City manager addresses Costco, Fuji Park

Dear Residents,

Due to potential significant effects on our community, I wanted take this opportunity as City Manager to present to you the various facts and considerations regarding the proposal to sell an undeveloped portion of city land at Fuji Park to Costco for development.

Why this site?

For the past five years Costco has been looking at potential sites in both Carson City and Douglas County. After rejecting five Carson City sites which did not satisfy their needs, Costco began negotiating with a property owner in Douglas County. In a final attempt to bring the retailer to our community, we suggested that if Costco would make a commitment to Carson City, we would bring forward a proposal to locate them on this site.

The site, shown in the City's land-use master plan as "future commercial", consists of 15 acres of undeveloped city-owned land used as overflow parking for a handful of events throughout the year. The company was immediately interested in this idea simply because of its location to the proposed freeway interchange with access onto HWY 395.

City staff, the Board of Supervisors, the Parks & Recreation Commission, and Costco itself, are concerned with the loss of overflow parking for special events. In response to that, the company has proposed constructing an overflow parking lot on its site for park use. In addition, staff is exploring three options to also create additional parking on the park site itself. Our intent has been and continues to be, that the project and the park co-exist successfully not only for park users, but for all the residents of Carson City.

Why expand the redevelopment district to incorporate this site?

The process of expanding the district has been a consideration at various times since the district was created. In this case, putting this site in the redevelopment district gives us the legal ability to negotiate the sale of the property directly with one party. We obviously want this ability because of the overall return a Costco store would bring to our community. Specifically, as earlier newspaper articles have pointed out, the projected sales for Costco at this location are such that it is unlikely any other type of project would generate more back to our community. This revenue generation would occur not only through the sale of the property and additional property tax, but most importantly, through a significant increase in sales tax revenue conservatively estimated at $1.2 million. In addition, the store will create close to 200 new full and part-time jobs paying high-end wages with a full benefit package. Thus, including the site in the redevelopment district and negotiating directly with Costco, achieves our goal of realizing the maximum lifetime return to our community in exchange for the sale of this under-utilized portion of city property.

Why do this at all?

Recently, Carson City has experienced a decline in the growth of sales tax receipts. Furthermore, as additional stores open outside of Carson City, we may continue to see a decline in future sales tax revenues, resulting in an erosion of our tax base.

Because Costco is a magnet store, other national retailers will want to locate as close to the Costco store as possible. Clearly, should Costco decide to locate further south (in Douglas County), this could mean a drop in sales tax revenue and an eventual increase in property taxes and/or a cutback in services to you, the residents.

On the other hand, if an agreement can be reached with Costco, one of the largest retail sales tax generators in the country, then Carson City's economic foundation is sure to remain strong. Therefore, redeveloping a portion of rarely used city property for a project with such a high long-term potential return to our community, will certainly enhance our community's health, safety and welfare.

What happens to the park?

Again, it is our hope that the park and the project can co-exist successfully; however, the Parks & Recreation Commission is on record as favoring the relocation and reconstruction of the park facilities and/or fairground in a more appropriate place. Our plans are to begin to work with the Parks & Recreation Commission and all interested parties toward that goal. Thereby, in the end, the entire community benefits by the creation of new park facilities in a more appropriate location, and the economy of Carson City is greatly strengthened by the eventual development of what could be a significant power center at the southern boundary of our city.

Finally, in securing this project, I believe Carson City is being both responsive and responsible - by timely responding to the opportunity that is presented to us and by being responsible in providing for the park users while enhancing our economic future for the welfare and benefit of the entire community.

Sincerely,