After an effort to establish a cooperatively owned grocery store in Northside hit major funding hurdles earlier this year, a new plan for the store’s potential site is coming together. Whether or not that larger development will have space for the grocery, however, is still up in the air.
Officials with Northside community development corporation Northsiders Engaged in Sustainable Transformation (NEST) say they will soon announce the developer chosen for the site.
That developer and organizers for Apple Street Market are meeting to discuss the feasibility of a grocery store as part of a larger development that NEST hopes will include affordable housing funded via Low Income Housing Tax Credits, both NEST and Apple Street say.
“Our goal is affordable housing development on the site,” says NEST Executive Director Sarah Thomas. “We’re going to have to meet all sorts of qualifications. We have the simultaneous goal of food access in the neighborhood, so it is a dream to incorporate them into the site.”
Apple Street Market Board President Kristen Barker says the grocery initiative is hopeful about the potential partnership.
“What I think what everyone wants is for this joint project to work,” she says. “There are a variety of challenges around it in terms of the size of space, and pricing. But I feel like we’re all going to bring all the creativity.”
NEST received more than $500,000 from the City of Cincinnati last year to purchase the former Save A Lot at 4145 Apple St. that has been floated as the market’s home since the low-cost grocer pulled out of the building in 2013.
As part of that funding agreement, it must be in development on a project at the site within 24 months. Organizers with Apple Street played a big role in lobbying the city for that money under the assumption the site would be used for the grocery.
Some political aversion to co-op grocery models — and struggles with Clifton Market, another co-op grocery up the road in Clifton — made some members of Cincinnati City Council and Mayor John Cranley reluctant to give the funding to Apple Street directly.
Last year, however, it seemed as though Apple Street was making strides toward opening in the market with NEST serving as the owners of the building. Then, a number of cards fell out of Apple Street’s financing deck.
At a February emergency meeting in South Cumminsville, members of the Apple Street Market board told more than 70 of the project’s 1,279 shareholders that a large chunk of the project’s financing had fallen apart just before implementation.
In late January, the Columbus-based Finance Fund withdrew $900,000 in seed financing from the project because Apple Street had not yet raised enough operating capital. But that was just the start of the bad news.
The market this month was supposed to close on New Market Tax Credits worth $1.5 million in financing for development costs. But PNC, the investor in those credits, is withdrawing from many of its 2019 new market projects due to devaluation in the credits caused by tax reforms passed by Congress in 2017.
The Cincinnati Development Fund holds the credits. Because of the financing difficulties, CDF must allocate them to other projects, though Apple Street organizers say CDF now has a new round of credits available.
“We’re in a totally new situation at this moment,” Barker said at the time. “Losing that tax allocation is a very big deal. Grocery stores in low- to moderate-income neighborhoods — while they can be very successful long-term — they need subsidy in the short term.”
The loss of funding came after the market spent $377,000 between June 2014 and January of this year on expenses like paying three employees (including $130,000 to a general manager over that time); conducting outreach efforts, a market study and retail planning; paying for design and engineering costs; and paying membership dues to Associated Wholesale Grocers, a major cooperative food wholesaler.
The loss of funding from the tax credits toppled another domino. NEST said the lost financing forced its hand to release a request for qualifications for other developers interested in the building.
NEST will announce the developer it selected in the coming days, Thomas says, and is focused on developing affordable housing at the site using LIHTC credits.
That too could be difficult, however. Last year, Cincinnati opted into a program through the Ohio Housing Finance Agency, which administers the federal credits, called FHAct50, which allowed the city to choose a single neighborhood — Over-the-Rhine — to receive LIHTC subsidies outside the state’s normal competitive process. In return, it gave up scoring advantages afforded Ohio’s largest cities in that process.
In recent years, Cincinnati has lagged behind Ohio’s other major cities when it comes to applying for and winning the credits, and its participation in the FHAct50 program could make it more difficult for developers outside of OTR to win the credits.
Thomas, however, says NEST is committed to pursuing the credits.
“It’s no secret that LIHTC is highly competitive,” she says. “That’s why we’re pushing for a 2020 application. That remains the focus. We have a lot of work to do along the way… community engagement, design. Everyone’s goal is the highest subsidy possible, because we know that’s what the neighborhood needs. We selected our co-developer based on our notion of wanting a true community partner. We’re prepared for what we have to do to make the right thing for the site, even if it’s not on the first attempt.”
She said that NEST, Apple Street and the developer should know in two to four weeks whether it will be feasible to incorporate the projects.
Meanwhile, Apple Street says it is bouncing back from its funding fallout and securing contributions that will help it put financing back together.
“The financial picture is pretty positive overall,” Barker said last month. “We had a goal to get to a million dollars (raised from members) by September. We’re close to $800,000.”
Last month, organizers announced the market effort had been tapped for an $80,000 grant from the United States Department of Agriculture’s Health Food Financing Initiative.
The co-op effort is one of 23 initiatives receiving an inaugural round of funding from the USDA program, which is aimed at expanding access to fresh food in areas where its availability is limited. Ten of those projects, including Apple Street, will receive financial help totaling $1.4 million. More than 240 applicants from 46 states were vying for the grants.
Reinvestment Fund, a national financial institution that administered the grants, says they’re about revitalizing communities in an equitable way.
“Access to healthy food is about more than making sure all Americans have easy access to nutritious, affordable food — it is also about strengthening local economies and community infrastructure,” said Reinvestment Fund President and CEO Don Hinkle-Brown in a news release. “The response to this funding opportunity is indicative of the immense need and the innovative approaches communities are undertaking to support equitable access to fresh, healthy food for everyone.”
The former Save A Lot location is more or less the only place available in Northside right now that would work for the market, Barker says, since getting supply agreements with the market’s choice wholesaler AWG requires a larger building than most other locations would allow.
“We’ve looked at a lot of spaces,” she says. “There is not another adequate space in Northside at this time. That’s not to say nothing would open up in some period of time. We also did market studies in some other areas that didn’t work out as well as this site.”
The grocery initiative’s last market study, conducted about a year ago, also led Apple Street to revise its business plan somewhat, Barker says. Boosters say the market’s conservative sales projections set it apart from Clifton Market, which struggled with sluggish sales.
“As a result of that particular study, we reduced our projections slightly,” she says. “They’re even more conservative now. The Save A Lot made $65,000 a week. We’ve reduced our projections to less than that — $61,000.”
Apple Street still faces hurdles, however, including raising enough money to unlock the financing it will need to move forward. How much money the market will ultimately need to raise a bit of a moving target, Barker says, since it isn’t clear yet exactly how much its portion of a shared project could cost.
In the meantime, all parties are trying to see how the pieces could fit together.
“They have wonderful momentum,” Thomas says of Apple Street. “It’s amazing to see people rally around this. But a ton of work remains.”
This article appears in Sep 11-18, 2019.