DULUTH – The St. Louis County Board on Tuesday unanimously agreed to give Costco $650,000 in tax abatement financing to develop the wholesale retailer’s first store in the region.

Those dollars, along with an additional $1.35 million in tax abatements from the city of Duluth, will be used to fund public improvements like roads, sewers and traffic signals.

“If we were not putting this up to improve the public infrastructure around this, this project probably wouldn’t happen,” Commissioner Keith Nelson said. “ ... The payback to the citizens of St. Louis County is a very good one.”

The Costco site sits on approximately 160,000 square feet of land at the intersection of W. Arrowhead and Haines Roads, near Duluth’s airport and on the city’s border with Hermantown.

Construction on property, which would include a liquor store and tire center, is slated to start this fall and finish a year later.

Officials from the county and city encouraged the board to approve the abatement, which would be paid off over a 10-year period. They cited an expected increase in sales tax and property tax revenue, the creation of 150 new jobs and the construction of needed infrastructure for future projects in a mostly undeveloped area.

Costco reported that about 1,700 of its members live in the Duluth area and travel to shop at the company’s stores in Brainerd or the Twin Cities, according to Adam Fulton, the city’s deputy director for planning and economic development. An additional 5,000 members live in the Thunder Bay area, across the border in Canada, but likely have seasonal homes in warmer cities with Costco stores.

“These are people who will come to Duluth and shop at Costco,” Fulton told the county board.