Voice of OC51%
Costco Is Coming to Brea As Concerns Grow Over Controversial Tax-Sharing Agreement 42%
By Angelina Hicks35% Hosam Elattar46%
8/3/2026, 5:58:00 AM
BS Summary: This article contains 30 faulty reasoning types, including Self-Serving Bias, Biased Writer Voice, and Loss Aversion, with Negativity Bias as the most egregious example at 22% saturation with 471 hits. Analysis detected 2,719 faulty-reasoning hits from 2,137 analyzed words, generating a BS Score of 40.2% and a BS Rank of 42% (15,293 of 26,004 articles). This article is better (less manipulative) than 58.80% of the article peer group.
A resident group in Brea is ringing alarm bells over what they say is a lopsided and secretly negotiated 50-year tax-sharing agreement with a prominent local developer to bring a Costco Wholesale store and gas station to the eastern part of the city.
City officials say the tax rebate is a needed incentive to bring such a development to the city, which boosts local tax revenue — including property tax — and brings jobs.
Under the agreement approved last December, city coffers won’t see any sales tax revenue for discretionary use the first two years.
After that, the city begins getting 5% of annual sales tax revenue, which is slated to increase by 5% every couple years.
It will be 30 years before Brea sees 50% of the sales tax revenue generated by the development.
The city’s general fund is slated to get less than half of the annual sales tax revenue generated by the big box store for discretionary use for those first 30 years while most of the money goes to the developer, Dwight Manley.
Once the tax rebate begins, 5% of the sales tax generated each year will also be set aside for the city’s senior center programs every year.
Brea resident Mark Strom, who lives about a quarter mile from the proposed Costco site, lambasted how the deal was struck as one of his biggest concerns.
“No one does this front loading,” he said in a phone interview.
“It absolutely raises eyebrows.”
“It’s the complete lack of transparency, the sneaking around [and] making key decisions in private.”
As of now, it’s the only tax-sharing agreement of this magnitude in Brea, approved after elected officials adopted an ordinance in the fall of 2025 to create incentives like tax sharing rebates to attract new businesses.
Assistant City Manager and Community Development Director Jason Killebrew, who helped Manley navigate the city’s process, said city council members are looking toward the future and the deal will generate new tax revenue without the city having to put up any money.
“Without the Costco in the City of Brea, there is no sales tax generation that is happening to begin with,” he said in a phone interview.
“You have to look at the totality of what bringing a Costco to the area would be, including property tax, including long-term outcomes, including Costco as a business, types of jobs, the loyalty that people have to Costco — all of those different things.”
Manley cited the $140 million price tag for the land as why he will get a majority of the sales tax generated from the popular wholesale store in the span of 50 years.
“The costs of carrying the property and then developing the property add eight figures to the purchase price,” he said in a phone interview.
“At the end of the day, the cumulative return, being a mid-single-digit percentage amount, is incredibly low by any developer standard.”
He said he chose to take on that low rate of return because he loves the city, adding that leaders have wanted a Costco store for 20 years.
“I’m from Brea, and it was something that the city wanted to have happen for a long time,” Manley said.
“If it didn’t happen here, there was never going to be a chance to happen.”
Manley bought the 34-acre Beckman Coulter campus on Kraemer Boulevard where the proposed Costco and housing is expected to be built on.
Meanwhile, elected officials are staying silent as concerns about the deal grow and as they face a potential lawsuit from the resident group.
“We have a Council meeting tonight with an executive session to address a potential lawsuit from the local neighborhood.
It would be inappropriate for me to respond without knowing the details of the suit,” said Councilman Steve Vargas in a July 21 text message.
Mayor Cecilia Hupp and the rest of the city council members ignored multiple separate requests for interviews on the issue, with staff advising them not to speak on the issue at the July 21 council meeting.
Did Brea Officials Violate California’s Open Meeting Law?
Strom and other residents with the Brea4All group are also raising concerns that city officials allegedly violated the state’s open meeting law — the Brown Act — by reaching a consensus on the revenue sharing agreement outside public view.
Earlier this month, lawyers representing the group sent a cease and desist letter to city officials demanding they give a written commitment to refrain from secretly reaching decisions on the proposed Costco and to properly agendize discussions on the planned development.
Residents point to a host of text exchanges between Killebrew and Manley in the months leading up to approval of the economic development agreement, revealed by public records requests, as evidence of secret deliberations.
Killebrew wouldn’t speak to the cease and desist letter but denied the allegations, adding city council members never saw the tax-sharing agreement until a couple of days before they approved it.
“The city continues to follow the Brown Act and will continue to honor and respect the Brown Act.
In no way, shape or form does the city feel that in their interaction, even in my interaction with Dwight as a developer, did we violate the Brown Act,” he said.
Text exchanges between Manley and Killebrew in October — unveiled by public records requests reviewed by Voice of OC — showed the two talking about Killebrew getting consensus on the proposal from the council.
One text from October shows Killebrew telling Manley, “Everybody gave the thumbs up to move forward.”
Killebrew said the text message exchange had been misconstrued and the consensus he was referring to was the ordinance approved by council members that allows for tax sale rebates and not Manley’s specific application for a tax sharing agreement to bring Costco.
Yet, the text messages seem to indicate the two spoke about Manley’s application.
“We need an application for the development agreement, it still has to be approved in a public hearing,” Killebrew texted Manley.
“I had thought November of this year we had talked about that part,” Manley responded.
“The November thing is the economic development ordinance that just passed and is effective November.
That allows the development agreement application to be submitted.
We were targeting a full application for the development agreement, Costco, and Lennar to be submitted in January and approved by June,” Killebrew responded .
“Can’t our thing be done prior?
It would be contingent on approval but what if we invest and develop for 8 months and then that doesn’t happen?”
Manley sent back.
“It has to be a public hearing because it’s tax dollars.
I have verbal support from city council,” Killebrew texted Manley in October.
The exchanges appear to show the two talking about a tax split months prior to the economic development ordinance being approved.
The text messages also show Killebrew coaching and advising Manley on what points to make and what to do to secure the deal ahead of the December public hearing, even suggesting he bring Costco representatives to the city council meeting to show excitement for the proposal.
“At the public hearing if the question comes up, I just think you need to explain what a tremendous financial lift this is,” he wrote to Manley, later adding, “Council will understand it in on (sic) on ones.
Sometimes Vargas likes to make statements just to ask questions for the ‘benefit’ of the public.”
Killebrew said the text messages between him and Manley were “highly typical” whenever he tries to attract a developer or a business to invest in the city.
“My job as the community development director is to build relationships, to be that resource to our business and development community, to answer questions, to keep momentum going on on proposals and projects, and to honestly be that conduit sometimes in between city matters,” he said in an interview.
Manley said he’s been involved with real estate in the city for 25 years, adding that none of his communications have been abnormal.
“Having friendly relationships with people is a good thing, and a couple of people have juxtaposed text messages out of sequence or months apart from when certain things happened and tried to paint a negative picture,” Manley said in an interview.
“To me, it’s character assassination.”
Bringing Costco to Brea
Killebrew said for decades city officials and residents have wanted to bring a Costco to Brea, with staff publicly reporting last year 35,000 residents left the city to go to Costco locations in La Habra, Fullerton and Yorba Linda.
By December, the dream of bringing Costco to Brea took a step closer to becoming a reality when council members narrowly voted 3-1-1 to approve the tax-sharing schedule with Manley without seeing any plans for the development.
Councilmember Christine Marick voted no in December, and Councilmember Blair Stewart was absent from the vote.
Marick voiced concern about what happens if the project doesn’t work out and said it’s difficult to consider the economic development agreement separately from the project plans that had not been submitted yet.
“I actually would love to have a Costco in the City of Brea,” Marick said at that meeting.
“That is not a secret.
I’m looking at this from a financial perspective of — what happens if it ceases to exist, and it’s so front loaded?
Is there a way that there can be some sort of protection for the city?”
Killebrew said the project is still in the permit streamlining phase but said it could be before the city’s planning commission by the winter of this year, though he expects it to be appealed and come before the city council by spring of 2027.
Slicing Up The Pie: How Much Revenue Will Brea Get?
The tax-sharing agreement between Brea officials and Manley means the developer will get most of the revenue generated if Costco opens for about three decades — with the split gradually increasing for city coffers before the deal sunsets completely after 50 years.
While the city’s general fund — a discretionary pot of money that funds services like police and fire — won’t see any of the revenue for the first two years, about 5% of annual tax revenue from the store will go towards helping fund programs at the city’s senior center.
Manley’s share of the revenue will go from 95% in the first year the store is open to 45% after 30 years then dropping down to 35% by year 41 of the agreement.
Through the life of the agreement, Manley is estimated to make roughly $77 million, the city is estimated to make a little over $50 million and another $7 million will go towards senior benefits.
The agreement also outlines that Manley would get 40% of any additional tax revenue if the city increases sales tax anytime within the next 50 years.
The deal comes after city staff previously projected facing a roughly $14 million budget shortfall in the 2027-28 fiscal year, according to their 2025-27 biennial budget, with staff saying earlier this year that city departments are looking at ways to temporarily save money.
David Cain, a Brea resident and former finance director for the City of Fountain Valley , said the tax rebate is a bad agreement during December’s public hearing.
“It takes 30 years for the city to get a 50-50 share on this agreement,” he said.
“I’ve done sales tax sharing agreements … You’re giving away future money that you don’t even have yet.”
Cain argued the additional revenue for Manley if sales tax increases should not be part of the agreement and said it should be reconsidered.
“It’s the worst sales tax sharing agreement I’ve ever seen in my history,” he said.
“I’ve been doing it for 32 years.”
Killebrew said it wasn’t appropriate to share his opinion on whether city council members should have pushed for a shorter term sales tax rebate deal that would have seen the city take the bigger slice of the revenue or split the money evenly over the life of the agreement.
During the council’s December hearing, leaders discussed other options for the site could include a warehouse project or a housing development that could fit more than 1,000 units.
A different housing project from Lennar Homes is also expected for the southern portion of the site, with Costco slated for the northern section.
It also comes at a time when a few other large-scale retail shops are leaving the city.
“We need sales tax money,” Councilmember Vargas said at the December meeting.
“Of course I’d like 100%, but with all of these large corporations going out, even getting a 40% split is better than nothing, an empty site, or 1,200 homes.”
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