The Pleasanton City Council is set to give final direction Monday to city staff on an agreement with Costco for how to pay for $21.47 million in roadwork necessary to accommodate the proposed Johnson Drive Economic Development Zone (JDEDZ), which is expected to include the wholesale retail giant's third membership store in the Tri-Valley.
The proposed deal with Costco to fund design and construction of the roadwork calls for just under one-third to be paid by city traffic impact fee reserves, just over one-third by a cash payment from Costco and just over one-third by a separate payment by Costco that will be reimbursed to the company by the city through a 60-40 sales tax sharing agreement with 1.5% annual interest charged for the city's remaining balance to Costco.
Any other developer who builds on the JDEDZ in the future would need to pay their proportional share of these infrastructure costs back to the city, and the city officials plan to use those funds to pay down their debt to Costco.
The council majority gave early support to the proposal during a special meeting Aug. 29, with Councilwoman Karla Brown expressing opposition and Mayor Jerry Thorne recusing himself from the discussion for previously owning Costco stock in a retirement fund.
The agreement has been updated since last month's meeting in accordance with council direction to include provisions that the city's remaining debt balance would be forgiven at the end of the 25-year payback period or if Costco ever goes out of business or the store closes for an act of God, according to Tracy Dunne, city public information officer.
The financing proposal still does not include any upfront payments from Nearon Enterprises, which owns a majority of the JDEDZ land including a vacant site along Johnson Drive that Costco would purchase for its new store.
Brown and Councilwoman Kathy Narum last month urged city staff to talk with Nearon representatives to see if the firm would provide money for infrastructure costs upfront. And some critics point to Nearon's lack of early roadwork funding as a reason to oppose the financing deal.
"Nearon will not be paying upfront transportation improvement costs as the landowner, but whoever develops the land will be paying a JDEDZ transportation fee," Dunne said.
The pending roadwork includes Stoneridge Drive and Interstate 680 northbound onramp improvements, Johnson Drive widening, improvements at the Johnson-Stoneridge intersection, new traffic signals at Johnson and Commerce and Johnson and Owens Drive (north), and right-of-way acquisition.
The financing proposal returns to the council for further public discussion and final direction on Monday evening. If endorsed then, the term sheet would be finalized and incorporated into the final JDEDZ proposal, which would outline how redevelopment could occur in 12 parcels along Johnson Drive and Commerce Circle near the I-580 and I-680 interchange.
The JDEDZ package would then head to the Planning Commission and Economic Vitality Committee for review in the coming months, with the goal of presenting it to the City Council by the end of the year, according to city staff.
Monday's special meeting is scheduled to begin at 6:30 p.m. in the council chambers at the Pleasanton Civic Center, 200 Old Bernal Ave. The council will gather beforehand in closed session, beginning at 5:45 p.m., to discuss ongoing contract talks with the Pleasanton Police Officers Association.
The council also has a regular meeting scheduled for the next night, at 7 p.m. also in the council chambers.
In the meantime, Pleasanton residents will notice some construction activity on Nearon property on Johnson Drive starting Monday, the company announced this week.
DeSilva Gates Construction will be hauling gravel material off 7200 Johnson Drive -- a mix created when the former nine-building Clorox technical center was demolished in 2015 there -- to be used as part of the Highway 84 widening and rehabilitation project, according to Nearon.