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RETAIL VIEW: Pennsylvania bringing retailers to underserved areas

Earlier this month, the state of Pennsylvania gave $500,000 for a small local supermarket chain to open another unit in Philadelphia.

The state made a similar investment in Shop Rite late last year, which has resulted in the development of another Philadelphia supermarket that is already up and running.

And the state has about $19 million more earmarked for similar investment.

The Pennsylvania Fresh Food Financing Initiative is an ambitious program designed to increase the number of supermarkets or other grocery stores in underserved communities across the state.

Initially the Pennsylvania Legislature funded the effort with $10 million, and it has added another $10 million for a total of $20 million which it hopes to use to attract about $80 million in private investment to build as many as 40 new grocery store outlets.

Kevin Ortiz, a spokesperson for the Pennsylvania Department of Community & Economic Development, told The Produce News that so far two projects have been funded, three others have been approved and nine more applications are in the pipeline. "And I have been told that more applications are being prepared," he said.

Mr. Ortiz said that he cannot even guess as to how many stores might be developed because each application is different and the request for funding is different. However, he did say that the latest agreement with Fresh Grocer seemed to be fairly average, so that if one extrapolates, the $20 million could result in 40 new markets throughout the state.

Oftentimes, the underserved areas are located near market sites that have been closed. It is believed that the state money can help make the venture a viable one where private funding alone won't do the trick.

The initiative was created in response to the rising concern over the lack of access to fresh foods in underserved communities, according to The Reinvestment Fund, which is the Pennsylvania non-profit organization charged with dispensing the money.

That organization cited a study called "Food for Every Child: The Need for More Supermarkets in Philadelphia, which revealed that people who live in lower-income areas without access to supermarkets appear to suffer from diet-related deaths at a rate higher than that experienced by the population as a whole.

These areas also tend to produce a greater percentage of children who are overweight and have diabetes and other diet-related diseases. The Fresh Food Initiative is designed to give more people access to the inexpensive, nutritious food that is commonplace in thriving communities throughout the country. Often those who need it most are faced with paying the highest prices for food as their communities tend to be served by smaller stores that usually charge higher prices.

Together with The Food Trust and the Greater Philadelphia Urban Affairs Coalition, The Reinvestment Fund formed a public-private partnership to support the Pennsylvania Fresh Food Financing Initiative. The applications ask for different levels of financing program covering different costs.

In the case of Fresh Grocer, the owners asked for the $500,000 for predevelopment costs of the store site. Others are apparently applying for other funds covering a full spectrum of issues including land acquisition financing, equipment financing, capital grants for project funding gaps, construction loans and permanent financing.

The Reinvestment Fund is working with supermarket developers and communities throughout Pennsylvania to determine how they can best utilize the financial and technical resources available through this initiative.

Besides bringing better and cheaper foods to inner cities and rural areas, the store openings will create jobs for those communities, which is as important since unemployment tends to run high in those underserved communities.

The Fresh Grocer supermarket will be located in the Yorktown section of Philadelphia and will serve as an anchor to Progress Plaza, which the Department of Community & Economic Development calls "the nation's first African-American-owned and developed shopping center.

The new Fresh Grocer store will be operated by Pat Burns, who owns five other markets in the region. Mr. Ortiz said that the Pennsylvania Fresh Food Financing Initiative is part of Pennsylvania Gov. Edward G. Rendell's economic-stimulus package. Called the First Industries Fund, the program has attempted to attract businesses to the state and especially to its cities and small rural communities.

One of the major aspects of the First Industries Fund is the agriculture program, which is attempting to fund various agricultural projects around the state. Supermarkets have been identified as being eligible to access this fund. In total, the program is making $100 million available to farmers, businesses involved in agriculture, and farm co-ops.

Since the program was approved by the legislature in July 2004, Mr. Ortiz said that more than $3.6 million in First Industries planning grants and loans has been made for approximately 30 agriculture-related projects throughout Pennsylvania, including four projects in Philadelphia.

The fund is managed by the Commonwealth Financing Authority, with much of the money going for low-interest loans or grants to production agriculture. A loan guarantee program for large-scale agricultural projects is also part of the packages. Most of the farming project approved thus far have been in the dairy, duck or grain businesses.