Housing Complex

License to Kale

Housing_Wholefoods-1

If a neighborhood’s wealth can be measured by its grocery options, the residents of H Street NE and the Capitol Riverfront have gone from broke to baroque almost overnight.

For years, people living near the western portion of H Street NE who didn’t want to take a car or bus to do their shopping had to make do with Murry’s, the grungy supermarket whose dismal Yelp reviews call it a “post-apocalyptic foodstore,” “the most hood super market you could ever find,” and the “‘ghetto-fab’ grocery store of the decade.” But last week came the news that a Whole Foods would be replacing the Murry’s and the adjacent H St. Self Storage, three blocks from a more-upscale-than-most Giant that just opened, and less than a mile from the NoMa Harris Teeter that opened in 2010.

The Capitol Riverfront’s had it even rougher, with no choices but a couple of corner stores and a mile-plus trek across the Southeast Freeway. But a Harris Teeter will be opening next year in the burgeoning neighborhood, and a Whole Foods will join it three years later.

In D.C.’s fast-developing mini-food deserts, it seems, when it rains radicchio and rapini, it pours. The supermarket boom in the heart of the city hasn’t been confined to the Capitol Hill offshoots of H Street and the Capitol Riverfront. A Trader Joe’s and a Natural Market will open on 14th Street NW near U Street, straddling the Yes! Organic Market that opened in 2008. Shaw and Petworth will soon have a substantially upgraded Giant and Safeway, respectively. A two-block stretch near Howard University was expected to get a Harris Teeter and a Fresh Grocer, before an underdog developer was chosen for the former parcel and a conflict between Howard and its developer halted plans for the latter.

What do most of these stores have in common, besides organic leafy greens you’ve never heard of? They’re located in D.C.’s “Supermarket Tax Credit Zone,” meaning that they’re eligible for a full exemption from real property taxes, business license fees, and personal property taxes for their first 10 years of operation, as well as from sales and use taxes on construction materials.

The law responsible for the tax breaks, the Supermarket Tax Exemption Act of 2000, targets “priority development areas,” according to the text of the bill. But those areas comprise the overwhelming majority of the District east of 14th Street NW. And so the tax incentives are going largely to high-end grocery stores flooding neighborhoods that are already brimming with some of D.C.’s most expensive restaurants, apartments, and condos—stores that opened there not because of the tax breaks, but because of all the disposable income present. Meanwhile, only three aging chain supermarkets serve the entirety of the city east of the Anacostia River.

Those tax breaks cost the city about $3.1 million in fiscal year 2013, according to an estimate from the Office of Revenue Analysis—and they’ll likely cost more in future years, with more supermarkets opening up.

The two planned Whole Foods stores, incidentally, are not eligible for the tax exemption. That’s because of an update to the 2000 law spearheaded by Ward 3 Councilmember Mary Cheh, which shrank the area the exemption covers. That legislation, the Food, Environmental, and Economic Development in the District of Columbia (FEED DC) Act of 2010, limits the tax breaks to census tracts with an average household income that’s under 60 percent of the area median income (though many places that were formerly eligible are grandfathered in if they open by late 2015).

But the area median income for a family of four is nearly $110,000, since the D.C. region includes six of the 10 wealthiest counties in America. So even the pared-down tax-credit map covers neighborhoods like Foggy Bottom and most of Columbia Heights.

And the Supermarket Tax Credit Zone could once again be expanded, if Tommy Wells has his way. Last week, the Ward 6 councilmember introduced the Grocery Store Incentive Clarification Act of 2013, which would “restore the supermarket tax incentives that were in place prior to 2011 and worked well in encouraging the establishment of supermarkets in areas that were previously underserved,” as Wells put it in his introductory statement. (The bill just happened to drop one day before plans for the H Street Whole Foods became public, and the two planned Whole Foods stores to which it would extend the tax breaks just happen to be located in his ward.)

Wells said Cheh’s bill “may have prematurely and adversely impacted the ability of supermarkets to expand their geographic reach and level of service within the District of Columbia.” He also stated that on at least one occasion, the Office of the Deputy Mayor for Planning and Economic Development told a developer or supermarket that the tax incentives would apply, when it turned out upon further review that they wouldn’t.

Wells didn’t respond to a request for comment, but one has to assume he was referring to one of the planned Whole Foods stores. Whole Foods Mid-Atlantic Regional President Scott Allshouse says Insight Property Group, the grocer’s landlord-to-be on H Street, was initially under the impression that the store was eligible for the tax breaks, later learned the map had changed and the store was no longer eligible, and got in touch with Wells about it.

Cheh says Wells’ bill is “undercutting the whole purpose of what I did” and questions his motives. “Is it a coincidence that Whole Foods announced that it wants to put two stores in Ward 6?” she asks. “Neither is in a [Historically Underutilized Business Zone], so they’re not eligible for the tax breaks.” In other words, under Cheh’s law, they’re not exempt from the taxes—but under Wells’ new bill, they would be.

Wells’ assertion that the rules prior to 2011 “worked well” doesn’t stand up to the map of supermarkets that have opened in D.C. in recent years. They’re concentrated in flourishing neighborhoods in the western and central parts of the city, which is where supermarkets would be opening anyway without any incentives. But that’s not where the city really needs them. Cheh claims her more restrictive legislation is helping “steer them to food deserts,” but that’s also questionable. Wards 7 and 8 remain woefully underserved, and Anacostia lost its only supermarket last year. The incentives still cover too much of the city for grocers to feel any, well, incentive to open stores in truly poor parts of town.

It’s not even clear that tax incentives play a role in attracting grocers to underserved neighborhoods. Allshouse says Whole Foods is coming to H Street because of the market it offers, not any tax breaks it thought it could earn (though of course the store and its landlord will fight for any tax savings they can get). Tax incentives can help with the financing of a new store, he says, but are unlikely to cause a company to choose one neighborhood over another.

“We wouldn’t say, ‘Let’s go there because there’s a tax incentive,’” Allshouse says. “We’d go there because it’s a neighborhood we want to be in.”

Rather than implement broad tax incentives for large swaths of the city, D.C. Fiscal Policy Institute Executive Director Ed Lazere says a better approach would be to provide direct grants and subsidies to projects in specific areas where the services are actually needed. That could raise a host of ethical issues, with influential councilmembers steering projects to their wards, but it would avoid the current problem of encouraging supermarkets to open locations in the wealthiest parts of the so-called underserved areas.

“A lot of subsidies tend to go into areas that are quote-unquote ‘emerging’ where you know they’re going to take off, because there’s a sense that the investment is going to pay off,” says Lazere. “It’s hard to get investment in truly struggling areas.”

Cheh, with input from the Fiscal Policy Institute, introduced a bill this summer that would require the D.C. chief financial officer to review all tax breaks every five years to assess their effectiveness. The supermarket incentives, crafted in part by her own legislation, would be a good place to start.

Photo by Darrow Montgomery

Comments

  1. #1

    Wells and Cheh, two intellectual giants of public policy. To think that again tonight at the mayoral debate Wells was decrying the pay for play antics of some sober and at least sometimes sober Council members.

    Thomo looked all shined up like an Irish miner at Sunday mass so somebody must have kept him away from the swill this afternoon. I'll bet things are jumpin' at Tunnicliff's or some other licensed beverage purveyor on the Hill by now though. Katie bar the door, Tommy is majorly thirsty.

  2. #2

    Quoting Ed Lazere as some sort of unbiased credible source?

    Lazere and his group never met a public welfare program they didn't love, regardless of how counterproductive it was and how it squanders public resources.

    And they never met a tax hike they didn't think should be bigger.

    The new groceries on H are within a few blocks of some very low income areas.

    I doubt Whole Foods will serve those populations, but Giant certainly will.

    And remember they are right on a trolley line (assuming it ever opens).

  3. #3

    But its Ed Lazere supporting focusing the tax breaks - and presumably reducing the amount of subsidy.

    Its great that some poor people will use the H Street Giant, but the tax break was almost certainly not necessary to get it to locate there.

    On this issue, I think Cheh is correct. Which does not mean Tommy doesn't still have the right vision on transport and other issues.

  4. #4

    "only three aging chain supermarkets serve the entirety of the city east of the Anacostia River" Um, there is an almost new Giant on Alabama Ave SE that just opened a few years ago. As recently as last year, there was a Yes! Organic at 2323 Pennsylvania Ave SE (now closed, sadly, but I hope this wasn't the grocery store you referred to as closing in Anacostia last year, because that store wasn't located in Anacostia [in fact, I don't know *what* store in Anacostia you're referring to]). As usual, west of the river papers only do a cursory job of properly reporting on the state of affairs east of the river.

    The west of the river reporting in this story, particularly around Wells, is spot-on. Cheh seems to be holding the logical position here. Whole Foods will make a boatload of money on H St and the city can use the tax revenue.

    @Hillman Lazere is as credible a source as any pro-business Chamber of Commerce type who would never have their name prefaced with the adjective "pro-business" (or "anti-labor", as it were).

  5. #5

    @Spirit Equality

    Yes, the Giant on Alabama Ave opened in 2008 but it is also the ONLY grocery store in all of Ward 8. One grocery store to service 70,000+ people and considering Ward 8 only has 3 sit-down restaurants we are indeed in a food desert.

    These tax exemptions for west of the river aren't doing us east of the river any favors. They just give more incentive for grocery store chains to open their next store west of the river.

    3 chain grocery stores east of the river (1 in Ward 8 and two in Ward 7) to service over 140,000 people is not a good look regardless of their age.

    With these new stores you will have neighborhoods that will have more grocery stores than 2 DC wards combined.

    Economic segregation is real.

    P.S. I wrote an editorial on this very thing this morning from my perspective as a Ward 8 resident.

  6. #6

    @Spirit Equality

    Also I think Aaron was referring to the Food Warehouse on Good Hope Rd that closed last year. It wasn't a really good grocery store but it was something.

    Also, before that Giant opened in 2008 that hadn't been a grocery store in Ward 8 for years.

  7. #7

    @Spirit Equality, Anacostia Warehouse Supermarket closed last year. It was in Anacostia. You can blast Aaron Weiner for a lot of things, but his ability to refer to east of the river neighborhoods by their actual names and not just the generic "Anacostia" or "Southeast" is unparalleled. Nobody is saying it was the greatest store in the world, but it was a grocery.

    http://www.washingtoncitypaper.com/blogs/housingcomplex/2012/11/30/anacostia-supermarket-sold-to-virginia-investor-who-hopes-to-replace-it-with-national-tenants/

  8. #8

    I guess I just don't know why Lazere is the go-to guy for Councilmembers.

    His ideology is stuck in the 1970s, as if we haven't had forty years to see what's wrong with unlimited public welfare as the ultimate social goal.

    The reason groceries won't locate in some of these areas is because of the crime.

    And the crime continues in part because of policies that Lazere has supported no questions asked for as long as anyone can remember.

  9. #9

    Murry's is spelled MURRAY'S. And it was the only store on H street pre-gentrification.

    It is pretty misleading to say there are "no choices but a couple of corner stores and a mile-plus trek across the Southeast Freeway" is really a misrepresentation of the facts. There is already a very nice Safeway/CVS/Starbucks combo literally right outside of the Waterfront metro. I live east of the river in Anacostia and will travel across the Southeast freeway to get to that Safeway as opposed to the horrible Giant and Safeway that are in my area, both on Alabama Ave.

  10. #10

    Murry's is spelled MURRAY'S. And it was the only store on H street pre-gentrification.

    It is pretty misleading to say there are "no choices but a couple of corner stores and a mile-plus trek across the Southeast Freeway." There is already a very nice Safeway/CVS/Starbucks combo literally right outside of the Waterfront metro. I live east of the river in Anacostia and will travel across the Southeast freeway to get to that Safeway as opposed to the horrible Giant, Safeway, and Murray's that are in my area, both on Alabama Ave.

  11. #11

    Ok, the Giant didn't open in 2008 but an entire year earlier. It's grand opening did not coincide w/the election of Barack Obama.

    I live near the Giant on Alabama, shop there religiously, and many, many times found things I needed (saffron, rice noodles, endives, etc.) that I would otherwise get from Whole Foods or Harris Teeter.

    So yeah, referring to it as horrible is really a "misrepresentation of the facts." Now if the issue is that you don't like shopping in lower income black areas (Safeway on Ala, Giant) and prefer upper income areas like SW then I get that.

  12. #12

    @ Anon:

    Murry's spells its name Murry's on its sign.

  13. #13

    @SEis4ME--

    You were right -- sortof. Giant's grand opening was December 7, 2007. I was thinking January 2008. I remembered because I closed on my condo in October 2007 and I remembered the store was not yet open.

    From WCSmith:
    http://www.wcsconstruction.com/gallery2/main.php?g2_itemId=3031&g2_page=2

  14. #14

    BTW I live in Ward 8 and I too have stopped shopping at the Giant on Alabama Avenue unless I'm in a bind -- or really close. I started shopping almost exclusively at the Safeway at Waterfront the past year. They have more options for what I shop for and the customer service is much better and more consistent -- even if the lines are long. It pains me to say that but it is the truth.

    I wish we had at least one more grocery store option in Ward 8.

  15. #15

    @Anacostia and @TheAdvoc8te

    Thanks for hipping me to the name of the store that closed in Anacostia last year. My apologies to Aaron on that point.

  16. #16

    @TheAd...thanks. The reason I remembered was because it opened before Obama won the Iowa Caucus.

    Sorry to hear about your bad experiences at Giant...I've had them too. Just not enough to make me want to travel to the SW waterfront w/their long lines (you're right) and bad fruit/veggies. Of course, different clientele there. But I will say that management (and corporate) has been responsive to my complaints.

    Now the Safeway? Different story altogether and the arrival of WalMart will essentially take care of that one.

  17. #17

    BTW, most of remember what was there before Giant moved in. A corner store market that sold food (like fresh meat) even Murry's would likely throw away.

  18. #18

    agreed with everyone that people in Capitol Riverfront didn't have to go far for groceries...about a mile to either the SW Safeway or the Harris Teeter at Potomac Ave.

    Now that I'm hearing about how many people come from SE to SW to use the Safeway I understand why the lines are so long! i really wish the SW Safeway would hire enough people to keep the lines down; they always have register that are closed and they have those quick service registers by the door that no one ever works at.

    Also, don't folks on H St. use Aldi? Surprised that wasn't mentioned.

  19. #19

    4 grocery stores EOTR: Fairlawn Market (old yes at 23rd/penn se), two Safeways (minn/benning and Alabama ave) and the Giant on Alabama.

    There may be a small organic grocery going in the old AWS. Either way, the new owner is making massive (much needed) improvements to the building. Cut new windows on the GH road side, gutted it etc.

  20. #20

    SBC, I'm not even sure that the influx of those from SE is the culprit. The line at that Safeway have been horrid even before they both opened Giant AND renovated that Safeway.

    I'm sure people other than me have to remember what after 5 looked like at the old Safeway. Horreebull!

    HH, the success of Yes Organic kinda takes away from the notion that there are good grocer options EOTR. I imagine that the decision to place another organic market in Ana will meet the same fate. Heck, even I didn't shop at Yes O.

  21. #21

    SEis4ME, I'm not trying to blame folks from SE for shopping at the SW safeway or suggest they shouldn't...just wishing Safeway would staff appropriately! I've lived in SW since the time of the old SW Safeway and agree it always had long lines. The difference is that before, the store was smaller and there wasn't room for more registers. Now there are lots more registers, but some of them are often closed. When I am there on a Saturday, there is usually one regular checkout line, two express lines, two closed lines, and 6 self-checks (which are all for under 15 items and usually one or two is broken).

    It typically takes about 20 minutes to go through the line if you have over 15 items to buy...last week I forgot to add coupons to my card and actually went home, added the items on my computer (don't have a smartphone) while my wife waited in line, and she put in my card number and checked out. So that long line cost Safeway $5! The week before, the line snaked all the way through the produce section so we had the chance to find some apples that were on really good sale. That cost them about $3! I know that doesn't matter to them, but it makes the time waiting in line feel better.

  22. #22

    I live in Ward 8 and travel to Wegmans It might be a little drive but the experience and prices are great. Sometimes one must go a litle father to get what they want. Think Tyson's Mall

  23. #23

    The Giant on Alabama Avenue is very disappointing. Not very clean, the staff is rude and there are never enough cashiers. Not to mention the off-putting loiterers in front of the store.

    I frequented Yes! but never to buy groceries for the family.

    I shop at the Harris Teeter on Jenkins Row, the Safeway at SW Waterfront and the Trader Joe's in Alexandria.

  24. #24

    @SBC, oh nooooooo! I didn't think you were suggesting that at all. I was actually responding to your suggestion that the lines at that Safeway could've been made longer by the influx of people from SE (like TheAdvoctate, Anon) who would rather shop there than at the Giant. But yeah you're right, the lines are indeed awful. After the last time I waited 20 minutes for self-checkout, I decided to not go back unless I just happen to be in that area.

    BTW, although I TOTALLY get where the EOTR grocery detractors are coming from, I think it's a bit different perspective for those of us who have don't have cars. For me, it would walking past Giant to Cong Heights Metro, get off at Waterfront, then do the same trip in reverse.

  25. communitydevelopment
    #25

    I'm against these subsidies for chain stories in rapidly gentrifying area where we all know 1) they want to come anyway and 2) they will rake in the money. if there are to be subsidies, let's use them for community-owned and operated stores. we don't need all these big chains. much smaller communities then DC have worker and member-owned groceries, and even ones that are not for profit. that would serve the needs of our lowest income residents, job creation and the local economy best.

  26. #26

    At the risk of pointing out the obvious almost all of our businesses in Ward 8 are small businesses -- chain stores avoid us like the plague so I would have to argue the opposite. We need a mix and that means some chain stores that can potentially hire more people at a time. The reality about the mom and pop shops in my neighborhood is that they tend to hire from within their family -- not a lot of those jobs going to Ward 8 residents.

    The only "chain" stores I can think of in Ward 8 are:
    Giant (Congress Heights)
    Popeye's (Congress Heights)
    Subway (Congress Heights)
    Ace Check Cashing (Congress Heights/Anacostia)

    BTW -- I just asked my co-worker who lives in Anacostia where does he grocery shop and he said the Safeway in Southwest.

    LOL!

Leave a Comment

Blogs Linking to this Article

  1. The mayoral race is on

    [...] Is the District’s supermarket tax abatement program being applied fairly? (Housing Complex) [...]

  2. District Line Daily: To Exempt From Obamacare or Not? - City Desk

    [...] Taxpayers are subsidizing fancy grocery stores to open in locations where they already want to open. [Housing Complex] [...]

  3. Chatter: Jack in the Box - City Desk

    [...] week’s Housing Complex column by Aaron Wiener concerned a D.C. tax incentive that has allowed supermarkets to proliferate in quickly upscaling [...]

Comments Shown. Turn Comments Off.
...