Costco pulls out of plans to build in Duluth

DULUTH – Costco says it is no longer coming to Duluth because of what it says are the high costs of developing in the city.

The warehouse retail chain terminated its purchase agreement "due primarily to extraordinarily high project bids which far exceeded others we've seen recently throughout the Midwest region," said Mike Stratis, Costco's site selector.

Costco had been planning to build on a large property at Haines Road and W. Arrowhead Road on which New Life Lutheran Church is located. The retailer had arranged to buy land from the church in January but pulled out of the deal Tuesday because it was "unable to obtain the project approvals," according to Costco's notice of termination for the transaction.

"The entire congregation of New Life Church is disappointed that the agreement did not go through," said Brad Jenson, a member of the church that had been discussing plans to move or build elsewhere.

Rob Stenberg, executive director of the Greater Duluth Business Association, wrote a Facebook post alleging the city puts up too many roadblocks for new business developments, costing Duluth jobs and sales tax revenue. "Duluth is simply not known as a business-friendly city," he said.

City spokeswoman Kate Van Daele said in a statement that the city is "hopeful Costco chooses to revisit their decision."

"The city of Duluth worked for months to advocate with and for Costco and [has] enjoyed a very positive working relationship," Van Daele wrote. "We are proud to lead with our values of expectation that local financial investment on the part of the city yields specific local job creation."

Stratis said Costco will explore the possibility of building at "future other sites and peripheral communities."

"My client looks forward to someday being a part of the greater Duluth community," he said.

Katie Galioto • 612-673-4478