“It took a long time and a lot of hard work to make this new grocery store a reality,” said Unified Government County Administrator Doug Bach at the groundbreaking for the new grocery being built on the east end of downtown Kansas City, Kansas.
Community members in large number had certainly given up on the idea that a grocery would be built in what had for a long time been classified as a food desert. For their convenience, community members were forced to shop at dollar stores that lacked fresh produce and vegetables and many other healthy options.
Finally, last month, the Wyandotte Unified Government and its many partners on the project broke ground on what will be a 14,000 sq. ft. in the 500 block of Minnesota.
“Downtown KCK and the surrounding neighborhoods have been without a grocery store for far too long, but after years of effort by countless people, the UG is excited to see this project come to fruition,” said Katherine Carttar, director of economic development for the Unified Government.
A lot of parts came together in a unique structure to make the grocery a reality. The grocery store structure will be owned by the Unified Government. The UG has entered into an agreement with The Merc Coop, out of Lawrence, KS, to be the store operator. The three-year management agreement requires the co-op to pay property taxes, utilities, and includes hours of operation, services, community benefits and financial structure.
The Merc Coop is a community-owned cooperative business with 45 years of experience operating a grocery store. They are committed to building relationships through outreach, employing local residents with livable wages and benefits, and seeking feedback from the KCK community.
The Merc will operate a full-service store, with fresh produce, a meat counter, prepared food, a café, and other grocery staples.
“Our unique business model puts the needs of community members first. The vision is to create a welcoming, multi-cultural urban market, offering a variety of products that include conventional, local and organic choices,” said Rita York Hennecke, general manager of The Merc Coop. “Everyone is welcome to shop at the co-op and anyone can become an owner.”
Finding a store operator may have been tough, but financing the project required a lot of creativity.
Total development costs are estimated to reach $7.2 million with just short of half, $3.2 million, of the funding coming from the Unified Government Hotel Revenue Fund.
This is income that’s generated from a tax added to all bills for stays at hotels located within the Unified Government borders.
Another $1.6 million will come from sales tax and property tax from the Downtown Grocery Tax Increment Financing District, which was approved by the Commission in August 2018. Tax Increment Financing Districts (TIFs) are defined geographic areas, typically around a redevelopment or development project. The concept of a TIF is that because of the development/redevelopment project the value of the property included in the project and the surrounding area will increase.
Under a TIF, the “increased/additional” property and sales tax revenue in the TIF area is directed to pay back the city’s investment in the project.
LISC purchased $1.42 million in General Obligation Bonds issued by the Unified Government of Wyandotte County and Kansas City to provide funds to construct the grocery store. LISC is a community development financial institution was able to take advantage of Healthy Food Financing Initiative funding, a program established by the U.S. Health and Human Services Department to bring grocery stores and other healthy food retailers to underserved urban and rural communities.
The UG was able to take the funds generated by the sale of the General Obligation Bonds to leverage another financing tools — New Market Tax Credits — available for the project because of its location in a food desert. With the assistance of Sunflower Development Group, the UG received the tax credits allocated by the Central Bank of Kansas City that net nearly $1 million in proceeds. The federal tax credit program provides an incentive to invest in distressed Census tracts, giving investors a tax credit to offset their federal income tax.
We told you it was complex, however, what you really need to know as a citizen is that as long as the grocery store survives and generates the projected revenue, the taxpayers of the Unified Government really shouldn’t be directly on the hook to pay for the grocery.
What citizens should also hope for is that the public/private partnership will invigorate the east end of downtown and serve as a catalyst to bring additional investment into the area. Already, the University of Kansas Hospital has invested $60 million right across from the project.