We teased about this last April Fools Day — when we said that Costco was buying up the Hicks-Crespi Estate on Walnut Hill Lane for its hottest new North Dallas location. It was a joke. Then Andy Beal actually BOUGHT the Hicks-Crespi estate, no joke! Costco has been eyeing Dallas for years for a location, from the dealership sites on East Northwest Highway to the intersection of Coit and Churchill just west of Central Expressway for a North Dallas big box location, where they have finally landed.
Now we are giddy with delight!
The City Plan Commission recently gave Costco a green light. Now the city’s Office of Economic Development wants to give them a Chapter 380 economic development grant “not to exceed $3,000,000″ to get the job done and bring the retail giant’s sales revenues into the city.
I mean, this is a no-brainer. The money comes from the 2012 bond proposition specifically to attract businesses to Dallas. This is the first incentive money spent in District 11 in over 10 years. Full disclosure: I live in District 11. Frankly, anyone against it just is not thinking straight.
I spoke with City Councilman Lee Kleinman briefly, who told me that sales tax revenues from the $3 million grant (remember, money already put aside to attract business to Dallas) could exceed ten million in sales tax revenues over the next ten years. He says he pushed Costco pretty hard last year, so hard, in fact, they almost walked away from the table.
“Is it that they want something economic, because the City gives other companies economic incentives? ” I asked.
Yes, he said. There are also costs inherent to the project, and the site is a little smaller than the behemoth discount retailer would have liked for maximum return on investment:
“They wouldn’t do the deal without the support due to overall project costs,” said J. Hammond Perot, assistant director in the Office of Economic Development, by email. “We had been trying to get a Costco for over 10 years, and that’s what it took.”
Jennifer Murillo, director of real estate development for Costco, told the City Plan Commission last week that the company “has been looking for a site in Dallas for many years,” and that it settled on the 13.2-acre Coit Road location, near the southwest corner of North Central Expressway and LBJ Freeway, after it came up for auction. The land had been owned by the Texas Department of Transportation.
The site, she said, is about 3 acres smaller than Costco would have preferred. But, she told the commission, it’s easy to access and has “fully developed infrastructure in place.”
The proposed store would be 151,000-square-feet with 16 fueling stations, 703 parking stalls and all the goodies Costco offers members, including a pharmacy, bakery, tire center. Not sure if it will also include a liquor store. Apparently the company also has worked with the CityDesign Studio to make the store better looking. It will have more parking spaces than the city requires. The store’s landscaping plan calls for 244 trees, which are 99 more than are required. Seems like a huge win win.
The City of Dallas desperately needs to expand its revenue base. It’s rapidly losing the tax on telephone land lines, as well as shopping center declining sales tax revenues as more people shop online. It is critical that they look for a logical means of expanding the city’s revenue base.
A Costco in Dallas would capture the large share of shoppers who already head to Plano East or West (or Duncanville, Fort Worth, Arlington, Southlake, Lewisville, Frisco and Rockwall) to shop Costco. Hello, Park Cities shoppers!
“It is pretty easy to pay for a Costco membership with the fifteen cents per gallon savings on gasoline, particularly as the gas is the highest grade available, top tier,” says Dormand Long, a former businessman and consumer activist who has conceived many a way for the city to increase revenue, including suggesting we study the innovations of Denver and Seattle in converting coin parking meters to modern kiosks. Denver increased its parking and overdue fines by $42 million, enough to completely fund its great public library system.
The Coit/Churchill site is a perfect location: while it is well removed from single family residential neighborhoods, a Costco could improve nearby home values: studies have shown that the values of homes within a reasonable driving distance of either a Costco, Trader Joe’s or a Whole Foods are significantly enhanced.
“While I am generally opposed to municipal subsidies to privately owned enterprises, this appears to be an option that would fund direly needed library, streets and other much needed improvements in the City of Dallas,” says Dormand.
Costco, he says, thrives because it is responsive to the wants and needs of its served markets. Customer service is among the highest in retail.
Kleinman agrees. Perhaps the biggest fiscal hawk on the City Council, he points out that the land has been lying fallow for years while we all drive north to the two Costco’s in Plano on both Central and the Dallas North Tollway to shop. He thinks TxDOT is great to be giving up the land.
Others on the City Council are not as excited. Phillip Kingston, for example, thinks Costco is rich enough and should need zero incentives — he has said there is no way he would support this. I would hope he would re-consider, and listen to his constituents who would also benefit.
There is speculation that Costco may raise membership fees, which account for “almost 70% of the $3.6 billion in operating profits it generated last year. The company has also said it will no longer accept American Express cards after June 19, switching to VISA instead.” In general, Costco appeals to higher net worth consumers who have an American Express (it’s that or cash) and don’t mind paying the annual fees of $55 to $110 (Executive Level). For these shoppers, an extra $5 or $10 a year is nothing, especially if they make up for it with cash back on their new VISA.
… among those with a net worth of $5 million or more (not including their primary home) Home Depot is the favorite store, regularly visited by 57%, followed by Costco (46%), Lowe’s (44%) and Target (41%). A third say they shop at Walmart, too.
Where they don’t shop is just as intriguing: Only 2% of the survey (based on 1,200 investors with net worth ranging from less than $100,000 to more than $5 million) ever go to Lord & Taylor, for example. And only 8% of the highest net-worth shoppers go to Neiman Marcus.
I rest my case. We need a Costco in Dallas, it’s the best company to get the money already earmarked for economic investment, and there is no doubt the return on investment will be solid.