Grocers Pursue Incentives to Open in South L.A.

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Major grocery store chains, under mounting pressure to open more stores in long-underserved South Los Angeles, are in turn pushing city officials for more incentives to do so.

Two reports released this month have called attention to the lack of grocery stores in South L.A. The reports have placed renewed attention on an issue that simmered after the 1992 riots shook the area.

One of the reports went further, calling upon city officials to enact regulations on the grocery industry to ensure that they locate more stores in the area.

Grocery chain representatives say they are looking to open more stores in South L.A., but that the lack of available land and a burdensome city entitlement process have complicated their efforts.

“We know there’s a market in South L.A.; it’s just hard to site and build stores there,” said Dave Heylen, spokesman for the California Grocers Association. “The city needs to do more to address these barriers with incentives, not more regulations.”

The association includes major grocery chains such as Compton-based Ralphs Grocery Co., a unit of Cincinnati-based Kroger Co., and Pleasanton-based Safeway Inc., parent of Vons and Pavilions.

Heylen said one association member

has been trying for two years to find a suitable site that’s large enough for a major grocery store and sufficient parking. Many parcels in South L.A. commercial corridors are too small.

City officials say they do offer incentives, such as one package the Community Redevelopment Agency has assembled specifically for major grocery stores and sit-down restaurants to open in South L.A. That package includes low-interest loans, “gap” financing to cover the period between initial approval and store openings, electricity discounts and expedited plan reviews.

City Councilmember Jan Perry, who represents much of the area, disputed the notion that there aren’t enough large parcels in her district.

“There aren’t many sites, but they are there,” Perry said. “We’ve been very aggressive in taking interested grocery store companies to some of the sites we do have available. Maybe some of the chains are simply not aware of what we have to offer.”

Perry said the bigger problem these days is the economic slowdown and the credit crunch, which she said has severely limited the ability of grocery store developers to get construction and gap financing.

Only a handful of grocery stores are either in the planning stages or under construction in South L.A. Farthest along is British-based grocer Tesco plc’s Fresh & Easy store. Construction began recently at the corner of Adams Boulevard and Central Avenue and the opening is scheduled for next year.

Terry O’Neil, a spokesman for Ralphs Grocery Co./Food 4 Less stores, said both chains are looking for sites, though none are scheduled to open this year.


Call for regulation

The limited progress in opening stores in South L.A. is not enough for community and local union activists, who have long complained about the lack of full-service grocery stores. The Alliance for Healthy and Responsible Grocery Stores formed recently to address this issue.

This coalition, along with the union-allied Los Angeles Alliance for a New Economy, has also been pushing the non-union Tesco to sign a community benefits agreement requiring the grocer to maintain certain pay levels for its workers and meet a set of environmental and health standards at all of its stores.

A report commissioned by the alliance issued earlier this month noted that there were 13 grocery chain stores and high-end food retail stores in five ZIP codes in West Los Angeles, but only four such stores in five ZIP codes in South L.A. The report said the lack of quality foods supplied by these major chains has led to high obesity rates in the area. Also cited were low-paying jobs and lax safety and environmental standards at the small grocery stores in the area.

The report called for increased regulation, which has often been a strategy union activists use to pressure companies or industries they are trying to organize.

Meanwhile, the other report released this month, from Washington D.C.-based non-profit Social Compact, argues that the U.S. Census Bureau has consistently understated incomes of South L.A. residents, in some cases by as much as 50 percent.

Greg Good, spokesman for the L.A. Alliance for a New Economy, said the new figures could make a big difference.

“Look, it can be just as difficult to find enough space in West Los Angeles as in South Los Angeles,” he said. “But the grocery stores always seem to find a way to build stores in West L.A. and not South L.A. Maybe this will help change the equation for them.”

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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