District H Councilman Ed Gonzalez, who represents the area around the proposed store and who championed the 380 agreement, insisted the deal was less an incentive to Kroger than it was a way for the city to extract benefits from a market-driven project. The deal gives the city two blocks of road, sidewalks and traffic lights more than a decade early, and also hands over to the city a third of an acre that it would someday need to extend Summer Street from Studemont to Sawyer.
Mayor Annise Parker said Houston’s strategy differs from that of cities that build infrastructure first and then try to recruit businesses to move in.
“We have not chosen to use that sort of what I would call ‘corporate welfare.’ We have said, ‘Business, if you want to open and you need the street, you pay for the street. We’ll pay you back, but if you really want to be there, you use your dollars upfront,'” Parker said.
The city will pay a premium on that upfront money. The deal calls for the city to pay Kroger back with 5.17 percent interest. The city’s rate on bonds through which it finances public works projects ranges from 2.55 percent to 4.06 percent, according to information that Councilwoman Anne Clutterbuck got from the city’s Finance Department.
“What do you make on your IRA? I would love to make a 5.17 percent return,” Clutterbuck said. “The taxpayer, in my opinion, should not be on the hook for that.”
The rationale given by Mayor Parker for the use of 380 agreements is sensible. It’s certainly a less risky approach than “build it and hope they come”. Aside from the premium interest rate, whether it’s good policy to use a 380 in this particular location is another matter. The outline of the deal here sounds better than what was struck for Ainbinder on Yale Street, but I’m dubious about the wisdom of a supermarket there. I’ve seen traffic at the light back up all the way to Center Street during the afternoon rush hour, thanks in large part to the many people wanting to enter I-10 West from Studemont. The thought of adding in grocery store traffic, not to mention another traffic light, makes my head hurt. Having said that, I’m not sure what kind of development could have been built there that would be both low impact on traffic and profitable to the developer. Long term, I may have to think about using Sawyer/Watson as an alternate route, though if the rumored plans of an Alamo Drafthouse come to fruition, it may not be much better.