Costco Sues Calif. City

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Costco Sues Calif. City

SOUTH SAN FRANCISCO -- Big-box retailer Costco is suing the City of South San Francisco over the city's rejection of plans for a gas station and over-flow parking lot at its location there.

The City Council rejected the store's application for a use permit in January. It also refused to certify the negative declaration of environmental impact, which said that a full-scale environmental report was not needed. City Attorney Steve Mattas said the council had environmental concerns, felt enough gas stations already served the area, according to the San Mateo Times.

Costco claims the rejection "was arbitrary and capricious" and that the council based its decision on speculation, not facts, since the city's own staff recommended approving the project.

In November 2002, despite planning staff approval of the application, the Planning Commission turned down Costco. The council upheld the rejection of the application on January 22, 2003, despite the city staff's recommendation to approve the project. The staff said the project should be allowed because it is consistent with zoning in the area and the environmental impact would be minimal, according to court documents.

The council was concerned that an earthquake might trigger a fuel leak from underground tanks that would pollute the Bay. Costco maintained the underground gas tanks would be "built to comply with stringent requirements imposed by a variety of regulators," according to court documents.

The council also argued that there would be additional traffic from the gas station and overflow parking lot. The city staff's report indicated the project would add 2,600 cars a day. Costco said concerns about traffic are unfounded because the traffic generated from the gas station is from people who are already driving to the adjacent store to shop, the report said. The store also argues in court documents that the area is zoned for planned commercial, which allows for gas stations. But the council said that the gas station didn't fit in area that was zoned to "encourage development" of amenities such as restaurants.