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Costco Anchoring CityGate Project

Costco is coming to the city of Rochester, big news for the local retail scene.

Costco will anchor the $250 million CityGate development at the former Monroe County Iola campus at Westfall and East Henrietta roads, which once housed tuberculosis patients.

CityGate had been stalled for years. Landing a major retailer made the difference for Anthony Costello & Son Development, who plan to start site work in the fall.

Costco has more than 400 stores and is a warehouse-style club store. It's known for paying workers well above minimum wage and offering good benefits. Cashiers can earn $40,000 after five years.

"Its good for neighbors here and good for businesses in the area, because this area will be cleaned up. It is the gateway from the south to the city," said Anthony Costello.

Costco typically only builds one store in a region, according to Costello. It will occupy a $30 million, 150,000-square foot store.

Rochester Institute of Technology Professor Joe Miller said Costco will shake up the Rochester retail scene. The bulk wholesaler charges up to 45 percent less on many items. One study showed other grocery stores may raise prices, possibly charging for convenience.

"What Costco brings that perhaps BJ's does not, is a devoted customer following. They have a lot more advocacy in their customer base," said Miller. He added Costco customers will find themselves using more space in their homes to store the bulk items.

CityGate will also include 300 apartments along the canal, additional retail space and a 150-room hotel. 

The project will seek tax incentives and other government assistance, but Costello did not spell out the financing details. City Council will have to approve the updated CityGate plan.

The Costco store is expected to open next spring.
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