News

Guest Opinion: Taxpayer subsidy plan for Costco

On July 19, the Pleasanton City Council approved a taxpayer subsidy plan for Costco and the Johnson Drive Economic Development Zone.

Matt Sullivan, former city councilmember. (Contributed photo)

The council disregarded that the traffic mitigation infrastructure costs had ballooned from a 2018 estimate of $21 million to the actual 2022 contractor bid of almost $34 million. The city has agreed to pay $24 million in taxpayer subsidies to Costco, a $100 billion corporation, with this deal. While many will cheer, the public needs to understand the sordid details behind this.

This project came out of nowhere in 2014 when the city staff introduced the JDEDZ concept including a Costco on Johnson Drive.

They established a "streamlined" and unprecedented approval process designed to limit public participation and information about the project and undermine the ability of residents to challenge its approval. They secretly negotiated millions of dollars in taxpayer subsidies with Costco to fund infrastructure costs, which Costco routinely demands from cities where they build, while the city publicly denied it.

After a Public Records Act Request confirmed the subsidy negotiations, the city still denied it, and the local press ignored it. This was crucial as the Measure MM anti-big box initiative election campaign was underway when these facts came out. Measure MM failed, but if the city had publicly acknowledged the subsidies and had the press done their job, would the result have been different?

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After the election, the city finally admitted to the subsidies. It produced an economic analysis justifying the "investment" with a seven-year payback. However, an independent analysis indicated it would take 20 years for the subsidies to break even -- based on the $21 million infrastructure cost -- and would result in significant harm to local, small, family-owned businesses. This study was presented to the council and they disregarded it.

Then the city and Costco prepared an environmental impact report that badly understated or ignored the project's environmental and public health impacts. They voluntarily redid it when faced with a citizens group lawsuit.

The second EIR wasn't much better, and the city was sued again. This time it made its way to the court of appeals. The court dismissed it because, in the interim, the legislature had gutted the California Environmental Quality Act eliminating key provisions and the lawsuit's basis.

And now the project will move forward. But what about the truth?

What about a city that hides the existence of subsidies and the negative environmental and public health impacts of the project for years, even during an election when the public has the right to know? What about approving a carbon bomb the same year the city adopts a Climate Action Plan that will do nothing to help the climate unless the subject of unlimited growth is addressed?

And what about a City Council that ignores these difficult issues and takes the easy way out by approving what they consider a popular project while dismissing the irregularities and unethical behavior by the city?

In an election year, these questions are worth pondering.

Editor's note: Matt Sullivan served on the Pleasanton City Council from 2004 to 2012 and is a former Pleasanton Planning Commission member. He has been active in civic issues locally for more than 20 years, including as a member of the resident group Pleasanton Citizens for Responsible Growth, which challenged the city's Costco approvals in court.

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Guest Opinion: Taxpayer subsidy plan for Costco

by Matt Sullivan /

Uploaded: Thu, Aug 18, 2022, 5:44 am

On July 19, the Pleasanton City Council approved a taxpayer subsidy plan for Costco and the Johnson Drive Economic Development Zone.

The council disregarded that the traffic mitigation infrastructure costs had ballooned from a 2018 estimate of $21 million to the actual 2022 contractor bid of almost $34 million. The city has agreed to pay $24 million in taxpayer subsidies to Costco, a $100 billion corporation, with this deal. While many will cheer, the public needs to understand the sordid details behind this.

This project came out of nowhere in 2014 when the city staff introduced the JDEDZ concept including a Costco on Johnson Drive.

They established a "streamlined" and unprecedented approval process designed to limit public participation and information about the project and undermine the ability of residents to challenge its approval. They secretly negotiated millions of dollars in taxpayer subsidies with Costco to fund infrastructure costs, which Costco routinely demands from cities where they build, while the city publicly denied it.

After a Public Records Act Request confirmed the subsidy negotiations, the city still denied it, and the local press ignored it. This was crucial as the Measure MM anti-big box initiative election campaign was underway when these facts came out. Measure MM failed, but if the city had publicly acknowledged the subsidies and had the press done their job, would the result have been different?

After the election, the city finally admitted to the subsidies. It produced an economic analysis justifying the "investment" with a seven-year payback. However, an independent analysis indicated it would take 20 years for the subsidies to break even -- based on the $21 million infrastructure cost -- and would result in significant harm to local, small, family-owned businesses. This study was presented to the council and they disregarded it.

Then the city and Costco prepared an environmental impact report that badly understated or ignored the project's environmental and public health impacts. They voluntarily redid it when faced with a citizens group lawsuit.

The second EIR wasn't much better, and the city was sued again. This time it made its way to the court of appeals. The court dismissed it because, in the interim, the legislature had gutted the California Environmental Quality Act eliminating key provisions and the lawsuit's basis.

And now the project will move forward. But what about the truth?

What about a city that hides the existence of subsidies and the negative environmental and public health impacts of the project for years, even during an election when the public has the right to know? What about approving a carbon bomb the same year the city adopts a Climate Action Plan that will do nothing to help the climate unless the subject of unlimited growth is addressed?

And what about a City Council that ignores these difficult issues and takes the easy way out by approving what they consider a popular project while dismissing the irregularities and unethical behavior by the city?

In an election year, these questions are worth pondering.

Editor's note: Matt Sullivan served on the Pleasanton City Council from 2004 to 2012 and is a former Pleasanton Planning Commission member. He has been active in civic issues locally for more than 20 years, including as a member of the resident group Pleasanton Citizens for Responsible Growth, which challenged the city's Costco approvals in court.

Comments

Michael Austin
Registered user
Pleasanton Meadows
on Aug 18, 2022 at 7:20 am
Michael Austin , Pleasanton Meadows
Registered user
on Aug 18, 2022 at 7:20 am

Matt,
You are the responsible party that created the ballooned infrastructure costs.
All along the way the city protected the best interests of majority Pleasanton voters.
You did not.

There are seniors in this community, looked forward to Costco opening. Unfortunately, some no longer have life. You denied them their last wish.


MichaelB
Registered user
Pleasanton Meadows
on Aug 18, 2022 at 7:22 am
MichaelB, Pleasanton Meadows
Registered user
on Aug 18, 2022 at 7:22 am

"What about approving a carbon bomb the same year the city adopts a Climate Action Plan that will do nothing to help the climate unless the subject of unlimited growth is addressed?"

What about ignoring climate alarmists who refer to development projects that residents/voters supported as "bombs"?

If anything is destructive (like a bomb) to living in a free society, it's the de-industrialization, central planning, and managed decline from "progressives" claiming that they are saving the world by doing so. We just received a "flex alert" this week because (unreliable) renewable energy sources were not expected to supply the requirements of the state.


resident
Registered user
Danbury Park
on Aug 18, 2022 at 7:37 am
resident, Danbury Park
Registered user
on Aug 18, 2022 at 7:37 am

Matt. Transparency, Truth??? LOL you have yet to be transparent or truthful. First off the lawsuits you reference above were filed by you. you forgot to disclose that in your "editorial". also you lost, all of them. This editorial just comes off as a being a sore loser, probably tryng to justify your massive consulting bill with your gas station clients.

Let's talk transparency and truth... who funded your lawsuits? who paid for your services to oppose the costso? lets be truthful Matt. Was it not a local consortium of gas stations that oppose coscto due to its more affordable gas? Are those stations scared that they wont be able to rip off Pleasanton residents for much longer?

Pleasanton and democracy has spoken. please just go away now and stop wasting our dollars with frivolous lawsuits while lining your pockets with consulting dollars.


LongTimeP-Towner
Registered user
Another Pleasanton neighborhood
on Aug 18, 2022 at 9:39 am
LongTimeP-Towner, Another Pleasanton neighborhood
Registered user
on Aug 18, 2022 at 9:39 am

Please Matt, GIVE UP!


Michael Austin
Registered user
Pleasanton Meadows
on Aug 18, 2022 at 9:47 am
Michael Austin , Pleasanton Meadows
Registered user
on Aug 18, 2022 at 9:47 am

Matt,

What relationship do you have with Black Tie limousine service?


factchecker
Registered user
Another Pleasanton neighborhood
on Aug 18, 2022 at 11:37 am
factchecker, Another Pleasanton neighborhood
Registered user
on Aug 18, 2022 at 11:37 am

Carbon bomb?

Sorry, I'm confused. If locating a Costco in Pleasanton results in myself and other residents driving fewer miles each trip to shop at Costco, isn't that in fact helping the environment?


Robertbush81
Registered user
Mohr Park
on Aug 18, 2022 at 12:34 pm
Robertbush81, Mohr Park
Registered user
on Aug 18, 2022 at 12:34 pm

I am now dumber from reading this. Please get the Costco built as soon as possible before the city approves 500 condos on the property.


VickiC
Registered user
Stoneridge
on Aug 18, 2022 at 12:52 pm
VickiC, Stoneridge
Registered user
on Aug 18, 2022 at 12:52 pm

While I am not cheering for a Costco, my biggest question/concern from this story is one sentence that should pop out to everyone:

"The city has agreed to pay $24 million in taxpayer subsidies to Costco, a $100 billion corporation, with this deal."

WHY do the taxpayers of Pleasanton have to foot the cost for improvements required so that the billion dollar corporation gets to build here? I think we have many other local improvement projects that would be better use of that money for all of Pleasanton.


Vic-tah
Registered user
Mission Park
on Aug 18, 2022 at 2:19 pm
Vic-tah, Mission Park
Registered user
on Aug 18, 2022 at 2:19 pm

Been there. Done that. We know who you are and who you represent. GO AWAY. The people have spoken. You should be sued personally for harming our local economy through your delaying tactics and for libeling Costco in the process. Just like Alex Jone,s you personally should pay, at least court costs.


Shpcapt
Registered user
Kottinger Ranch
on Aug 18, 2022 at 5:35 pm
Shpcapt, Kottinger Ranch
Registered user
on Aug 18, 2022 at 5:35 pm

Matt

You never give up . After delaying the project for so many years with your silly lawsuits you have the gall to write this column. Shame to the Weekly for letting him do this. We should build Costco asap.


Michael Austin
Registered user
Pleasanton Meadows
on Aug 18, 2022 at 6:02 pm
Michael Austin , Pleasanton Meadows
Registered user
on Aug 18, 2022 at 6:02 pm

Taxpayers are not directly funding, paying for the $24 Million upgrades. The upgrades will be paid from sales tax generated at the Costco store after it opens for retail sales.

The bulk of the funding will come from future hotel development and related retail business that will build in the newly developed economic zone. Read the summary of the JDEDZ transportation improvement and Costco allocation agreement with Costco Wholesale corporation.

If for any reason this development goes awry, the Pleasanton debt agreement is forgiven.


SHale99
Registered user
Village High School
on Aug 18, 2022 at 6:29 pm
SHale99, Village High School
Registered user
on Aug 18, 2022 at 6:29 pm

Matt: have you just plain forgotten all the posts that were here a few years ago on this very topic? People WANT A Costco in Pleasanton; whether or not Costco is subsidized is a non-event. There were enough controls put in place, why do you insist on 'forgetting' those details?

When this new Costco opens it will be jam packed. But you can't shop there, k?


FrankB
Registered user
Vintage Hills
on Aug 18, 2022 at 6:52 pm
FrankB, Vintage Hills
Registered user
on Aug 18, 2022 at 6:52 pm

The people commenting on Matt Sullivan's opinion seem well informed as to the history of this debate. What value does Matt's opinion have after he and his financial backers have lost their argument (in court) many times over the years. Matt has caused the increased cost of this development and takes no responsibility for the consequences.
Why did the Pleasanton Weekly choose to run this opinion piece now?


Ugh
Registered user
Val Vista
on Aug 18, 2022 at 7:13 pm
Ugh, Val Vista
Registered user
on Aug 18, 2022 at 7:13 pm

The Weekly has to be fair. If you are a regular consumer of Weekly news, you know Matt Sullivan dislikes our local paper and the staff. I also think regular readers know that our paper doesn’t shy away from confronting a lack of transparency. If you question this, look at the coverage of our City Council lately. Let’s summarize - Gas station owners in Pleasanton are freaking out about our residents having choices. We live in a free market and I’d like to decide where I shop. Matt alone has increased the cost of this project by trying every delay tactic he can find. Costco tax revenue is the largest tax contributor for the town of Danville. This business will significantly support our City AND make it easier to shop at a Costco, while providing us, as consumers, options.


Pleasanton Parent
Registered user
Pleasanton Meadows
on Aug 19, 2022 at 9:21 pm
Pleasanton Parent, Pleasanton Meadows
Registered user
on Aug 19, 2022 at 9:21 pm

Matt continues to defend the Cox family and their raping of the Pleasanton community.

Time for this families reign of terror on the Pleasanton community to end.


Jake Waters
Registered user
Birdland
on Aug 20, 2022 at 9:06 am
Jake Waters, Birdland
Registered user
on Aug 20, 2022 at 9:06 am

Bravo, all great comments.

Why does Matt protest too much? And I believe we are beyond the ‘protest too much.’

Matt sits on his thrown and claims to be protecting the citizens over the evil Costco deal. Really? What is in it for Matt? What are his political and financial connections that would have him behave as a barking dog in the night? This has cost the taxpayers more because of his long protesting rants.

He speaks of Carbon Bombs, environmental impacts, traffic, and more, but a Hotel is being built in the middle of his argument.

I am still concerned about this project, because it is possible that the Mayor and Matt are connected in some way. He endorsed her for city counsel I believe back in 2012. If I’m wrong, please feel free to correct me. The Mayor has been very quiet about this project without much confidence building comments from her personally.


Michael Austin
Registered user
Pleasanton Meadows
on Aug 20, 2022 at 11:13 am
Michael Austin , Pleasanton Meadows
Registered user
on Aug 20, 2022 at 11:13 am

Mayor Karla Brown is not business friendly. Mayor Brown is on record stating, "may need to reconsider the Costco build if anyone pulls out". She appeared confident Matt Sullivan would win out.

"When you take the "friendly" out of business friendly, the only thing you have left is business-business as usual. And we all know that's just not good enough".


HowardC2
Registered user
Golden Eagle
on Aug 20, 2022 at 6:16 pm
HowardC2, Golden Eagle
Registered user
on Aug 20, 2022 at 6:16 pm

HI,
Just a couple of disclaimer. I am a Costco Shopper and support putting Costco on Stoneridge. I do not know Matt personally. I also attended and spoke at a number of council meetings.
Much of what Matt said is true. There was under Mayor Thorne lack of transparency.... and a lack of access. This deal was cooked before coming to council. When I asked Nelson Fialho the city manager at that time.... why other retailers were not considered.... He said it was too late.. the deal was already done. How could this be? I could only conclude that Mayor Thorne had already did a deal with Costco. The city would be on the hook for almost 2/3 of the cost. The city could have easily brought in other suitors... like Sams Club or Ikea which would have made it a bidding war for the site. I'm sure the last thing that Costco would want is a Sam's Club between their Livermore and Danville sites which also happens to be two of the top five out of over 2 dozen revenue sites in the Bay Areas. They would be happy to pay 2/3 to just keep Sam's Club out. Some of these points that others are making don't seem relevant. I don't see many seniors shopping at Costco...portions are just too big. As far as controls and check and balances, there IMHO are none. Gilbralter Ave is a 2 by 2 lane street until it hits Hacienda where one of the lanes was converted into parking to satisfy what is probably a parking requirement for condo development which was originally supposed to have retail shops at the base.....Everytime I pass by I always comment to myself that is the oddest-looking street.... happen under Mayor Jerry reign.
I could go on and on... but the character limit does not allow me. This paper is just as guilty because it does not reflect what was said and who said it and sometime chooses to print what was not said.


Michael Austin
Registered user
Pleasanton Meadows
on Aug 20, 2022 at 6:51 pm
Michael Austin , Pleasanton Meadows
Registered user
on Aug 20, 2022 at 6:51 pm

Thorne never had a deal with Costco, if he had a deal at all. Costco owned the land. Other retailers would not have been involved with that land.

Nelson negotiated the final agreement. In the very early stage, I exchange email with Nelson, asked Nelson to include clause "that if a mega corporation buys out Costco, Pleasanton debt be forgiven". Nelson replied, we will explore that. He did explore that and negotiated multiple amenities to go along with that from Costco.

If anything goes awry with this deal, Pleasanton's debt agreement will be forgiven.


keeknlinda
Registered user
Vintage Hills
on Aug 20, 2022 at 10:00 pm
keeknlinda, Vintage Hills
Registered user
on Aug 20, 2022 at 10:00 pm

Sam's Club is associated with WalMart. Perhaps HowardC2 is oblivious to the fuss there is surrounding anything to do with WalMart. Some folks fought tooth and toenail to keep the grocery store from taking over the former Nob Hill location. Many residents still simply won't shop at WalMart, either the main store or the grocery location.
Costco came up with a plan, elicited support from many, many residents, presented, negotiated details, and hung in there despite the frivolity of wealthy naysayers who had other notions for the location.
Courts sided in favor of Costco, EIR got clearance, and a majority of residents can't wait to shop at home. Even seniors, like me. Big portions? I have a freezer, and know how to divide and conquer. Or share with neighbors, as they do with me.
I have a very different view of Mayor Thorne than HowardC2. He worked hard to improve this city, and gained respect all the way from here to Sacramento to Washington DC. He brought us, through carefully thought out planning, to a respected stature within many sectors of city rankings, in spite of attempts to stop some of the work.
Mr. Sullivan didn't get re-elected, and it still sticks in his craw. Always will, one supposes. Time for him to find something else to occupy his time and let this city get on with what promises to be a huge win for its residents.


Jack
Registered user
Downtown
on Aug 22, 2022 at 9:18 pm
Jack, Downtown
Registered user
on Aug 22, 2022 at 9:18 pm

You might not like his style... but Matt's not wrong.


MattSullivan
Registered user
Stoneridge
on Aug 23, 2022 at 11:04 am
MattSullivan, Stoneridge
Registered user
on Aug 23, 2022 at 11:04 am

Hey keeknlinda

I was elected twice, then termed out. So there's nothing in my craw to stick! As a citizen (in the broad sense), it's my responsibility to spend my time any way I want, including working for honest, transparent government.

Jack - finally, someone on this blog gets it! Thanks!


Vic-tah
Registered user
Mission Park
on Aug 23, 2022 at 2:59 pm
Vic-tah, Mission Park
Registered user
on Aug 23, 2022 at 2:59 pm

Matt, so the score is (by my count) 15 to one. What does that tell you?


SHale99
Registered user
Village High School
on Aug 23, 2022 at 3:55 pm
SHale99, Village High School
Registered user
on Aug 23, 2022 at 3:55 pm

>> including working for honest, transparent government.

Have you noticed (ever) you seem to be on an island kinda by yourself on this issue? Majority want a new Costco. Put your 'supporters' money where your mouth is and do a poll.

Otherwise, you are just blowing hot air all this time.


Michael Austin
Registered user
Pleasanton Meadows
on Aug 23, 2022 at 7:47 pm
Michael Austin , Pleasanton Meadows
Registered user
on Aug 23, 2022 at 7:47 pm

In all likelihood Matt Sullivan is responsible for a number of city amenities not happening. There are very diverse groups of people in Pleasanton. Those groups of people want a skate park, a cricket field, a Pickle ball court, West Los Positas fixed, wastewater fill station, the list goes on and on.

Matt is responsible for the JDEDZ ballooning costs. That money would have provided a number of those amenities, probably all of them.


resident
Registered user
Danbury Park
on Aug 23, 2022 at 8:34 pm
resident, Danbury Park
Registered user
on Aug 23, 2022 at 8:34 pm

Cheaper gas is on it way! about time. It's pretty clear a huge majority want and welcome Costco. Glad to see democracy worked even it took a while because someone wasted a ton of money with frivolous lawsuits.

The gas stations in Pleasanton/Dublin, most owned by 1 or 2 entities were a major financial backer of the opposition. Keep that in mind next time you need to fill up. Livermore has some great independent stations that are a wayyy cheaper, i use those as much as I can now.


Mica
Registered user
Alisal Elementary School
on Aug 24, 2022 at 9:21 pm
Mica, Alisal Elementary School
Registered user
on Aug 24, 2022 at 9:21 pm

Its interesting thst Matt keeps referring to a tax payer subsidy. What a crock. CostCo advanced the construction of tbe I680 northbound ramp widening as well as Johnson Dr improvements which benefits all of our community. They will reimburse the City over a phased basis minus CostCo's directly attributable mitigation. Remember he also fought Walmart's grocery where Nob Hill previously existed because he said we already have enough grocery stores. Sounds like an environmental elitist and a snob who likes to spend taxpayer money defending his unsuccessful lawsuits because he wants to control how and where we shop


Ptowner
Registered user
Pleasanton Middle School
on Sep 3, 2022 at 8:50 am
Ptowner, Pleasanton Middle School
Registered user
on Sep 3, 2022 at 8:50 am

In his recent op-ed on the Johnson Drive Development, Matt Sullivan pointed out that the current estimated cost of the traffic mitigation infrastructure had escalated to $34 million from $21 million. This reflects the cost of inflation since the original proposal date, something we are all currently challenged with.

Matt Sullivan and the small group that he led to oppose the project resulted in Measure MM which the citizens of Pleasanton solidly voted against in favor of developing Costco and the other proposed businesses. The additional law suits initiated in an attempt to overrule the vote and will of the people on Measure MM caused substantial delays and additional costs to the project.

In addition, the delays in opening Costco and the other proposed developments on the site have cost Pleasanton residents the benefits of substantial tax revenue that would have been generated by an earlier opening date. This revenue could have been used to fund any number of additional projects benefiting the people of our city. A rough estimate is that could have been approximately $2 million per year following the opening of the businesses.

Assuming that Costco and the other business could have opened in 2020, that means that the potential cost to the City in infrastructure and lost tax revenue has been approximately $17 million. Matt Sullivan and his group of dissenters are responsible for this.

Matt Sullivan has contributed to the early development of Pleasanton having served on the Pleasanton City Council and the Pleasanton Planning Commission and for that he is to be thanked. However, he has been on the wrong side of this issue from the start and he and his followers have cost the residents tax revenue and lost opportunities for consumers by not allowing this project to move forward as desired by the people of Pleasanton.

Thanks to the current Mayor and City Council members for staying the course in delivering the project to the people.


SHale99
Registered user
Village High School
on Sep 3, 2022 at 11:34 am
SHale99, Village High School
Registered user
on Sep 3, 2022 at 11:34 am

"However, he has been on the wrong side of this issue from the start and he and his followers have cost the residents tax revenue and lost opportunities for consumers by not allowing this project to move forward as desired by the people of Pleasanton."

Amen.


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