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Council approves Costco tax-reimbursement agreement after clarification on percentage; public commenter urged hearing on full reimbursement
Summary
Council approved an amended incentive agreement with Costco (resolution 2025R-011) after staff clarified the agreement pays 100% of the 'designated' sales tax, which is defined as 75% of the city's 1% sales tax; a former city planner warned a public hearing is required when EDC sales tax is used.
Council approved resolution 2025R-011 on Feb. 12 to amend an existing incentive agreement with Costco related to infrastructure reimbursement. The vote was 4-0.
Background and public comment: A written public comment submitted by Stefan (Stephen) Saperoli — read into the record by staff — said Costco presented to council on Feb. 5 requesting a 75% sales-tax reimbursement for 20 years but that the consent-agenda item before council would provide what the commenter read as 100% reimbursement of the designated amount for 20 years with no maximum. The commenter warned that state law requires a public hearing when Economic Development Corporation (EDC) sales tax is used for such a project and argued the city risked violating public-hearing requirements if the council approved the consent agenda item without a hearing.
Staff clarification and council action: City legal staff explained the agreement defines "designated sales tax" as 75% of the city's 1% sales tax. When the agreement later refers to returning 100% of the designated sales tax, that language can be misread but, read together, the effect is that Costco would receive 100% of the designated portion (i.e., 100% of the 75% slice), not 100% of the city's full 1% sales tax. Legal staff said this structure has been in the agreement throughout and that the packet's recent numerical entry updated only the interest amount used for the infrastructure repayment calculation; that numerical amount had been omitted in earlier packet materials and was added after updated information was provided to city staff.
Council members asked legal staff to confirm public-hearing requirements had been met before voting. Legal counsel indicated the public-hearing requirement for use of EDC sales tax was satisfied (legal counsel's words: "I believe so" in response to the question). With that clarification, council approved resolution 2025R-011, vote 4-0.
What was decided: Council adopted the amended agreement (resolution 2025R-011). Staff noted the only change in the document was a filled-in interest amount for previously agreed infrastructure repayment; council asked that the final signed copy correct minor date typos noted during discussion.
