A rendering of the more-modern design for the Wal-Mart planned for East… (jstampfl/ c.o. A&R Companies )
The D.C. Council’s preliminary decision to require the city’s largest retailers to pay a “living wage” has put Wal-Mart’s plans for the District in doubt, setting up a difficult veto decision for Mayor Vincent C. Gray.
The council voted 8 to 5 Wednesday to impose a super-minimum wage of $12.50 an hour — well above the District’s regular $8.25 minimum— on retailers reporting at least $1 billion in annual corporate revenue and operating in spaces of 75,000 square feet or more. A second and final vote is scheduled for July 10.
The bill — backed by organized labor and other advocates for workers — would affect stores already operating in the city, including Home Depot, Macy’s and Costco, which would be required to comply within four years. But the legislation, known as the Large Retailer Accountability Act, is generally seen as aimed at Wal-Mart, which plans to open six D.C. stores in the coming years.
In public statements, Wal-Mart has declined to say how the legislation would affect its plans, other than to warn that it would have “negative consequences.” Several city officials who have been briefed by company representatives say the retailer has not threatened to cancel stores.
But real estate executives familiar with Wal-Mart’s plans say that if the measure becomes law, the company would shelve plans for the three stores not under construction. That would include one at Skyland Town Center, a project near to the mayor’s heart and his home in Southeast Washington.
The council’s vote puts Gray (D) under considerable pressure because he has made economic development of underserved areas — particularly in the eastern half of the city — a priority. But vetoing a bill that would give a leg up to low-income workers could be uncomfortable for Gray, who might seek reelection next year.
Gray said Friday that he had not decided whether to veto the legislation, as Wal-Mart called on him to do last week. But he acknowledged that the Skyland project — at the intersection of Good Hope Road, Naylor Road and Alabama Avenue SE — and two others will influence his thinking.
“It certainly is a factor,” he said. “There’s no question about that.”
Gray pressed Wal-Mart representatives at a Las Vegas retail conference two years ago to open a store at Skyland and then personally called Bill Simon, president and chief executive of Wal-Mart U.S., to ask that a store be expedited there.
Wal-Mart, the world’s largest retailer, complied. The company signed a commitment with McLean-based Rappaport Cos. to serve as the top retailer in Skyland Town Center, a mixed-use project with a town square and 476 apartments. Skyland, which could break ground next year, would be the largest project built in a D.C. neighborhood east of the Anacostia River, and the city has put up $40 million in subsidies and spent $28 million on other expenses to advance it.
In an e-mail, Henry Fonvielle, president of Rappaport, did not say Wal-Mart would pull out of Skyland, but he did say there “is no doubt that the [bill] will make it more difficult for developers” to attract large retailers.
Gray held out the possibility that the legislation could be tweaked before the July 10 vote. “I’ve got to sit down with Wal-Mart and find out what their issues are,” he said. “See if we can find a way to, say, thread the needle.”
Grant Ehat, principal at JBG Rosenfeld Retail, which is building Wal-Mart stores in Fort Totten and on H Street NW, said the measure would be more fair if it did not exempt unionized chains, such as Safeway and Giant, which Wal-Mart will compete against for grocery sales.
“I can’t imagine that they will proceed on any of the unbuilt stores if this bill passes,” Ehat said.
Without Wal-Mart, Skyland lacks a critical anchor tenant, making the project unfeasible. And the legislation probably would affect other projects, such as the redevelopment of the former Walter Reed Army Medical Center campus, which Wegmans, a grocery chain based in Rochester, N.Y., has been looking at as a possible location.
Council member Muriel Bowser (D-Ward 4), who represents the Walter Reed area and chairs the council’s Economic Development Committee, said that she met with Wegmans representatives in May and that they brought up concerns about the bill. Bowser voted against it.
The political calculations for Gray, who has received support from both business and labor, are complex. A veto, which could be overridden by nine votes, would come against the backdrop of next year’s mayoral race.
Two council members who have begun mayoral campaigns, Bowser and Tommy Wells (D-Ward 6), opposed the bill Wednesday, citing its potential to dampen development in retail-starved neighborhoods. A third, Jack Evans (D-Ward 2), supported the bill after the council approved an amendment scaling it back. Otherwise, the measure would have applied to all retailers with $1 billion or more in corporate sales, regardless of store size.
Council member Vincent B. Orange (D-At Large), a lead backer of the legislation, said fears that the measure would drive off Wal-Mart or other retailers amounted to “crying wolf.” He said the city’s growing population and strong economy make it an attractive market for retailers, even in long-neglected neighborhoods.
“The District of Columbia has arrived,” Orange said. “We don’t have to beg people to come to the District anymore. . . . At the end of the day, there is no other growth in the suburbs. The growth is in the city.”
If Wal-Mart threatens to abandon Skyland or other projects, Gray should call their bluff, Orange said.
“If Wal-Mart doesn’t come, someone else will come,” he said. “Trust me.”