Over the past summer, I and many other residents of the St. Cloud area couldn’t help but notice the arrival of the massive new Costco store at the former Heritage Park in St. Cloud. It was a big development for shoppers in the city, and many were understandably excited to have another option for finding deals on purchases. However, the situation isn’t all rosy. A lawsuit has been filed alleging that the city of St. Cloud engaged in unethical practices in selling Heritage Park to Costco. These claims deserve to be investigated and shared with the public.
So who is suing the city of St. Cloud? In August 2018, a group calling themselves the Citizens for Government Accountability filed suit in Stearns County District Court, citing concerns about the process through which Costco was able to purchase the land containing Heritage Park to build their store. Just last week, the group revealed their membership, and it contains many prominent people within the St. Cloud business community.
Now hold on, you might say. This is just a bunch of competitors angry that they have to compete with Costco or didn’t get to buy and develop the land. They’re just mad that they lost the bidding war right?
But that’s where things get interesting. The group states there was no competitive sale of the land. When the city of St. Cloud chose to sell Heritage Park to Costco, they contend, the city merely entered into a letter of intent with Costco, rather than listing the property on the open market for bidding. This denied any other company or individual the ability to make a better offer on the property.
That sounds bad enough, but it isn’t even the worst part. The sale price of the land itself was also a steal. How much of a steal you might ask? Citizens for Government Accountability had the 19 acres that was sold to Costco appraised at $8.7 million. The city sold the land to Costco for only $3.5 million. For some quick math, this is more than $5 million less than what the outside appraiser considered it to be worth.
If the discrepancy is that big, it would be considered a public subsidy to Costco under Minnesota law. Under those rules, if the city sold the land for at least $150,000 below its market value, as appears to be the case, St. Cloud would have been required to hold a public hearing where Costco would have made commitments about the economic benefits it was bringing to the area. No such meeting was held.
If all of the allegations spelled out in this lawsuit are true, this would represent a massive scandal on the part of St. Cloud city leadership. Not only was the land sold to Costco in a shady manner, it was also sold for under appraised market value and without the public being informed as they are legally entitled to the subsidy that Costco was being granted.
For those who would say they’re happy we got a Costco and the lawsuit should be disregarded because of the business people who are filing it, how do you feel about the city giving up at least $5 million in revenue for roads and other local services to subsidize one of the largest corporations in the United States coming to town? How would you feel if the city asked for additional taxes from your hard-earned money after giving Costco a $5 million break?
The case is set for its first court hearing on Friday, Oct. 25. We as residents deserve to know the full truth of what happened and if unethical practices were employed as is alleged. St. Cloud leaders should be held accountable, whether through judicial action or at the ballot box. Perhaps the land should go back up for sale in a truly competitive auction, or Costco should have to pay the actual market rate for the land. Whatever happens, this kind of corruption, if true, should have no place in St. Cloud or this state. It’s just up to us to care enough to demand action and reform.
Connor Kockler is a student at St. John’s University. He enjoys writing, politics and news, among other interests.