Editorial | Open arms for Costco

Editorial | Open arms for Costco

The plan to bring a Costco to Market Place Mall is a good move all the way around.

It's not often that sober and strait-laced members of the city council in Champaign act like shameless groupies.

But the news that Costco, a membership-based retail business with 770 stores worldwide, is coming to Champaign pushed them over the edge.

The jobs, the sales tax revenue, even the prospect of in-store samples of salmon and macaroni and cheese have them panting in anticipation of approving a development agreement with company officials.

People should withhold judgment on the samples, but Costco's decision to open a store in fall 2020 or spring 2021 at the Market Place shopping center really is good news.

The popular business, which competes with Walmart-owned Sam's Club, is a commercial phenomenon.

Under the proposed agreement, the company will build a 150,000-square-foot store immediately next to Market Place in the location once occupied by Bergner's. The mall's owner, Brookfield Properties, intends to subdivide their lot and sell a lot to Costco.

Not only will Costco fill the gaping hole created by the absence of Bergner's, it's the kind of business that draws people and creates new opportunities for businesses already at the mall and those that might move there.

There is, of course, always a catch in these kinds of arrangements that come in the form of business incentives. Although objectionable, these incentives have become part of the business landscape, to the point that complaining about them is fruitless.

In this case, the city will reimburse Costco $2.75 million of the anticipated $7.1 million in sales tax revenue the store expects to generate in its first six years of operation.

"In that time frame, the city would fulfill the reimbursement option and still retain approximately $4.3 million in sales tax revenues," city officials state in a memorandum on the issue.

Costco has a good reputation as an employer, both in terms of the number of people who work at their stores and the salary and benefits they are paid. The new store expects to grow from about 150 employees initially to more than 200 once full operations are up and running. The average Costco employee earns about $22.50 per hour.

It's not just the city of Champaign that will benefit from this commercial leviathan. The overall 9 percent sales tax, which is far too high, is divided among six different governmental units.

The state collects 5 cents of every 9 cents in sales tax on a $1 sale. The city's municipal tax is 1 cent, and the city's home-rule tax is another 1.5 cents. From there, the county collects 0.25 cents in sales tax, 0.25 cents for public safety and 1 cent for county school facilities.

Sales tax in Champaign County county represents a wide assortment of levies because, according to city officials, taxes on some items, like food and drugs, are exempt, while special levies are imposed on other purchases like gasoline.

"Additional taxes that are collected by the city include an additional one-half cent food and beverage tax for any food and beverage sold for immediate consumption and a motor fuel tax of four cents per gallon of gasoline sold," the city officials state.

Frankly, it's hard to find much to complain about in the city's agreement with Costco. It will provide an additional shopping amenity with proven consumer appeal while reinforcing the community's reputation as strong economic force.

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