Monday, July 21, 2008

Los Angeles 'Coalition For Healthy and Responsible Grocery Stores' Ups the Ante On 'Food Deserts'; Michigan Passes Law Offering Grocers Incentives

The state of Michigan USA has passed a new law which allows city governments to give tax breaks to food and grocery stores that sell fresh produce, fresh meats and dairy products if the grocers will open stores in urban and rural "food desert" neighborhoods which are currently underserved by stores offering such fresh foods at affordable prices.

The new law, Public Act 231, applies to designated urban and rural lower-income areas in Michigan.

Under the new law, local governments with the state's assistance can offer supermarket chains and other grocers up to 10 years' worth of tax abatements in return for locating new stores that sell healthier fresh foods in such underserved neighborhoods.

The new law also allows for tax incentives and abatements to be given by city governments to existing grocery and convenience stores in these designated Michigan "food desert" areas in return for the retailers agreeing to carry an agreed upon selection of fresh produce, fresh meats and dairy products in their existing low-income urban and rural neighborhood stores.

The sponsor of the bill, state senator Mark Jensen, R., Gaines Township, Michigan says, "This new measure will help make Michiganians healthier and spur neighborhood revitalization."

Public Act 231 was just signed into law last Thursday.

Tesco's Fresh & Easy and 'Food Deserts'

The issue of urban and rural neighborhoods being underserved by grocery stores that offer fresh foods, along with a decent assortment of basic grocery items at affordable prices, is a major one currently in the U.S.

Tesco's Fresh & Easy Neighborhood Market USA has said one if its key strategies with its small-format, combination basic grocery and fresh foods Fresh & Easy chain is to locate stores in "food desert" neighborhoods in its market region of California, Nevada and Arizona, as well as elsewhere in the U.S. when it expands into new states.

Currently, Tesco has two of its 63 Fresh & Easy grocery stores, which in addition to selling a selection of basic food and grocery items, also offer a limited assortment of fresh produce, fresh meats, dairy and perishables, and fresh, ready-to-eat and ready-to-heat prepared foods items, along with wines, craft beers and some non-foods items, in "food desert" neighborhoods. Both of the stores are in Southern California. One is in the low-income city of Compton, the other in the historically low-income but rapidly gentrifying Eagle Rock neighborhood of Los Angeles.

Last week, as we reported here, Tesco broke ground on a new Fresh & Easy store which will be the ground floor retail anchor of a new affordable housing mixed-use 80 unit apartment building in a low-income neighborhood of South Los Angeles which is currently underserved by grocery stores that offer fresh foods and groceries at affordable prices.

Los Angeles coalition ups the ante on 'food desert' issue

The city and county of Los Angeles does at times offer certain tax breaks to food and grocery retailers if they will locate in a particular underserved neighborhood. However, there isn't a comprehensive plan in place, as is the case in most of the U.S., although that is beginning to change.

A Los Angeles group, the Coalition for Healthy and Responsible Grocery Stores, has just released a report (July 17) from what it calls its "Blue Ribbon Commission," urging Los Angeles' city leaders to "take charge in remedying a growing divide in how the grocery industry treats underserved and affluent communities."

The Commission, comprised of leaders from the political, development, health and faith communities, gleaned its findings from public testimony taken at a May hearing, where community residents, industry experts, academics, workers and clergy described a looming grocery crisis in Los Angeles, according to the report.

In the report, the "Blue Ribbon Commission" offers a number of recommendations to city of Los Angeles political leaders, which the coalition says need to be acted on to help solve the "food desert" issue in the city. These recommendations include "creating a direct challenge to generate a policy creating uniform standards for grocery operations in Los Angeles," the report says.

“What is consistently clear, the deeper you look, is that this (Los Angeles) city can ill afford to sit idly by as this highly dynamic industry evolves in increasingly inequitable ways,” contends Reverend Norman Copeland, Presiding Elder of the African Methodist Episcopal Church of Southern California and a member of the Commission. “The stakes are too high for there not to be some city-wide standards.”

Additional recommendations for city leaders include identifying new incentives – as well as building on existing ones – to draw more grocery chains to underserved communities. The Commissioners suggest, however, that those incentives be tied to quality of service standards. To industry leaders, the Commissioners recommend engaging more aggressively with community stakeholders. They also challenge grocery chains to increase store access in underserved neighborhoods and to increase health care affordability for workers.

According to Blue Ribbon Commissioner Jackie Goldberg, a former California Assemblywoman and L.A. City Councilwoman, these recommendations are just the
beginning: “Together, we’re going to push for action on these recommendations – and we’re going to continue pushing until we see real progress.”

The coalition announced its recommendations at a press conference in Los Angeles on July 17. Following the press conference, members of the coalition delivered their petition directly to Los Angeles city hall.

The coalition's report

Below is a summary of additional arguments, taken from the report, the Los Angeles Coalition for Healthy and Responsible Grocery Stores makes in its "Blue Ribbon Commission" report:

"The Commission based its recommendations on findings showing that underserved communities are suffering the consequences of grocery industry 'red-lining' on myriad levels," the report says.

"For example, testimony showed that not only are underserved neighborhoods becoming 'food deserts,' (a term often used to describe neighborhoods that have no full-service grocery stores within a half square-mile of their center), but that even in those low-income communities where major chains have opened, the quality and depth of their food and services is discernibly lower than in stores in more affluent neighborhoods. The cumulative effect, according to the report, is that residents, families and kids in those communities suffer from disproportionately high rates of diet-related health problems.

Former teacher, Alex Reza, underscored this point during testimony: 'In my 30 years as a teacher in Mission Hills, I saw children impacted by second-class food options. Study after study shows that children deprived of healthy food choices are less prepared for school'

Commissioners also found during testimony that consumers in 'food desert' communities have much less opportunity to buy environmentally-friendly products, the report argues.

For example, according to research contributed by student organizations at UCLA and USC, stores in South and East L.A. and the Northeast San Fernando Valley are less likely than stores in West L.A. to sell recycled paper products or organic or locally-sourced products.

'Our communities deserve the same environmental standards that wealthier neighborhoods receive and we want the opportunity to make environmentally responsible choices. I can have an individual impact by recycling and buying food that hasn’t been flown thousands of miles. However, we can only do this if the option is available to us,' said Nury Martinez, in written testimony to the Commission. Martinez is the Mayor of San Fernando and Executive Director of Pacoima Beautiful, an organization dedicated to environmental justice in the city of Pacoima."

The report further argues:

"Most stores in “food desert” communities are independently-owned and non-union, their workers are paid less and afforded less training. Consequently, according to the findings, those communities end up suffering not only from limited access to quality, full-service stores, but also from the absence of what has historically been a stimulus industry for neighborhoods and the diminished professional standards that come with non-union stores.

'These findings truly illustrate a tale of two cities,' says Elliott Petty, Retail Analyst for the Los Angeles Alliance for a New Economy (LAANE), a member organization of the Alliance. 'Most people know that major chain grocery stores have red-lined low-income communities for decades. However, these findings flesh out the fact that the lack of access is compounded by the resulting poor job quality, environmental standards and professional standards in the stores that do exist'.”

All food stores, or just some, welcome in L.A. underserved neighborhoods?

The Los Angeles Coalition for Healthy and Responsible Grocery Stores, which is currently engaged in a major campaign designed to get Tesco's Fresh & Easy Neighborhood Market to locate more of its small-format Fresh & Easy grocery stores in low-income Los Angeles neighborhoods underserved by grocery stores that sell fresh foods and groceries at affordable prices, isn't in favor of all stores that sell fresh foods and groceries at reasonable prices however.

Many of the same organizations that comprise the coalition, were key players in a successful campaign in 2004 to prevent Wal-Mart from building one of its combination food and general merchandise Supercenters in the low-income, "food desert" city of Inglewood.

One of the supporters of locating that Wal-Mart Supercenter in Inglewood was PBS television host, Los Angeles resident, and African American community activist Tavis Smiley. Wal-Mart is a major sponsor of the "Tavis Smiley (talk) Show" on PBS, as well as being a financial supporter of numerous African American-oriented initiatives the talk show host and author leads throughout the U.S.

In fact, numerous Inglewood residents supported the Wal-Mart Supercenter along with Smiley, while others opposed it. The end result was that Wal-Mart wasn't allowed to build its store in the neighborhood. No other food and grocery retailer has opened a store at or near the former Wal-Mart Supercenter location in Inglewood in the four years since members of the coalition were instrumental in defeating Wal-Mart's plans to open a store in the underserved neighborhood.

The coalition member organizations who opposed the Wal-Mart Supercenter going into Inglewood in 2004 sited as their primary argument--as does the coalition itself--the size of the Supercenters (average of about 180,000 square feet), along with Wal-Mart's non-union status in their opposition campaign.

Therefore, it will be interesting to see how the Coalition for Healthy and Responsible Grocery Stores responds--whether it supports or opposes-any initiatives Wal-Mart makes to locate its new small-format Marketside grocery stores--which will sell fresh produce and meats along with basic groceries and fresh, prepared foods--in Los Angeles neighborhoods that are underserved by such grocery stores.

Based on the fact it's urging Tesco to open more Fresh & Easy stores, which the Wal-Mart Marketside stores that will start opening this fall in the Phoenix, Arizona region are very similar to, it would appear then that the group shouldn't have any problems if Wal-Mart does propose opening some of the stores in these underserved Los Angeles inner-city neighborhoods. (Wal-Mart has plans to open Marketside stores in Southern California as well as in Arizona and elsewhere.)

After all, like Wal-Mart, Tesco's Fresh & Easy is non-union. And despite an aggressive campaign, which the Coalition for Healthy and Responsible Grocery Stores supports, by the United Food & Commercial Workers Union to unionize Fresh & Easy store-level workers, it doesn't appear Fresh & Easy will go union anytime soon.

Incentives first, politics later?

Meanwhile, in our analysis we believe the best position at present in order to get food and grocery retailers to open more stores in "food desert" neighborhoods is to create an incentive package like the state of Michigan is doing with its new law. Once such a package is created in Los Angeles, if food and grocery retailers don't take advantage of it and begin to open more stores in these underserved neighborhoods, the evidence will be clear that the industry is not doing so for very specific reasons.

Further, if a solid incentive package exists, and grocers don't take advantage of it, they could do so at their own peril in terms of potentially bringing on more restrictive legislation, along with much negative publicity, on the issue of not building stores in low-income neighborhoods.

The fact is, much potential business exists in these underserved neighborhoods. The grocer--be it Tesco's Fresh & Easy or others--that jumps on this opportunity stands to reap substantial benefits from doing so.

Of course, politics is involved, as the Wal-Mart Supercenter experience in Inglewood demonstrates. Does the coalition want food retailers to go into these "food desert" neighborhoods? Or does it just want "certain" grocers to do so, even if neighborhood residents say want a Wal-Mart Supercenter?

Further, is the coalition's ultimate argument to Tesco that if it works out an agreement with the coalition to say open a certain number of Fresh & Easy stores in the underserved Los Angeles neighborhoods, that agreement also must come with a pledge to unionize its store-level employees? If so, as close observers of Tesco's Fresh & Easy, we can tell you such a deal will never fly with the retailer's senior executives.

The bottom line is that whatever the case may be, it's important not to lose site over the "ultimate consumer" in this debate--the residents who live in these underserved neighborhoods.

This fact is important for the coalition, Los Angeles' city leaders and supermarket industry leaders to not lose site of. After all, having these underserved neighborhoods is a social, public health (obesity and such) and economic issue that affects business, government and society as a whole, along with impacting the children who live in these neighborhoods even more so than it does the adults. That's good reason enough (the future of the kids) all by itself to make solving the "food desert" issue a group effort.

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