Costco Project Overview

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• Costco Project Overview
• Presented ByAlderman Joel Erickson

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Fundamental Questions

• Why are we discussing this today?
• Why would the city need to be involved?
• What would be each partys role?

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Costcos History with Berwyn

• Interested in Berwyn
• Previously engaged in discussions about a site in
  Berwyn
• Believes that market criteria are satisfied
• Believes that the Cermak Plaza site is best fit

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Could there be a Gap?

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Possible Reasons for a Gap

• ROI not satisfied
• Extraordinary development costs including
  building and improvements
• Interests costs incurred

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Costco Company Philosophy

• Ethics-driven company
• Land policy is to buy or lease real-estate at as
  close to market value as possible
• Does not seek incentives where Corporate ROI is
  satisfied

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Deal Structure

• Costco agrees to build a 150,000 SF facility and
  pay for
• development related costs
• the building construction costs
• FFE (furniture, fixture equipment)
• inventory
• Gap closed through use of incentives

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Structure of City Financing

• City enters into agreement with Costco to pay
  identified GAP
• City sells sales tax revenue bonds
• The bonds are backed by the sales tax proceeds
  from the Costco store.
• The City makes no further commitments, uses no
  other revenues, and does not make full faith and
  credit pledge
• If store does not perform, there is no recourse
  against City

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Sales Sales Tax Estimates
Estimated Sales Tax 1 of State tax and
.5 for Home Rule sales Tax 1.5 sales tax total
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Proposed Bond Payments Coverage
If sales tax performs as projected (or better),
the schedule could be shortened by 4 years or
more.
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Sales Tax Considerations

• Costco does not cannibalize other retailers as
  some other large retailers do
• Jewel sells 60,000 plus items
• Meijer sells 130,000 items
• Wal-Mart sells 150,000 items
• Lowes sells over 80,000 items
• Costco sells 3,700 to 4,000 items

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Employment Other Benefits

• Typically employ 200 to 225 employees 50 full
  time and 50 part time
• Full time workers receive health insurance,
  dental, life, 401K, optical for the employee
  and their families
• After 6 months, part time workers receive the
  same benefits
• Average national wage 17 per hour
• 84 of employees are still employed after 1 year
• Involved with national philanthropies such as
  Mercy Crusade for Children. Also, sponsor local
  community initiatives such as local softball and
  baseball teams

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Neighborhood Impact

• Managers bonus is partially predicated on the
  cleanliness of the store, both internal and
  external.
• Utilize an internal compaction and garbage
  system.
• No outdoor speakers.
• Traffic
• Doesnt open until 10 AM for business customers
  and 11 AM for others
• Close at 630 PM on Saturday and Sunday
• Busiest weekday times noon to 2 PM
• Deliveries
• 12-14 trucks per day
• 5-830 am, and gone by 10 AM
• Does have deliveries made in smaller trucks at
  other times

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Proposed Schedule

• Milestones
• ZBA
• City Council approval
• Building permit issued
• Approximately 120 days after building permit is
  issued - Grand Opening
• City issues bonds

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• Questions?