BREAKING DOWN THE COSTCO PROJECT

 

When Washington County’s Commissioners announced in June that they were allocating $5.9 million from the county’s blight mitigation fund for the demolition of the Washington Mall, the first reaction of many was disbelief. Why would such a large amount of public funds be used to benefit a private developer, Chapman Properties, and the Costco corporation, one of the most successful retail operations in the country?

For the similar demolition of Century III Mall in Allegheny County no county funds were used. Instead, a more modest million-dollar award for demolition came from the state’s Redevelopment Assistance Capital Program (RACP) fund. One difference was that when work began at the Century III location, no developer or large retailer had expressed an interest in rebuilding at the site.

The more common route for county blight mitigation is the Pennsylvania Act 152 Blight Removal Program. Under this 2021 initiative, the focus is on demolishing hazardous structures, site development for developing projects, and multiphase planning efforts. The Act permits each county to create dedicated demolition funds by adding a small fee onto recorded deeds/mortgages. Typically, a county grant under the program cannot exceed $250,000.  Since its inception, 181 structures have been demolished across Pennsylvania at a cost of $5.2 million.

The road leading to the funding for the Washington Mall demolition is complicated and explains why all three commissioners enthusiastically supported the project. The bottom line is that no county general fund revenue, collected from local taxpayers, was used for the demolition to make way for Costco.  In addition, when the Costco store opens its doors, a proven generator of economic growth and future tax revenue will benefit the community.

The funding stream making the demolition possible begins with the pandemic. The American Rescue Plan Act of 2021 (ARPA) was a $1.9 trillion economic stimulus Bill passed by Congress, and signed by then President Biden, without a single Republican vote. The funding included $7.9 billion for the Commonwealth of Pennsylvania. Of this amount, $4.95 billion was allocated for the largest cities and the 67 counties. The remainder was divided among Pennsylvania’s smaller municipalities.

Washington County was awarded the significant sum of $98.9 million in ARPA funding. The funds were used for a variety of projects. As I have discussed in a previous commentary, many were initiated without the approval of the minority commissioner, Larry Maggi, and with little transparency or community input.

Ironically, despite ongoing opposition to the ARPA for inflating the deficit, Republican elected officials have not returned any of their allotted assets. Instead, like Washington County, Republican efforts have focused on extending deadlines and reallocating funds to ensure that all the ARPA money was spent.

With the deadline for using the funds looming, all three commissioners agreed to launch the Washington County Blight Mitigation and Demolition Fund program utilizing the remaining $12 million of the County’s ARPA allotment. In March of 2025, they approved an agreement between the County, the Redevelopment Authority, and the Washington County Land Bank to create and administer the program.

The first project was a modest effort to demolish and remove the remnants of the collapsed structure on 15 North Main Street in the City of Washington. The County only allocated $85,000.

Within months, Washington County’s blight mitigation program was supersized into a project never contemplated by any local blight removal plan.  Half of the allotted $12 million in funds from the local blight mitigation and demolition fund were earmarked to benefit one developer seeking to bring a Costco store to Washington County.

On its face the use of federal ARPA funds, which morphed into blight mitigation funds, and were then used to snare a Costco for Washington County was an astute move. The economic benefits of supporting a Costco are many and long lasting. It is difficult to image a better use for the funds.

However, there are unresolved issues. Because of the unprecedented amount of public dollars used in a private project, the public deserves transparency and full disclosure of all written agreements and activities related to the project.

First, all correspondence, memorandums of understanding, and contracts between the County, developer, and Costco should be disclosed. Is Costco receiving tax-increment financing or other perks to further lower its project costs? Second, regular updates on the Costco build-out should be publicly posted.