Regina reluctantly agrees to $6.78M incentive for second Costco

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City council agreed to cough up a multimillion-dollar incentive for a second Costco in Regina, but not before protesting the need to compete with the provincial government for the retail giant’s business.

Costco had been in negotiations with developer Forster Harvard to purchase land on the west side of Regina — 8701 and 8201 Dewdney Avenue in the Westerra neighbourhood — to build a new store and gas bar.

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It was to be the fledgling suburb’s first anchor tenant for retail, having submitted development plans to the city in July 2024.

But Forster Harvard president Blair Forster told council on Wednesday that Costco backed out of their nearly finished agreement in December to instead entertain building at the nearby Global Transportation Hub (GTH).

Forster said Costco was offered a lower price for land at the inland shipping hub, which is owned by the provincial government and operates as its own municipality.

“We, under no circumstances, thought (the GTH) would be used to compete with retail from the City of Regina, and I think that was echoed today,” noted Forster, who later added that securing this incentive would likely bring Costco back to its agreement in Westerra.

City council agreed to dangle the $6.78-million carrot, voting 10-1 in favour. Coun. Sarah Turnbull (Ward 5) was against.

Concerns about the spend were ultimately overridden by arguments that the big-box store is necessary as a future property tax source and a stimulator for the developing suburb.

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However, nearly all councillors expressed a feeling that their support was given under duress to protect the city’s economic interests.

“I fundamentally object to the principle at play here,” said Coun. Victoria Flores (Ward 6). “My disappointment is with our provincial government, who would foster a competitive environment that effectively pitted Regina against an unfair, advantaged position, and forced our hand into this position.”

Daniel Hersche, president and CEO of the GTH, responded Thursday by clarifying it was Costco that approached them.

“It is unfortunate that we’re viewed as competing with (the city),” Hersche said. “But Costco is a private business and can choose to locate where makes sense for their business.”

Asked why his group would court a retail store, Hersche said the GTH’s mandate is to “create jobs for Saskatchewan” and that “Costco aligns with that.”

The area mainly comprises commercial tenants like transport companies as well as shipping warehouse for Loblaws, Amazon, Cargill, etc.

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Hersche said the situation is “unique” with Costco being a wholesaler and a retail store, adding that the GTH does not plan to actively pursue similar retail businesses in the future.

‘We should all be deathly afraid’

During Wednesday’s discussion, Coun. Jason Mancinelli (Ward 10) asked if the deal fell through because GTH had “undercut” Forster Harvard on their offer.

“Costco does what Costco does, which is find the lowest cost platform they can operate,” responded Forster.

The difference between the two sites was “about $10 million,” said Forster, noting that his company operates at market price while the GTH’s land parcels are “highly subsidized.”

Forster Harvard has agreed to cut its cost by $3 million on top of the city’s incentive to “match the price” from the GTH.

An additional $500 million in Westerra investment is pending based on Costco’s presence and would be at risk should the retailer go elsewhere, according to Forster and other developers who spoke Wednesday.

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Those commitments include another grocery store for the area, additional retail space and 300 more residential units.

“That money goes away if this deal goes away (and), if that was to happen, we should all be deathly afraid,” Forster said. “Because what’s next? What other tax revenue do we lose as a community if that sucking sound starts to happen?”

In this case, an added incentive changes the conversation.

“I think this is going to see a significant expansion of the west area neighbourhoods because of the decision,” added Forster.

After Wednesday’s meeting, Mayor Chad Bachynski said he didn’t think the city agreeing to the incentive would necessarily set a precedent for courting retailers in the future.

“This is the deal that had to be made in order to secure Costco to come to the city,” said Bachynski. “This was a unique situation that I’m very much hopeful we don’t come across again.”

Coun. Shanon Zachidniak (Ward 8), who represents Westerra, said the situation was upsetting but public feedback on the development clearly showed that residents do want another Costco.

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“These frustrations, they have to be addressed to the province and to the GTH,” she said.

As negotiated, the deal is contingent on Regina’s second store being built and opened within two years of acquiring the land.

The incentive funds, which come from the city’s land development reserve, are to be paid back over about eight years using the store’s commercial property taxes, estimated at $500,000 per year.

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