Houston using tax breaks to lure big name businesses


Freddy's Frozen Custard just opened a few months ago on the edge of Houston's far west side. The area still has a lot of open land and the folks at Freddy's would love a big box retailer like Costco.

"It will be great for the local businesses out here, especially ours being new to the area," said Padden Nelson. "It would get us to see customers who wouldn't otherwise see us. We're excited to see them as a future neighbor."

And it looks like they're getting what they want. Houston city council is set to vote on a new 380 agreement with the warehouse membership store. If approved, it would rebate tax revenue to Costco for making infrastructure improvements on a property under Houston's jurisdiction.

City councilmember Melissa Noriega said, "It's a way of funding infrastructure, all the stuff that goes under the ground."

City leaders say they believe the deal is needed because the area is less than a mile from Katy, and Costco could easily locate in Katy, taking with it valuable tax revenue.

City councilmember Stephen Costello explained, "There is always competition for new development and this is basically us trying to solve a problem with competition."

But nearby residents say they don't really care where the Costco is located, as long as one is built -- and soon.

"Honestly, as long as it's close to Katy, and we don't have to go 30 to 40 miles out of our way, it's still going to be great," said one Katy resident. "Right now Costco is just too far for us to go."

For the city, there's no out-of-pocket cost, but they could incentivize anywhere from $1-2 million in tax rebates. But the city says over the course of the next 20 years, it could get at least $8 million in taxes in return.

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