Costco seeking more city money for Longmont project

LONGMONT — Initial cost estimates for the new Costco Wholesale Corp. (Nasdaq: COST) warehouse store in Longmont — a public-private partnership between the city, Costco and a private landowner — missed the mark, and the company is seeking nearly $2.5 million in additional public funding. 

Costco had estimated the public funding and fee rebates necessary for the project at around $12.5 million and now expects that need to exceed $15 million.

The difference, should the Longmont City Council opt to provide it on Tuesday, would be made up through a combination of American Rescue Project Act funds and sales tax revenue from the Harvest Junction East Fund.

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Costco plans to build the 150,000-square-foot store on a nearly 50-acre site near Longmont’s Harvest Junction development.

As part of a three-way deal between Longmont, the land owners and Costco, the city also will acquire nine acres of private land for an affordable housing development.

“The project team has undertaken the planning and design and is nearing completion of the permitting,” according to a city memo. “The project has been put out to bid and bids from qualified contractors have been received and reviewed. Bids received were quite a bit higher than the original estimates.”

Construction price increases were a major factor in the cost underestimate.

“Prices for items such as pvc pipe, steel, wood and concrete have escalated by more than 30%

in the past year. In addition, the construction market in the Denver area and along the Front

Range is more active than normal,” according to a city memo. “This has led to material shortages and delays in supply, which has resulted in pricing increases. The increased activity in this area has also resulted in labor shortages that have also been a factor in the pricing increases.”

Additionally, the original cost estimate failed to contemplate ditch relocation, site underdrain, additional site grading and earthwork, and demolition.

“There is a need for the city to move forward with an additional appropriation at this time to

cover the current maximum identified costs so that the closing on the property can take place

next month allowing construction to commence and keep with a timetable to meet Costco’s

needs to be able to open the facility,” the memo said. “Currently that timetable anticipates opening the store in the second half of 2023.”