Last week, Gypsum Town Council members agreed to sign off on a new economic development agreement with Costco that basically extends an old one that helped bring the retailer to town in the first place.
The original agreement expired in 2011. It called for the town to rebate 38 percent of the sales tax generated by Costco for three years, or until a $4.2 million cap was reached. When the revenue cap wasn't met in three years, the town rebate dropped to 15 percent of the sales tax for an additional two years.
Under the new agreement, the town will rebate 15 percent of the store's generated sales tax for another five years, regardless of the old cap. Gypsum Town Manager Jeff Shroll estimated the town rebated about $3 million to Costco during the original time period.
Shroll acknowledged that it's easier for the town to make the deal with Costco now that its revenue-sharing agreement with Eagle will end this December.
The revenue-sharing agreement dates back six years and splits unencumbered sales tax revenues from the Costco retail block at roughly 60/40, with 40 percent going to Eagle. However, the deal did not mean Eagle collected $40 from every $100 in sales tax generated at the big box store.
According to Gypsum Finance Director Mark Silverthorn, Gypsum is required to earmark .8 percent of its sales tax revenue for law enforcement services and an additional 1 percent for the Gypsum Recreation Center debt. As a result, the 60/40 cost share comes into play after these required deductions and the end result is lower. Last year, Eagle received $16 for every $100 in sales tax revenues from the Costco site.
When the revenue-sharing agreement expires at the end of December, Gypsum will be looking at an extra $400,000 in sales tax revenue that was formerly going to Eagle.