Council agrees on $10 million incentive for Costco
Cape Coral City Council approved a $10 million incentive package for a planned Costco on Monday.
At the beginning of the meeting City Manager Michael Ilczyszyn asked for the matter to be moved to the front of the agenda, placing it ahead of citizen input.
Resolution 302-26, the Economic Development Incentive Agreement between the city and Costco Wholesale Corporation was approved 7-1 with Councilmember Keith Long dissenting.
The incentive package includes Enhanced Property Value Recapture Grant for funding up to a maximum amount of $8,000,000; impact fees associated with the project, for an amount not to exceed $1,800,000; and utility impact fees up to a maximum amount of $200,000. The payment is to occur over a 25-year performance period.
Ilczyszyn said the site, at 600 Chiquita Blvd. S. at Pine Island Road has some compaction issues with the soil. He said it was necessary that the city comes up with a way to make it a developable property.
Although the site fit all of Costco’s criteria, it had a higher-than-usual barrier to entry because of the compaction, he added.
“If we don’t step in to help bridge that gap, they walk away,” Ilczyszyn said. “If Costco, who is well capitalized, can’t make the financials of this site work, then who would be able to? No one regionally, and certainly anyone locally to make that development and work with us with repayment overtime.”
Ilczyszyn said the incentives are to lower the barrier of entry for the No. 1 resident request for retail wholesale.
The city is working with Costco to expand the roadway itself, including sidewalks, curbs and turn lanes from the front of their property to the back of the property.
“There are a series of offsite improvements. They are going to help us construct while they are doing their project,” Ilczyszyn said.
Ilczyszyn said the synthetic “Tax Increment Financing” incentive for Costco essentially is similar TIF incentives offered in the Community Redevelopment Agency district operating in the South Cape.
TIF financing allows what is essentially a rebate of taxes between the undeveloped site’s baseline taxable valuation and the taxable value of the property after development for an agreed-upon number of years.
“We don’t have any county participation. It would just be our property taxes after the construct, after they get a CO and on the tax bill,” he said. “Right now, the site is generating little to no ad valorem tax – no public service tax, no service tax, no gas tax. It’s deferring the receipt of taxes we would get in order to incentivize.”
Councilmember Laurie Lehmann said Costco could have gone to Punta Gorda, or Fort Myers, but by doing the incentive, the city is encouraging them to come to Cape Coral. She said it helps the whole concept of what city officials are trying to achieve – live here, work here, play here, and stay here.
“The company is worth a hell of a lot of money, but if we don’t do the incentives, we are not encouraging companies to come here and build their large stores. The more commercial we get they are paying the majority of taxes, which ultimately lowers the tax base for residents,” Lehmann said.
To reach MEGHAN BRADBURY, please email mbradbury@breezenewspapers.com