Financial Carrots Dangled to Spur Supermarket Development

Beth Fitzgerald | April 2, 2012 | Health Care
Robert Wood Johnson Foundation provides funding to entice grocers to city ‘food deserts’

A green grocer will break ground in Vineland as part of financing efforts to attract supermarkets to “food deserts” – the New Jersey cities scare in options for fresh fruits, vegetables and healthier food choices.

Robert Wood Johnson Foundation is providing $12 million to help bring affordable fresh food to an estimated 1 million New Jerseyans living in cities where this grocery gap is believed to play a major role in high rates of obesity among children, and preventable diseases like hypertension and diabetes among their parents.

Called the New Jersey Food Access Initiative, the program is being managed by The Reinvestment Fund, which partners with developers to open supermarkets in nutritionally starved places, where healthy food is hard to find but fast food chains are pervasive.

Donald Hinkle-Brown, president and CEO of The Reinvestment Fund, a nonprofit community development organization, said the first supermarket will break ground in Vineland in June, and will be developed by ShopRite operator Bottino’s. The second project in Elizabeth will break ground in the fall and be developed by the firm Inner City Development.

The Reinvestment Fund will lend $2 million to $3 million for each project, which will then raise the balance of the money for supermarkets whose total cost, depending on their size, will range from $10 million to $20 million, Hinkle-Brown said.

Based in Philadelphia, The Reinvestment Fund was selected as a development partner by the NJ Economic Development Authority, which is expanding efforts first launched in 2009 with $3 million in seed money. The Reinvestment Fund is credited with developing 90 new supermarkets in Pennsylvania by leveraging private investment with $30 million in state funding.

“We will be the lead on securing the funding, and then others will come with us,” Hinkle-Brown said. The supermarkets typically assemble a packaging of financing that include seed money from The Reinvestment Fund, public dollars, tax credits and bank loans. The involvement of The Reinvestment Fund is critical to getting these projects off the ground.

“By getting an early yes from us, it helps those other [funding] sources understand that [the project] is really going to happen, and they should pay attention to it,” Hinkle-Brown said.

The official launch of the supermarket initiative was held last week in New Brunswick at the construction site of a Fresh Grocer supermarket set to open in October. Fresh Grocer will be on the ground floor of Wellness Plaza, a $105 million development that includes a health center operated by Robert Wood Johnson University Hospital. It’s part of a downtown project by the New Brunswick Development Corp. in a public private partnership that includes the hospital, the EDA, the city of New Brunswick and the county of Middlesex.

The Fresh Grocer store isn’t a project of The Reinvestment Fund, but is the sort of project envisioned by the initiative, which will emphasize development in Atlantic City, Camden, East Orange, Elizabeth, Jersey City, Newark, New Brunswick, Paterson, Trenton and Vineland, officials said.

Also on Thursday, a study was released that offers policy recommendation to guide officials as they develop new supermarkets in underserved areas. The New Jersey Food Marketing Task Force, a coalition of stakeholders that includes the state of New Jersey, several supermarket chains, community development agencies and nonprofits, issued the report, “Expanding New Jersey’s Supermarkets.”

The study recommends that New Jersey help developers identify sites for supermarkets, streamline regulatory review to speed the process, help with financing, coordinate transportation so that shoppers can access the supermarket, and direct workforce development programs to these projects so that they can hire and train the needed staffs.

Robin E. Mockenhaupt, chief of staff of the Robert Wood Johnson Foundation, said reversing childhood obesity is a major priority of the Princeton-based foundation. In addition to the supermarket initiative, RWJF is funding the New Jersey Partnership for Healthy Kids, which is bringing stakeholders together in several cities to increase access to physical activity and better nutrition in an effort to bring down the high rates of childhood obesity.

“Healthy food and increased physical activity have to be part of the whole solution,” she said. “And you can’t have access to healthy food unless you have grocery stores.”