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Dallas OKs a $2 million tax break for Kroger’s grocery and apartments near in Uptown

Council members said they approved it because the project includes 75 units with affordable rent for lower-income households.

Update: This story is being updated.

The Dallas City Council approved a 10-year, $2 million tax break for Kroger on Wednesday to build a new grocery store with apartments above it, including 75 affordable units.

The two-hour discussion before the 11-3 vote in favor of the project shifted from the need for another grocery store to the project’s ability to bring affordable housing to the area.

Kroger owns the land at 1823 N. Hall St. and is building the project with Southeastern Development. They plan to build an 80,000-square-foot grocery store and 356 apartments above it. Construction is scheduled to begin in August 2022 and finish in fall 2024.

The council’s Economic Development Committee recommended the project last month for its original ask of a $4 million tax break over 10 years.

Council member Casey Thomas said there’s been a lot of misinformation about the project. The tax dollars are to make the project affordable so that there can be a lower-income housing included, he said, not to provide incentives for a grocery store.

Others argued that the project didn’t need incentives because the neighborhood is one of the few areas of the city with population growth. If Kroger didn’t build there, they said, another developer would come along.

But that growth is one of the reasons the neighborhood is short on affordable housing.

“No developer is going to build affordable housing for free. This is where the workforce can live near their jobs and where housing is increasingly unaffordable,” council member Jaynie Schultz said.

City officials say they want to tackle the Dallas’ lack of affordable housing, but progress has been slow.

“If this was just about a grocery store, I wouldn’t approve it, but it’s an opportunity to improve the city’s housing stock,” council member Adam Bazaldua said. “Let’s see if we can replicate this concept [of housing above the store] in other areas.”

Council member Cara Mendelsohn wasn’t persuaded and said the city can’t keep giving away tax revenue. Likewise, council member Omar Narvaez opposed the tax break, saying it’s being given in an area that doesn’t need economic development funds.

Robin Bentley, director of the office of economic development, said the city has approved 13 developer projects in the past 10 years that included low-income housing at an average cost of $160,000 per unit in cash incentives.

The Kroger project’s cost to the city would be much less at about $28,000 per apartment unit. But there are no cash outlays this time, and the total tax abatement would be paid at the end of the 10 years. Plus the land will fetch a higher tax assessment after it’s developed, resulting in more revenue for the city, said council member Paul Ridley, who represents the district that includes the proposed project.

Council member Carolyn King Arnold said she opposes the project because of where it is. She said Kroger hasn’t responded to the grocery needs of southern Dallas.

Kroger spokeswoman April Martin said the incentive is for the affordable housing part of the project and not the supermarket it plans to build. Also, this project “does not preclude considering for the southern sector in the future,” she said. “We are open to development in South Dallas.”

The city’s chief of economic development, Eric Anthony Johnson, said the grocery industry operates on slim profit margins of 1% to 2%, so when a retailer decides where to build a new store, “everything presses up against that, including insurance costs, security and shopping patterns of the area.”

This headline has been updated to say that the development is near Uptown.

Twitter: @MariaHalkias

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Maria Halkias, Staff writer. Maria Halkias has covered the retail scene for The Dallas Morning News since 1993. She has chronicled the stark changes in grocery, malls, e-commerce, major bankruptcies and local retail entrepreneurs.

mhalkias@dallasnews.com /maria.halkias @MariaHalkias mariahalkias LinkedIn Iconhttps://www.linkedin.com/in/MariaHalkias
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