Developer could get $17 million in incentives to pave the way for Costco in Des Plaines

A real estate developer could receive financial incentives worth more than $17 million to clear the way for Costco to open a business-focused store and gas station on Des Plaines’ southeast side.

The two-part deal calls for deeply discounted real estate taxes and a decade worth of sales-tax rebates. The Des Plaines City Council is scheduled to finalize the agreement Monday.

A 137,327-square-foot Costco Business Center and a 24-pump gas station are planned for 14 acres at 2200 and 2400 E. Devon Ave. The site is in the 6th Ward, in an office park just west of Interstate 294.

Preparing the land for construction is expected to cost Evergreen Park-based developer RSA Properties II more than $30 million, city documents indicate. Costco would buy the site and be responsible for constructing the store, which it would undertake without receiving incentives from the city, said Jeff Rogers, Des Plaines’ community and economic development director.

Costco Business Centers have different inventories than regular Costco warehouse stores, such as commercial appliances, individually wrapped snacks and an expanded selection of beverages, according to costco.com.

As part of the proposed incentive package, the city council will declare the property blighted and support the developers’ request to the Cook County Board to reduce the property’s assessment rate for 12 years. The maneuver, relatively common in Cook County, is designed to encourage development of rundown properties.

If approved, the incentive could cut the property's tax bills by about $7.5 million over the 12-year period, city documents indicate.

The council also is considering rebating up to $9.75 million in sales tax revenue and interest to RSA Properties II over 10 years.

For the first three years of the deal, the company would receive 80% of the city’s share of sales tax generated by the store and gas station. For the seven years after that, Costco would get 65% of the city’s share of sales tax.

An office building on the property already has been demolished to make way for the Costco. A second building will be razed, too.

Additionally, part of a 16-acre retention pond will be filled in to create land for a parking lot. The council on Monday is expected to give the developer limited use of city flood-prevention equipment to drain the pond.

If the deal moves forward, the Costco operation is projected to be ready for customers late this year, documents indicate.

Monday’s meeting is set for 7 p.m. at city hall, 1420 Miner St. It will be livestreamed at desplainesil.gov.