Costco to spend $16M in road improvements, impact fees as part of development in Tumwater

Costco Wholesale Corporation is expected to spend around $16 million on road improvements and traffic impact fees under a proposed development contract for a new warehouse in Tumwater. 

The company is planning to move from its current location at Littlerock Road to an undeveloped 55-acre site on Tumwater Boulevard west of Interstate 5. 

The project includes a new warehouse, fueling station and car wash with additional lots  for commercial establishments. 

A future phase of the project calls for a multi-family residential project at the southern portion of the site. 

Tumwater Transportation and Engineering Director Brandon Hicks said large-scale projects typically require a development agreement.  He made his remarks at a Tumwater City Council meeting on Sept. 2.

The contract would protect the developer by assuring regulations remain unchanged for a certain period of time, while giving the city certainty when public improvements would be built as part of the project. 

Hicks noted the proposed 10-year agreement with Costco only covers commercial areas and excludes the residential project. 

The contract was not presented during the meeting, but Hicks outlined several of its components before the council.

As part of the agreement, Costco will spend $11 million to extend Tyee Drive SW south from Tumwater Boulevard SW and install three new roundabouts. 

One of the roundabouts is planned at Tyee Drive SW and Tumwater Boulevard SW, and the other two within the project site to provide better access to the commercial outlots and the residential project. 

Costco will also pay traffic impact fees of nearly $2 million. The city determines the fee to offset the cost of transportation infrastructure needed to support additional traffic as a result of new development. 

Since Costco is leaving its current location, Hicks said the company would receive a partial fee credit to reflect reduced trips. 

Costco would also contribute nearly $3 million in mitigation fees for the roundabout being planned for the northbound ramp of Interstate 5 and Tumwater Boulevard. 

Hicks said the city is leading the design and construction of the roundabout, which is funded in part by fees paid by future developments that will benefit from the project. Staffers are still designing the roundabout, with plans to go out to bid by the end of the year. 

Utility improvements 

The development contract also covers required improvements on utilities, tree protection easements, as well as conditions set for the project under the State Environmental Policy Act. 

Hicks said Costco plans to extend water and sewer mains along Tumwater Boulevard SW, and along Tyee Drive SW. 

Hicks said while regulations only allow the city to require infrastructure serving a project's immediate footprint, Costco has agreed to oversize the utility lines for future needs.

The city would reimburse Costco for the added capacity and later recover costs through latecomer fees on future developments. 

Tree retention plan 

The tree protection easement involves setting aside around 2.56 acres of forested land to meet city requirements. 

Hicks said the area sits at the lower right corner of the site and includes the oldest timber. According to the tree retention plan, 660 of the 1,794 existing trees will be retained.

Formal contract 

Hicks said staff will formally present the content of the development agreement to the council by Oct. 15. A public hearing is going to be held before the city council considers the agreement. 

Land use application 

The development agreement is a separate process from Costco’s land use application, which will determine if Costco can move forward with the project. 

Cosco formally submitted a land use application in July, and the city issued a notice of application in August to inform the public of the project.  

Tumwater Senior Planner Alex Baruch said staff are currently working to finalize a decision that would determine the extent of environmental review needed for the project under the State Environmental Policy Act. A traffic study is also required as part of the process.

If the city approves the land use application, Costco plans to get the project underway in spring or summer of 2027.

City Administrator Paul Simmons added Costco has expressed a target opening date of October 2027 for the warehouse, fuel station and car wash.