Plans are in the works for a new Costco Wholesale Corporation warehouse retail building at the Interstate 5 Tumwater Boulevard Southwest exit, after the Tumwater City Council held a public hearing and then approved a development agreement with Costco for the new building during the council’s regular meeting on Monday, Nov. 2.
The new Costco will be about a mile south of the existing Costco on Tyee Drive Southwest, and to facilitate the construction of the new Costco, Tyee Drive will be extended past Israel Road Southwest along I-5 down and past Tumwater Boulevard Southwest. The old Costco will be closed once construction of the new one is completed.
Along with the new retail warehouse, which is approximately 165,000 square feet, Costco’s site plans also included a proposed car wash and gas station. On the extension of Tyee Drive, roundabouts are planned, as is a new roundabout at the Tumwater Boulevard/I-5 interchange.
The agreement between the City of Tumwater and Costco was needed in order to account for the complexity of the project.
According to the agreement in the council’s agenda report, Costco is paying up to $1,704,962 for the Tyee Drive extension right-of-way and improvement; up to $7,790,692 for construction of the Tyee Drive extension; up to $2,930,939.05 for the preliminary estimate of the Tumwater Boulevard improvement and $170,905 for its right-of-way; up to $1,414,858 for utility infrastructure upgrades and up to $2,797,184 for I-5 interchange improvements, which include new northbound I-5 on- and off-ramps.
Costco will be constructing utility improvements to facilitate both their new retail building and future developments, with the city reimbursing Costco for the difference. The term of the development agreement is 10 years, and City of Tumwater will reimburse Costco for whichever is less between the combined cost of the Tyee Drive construction and right of way, or $5,140,100.
During the meeting, councilors also approved a new public safety sales tax of 0.1% as allowed by state law, with revenue generated to be used for criminal justice services. City staff estimated the tax will generate around $1.2 million per year over the next budget biennium.
Following a public hearing, councilors approved the city’s 2027-2028 biennial budget on first reading. According to the budget in the council’s agenda report, the beginning fund balance is $170,870,767, with revenues forecasted at $355,798,505 over the next two years.
Expenditures are expected to total $437,172,788, leaving the city budget with an ending balance of $89,496,484 for the 2029-2030 budget biennium.
Additionally, a proclamation was made dedicating November as American Indian Heritage Month in Tumwater, with Squaxin Island Tribe Council Member Greg Lehman, Chehalis Tribe Chair Sheilah Bray and Chehalis Tribe Secretary Cheryl Starr on hand to accept the proclamation.
