City of Regina proposes giving $7 million to Costco for second location

The City of Regina’s administration wants to keep a proposed second Costco Wholesale location within the city limits, and it’s recommending shelling out millions of dollars to do it.

Last year, the city approved a discretionary use application for a second Costco location on the western edge of the city.

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However, according to a report from the city administration, the company found the total development costs at that location to be too high between the land purchase, site and store development costs. Costco released the site and found another location outside the city limits.

The city asked the company to reconsider and got together with it and the land developer, Forster Harvard Development Corp., to work out an economic development incentive agreement.

The deal involves the city paying a total of $6,780,000 to Costco from the Land Development Reserve, to be paid according to a series of benchmarks.

There’s been talk about a second Costco store being built in Regina as far back as 2017. (980 CJME file photo)

The first is Costco buying the land which, according to the agreement, has to happen by the end of this year or could be extended to the end of 2026. Costco would get the first $1M within 30 days of acquiring the land.

The second benchmark would be Costco building the store. Within 30 days of construction starting, $2.89M would have to be paid. And then, another $2.89M would have to be paid within 30 days of the store opening, which would have to happen within four years of the land being acquired, 2030 at the latest.

If the company doesn’t meet the timelines, the city would get its money back.

Money from the property taxes in that area would be used to build the Land Development Reserve back up, with administration estimating it would take seven to eight years, calling that a conservative projection.

In its report, administration explained why it wants the store within the city.

It said the Costco on the other side of Regina at the Aurora development will generate $519,737 in municipal property taxes in 2025, and the adjacent businesses are expected to bring in $538,029 in municipal property taxes in 2025. There are also hundreds of residential units and more retail units being built in that area, which are expected to generate even more for the city in taxes.

The administration is interested in the revenue it could generate with the second Costco itself, but also through the development expected to spring up around it.

“The Costco will anchor additional commercial and residential development on the west side of the city. The new commercial offerings will provide both shopping and employment opportunities to residents of existing and planned neighbourhoods,” the report noted.

The report also mentioned the slow demise of brick-and-mortar retail as more and more people turn to online shopping for their needs, pointing out that a loss in brick-and-mortar shopping means a loss in retail property tax revenue for the city.

“Costco is a unique anchor that drives tremendous traffic and sales through a traditional bricks and mortar shopping experience. The Costco at Aurora averages 2,000,000 visits per year or 5,500 per day,” administration explained in the report.

The report said if the city doesn’t approve the incentive agreement, then Costco will likely build at the location picked out outside the city limits.

The Land Development Reserve, where the $6.78M would come from, has been used for this sort of thing before, according to the report. And administration pointed out that development incentives are reserved for unique projects “offering significant community benefit.”

The money would be paid out, potentially, over several years. According to the budget book prepared for the 2025 proposed budget, city administration expected the Land Development Reserve to end 2024 with $1.228M and end 2025 with $1.582M. The budget book projected the fund would end 2026 with $5.974M. These numbers came from the proposed budget for 2025, and it’s still unclear what effect budget talks in March and ongoing budget conversations, might have had on those numbers.

At a private meeting held on Wednesday, the city’s executive committee considered the administration’s report and heard from Blair Forster, with Forster Harvard Development Corp., and Walter Kczynski, with Costco Wholesale Canada. The committee ended up agreeing with the recommendation in the report.

The report will be considered by City Council at its meeting on Wednesday.

Mayor Chad Bachynski wasn’t interested in talking about the situation on Tuesday, before the meeting, but said he didn’t think this deal would set a precedent for other developments in Regina in the future.