Georgetown Giving $4.4M to Costco

Now we know that the City is giving at least $4.4M to Costco to induce them to build a store in Georgetown.

City officials said the project is expected to bring more than $11 million in 10 years to the city and create 235 jobs once the store opens. Part of the incentives include a $2 million sales tax rebate to Costco. It also includes $2 million from the Georgetown Transportation Enhancement Corp. for two public roads for the project. The corporation is funded with a half-cent sales tax for transportation projects for economic development.

The Georgetown Economic Development Corp. is paying $400,000 for a $1.2 million gas line to serve the store; Atmos Energy is paying the rest of the cost for the gas line. The city’s economic sales corporation is paid for with a quarter-cent sales tax.

It is fair to ask the council members that voted for this package of incentives why they are willing to give away $4.4 M of sales tax dollars while they are still sticking it to the electric customers with higher rates and shifting funds around within the city budget to hide the $38 M in losses generated since 2018.

There are many studies have shown that these taxpayer funded incentives are not net positive as stores like Costco would come without the incentives as that is where the customers are located. A lot of lessons in economic development have been learned over the previous decades, and one of the key lessons is that many incentives go to companies that were going to come even without incentives. This is particularly for businesses, like a Costco or even distribution centers, that are trying to serve a region.

Of course the city staff disputes these findings and point to their predictions that they will recover $2.4 M within the first 3 years after the store opens, which maybe up to 5 years in the future.

It is time for the City to perform a rigorous financial analysis to identify the true costs to the city along with the expected payback period and the opportunity costs associated with the tax revenue given to Costco. This analysis needs to be made available to the public.

Also the City should keep separate accounts for revenue and expenses for at least 5 years after the store opens so that taxpayers can hold the staff and Council accountable by comparing actual results with the analytical predictions.