Gimme a (tax) break

The city, county and state should stop giving tax breaks to corporations and developers.

So what’s it like to go shopping at the River Oaks District on Westheimer just inside Loop 610? It’s exhausting. We eyed a $150,000 pre-owned wristwatch by Patek Philippe at de Bouile before trying out $7,000 crocodile and python handbags at Dolce & Gabbana. Men’s suits at Kiton will set you back thousands, as will dresses at Akris. But fear not, there’s relaxation on the schedule; you can take a movie break at iPic, where tickets are $28 — that’s one seat with free popcorn.

When you cater to crowds that can afford those prices, what do you need from the city? A tax break, of course.

We say that with tongue in cheek, but that’s what the shopping center’s developers got from the Annise Parker administration. Fast forward to a recent sale of the district for $550 million by a group including the San Diego-based (that’s California) real estate firm OliverMcMillan (“Prime deal seen as resiliency of retail” Page A1, June 10). What did the city get at the closing table on its investment? You guessed it: Not enough to buy an $8 lip balm at L’Occitane.

This page has been consistent in beating the drum to say tax breaks for economic development are generally bad policy, especially when they go to the richest of the rich. The River Oaks District pulled the vicuna over council’s eyes and ended up with a $19 million tax break, including the building of a whole new street, one free of potholes for its Bentley-driving customers.

Don’t get us wrong; we never say never. Bring us a grocery in a food desert, and we’ll be all for tax breaks. Build affordable housing in a city that’s growing out of reach for working families. We vote “yes” to giving wives of veterans relief. But while we admire Hermès scarves and ties as much as anyone, a reason eludes us as to why the city should give the French high fashion retailer an incentive to move less than a mile into a shop with a separate VIP entrance.

Not only do rich developers not need tax breaks; in this case, the city subsidized a high-end development in an area already prone to gridlock. The developer also knocked down affordable apartments and replaced them with housing that caters to the wealthy. Tax breaks are usually granted to get the opposite results.

River Oaks District is located between two of Houston’s shopping meccas: the Galleria and Highland Village. The taxpayers, it turns out, funded a shopping center for the mega-rich to compete with other high-end retail stores in the same area. “The Galleria serves clearly everybody, including but not limited to the top 1 percent of Houston,” David J. Contis, the president of Simon’s mall division, told Texas Monthly’s Mimi Swartz.

If along with us you’re shaking your head in disbelief, this is what happened. Around 2005, OliverMcMillan bought the 15-acre tract for commercial development before it had its hand out, asking for tax breaks. After once being turned down, it struck gold when Parker’s City Council approved the incentives, provided that stores in the project generate that much in sales tax.

“This investment will create jobs, have a positive impact throughout the local economy and result in improved infrastructure for the area,” the administration claimed. Of course, lots of businesses in town create jobs, have a positive impact on the local economy and result in improved infrastructure for the area, but they don’t receive any tax incentives.

The developer noted that the project, which features walkable streets and sidewalks as key features, would not have happened without the support of Parker, as reported by Paper City.

Really? Who can be naïve enough to believe that without a tax break, no economic use could be found for this tract of prime acreage right inside the Loop? If a high-end retail development did not make sense without this tax break, how did the developers manage to sell it for $550 million at a time when the oil crunch has hurt many retailers? Your tax dollars at work, folks. Tuesday, Harris County Commissioners Court approved a tax relief plan for an Amazon facility in northwest Houston. If only the rest of us were so lucky as to get tax cuts to do things that made sense for us to do, anyway.