The Oconee County Industrial Development Authority on Tuesday agreed to issue $16 million in bonds and waive real and personal property taxes for 15 years to entice Costco to locate in Epps Bridge Centre II.
The Board of Commissioners followed by agreeing to cover the costs of the bonds, since the Industrial Development Authority has no ability to raise taxes on its own.
Courtney Bernardi, president of the Oconee Chamber of Commerce, which is handling development work for the county, told the Authority and Commission members that Costco plans to build a 155,000 square-foot store on 23 acres now owned by Frank Bishop, the developer of the Epps Bridge Centre complex.
The store, which could open in May or June of 2022, would employ 250 to 275 persons and generate $94 million annually in sales in its first year of operation, she said. By 2030, the expected sales would be $150 million, she said.
County Attorney Daniel Haygood said, using a $100 million as an annual sales figure, the county would be compensated fully for the needed bond payments by the $1 million in Local Option Sales Tax revenue the store would generate.
That would leave $1 million in Special Purpose Local Option Sales Tax revenue for the county, $1 million for the county’s schools through the Education Local Option Sales Tax, and another $1 million for county transportation spending if voters approve that new tax in November, he said.
Late on Tuesday evening, Bernardi put out a news release saying “Costco is coming to Oconee County.” The press release contained a statement from a Costco spokesperson saying “We are excited to be joining the Oconee community”
Costco has been looking at 23 acres at the corner of Plaza Parkway and the Oconee Connector in what officially is Epps Bridge Centre II, Bernardi said.
|Bernardi Before Commission|
Hobby Lobby is the only tenant of that part of the Epps Bridge Centre complex at this time, and Costco would become its neighbor.
The site, already graded, is to include the warehouse-style building plus 18 fuel stations initially, Bernardi said. The site will be planned with the possibility of expanding to 24 stations, she said.
The site had been designed for the possibility of attracting Costco, headquartered in Issaquah, Washington, near Seattle, from the beginning of planning for Epps Bridge Centre in 2016
The rezone plans from 2016 showed a building of 146,290 square feet and an out island that appeared to be for fueling stations.
In 2017, Bishop’s Oconee 316 Associates LLC of Atlanta, split Epps Bridge Centre II into two phases, putting on hold plans for the Costco lot and moving ahead with plans for the part of the shopping center that now houses Hobby Lobby.
Costco is a membership-only warehouse club, meaning only those who pay a membership fee can shop at the site.
According to the company web site, a household card, good for two persons, currently costs $60 annually.
Long Time Coming
“This is a day that I’ve worked toward for a long time,” County Attorney Daniel Haygood said in opening the discussion at the Development Authority on Tuesday.
|Haygood Before Commission|
“What we’re talking about today is the location of Costco in Oconee County and the incentive package that it will take to get them here.”
First, however, Haygood said he wanted Bernardi to give an overview of Costco and its plans.
“We’ve talked about this for a number of years,” Bernardi said. “And I think we all have an idea, but I’d like to just reiterate a little bit about who they are looking at Oconee and why we’ve been having these conversations..for about nine years.”
Costco is the world’s fourth largest retailer, Bernardi said. “And that’s a huge thing for any community, especially a community of our size, to have a retailer looking at our community–that big of a retailer.”
“They are looking to build a 155,000 square foot building on that site. It’s pad ready,” she said.
Bernardi said the site will have 699 dedicated parking spots, and that is much lower than normal for a Costco “but they were willing to work with us and that is the number they will have there.”
Haygood said Costco already has submitted plans to the county Planning and Code Enforcement Department and review is underway.
Benefits Of Costco
Bernardi said one of the things that makes Costco distinct is how they treat their employees.
“It is really far and beyond what most retailers do,” she said.
The 253 to 275 employees Costco is expected to hire would be paid an average hourly rate of $23, she said.
“Typically you’ll start out at $16.50,” she said. And the average annual salary is $58,000.
Costco offers bonuses she said, and it pays time-and-a-half on Sundays.
They offer medical benefits, drug, visual, and dental coverage, and disability and life insurance “to their entire workforce,” she said.
“They expect to open, given we move forward today and can start construction after the bond validation process, we expect the store to open mid 2022, which would be about the May/June time frame,” Bernardi said.
|Bishop Before Development Authority|
Bishop, following Bernardi, thanked Bernardi and the county “for all the efforts that you all put into and patience you’ve had with us in trying to bring this opportunity to Oconee County.
“And we just want to say thank you for being here. It’s been a long time to get to this point,” he said.
“We hope you’ll make the right decision,” he said.
The decision of the Industrial Development Authority and the Board of Commissioners was unanimous.
Haygood followed Bishop in speaking at the IDA meeting and said that the projected sales tax revenues were calculated by an independent group, not by Costco.
If the numbers are rounded to $100 million in annual sales, that would produce about $3 million for the county with the current taxes in place. If sales go to $150 million a year, revenue would be $4.5 million.
Each of the sales taxes, including the proposed transportation tax, is 1 percent, though each has different exemptions, and LOST generates less in revenue than the others.
|Labeled Aerial Of Costco Location|
“But getting them is not going to be free,” Haygood continued in explaining the incentive proposal before the Authority.
The $16 million in bonds that the IDA decided to issue will pay for purchase of the property, which the IDA will own, and site improvements.
The bonds will mature not later than Dec. 1, 2048, but Haygood said he expects they will be paid off in 16 years.
Costco will pay for construction of the building.
“The county’s legal limitation of what it owes on these bonds will be an amount equal to the revenue generated by the Local Option Sales Tax,” Haygood said.
The county is not pledging to use the actual revenue from the Local Option Sales Tax because it is not allowed to do so, he said.
“We do not have to pay more than the amount generated by LOST,” he said.
“If Costco moves, the county and the IDA have no obligation to make further bond payments,” Haygood said.
The $16 million on bond sales includes $1.2 million in bond reserves to be used for last payment, according to Haygood.
Because the development authority will own the land, there will be no taxes on the land or the personal property for 15 years.
At end of 15 years, Costco will own the property and will begin paying taxes.
Bernardi, Bishop, and Haygood all spoke again at the Board of Commissioners meeting, repeating much of what they had said before the Industrial Development Authority.
Commissioner Amrey Harden, who is in his first term on the Board, asked for a comparison with what the county had done to entice Caterpillar to move to the county in 2012.
According to the bond documents approved by the Industrial Development Authority, the county still owes $8.3 million on the $10.4 million it borrowed in 2012 to provide enticements for Caterpillar.
“Were is the payback on Caterpillar?” Harden asked.
Haygood and Daniell responded, providing an usual assessment of the use of incentives in the Caterpillar case.
Haygood And Daniell On Caterpillar
Haygood said Caterpillar will pay property taxes after about another 10 years and has bought jobs to the county.
“I think at the time there was the thought there would be other business that would locate because of Caterpillar,” Haygood said. “That didn’t necessarily turn out to work. ”
Daniell said that even with the abatements in place Caterpillar is paying property taxes in the county and is in the top 20 tax payers.
“I don’t know that the deal worked out exactly like everybody thought,” Daniell continued.
“It kind of is an intangible metric that I’m talking, but it’s been more than one that said when that announcement came out it triggered something, gave people confidence to go out and start moving dirt again,” Daniell said.
“At some point the Orkins are going to want to sell property again,” Haygood said, referring to the owner of adjoining property, “and when they do we’ve got an industrial park sitting there waiting on them.”
I did not attend the meetings of the Industrial Development Authority and the Board of Commissioners, held at 4 p.m. and 5 p.m. respectively in the Commission Chamber at the Courthouse in Watkinsville.
Both were live-streamed, and I watched and recorded them from the Zoom sessions.
I missed the link to the Commission meeting and logged in just as Bernardi was finishing her introduction.
Diane Baggett, Communications manager for the county, told me that Bernardi’s comments before the Commission largely replicated those she had given to the Authority.
I will embed the full video from the county YouTube site after it is uploaded on Wednesday morning.
I have a comment only signed with a first name. I require those wishing to comment to use both the real first and last name.
What was not addressed by the county:
The current tax value for that 23+ acre Costco property is $3,756,780.
Will the $16 million to purchase that property NOW come from bond investors $$$? I can't imagine Frank Bishop waiting 15-20 years for a completed payout. Is Oconee County backing the bonds?
Who are the bond underwriters? (They will be first able to sell the bonds to their clients leaving out other investment groups.)
What is the yield to maturity with maturity expected Dec. 2048?
Thank you, Lee, for keeping us the the Oconee loop.
- Beverly Rodgers
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