995 status report prepared for the trustees, an appraiser valued the school site at $5.4 million if it all went toward retail use and $5.8 million if a combination of residential and retail moved in. That same report, written a few months after the school board began asking for proposals, includes six possible uses for the site.

The trustees eventually adopted the second option—leasing the school to Wal-Mart through Arnel Retail Group Inc. to build a 145,000-square-foot "big box" outlet for $442,000 per year for 20 years. But the report also makes clear that the Wal-Mart choice was far from the most lucrative option available to the trustees. For example, another developer offered $568,000 per year for 30 years to lease the property to unnamed retail outlets. And the developer for a grocery chain offered $864,000 per year for an open-ended period of time—nearly double Wal-Mart's offer—to lease the property or $9 million upfront to buy it. The grocers even offered leases of $542,000 per year to build a scaled-down store and houses or $700,000 per year for the store and apartments.

When asked why the school board went with Wal-Mart's lower bid, district superintendent Dr. James Tarwater paused. "City pressure," he said at last. "The city wanted commercial use to get the sales-tax revenue. You don't get any sales-tax revenue from a market."

Having had Wal-Mart's proposed lease payments (unchanged to this day) in front of him for more than a year didn't stop Tarwater from telling reporters in 1996 that the Wal-Mart deal would bring in $600,000 per year to the district. What Tarwater didn't broadcast was the option of selling the land for cash—an option publicized only late this year. In any case, lease negotiations dragged on through 1996, ending in 1997. By then, the City of Huntington Beach was well on its way to rezoning the land—the last major hurdle before construction could begin.


Saying the project would generate $400,000 in sales-tax revenues and $40,000 in property-tax revenues for the city, Council Members Shirley Dettloff, Pam Julien, Dave Garofalo and Bauer voted to rezone the land following a tense mid-December 1998 City Council meeting. Opponents cried foul, accusing the council of scheduling the vote during the busy Christmas rush. Others pointed out that the city of Westminster pulls in only $50,000 per year in sales taxes from its Wal-Mart.

The Wal-Mart store Huntington officials intend to squeeze into the Crest View site is part of the largest discount retailer in North America. The company had sales of $137.6 billion for fiscal 1998—an increase of nearly $20 billion from 1997—operating almost 3,000 discount outlets, Supercenters and Sam's Clubs in the U.S., Canada, Mexico, South Korea, China, Brazil, Germany and Argentina.

Industry analysts have fawned over Wal-Mart founder Sam Walton's aggressive moves into small towns and his use of part-time, nonunion labor (called "associates," not "employees"). In doing so, said Wall Street Journal reporter Bob Ortega—author of the book In Sam We Trust—in a Nov. 19, 1998, interview on National Public Radio, "Walton himself felt no compunctions whatsoever about violating National Labor Relations Act laws, in terms of anything it took to keep the unions out."

Wal-Mart has thus come to represent more than a giant retail outlet. Across the country, it has earned a reputation as a juggernaut—a ravaging beige beast quickly consuming small businesses in small towns.

Wal-Mart regularly faces resident opposition to its new stores, much of it fed by information gleaned from books like Ortega's. The Web site is the ultimate clearing-house for the anti-Wal-Mart activist. The site's recent news section includes updates on the Huntington Beach fight; a controversy over Wal-Marts in the California towns of Visalia, Tulare and Porterville allegedly selling returned bikes at new-bike prices (Wal-Mart says the sales were mistakes); and a story about a Madison, Wisconsin, Wal-Mart loader allegedly fired for "stealing" a handful of corn chips from an open bag in the employee break room. The site also includes a list of the 67 Wal-Marts across the country either killed by opponents or withdrawn by the company.

The first homes in the Crest View district were built in the mid-1950s, and many of them are rather frayed around the edges. Unlike the anonymity of so many newer housing tracts, the outside of these dwellings—the color of paint, the style of landscaping—tells you something about the people who live in them. Or the people can tell you themselves. Lots of them are outside: adults working in their yards, kids playing on the sidewalks. Garage doors often stand open on Saturdays, revealing tools and tinkerers at workbenches. Motor homes and boats are parked in the driveways. There is no neighborhood association—at least, there wasn't until they heard about the Wal-Mart.

Wal-Mart covets the Crest View school site for every reason but the last one. The middle-aged homes and middle-class homeowners provide near-perfect demographics.

What's kind of surprising is that Crest View residents don't want the Wal-Mart. It's not as if they're trying to protect a Walden-like refuge or even a Del Webb-like überburbia. Crest View's closest brush with the natural order is the Good Shepherd Cemetery across Talbert. Meanwhile, its nearest retail outlets are a jumbled tribute to the haphazard style of Huntington Beach planning: the Wienerschnitzel, the Condom Revolution, the Pawn & Guitar Center, Beach Auto Sound, a self-serve car wash and a place that sells beanbags and futons. Without any major food or houseware outlets nearby, you'd think the people would appreciate the convenience of a full-service discount store right around the corner.

"Frankly, I'm sort of surprised at the vehemence of the opposition," Bauer admitted.

Crest View United probably would have objected to any commercial development of the old school, but their ferocity is undoubtedly fueled by their foe's reputation. They hate Wal-Mart.

"If you know Wal-Mart, then that shouldn't surprise you," Cronk said. "If you're familiar with the way it operates, where it makes its money, how it makes its money, the things it has done, then you should not be surprised that we don't want one in our neighborhood."

Even Bauer gets a little cautious about appearing too cozy with the retail giant. "I don't want to come off as a Wal-Mart defender," he said. "What I'm really a defender of is commercial opportunity to help the folks of Huntington Beach pay for the services they need and want, as opposed to raising taxes. I know Wal-Mart doesn't have a good reputation—everybody's down on the big guy—but it's difficult to find ventures with that kind of revenue, and in a built-out city like Huntington Beach, it's rare to find a place to put them. You take what you can get."


Or instead, maybe you take a look at the study The Impact of Big Box Grocers on Southern California, produced last month by UC Irvine professor Marlon Boarnet and UCLA professor Randall Crane and released by the Orange County Business Council (OCBC). It's hard to find a more pro-business, pro-development group than the OCBC, yet the study reads as if its preparers work for the United Food and Commercial Workers union.

"The aggressive entry of supercenters such as those operated by Wal-Mart into the regional grocery business is expected to depress industry wages and benefits at an estimated impact ranging from a low of $500 million to a high of almost $1.4 billion per year, potentially effecting [sic] 250,000 grocery industry employees," reads its first key finding. "The full economic impact of those lost wages and benefits throughout Southern California could approach $2.8 billion per year."

Current Wal-Mart starting employees make $6 to $7 per hour, according to Boarnet and Crane. By comparison, in the California grocery industry as a whole, merchandise clerks start at $7 per hour, food clerks $9.78 per hour and meat cutters $11.43 per hour.

Further, the report states, Wal-Mart employees earn just six paid holidays per year—three less than the rest of the industry—and lack cash buyouts for unused sick leave. Wal-Mart employees also lack vision care and pension plans and must pay part or whole premiums for health insurance (just 38 percent of Wal-Mart employees have health care). But Wal-Mart employees do get a chance to buy Wal-Mart life insurance, share in a stock-ownership plan and reap the rewards of a 10 percent discount card on all Wal-Mart purchases.

When all wages and benefits are put together, Wal-Mart's full-time employees—and most of its employees work part-time—receive between $18,946 and $20,209 per year, compared with $32,385 for the rest of the grocery industry.

The presence of a Wal-Mart doesn't just hurt its employees; it also tends to diminish the standard of living of workers at other stores as well. "We don't live in a vacuum," said Brian Young of the United Food and Commercial Workers, which represents unionized employees at markets like Ralphs, Vons, Food 4 Less, Albertsons, Stater Bros., Lucky and even Gelsons. "Responsible employers have a hard time competing with the irresponsible wages and conditions at the Wal-Mart across the street. And because of the tremendous turnover among employees at Wal-Mart, it's next to impossible to get a union voted in."

None of this has persuaded the Huntington Beach City Council.

It responded to the OCBC report by spending $4,000 to hire an outside consultant to produce its own report. This document concluded by smugly dismissing the OCBC research as "of limited relevance" because its comparisons did not match the proposed Huntington Beach Wal-Mart in every detail. The city report ignored the shabby wages and conditions of Wal-Mart workers. Instead, it made a big deal about Wal-Mart's agreement to limit its non-taxable sales (read: groceries) to 10 percent of its floor area. But the city report never explained how this 10 percent provision would be monitored or enforced, or whether Wal-Mart would even be penalized for violations.

The council demonstrated a similarly arrogant response to the 22,000 signatures collected by Crest View United volunteers during weeks and weeks of standing outside stores and walking door to door. "Our objective is the common good," sniffed Bauer, "whereas the objective of Mr. Cronk and his people is self-serving, frankly."

But Councilman Dave Sullivan, part of the council minority opposing the Wal-Mart project, said a higher principle is being destroyed. "Whatever the motives, Idon't think we should defecate on democracy,"he said. "And that's what's happening."

Rather than setting a date for the special election the citizens had earned, the City Council invoked another statute allowing it 30 days to study the OCBC report's findings—and used the time to formulate a counterattack.

Determining that the Wal-Mart project was probably doomed if zoning was the only question on the ballot, the council angled to come up with more issues. The laundry list in the California general primary on March 7 looked perfect. But the date was too far away. Then the council discovered that the special election could be incorporated into the general election if there was another item on the ballot.

Bauer came up with that other item: he drafted an advisory issue (basically a non-binding public-opinion poll) asking voters what they'd like to buy with half the sales tax money from the Crest View site. The wording was misleading, posing the question as if the commercial use of the site was a done deal. And in case voters couldn't come up with their own wish list, Bauer offered lots of suggestions. The language in his advisory question is so full of goodies that it sounds as if it were drafted by Hansel and Gretel.


It reads:

"Shall 50 percent of the sales tax income from the Crest View site be spent to acquire, develop, improve, maintain sports fields for soccer, football, softball, baseball, and other sports; replace restrooms, bicycle/pedestrian trails, lighting, and showers on city beach; acquire senior center site; develop swim complex, and improve neighborhood parks and tot lots?"

Keep in mind that even under the best-case projections, the City Council would have only $200,000 per year available for this shopping spree. And don't forget that this is only an advisory vote. Even if it passes unanimously, the council isn't obliged to spend a cent of the money on anything on that list.

And what about the other $200,000 of projected sales-tax income? Members of the council have been dangling it before other constituents, suggesting it could solve any number of other problems—including improving the city's sewer system.

But there's also the possibility that this money will find its way back to Wal-Mart or the project developer, Arnel Retail Group. It's common for Wal-Mart to negotiate sweetheart deals with the cities where it locates, from the waiving of fees and the public construction of surrounding roads and improvements to other goodies—including the rebate of sales taxes.

Sullivan confirmed that the use of city funds to mitigate traffic-impact costs—an expense approaching $100,000 that normally falls to the developer—has already been discussed. "Where do you think that money would come from?" he asked, referring to the city's share of the sales tax.

Bauer tried to dismiss such speculation, but he admitted that he could not guarantee that Wal-Mart or Arnel would not end up with some of that money.

"At this point, there's no rebate. It has not been discussed," Bauer said. "Our policy normally is not to give rebates. But if there are compelling reasons, we might."

And if anybody can come up with compelling reasons, it would be the movers and shakers at Arnel Retail Group, the development company headed by the notorious Argyros and the unctuous former county Supervisor Bruce Nestande. Arnel isn't the largest developer in Orange County—that's the Irvine Co.—but it is probably the meanest.

Argyros is the former co-owner of AirCal airlines with sometime-pal, sometime-rival William Lyons. He's the former owner of the Seattle Mariners, (which brought him near-universal hatred from the professional baseball world). But he is perhaps best known for his devil-may-care pursuit of the proposed El Toro International Airport. Argyros' pro-airport group, the felicitously named Citizens for Jobs & the Economy, puts out the most vitriolic mailers on the issue. Argyros himself sits on the county's El Toro Citizen's Advisory Commission—a virtual rubber stamp for airport proposals that was created by the 1994 Measure A. Measure A, of course, would be the ballot initiative funded largely by Argyros, which transformed the proposed airport from pie-in-the-sky into a citizen-mandated pie in the face.

But like the Huntington Beach City Council, Argyros wants no part of the ballot initiative that Crest View United earned with its petition drive. Shortly after the Registrar of Voters verified there were enough signatures to qualify, Arnel Retail Group filed suit to invalidate the effort on a technicality: the common folk of Crest View United are accused of failing to carry with them a copy of the city's general plan while they were gathering signatures.

In the suit, Arnel names the city of Huntington Beach, its City Council, its city clerk—and a private citizen named Robert F. Cronk, along with 30 other unnamed members of Crest View United.

"It's a sham lawsuit intended to deprive the people of their right to vote and make a decision on an issue with tremendous implications on their lives," Cronk said. "Certainly, Arnel has the right to challenge our petition, but the basis of the challenge draws the battle lines pretty clearly: on one side, you've got this rich and powerful and very professional developer who is used to manipulating the law to get what it wants, and on the other, there's a loose group of neighbors hoping to preserve the lives they have built."

City Councilman Tom Harman, an attorney, saw it pretty similarly. "I'm offended [by the suit]," he said. "Unfortunately, these types of suits are fairly common. The election code is very specific on the matter of initiatives. You must comply exactly, cross all the t's and dot all the i's. But whether or not you try to stop an election on the basis of something like that comes down, literally, to the spirit vs. the letter of the law."

Speaking of technicalities, however, the behind-the-scenes machinations at City Hall are crawling with potential little conflicts of interest regarding this project. One of the worst: Huntington Beach city attorney Gail Hutton can't defend the city against the suit by Arnel because her son works for Argyros—as the pilot of the developer's private plane. Hutton finally disqualified herself only after others had uncovered the compromising situation. She did not return phone calls for this story.


In Elizabethan theater, some of the most dramatic moments—the murders, the heroic battles, the betrayals—occur offstage. So it was probably fitting that in the Battle Against Wal-Mart, one of the most bizarre twists occurred in a closed meeting between Huntington Beach officials and representatives of Arnel Development. In that Oct. 4 confab, Arnel suddenly and somewhat inexplicably agreed to drop its lawsuit against the city, Cronk and Crest View United. Even weirder, Arnel also apparently agreed to hold off developing Crest View, even though the city had already green-lighted the project. Had the company so much as turned over a spadeful of earth at the site, it could have claimed that its work was underway—that it was "vested," to use the legal term—and that the election had cost it hundreds, thousands, even millions in downtime.

The city's ass had been bared at Crest View, and the council had judiciously covered it. But the council took a grander tone when it announced the deal later that day in the course of its regular public meeting.

"Because of this agreement, Arnel will not be vested on this site and thus cannot challenge the election on those grounds," Councilwoman Shirley Detloff pointed out over and over during a droning and self-congratulatory monologue. "By reaching this agreement, this council has protected democracy. There is no chance of the election being overturned because this council did not allow them to get vested."

The way Dettloff kept pounding on that point—that Arnel was not vested—was a tip-off that it is another technicality. Yes, it's true that the March 7 election won't be overturned on the basis of Arnel's vestment. But the will of the voters can still be reversed by Arnel. Democracy hasn't been protected. The ballyhooed agreement expires on March 8, the day after the election, so if Arnel doesn't like the results of the voting, it can simply refile its suit to nullify the petition and thus the election, and the will of the people can still be thwarted. A Wal-Mart can still rise on the site of the Crest View Elementary School.

"It's just more gamesmanship," Cronk snorted, "and Arnel definitely knows how to play the game to win. We're dealing with big, rich professionals here—and they didn't get that way by throwing in the towel every time they were asked to respect the will of the people."

Would Arnel actually do such a thing?

"We don't have any comment," executive vice president Rudy Baldoni said tersely. "We don't want to talk at all about what we're doing. We're not going to tell you what we're going to do."

Well, how about this for a prediction:

Crest View wins the March 7 election in a landslide. Arnel refiles its suit. A judge overturns the vote on the basis of Crest View's apparent technical violation in signature gathering. Arnel settles out of court with the city, leaving Cronk and Crest View as the lone defendants in the suit. The bulldozers start their engines.

When Bauer was presented with this scenario, you could almost hear him wringing his hands. Almost. Perhaps he was washing them.

"They [Arnel] have got to do what they've got to do," he said. "This job is not always a lot of fun."

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