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.
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