York County approves Costco incentives deal. Will last-minute changes kill it?
A divided York County Council approved a tax incentive deal Monday night to bring a $240 million Costco distribution center to Rock Hill, despite a warning that the last-minute changes could derail the deal.
The county had considered a $30 million infrastructure credit for the company, or payments for the nearly $44 million in road and electrical improvements Costco plans. Instead, the county opted for a $25 million credit because that’s how much Costco would pay for off-site public improvements.
While a company representative didn’t argue against that reduction when York County Council met Monday, another change could prove problematic. Council decided to shift more of the cost of the credit from the Rock Hill School District to the city of Rock Hill.
Rock Hill would give back $2.7 million more in tax credits, dropping the school district contribution by that same amount. In total, Rock Hill would give $8.2 million in credits. The school district would contribute $12.8 million and the county $4 million.
York County Manager Josh Edwards warned his Council that the $2.7 million switch so late in negotiations could prove catastrophic.
“If done at this stage of a project,” he said, “it will effectively kill this project.”
Councilman William “Bump” Roddey held firm on his request to have the city pay more for the project. York County has the authority to set economic development deals and shouldn’t cede it to Rock Hill, he said.
The percentages each governing body gets from economic development deals is mostly uniform at the rates in place prior to Monday’s late change. But there’s no requirement to leave them there, Roddey said.
“If we let the city make this determination on this deal,” he said, “we’ll never have control over any other deal that comes through this chamber ever again.”
Rock Hill Mayor John Gettys hadn’t seen a move like what the county did Monday during his 16 years on Rock Hill City Council or as mayor, he told The Herald on Tuesday.
“I’ve never seen them take money from one governmental entity — not themselves — take it from one governmental entity to give to another,” Gettys said. “So to say that I’m surprised would be an understatement.”
It’ll be up to Costco to determine whether the county switch kills the project, Gettys said. “That’s a question for (Costco). They’ve got some hard decisions to make.”
The Herald was unable to reach Costco Tuesday for comment.
What is happening at the Costco site?
Costco is looking to open its distribution site in 2027. The 168-acre site at Interstate 77 and Porter Road would serve 20 Costco warehouse stores in the region. The plan projects 165 jobs.
The $30 million infrastructure credit would have represented half the amounts the city, county and school district would have collected in taxes for 20 years. So schools would collect $18.7 million but forego that same amount. Those figures were $6.5 million for the city and $4.8 million for the county.
“I want Costco,” Roddey said. “But I also don’t want to take as much as we can from our schools.”
Rock Hill provides water, sewer and electric service to the area. The city could afford to give up 75% of its revenue rather than 50%, he said, with the school district giving back less money. The county would still give up 50%.
“Whatever Rock Hill gives up, they’re going to make it back hand-over-fist,” Roddey said.
Other Council members shared concern in the 4-3 vote to switch final rates Monday. Councilwoman Debi Cloninger agreed with wanting to help schools, but noted they’ll get $1 million or more per year from the deal without getting more students to serve.
Cloninger didn’t want to lose the Costco deal over the changes.
“You’re walking a tightrope here,” she said.
Councilman Watts Huckabee voted against the changes. Huckabee detailed a list of $78 million in economic development, electric and utility improvements the city intends to make in the Porter Road area in the next 20 years. Plus, he said, economic development helps schools.
“We’re increasing their budget every time we bring a business into York County,” Huckabee said.
The Costco decision is bigger than one project, Gettys said. The city and county have to reassure businesses outside the area that the city supports both business and economic development, he said.
“What we need more of in this community are professionals,” Gettys said. “We’ve got some real opportunities that we should see come to fruition in the next few months.”
Debate on Costco project in Rock Hill
Half a dozen residents spoke against the Costco plan Monday.
They were concerned with the school impact, truck traffic on roads, lower wages for distribution compared to manufacturing sites and increased public safety needs. A few argued for Costco, citing proposed traffic upgrades and employee satisfaction with one of the country’s top companies.
Hours of debate Monday included a stint in executive session, a deal showing that Rock Hill would get $3 million from Costco when a certificate of occupancy is issued and a company imposed deadline of Dec. 11 for the county to approve the incentive plans.
Council supported the Costco project, even when members disagreed on now infrastructure credits should be funded. Bringing the third-largest retailer in the world to York County is a win for the area, the state and for future development of the Porter Road area, Huckabee said.
“We’re not really interested in warehouse and distribution out on the Porter Road site,” he said. “Costco is a different tenant.”
Council members repeatedly brought up the failed Carolina Panthers headquarters deal in Rock Hill to note that the county can set varying payback amounts between themselves, schools and the city.
Chairwoman Christi Cox already had concerns with the traffic Costco will bring. Decreasing the credits schools have to give back made sense for this project, she said.
“Just because a business is allowed to come here doesn’t mean that we need to subsidize them,” Cox said. “The idea of giving $30 million, $25 million in free tax money that will primarily come from our schools is a problem for me.”
