Downtown Groceries

DebSF -- February 20th, 2008

Tuesday’s Washington Post story about vanishing grocery stores in NYC got me thinking about downtown and the long-held notion that good-sized grocery store would serve to jumpstart and solidify development. The Friendly Food Coop, I think, would maybe like to be that grocery store.

Now, grocers traditionally make profit margins of only 1 to 2 percent, and rising rental prices like those we’ve seen in recent years can make even popular, busy stores unprofitable.

In planned mixed-use communities, where the entire tract is controlled by one developer, this is not often a problem. The developer is interested in maximizing the value of the whole community rather than just one piece of land, so there is an incentive to include value-increasing retail options, like grocery stores, often by heavily subsidizing retail. A neighborhood with a diverse and convenient retail mix will be highly desirable, producing increases in residential property values which easily make up for the money spent on retail subsidies.

So, what do you think about the following proposition:

Harrisonburg should directly subsidize a downtown neighborhood-serving grocery store, in the knowledge that tax revenues will then increase due to higher property values, possibly by helping out specific local organizations (I’m looking at you, FFC) who are trying to start just such an establishment. What they should NOT do is pretend this is some leave-alone market outcome that doesn’t need addressing. Neighborhoods -and downtowns- prosper when needs are recognized, analyzed, and addressed. Sometimes the market solution alone doesn’t work.

Workable solution or silly idea?

16 Responses to “Downtown Groceries”

  1. finnegan says:

    This is way outside my area of expertise, but here are just a few thoughts of the top of my head:

    From what I know of city council, and the way certain subsidies or city gov’t involvement are portrayed in the media these days (One Court Square, B&GC, etc) I can’t see them going for something like that. I would think it would be an unpopular and risky move, regardless of any potential benefits.

    Also, where would that leave businesses like Midtowne Market? Wouldn’t that put them at an unfair disadvantage?

  2. barrystyne says:

    New York ANTIQUE SHOPS are also almost all gone. They went away from Long Island first and the blight has worked its way inward. Seems like all around the City private sector stores not-run by huge chains are (unless owned by millionaires) going away. Sad.

  3. Finn~ I believe you are right on. Anytime a city gives a hand to one “group” without thinking of the others trying to making on their own, you are basically digging them a grave. I’m not sure about Dave and Midtowne Market but I know Linda from Mike Conv. Store and she says that business really bites it when the kids go on break for anything. If the city will not be helping ALL, then let them help no one.

    If FCC wants to be private, let THEM do the leg work (which is what they are doing) instead of realying on taxes to help them start or be profitable.

    JMHO…of course.

  4. David Troyer says:

    do any of the big box retailers in town receive tax incentives?

  5. If they do ( and I have no way of finding out. maybe Mr. Chenault could enlighten us) I don’t think they deserve it. They move to town for the same reason all the hotels and restaurants do…students and their parents.

  6. v says:

    Get the BOYS AND GIRLS CLUB to set up a grocery downtown with a questionable business plan and shoddy bookkeeping. Council will shovel millions at it.

  7. Jonathan says:

    This is more a story of a traditional bid-rent gradient. The further you move from the downtown location, the cheaper the rent gets. It is a common story almost everywhere in the United States, and one of the main drivers of urban sprawl. Lack of grocery stores is not downtown’s problem, much cheaper rent on 33 is the problem.

  8. charles chenault says:

    None of the big box retailers receive any subsidies from the city. I believe Harrisonburg Crossing did receive some road construction assistance which was eventually paid back. Any economic subsidies should be tied to the size of the investment and what the project brings to the entire community. A good example is the new housing project on East Market Street which is receiving economic development credits (freezing of real estate assessment over a period of time based on the size and type of investment). In my mind, this is will be instrumental in the success of downtown.
    Thanks – Charlie

  9. Frank J Witt says:

    Charlie, thank you for the info. I really appreciate the input you give us commoners…

  10. charles chenault says:

    Frank – no one is more common that me.
    Thanks – Charlie

  11. JGFitzgerald says:

    City paid for the road changes (I hesitate to call them improvements, in retrospect), if memory serves. The developer fronted the money, with a 3-year payback. Sales tax was supposed to increase enough. I don’t remember if it did.

    Traffic did.

  12. charles chenault says:

    Thanks Joe – Charlie

  13. David Miller says:

    I’d like to chime in. I like the idea behind this discussion but would strongly say that city gov can best serve citizens by the incentives that it currently offers and perhaps extend and boost those incentives instead of subsidizing businesses. I do not believe that since my business benefits downtown revitalization, I should receive a check from the city. Same goes for FCC, and trust me, we don’t really need it. What we need are further incentives for building renovations like The Keezle building to be refurbished (a nightmarish proposition for anyone who has ever seen the basement) into mid income housing. We need for places like The Artful Dodger to build up so that they can bring crowds like only Rocktown can host. We need further development of what we have. This will boost our markets with more customers instead of subsidies. We’ll make it and so will the FCC (anyone at their Feb get together should have left with a positive outlook on its future). We’d just like more customers and that might mean things like the public private coops such as the alleyway re-construction. Personally I’d like to see the city help the Dodger grow up, find a buyer for the Keezle building that will commit to a certain dollar figure with matching funds coming from the city and I am very much looking forward to the streetscape project that council has wisely funded to make Downtown an attractive destination for all of the above ideas!

  14. Deb SF says:

    The federal government provides incentives for lots of household behavior through tax deductions (e.g., interest you pay on your mortgage, or for charitable deductions) and through tax credits that more directly reduce your taxes (e.g. for making your home more energy efficient). This is the similar to the family of credits and freezes that are aimed at downtown development.

    And, of course, the feds aim direct subsidies at various industries (e.g., agriculture, energy and transportation) for a variety of reasons.

    Is the argument against local subsidies based more on political feasibility and an existing local sense of fairness? Or on more hard-lined cost-benefit analysis?

  15. David Miller says:

    Deb

    I simply think that incentives based upon revitalization of a particular area are good; incentives to create a particular store are bad. Example; FCC receives 100,000 from the city to open, Midtowne Market receives none. Fair? Instead I suggest that the situation we have already fosters growth; incentives to revitalize downtown property creates enticement for property owners to upgrade and repair while maintaining or lowering rent. This provides incentives for all businesses to be here instead of choosing a pet project. The market argument for this one is a valid one. The market has dictated the opening of a downtown grocery, FCC was formed and progressing nicely. In this case the market argument was supplanted by 5 years of HDR’s works, the works of Economic Development and many many hardworking entrepreneurs.

  16. Tim says:

    I got to say that reading the previous post (a couple back) has me way excited about FCC opening up. I’ve lived downtown for 7 years now and always wished we had a grocery store in walking distance.
    That said, I don’t see how the city can pass out money to one start up and not another with out it being discrimination. And, I really don’t like the idea of hypothesizing about how much revenue one place might make, and using it as justification for handing out the revenue that other downtown businesses have already made for the city. Something about where your birds are and how much their worth is comes to mind.

    FCC will be fine on it’s own. Not to mention the fact that it already has a very liberal feel to it, if it is subsidized in reality, there’s a chance it might get a very harsh backlash from the conservative portion of the community.

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