County sticks to proposed $4 million subsidy to help move Costco to Wheaton
Critics say money could be better spent elsewhere in tough budget year
County Executive Isiah Leggett's proposal to pay a $4 million subsidy to lure a Costco warehouse store to Wheaton has sparked an ongoing debate over whether the money would be better spent on endangered county services.
Leggett has proposed such things as raising fees, imposing a modest tax hike and cutting as much as $2.8 million in funding for county libraries to help cover a $300 million deficit in his proposed $4.35 billion fiscal 2012 spending plan.
But Leggett is also proposing to provide Westfield Wheaton Shopping Center with a $4 million subsidy to help cover construction costs for a $62 million, 232,000-square-foot addition to the mall that will house Costco and other retailers.
County Councimen Marc Elrich (D-At large) and George Leventhal (D- At large), both of Takoma Park, stand on opposite sides of the question of whether the subsidy represents good policy and a worthwhile investment in the county.
Elrich said he believes that large corporations such as Westfield Group, the retail property group that owns Westfield Wheaton do not need handouts from the county at a time when the county cannot afford to take care of residents.
"I think it was a mistake to start with, and I think it's a mistake now," Elrich said. "And if I've got to choose between Costco versus libraries and public services, I'm taking libraries and public services."
Subsidizing the Costco project, Elrich said, simply pales in comparison to other county needs.
But Leventhal disagrees. In order to attract jobs and compete with surrounding areas, such as northern Virginia, the county must make economic investments, even if it seems like "a bitter pill to swallow,'' he said.
"Our problem is a drop in tax revenue," Leventhal said of the county's budget. "We've got to do things that will start to attract business."
Costco will help bolster the county's economy, benefiting residents in the long run, he said.
The Costco project will provide 240 jobs during the construction period, according to Peter Bang, chief operating officer for the Montgomery County Department of Economic Development. Once the project is completed in 2012, Costco and stores occupying an additional 80,000 square feet of retail space will provide about 470 jobs, he said.
The county would receive an estimated $205,000 in new revenue during construction, Bang said. The first year after the construction is complete, and Costco and other retailers filling the new space are operating, the county will generate an estimated $785,000, he said. Over the first 10 years, Costco and new retailers would generate an estimated $8.3 million in tax revenue, he said.
The county does not track economic impact, which includes secondary spending, Bang said.
Starting salary for a Costco employee is $11 per hour; after four years, the average employee earns $18.50 per hour, said Erich Brann, manager of real estate development for Costco, according to minutes from a Jan. 25, 2010, Wheaton Redevelopment Advisory Committee meeting.
The Costco project also may include a gas station with four islands and eight pumps, provided the Montgomery County Planning Board approves a special exception to override zoning laws, which do not now allow for a gas station on the site.
Some nearby residents have opposed a gas station, saying that its effects on the environment, noise levels and traffic congestion are unreasonable.
Costco applied for a special exception in November and planned to go before planning board the first or second week of May. But the special exception is on hold until September, said Valerie Berton, spokeswoman for Montgomery County Park and Planning.
Donna R. Savage, chairwoman of the Kensington Heights Civic Association land use committee, said that although there is a difference of opinion within the association, it generally recognizes the need for an economic investment such as Costco. But community members still have concerns about the project, including the traffic the store will generate, a potential gas station located near single-family homes and truck shipments arriving overnight, she said.
"When the county gives money to a corporation in this fashion, it seems to us that the result of what that money is being used for ... should not be detrimental to the communities surrounding the mall," Savage said.
The council, Savage said, should attach some strings to that $4 million. The proposed site of the gas station should be at least 1,000 feet from any residence, and Costco should engage the community in discussion about the design and implementation of the store, she said.
Costco is now refusing to engage with the civic association, Savage said.
"They're not being very good neighbors, and they're not even here yet," she said.
Danila Sheveiko, chairman of the civic association's Costco working group, said that Costco representatives said they will no longer meet with the association because the association is being unreasonable about the gas station.
The association has focused on issues mainly surrounding the gas station, because it's not against the store coming to Wheaton and did not want to assume a "not in my backyard" stance, Sheveiko said. But because the project received the green light at the highest levels of county government, subsequent plans have excluded input from neighbors, he said.
"We're not even against the $4 million, as long as our concerns are addressed and it's not a disastrous situation," said Sheveiko, who shops at Costco in Beltsville. "Instead of forcing this project on the community, they should have gotten everybody together and figured out an alternative. As it stands, the $4 million is a travesty."
A Costco representative said Monday that the company's corporate policy is to not comment on specific markets.
Officials of Westfield Wheaton Mall could not be reached for comment.