County votes to move forward on first half of $4 million subsidy to help lure Costco to Wheaton
Some council members argued unsuccessfully that money would be better spent elsewhere
By approving a $2 million subsidy to the owner of a Wheaton shopping mall to lure a Costco store, the Montgomery County Council on Monday solidified giving more than 25 percent of a grant and loan program's funds to a single company.
The council on Monday voted 6-3 to reject an attempt to derail a proposal to give $4 million over two years to Westfield Group, saying that the county should not back out of an agreement.
Council Vice President Roger Berliner (D-Dist. 1) of Potomac said the council should not debate the merits of the project and needs to honor its word.
"I believe the integrity of this council is more important at this moment in time," Berliner said. "This council should not revisit what the previous council reluctantly agreed to, and we should be done."
But Councilman Marc Elrich (D-At Large) of Takoma Park said that the county should not pursue a deal that no longer makes sense financially.
"To keep your word on something that lacks merit, I think, is a disservice," he said. "We're going to put our resources into things that really bring value to the county as opposed to giving Westfield $2 million or $4 million."
The council will adopt the budget on May 26.
During the course of 15 years, the county has distributed $24.13 million among 154 projects through the Economic Development Fund Grant and Loan Program, which provides financial assistance to private employers who create or retain jobs in the county.
Westfield Group, which owns the Westfield Wheaton Shopping Center, secured roughly a quarter $6 million of all grant and loan program funds issued since it began in 1995. It was one of three retailers that received funds; the other two received a combined $33,000. With the additional $4 million subsidy over the next two years, more than 30 percent or $10 million of the program's funds and committed funds will have gone to a single company.
Elrich thinks the county ought to invest more heavily in bio-technology. Since 1995, bio-technology projects, including bio-medical projects, have received 19.3 percent or $4.67 million from the grant and loan program, according to a county report.
Steve Silverman, director of the county's Department of Economic Development, said the funding was not about Westfield Group, but rather Wheaton. The first project, $6 million for a garage that helped bring a Macy's to the Westfield Wheaton Shopping Center, gave Wheaton the "shot in the arm" it needed to stimulate economic development, he said. Funding to lure a Costco will do the same.
Silverman also pointed out county funding for community revitalization comes from a variety of sources, not just this program. For example, the fund does not reflect the quarter of a billion dollars the county invested in downtown Silver Spring or the millions of dollars in tax incentives provided to other businesses.
"I think it would be false to just look at the Economic Development Fund and think that all of the support for community revitalization is going to Westfield," Silverman said.
Still, Elrich thinks a shopping mall should not receive a subsidy while the county is cutting library funding, government employee wages and benefits and health care programs in an effort to close a $300 million budget gap. Westfield likely will continue to pursue the Costco deal, regardless of whether it receives county money, Elrich said.
"This property is one of their better performing properties in the world," he said. "It is not at the bottom. It is not a suffering place. They have plenty of assets, and they have the ability to bring Costco here."
But Silverman said the Costco project offers other benefits, such as jobs and long-term tax revenue.
Each of the projects considered for program funding must meet job creation and retention goals.
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.
The county would receive an estimated $205,000 in new revenue during construction, Bang said. In the first 10 years, Costco and new retailers would generate an estimated $8.3 million in tax revenue.
County Executive Isiah Leggett (D) proposed the subsidy.
Westfield could not be reached for comment Monday afternoon.