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What does Costco do to a small town?

Norm Van Eeden Petersman
  • Edited
Conrad asked "what does Costco do to a small town?" 
Great question - I did a comparison of property tax per acre between the Kirkland, WA Costco store (formerly the headquarters of Costco) and one of the modest two storey structures in the downtown area of Kirkland, WA and the downtown location was contributing 14x more in taxes per acre than the Costco. The consequence of this discounting of the property taxes for the Costcos and Walmarts and Targets of this world are staggering: they enjoy subsidized access to local markets while seeing their small competitors saddled with larger bills on a comparative basis (we use value per acre and property tax per acre to compare parcels equally and to see their relative productive efficiency for each acre of land used). 
 
In communities that are funded by sales tax as the chief driver of their revenues, the temptation can be to land a Costco and derive a boost in revenues from out-of-town shoppers who enter your community, contribute sales tax revenues, and then leave again. But the cost of doing so can be significant when you factor in the amount of public infrastructure required to host a Costco including upsizing intersections, adding signals in places where they weren't needed before, and removing the relative stability that other businesses in town enjoyed before the Costco came in to take a lot of their market share. 
 

Recommended Articles:

  1. https://www.strongtowns.org/journal/2022/5/23/large-scale-small-scale

  2. I also thought that Daniel had some good insights more generally on the way that silver bullets can often prove to be quite disappointing:
    https://www.strongtowns.org/journal/2022/10/17/the-city-should-put-a-trader-joes-there-and-other-muddled-thinking-about-development

  3. If you're looking at the numbers side of things, Chuck's piece on Kansas City is worth investigating:
    https://www.strongtowns.org/journal/2020/10/11/the-numbers-dont-lie

The traditional development pattern – even when blighted and occupied by the poorest people in our communities – is financially more productive than our post-war neighborhoods, regardless of their condition. Across North America, our poor neighborhoods tend to subsidize our wealthy neighborhoods. The only places this doesn’t hold true are communities where the poor have been displaced out to the edge.

None of this would surprise our ancestors. One evening, Joe and I were wandering through the library at Harvard’s Graduate School of Design, where Joe had done his graduate work. We were browsing town planning books from the late 1800s and early twentieth century. Repeatedly in these publications, we came across a simple metric they used for measuring success: value per acre.

I have a civil engineering degree, a graduate degree in urban and regional planning, and decades of experience. Joe has an architecture degree, graduate work in planning, and a similar level of experience. We were never taught about value per acre. It is lost wisdom, abandoned along with so many of our ancestors’ hard-gained insights.

And one of the key contributors to the devaluation of the land that Costco owns is the calculations of value for parking and Chuck and Abby talked about this on Upzoned: 
https://www.strongtowns.org/journal/2021/1/26/parkings-free-ride 
 
So what do you think? How would you address Conrad's Costco question? Drop a comment below.

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