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Costco Applying for Tax Breaks

The state restricted incentives for retail sales tax breaks , raising questions about Costco's application.
As expected, Costco is applying for tax incentives for its new store at CityGate.

CityGate is a $250 million development planned for East Henrietta Rd. It will include the $30 million Costco store, as well as other retail space, a hotel and 300 apartments.

Costco has applied for property and sales tax incentives worth $3.6 million over 14 years. According to a cost-benefit analysis provided by the County of Monroe Industrial Development Agency, Costco would generate more than $10 million in income, sales and payment in lieu of taxes payments during this time frame.

The store is expected to employ 225 workers. Nearly 200 people will work on construction. 

Costco's application raises questions about new state restrictions on retail tax breaks. The state only allows such incentives if the project is a tourist attraction, in a distressed area or provides good and services not available in the area. 

COMIDA didn't specify which exemption Costco falls under. But Carlos Carballada, the city's Commissioner of Neighborhood and Business Development, wrote in a letter of support for the project that it would be the only one of its kind in the city. "Currently, city residents must travel to the surrounding towns to access wholesale club stores."

The city has offered Costco a 14-year property tax abatement. Costco would pay 10 percent of property taxes in year one, 20 percent in year two, 30 percent in year three, 40 percent in year four, 50 percent in years five through ten, 60 percent in year 11, 70 percent in year 12, 80 percent in year 13 and 90 percent in year 14.

Critics of retail tax breaks say they do not encourage economic development because the jobs are typically low wage, often would be created anyway and create an unequal playing field. Area Wegmans and Tops stores also received tax incentives.

This will be Costco's first store in the Rochester area. It is not expected to build another store in the region. It will have 650 parking spaces and a gas station. 

There will be a public hearing on the tax incentives August 27 at 10:30 a.m. at the Watts Building. COMIDA will vote on the package at its noon meeting.
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