Kroger tax break request falls flat with some on Council. Katherine Driessen, HoustonChronicle.com ($$$)
(That will be $3.50/month, to read reporting lacking in detail)
The 75 percent tax abatement would last a decade and apply to Kroger's $17 million expansion, which calls for an additional 80,000 square feet at the company's facility on Gellhorn Drive. The company also is planning to spend $24 million on general facility upgrades.
The story goes on to question both the reality that Kroger would gain the benefit they are claiming from expanding the Indiana location, or if they would really shift a large amount of product shipped from Gellhorn to the alternate location.
Then there's the issue of so-called "food deserts", those fuzzily defined, hard to quantify areas of the city where apparently no food is available or, at least, no food that the City Council (and those who prescribe to food deserts) feel is of the quality they desire.
In typical Chronicle fashion, much of the pertinent information regarding the request is omitted from the story, or buried at the bottom in favor of pushing a cause celeb.
First, WHY would a Houston expansion be so much more prohibitively expensive? Is it the property tax rate itself? (unlikely) Or is it the fact that, in Houston, Kroger would be absorbing a huge increase in rain taxes to fund the lightly audited Rebuild Houston
Second, are "food deserts" even a consideration here? While Councilmembers Green and Boykins are making a lot of noise about Kroger's refusal to expand within their districts, it seems that, based on quotes buried at the bottom of the story, these items are off the table when considering the merits of any expansion. In other words, Green and Boykins are practicing Houston Way politics.
They will claim it's "for their districts" of course, and that is probably somewhat true, but the fact is that they are also hoping to force Kroger into building in their district which would allow them a nice ribbon-cutting ceremony that they can include in future campaign literature.
Third, it doesn't appear that the proposed Kroger project is going to create the minimum jobs required to qualify in the first place. Kroger is claiming that 15 jobs will be created, although (according to the article) they're claiming all 300 current jobs in their job-creation numbers. While that doesn't make any sense it also feels like an add-on done by a proposal team that realizes the math doesn't add up. At 15 jobs, the $770,000 calculation (anyone know how they came up with that number?) amounts to just a hair over $50,000 in tax savings for jobs created. While that's not as bad as some economic incentive proposals, it's still likely to be more than the average salary of the positions that will be (maybe) added on.
Finally, there's scant evidence to suggest that Kroger's addition is going to offer them any cost savings at all.
By default, I'm opposed to corporate tax abatements on the grounds that they are an artificial intrusion into the marketplace by government creating a system where certain companies are granted most favored nation status at the expense of their competition. While I believe in low, simple tax systems I also believe that the overall public good is rarely served efficiently by abatements of this type. Too often the numbers just don't add up.
The Chronicle, as is often the case, tends to be for/against these things based on either the type of business or how willing that business reacts to policies that they deem important (food deserts for instance) and while there's little evidence that Kroger is a bad corporate citizen my gut feeling is that this will be editorialized against by the New Mrs. White and (eventually) denied.
Unless Kroger agrees to open stores in certain areas of Houston that is. Should that happen then all of those against will suddenly be in favor and the myth of food deserts will still (amazingly) be with us.
That's the thing about poorly defined "problems". If someone works to fix them they can always stay around by moving the goal posts to keep the issue alive. In Houston, there's no doubt that what passes for leadership has seized on food deserts as a method to beat companies about the head to achieve a desired result.
A smart company would promise to "study" the issue of expansion into food deserts, possibly by hiring on friends of the Council in an advisory role. They would then get the abatement and lose nothing other than some consulting fees and a few bucks from the lobbying fund. This would (probably) flip the no votes to yesses and sweep under the rug the fact that the proposal itself doesn't technically meet all of the minimum requirements for abatements.
Is this Kroger's fault? Of course not. It's Houston's fault for electing leaders who apparently don't understand the requirements for the rules they are charged to enforce. They could then continue to make serious faces come budget time as they try to figure out how they can spread around the lost tax revenue in a manner that doesn't affect the revenue cap.
The Houston Way folks, it's alive and well.
