Costco, Yorkville negotiating $10M tax rebate before building

While the proposed Costco received full approval from Yorkville city officials, developers are looking for a sweeter deal to keep them from putting the plans back on the shelf.

The Yorkville City Council approved the necessary plans, ordinances, and special use permit at their Jan. 28 meeting to allow Costco to build a 160,000-square-foot members-only retail store and a gas fueling facility.

To get the plans across the finish line, Costco representatives are requesting a sales tax rebate to make the project “economically feasible” for Costco.

City Administrator Bart Olson said that Costco is requesting a $10 million sales tax rebate over 20 years. This includes a .75% rebate for the first six years and a .5% rebate for the next 14 years.

“My assumption is that if the city does not agree it would be a dealbreaker, although Costco has not told me that explicitly,” Olson said. “They said they needed it in order to develop in Yorkville because there’s development costs and land acquisition costs that are different than in other communities. Right now we’re buttoning up the language and we hope to vote on it at the next meeting.”

The site of the development is located on 33.14 acres at the northwest corner of Veterans Parkway and Countryside Parkway in the Yorkville Crossing development area.

A full vote on the proposed sales tax rebate is currently scheduled for the Feb. 11 city council meeting.

According to city documents, the potential sales tax rebate to Costco is supported by city officials because the project is expected to create jobs for the city, increase the city’s tax base, and strengthen the city’s commercial sector.

City officials also argue because the area has remained undeveloped for years, the construction of the Costco would spur further development of the adjacent areas.

“The development will be a significant regional draw for people outside of the community to come shop here,” Olson said. “The nearest Costco locations are going to be 20-30 miles away. Their footprint is going to be very wide and that’s a benefit to the community. The added jobs are nice, so is the property taxes, but primarily they generate a ton of sales tax. I would expect them to be one of the city’s largest sales tax generators.”

Olson said the Costco may generate as much as $1 million annually in sales tax revenue for the city.

The city has provided tax rebates before as a strategy to incentivize developments. In 2002, Menards was given an $8 million sales tax rebate. Jewel was provided $3.2 million in the early 2000s. The Kendall Marketplace development is receiving a $15 million sales tax rebate over the next 20 years.

In addition to the retail store and fueling facility, the development plans include a parking lot with up to 956 stalls, perimeter lots, and lots designated for stormwater management.

The plans for the development do not currently contain a convenience store alongside the fueling facility. When completed, the gas fueling facility will house 16 gas pumps with 32 fuel dispensers. Costco wants to eventually expand to include 20 gas pumps with 40 fuel dispensers.

At a previous public hearing, some residents voiced concerns that the influx of shoppers could lead to traffic nightmares in the residential area. Residents were especially concerned with congestion posing safety risks for the nearby public park, which includes baseball fields and biking paths.

Costco representatives said at the meeting that they would provide a connection to the nearby biking and trail system. The representatives said a traffic study they conducted suggested that the Illinois Department of Transportation should consider making timing changes to the intersection of U.S. 34 and Countryside Parkway to mitigate traffic concerns. The traffic study did not recommend additional traffic measures for the intersection at McHugh Road and U.S. 34.

The current property owner of the site is Joda Land Holding, LLC.