Costco Wholesale is moving to Baton Rouge, thanks to a $7 million incentive deal that city-parish officials said was essential to lure the superstore to the city.
Costco is expected to open a 150,000-square-foot store by next April at the former Coca-Cola bottling facility on Dawnadele Avenue. Company officials say it would provide jobs for 250 employees, made up of half full-time and half part-time positions.
The Metro Council voted 10-1 at its meeting Wednesday to support the deal proposed by Mayor-President Kip Holden’s administration. Councilman Ryan Heck, whose district encompasses the area proposed for the superstore, cast the sole vote against the deal; Councilwoman Donna Collins-Lewis did not attend the meeting.
“Baton Rouge is a leading economy in the nation,” Heck said in an interview after the meeting. “We’re not Detroit. We don’t need to beg people to be here and we need to start acting like it.”
Heck had said last week that he expected to support the deal. But he said he changed his mind on Wednesday after deciding that an economic development deal for a retail company would set a bad precedent.
“We’re not going to consume any more bananas, apples, refrigerators or televisions because Costco is here,” he said. “Every dollar a person spends at Costco is at the expense of consumption at Albertson’s, Kadair’s, Calandro’s, the optical shop, the insurance company. It’s not new consumption. It’s just shifted consumption.”
He said it makes more sense for the city-parish to subsidize economic developments like the one recently approved for technology giant IBM, because those jobs add to the tax base.
While the rest of the council supported the deal, some members said it was not an easy decision.
“There’s no denying they’ll be good for Baton Rouge,” said Mayor Pro Tem Chandler Loupe. “But there’s also no denying that the general public does not like this type of arrangement.”
He admitted it was unfair to Wal-Mart and to small businesses who don’t receive help from the city-parish.
Loupe suggested the Mayor’s Office create standards for what types of businesses qualify for the economic development assistance. He said they’ve put the city-parish in a position that all incoming businesses will ask for similar deals.
Ted Johnson, Costco’s development director, told the council the store will hire 250 employees, made up of half full-time and half part-time employees.
A full-time Costco cashier’s annual salary after five years is $50,700, Johnson said, adding that both part-time and full-time employees receive benefits including medical, dental, vision, pharmacy, life insurance, stock options and 401ks.
Johnson also touted Costco’s history of public service, working with schools, offering scholarships, and raising money for local hospitals.
The $7 million deal will pay for $5.5 million in road improvements, to alleviate traffic back ups in the area, and $1.5 million toward the $4.5 million cost of tearing down the old Coca-Cola bottling facility.
Costco, not the city-parish, will oversee the construction.
The city-parish will also pay Costco a 4.5 percent interest rate over an estimated four years, which will bump the city-parish’s total allocation to about $7.8 million.
William Daniel, Holden’s chief administrative officer, said the city-parish could have just as easily taken a loan from a bank to pay for the road improvements. But, he said, letting Costco foot the initial bill for construction and then earn its money back through sales tax rebates over the next few years protects the city-parish’s investment.
“If Costco leaves, and we still owe them $3 million, then we don’t owe it to them anymore,” Daniel said. “If Costco goes away, we still have all the infrastructure improvements.”
Officials with Celtic Studios, a movie production studio located next door, also spoke in support of the deal.
Costco has agreed to sell a portion of its land to Celtic for below market cost which will be used to expand digital effects firm and Academy Award winner Pixomondo.
Robert Bayham Jr., Celtic’s chief financial officer, said Costco developers have worked with Celtic for the past year.
“They would be an excellent neighbor and bring class to a blighted area,” Bayham said.
In other business, the council deferred action on a an ordinance allowing a new residential and mixed use development called Harveston to create a sewer treatment district separate from the parish’s system was deferred until June 12.
Another ordinance banning animals from being tethered for more than an hour was also deferred to the June council meeting.
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