Costco distribution center location

A view from across the roadway to the northeast quadrant of SW 18th Street and SW 39 Avenue to the land planned for the new Costco Distribution Center. (Jeffrey Jackson/People’s Press)

OWATONNA — The long-rumored building of a Costco Distribution Center in Owatonna’s industrial park — bringing with it up to 200 new jobs — will be taking steps toward becoming a reality in the upcoming weeks, city officials confirmed on Tuesday.

The distribution center, initially slated to be 354,000 square feet with room for multiple planned additions, is planned for an L-shaped plot of land located just north of 18th Street SW, across the street from Kibble Equipment, and just west of 39th Avenue SW — a location that city officials say is ideal because of its close proximity to both Highway 14 and Interstate 35.

But first the land, about 173 acres, will need to be annexed into the City of Owatonna — just one of many steps the city will need to take before Costco can break ground for the distribution center.

Costco, which bills itself as a “membership warehouse club,” with 10 locations in Minnesota, would use the Owatonna center, also termed a “depot,” to service stores in Minnesota, as well as one in Fargo, North Dakota, and two in Iowa. There would not be a store in Owatonna.

Rumors of the proposed Costco depot in Owatonna had been floating around since at least early March, but nothing official had taken place, so city officials could not confirm, and Costco officials, citing public policy, declined to comment.

The city’s silence was broken this week, however, as the city began to put on the official calendar items that would need to be done before the groundbreaking on the distribution center would take place.

If all goes according to plan, said Troy Klecker, the city’s planning and development director, ground will be broken sometime in September. The project is expected to take a year to complete.

Once complete, the center is expected to employ 200 people — 125 full-time and 75 part-time — with salaries ranging from $15 to $26 an hour.

One of the first things to be done between now and when ground is broken is that the land, currently located in the Owatonna Township, will need to be annexed into the City of Owatonna. A legal notice was published in the People’s Press on Saturday, July 6, and the Owatonna City Council is slated to vote on the joint resolution allowing the city to annex the land at its next meeting on July 16. The Owatonna Township Board is scheduled for its vote on the resolution on July 23. The administrative law judge could then approve the annexation a month later, by Aug. 23.

The city also has submitted an environmental assessment worksheet, known as an EAW — something that must be done whenever more than 80 acres of agricultural land is being converted into land for other uses. The EAW will be submitted to the Minnesota Environmental Quality Board and the city’s planning commission will also be taking public comment.

In addition, the city’s planning commission also will have a public hearing about replatting the property before the plat goes before the city council for approval. The commission and the council also will play a role in tax increment financing for the property.

“There’s a lot of work to be done,” Klecker said.

But, he said, it’s worth it.

“This is a very exciting project,” said Klecker. “It’s probably the biggest project in Owatonna in years.”

Most projects that the city has seen in the industrial park in recent years, he added, have been business expansions, like those of Viracon, or businesses moving into an already existing building.

The last time a business came into town from outside and built a new building in the industrial park was in 2009 when Rayven came to Owatonna, he said.

“And that was a much smaller scenario,” said Klecker. “To have one of this magnitude is really amazing.”

Costco officials declined any comment on Tuesday.

Reach Managing Editor Jeffrey Jackson at 444-2371 or follow him on Twitter @OPPJeffrey.

Jeffrey Jackson is the managing editor of the Owatonna People's Press. He can be reached at 507-444-2371 or via email at

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