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Costco

You may finally be able to buy booze at Walmart and Costco now

I agree with this.

A protectionist Texas law that has kept Walmart, Costco and other giant retailers from selling hard liquor was found unconstitutional by a federal judge this week, prompting cheers from free-market advocates — and vows of a quick appeal from one of the parties on the losing side.

The Texas law that was struck down — unique in the United States — forbids publicly traded businesses from owning liquor stores while allowing family-owned companies to grow into giant chains without fear of competition from large national or international corporations.

If the late Tuesday ruling by U.S. District Judge Robert Pitman survives appeals, Texas consumers — like those in at least 31 other states and many foreign countries — will be able to buy vodka, tequila and bourbon from Walmart-owned stores and from other multinational retailer outlets.

“For decades, these laws have stood in stark contrast to Texas values,” said Travis Thomas, spokesman for Texans for Consumer Freedom, which advocates for free-market reforms in Texas. “The State of Texas should not pick winners and losers in private industry.”

[…]

Experts said an appeal could take more than a year to play out in the federal court system — longer if it were to wind up in the U.S. Supreme Court. In the meantime, Texans can expect the status quo in liquor retailing. If publicly traded companies are allowed eventually to sell distilled spirits, existing law would still require the companies to build separate facilities, though they can be adjacent to existing stores.

See here and here for the background. The Texas Package Stores Association, which represents the state’s liquor store owners, has vowed to appeal, and I’d expect this to go the distance. As you know, I’m no fan of Walmart, but on this issue I think they’re in the right. Now if we could only bring a similar sense of sanity to the state’s ridiculous beer laws, we’d really have something.

Costco joins in on liquor sales

Not just Wal-Mart any more.

Wholesale giant Costco has joined Wal-Mart and other retailers in the fight to let public corporations sell liquor in Texas.

Texans for Consumer Freedom, a group formed last month to lobby Texas lawmakers to loosen restrictions on the state liquor market, announced Wednesday that Costco Wholesale Corporation would lend its name to the effort.

“We are glad to be joined by Costco in our efforts to level the playing field for the retail sale of spirits so Texas consumers receive the choice, convenience and lower prices competition provides,” Travis Thomas, a spokesman for the group, said in a statement.

[…]

“Costco proudly stands with Texans for Consumer Freedom in its efforts to eliminate the unusual Texas spirits laws that artificially restrict competition and prevent us from directly serving our over 1.3 million Texas members,” Executive Vice President Dennis Zook said in a statement.

See here, here, and here for the background. Kroger and the Texas Association of Business were already in with Wal-Mart, and the Texas Package Stores Association – basically, the existing liquor stores – stands in opposition. My impression is that the bills in question will have a decent chance of passing, but we’ll see.

Council approves Costco tax rebate

I still don’t think this is a good idea.

The Houston City Council on Wednesday approved a $1 million economic development deal to help Costco build a store outside the city limits.

In a rambling discussion ending in a 12-3 vote, supporters argued that the sales tax rebate would drive further development in the area around the site of the proposed store, at Interstate 10 and the Grand Parkway, generating revenue the city would not collect otherwise.

Opponents said they had heard no argument for why the rebates were needed for the store to be built, or, in Councilman Andrew Burks’ case, said the deal did not ask enough of Costco.

Corporations should take a more active role in funding after-school and summer jobs programs in the city, Burks said, and should give preference to veterans in hiring.

[…]

The store would sit on 14 acres Costco has under contract in the Cimarron Municipal Utility District. The city since 2003 has had an agreement with the district under which the parties split the revenues of a 1-cent sales tax collected within the district’s boundaries. The city provides only animal control services there, and property owners pay no city property taxes.

Economic development experts have said the area is likely to develop without incentives, given that a new segment of the Grand Parkway connecting I-10 with U.S. 290 will open in December. Councilman C.O. Bradford, who joined Burks and Councilman Larry Green in opposing the deal, took a similar approach.

“Is the incentive necessary?” Bradford asked. “I haven’t heard anybody articulate the real need for the incentive.”

Councilman Ed Gonzalez said the proposal was necessary because Costco was considering a nearby site that would generate no revenue for the city.

“While technically, yes, it’s a very lucrative site, very high-profile and likely Costco would still come there, I think to some extent, by us having skin in the game, we guarantee they do come into this area,” Gonzalez said. “I would rather us control some of our own destiny here, make sure this investment is here and leverage our $1 million to bring a much greater return to the citizens of the city.”

See here for the background. I get why Council agreed to this, but the question I haven’t seen asked – let alone answered – is what the return for the city would be compared to what was likely to be built on that property if no rebate was offered. We all agree that something would be built, possibly this very Costco, but even if you accept that Costco would have gone elsewhere, something else would have been put there eventually. As such, it makes no sense to compare the revenue the city will get from making the deal to zero. Compare it to some scenarios where something else gets built, and compare it to that. Is it still worth the money the city is giving up? If it is, then I can live with this. If not, then we need to do a better job of making economic projections.

A tax break where?

I don’t quite understand this.

The Houston City Council on Wednesday will consider giving up to $1 million in tax rebates to a Costco store that would be built outside city limits.

City officials say the proposed 151,600-square-foot warehouse and liquor store, in the 23600 block of Katy Freeway, will act as a catalyst for further development in the area around Interstate 10 and the Grand Parkway, and generate tax revenues the city otherwise would not collect.

[…]

The 14 acres Costco is under contract to buy is in Cimarron Municipal Utility District, with which the city cut a special-purpose annexation deal in 2003. Under the agreement, the city and utility district split the revenues of a 1-cent sales tax collected within the district’s boundaries. The city provides only animal control services there, and property owners pay no city property taxes.

[…]

Without the incentive, Chief Development Officer Andy Icken said, the company likely would have picked a tract it had under contract a mile west of the utility district, near Katy Mills Mall, where no revenue would have been generated for the city.

Icken said the city expects to collect $8 million in sales tax revenues from the store during the life of its annexation agreement, after rebates. The rebates will come from sales taxes generated by the store, and will be used to reimburse Costco for infrastructure work, mainly a road connecting it to the I-10 feeder road. The Cimarron district will pay for soil work to make the site suitable for construction.

Combined, Costco would be reimbursed about $2.5 million. Costco representatives declined to comment on the project or the rebates.

Councilwoman Melissa Noriega said she has concerns about the proposal, but has not decided how she will vote. “It seems like Costco is an awfully big, well-funded company to need that kind of infrastructure assistance,” she said. “Having said that, I know we want to incentivize the kind of retail they produce for the tax rolls.”

I get wanting to have the place built in an area that benefits the city. The usual arguments about this kind of subsidy relocating retail activity instead of increasing it is a bit less concerning when the location of the retail activity is the point. While it is unquestionably true that something is going to be built at this location, given the upcoming Grand Parkway expansion, I get wanting to make it happen sooner, since the city’s revenue sharing deal with the Cimarron MUD expires in 2033, and I get wanting to ensure that what does get built is of top quality. But yeah, I don’t really see why a large well-funded company like Costco needs the incentive. I’m sure they know which location is best for them, and I don’t know how much difference a relatively minor tax break will make to their bottom line. Council should be very skeptical of this.

Will the Alabama Bookstop be spared the wrecking ball?

A commenter at Swamplot, who claims to have inside information, has the following to say about the River Oaks Shopping Center and the Alabama Bookstop.

1. Barnes and Noble owns Bookstop. They are closing it to move to the new location at ROSC.

2. Weingarten has no intent of demolishing the Alabama Theater. They have been marketing the space for re-use. They intend to restore the facade when a new tenant signs on.

Everyone knew that the Bookstop’s days were numbered. With the massive Borders Books just a few blocks away at Alabama and Kirby, and the new B&N opening soon, there couldn’t possibly be enough capacity to keep the Bookstop in business as well. The question that vexed everyone who cared about preservation was what would happen to the historic Alabama Theater building that currently houses the Bookstop. If this information is accurate, it’s the first positive thing I’ve heard about its disposition since Weingarten first announced the demolition of the original River Oaks Shopping Center.

The commenter had more to say about other matters, including this somewhat puzzling bit.

4. Weingarten’s long term interest in ROSC is to achieve the highest and best use for this property. They want to bring a higher density to the center that they feel is appropriate for its location.

5. Before the crash last fall they were working on a plan to improve the walk-a-bility of the ROSC through landscaping and art. I believe the project is on hold right now. Its interesting how everyone is in favor of density (less driving and more walking) except when it affects something in your backyard.

I still don’t understand how adding a massive bookstore and a five-story parking garage contributes to “less driving and more walking”. There’s a discussion in the comments to that Swamplot post about how of course the ROSC is “walkable” because hey, you can park your car in the lot and then walk to any of the nearby stores. By that definition, the shopping center that includes the Costco at I-10 and Bunker Hill is walkable, too. The new ROSC may or may not be more pedestrian-friendly than the old one was, at least for those who drove and parked there. There are certainly things that can be done to make it so, some of which were explored in that comment thread – planting trees, widening sidewalks, etc. I seriously doubt Weingarten cares to spend any of its own money on stuff like that, but I’ll be happy to be proven wrong about that. When there’s mixed-use development in this area, as well as transit options to get residents in and out of there without needing to drive, then we can talk about density and walkability in a meaningful fashion.