Sunday, January 17, 2010

Response to Blog

By Steve Silverman.

The article above raises legitimate questions about the Costco initiative. Here are some answers.

The County Executive’s proposal to invest in bringing Costco to fill the now four-year-long hole left at Westfield Mall when Hecht’s went out of business is first and foremost about jobs.

The initiative would produce 475 permanent jobs, at a time when the County has lost thousands of jobs due to the economic downturn. It would create an additional 250 to 300 construction jobs. And it would leverage more than $50 million more in private investment.

Additionally, the County would receive property taxes, income taxes, and impact fees – and the State of Maryland would receive sales tax – from the Costco operation. Right now the empty Hecht’s is generating zero.

As with all investments from the County Economic Development Fund, this is a “money-maker,” not a money-taker.

Here’s how the process works: The County Department of Economic Development explores possibilities for investment of the County’s Economic Development Fund. It brings those possibilities to the Council, meeting in closed session. It is closed session because these are negotiations involving proprietary information, public disclosure of which, at that point, would compromise the County’s negotiating positions and possibly affect County negotiations with other companies.

The Executive seeks the Council’s advice. If the Executive decides to move forward, a formal proposal is sent to the Council, which involves public hearings and scrutiny from Council committees and the Council as a whole in public session.

Concerns about Wheaton’s central business district are legitimate. This development would strengthen the County’s vision for Wheaton. The mall is a given. It will be there whatever happens to a “Town Center” vision for the rest of Wheaton. This is part of an overall, ongoing effort to improve Wheaton, while retaining its unique character. The County Executive has just announced a “Request for Qualifications” to search for and choose a development partner to redevelop acreage owned by the County and Metro in downtown Wheaton toward that end (click here to view). And the County Executive’s recommended Capital Budget includes more than $7 million additional in Wheaton infrastructure.

But the success of that revitalization vision – and private investment in that vision -- rests on the mall being successful. Unlike the Costcos in Beltsville and Gaithersburg, shoppers will have to enter the mall to patronize Costco, just like with J.C. Penney and Target.

Since it would be filling up an already existing space in an already existing shopping mall, there would be no changes or public transportation investment necessary to facilitate the project.

The article above raises the question of possible impact of Costco on small businesses in the Wheaton area. In fact, Westfield businesses and many other businesses in Wheaton are already supportive of the Costco possibility. Why? Because every business in Wheaton needs more customers, more boots on the ground, more patrons.

And, in central Montgomery County alone, Costco has more than 12,000 business members. Small businesses shop at Costco for supplies the same way contractors depend on Home Depot for the materials they need. In fact 92 percent of businesses in Central Montgomery have Costco memberships.

The County’s economic development strategy is broad – including major efforts on expanding our biotech efforts, work to retain and expand federal job presence, and forging new ground in green technology. Incentives are only one factor among many in corporate decisions to locate. We continue our efforts on a broad array of opportunities, including, but not limited to Northrop Grumman.

As a matter of fact, in 2000, then-County Executive Duncan proposed, and the County Council unanimously approved, a $6 million incentive to bring Macy’s to this very same Westfield.

Counterposing the possible layoff of 44 bus drivers to the incentive being discussed is your classic false choice. One could pick any item of a County budget of $4.3 billion and juxtapose it to reductions being proposed by the County Executive to close a $608 million budget gap in the coming fiscal year.

Again, the investment by the County in a successful company such as Costco would create jobs, strengthen Wheaton revitalization, and provide individuals and small businesses with increased consumer choices.

And Montgomery County needs all kinds of jobs at this time of economic downturn, including retail jobs, in order to meet the varying employment needs of our residents. Costco, it should be noted, does provide health benefits for employees working 20 hours a week or more – and for their families.

It would, again, be a money-maker that would strengthen the County’s tax base and, thus, help maintain critical County services.

We look forward to working with the Council to advance this initiative and, more broadly, to move the ball forward on Wheaton revitalization.

Steve Silverman
Director, Montgomery County Department of Economic Development