Throughout the month of August, we'll be talking about local food issues. We're kicking off this series with a two-part essay by our very own Max Azzarello. Find all our local food-related content here.
On November 9, 2012, Mayor Jim Cahill led a ribbon-cutting at the Fresh Grocer, a 50,000 square foot supermarket in downtown New Brunswick, New Jersey. It was the city’s first new full-service supermarket in a generation, the latest nine-figure project spearheaded by the New Brunswick Development Corporation.
The supermarket would be the anchor of the $105 million Wellness Plaza development (along with a state-of-the-art private gym and a 1,275 space parking garage), the mayor explained. It would provide unprecedented access to healthy, affordable foods for thousands of the city’s low-income residents, and is located within a 15-minute walk of 75% of the city’s residents. In addition to nearly 300 temporary construction jobs to build the site, 200 of the Fresh Grocer’s 300 new employees lived within one mile of the store.
“We’re not just a supermarket. It’s some ways, we’re a community center,” explained the Fresh Grocer CEO Pat Burns, taking pride in his company’s ability to work with low-income residents in urban communities to help create a supermarket that best serves their needs.
To that end, the New Brunswick location would provide ethnic foods that cater to the city’s minority communities, partner with a local non-profit to sell food created by New Brunswick residents, offer a free shuttle service for those who shopped there, and provide job training and nutrition programs for employees.
With the cut of a ribbon, New Brunswick was no longer a food desert.
A year and a half later, the Fresh Grocer abruptly closed.
As is the case with urban areas across the country, New Brunswick has serious issues of food access, particularly in its low-income neighborhoods. These areas, largely Black and Hispanic, have below-average employment rates, education rates, and household incomes, and have fewer two-parent households—all factors that can contribute to higher rates of obesity and food insecurity.
29.3% of the city’s households do not have cars (with a disproportionate share of those households almost certainly coming from the lower-income neighborhoods), meaning that many of them are limited to shopping at whatever food stores are in their immediate area.
Having lived in the heart of that neighborhood, I am familiar with the food stores available: There are dozens of bodegas and corner-stores, most of which do not carry any fresh meat or produce, only packaged foods. An informal survey I conducted in 2012 revealed that many of these stores are family run or owned, with employees living in the neighborhood. There are also a handful of larger markets and groceries that have meat counters and produce aisles, but they do not have the purchasing power to match the lower prices of a big supermarket.
Two years earlier, a different Fresh Grocer received national attention — this one in North Philadelphia. It was there that First Lady Michelle Obama (along with Treasury Secretary Tim Geithner) launched the Healthy Food Financing Initiative (HFFI) as part of her “Let’s Move!” campaign to end childhood obesity. The goal of HFFI was “to bring grocery stores and other healthy food retailers to underserved urban and rural communities across America”.
HFFI was modeled after Pennsylvania’s Fresh Food Financing Initiative (FFFI), a statewide program “designed to attract supermarkets and grocery stores to underserved urban and rural communities” that received more than $85 million in loans and grants to finance 88 projects, with many Fresh Grocer locations among them.
The FFFI financing model has been replicated by several states and cities, including New York State, Indiana, New Orleans and Cincinnati, to name a few. Shortly before the Fresh Grocer opened in New Brunswick, New Jersey launched its own Food Alliance Initiative at the supermarket’s construction site.
The Philadelphia Food Trust, meanwhile, has been credited with helping end the city’s food deserts. Of the 18 Philadelphia supermarkets that were funded through FFFI, two were located directly within the area of greatest need, while two-thirds were within a half-mile of such areas.
As the Food Trust explains, the crux of these initiatives is to use “strategic investments with public funds to reduce risks associated with the development of more supermarkets in lower and moderate-income communities.”
Although each of these initiatives states that it can help finance corner-stores and nontraditional retailers such as farmers’ markets and CSAs, it’s clear that these financing mechanisms primarily serve large-scale supermarkets. This is unsurprising given the large portion of funding these initiatives receive from New Markets Tax Credits, which typically require a minimum $5 million project size, well above the cost to build a small market.
In fact, the very definition of food deserts focuses specifically on supermarkets. HFFI uses the USDA definition to determine where to allocate its funds: “At least 500 people and/or at least 33 percent of the census tract's population must reside more than one mile from a supermarket or large grocery store (for rural census tracts, the distance is more than 10 miles).” In other words, the only defining characteristic of a food desert is its proximity to a supermarket.
And so the opening of the Fresh Grocer instantly turned New Brunswick from a food desert to a food oasis. Whether it did anything to help the city’s most food-insecure residents is another question entirely.
Whose Risk is it Anyway?
These words were shared at the Fresh Grocer’s ribbon-cutting by Chris Paladino, President of the New Brunswick Development Corporation (Devco). He — the private developer — went on to thank the public officials he worked with to help secure government funds for the project's creation.
Mayor Cahill, meanwhile, rattled off a laundry list of government bonds and tax credits that were secured to help finance the Fresh Grocer. A deeper look at these highlights just how much public funding has gone into the supermarket and its related developments.
Some of these bonds were issued for both the $105 million Wellness Plaza (the Fresh Grocer, the Wellness Center and the parking garage) and the neighboring $150 million Gateway development, so I’ve tailored the amounts to reflect an equal proportion for the Wellness Plaza only. While each program provides credits at different rates, the numbers in parentheses represent the approximate total government subsidy the bond provides:
- $35 million in New Markets Tax Credits (NMTC) - (~$10.5 million in subsidies)
- $17.4 million in Build America Bonds - (~$5 million in subsidies)
- $11 million in Recovery Zone Economic Recovery Bonds - (~$4.2 million in subsidies)
- $10.3 million in Recovery Zone Facility Bonds - (~$2.1 million in subsidies)
All told, the government has covered roughly $46 million of the project’s $105 million cost with public funds. So while these credits decrease the risks facing developers and investors, they push those risks onto the people of New Jersey and the United States.
Notably, three of these incentives (NMTCs and the Recovery Zone Bonds) are exclusively used for bringing investments to underserved, low-income communities.
The only problem? This is not a low-income community...
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(Top image source: Revireo)