GARDEN GROVE : City Approves Costco Development Pact

The City Council this week approved final terms of a development agreement that will allow the Costco Wholesale Corp. membership store to move to a larger location on a 13 1/2-acre parcel that the Agency for Community Development owns near the Garden Grove Freeway.

The council on Tuesday approved on a 4-1 vote final development fees totaling $695,000 for the move from the store’s current location at 11822 Gilbert St. Officials said, however, that more than half the development fees imposed this week will be reimbursed to Costco by the Agency for Community Development, the city’s redevelopment agency, after the store opens.

Costco officials plan to construct a 156,000-square-foot building on land south of Garden Grove Boulevard and west of Euclid Street.

The future Costco store will include new and expanded services such as a pharmacy, deli, nursery sales and a tire service center.

City officials estimate that Costco will double annual sales because it will be near the freeway and is expected to increase its regional drawing power. This would result in annual sales tax revenue to the city of $540,000 in the third year of operation and approximately $13 million over 20 years, according to officials.

Officials predict that the center will produce 50 to 75 full- and part-time jobs.

The agency has spent about $9.9 million to buy lots and clear the site for the new store. But the net cost, because the city is trading for the land that Costco owns at its current location, is $6.8 million.

Councilman Robert F. Dinsen cast the only vote against the agreement, claiming the agency is paying too high a subsidy for the move.

Councilman Mark Leyes said that Costco officials needed a bigger store with more visibility to compete with rival stores.

Costco will continue operations at its current site during construction. Costco will pay rent of $29,167 a month to the agency for community development until leaving the building.

The main entry and exit for the new store will be at Garden Grove Boulevard and Main Street.