Widgets Magazine
Page 26 of 71 FirstFirst ... 2122232425262728293031 ... LastLast
Results 626 to 650 of 1772

Thread: Costco

  1. #626

    Default Re: Costco

    Here is the wording from the incentive document:

    Project Background
    Costco plans to invest approximately $15,000,000 or more for the
    construction and equipping of approximately 150,000 sf of commercial
    space. The new facility is anticipated to have approximately 150 part and
    full-time employees and is expected to open by April 2019.

    City Financial Structure
    Oklahoma is the only state where a city cannot utilize property taxes to
    fund day-to-day operations. As a result, Oklahoma City is heavily reliant
    on sales tax to support operations. In an effort to expand the City's sales
    tax base, the City Council adopted a retail policy in 2009 to promote
    retail projects that are new to market, have a regional market draw or
    support underserved areas. Oklahoma City is considered a driver of retail
    in the state with a variety of shopping opportunities and its central
    location in the state.

    Economic Impact
    Based on industry research, City staff projects Costco will generate an
    estimated $80 million in annual sales in year 1 and grow to more than
    $140 million by year 6. It is anticipated that approximately 41% of the
    sales will be new to the City's sales tax base. For the initial six years, it is
    projected that Costco will annually generate approximately $600,000 -
    $1,100,000 in new City General Fund sales tax, $270,000 - $500,000 in
    new Better Streets, Safer City sales tax, $200,000 - $375,000 in new
    Public Safety sales tax and $35,000 - $60,000 in Zoo sales tax.

    The City's FY 2018 General Fund budget totals $404 million.
    Approximately 62% or $250.6 million of the budget is funded by sales
    and use tax and approximately 51% of the sales tax is derived from retail
    activity. The proposed project would be classified under the General
    Merchandise category of retail sales tax. With an existing General
    Merchandise sales tax base of 1.4 billion annually, it is expected that the
    project would increase the overall General Merchandise category between
    7-10% over the next five years.

    Recommended Incentive Amount: $3,000,000
    It is recommended that a performance based incentive amount not to
    exceed $3,000,000 be provided to Costco over a 4-5 year period based on
    85% of the net new General Fund sales taxes based on the following:
    • The current retail incentive policy promotes the development of
    new to market retailers and regional attractions
    • Costco is a regional draw with a trade area based on serving
    customers up to 90 minutes away or greater.
    • Costco will attract over 900,000 annual visitors
    • Costco will attract shoppers from outside of the region,
    preventing/reducing retail sales leakages to surrounding
    communities
    • Costco will allow the City to recapture sales tax from over
    2,777 OKC based consumers who are currently traveling to Tulsa,
    Kansas and Texas.
    • City will receive related internet sales from local
    residents which will result in new sales taxes.

  2. #627

    Default Re: Costco

    They knew how much to ask for because the City already paid Cabela's -- which is right across the street -- $3.5 million.

    Reminder that Tulsa paid Costco $2 million but Costco argued the Western & Memorial site was expensive to build upon due to drainage issues. So why exactly are taxpayers footing this bill? Why not just pay the landowner less, given the limitations of his property?


    They basically came to the city and say, "Either give us this amount or we'll take our sales tax to Edmond". It's exactly what Cabela's did, too.

    But of course that argument seems like an empty threat. Does anyone really think that these two big retailers who are likely to only operate one store in the area for some time, would take a much lesser location in Edmond if they didn't get this incentive?

  3. #628
    Join Date
    Aug 2013
    Posts
    5,209
    Blog Entries
    7

    Default Re: Costco

    Quote Originally Posted by Pete View Post
    They knew how much to ask for because the City already paid Cabela's -- which is right across the street -- $3.5 million.

    Reminder that Tulsa paid Costco $2 million but Costco argued the Western & Memorial site was expensive to build upon due to drainage issues. So why exactly are taxpayers footing this bill? Why not just pay the landowner less, given the limitations of his property?


    They basically came to the city and say, "Either give us this amount or we'll take our sales tax to Edmond". It's exactly what Cabela's did, too.

    But of course that argument seems like an empty threat. Does anyone really think that these two big retailers who are likely to only operate one store in the area for some time, would take a much lesser location in Edmond if they didn't get this incentive?
    Tulsa was in a worse spot negotiating with Costco, as Bixby is literally on the other side of Memorial Dr from the Tulsa location. Paying these fees is outright extortion made possible by the outmoded way Oklahoma allows cities to fund themselves.

  4. #629

    Default Re: Costco

    If we have to draw the line somewhere, let's draw it after we get a Costco!

  5. Default Re: Costco

    Quote Originally Posted by catch22 View Post
    If we have to draw the line somewhere, let's draw it after we get a Costco!
    A search in Google shows that COSTCO seeks tax incentives just about everywhere it goes - including a town where they were to build a chicken processing plant. Even here in Progressive Denver in a nearby town of Parker, CO, they got $7mm. There are towns that said no, but got no COSTCO. As usual, Swake has tried to paint this as some sort of backwards Oklahoma thing when it is the normal M.O. If you read the proposal you will see the expectation is the store will increase OKCs overall tax collections.. If the store generates sales at the forcasted level - which is conservative for what average national store sales are - the incentive for THEM is a wise decision. Cabella's is another story.

  6. #631

    Default Re: Costco

    Quote Originally Posted by king183 View Post
    Why does a multi billion dollar retail corporation need $3 million in incentives, especially if, as mug notes, the store will generate $100 million in sales? Costco will build here anyway because there is money to be made and I can think of a hundred other things that $3 million could be used for to improve this city.
    People were getting sick and tired of waiting for Costco to come. For all you know, it's become the custom around the country for big chain stores to first get tax breaks before breaking ground. Costco was possibly patient enough to wait years more for a tax break. Restaurant chains, such as Olive Garden, have been known to take sales tax breaks.

  7. #632

    Default Re: Costco

    I really think what Costco was waiting for was for Oklahoma's liquor laws to be updated to last century standards. You'll never be able to convince me that the target date for opening is shortly after the new rules kick into effect for any other reason.

    That said, to address the tax break situation, as I understand it there are thresholds that must be met. Costco isn't getting a $3,000,000 check. Pete's post above has the details.

    Please don't confuse this with the buckets of money thrown at oil companies for no reason. This is a "if you make $10 for me, I'll let you keep up to $7.50 of it" type deal. For a limited time, and with a cap.

  8. #633

    Default Re: Costco

    Quote Originally Posted by stile99 View Post
    I really think what Costco was waiting for was for Oklahoma's liquor laws to be updated to last century standards. You'll never be able to convince me that the target date for opening is shortly after the new rules kick into effect for any other reason.

    That said, to address the tax break situation, as I understand it there are thresholds that must be met. Costco isn't getting a $3,000,000 check. Pete's post above has the details.

    Please don't confuse this with the buckets of money thrown at oil companies for no reason. This is a "if you make $10 for me, I'll let you keep up to $7.50 of it" type deal. For a limited time, and with a cap.
    That may be true, but for the record, there has been a Costco in Wichita since 2015 and KS liquor laws are very similar to ours. They just approved beer up to 6 point in grocery stores in April 2017 which will go into effect in 2019 as a reaction to CO and OK virtually eliminating 3.2 beer and concern over the potential future lack of 3.2 beer supply. They still do not allow wine to be sold anywhere outside of a liquor store.

  9. Default Re: Costco

    Wichita has more concentrated wealth than OKC does so site selection is easier to justify on a spreadsheet

  10. Default Re: Costco

    Quote Originally Posted by stile99 View Post
    I really think what Costco was waiting for was for Oklahoma's liquor laws to be updated to last century standards. You'll never be able to convince me that the target date for opening is shortly after the new rules kick into effect for any other reason.

    That said, to address the tax break situation, as I understand it there are thresholds that must be met. Costco isn't getting a $3,000,000 check. Pete's post above has the details.

    Please don't confuse this with the buckets of money thrown at oil companies for no reason. This is a "if you make $10 for me, I'll let you keep up to $7.50 of it" type deal. For a limited time, and with a cap.
    It may have played a small part but only one COSTCO in the state of Colorado iscallowed to sell liquor. The "flagship" liquor store at the Park Meadows Mall COSTCO has a relatively small selection of brands so the sales revenue would have to be relatively small.

  11. Default Re: Costco

    hope and expect that OKC's will also be a flagship
    Oklahoma City, the RENAISSANCE CITY!

  12. Default Re: Costco

    I'm still holding out hope for the Norman location!

  13. #638

    Default Re: Costco

    Quote Originally Posted by FighttheGoodFight View Post
    I'm still holding out hope for the Norman location!
    While they aren't actively looking now, I think once they see OKC's numbers surpass their projections (like every other retailer who has come here) I think they will probably put one down in Norman and eventually Yukon.

  14. #639

    Default Re: Costco

    Costco's fixed-price car buying service is really growing:

    http://www.businessinsider.com/costc...ey-perk-2018-2

  15. #640

    Default Re: Costco

    The incentives are on the City Council agenda for Tuesday, which would be the final hurdle before Costco closes on the Memorial and Western property and starts construction for an early 2019 opening.

    As is the practice with such things that originate with economic development / The Alliance, they have already met and presented this to council in private meetings and basically received their blessing before ever taking it to the Economic Development Trust, which has already approved.

    Also, I am not aware of the council ever voting down any economic development incentive.

  16. #641
    Join Date
    Jun 2011
    Posts
    6,697
    Blog Entries
    1

    Default Re: Costco

    You'd think that at least a Sam's rep would show up and say "we didn't need incentives, why should they get them".

  17. #642

    Default Re: Costco

    Probably because they saw ACADEMY waste their breath when Bass Pro was granted their "incentives".

  18. #643

    Default Re: Costco

    Quote Originally Posted by FighttheGoodFight View Post
    I'm still holding out hope for the Norman location!
    Not if it means losing out on sales tax $'s thank you very much. By losing out on sales tax $'s, I'm referring to the money that would be lost from a decrease in what Sam's contributes to the Norman economy and those sales tax dollars going to Costco's profit instead of going into the Norman tax coffers

  19. Default Re: Costco

    Per the proposal in Pete's earlier post, the projection is for approximately 41% of sales will be newly generated (as opposed to simply a shift in market share). People shopping at stores in Tulsa and DFW will return and new shoppers will come in from other parts of the state. If there is a short term cost of $3mm in order to get $4.2mm annually going forward for the forseeable future, why in the world would you NOT make this investment? I don't believe every new business should get this but COSTCO is as sure a thing as you will find.
    Yes, that $3mm can be used on streets and it will come with or without COSTCO. Doesnt $4.2mm for roads and streets annually in exchange for a one-time $3mm incentive sound far better? This is an investment in the future, just like MAPS

  20. #645

    Default Re: Costco

    I was refering to a future Norman location. You do make a good point about newly generated money. Should one be proposed for Norman with the condition os sales tax rebates, it should only be based on what a study would indicate new revenue generation and the same % applied to the rebate formula.

  21. #646

    Default Re: Costco

    ^

    The flaw in the 'the incentives come from new sales' argument is that the assumption we are dealing with an either/or proposition, which is always how it is presented by the people working in economic development.

    How about getting the new sales without having to pay a company millions? Does anybody really think that given the overall investment and massive amount of revenue Costco generates that they would forgo all that if they didn't get this reimbursement? Sam's -- which is a close to a parallel and control in an experiment -- is a mile away and didn't need anything from the city.

    The problem becomes that the more you do this, the more these companies have leverage. Costco knows that OKC paid $3.5 million to Cabela's right across the street.

    We also set aside huge amounts for this sort of thing, so when someone comes with their hands out, it's already waiting for them.


    It seems all that money should stay in the general budget where we are cutting school days and mental health services and only be carved out when it is determined that this sort of thing is a better use of that money.

    That is not going to happen until people better understand the amounts involved and how this all works, and I'm working on breaking all that down.

  22. Default Re: Costco

    Quote Originally Posted by Pete View Post
    ^

    The flaw in the 'the incentives come from new sales' argument is that the assumption we are dealing with an either/or proposition, which is always how it is presented by the people working in economic development.

    How about getting the new sales without having to pay a company millions? Does anybody really think that given the overall investment and massive amount of revenue Costco generates that they would forgo all that if they didn't get this reimbursement? Sam's -- which is a close to a parallel and control in an experiment -- is a mile away and didn't need anything from the city.

    The problem becomes that the more you do this, the more these companies have leverage. Costco knows that OKC paid $3.5 million to Cabela's right across the street.

    We also set aside huge amounts for this sort of thing, so when someone comes with their hands out, it's already waiting for them.


    It seems all that money should stay in the general budget where we are cutting school days and mental health services and only be carved out when it is determined that this sort of thing is a better use of that money.

    That is not going to happen until people better understand the amounts involved and how this all works, and I'm working on breaking all that down.
    Respectfully, to your question about whether or not COSTCO would forgo building here if OKC failed to provide incentives -- We'll never know but specifically about COSTCO, there are articles you can look up that shows they did, in fact, not build in more than one community where incentives were not offered. They have legitimate concerns that Wal Mart owns this city and are not begging to come here.
    With regard to sales projections, even if the true figure isn't 41% but 20%, it's still a wothwhile investment because once they have their incentive paid, the tax revenue continues.
    With regard to precedent and everyone having their hand out, I really don't see it that way. If XYZ Fabrics wants to come into the market, let them do it on their own. There are 10 other fabric sellers here. Same for In and Out Burgers or most other retailers. Sam's and Target are the only other real competitors and Sam's is disliked by a lot of us for quality - not political reasons. COSTCO quality is significantly higher plus their online services are outstanding. Government should pick and choose. Some are nearly obsessed with Cabellas. Personally, I don't care for them one way or another but there are probably very few retailers who would be worthy of incentives. COSTCO is one - again, trading some school/road money today for likely a lot more in the future is a worthwhile investment.

  23. #648

    Default Re: Costco

    Quote Originally Posted by mugofbeer View Post
    Respectfully, to your question about whether or not COSTCO would forgo building here if OKC failed to provide incentives -- We'll never know but specifically about COSTCO, there are articles you can look up that shows they did, in fact, not build in more than one community where incentives were not offered. They have legitimate concerns that Wal Mart owns this city and are not begging to come here.
    I can also point you to hundreds of locations Costco has done without any economic incentives whatsoever.

    It's very simple: There are companies like Costco who seek economic incentives where they know they have leverage. That takes all of 15 minutes to determine... A quick visit to the city and state economic websites tell you right away if they have these types of programs.

    Then, they just do a bit of quick research, see that Cabela's got $3.5 million right across the street and so did Von Maur and others and they also know they were able to work Tulsa for $2 million for that site.

    Look at Amazon vs. Federal Express, two national companies who have recently expanded greatly in OKC. Amazon seeks incentives, asks for them and thus we paid them. Fed Ex is now building their second big facility in a year and they never even contacted economic development (I asked Cathy O'Connor specifically). If they had, I'm sure they would have been paid as well but for whatever reason, they didn't nor do the huge majority of companies that move here or greatly expand.


    I'll state it again: If you set aside money from your budget for this purpose and hire people specifically to distribute these funds, it is money that largely goes looking for a problem to solve.

    The entire premise of economic incentives is the "but for" argument: This will not happen but for the incentives, so all the new revenue generated is somehow magical found money.

    It's important to keep in mind that is completely un-provable and IMO a horrible argument for allocating BILLIONS in corporate welfare when the state is in emergency.

    Not to get into a whole trickle-down economic discussion but that has largely been proven to be a failure and that philosophy and practices such as this that result can pretty much be traced directly back for our current state government crisis. We don't need to raise taxes one bit; all we would have to do is cut back on some of these incentives and the budget gap would close overnight. But the truth is, these are all separate programs and nobody has the totals... I know because I've been researching this for some time and I'm determined to quantify all this. The fact that nobody really even bothers to total it up tells you 1) That's incredibly dangerous budgetary management; and 2) They would rather not have the public know.


    If this worked like business and you went to your boss and said, "Hey if you give me a big pool of money to give to potential clients, I can bring in a lot more." What do you think they would say? I can tell you it would go exactly like this: "We have thousands of clients already who didn't need to get paid. We have one exactly like this in the exact same business who didn't need it. Do your job and stop asking the company to pay for what you should be able to do on your own while we can spend that money on much more important things. And by the way, once you let that genie out of the bottle a lot more clients are going to come to us with their hands out."

  24. #649
    Join Date
    Feb 2005
    Posts
    10,031
    Blog Entries
    1

    Default Re: Costco

    Let's not forget that Costcos will decrease some of the sales tax revenue received from other stores that carry similar products. Although, Costco have a unique product line, there are some items that Costcos carry that make it convenient (discounts on trash bag-sized pouches of chicken nuggets and bulk packs of toothpaste) for you to buy from them while you're in their shopping domain.

    It's nice to attract a Coscos; however will we have the same concerns we had when the City helped subsidize the construction of Bass Pro over the objections of Academy who wanted similar concessions.

    With the closings of many of the Sam's Club (Walmart family); another membership store is ready to move in.

  25. #650
    Join Date
    Feb 2005
    Posts
    10,031
    Blog Entries
    1

    Default Re: Costco

    As one who is through paying for memberships for the paltry savings you receive, hope there will never be a need for me to patronize Costco. There are ways around these membership clubs.

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. lets bring COSTCO to OKC campaign
    By beshy in forum Businesses & Employers
    Replies: 23
    Last Post: 11-11-2011, 05:31 AM
  2. Costco "Considering" Oklahoma, however?
    By progressiveboy in forum Current Events & Open Topic
    Replies: 67
    Last Post: 09-09-2011, 07:49 AM
  3. Costco Email Response Re: Oklahoma City
    By writerranger in forum General Civic Issues
    Replies: 53
    Last Post: 09-29-2006, 07:08 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
Single Sign On provided by vBSSO