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City Beat: Council approves Costco deal

Members also set distribution of coronavirus relief funds for housing and businesses

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Springfield City Council gave the all-clear during its June 15 meeting for the city to enter into a $4.8 million deal to bring Costco Wholesale Corp. (Nasdaq: COST) to the market.

The access and infrastructure agreement requires the city to reimburse Costco for public infrastructure improvements made to an 18-acre development site on the corner of U.S. Highway 65 and Chestnut Expressway.

Costco’s plans to enter the city were dependent on council passing the infrastructure deal.

The site plans call for relocating Eastgate Avenue, extending Olive Street and making traffic signal modifications and stormwater improvements. The costs are slated to be repaid to Costco over a 15-year period through half of the 1% general sales tax, quarter-cent capital improvements sales taxes and eighth-cent transportation sales taxes generated by the store.

Costco site selector Mike Stratis said at the June 1 council meeting that, if approved, the company planned to finalize the land deal in September and complete infrastructure improvements by April 2021. Burks Development Corp. owns the land, as well as an adjacent 32 acres that is set to be developed as Kirkland Commons, according to city documents.

The Costco store is slated to open by August 2021 and create at least 125 jobs with an average hourly wage of $25.50. It also offers benefits packages with health, life, dental, orthodontic, disability and optical coverage, Stratis said.

At the most recent meeting, Councilman Matt Simpson said he supported the deal, especially because of Costco’s plan to offer wages higher than the current average wage. According to 2019 Bureau of Labor Statistics data, the average hourly wage in Springfield was $20.51. In December 2019, the state’s minimum wage bumped to $9.45 per hour.

Other council members said Costco’s arrival could trigger additional development.

“Costco is a bellwether sign that Springfield has arrived to a certain point,” said Councilman Richard Ollis. “I look forward to not only the arrival of Costco, which I think is a big deal for our community, but it also sets us up for future expansion and future businesses to locate, as well.”

According to Costco’s website, the company plans to open nine stores by September in the United States, Canada and Japan. Additional information about plans in Springfield were not yet available.

Federal funding
Discussions on allocating $916,000 in federal coronavirus relief funding for businesses and affordable housing continued at the June 11 meeting. Council eventually passed a substituted measure, which put additional funding behind housing assistance.

During the June 1 meeting, council members widely disagreed on how the city should use the Coronavirus Aid, Relief and Economic Security Act money from the U.S. Department of Housing and Urban Development. City staff originally recommended allocations of $403,000 to businesses, $330,000 to public services and homelessness efforts, $45,600 to affordable housing assistance and nearly $137,500 to a COVID-19 contingency plan, according to bill documents.

Councilman Craig Hosmer expressed concern at the previous meeting that housing assistance should be a greater priority.

The ordinance approved 8-0 on June 15, with Councilman Mike Schilling absent, allocated $183,000 of the federal funds to housing assistance by moving the funds originally set aside for a COVID-19 contingency plan. The bill substitute also made available a federal $200,000 HOME Investment Partnerships Program grant that city staff previously said was in the pipeline for further assistance. The original funding suggestions for business and public service efforts were unchanged.

The business assistance will be available through $10,000 forgivable loans to help companies maintain jobs threatened by COVID-19.

The program has a sliding scale of requirements for loan forgiveness, depending on the size of the company, said Director of Planning and Development Mary Lilly Smith.

She said the loan program is expected to issue funds to 40 businesses, and the housing assistance is set to provide 200 families with three months of rent. Details of the loan program were not published online by press time and information was not attached to council documents.

Smith said the city is asking HUD for the ability to move money between the housing and business efforts at a later point, depending on demand.

Hosmer, who eventually approved the plan, continued to voice concerns over financial equity.

“We’ve been working to try to affect poverty on this council for years and it seems like the one time we ... have the resources to do that, we choose not to do an equitable distribution between what poor people need and what businesses need,” said Hosmer. “The need is great on the business side, but the need is also great on housing and helping people stay in their homes.”

Balanced budget
Council agreed to a city budget for the upcoming fiscal year, which begins July 1.

The $368 million budget is roughly 6% lower than last year’s budget based on current sources of revenue and anticipated impacts by COVID-19, according to previous Springfield Business Journal reporting.

City Finance Director David Holtmann has said he anticipated his department would present a contingency plan to council in late June in case revenue losses are greater.

“This is our best projection at this time,” Holtmann said at the June 1 council meeting.

Under the approved budget, general sales tax is estimated to drop $3 million year over year because of fewer purchases made during the COVID-19 stay-at-home orders. However, use-tax revenues are expected to increase slightly by $170,000.

The city also is anticipating a slight revenue loss under the quarter-cent improvement and eighth-cent transportation taxes, though Holtmann said the city still should have adequate funding for its committed projects.

Other action items
Council agreed to table a rezoning request by developer Titus Williams for a roughly 10-acre stretch on West Plainview Road where he’s planning a multifamily complex. The plan has received widespread criticism from neighborhood members, according to past SBJ reporting. Councilman Andrew Lear moved to table the vote because of a supermajority protest petition against the ordinance, as well as the absence of Schilling and a recusal from Simpson because family owns nearby property. The rezoning will be up for vote June 29.

With council approval, restaurants are now able to apply to temporarily relocate dining options in greenspace while following social distancing requirements outlined by the Centers for Disease Control and Prevention.

Council members approved two emergency bills at the June 1 meeting that temporarily allow restaurant owners to provide additional dining opportunities in private parking lots and on sidewalks.

City Manager Jason Gage told council staff members are considering purchasing 240 body cameras for police officers in 2021. He said the equipment and annual licensing are estimated to cost $612,000 and could be funded by the quarter-cent capital improvement sales tax. Adding the body cameras to the department’s use of dash cams would be a $1 million project over the next few years because of maintenance and licensing fees. Gage said he anticipates also adding police staff. Council will consider the purchase once city staff has finalized project details.

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