Regina’s $6.8M subsidy to Costco could have been avoided, says auditor

A $6.8-million subsidy the City of Regina is paying Costco could have been avoidable had a provincial Crown corporation properly collaborated on the retail giant’s plans for its new location, Saskatchewan’s auditor said Tuesday.

Tara Clemett said the Global Transportation Hub, the Crown agency operating an industrial park in Regina, didn’t have a framework in place with the city when negotiating with Costco.

“There is the potential the additional cost may have been avoided if some of this collaboration and those procedures had been better defined,” she said at a news conference.

Clemett made the comment following the release of her report that included the issue.

Earlier this year, city council approved giving Costco the subsidy, a move that ensures it receives property tax revenue from the store and promises additional development in Regina’s budding Westerra neighbourhood.

The decision came after problems arose last year with securing the store in the neighbourhood.

In late 2024, Costco backed out of an agreement it was finalizing with a developer to build the store in Westerra. Instead, it began negotiating with the Global Transportation Hub to build in the industrial park.

The park operates autonomously and functions like a municipality, receiving its own property tax revenue.

To get Costco back, council approved the subsidy. The city is providing the $6.8 million to the retailer in increments, with all of it to be paid once the store opens.

It’s as much as roughly 4.5 million of Costco’s famous $1.50 hot-dog-and-drink combos.

Costco didn’t immediately respond to a request for comment on the subsidy. Construction of the new location started in September.

The city said in a statement Tuesday the money will come from the land development reserve, so it won’t increase the mill rate.

“This reserve may be used to incentivize developments in the city, and the expense will be replenished with property taxes collected from Costco over the next seven to eight years,” it said.

Clemett said the Crown corporation should have had a procedure in place to talk with the city when Costco considered building in the industrial park.

Her report said the Global Transportation Hub made attempts to collaborate, including sending emails to the city of its intent to sell the land to Costco.

“At the end of the day, there was an additional cost that was incurred without this collaboration,” she said. “The key will be (the Global Transportation Hub) probably formalizing and defining who, what, where (and) what should have happened.”

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Daniel Hersche, CEO of the Global Transportation Hub, said he had many phone calls with the city about Costco’s plan.

“I did inform them when conversations started happening,” he said in an interview.

He still accepts the auditor’s recommendation, he said, and is working on having an improved framework with the city going forward.

“I think at that time, collaboration could have been better,” Hersche said. “Our goals should be the same as the City of Regina’s goals.”

As a Regina taxpayer, he declined to say how he feels about the city funding Costco.

“The city obviously made their decision to incentivize development,” Hersche said.

The Opposition NDP has accused Premier Scott Moe’s Saskatchewan Party government of pitting the city and the Global Transportation Hub against one another.

New Democrats have called on the province to reimburse the city for the $6.8-million Costco bill.

“(This) should have never happened,” Joan Pratchler, a Regina NDP legislature member, told reporters Tuesday. “Stay in your lane, provincial government.”

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