Baltimore to give big tax break to attract more grocery stores

BDC chief: "A quality grocery store can transform a neighborhood faster than anything."

The Rawlings-Blake administration is banking on a new strategy to bring fresh food to disadvantaged Baltimore communities: an 80 percent break on the taxes grocery stores pay on their cash registers, freezers and other equipment.

The City Council unanimously approved the legislation Thursday as an incentive to encourage supermarkets to open in communities that don't have such stores now, areas known as food deserts.

Unlike corner stores or pharmacy chains, supermarkets need a large and steady stream of customers to buy the perishable foods they sell, such as meats, baked goods and dairy products. That challenge and others have kept them out of many city neighborhoods.

At the newly opened Save-A-Lot in Park Heights this week, Lenae Queen and Shanelle Starkes stacked packages of steaks and chicken gizzards and a bottle of orange marinade in their cart. They were planning a barbecue.

The sisters, who live in West Baltimore, said they were grateful for a nearby store where they could get all their shopping done in a single trip. They said they also liked the prices and the freshly painted walls inside the 13,000-square-foot store that opened on Cold Spring Lane in October.

"The convenience is definitely the best part," said Queen, 34.

Mayor Stephanie Rawlings-Blake said the steep discount on personal property taxes — which will extend for a decade — is worth it to spur investment in the places where it's most needed. Grocers say barriers to operating in the city include Baltimore's high property tax rate and the need for large tracts of land. Notoriously thin profit margins compound the problem by making it hard for supermarkets to absorb any financial losses.

"I anticipate this being helpful in bridging that gap and bringing investors to some of our struggling communities by making it a more feasible, more profitable experience for them," Rawlings-Blake said.

The measure is the latest tool in a sweeping plan to erase health disparities that contribute to a 20-year difference in life expectancy in wealthy and poor neighborhoods in Baltimore. The plan includes a 90 percent tax credit for urban farms and "virtual supermarkets" that allow public housing residents, including the elderly and disabled, to order groceries online using food stamps.

The new personal property tax credit is available to stores that sell produce, meat, dairy, seafood and packaged food and locate in a food desert. By the city's standard, a food desert is an area that is at least a quarter of a mile from a supermarket, with high levels of poverty and about a third of residents without a vehicle.

The tax breaks could be worth more than $100,000 a year, based on the size and value of the supermarket. Some existing stores undergoing significant renovations also can qualify.

Dr. Leana Wen, the city's health commissioner, said access to healthy food is directly tied to key health measures, such as rates of obesity and heart disease, making the matter critically important in Baltimore. One in three of the city's African-American residents live in food deserts, which Wen said are often "heavily saturated" with carryouts and liquor stores.

"I know, as a physician, I can't just tell my patients they need to eat healthier food if they don't have anywhere to go get healthy food," Wen said.

She said the issue isn't a matter of desire.

"We know what our community is telling us: They are looking for healthy food options," Wen said, citing surveys.

Mawusi Roberts said he has been cooking more and ordering fewer takeout "chicken boxes" since the new Save-A-Lot opened about a mile from his home.

"It does change your eating habits," said Roberts, 30, while shopping for the ingredients to make hamburgers for his family for dinner. "The store is really convenient. I like to shop on a daily basis. We eat a lot, and I like to cook."

William H. Cole IV, president of the Baltimore Development Corp., said supermarkets mean more to the city than better health outcomes. Grocery stores can serve as "stable anchors," because of the volume of customers they can draw. Other businesses, counting on picking up some of the foot traffic, tend to cluster around thriving supermarkets.

"A quality grocery store can transform a neighborhood faster than anything," Cole said.

Besides the new personal property tax credit, Cole said grocery stores are eligible for enterprise zone tax credits.

In Howard Park, early indicators, such as rising income levels and vehicle availability, show a new ShopRite is having a positive effect on the neighborhood, according to city officials. The 68,000-square-foot store opened about a year and a half ago. It's the largest grocery store in Baltimore and includes a pharmacy and low-cost primary-care provider.

Stephen Klein, ShopRite's director of real estate, said the city's new tax credit could be a factor in any future decisions the company may make to expand in Baltimore. Because the city's real property tax rate is so much higher than the surrounding suburbs, the break on the equipment inside could help make stores profitable, he said.

"As a family business, we are trying to make investments for the long term," Klein said. "Opening a store in Howard Park was based on our interactions with the community, and our belief that the neighborhood had been overlooked for many years."

Erich March said he hopes to see the city do more to encourage and support grocery stores. He and his then-wife opened a small grocery called Apples & Oranges in East Baltimore, but they had to close it this year after about two years in business.

March said they opened the 6,000-square-foot market in hopes of contributing to a cultural change in the community. But they couldn't purchase food in high enough quantities to be competitive with large chains, among other challenges.

"We were trying to bring a healthy alternative to the community, as opposed to all of the carryouts and high-cholesterol foods that have a detrimental effect on people," March said. "There is really a critical need that has to be addressed."

Baltimore Sun reporter Luke Broadwater contributed to this article.

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