A plan spearheaded by Montgomery County Executive Isiah Leggett (D) to bring a Costco to Wheaton could be in jeopardy, with a majority of County Council members saying they will not support a $4 million subsidy as an incentive for the retail giant.
In July, Costco and Westfield Wheaton mall reached an agreement to open a new store by early 2012 — an announcement that sparked hope among some in the local business community who thought the big-box retailer would attract thousands of new shoppers to an older area of the county that has struggled economically.
As part of the deal, Montgomery officials agreed to give the mall’s owners $4 million over two years toward the $39 million construction costs. There was opposition on the council, but the main hitch in the deal appeared to be neighborhood concerns about plans to build a Costco gas station on the site.
But council support is eroding. Five of the nine council members said they do not support the deal. A report on the issue first appeared in the Washington Examiner.
Three members of the previous council who opposed the subsidy the first time around are finding allies in two council members elected in November. Craig Rice (D-Upcounty) and Hans Riemer (D-At Large) say they cannot support such a lucrative public subsidy at a time when officials might be forced to make deep cuts in services. The county has been seeking to close a budget gap of about $300 million for next fiscal year.
“We need the money for more urgent needs,” Riemer said. “I think Westfield has a very profitable mall that will be even more profitable if Costco comes.”
The deal is scheduled for a vote in the Planning, Housing and Economic Development Committee on Monday as part of a package of measures tied to the county’s economic development fund. It will then go to the full council for a vote.
“We’re not [Westfield’s] cash cow,’’ said council member Marc Elrich (D-At Large), who from the beginning has opposed the $4 million subsidy, which would be paid in installments of $2 million over two years. “This represents a real choice. Either $2 million goes here, or $2 million goes somewhere else. Given the cuts we’re facing, there are more important places to put the money.”
Council President Valerie Ervin (D-Silver Spring) and council member Phil Andrews (D-Gaithersburg-Rockville) also said Tuesday that they would not vote for the deal. Council member Roger Berliner (D-Potomac-Bethesda) said he is still considering the issue. Council member Nancy Navarro (D-Eastern County) could not be reached for comment.
Members of the Leggett administration said Tuesday that such a move would be unprecedented.
“We do not believe that a majority of council members are willing to jeopardize future job creation in Montgomery County by voting against the Westfield agreement,’’ said Steven A. Silverman, director of the county’s Department of Economic Development. “They’re risking the reputation of the county by going after this transaction.’’
Nancy Floreen (D-At Large) — one of two council members who have said they would vote for the subsidy — agreed, saying she thinks the matter has been settled.
“If we were to revisit this, it would mean that you can’t count on Montgomery to uphold a deal,’’ she said. “I appreciate that new council members might raise questions and ask questions, but they have to understand the decision that was made before they arrived.”
If the deal were to be approved, it would not be the first time the county has offered Westfield financial support to attract a tenant. In 2005, Montgomery officials contributed $6 million to help build a parking garage as part of an effort to bring Macy’s to the mall.
Council member George L. Leventhal (D-At Large), who supports the measure, said he understands that a subsidy to a private company might be “a bitter pill to swallow” but added that “the public needs to understand it’s what’s necessary to attract jobs and investment to the county.”
Leggett has touted the project as a way to bring jobs and revenue to the eastern portion of the county. County officials say rebuilding the former Hecht’s department store space, which has been vacant since 2006, to accommodate Costco and other retailers would bring up to 300 construction jobs and 475 retail jobs to the area at a time when such jobs are scarce.
Costco officials said it is a corporate policy not to comment on specific markets. Westfield spokeswoman Katy Dickey said the mall operator has no reason to think that the project will not go forward.
“There’s an agreement in place, and the expectation is that the county will follow through,’’ she said.