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Wanted: inner-city supermarkets

A fresh idea brings healthy food to low-income neighborhoods.

(Page 2 of 2)

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.

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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’s Kennedy School of Government. Mr. Goldsmith heads a Harvard awards program for policy innovations, in which the FFFI is a finalist. “It’s often very complex, and the fact that public money was flexible and the private sector was involved looking at risk” 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 – rather than median household income, a more common tool – to estimate that Philadelphia’s inner-city communities hold at least $50 million of retail buying power per mile.

FFFI’s gap financing covers grocers’ operating needs. For example, Brown needed help paying for security and training – 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’t pass the costs on to customers. “There would be no way to do this. These are customers with very modest means,” he says.

Brown’s ShopRite opened alongside several large stores, creating 900 jobs just in that one neighborhood, he says. “Which means 900 families can buy food and get off of welfare,” Brown says. (Most of his employees live in the local community.)

Mr. Klothen notes that there’s 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’s success has sparked a slew of cities and states contacting Representative Evans and plan partners about replicating the program – an idea they embrace.

“When you get going, it really works,” Klothen says. “It’s a good role for government to play – making it possible for the private sector to do what it does best and can’t do without gap financing.”