Wednesday, September 3, 2003

Kroger garage deal in doubt

Without it, company might leave

By Gregory Korte
The Cincinnati Enquirer

A deal to keep the headquarters of Kroger Co. downtown could be in trouble, Cincinnati Mayor Charlie Luken said Tuesday.

The reason: politics, he said.

On paper, Luken said, the deal is even better than the one City Council approved in principle, by an 8-1 vote, in June. City officials now estimate the cost of a parking garage across from the Kroger building at Vine Street and Central Parkway at $12 million - lower than the $12.75 million to $15 million originally thought, Luken said.

Kroger has also agreed to spend $20,000 on a marketing study for the intersection of Hamilton Avenue and West North Bend Road, where Kroger abandoned its College Hill store. Neighborhood leaders and City Council members had been pressuring Kroger to help revitalize that business district.

But some council members remain unconvinced.

"I want to see it on paper," said Councilman Chris Monzel, who was the only no vote for the deal in June. "I'm waiting for the administration to say, what's the cost, what's the deal, are there clawbacks?"

The issue: A $12 million parking garage for Kroger downtown.

This week: City manager's report to council on the Kroger deal.

Next week: Council vote on Wednesday.

Possible sticking point: Kroger ownership of the facility after 30 years.

Downtown jobs at stake: 1,200.

"Clawbacks," a term that entered the City Hall lexicon during the Convergys debate, are provisions that allow the city to recoup its costs if a company reduces its employment below a certain threshold.

Those answers should come in a report from City Manager Valerie Lemmie this week, with a vote to follow a week from today. City officials working on that report could not be reached Tuesday, but privately briefed some members of City Council about the deal.

Some council members - including Vice Mayor Alicia Reece and Councilman David Crowley - had previously conditioned support of the downtown garage on Kroger's willingness to redevelop the College Hill site.

But after neighborhood business leaders said they were satisfied that Kroger was making good faith efforts to find a new tenant, Crowley said he will no longer block the downtown garage based on that issue alone.

But Crowley said he still had concerns about a provision of the deal that would give Kroger ownership of the parking deck after 30 years.

Though the two deals look completely different on paper, the Kroger deal inevitably brings comparisons to City Council's vote in July to give $52.2 million in incentives to Convergys Corp.

Monzel said responding to Kroger's threat - build a parking garage or they'll leave for the suburbs and take their 1,200 jobs with them - would be a failure to "learn the lessons of Convergys."

But Luken said there's no comparison.

"The problem with the way these things are being handled is that council creates the furor and then complains about the perception," he said.

A backlash over the Convergys vote - along with a looming City Council election - is making the Kroger decision harder than it needs to be, Luken said.

"It is a much, much easier deal on everyone than Convergys, and far, far less expensive," he said.

Still, Luken said he heard from council members over the Labor Day weekend that they didn't like feeling bullied - even by the city's second-largest employer. Kroger's parking crunch - and threat to leave town - should have been foreseeable, they said.

Kroger chairman Joseph Pichler said last week that the company did not realize until this spring that a new elementary school to be built on Central Parkway would eliminate 355 spaces used by Kroger employees.

Other nearby parking spaces will be eliminated by downtown development. He said the only solution was to build a garage on a lot owned by Kroger.

"I'm as supportive as I've ever been," said Councilman John Cranley. "As I said before, I think the way they handled this could have been better. But it's not worth losing the 18th-largest company in the country."


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