Officials in Osceola have revamped a deal with a supermarket to help ensure it remains open and challenges the city’s description as a “food desert” under U.S. Department of Agriculture guidelines.
The city cut a check for $83,333 to the owners of Hometown Supermarket after a unanimous vote Monday night of the City Council to expand a 2018 deal that first drew the grocery to town, Mayor Sally Wilson said.
Such payments are legal after state voters’ approval in 2016 of a ballot measure to revise constitutional Amendment 82 of 2004, which dealt primarily with state financial incentives for so-called super projects. The 2016 amendment lifted all limits on those state incentives and also allowed local governments to help fund economic development with direct grants. Legislation this year eased the process further.
Critics of the 2016 measure — and of financial incentives in general — called it “corporate welfare.” The measure won about 65% of the vote, roughly the same percentage of support as the original Amendment 82 received.
Osceola, in Mississippi County, lost its Food Giant supermarket shortly after Christmas 2017. The store site, at the southeast corner of Keiser Avenue and U.S. 61 near downtown, remained vacant for some 10 months, until early November last year. That’s when investors and owners of Hometown Supermarket, 25 miles away in Lepanto, opened the Osceola store, lured there by the city’s incentives. Osceola has about 6,900 residents.
The 2018 agreement, broached by then-Mayor Dickie Kennemore and approved by the City Council, called for $75,000 to be paid to the supermarket’s owners this November, about a year after the store’s opening. Payments of the same amount would be made over the following six years, contingent on the grocery continuing to meet certain thresholds, including having the equivalent of at least 20 full-time employees.
The money was to come from surpluses of the city-owned electric company, not from general revenue.
Kennemore last fall said the revival of the grocery site was both an effort to help current residents and to attract new ones.
Wilson, who defeated Kennemore in his re-election bid last fall, said the City Council, after some discussion but no opposition, voted Monday to raise the annual grant to $100,000, with monthly payments of $8,333 to be made over the next five years and four months. The $83,333 lump-sum payment approved this week represented the first 10 months since the store’s opening.
Last year’s agreement hinged on the grocery investing at least $100,000 on equipment, machinery and improvements on the property, which is still owned by Food Giant. The requirement of at least 20 full-time-equivalent employees remains part of the deal, as well as a stipulation that all state, city and county taxes be paid.
Wilson said she and the council thought it was fairer and more helpful to the store’s owners to write them a monthly check to help with expenses, considering the investment they’d made last year just to open the store.
The contract also stipulates that the financial benefits to the city — such as revenue in payroll and sales taxes — be greater than the costs. The store’s adherence to the contract is subject to review by the city, and monthly payments can be withheld if there are any problems, Wilson said.
“We are really proud we were able to do this,” said Wilson, a civil engineer and owner of Sally Wilson Engineering who described herself as a proud shopper at the new Osceola market. “The council stepped up, and I’m happy for our residents.”
While the grant, by the technical wording of the law, is for “job creation, job expansion and economic development,” Wilson said there’s also a “quality of life” aspect to the city’s decision.
Wilson said her city has a few discount and convenience stores, a small “mom-and-pop grocery” and a Walmart Supercenter that’s on the western edge of town, near Interstate 55. But after Food Giant closed, access to fresh vegetables, fruit and meat became “extremely limited,” especially for the elderly and those without transportation, she said.
That made it important, she said, to work out a deal for Hometown Supermarket’s arrival.
“How do we ensure our residents can get fresh produce, fresh meat, fresh vegetables — a basic need for life?” she said.
She said she hopes the Osceola experience will lead to the Arkansas General Assembly passing legislation allowing specific tax incentives for supermarkets to move into “food deserts.”
The USDA defines a food desert as an area where “at least 500 people and/or at least 33 percent of the census tract’s population reside more than one mile from a supermarket or large grocery store.”
The Arkansas General Assembly this spring approved a bill adding “facilities for the retail sale of goods” to a list of projects eligible for local grants. Previous law cited manufacturing, production, recycling, technology, warehouse, job-training and industrial facilities, regional or national corporate headquarters facilities, and distribution and call centers.
Rep. Robin Lundstrum, a Republican from Elm Springs in Benton County, sponsored what is now Act 798 of 2019.
Lundstrum said Wednesday that she was proud to hear of the Osceola effort. “I know there are issues in small towns all over the state with grocery stores not being able to stay open,” she said. “It’s a good investment by the city, but it’s now up to the community to support it.”
Lundstrum said she wasn’t aware of any other projects similar to that in Osceola. The Arkansas Economic Development Commission also doesn’t collect information on similar local efforts since Amendment 82 was amended.
“[Act 798] just recently took effect,” she said. “I think there will be quite a few over the next six months to a year that will bubble up. A lot of people will be watching closely, to see how it works in the real world. It’s not a free-for-all; it’s taxpayers’ money. If it doesn’t work somewhere, [those officials] will be voted out. Voters are pretty savvy on that.”
Critics of the 2016 measure — and of financial incentives in general — called it “corporate welfare.” The measure won about 65% of the vote, roughly the same percentage of support as the original Amendment 82 received.