Costco is officially headed to Loveland.
In an 8–1 vote Tuesday, the City Council approved a long-debated business assistance agreement with developer Realberry that clears the way for a 160,000-square-foot warehouse at U.S. 34 and Centerra Parkway, in exchange for a 25-year tax-sharing arrangement and a $13 million roadway project.
“The only way we grow our general fund is to grow the taxes we get, and the only way to do that is to bring businesses in,” Mayor Pat McFall said before casting his vote in favor.
According to the terms of the agreement, the Costco will be built on an 83-acre parcel owned by Realberry that is within the boundaries of the Centerra urban renewal plan, which expires in 2029. But the agreement approved on Tuesday is a standalone deal, Loveland City Attorney Vince Junglas emphasized.
“I can understand how, certainly, members of council or members of the public, may conflate the two, but they’re very different,” Junglas said. “And this agreement does not rely upon tax increment financing as an urban renewal plan would.”
To fill its part of the bargain, Realberry has agreed to sell around 19 acres of its parcel to Costco for a nominal price, and will also build an 850-space parking lot and extend “dry” utility infrastructure to the site, to include electric, natural gas and broadband lines.
To fund these commitments, the developer will use private funds, to the tune of $10.6 million.
Constructing other infrastructure for Costco, such as the water utilities, will take a projected $22.4 million, an amount Realberry can’t afford to advance without offsetting revenue, said Jeff Breidenbach, the company’s director of development for Northern Colorado.
“We just can’t proceed with the project from a math standpoint,” he said. “We have no upfront revenue, but significant upfront cost. So from a developer standpoint, we can’t move forward with the project unless we have an investable project that can cover its costs to actually build the project out.”
That’s where the city comes in. To advance the project, Realberry requested the formation of a public-private partnership involving tax sharing and assistance with infrastructure construction.
More specifically, the city agreed to give up 1.25% of its 3% sales tax at Costco for 25 years, noting that the share applies only to new revenue generated at the site, which currently produces no sales tax.
The city also agreed to fund the construction of Kendall Parkway from Sky Pond Drive to U.S. 34 at an estimated net cost of $11 million, after a $2 million contribution to the project from Realberry.
In exchange, the city will earn a projected $2 million per year from its remaining 1.75% tax on Costco sales and up to $125 million over the 25-year term of the agreement. The city also stands to collect around $68,000 in property taxes from the retailer, along with an estimated $78,000 annually in fuel tax revenue and approximately $3 million in one-time building and permit fees.
Indirectly, the city will also benefit from future development that is expected to follow Costco, which, as the world’s third largest retailer, has proved to be a magnet for other businesses, said Marcie Willard, the city’s economic development director.
“We consider that retail gravity effect, because other companies and other businesses want to locate near a Costco,” she said.
Also coming with the warehouse are around 300 employees that are better paid and have lower turnover than other retailers, Costco’s real estate director Jenifer Murillo told the council.
“We are very proud of the jobs that we provide,” she said. “They have great benefits. There’s a lot of upward mobility. Everybody is hired from within. All of our executives pushed carts at one time in their life.”
The agreement contains some guardrails for the city, explained Willard. The 1.25% sales tax share is capped at 25 years and at no more than $25 million in bond proceeds. Moreover, the tax share does not begin until Costco receives a certificate of occupancy, and if vertical construction does not begin within two years, the agreement terminates.
If sales underperform, bondholders — not the city — bear the risk on the 1.25% portion, Junglas and outside bond counsel Dalton Kelly told council members. Any revenue generated beyond debt service and capped reimbursements would flow back to the city’s general fund through what officials described as a “waterfall” structure.
But even those guarantees weren’t enough for the skeptical residents who spoke during public comment. Several questioned whether the city should offer incentives to a developer with billions of dollars in assets, arguing that Realberry and Costco could finance the project privately. Many also voiced concerns about getting into yet another long-term deal with a developer facing scrutiny for its management of the Centerra urban renewal plan.
“There is no faith in this developer whatsoever, and to continue to give them our tax money is obscene,” said Ward 2 resident Megan Eliezer. “It is just obscene, especially when we are at a budget shortfall that we keep hearing about. It’s not the grocery tax that’s the problem. Giving money to developers is the problem.”
Others raised concerns about the lack of early public disclosure during negotiations and whether the project could divert sales from existing businesses such as Sam’s Club or King Soopers.
Those concerns were not enough to sway most council members, who said prior to the vote that the promise of new revenue outweighed the risks in the deal.
“I think it’s a good deal for the city of Loveland because of our financial position here,” said Councilor Zeke Cortez. “And I think long term, it’s just going to expand. There’s just going to be more growth out in that area, and after the 25 years is up, or even before the 25 years, I think we’re going to be made whole.”
The measure ultimately passed 8–1, with Ward 2 Councilor Sarah Rothberg casting the lone dissenting vote.
“What I would really like to see happen here is developers develop the land, sells the land and the business comes in, builds it out,” she said. “Then the city has sales tax all to themselves and can provide that infrastructure support and maintenance and build out. I think that kind of system has a lot of trust with community members.”
According to city staff, the anticipated opening for Loveland’s Costco is early 2028.
