Costco began in Seattle, opening their first store more than 40 years ago. Since then, the discount warehouse club has grown to 871 stores around the world. Their cost for a hot dog and soda has remained $1.50 since 1985. 

South Los Angeles is welcoming a new 185,000-square-foot Costco that includes a home to 800 apartments with a rooftop swimming pool. Reportedly, 185 of the rental units are for “low income” families.

Some people are calling it the “COSTCO PRISON.” Why? The answer is explained below, but first, here is some company wide information many stores, operations and warehouses may have concerns about:

DEI Policies

Texas Attorney General Ken Paxton sent an Iowa- and Kansas-led 19 multistate letter to Costco demanding that the company fully repeal its discriminatory diversity, equity, and inclusion (“DEI”) practices.

Attorney General Paxton’s letter follows President Trump’s executive order encouraging “the Private Sector to End Illegal DEI discrimination and Preferences.”

Despite the U.S. Supreme Court repeatedly warning against the utilization of race-based preferences and classifications, Costco has remained steadfast in its support for its insidious DEI practices and policies.

“Discriminatory DEI policies are unethical, unlawful, and fundamentally un-American,” said  Paxton. “The fact that Costco continues to defend such practices is reprehensible. DEI programs consistently promote divisive and discriminatory ideology as opposed to ensuring that all individuals are treated equally and with respect, and that’s why I’m calling on Costco to end their woke policies immediately.”

The letter concludes by urging Costco to inform Attorney General Paxton and the rest of the coalition within 30 days if its DEI policies have been repealed.

‘Costco Prison’

So why are some people calling the new location in South LA the “Costco Prison”?  

In June 2019, off duty police officer, Salvador Sanchez, holding his 1-year-old, was shopping in Corona, just southeast of LA, when 32-year-old Kenneth French knocked him to the ground from behind.

The officer, thinking he had been shot, fired gunshots seconds later, fatally wounding French and critically injuring the man’s parents, Russell and Paola French.

The French’s later testified that their son suffered from schizophrenia and had recently been taken off medications.

Liberal Xavier Becerra became the first Latino Attorney General in California’s history, when in 2017, Governor Jerry Brown appointed him to the last two years of Kamala Harris’s term, after she won election to the United States Senate. 

Becerra’s office filed charges of voluntary manslaughter and two counts of assault with a firearm against Sanchez in 2021, even after a Riverside County grand jury did not bring an indictment.

At the end of 2020, Becerra was announced to be President-Elect Joe Biden’s pick to lead the Department of Health and Human Services. He began in that position in March 2021.

In January 2024, a mistrial was declared after jurors in Riverside County deadlocked, with a majority in favor of acquittal. Prosecutors decided not to pursue a retrial.

A few days after the Corona shootings, a former boyfriend and gunman was dead of an apparent self-inflicted wound after he shot and injured his ex-girlfriend and her current boyfriend outside of a Costco Wholesale in nearby Chula Vista. 

While the trial and the shootings may not have much to do with the term “Costco Prison,” it does help set the tone of reputation concerns in the area.

So with California, being  the land of  regulatory arbitrage, Costco realized they need to find a way to build a new store in Central/South LA.

One concern is that building anything, especially a new massive big-box store, is very difficult to get approved in LA. They’re subject to discretionary approvals, site plan review, and have to go through the bureaucratic and lengthy process of administrative regulations governing implementation of the California Environmental Quality Act (CEQA).

Costco was facing years of public hearings, millions of dollars of consultant fees, and an uncertain outcome.

However, mixed-use housing projects that meet certain criteria are automatically exempt from discretionary reviews by state law (AB 2011).

To acquire full protection of state housing laws (HAA), mixed-use buildings must be at least 2/3 residential. The Costco itself is 185,000 square feet. So they needed at least 370,000 sq ft of residential.

(They ended up with 471,000 sq ft of residential plus an additional 56,000 sq ft of amenity space)

But for a project that big, to qualify for AB 2011, they are required to pay not only prevailing wages, but use “skilled and trained” (aka union) labor.

Union labor requirements only apply to on-site construction. So to lower the amount of on-site labor needed, Costco turned to pre-fab building modules. Pre-fab modules need to fit on trucks, which results in mostly small shotgun-style one-bedroom units. And that’s how you end up with a Costco housing project that resembles a prison.

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Dodie & Jack Dennis are regular customers of Green Pasture. Highly recommended.

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