If Costco’s proposal for a mixed-use retail and housing development in California is successful, you won’t have to go far to pick up a rotisserie chicken or a package of 30 rolls of toilet paper.

The company, in partnership with developer Thrive Living, announced plans in June to open a new South Los Angeles store with an 800-unit apartment complex attached. In a press release, Costco also announced that the combo retail-housing project will include 184 affordable units.

A Thrive Living representative told the New York Post that the project is still awaiting permits, and it is unknown when construction will begin.

In addition to being able to shop for super-sized bottles of spirits or vats of heavy whipping cream at the bulk retailer, Thrive Living plans the following for the apartment complex:

• Five courtyards and a landscaped walking path.
• A rooftop pool, a full basketball court, and various climbing and play structures.
• Indoor/outdoor fitness area.
• Outdoor area for community movie nights.
• Community gardens where residents can grow their own food.
• Classrooms for community gatherings, tutoring, and mentorship.

The site would feature a “state-of-the-art store, featuring fresh produce [and] healthy food options for residents,” Thrive Living told the Los Angeles Times. The store would also include an optical service counter for eyeglasses, a pharmacy, and a delivery service. 

The mixed-use complex would replace a vacant five-acre lot that a hospital once occupied.

Why would Costco get into the apartment building business?

Costco didn’t return messages on why the retail company would venture into a business so different from selling bulk goods, but Southern California housing activist Joe Cohen has a theory.

“The problem is, new massive big-box stores are hard to get approved in LA.,” Cohen wrote on X, formerly Twitter. “So Costco did what any good Scooby-Doo villain would do. They put on a mask that says ‘I’m an apartment building, not a big-box store.’ “

Gabe Kadosh, a vice president of Colliers in Los Angeles, told real estate publication CoStar that Costco may test the concept in California before developing other mixed-used developments across the state and the nation.

“It’s certainly fascinating and something that people are going to be watching,” Kadosh told CoStar. “Developers are going to be paying attention.”

What to know about Costco

In 1976, Costco opened in San Diego under the Price Club name. In 1983, the company opened a Seattle location. In 1993, Price Club officially changed its name to Costco. With 206 locations generating $16 billion in annual sales, the superstore chain currently operates 847 warehouses globally, with an average size of 146,000 square feet, according to its website. 

Today, Costco employs 300,000 people worldwide, has 129.5 million members, and has $248 billion in annual sales.

Opponents of the bill include some low-wealth districts and advocacy groups that say the proposal does not go far enough in addressing the equity gap that benefits affluent school districts.

A recent report from the UC Berkeley Center for Cities + Schools found that districts in the wealthiest communities got $4,000-$5,000 more, per student, to modernize their facilities than districts in the least affluent communities. This is because districts receive a match based on what they can raise themselves. Districts with low wealth and property values are limited in the amount of a bond they can raise, while wealthy districts and large urban districts like Los Angeles and San Francisco can raise much more.

“We’re sending a message and a wrong message that some kids matter more than others,” said Lynwood Unified School District superintendent Gudiel R. Crosthwaite.

Public Advocates, a public interest law firm, had proposed a different sliding scale that would have given the lowest-wealth districts, such as Lynwood, a 95% match from the state with a 5% local contribution, while the richest districts would have received just a 5% match for a 95% local contribution.

The firm has now threatened to sue the state based on the current proposal language, which they say violates students’ constitutional right to a high-quality education.

Despite intensive lobbying from the fast-food industry, the new wage of $20 an hour for quick-service chains with at least 60 locations nationwide went into force on April 1.

The California Business and Industrial Alliance certainly isn’t happy with the legislation. It took out a full-page ad in USA Today in early June featuring mock obituaries for brands it says were “victims” of the new minimum wage.

The CABIA claimed in the ad that nearly 10,000 jobs had been cut between September, when Newsom signed the law, and January.

“Governor Newsom’s bad policy remains indefensible, and workers and businesses are suffering for it,” Tom Manzo, founder of the CABIA, told Business Insider over email. “It is obvious what is happening to the Fast Food industry no matter how Team Newsom spins the numbers.”

The CABIA ad cited data from the Hoover Institution, a public policy think tank and unit of Stanford University that aims to “limit government intrusion into the lives of individuals.”

It’s unclear where the Hoover Institution got its 9,500 figure from, though it did link a report by The Wall Street Journal, which said it used state figures.

Business Insider could not independently verify these figures, as data from both the California Employment Development Department and the US Bureau of Labor Statistics shows a drop of about 11,600 jobs when not seasonally adjusted.

The CABIA’s argument was based on a drop in employment between September and January. But BLS data shows that employment in California’s limited-service restaurant industry dips in the winter. In every year for at least the last decade, employment has been lower in January than in the preceding September.

It’s typically at its lowest in January and its highest in August.

The BLS data includes employment at all limited-service restaurants, including those exempt from the new minimum wage.

Restaurants typically hire more workers during the summer months as tourism fuels spending and people spend more time outside their homes.

Seasonally-adjusted BLS figures, which take yearly fluctuations into account, show that employment in California’s limited-service restaurant industry actually rose by about 6,000 people between September and January.

Newsom has clapped back at criticism of the new minimum wage

“California’s fast food industry has added jobs every month this year, including roughly 10,600 new jobs in the two months since Governor Gavin Newsom signed the fast food minimum wage bill into law,” his office said in a recent press release.

The following graph, made using BLS data, shows that employment in limited-service restaurants in California has been higher than 2023 levels for every month so far this year when not seasonally adjusted.

However, Newsom’s remarks have to be taken with a pinch of salt, too. The year-over-year growth in limited-service restaurant employment is a continuation of a trend seen before the pandemic, too, with total employment in the industry growing every year.

And the month-on-month growth in employment so far this year is nothing new. Employment typically grows in the buildup to the summer.

It is clear some fast-food chains have laid off workers in California, including in some cases by closing restaurants, partly in response to the new legislation. Seasonally-adjusted BLS data suggests that there has been a small dip in workers in California’s limited-service restaurant industry — about 2,500 — since January.

However, the BLS statistics suggest that the situation is not as dire as the CABIA paints it to be.

The $20 minimum wage was introduced to support workers in a state with a notoriously high cost of living. The fast-food industry is generally known for low pay, with some workers having to pick up a second job to make ends meet.

Analysts previously told BI that the legislation is also expected to boost wages in other industries, as employers will face more competition for workers.

Have you been affected by California’s new $20 minimum wage? Email this reporter at gdean@insider.com.