Kleinman calls Clayton ‘Costco killer;’ Clayton questions bailing out multi-billion-dollar business

The land Costco is eyeing sits on Coit Road near Central Expressway.
The land Costco is eyeing sits on Coit Road near Central Expressway.

Whether or not Costco comes to Coit Road in Dallas depends on whether or not the city will give the retail giant a $3 million tax credit; and whether or not the city agrees to provide the credit should be decided this Wednesday by the Dallas City Council.

Preston Hollow Councilman Lee Kleinman, whose district includes the new development, is leading the charge to support Costco, saying it doesn’t just make economic sense, it makes community sense.

“They’re bringing a lot of new jobs to the neighborhood,” he told the Advocate. “Their minimum wage is $13 an hour, which is well above the Dallas living wage of $10.37.”

East Dallas representative Mark Clayton is more wary, questioning why the city should provide a handout to a multi-billion dollar company.

“I think it sets a really bad precedent that we’re starting to buy brands,” Clayton told the Advocate. “It’s basically saying if you just hold out long enough, the City of Dallas will pay you to be here.”

The $3 million would be part of the city’s Public Private Partnership Program, which has strict criteria for what projects pass muster. In Northern Dallas, a project must, at minimum, create 100 jobs or bring in $5 million into the city’s coffers. Costco would do both, Kleinman points out, providing 175 permanent jobs in its first year alone and bringing in $16.8 million in sales and property tax during the first 20 years of operations.

“That’s tax revenue we’re leaking to Plano,” Kleinman says, pointing out that Dallas residents regularly drive to Costco locations in neighboring cities because of their deep discounts.

Clayton isn’t against Costco, but wants to save the city’s limited economic development resources for the projects that enhance the city, in more ways than just its economy. He said the Public Private Partnership Program was designed to support projects that fill a needed gap in the city, such as bringing grocery stores to the food deserts of Southern Dallas.

“I’d be supportive if they were opening in South Dallas, but they’re not,” he says. “We would love the sales tax revenue but it just doesn’t pass the smell test.”

Kleinman countered that Costco has an economic formula of how much it will spend to open in a new location, and often seeks tax credits in areas with higher property taxes such as North Dallas. In 2013, Houston’s City Council approved $1 million in tax credits to open the city’s eighth Costco location, citing the overall economic benefit the retailer would bring.

Kleinman added that the 13-acre property Costco is eyeing at 12550 Coit Road has been in the state’s possession and thus “off the city tax roll” for 20 years. He argues it’s better to make some property tax off the land then continue to let it sit.

“Plus we get jobs with high wages, plus we get the convenience for our residents,” he adds. “The more narrow issue is why does Clayton want to be a Costco killer? I understand being a Walmart killer but Costco is supposed to be the good guys.”

Clayton says that’s not a fair assessment since he’s undecided on issue, but leaning against it unless he hears a strong argument as to how Costco will better the neighborhood.

“We already have Sam’s and others like [Costco]” he says. “I’m just not sure we need it.”

If it gets the grant, Costco hopes to break ground this summer. The retail giant would get the first $1 million from the city in June 2017 only if it had added $20 million in infrastructure improvements on the land, and had provided 150 full- and part-time jobs paying at least $13 an hour. The rest of the funds would be paid out every two years in $500,000 increments only if Costco meets certain milestones, such as $100 million in gross sales per year.


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