Downey is getting serious about landing a Costco on Firestone Boulevard, and the price tag could hit $10.5 million. The City Council is set to weigh a funding plan that staff say would clear the way for a new Costco warehouse and gas station by helping relocate Downey Nissan, freeing up the dealership’s current lot and a neighboring vacant parcel for redevelopment. City officials say the payoff could be big, with an estimated $3 million a year in new sales-tax revenue and a broader tax base over time.
What the council will consider
On Tuesday, council members are expected to decide whether to approve a Master Development Funding Agreement and pull $10.5 million from the General Fund Economic Opportunities Reserve, according to a staff report. As detailed by The Downey Patriot, the deal links Costco Wholesale Corp., Downey Nissan and two Andrews Rancho parcels, and traces back to Costco’s first approach to the city in late 2022.
If the council signs off, staff would be directed to have the city manager execute the agreement and related documents, effectively kicking off a multi-party effort to bring the wholesale giant to one of Downey’s busiest corridors.
Downey Nissan's role
Downey Nissan, which lists its address at 7321 Firestone Blvd, is the linchpin in the whole plan. City staff describe the dealership as a major economic anchor, and say its relocation is necessary so Downey can keep the Nissan operation and still make room for a Costco warehouse within city limits.
Under the proposal, Downey Nissan would move across Firestone to a southern parcel owned by Andrews Rancho del Sur, with nearby parcels used for extra parking. The current Nissan site, along with an adjacent vacant lot, would then be available for Costco’s warehouse and fueling station.
Deal structure and dollars
According to staff recommendations, Costco would enter a ground lease for the north parcel and put up as much as $20.8 million toward construction of a new Downey Nissan facility. The city’s share would include a $10 million lease-cancellation payment to Downey Nissan and an estimated $500,000 contribution for environmental review and entitlement work.
As outlined by The Downey Patriot, the framework also sketches out two future sales-tax sharing agreements: $3 million with Costco and $2 million with the dealership, both set to take effect after certificates of occupancy are issued. City staff argue the project would expand the local tax base, generate both construction and permanent jobs, and ultimately refill the economic reserve that would be tapped to launch the deal.
Timeline and what to expect
Staff estimate that the California Environmental Quality Act (CEQA) review and entitlement process will take about 10 to 12 months. Each major construction phase is expected to last roughly a year, so full buildout would stretch over several years.
That schedule tracks with regional practice, where environmental review and discretionary approvals often add months to project timelines. Municipal planning materials note that environmental review can run from a few months for simpler cases to a year or more for complex ones. Long Beach Planning and industry guides describe similar time frames for CEQA and entitlement steps.
Why city staff back it
City staff are pitching the agreement as a long-term play. They say the Costco project would broaden Downey’s sales-tax base and support ongoing economic growth, which they argue is reason enough to tap the city’s economic-opportunities reserve for a one-time relocation payment.
Fiscal watchdog groups urge caution when it comes to reserves. The Government Finance Officers Association recommends that cities adopt formal policies for fund balances and use risk-based planning when setting reserve levels. GFOA notes that reserves are a core piece of local financial policy and should be formally adopted, monitored and reviewed on a regular basis.
The council’s vote this week will determine whether staff move into formal negotiations and start the environmental review and permitting process. If the deal advances, the relocation and construction would be sequenced so the new Nissan dealership opens before Costco construction begins, and the council would review the separate sales-tax sharing agreements after certificates of occupancy are issued. Residents and business owners along Firestone can expect public hearings and public comment opportunities as the CEQA process unfolds.
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