Plans for the first Costco in this East Bay city move ahead

OAKLAND, Calif. - The city of Oakland is one important step closer to getting its first Costco, as plans to build a new warehouse store at the city’s old army base in West Oakland take a big leap forward.

What they're saying:

Mayor Barbara Lee expressed her excitement about the project on social media last week, saying, "Not only does this mean easier bulk shopping, but it also brings 400+ high-quality jobs and $3 million in new annual tax revenue for City services. Who else is counting down the days?!"

Unanimous vote

What we know:

Her comments follow the city council’s unanimous vote earlier this month to approve a two-year exclusive planning agreement with Costco Wholesale Corporation to build a store and a gas station on two parcels in the North Gateway neighborhood at 101 Admiral Robert Toney Way and 2308 Wake Avenue.

That means the city has two years to work with the big box chain, and no other proposed projects, on plans to build a store on the roughly 23-acre property. As part of the exclusive negotiation agreement, Costco would pay the city $300,000.

The company would also have two six-month options to extend the negotiation period, with each additional extension costing the company an additional $25,000. 

The city acknowledged that the move would waive competition from other businesses interested in leasing the land but said the city administrator has determined that locking into an exclusive agreement with Costco is in Oakland's best interests based on the significant new jobs and revenue that the project would provide.

"Costco is well positioned to follow through on a development where other parties may fail," the city said in the resolution's agenda report. 

The city also noted that an investment in Oakland by Costco, the third-largest retailer in the country, would lead to "a positive market signal to other businesses and investors."

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During the exclusive negotiation agreement (ENA) period, in addition to working out the terms of a long-term lease, the two sides would establish terms of the development itself, including the site design and infrastructure and land requirements. 

They would also hammer out details of how the community would benefit from Costco's presence there.

Those terms would be based on past Oakland Army Base projects, "including specific job policies related to local employment, workforce training, and local business and small business contracting," according to a city council agenda report.

Hundreds of new jobs 

The city said the store would create 400 new and ongoing jobs that offer competitive pay, on average $32 an hour, as well as strong benefits, and opportunities for career growth. 

During the building process, the project would also lead to additional temporary construction jobs. 

Revenue to the city

By the numbers:

In addition to the estimated $3 million from annual general fund revenue, the city is also expected to receive new sales tax revenue from the business, estimated at $2.2 million per year, as well as about $720,000 in new business license tax collections under the city’s progressive tax rate structure. 

Those figures are based on estimates that the store would generate annual gross sales of $300 million.  

"The City would also receive its proportionate share of new property tax revenues, which are expected to be substantial," the report said.

The location and its access to freeways, city officials noted, would also lead to additional spending from customers from outside Oakland.

Affordable option in a ‘food desert’

The city also said that the warehouse store would offer residents, especially those in the neighborhood widely considered a food desert, an affordable option for goods and services.

"One of Costco’s central competitive advantages is its low prices," the report said. "Because groceries are sold at Costco, the proposed store would provide a new source of fresh food in a neighborhood that is considered a food desert due to a relative lack of existing grocery stores."

Community response 

The resolution’s approval follows four community meetings about the project led by District 3 City Councilmember Carroll Fife. The city said Costco attended the meetings and presented its plans, with the residents invited to offer input. 

Dig deeper:

Oakland-based McFadden Finch Foundation for Community Enrichment has been closely following the project. The non-profit seeks to promote informed civic engagement and said it advocates for redevelopment in Oakland that results in meaningful and measurable benefits for its residents. 

The group said that community reaction around the Costco plan appears to be mixed but generally positive, as many residents feel optimistic about the promise of new jobs, increased revenue for the city, another shopping option, and the reuse of the land which has stood vacant for decades.

Project concerns

The other side:

Opponents of the plan point to issues including traffic and whether the company could commit to long-term policies to help the community. 

"Others have expressed legitimate concerns regarding traffic, truck circulation, environmental impacts, air quality, and whether surrounding neighborhoods will receive meaningful and enforceable community benefits," the nonprofit’s founder and director, Maury McFadden, shared with KTVU in an email correspondence. 

The city acknowledged those concerns in its report.

It also noted concerns over the future of two major recyclers, California Waste Solutions and CASS, Inc, that were previously working on plans to build facilities in that area.  

Last month, the city council directed the city administrator to develop a move forward to build the facilities out of the West Oakland neighborhood. 

Positive signal

The city council’s approval of the ENA provides a strong indication that the Costco plan would ultimately get the green light, according to McFadden, who noted it "demonstrates meaningful political support and gives the project positive momentum."

But it’s far from a done deal.

What's next:

"Several important steps remain before construction receives final approval," he explained. "Environmental review, infrastructure planning, financing, and continued community engagement will all influence the final outcome."

McFadden speculated that if the negotiations run smoothly and don’t face any major barriers, residents can expect five to seven years before the Costco would open. 

"Redeveloping a former industrial property requires extensive planning, environmental work, infrastructure improvements, permitting, and construction," he said.   

KTVU reached out to Costco for comment but did not immediately receive a response. On the media request section of its website, the company did note, "We cannot comment on locations that will be opening more than three months from today."

The McFadden Finch Foundation for Community Enrichment said that it neither supports nor opposes the Costco plan but stressed the importance of ensuring residents of Oakland win in the long run. 

"If this project moves forward, we believe it should prioritize local hiring, workforce development, environmental stewardship, infrastructure improvements, opportunities for local businesses, and meaningful accountability to the surrounding community," the non-profit said. "Our hope is that this development becomes a model for how economic investment and community benefit advance together."

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