Elk Grove to Consider up to 25-year, $8 million Sales Tax Sharing Incentive For Costco Landlord

March 30, 2017 |   The Elk Grove City Council will consider awarding an $8 million incentive that could be paid back over 25 years ...

March 30, 2017 |  

The Elk Grove City Council will consider awarding an $8 million incentive that could be paid back over 25 years to the landlord of the Costco store scheduled to open in the City.

According to the notice, "The agreement would provide for sales tax sharing between the City and the landlord/property owner in a present value amount of not more than $8,000,000, as escalated and adjusted over time, all as provided in the agreement. Payment would be made for up to 25 years, or until the entire economic development incentive amount of $8,000,000, as provided in the agreement, is paid, whichever occurs first."

The Costco, which will be located at the northwest intersection of Civic Center Drive and Babylon Drive in The Ridge Shopping Center is being developed The Ridge EG East, LP. The development of that big-box store was opposed during the approval process by several nearby residents in adjacent neighborhoods in the Laguna Ridge area who expressed concern about noise and traffic effects.

The notice states that questions regarding the proposed incentive should be directed to the City's Economic Development Department at (916)478-3690. The City Council will consider the incentive at their April 12 meeting.

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D.J. Blutarsky said...

The Art of the Deal!

1. Elk Grove has a reputation of being an easy mark.

2. Pappas/Costco does not deal in good faith, waits until after project approval before mention of a need for incentive, or they walk.

3. The City is outgunned 2-1 in the negotiations. (1) Pappas leverages to write down lease to (2)Costco, and they both benefit.

4. Costco architectural design is substandard for region, even Hume questions.

5. City has no leverage, other than to call their bluff and say, "then walk". The track record of the City in calling bluffs is dismal. Just see what happened when Gil Moore/Mickey D threatened to walk--City opened up entire freeway to large signs. Oh, but we got a plastic elk in the deal!

6. Voters are enamored with new shopping opportunities and fail to see the impact of giving away future sales tax revenue. Does sub-prime auto loan bubble and the Auto Mall mean anything? Just wait.

7. Costco market studies support a store in Elk Grove, period. If the market feasibility relied upon filling an $8 million gap over 25 years, I would fall over laughing!

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