The economics of the supermarket business are tough even in the best of times. Profit margins are low, products are perishable and even small changes in sales volume can plunge operators into a sea of red ink. That makes store owners think twice before locating in poor, inner-city communities like Sandtown-Winchester, where Freddie Gray grew up. One consequence of their reluctance to do business in such areas is that roughly a quarter of Baltimore residents now live in so-called "food deserts" — sections of the city in which there are virtually no grocery stores or supermarkets within easy reach where people can buy fresh, healthy foods.
That's why the Baltimore City Council last month unanimously approved a proposal by Mayor Stephanie Rawlings-Blake to offer substantial tax breaks to supermarket owners who invest in underserved city neighborhoods. Under the plan, the city would cut the taxes grocery stores pay on personal property like cash registers, freezers and other equipment by 80 percent. That's a significant incentive that could pay big dividends if it entices business owners to locate in any of the two dozen or so Baltimore neighborhoods presently without easy access to fresh meats, fruits and vegetables.
Food deserts aren't just an inconvenience for poor city residents. They're also a serious public health problem and a drag on economic development in struggling neighborhoods. The lack of access to healthy foods leads to poor dietary choices that contribute to conditions such as obesity and to illnesses like asthma, diabetes, hypertension and heart disease. Children who don't grow up eating healthy meals are especially hard hit, and the effects of poor nutrition can affect their development throughout their lives. The link between public health and diet — particularly the fats, sugars and cholesterol that characterize convenience store foods and carryout menus — is well-documented in the 20-year disparity in life expectancy between residents of the city's poorest and wealthiest neighborhoods.
The presence of supermarkets and grocery stores within easy reach makes communities much more desirable places to live, but their absence likewise depresses home values and property tax revenues. That's why stores that sell healthy foods can also be important engines of economic development. Not only do they attract a steady volume of customers to their locations, other businesses nearby also benefit from the increased traffic and become more likely to hire additional workers, expand their product lines and generate additional revenues for the city. Baltimore's leaders are right to promote that happy cycle of local business development driven by supermarkets and groceries. As Baltimore Development Corporation President William H. Cole recently noted, "a quality grocery store can transform a neighborhood faster than anything."
But if that's the case, why stop there? The personal property tax incentive now on the table would give supermarket and grocery store owners tax breaks worth about $100,000 on their equipment, based on the size and value of their stores. That's a hefty chunk of change, but it represents only a relatively small fraction of their overall cost of doing business. The personal property tax on which the mayor is giving these grocers a break isn't the only tax that is substantially higher in the city than the suburbs, so further incentives like those typically reserved for mega-developments may be warranted, at least until grocers can prove that operating in the inner city can be profitable.
Such incentives are often criticized as "giveaways" for business that don't really help the people who most need it in Baltimore. But incentives that lured a supermarket owner to open in Sandtown-Winchester would bring immediate benefits to the neighborhood in terms of public health, and it would also likely boost home values and spur additional businesses to locate nearby. The mayor took an important first step, but she and the City Council need to be prepared to do more to attract the kind of supermarkets and grocery stores that will help Baltimore's food deserts bloom.