The City Council Tuesday night approved a trio of measures to keep the 150,000-square-foot Costco retail store on track for a 2023 opening, despite the rising cost of bringing the facility to Longmont.
With little comment, the council signed off on an ordinance to spend an additional $3.68 million from three funds — the water acquisitions fund, affordable housing fund and the Harvest Fund East Special Revenue Fund — for the Costco project. Council also agreed to a loan increase and side letter agreement with the parties associated with the store’s development.
Costco remains a good investment for Longmont, said Mayor Joan Peck. “I am excited the city is going forward with this,” Peck said.
Jim Golden, Longmont’s chief financial officer, told the council the extra funds are offset largely by fund transfers, cash in lieu of water rights and from proceeds of advanced revenue Costco is projected to generate.
The project cost for Costco in November 2020 was over $12 million, Golden said. Initial bids for the project hiked the cost to $17 million by December 2021.
Since then the city has worked with bidders to clarify and lower the projected cost to $15 million, Golden told the council. Of that amount, $10.8 million is the cost to the city to essentially “incentivize Costco to locate in Longmont,” the report states..
Several factors played into the increased costs of the project, including the Bonus Ditch relocation, site underdrain, additional site grading/earthwork and demolition.
The prices for construction material has also gone up, according to a city staff report to the council. “Prices for items such as pvc pipe, steel, wood and concrete have escalated by more than 30% in the past year,” the report states.
At least $2.9 million of the hard costs will ultimately be funded from the city’s Affordable Housing Fund, according to the report. That price represents the $1.4 million authorized in 2020 plus an additional $1.4 million in American Rescue Plan funding to purchase the 9-acres of affordable housing property. That also covers the corresponding share of public improvements associated with the affordable housing property, according to city officials.
The remaining balance — $12 million — will be funded through sales tax generated from the development, the city staff report states.
In fact, “the $10.86 million to incentivize the Cosco project would essentially be covered in less than four years,” the report states. The $12.8 million of the Costco project and the associated affordable housing project, would essentially be recovered in less than four years from sales taxes generated by the store, the report states.