Wednesday, September 10, 2014
Costco Wholesale Corp. is a business.
Specifically, it is a $100 billion company, one of the 20 largest in the United States and one of the biggest retailers in the world. On a per-share basis, Costco's stock ($126) is more valuable than Apple's ($98), and the company is showing no signs of slowing down.
Despite its shimmering reputation for paying higher-than-market-rate wages and offering excellent employee benefits, Costco is not a charity. In looking to relocate to the Jackson area, Costco is not making an altruistic overture, bestowing a gift on the people of the capital city and expecting nothing in return.
So between Costco's profit expectation and the emotions of Jackson residents who felt spurned by businesses, such as Sam's Club—a Costco competitor—and Puckett Machinery that have moved out of town in recent years, the city's elected officials feel stuck between a rock and a hard place. In fact, the loss of Sam's and Puckett became political fodder against former Mayor Harvey Johnson Jr. in his failed 2013 re-election bid.
A prime sticking point is the position of Mississippi Secretary of State Delbert Hosemann, who has told the city that any change in use of land on Lakeland Drive, just east of Interstate 55, which was deeded to the city specifically for parks more than 50 years ago, would trigger a reversion provision, allowing the state to take back control of the land.
Jackson's current mayor, Tony Yarber, declined to speculate on whether the age-old tension between Jackson, a Democratic stronghold, had anything to do with resistance from state officials such as Hosemann, a Republican.
"Politically, it is a win," Yarber said last week. "It's a statement that we are vibrant. It is a huge statement for Jackson, and it says, despite the (negative) news clippings, here is the other side of Jackson's story."
Nor is Yarber buying Hosemann's story about the state retaking possession of the land near Smith-Wills stadium. In a telephone interview Sept. 5, Yarber said the property was used for non-recreational purposes in the late 1980s and early 1990s, rendering Hosemann's point moot.
Yarber hopes to make that case to the Jackson City Council. The planning board, which rejected the city's zoning request Aug. 27, makes recommendations that the city council then accepts or rejects in whole or in part. Yarber said he does not have a timetable for putting the appeal before the full council.
Bo Brown, a former Ward 4 councilman, was the lone member who abstained in the August planning board meeting, which he called a vote for neutrality between the Yarber administration and the residents and directors of nearby museums who oppose the Lakeland location.
"I definitely saw the pros and cons on both sides of it. If you ask me does the city of Jackson need new tax revenue, I would have to say yes. If you ask me does the city need to invade on the green space that we have ... (and) the traffic congestion it would create, I would say those are things to consider as well," Brown said.
City ordinances permit parties to appeal recommendations from the planning board to the council; Yarber said his office is planning to appeal to the planning board first, but ultimately wants to get the issue before the seven-member city council.
Unlike planning board members, who are appointed, council members may feel more intense political pressure to vote in favor of granting the zoning request regardless of the uncertainty around Hosemann's position that the land would revert to state ownership.
Yarber rebuffed accusations that his administration has been secretive with plans for the project, which late Mayor Chokwe Lumumba initiated and kept quiet, saying the retail giant asked the city to not "talk about it (until) we got over some initial hurdles."
Besides, the mayor added: "The way we look at it, when we got here, Costco was sitting in the frying pan, and they were really dictating the terms. There were no alternate sites. That is the only site they have their eyes on. We've talked to them about some other sites, but their numbers say in order for them to be successful, that's the site they need to be in. So we haven't been able to do any negotiating on where the site would be because the site piece was kind of non-negotiable."
Some speculation has arisen that Costco should pursue the former Sam's Club location just off Ridgewood Road in north Jackson, but Yarber points out that Sam's, a division of Bentonville, Ark.-based Walmart, left that location because the building was in disrepair and the company thought it could be more profitable in Madison.
The Lakeland site, Yarber believes, represents a catch-all for some of the highest traffic counts in the Jackson metro. Some 50,000 vehicles traverse Lakeland near the land that is proposed for the Costco, Mississippi Department of Transportation information shows. Interstate 55, between the Fortification Street and Northside Drive exits, sees traffic counts of between 100,000 and 125,000 vehicles.
The profit potential is great, especially for a company that doesn't have particularly large profit margins, just 2 percent of overall sales. Costco makes money by carefully surveying sites around the country and moving where the company can maximize its profits. Going into the 2014 fiscal year, which began Sept. 1, 2013, the Issaquah-Wash.-based company planned to spend between $2.3 billion and $2.5 billion on expansion, which would include opening 30 to 36 new warehouses.
That was an increase from the $2 billion Costco spent to open 26 new stores in fiscal 2013. Yarber added that he has had two cordial conversations with Hosemann, who seems entrenched in his position that the land would revert back to state ownership. In the meantime, the city's legal department is preparing for a possible showdown. Lawyers for Jackson plan to argue that the reversion to state ownership happens at the issuance of a certificate of occupancy, not after rezoning as Hosemann has argued.
"One doesn't allow anything to happen. One allows construction to happen," Yarber said. "That's what the attorneys are working through, and we think that we've got a really strong case."
Jackson Planning Board Members
William "Bo" Brown
Source: City of Jackson