Elk Grove close to landing Costco, but neighbor concerns and public subsidy unresolved

Elk Grove residents are excited and wary about the prospect of a Costco store coming to town.

Some are concerned about traffic, noise and the warehouse store’s effect on neighboring home values. On the other hand, many find the opportunities for shopping, jobs and tax revenue appealing.

Elk Grove Mayor Gary Davis said he has little doubt Costco would be a boon to the sprawling suburban city of 160,000. He’s worked for years to get the company to locate in Elk Grove.

But he said he doesn’t like the way Costco wants to lower its rent by asking the city to provide economic incentives to its would-be landlord.

“I don’t buy into it,” Davis said. “We need to be very transparent.”

The members of the Elk Grove City Council are likely to get an earful about Costco at their meeting Wednesday night, when they weigh whether to grant the company a conditional use permit and waive further environmental review of the project.

The proposed Costco site – a vacant field near Elk Grove Boulevard and Bruceville Road – occupies a prime spot in the sprawling city.

 

“That intersection has been long planned for large-scale retail, somebody exactly like Costco,” Davis said. “It’s a central place in our city, and it’s been vacant for years.”

“Costco first expressed interest in coming to Elk Grove in 2008, and here we are in 2016 finally ready to pull the trigger,” the mayor said. “I’m excited about eight years of hard work materializing.”

Davis said he isn’t excited about a request to help fund the project through economic incentives to the landowner – an affiliate of real estate firm Pappas Investments, based in midtown Sacramento.

“The Property Owner has advised the City that the proposed lease with Costco will not be financially viable for the Property Owner, and the Costco Project might not proceed, unless the Property Owner receives an economic incentive from the city in an amount to be determined,” city planners wrote in a report to council members.

Asked what that meant, the mayor said Costco is known for requiring its development fees to be reimbursed through sales-tax sharing agreements with cities. In this case, Costco wants the city to give its landlord a subsidy while the company pays lower rent, he said.

Costco would still benefit financially, but in a less straightforward way that would avoid the public perceiving it as a tax kickback, Davis said.

“When I first met with Costco in 2008, they indicated very clearly that they only locate in cities where 100 percent of their impact fees are returned to them in terms of sales tax sharing,” the mayor said. “They didn’t want to do that directly (in Elk Grove). They said, ‘Work that through the lease with Pappas.’ ”

Representatives for Costco and Pappas weren’t available for comment Tuesday.

The economic incentives are likely to be the topic of a future council meeting, Davis said.

On Wednesday, council members are scheduled to discuss whether to grant Costco a conditional use permit for a 150,000-square-foot store with 750 parking spaces and up to 30 gas pumps.

They also have to decide whether to waive additional review of the project under the California Environmental Quality Act because the proposed location is already slated for commercial development under the city’s general plan, and therefore may be exempt from the law.

Residents, however, said they’d like the council to take another look at whether the planned location is appropriate. Large housing tracts abut the proposed Costco site to the north and south, and some homeowners say a Costco would make more sense closer to busy Highway 99.

Kristina Wendorf, who lives across Civic Center Drive from the proposed Costco site on Elk Grove Boulevard, said she doesn’t think the store fits in with the neighborhood.

“Our concern is that it’s going to create a lot of traffic in the area,” Wendorf said. “There are a lot of schools around there, and lots of kids travel up and down Civic Center Drive every morning and afternoon ... so I'm concerned about safety for our children.

“I'm also concerned about any night riffraff, and any people squatting in the area,” she said. “I just feel like it's going to drive our home price down when we go to resell in the future.”

Other residents submitted written comments to the city suggesting alternative sites.

“I like the idea of a Costco nearby, however I am very concerned about the traffic this will produce,” wrote Lisa Aoun, who lives about a mile from the planned development. “The area is already awful when it comes to the traffic, and there are really no ways around the area concerned.

“I don’t know if it’s too late, but I guarantee if you asked the citizens of this wonderful city, they would agree that this project should be moved near Grant Line Road. By the freeway. Easy access to everyone and not a big traffic problem.”

Davis said Costco selected the Elk Grove Boulevard site and was unlikely to consider another location.

“I believe it’s either this location or it’s not our city,” he said. “They’re going to go where their analytics said they should be.”

This story was originally published May 24, 2016 at 6:36 PM with the headline "Elk Grove close to landing Costco, but neighbor concerns and public subsidy unresolved."