Government Incentives for Food Deserts?
Local consumers appeared thrilled last month with the announcement that Whole Foods plans to open its first store in Detroit. But a few weren’t so happy that part of the impetus for their arrival was more than $4.2 million in tax and loan incentives.
According to Crain’s Detroit, the 21,000-square-foot project is expected to get $1.5 million in local and community foundation funds, $1.2 million in federal tax credits under the New Market program and $1.5 million in state incentives. The incentives are reportedly going to the developer, not Whole Foods.
The store, expected to open in 2013, is estimated to create 60-75 new jobs in the area. It’s also expected to bring more fresh fruit and produce options to an area defined by the U.S. government as a “food desert,” or one with low access to healthy food. The only other national grocer in Detroit is Aldi, with two stores. Meijer is also reportedly close to signing a deal to open a store in the city that also involves incentives. Detroit lost many of its local supermarkets when A&P shut down Farmer Jack in mid-2007. Whole Foods’ arrival is also expected to encourage competition among grocers for quality food at good prices and support the nearby farming community.
Legislators hope Whole Foods’ arrival will embolden other stores and other businesses to the inner city.
According to The Detroit News, Detroit Mayor Dave Bing said at a recent press event, “Not only are we getting an upscale grocer, but they’re a national firm, which I think is very, very important. Hopefully, this is the beginning of more to come.”
Lyneir Richardson, CEO of Brick City Development Corp., Newark, N.J.’s version of the Detroit Economic Growth Corp., said Newark regularly uses incentives to draw businesses to the city, including grocery stores.
“When we are advocating for a project, we look for the gap that would allow the developer and the retailer to take a risk on a city location,” Mr., Richardson said to Crain’s. “This gives them some incentive to locate and stay in our city.”
Mr. Richardson added that Newark — also a food desert — “would love to get Whole Foods to take an interest in our city. Whole Foods is a game changer.”
Critics to the plan include Martin Manna, co-publisher of Chaldean News, who told The Detroit News that the proposed tax breaks — even if they’re going to developers — aren’t fair to the 83 independently-owned grocers in the city on whom most Detroit residents rely.
“For 50-plus years, independents and mostly Chaldean grocers have provided fresh food in the inner city, and very, very few of them are given these kinds of tax advantages,” Mr. Manna said.
- $4.2 million in incentives key to Whole Foods deal – Crains Detroit
- Incentives gamble is about drawing more than just Whole Foods – Crain’s Detroit
- Whole Foods Market to Open Store in Midtown Detroit with Help from DEGC’s Green Grocer Project – Detroit Economic Growth Corporation
- Whole Foods to set up shop in Detroit’s Midtown – The Detroit News
- Meijer still aiming for new Detroit store; is safety still an issue? – Detroit Business News
Discussion Questions: Are government incentives part of the solution to solve food deserts, particularly for inner cities? What’s your general view on incentives that support retail developments?