How to Get a Grocery Store: The Greensboro Cooperative Approach

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Lee1Previous posts to this blog looked at food deserts and development finance tools that can be used to address food deserts. This post provides an in-depth look at the story of a cooperative grocer in Greensboro that aims to eliminate its neighborhood’s food desert and spur economic development.. The Korean photographer Daesung Lee recently drew attention to the desertification of the Mongolian steppes through a series that juxtaposed billboard-sized photographs of once-lush grasslands against backdrops of the arid landscapes that have replaced them. The process of desertification is at once gradual and abrupt: Lee’s landscapes emphasize the nomadic people and animals that the receding grasslands have now stranded. One thinks of the familiar images of desperate polar bears perched on shrinking ice sheets.

Like desertification, disinvestment from a community doesn’t happen overnight. The withdrawal of businesses, jobs, and resources from low-income neighborhoods happens over time, though large events can precipitate and even hasten greater disinvestment. Ultimately, this process strands residents in deserts not so different from those Lee captures: harsh, inhospitable, and barren but for the people who still live there. Looking at an image of an actual desert is a reminder of the aptness of the term “food desert” for the areas in our communities—there are many—in which residents lack access to healthy and affordable food.

For residents near Phillips Avenue in northeast Greensboro, one event that highlighted, and further fueled, community disinvestment was the closing of the Winn-Dixie grocery store in 1998. The Winn-Dixie, in the Bessemer Shopping Center on Philips Avenue, was the only grocery store within miles, and its sudden shuttering was a landmark event in a prolonged disinvestment from northeast Greensboro. It was also the moment at which Phillips Avenue became—overnight—a desert.

gccIn Deasung Lee’s photos, there is a sense of optimism—though the landscapes Lee shoots are barren, their juxtaposition with vibrant past scenes and resilient residents gives hope that just as this area became a desert, it has the potential, and the stubborn human spirit, to be something more. It’s a similar feeling standing in front of the vacant Phillips Avenue shopping center these days. Outside, a sign proclaims, “Coming Soon! Renaissance Shops at Phillips Avenue.” Nearly 17 years after losing its grocery store, residents are hopeful that the shopping center is finally coming back to life, anchored by the Renaissance Community Coop, or RCC, a community-owned grocery store (a past blog post introduced the RCC story). It’s no coincidence that “renaissance”—meaning a rebirth or renewal—was the name chosen for the shopping center; nearby residents hope the center will revitalize the entire neighborhood.

The City of Greensboro purchased the shopping center soon after Winn-Dixie left in early 1999 and attempted to attract a grocery tenant. As the anchor site sat vacant, other retailers in the shopping venter gradually left; currently, only a Family Dollar remains in the 45,000 square foot center. Beginning a few years ago, residents started to talk about how they could bring a grocery store back to the shopping center. (For accounts of how the community came together and built the political will for a revitalized shopping center, see the RCC website or this article from YES! Magazine. For information on the statutory authority with which local governments in North Carolina may be able to support efforts to bring grocery stores to food deserts, see this past blog post.) The RCC case could be instructive as a community-organizing model. It’s also useful due to its innovative financial structuring, which may make the grocery store—which seemed like a hopeless pursuit for well over a decade—finally a reality.

The RCC isn’t just any grocery store: it will be cooperatively owned. In addition to community ownership of the store, residents hope community ownership of the entire shopping center might be possible at some point in the future. Community ownership, they hope, will ensure that the center is home to businesses and services that are needed by the neighborhood, and that local money stays where it’s desperately needed: in the neighborhood. People have floated ideas about banking services, health services, and restaurants.

With technical assistance from the Greensboro-based Fund for Democratic Communities (F4DC), RCC organizers created financial projections that put the cost of a store at approximately $1.8 million. In meeting with and studying other cooperative stores, they had learned that co-ops that didn’t start large enough often fail. At $100 each, it would take about 18,000 individual ownership shares to finance the hard and soft costs for the store. To renovate the space and open its doors, the RCC would need a blend of owner equity, debt, and subsidies and other forms of assistance from committed partners.

As of early June, the RCC had received commitments for or raised about $1.5 million—nearly 85 percent of its goal. F4DC’s support has been critical. In addition to advising community members on cooperative businesses, the foundation has provided $140,000 in direct expenditure support for the RCC, and will guarantee a certain amount of both owner equity and owner loans. The RCC development budget calls for about $100,000 in owner equity and $200,000 in owner loans; F4DC has guaranteed a zero percent interest bridge loan for the balance if either amount falls short at the time the cash is needed to open the store.

As of June 4, the co-op has 555 equity owners, and has raised $109,000 in owner loans. In addition to this investment by community members, the RCC has raised about $25,000 through grassroots fundraising, including $16,000 from a crowdfunding campaign on the website IndieGoGo.

Another critical partner to the RCC is the Self-Help Ventures Fund, part of Self-Help Credit Union, based in Durham. In January 2015, Self-Help purchased the shopping center from the City of Greensboro for $490,000, with the intent of leasing the grocery site to the RCC. Self-Help will also redevelop the rest of the center and seek to attract community-minded tenants to the retail spaces that flank the RCC’s future home. Self-Help has pledged $350,000 in the form of a leasehold improvements allowance, a substantial increase over the standard tenant improvement allowance.

Another $658,000 committed to the RCC comes from financial institutions and foundations. Northcountry Cooperative Development Fund, in partnership with Natural Capital Investment Fund and National Cooperative Bank, has committed $225,000 (NCDF is also a funder of the recently-opened Durham Co-op Market). Loan and grant commitments from various local and regional foundations make up an additional $233,000.

Regenerative Finance, a group of young investors with an interest in supporting local economies, has committed a “patient” loan (the loan has a term of at least 11 to 15 years) of $200,000 to the RCC. The structure of the deal is unique: Regenerative Finance will invest the money in The Working World, a loan fund that provides investment capital to cooperative businesses, and The Working World will pass the money to the RCC. The promissory note between the RCC and The Working World stipulates the RCC will only repay the loan once the store is profitable and has paid back all its other debts. During the period in which the store is profitable but has not fully repaid the loan, the RCC will pay five percent of its pre-tax profit to The Working World. According to Marnie Thompson, co-Managing Director of F4DC, “These royalties will be held by The Working World until such time as we have set up a revolving loan fund of our own in Greensboro, and then these royalties will form the kernel of that new loan fund.”

Finally, public partners that understand the importance of neighborhood economic development and food security are playing a critical financing role. In April, the Greensboro city council voted to award the RCC a $250,000 grant. Now, the RCC hopes that a matching grant from Guilford County will close the financing gap and allow construction to begin.

The Greensboro RCC story, to the extent that it has been written, is about creative community revitalization. Revitalization is the opposite of desertification—it’s the process by which a neighborhood, or a food system, or a landscape, comes back to life. For residents of northeast Greensboro, and the many communities around the country that are following and learning from the RCC story, this case provides reason to believe that vision, hard work, savvy organizing, and strong partnerships can help a community come back livelier than ever.

Andrew Trump is a student in the Master of City and Regional Planning and Master of Public Administration programs at UNC-Chapel Hill and a Fellow at the Development Finance Initiative.

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