Tax credits have helped to bring grocery markets back to New Orleans after Katrina, including Circle Food Store on Bernard
Not this year.
Mississippi House members let a bill die last week that would have created incentives for supermarkets to open in under-served areas. The legislation, Senate Bill 2840, was seen as a way to stem the spread of so-called “food deserts” that have left whole communities and regions with little or no access to fresh meat, vegetables and fruit.
Introduced by Sen. David Blount, a Jackson Democrat, SB 2840 won strong approval in the Senate but died on the House calendar March 17, failing get a vote in the House Ways and Means Committee.
Blount declined to predict the bill’s chances in an interview last week but noted a host of Senate members signed on as co-sponsors before the measure went to the House. The senator thought as well that the bill had gained considerable bipartisan favor from his House colleagues.
To allay fears of hurting business for mom-and-pop grocery markers, Blount wrote the legislation to specify that eligibility for incentives would be limited to supermarkets that come into an area deemed under-served through census data collected by the North American Industry Classification System.
Census tract data on poverty rates would be part of the eligibility calculation, according to Blount.
The bill did not mandate a set percentage of food types to be sold, but would have required qualifying grocery stores to make fresh produce among the offerings, Blount said.
The job tax credit was a key component of SB 2840. Supermarkets that opened in eligible zones would get a tax credit equal to 10 percent of the store’s payroll. The exemption could cover up to 50 percent of a store’s income tax liability annually. Total tax credits are capped at $4 million a project.
SB 2840 also exempted materials used in building a grocery store in an eligible NAICS zone from sales taxes.
Hope Enterprise Corp. executive Ed Sivak said last week he and other supporters of efforts to turn back food deserts were “excited about the potential” SB 2840 had for addressing the problem. “We like the idea of using tax credits to get development in areas of economic distress,” said Sivak, senior vice president of policy for Hope Enterprise, a non-profit community development finance entity that also sponsors Hope Federal Credit Union.
Hope Enterprise has longed used federal New Market Tax Credits to spur private sector investment in low-cost housing in distressed communities and regions.
Hope Enterprise has also used tax credits to help grocery markets return to parts of New Orleans that lost their stories to Hurricane Katrina. Louisiana’s Fresh Food Initiative has used tax credits to generate about $40 million for development of fresh food markets in New Orleans alone, Sivak said. “It’s an initiative to put grocery stores in communities that don’t have one.”
Or, he added, to “either get one or keep them there.”
Dozens of food retailers have received the development services and have created about 200 jobs through them, according to Sivak.
The effort used the $40 million tax credits and an additional $11 million from federal Community Development Block Grants fund, he said.
“Some of these projects may have seven or more different partners provide financial contributions. A great example is the Circle Food Store.”
The first blacked-owned grocery store in New Orleans when it opened in 1938 at 1522 Bernard Ave., the Circle Food Store received severe damage in Katrina. Ownership was having a hard time putting together money to rebuild and reopen, Sivak said.
Hope joined with the City of New Orleans, the State of Louisiana and bank partners to arrange an $8 million package, Sivak added.
The tax credits proved crucial to the rebuilding and reopening of the Circle Food Store, he noted. “Any time you can add some kind of incentive, it enhances the likelihood we’ll see one of these projects come to fruition.”
Its success in helping restore the Circle store allowed Hope to open a Hope Federal Credit branch inside the store.
Hope is now working to help restore food market options in South Jackson after the February loss of the Kroger supermarket on Terry Road and the November loss of the Sunflower supermarket in Utica, the rural Hinds County community’ lone food market. “It’s important to have community development partners at the table,” Sivak said of Hope’s role.
Opportunities to make things happen in south Jackson are out there, including for the former Kroger site, he added.
Sivak is correct on that, said John Michael Holtmann, Duckworth Realty’s vice president of brokerage who represents the owners of the former Kroger store.
Holtmann voiced confidence another grocer will take over the empty space.
“We’ve had some great interest in that property” from supermarket companies, he said. “The building needs some work. A few groups are doing due diligence.”
Holtmann served on the 50-member Mississippi Grocery Access Task Force that prepared a report in 2012 titled “Stimulating Grocery Retail in Mississippi.” Financial incentives were among the task force’s recommendations. Holtmann said he is hoping state leaders have not given up on creating incentives such as sale tax rebates and tax credits to bring supermarkets to under-served areas.
“I wish we could get more proactive,” he said after the demise of Sen. Blount’s legislation.
While Mississippi has no direct incentives for supermarkets, it has awarded approximately $150 million in sales tax rebates to a trio of discount shopping malls in the last three years.
For now, communities can get help on the supermarket front from the Mississippi Development Authority’s asset development, MDA spokeswoman Marlo Dorsey said.
“The team actively works with communities throughout the state to advise them on best practices to attract groceries stores and offers data support for retail recruitment,” she said in an email.
In Utica, Mayor Kenneth Broome sounded upbeat in an interview last week about his town’s prospects for replacing the Sunflower, a 40-year fixture in the community of 980 people. Utica is ready to offer land at the east end of town on East Main Street near Highway 18, Broome said.
“We’re talking to Piggly Wiggly” about the East Main Street site, he added, and noted the Piggly Wiggly would have a pharmacy.
What’s more, said Broome, the Hattiesburg-based Roberts Co., owners of Mississippi’s Sunflower stores, says it is close to getting a supermarket company to take over the old Sunflower building.
Roberts Co. executives did not return a phone call seeking comment. Mayor Broome said the company lease on the former Sunflower site has two more years to run.
Broome said he is puzzled about why the Sunflower closed in the first place. Utica has fewer than 1,000 residents but 8,000 people live within a five-mile radius and nearly double that number within a 10-mile radius, according to the mayor.
A likely reason, according to California food-retail consultant Norris Bernstein, is that the store’s profit margin stalled. “Obviously, the major thing is profit level,” he said, but emphasized that profit level must include “a sustained feeling that there is growth opportunity in that market.”
The area’s growth must guarantee a continued presence that is worthwhile, Bernstein said.
“You don’t have to have wealthy clientele,” he added. “What they are looking for is a market that is growing.”
Walmart’s Neighborhood Markets, typically food stores of about 40,000 square feet, could be an option for some Mississippi communities who have lost or never had a supermarket, Bernstein said. “I would contact Walmart. Walmart is pretty good people. They understand markets in the South.”
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