Costco Plans Store in San Luis Obispo, Calif.

Costco can open at Froom Ranch, the San Luis Obispo City Council said Tuesday, even though permits for needed road construction are held up by the search for an endangered species.

By a 3-to-1 vote, the council accepted a $1.9 million bond from the company, which hopes to open a store on Los Osos Valley Road next year. The money will be put toward straightening Calle Joaquin.

Councilman Allen Settle owns property near the proposed site and did not vote on the issue because of conflict-of-interest rules.

The move guarantees that Costco will be allowed to open even before the road is improved. Councilwoman Christine Mulholland voted against the motion, arguing the deal could leave the city on the hook for road improvements and habitat creation in excess of the $1.9 million bond.

"Costco has deeper pockets than the city has," she said. "If anyone should be taking the risk, it should be Costco."

The bond provided a guarantee to the city that road improvements would be completed and gave Costco the security of knowing its project will move forward, said Patricia Wilmore, the San Luis Obispo Chamber of Commerce's governmental liaison.

"This bond is a win-win for both the city and the applicant," she said.

The vote was the last official step required before construction on the 140,000-square-foot store could begin.

Under the original development plan, the store could not open until road improvements received the Army Corps of Engineers' approval. But the corps requested that biologists search the site for the endangered vernal pool fairy shrimp.

The road improvements are needed to deal with increased traffic that Costco's opening could cause. But the search for the shrimp could go on until next February -- delaying the permits and, under the original deal, the store's opening.

Without a council guarantee that the store will be allowed to open, Costco executives said in a letter to the City Council that they could not take the risk of buying the land by the owner's December deadline.

It is unclear when permits for the road improvements could be issued if fairy shrimp are found, said Neil Havlik, the city's director of natural resources.

Creating a habitat for the misplaced shrimp would be easy, Havlik said. The shrimp have been found in artificial ponds, he said.

Councilman John Ewan said residents want a Costco sooner rather than later.

"I think the community is expecting to see this project," he said, "and expecting to see us work with Costco."

The fairy shrimp were not included in an earlier study of the land around Calle Joaquin because biologists did not know the tiny crustacean had been found in the area.

The U.S. Fish and Wildlife service had only recently found the animal about a mile away, off Tank Farm Road.

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