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DULUTH – Construction on the region’s first Costco will likely start in the fall, according to a St. Louis County Board letter.

The wholesale retailer is preparing to build a store with 725 parking spaces on approximately 160,000 square feet at the intersection of W. Arrowhead and Haines Roads. The city of Duluth is working with Costco on a deal that entails more than $2 million worth of improvements to public infrastructure, according to the letter.

Costco filed plans to build on the Duluth site last fall but terminated an agreement in March citing “extraordinarily high project bids.” The company put out a new request for bids in May that allowed contractors more time to complete the project in an economy with a sudden supply of workers due to projects delayed by the COVID-19 pandemic.

Duluth will require a project labor agreement, prevailing wage rates and community benefits agreement for the development.

Construction on the long-rumored store would be expected to finish in the fall of 2021. This month, the city and St. Louis County will consider providing a combined $2 million of tax abatement financing for the public upgrades, which would include work on roads, sewers and water mains.

“Without these improvements the development cannot proceed,” the letter said.

Adam Fulton, Duluth’s deputy director of planning and economic development, said Costco still has to receive a building permit and earn approval from the planning commission. But the project, which he estimates would cost in excess of $20 million, is nearing the final steps of the planning process.

Mayor Emily Larson said she’s excited about the prospect of job growth, as well as the recognition from “a national retailer who sees us as an opportunity for growth.” She’s never been in a Costco, so she’s also eager to check out the members-only retailer with a loyal following throughout the country.

“I think Costco comes in with a lot of intention,” Larson said. “For Duluth to be at an economic turning point and a growth point for their market says a lot about who Duluth is becoming.”

Katie Galioto • 612-673-4478