By Jason McFarley, Truth Staff
ELKHART -- Kroger Co. has taken back to the drawing board a request for a tax break on its planned new $7 million store on the city's south side.
The move is not expected to affect the project but may calm some concerns among city leaders hesitant to set the precedent of giving property tax abatements to retailers.
The Elkhart City Council was to vote on the abatement Monday, but Council President Jim Pettit, R-1st, said at the meeting that company officials had asked late last week that the matter be postponed while they review their options.
Councilman Arvis Dawson, D-5th, who represents the Pierre Moran area where the store is planned, said he suggested to company officials that they explore incentives from the city other than the 10-year, nearly $500,000 tax break they are seeking.
City planning staff has recommended the council approve only a five-year, $260,000 deal.
At issue for a number of the council members are two concerns:
* The first tax abatement for a single retailer could lead to many others seeking the same break.
* And the abatement may be counterproductive in an area that likely will soon be designated a Tax Incremental Financing district. In a TIF district, the increases in property taxes that occur from new development in a specific area are collected and used to make public improvements to infrastructure in that area. Abating taxes on the Kroger project, some say, would deprive the TIF district of money to make long-needed sewer and road improvements in the area.
"I think they (Kroger officials) got the feeling that as much as we want to do the abatement, we have to look at what we're doing in our neighborhoods ... " Dawson said.
"I think they're willing to work with us for a win-win situation."
Pettit said after the meeting that while he opposed the abatement for Kroger alone, he might be in favor of a tax break for the larger redevelopment of Pierre Moran Mall.
Mall developers intend to refashion Pierre Moran into a strip shopping center known as Woodland Crossing, anchored by a new 70,000-square-foot Kroger store.
Kroger officials have said they recently signed a 20-year lease to remain at the site and have given the city no indication they will pull out of the project if the abatement request fails.
Councilman Rod Roberson, D-at large, said Kroger's commitment to the project as well as the consequences for the TIF district were reasons why he thought the abatement was unnecessary.
He said he also did not like the fact that, as Kroger officials said, the savings from the abatement would go to the retailer's bottom line rather than into improving the store.
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