Castle Rock finalized the details to allow the construction of the Dawson Trails development, which includes the Crystal Valley Interchange and a Costco.
Town Council approved a number of documents related to the development project at its Sept. 6 meeting which clears the way for developers Westside Investment Partners Inc. to begin building the planned 5,850 housing units and 3.2 million square feet of commercial space.
In order to get a Costco in the area, town council members agreed to a $10 million incentive package that includes $3.5 million upfront from the Economic Development Fund and another $6.5 million from the town remitting a third of the store’s annual sales tax revenue.
Town Manager David Corliss said the town could expect to see $4-6 million in sales tax revenue annually from Costco, which would fund future police and fire staff that the town otherwise could not afford.
“We need additional sales tax in order to grow our police and fire departments,” Corliss said.
Despite the benefit to the town revenue, council member Laura Cavey was hesitant to offer incentives to an already profitable chain store and ultimately voted against the agreement.
“I would rather see us incentivizing the little guy, helping small business or doing other things with those tax dollars,” Cavey said. “I understand very much that we need this money to fund our police and fire, but robbing Peter to pay Paul doesn’t seem like the right thing to do.”
Corliss said he understood Cavey’s reticence, but noted the money doesn’t go directly to the company, but rather to the developers for infrastructure for the Costco. He added that 35,000 town residents already shop at Costcos in other communities and the store’s tax revenue would be crucial to future budgets.
“It is a necessary requirement in order to attract a large retailer,” he said. “There’s not a community in Colorado that would not also provide some level of incentive for a Costco or similar retail development because they depend on retail sales tax to run their operations.”
Additionally, the council approved changes to the service plan for the Dawson Trails metro districts to allow the neighborhoods to take on more debt for infrastructure, including the $50 million developer’s contribution to the Crystal Valley Interchange.
"In consideration of the substansial contribution to the interchange and additional town infrastructure, the town has agreed to amend certain requirements," Town Attorney Michael Hyman said.
Under the agreement, metro districts can take on more debt service by raising property tax rates over what’s typically allowed, debt service plans are limited to 50 years maximum and debt is limited to $1.06 billion total. It also allows the creation of special improvement districts and removes a developer requirement to remit specific ownership taxes.
For every year that districts raise property taxes for infrastructure debt, the districts will owe five mills to the town to help defray costs for providing services to the neighborhood.
The agreement protects buyers from having fees passed on to them through purchase prices and requires the districts to ask the town’s permission to issue or refinance debt, on top of other transparency requirements.
"We're not going to charge the citizens of our town to build the public improvements to serve the Dawson Trails planned development," Hyman said.
Construction on the Crystal Valley Interchange is scheduled to start next year and finish in 2025 with the opening of Costco likely that same year.
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