Residents in Brea, California, are voicing strong opposition to a tax-sharing agreement approved by city officials for a proposed Costco and gas station, alleging that the deal was negotiated in secret and favors a developer over the city's financial interests.
The controversy centers on a 50-year tax-sharing agreement with developer Dwight Manley, approved in December, for a project on the former 34-acre Beckman Coulter campus. Under the terms of the deal, Brea's general fund will not receive any discretionary sales tax revenue for the first two years after the Costco opens. Thereafter, the city's share will begin at 5% and gradually increase to a 50-50 split approximately 30 years into the agreement. An additional 5% of the annual sales tax generated after the rebate period commences will be allocated to senior center programs.
Projected financial outcomes show Manley is expected to receive about $77 million over the agreement's lifespan, while the city is anticipated to collect just over $50 million, with roughly $7 million designated for senior programs. The developer would also receive 40% of any additional sales tax revenue if the city increases its sales tax rate during the agreement's term.
City officials contend that the incentives are essential to attract Costco to Brea, arguing the project will create jobs, generate new tax revenue, and increase property tax collections. Manley stated the agreement reflects the significant costs associated with acquiring and developing the property, citing a $140 million purchase price and additional development expenses. He characterized the project's return as modest by industry standards and pursued it due to decades of city efforts to attract Costco.
However, a resident group called Brea4All, represented by Mark Strom, has raised serious concerns about both the structure of the agreement and the transparency of its negotiation process. The group alleges that city officials violated California's Brown Act, a state law governing open meetings, by reaching a consensus on the tax-sharing agreement outside public view before its formal approval.
Attorneys for Brea4All sent a cease-and-desist letter to city officials, demanding an end to private decision-making and proper scheduling of future discussions. The allegations are supported by text messages obtained through public records requests, which appear to show Assistant City Manager and Community Development Director Jason Killebrew discussing council members' support with Manley before a public hearing. In one text, Killebrew stated, "Everybody gave the thumbs up to move forward," and in another, "It has to be a public hearing because it’s tax dollars. I have verbal support from city council."
Killebrew has denied violating the Brown Act, asserting the messages were taken out of context and that council members did not review the specific tax-sharing agreement until days before the vote. He described his communications with Manley as routine interactions between city staff and developers.
Manley also rejected the claims of impropriety, calling the allegations "character assassination."
The debate unfolds as Brea projects a budget shortfall of approximately $14 million for the 2027-28 fiscal year, with city departments seeking ways to reduce spending. Councilmember Christine Marick cast the sole dissenting vote in the 3-1 approval of the agreement, expressing concerns about the city's financial safeguards should the development falter. Former Fountain Valley Finance Director David Cain criticized the agreement, calling it "the worst sales tax sharing agreement I’ve ever seen in my history."
Mayer Cecilia Hupp and other city council members have largely refrained from public comment on the controversy as the possibility of legal action looms.