Groveling For Dollars

by Mike Geniella, January 11, 2010

Look at those Costco executives grinning ear-to-ear.

They’ve got the city of Ukiah and Mendocino County engaged in a bidding war for the location of a planned new store in the Ukiah Valley, a winner-take-all scenario that could cost local taxpayers $11 million or more in “incentives.”

But few details are known because secrecy shrouds the negotiations, which are in their infancy and are being conducted behind closed doors. An air of desperation surrounds the city-county struggle, with the victor hoping to capture up to $1 million or more annually in new sales tax revenue expected to be generated by a Costco store.

Costco’s project promises to provide the single biggest infusion of tax revenue for local entities in decades, yet the lack of a long-promised sales tax revenue sharing agreement and a valley-wide development plan sees the city and county acting like snarling junkyard dogs fighting over a single bone.

The city’s new role as a public landowner competing against private developers to lure Costco is unusual, and being sharply questioned by local business leaders who already fear the competitive edge if the big box wholesale retailer comes to town.

“Providing basic infrastructure such as streets and sewer connections make sense, but for the city to be engaged in land dealing is troubling,” said Jim Mayfield of the family owned Rainbow Agricultural Services.

City council members, acting as directors of the city Redevelopment Agency, last year purchased 18 acres of land at the Redwood Business Park, and took an option on another 14 acres in order to package a site for more big box retailers like Costco. Mayfield and other local business owners are questioning how the city’s new role as a developer fits with the “Save our Local Economy” slogan used last fall by city leaders and others to defeat a proposed shopping mall at the old Masonite mill site just outside city boundaries.

County administrators can’t compete with potential city land incentives for Costco, but what they can do is offer a streamlined permit process if the retailer opts to buy property at the Masonite site. Should Costco buy land there, county planners say only a minor use permit would be required for a new store. Presumably other big box retailers could do the same, given the shaky finances of the Ohio-based development company that owns the Masonite land.

So local voters who may have thought the outcome of the controversial Measure A campaign last November had put the battle over big box retail development in the Ukiah Valley on hold now face the fact that the fight has just begun.

What remains unanswered is how a Costco-based development at either end of the Ukiah Valley will benefit Ukiah’s historic downtown shopping district. The last major city-funded redevelopment projects – the Ukiah conference center and the Alex R. Thomas square – were built more than a decade ago. The Thomas family contributed $300,000 to the square project.

Mayfield and other local merchants wonder when downtown truly becomes the beneficiary of city “revitalization” efforts, the term city officials use to describe their development scheme at the Redwood Business Park.

Fair question.

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