Costco to Seek Tax Incentives for East Lansing Store

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Thursday, August 4, 2016, 7:59 am
Alice Dreger

Above: Image from Costco’s site plan application for the Saginaw Highway location

Costco is intending to ask for a tax increment financing (TIF) deal for the store it seeks to build on Saginaw Highway. At East Lansing’s Brownfield Redevelopment Authority (BRA) meeting last Thursday, City of East Lansing Planning staff Lori Mullins told the BRA the project is “in need of Brownfield support.” She introduced the store’s representative, Ted Johnson, who then told BRA that the land, the site of an old marsh,  is difficult to build on and so will cost Costco more than typical new store construction.

Johnson is Costco’s Director of Development for Midwest projects. He said he had been working on the project for about ten months, and that Costco is currently under contract to purchase the property, the 65-acre site of an old golf course and miniature golf course at the southeast corner of Saginaw Highway and Park Lake Road.

According to Johnson, Costco stores typically require about seventeen acres. Since that means the store will not need all the land the company is purchasing, Costco is looking to leave natural areas on the east and south sides of the property to help create buffers between the commercial development and neighborhoods nearby.

Johnson told the BRA he hopes to get construction and other approvals by this winter and to start construction next spring, with a store opening in November of 2017.

He said the site “has a lot of issues,” including a lot of deep peat pockets. Additionally, the site is lower than Saginaw Highway, which means it has to be built up seven to nine feet in order to reduce the drop from the highway to the store property. “It’s in a hole,” he said, and this requires “a lot of money.”

As for the wetlands in the area, Johnson said he was working with the Michigan Department of Environmental Quality (DEQ) to replace wetlands that will be lost to the project. The photo below shows the land as it currently exists.

Johnson told the BRA he expects to be back to the BRA with an application for TIF financing in September of this year. ELi previously reported that Meridian Township—which shares some control of this property with East Lansing through an annexation agreement—has insisted on legally limiting possible TIF on this property to $1 million. Meridian Township has historically used much less TIF than the City of East Lansing, and the Township Board does not want a larger TIF on this property.

Mullins asked Johnson to speak to the BRA about how much more this site will cost to develop than other Midwest sites. Johnson answered, “Don’t hold me to the numbers,” but said he had three projects of this sort currently, and that the typically cost about $6.5 million. This one, he said, could cost $9 or $9.5 million.  Johnson said Ingham County’s requirements for managing Park Lake Road was making the project more expensive.

At the East Lansing Planning Commission meeting on Wednesday (the day before the BRA meeting), representatives of two nearby neighborhoods were positive or neutral about the store coming, but raised concerns about plans for traffic flow in Costco’s application. The Michigan Department of Transportation (MDOT) has let Costco know it has a number of remaining questions about the plan that will need to be addressed.

City Planning staff Darcy Schmitt told Planning Commission on Wednesday that before the Commission votes on any approvals for this project, various traffic and environmental issues will need to be worked out.

You can watch the Planning Commission discussion of this project by clicking here.

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