Thursday, June 19, 2003

City cuts Kroger deal on parking


Grocer was looking outside city

By Gregory Korte
and Ken Alltucker
The Cincinnati Enquirer

The city of Cincinnati has agreed in principle to provide $15 million to build the Kroger Co. a new parking garage. The 120-year-old company said it had been scouting locations outside of the city for its headquarters to accommodate employee parking needs.

Mayor Charlie Luken and City Manager Valerie Lemmie forged the deal, which was announced to City Council Wednesday.

It calls for building an 850- to 1,000-space parking garage at the northeast corner of Vine Street and Central Parkway, near the company's headquarters.

The company now leases 14 lots with 1,038 parking spaces spanning downtown's northern blocks, but more than 400 spaces could be eliminated within two years because of private development and a proposed school near Central Parkway and Elm Street.

"When we realized what was coming in the immediate future, we began a search for alternate (parking sites)," chief executive officer Joseph A. Pichler said Wednesday. "There weren't any available."

So Kroger studied at least two options: build a new parking garage, or move its Vine Street headquarters staff of 1,200 out of downtown.

Pichler said the company would save money if it established its headquarters in suburban Cincinnati. Kroger even studied the possibility of moving to unspecified sites in and out of Ohio.

While Pichler declined to reveal potential sites outside downtown, he confirmed one site outside Cincinnati as a "firm" possibility and "another outside the state that has potential."

Message explicit

Luken said Kroger's position was explicit: "If no solution to the short- and long-term parking needs is found, it will be necessary for Kroger to relocate the corporate HQ," Kroger said in its proposal to the city.

"This was not a threat," Pichler said. "We love this city. We all want to stay here."

The deal Kroger negotiated calls for the city to spend $13 million to $15 million to build a parking garage on the existing parking lot, which Kroger purchased a month ago for $3 million. The plan still needs City Council approval, expected to come in August.

The garage would be operational by March 2005.

The city would own and operate the garage, with Kroger contributing annual payments of $510,000 for maintenance and debt in exchange for 850 spaces. That's the same amount of money Kroger and its employees now spend on parking. The city would need an additional $850,000 to $1.1 million a year to finance and operate the garage.

Despite the cost, Luken was decidedly positive about the agreement Wednesday.

"I think it's fair to say Kroger is taking less than they could have gotten if they relocated. One thing I'm continually surprised at is the lengths other cities will go to offer incentives," he said. "Joe Pichler is the big reason we were able to put all this together. He's very dedicated to the city."

Other benefits

Not only would the new garage solve Kroger's parking crunch, Luken said, it would also provide needed evening parking for the Ensemble Theatre and trigger private development along Vine Street. The city is also studying a plan to include a two- to four-story residential development - including 20 to 50 units - on the Vine Street side of the site.

But most important for the city is Kroger's continued presence as one of the city's six Fortune 500 companies - and the more than $2.5 million in city earnings taxes its headquarters generates. Kroger has 1,186 jobs at its headquarters with an average salary of $90,000, and plans to add 275 more jobs downtown over the next seven years.

Downtown boosters say losing such a large corporate icon would ripple across downtown. Kroger estimates its vendors and suppliers employ 250 downtown workers, and the grocer's presence has attracted new employers such as Dunnhumby USA, a London-based marketing and data analysis firm that recently established a downtown office with plans to hire more than 100 workers.

If Kroger left downtown, "it could prompt those vendors to relocate to wherever Kroger goes," said Bill Schneller, a commercial real estate broker with CB Richard Ellis.

What's more, downtown already faces a battle to keep Convergys Corp.

The billing and customer management firm expects to soon wrap up its search for a new campus and its 2,000 employees now scattered across three downtown buildings and a fourth in Norwood.

E-mail gkorte@enquirer.com and kalltucker@enquirer.com




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