I’ve been promising my children we’d do our Christmas shopping at Costco in Ukiah since about 2013, so when I tell them Costco plans to open in April, I can hardly blame them if they don’t rush to put it on their calendars. However, this time, it’s the real deal. Escrow is scheduled to close in September, and Costco plans to break ground shortly thereafter.
When a company like Costco decides to build a store in a new location, it’s generally the result of long hours of negotiation to determine who will pay for what. Costco needs infrastructure to support its new store, and local government needs to be sure the tax revenues and other benefits outweigh the costs.
Now that negotiations are done, we can expect construction to begin. While Costco works on building its store and gas station, local contractors will begin several infrastructure projects: reconstructing Airport Boulevard, adding a second left-hand turn lane from westbound Talmage Road onto Airport Boulevard, as well as creating a two-lane off-ramp from southbound Highway 101 at Talmage Road with censors connected to the traffic light at the Talmage and Airport intersection. They will also add a left-hand turn lane from Hastings Avenue on to State Street and a traffic light at Hastings Avenue and Commerce Drive.
I don’t have a lot of details, but I am told Ghilotti Construction has been awarded a $4.6 million contract for much of the construction (not including the off ramp).
The half-cent sales tax recently approved by Ukiah voters via Measure Y will fund the rebuilding of Airport Boulevard. Additional funding will come from a gas tax and a capital improvement fund. Contributors to the capital improvement fund include businesses currently located in the Redwood Business Park (that’s the official name for the Airport Boulevard shopping area).
I know we still have people against Costco coming to town, but it’s here so let’s embrace the benefits, of which there are many. When Costco opens, it will provide a place with more goods at lower prices, and its presence will likely lead to lower prices on goods throughout our community (thanks to the laws of supply and demand). Gas prices should also drop. Lower prices make everyone’s paycheck go further. Most of the jobs at Costco will pay enough to allow their employees to afford Ukiah-area rents, and I expect many employees will be able to afford to buy homes.
People will not go to Santa Rosa to shop as often, saving gas and keeping more sales tax revenue here. Having a Costco in town will also reduce online shopping. Many locals say they would shop in Ukiah if they could find what they’re looking for. While Costco may not be a local mom-and-pop business, shopping there will certainly support the local employees who work there, and it will increase sales tax revenues to pay for things like public safety and other services many of us appreciate.
Ukiah’s 8.375 percent sales tax gets distributed to city, county and state governments. The city gets approximately 2 percent. The state gets approximately 5 percent, and the county gets the rest (including 0.125 percent for the library). Costco will also pay property taxes to the tune of about 1 percent of the finished value of the land and improvements.
Thanks to City Manager Sage Sangiacomo and City Councilmember Doug Crane for providing timely information about costs and revenue on this project. The city’s fiscal analysis for Costco conservatively estimates net annual sales tax revenue to the City of Ukiah will be about $800,000. The estimated assessed valuation for the Costco development is about $27,000,0000, so property tax revenue should be approximately $270,000 of which the city will get about $25,000. Most of the other $245,000 gets distributed to other local agencies. Overall, this is a good deal for Ukiah.
If you have questions about real estate or property management, contact me at email@example.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.