A plan to create an economic development district around a proposed Costco would funnel a fixed amount of sales tax revenue from the food club warehouse to realign Dawnadele Avenue and carve out property for digital effects firm Pixomondo and an unnamed tenant, a Baton Rouge official said Thursday.

William Daniel, Mayor-President Kip Holden’s chief administrative officer, said the administration believes the tax increment financing mechanism, known as a TIF, is necessary because the former Coca-Cola building that Costco wants to purchase off Airline Highway would otherwise sit vacant and blighted. It’s also a chance to bolster the local movie industry at nearby Celtic Studios, where Pixomondo is located and growing, he said.

That’s the case that the administration will take to the public and Metro Council members in upcoming homeowners association and council meetings, Daniel said.

“It’s our job to convince the public that this is a good project and convince the council that it’s a good project,” Daniel said.

Costco has a purchase agreement pending to buy the former Coca-Cola bottling facility, located southwest of Airline Highway and Interstate 12. Costco recently got site plan approval from the city-parish, but told the planning commission it is working with the state on changes to Dawnadele necessary to make the site work for its store.

The retailer also approached the city-parish about what needed to be done, which was the beginning of the deal now being negotiated.

“They were very upfront about what kind of return on investment they would need and said, ‘Here’s what has to be done for us to come here,’ ” Daniel said.

He said using a 2-cent, undedicated portion of sales tax generated by Costco to finance improvements is a better route than borrowing the money.

“Under normal circumstances, a retail store like Costco doesn’t need a TIF, but given the infrastructure improvements, the opportunity to clean up a piece of blighted property and expand a portion of Celtic Studios for Pixomondo, we think it’s a win for the parish,” Daniel said. “This isn’t for Costco to build their store.”

For the Dawnadele improvements, Daniel said the state would transfer ownership of the street to the city-parish. Costco would hire and pay a contractor to make the improvements using the tax revenue diverted through the TIF.

Daniel would not go into details about how the deal would work for the portion of the property that will become part of the nearby Celtic Studios complex to house Pixomondo.

“Some of that property will be used in conjunction with the movie studio,” he said.

Daniel would not put a number on how much tax revenue would ultimately go into the project.

“We’re not there yet,” he said. “We’re still negotiating.”

Daniel said it will be a set amount, unlike other TIFs that allow developers to keep collecting the revenue. He also said there will be “clawback” provisions to protect the city’s investment, though he said the administration expects Costco would follow through on its plans.

The Metro Council on Wednesday set a public hearing for May 8 on the Costco proposal.

Councilman Ryan Heck’s office said that ahead of that date there will be a Lakes at Oxford homeowners association meeting on April 16 attended by a Costco representative, the company’s traffic engineer and Baton Rouge chief traffic engineer Ingolf Partenheimer.

Matt Watson, legislative aide for Heck’s district, said Heck won’t have an opinion before the homeowners meeting. It will be held at 6 p.m. at Jefferson Baptist Church.

Pixomondo, which won an Academy Award for its work on “Hugo” and has studios in Berlin, Los Angeles, London and Toronto, among others, opened a studio at Celtic in April 2012 amid great fanfare and with state incentives.

Annual salaries were said to average more than $65,000, plus benefits.

The company said it would hire 50 people in its first year, expanding to 75 by the end of its second year.

Costco has become known as an alternative to Sam’s Club, paying salaries and offering benefits to employees higher than average for that retail segment. Its product mix is considered highly differentiated as well.

All other benefits aside, Daniel said Costco would be a welcome addition to the market in its own right.

“It will bring a very desirable retailer to Baton Rouge that will assuredly go somewhere in this region if we don’t get them,” he said.