Wanted: inner-city supermarkets
Grocer Jeff Brown put a lot of sweat into his ShopRite supermarket in inner-city Philadelphia: He built a pork-free meat room for Muslim customers, stocked the aisles with the Jamaican and African cuisine that neighbors requested, and taught job skills to the hires new to the workforce.
Despite skyrocketing commodity prices, Mr. Brown says the store 鈥� a venture that he never could have opened without a loan from Pennsylvania鈥檚 Fresh Food Financing Initiative 鈥� is making money.
叠谤辞飞苍鈥檚 ShopRite is more than just a driver of urban development. It鈥檚 part of a major public-health program aimed at squashing obesity and related concerns such as heart disease and diabetes.
鈥淭here aren鈥檛 any other supermarkets within two to three miles,鈥� he says. Without his store, the patrons 鈥渨ould probably eat at McDonald鈥檚 or shop at a drug store or the dollar store for food 鈥� none healthy or fresh.鈥�
Pennsylvania鈥檚 Fresh Food Financing Initiative (FFFI) is believed to be the nation鈥檚 only statewide public-private funding initiative dedicated to opening grocery stores in underserved areas. In three years, the $120 million fund has provided 鈥済ap financing鈥� 鈥� money beyond what a grocer normally could receive in grants and loans 鈥� to open or update 52 supermarkets statewide, creating some 4,000 jobs in the process.
From its inception, the plan has been admired by policy experts for its merging of economic and public-health innovations. But as gasoline and food prices continue to rise, the FFFI is attracting increased attention.
鈥淲hat people are forced to do in some communities is travel to supermarkets in suburban locations, and the cost of gasoline has risen dramatically,鈥� says Ken Klothen, a deputy secretary of the Pennsylvania Department of Community and Economic Development, the state arm of the partnership.
Diet was the main concern in 2002 when an employee of the Food Trust 鈥� a Philadelphia group dedicated to increasing access to healthy, affordable food 鈥� stopped state Rep. Dwight Evans on his evening walk. Public health and economic development initiatives existed in many low-income Philadelphia areas. But the ends weren鈥檛 meeting, and residents鈥� food shopping options were still drugstores, expensive corner shops, or fast food.
鈥淲e hadn鈥檛 had a real policy about food access that was coherent, and the big challenges are the issue of obesity, the generation of jobs, and community transformation,鈥� Mr. Evans says.
Convinced a grocery store initiative could be an answer, Evans persuaded the governor to establish the FFFI with $10 million included in a 2005 stimulus bill, followed by another $10 million in 2006 and in 2007.
The Reinvestment Fund, a private nonprofit lender and investor in low-income communities, was tapped to manage the fund. The Food Trust and the Greater Philadelphia Urban Affairs Coalition round out the partnership.
Public-private state initiatives can be hard to manage, says Steve Goldsmith, a former mayor of Indianapolis and professor at Harvard University鈥檚 Kennedy School of Government. Mr. Goldsmith heads a Harvard awards program for policy innovations, in which the FFFI is a finalist. 鈥淚t鈥檚 often very complex, and the fact that public money was flexible and the private sector was involved looking at risk鈥� in this dual-purpose initiative is intriguing.
Part of that flexibility required delving more deeply than conventional market analysis to assure the grocers that low-income areas could sustain a supermarket. In its own study, the Food Trust used population density figures and local spending data 鈥� rather than median household income, a more common tool 鈥� to estimate that Philadelphia鈥檚 inner-city communities hold at least $50 million of retail buying power per mile.
FFFI鈥檚 gap financing covers grocers鈥� operating needs. For example, Brown needed help paying for security and training 鈥� such costs for inner-city stores are much higher than those for the suburban shops that he owns. And in this case, Brown says that he can鈥檛 pass the costs on to customers. 鈥淭here would be no way to do this. These are customers with very modest means,鈥� he says.
叠谤辞飞苍鈥檚 ShopRite opened alongside several large stores, creating 900 jobs just in that one neighborhood, he says. 鈥淲hich means 900 families can buy food and get off of welfare,鈥� Brown says. (Most of his employees live in the local community.)
Mr. Klothen notes that there鈥檚 still work to be done. For one, many of the new jobs earn enough money to feed an individual, but still not enough to support a whole family.
Nonetheless, most observers, including Klothen, agree the project is a success.
While several cities have their own supermarket programs, FFFI鈥檚 success has sparked a slew of cities and states contacting Representative Evans and plan partners about replicating the program 鈥� an idea they embrace.
鈥淲hen you get going, it really works,鈥� Klothen says. 鈥淚t鈥檚 a good role for government to play 鈥� making it possible for the private sector to do what it does best and can鈥檛 do without gap financing.鈥�
