Mayoral candidate Jeff Brown got $18.7 million in taxpayer support to open ShopRite stores in ‘food deserts’

Mayoral candidate Jeff Brown’s success opening ShopRite stores in so-called food deserts — low-income areas that lack access to healthy and affordable grocery options — is the central theme of his campaign.

But in speeches and advertisements, Brown usually leaves out one critical partner that made his efforts possible: taxpayers.

“My entire industry said it’s not possible to solve it,” Brown, a fourth-generation grocer and first-time candidate, said at a recent forum. “Well, I did it. I solved it.”

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He did not mention that his stores have received at least $18.7 million in public subsidies, according to state records and news releases announcing the openings of his stores.

In addition to that sum, which Brown confirmed, his stores have also benefited from other government support, including more than $300,000 in reimbursement for personal protective equipment during the height of the coronavirus pandemic and indirect help securing $28.9 million in loans. In addition, the property owners of several of Brown’s stores received public support that helped make the projects possible.

Brown’s groceries in underserved neighborhoods launched him into the public eye in Philadelphia, and earned him headlines as a do-gooder entrepreneur. They also led to his first foray into City Hall politics as one of the most visible opponents of Mayor Jim Kenney’s tax on sweetened beverages.

Brown is one of 12 Democrats running in the May 16 primary.

In interviews, Brown acknowledges that public subsidies were necessary to launch his stores in underserved areas.

“We spent a very small amount of public dollars to solve a big public problem using the free enterprise system in a very smart way,” he said in a recent interview at his campaign headquarters in Center City. “We’ve been extremely extremely careful about taking government money.”

But not everyone who was involved in the effort, which used state and federal subsidies as well as philanthropic funding, is happy about how Brown has portrayed his role in campaign ads and speeches.

The Fresh Food Financing Initiative, a groundbreaking program championed by then-State Rep. Dwight Evans (D., Phila.), launched in the early 2000s during then-Gov. Ed Rendell’s administration and became a national model. One top state official from that time said Brown’s campaign makes it seem as if he opened his stores out of charity, when he profited thanks to government subsidies.

“A lot of people watching this race see the altruism that he portrays himself with,” said the former official, who spoke on the condition of anonymity because of having to work with the next mayor’s administration. “There’s no mention of all the other people’s money that allowed him make to make his money.”

State Sen. Vince Hughes (D., Phila.), who helped secure funding for some of Brown’s earliest stores in areas without groceries, declined to comment on Brown’s campaign, but emphasized that the success of those stores was a group effort.

“Each one of these endeavors were done as a team, not as a solo individual, and the truth of the matter is it’s teams that win, not individual players,” Hughes said. “We need to understand that the success that has occurred with these supermarkets has been a result of everybody being a team to be successful.”

Groceries typically operate with very low profit margins of about 1% to 2%. But stores in poor, urban neighborhoods often operate with a 4% loss, Brown said. In Philadelphia’s case, that resulted in supermarket chains largely pulling out of disadvantaged Black and brown neighborhoods by the 1990s.

Brown said in the interview that government programs made it possible to break even by making up that gap in profitability. In addition to the Fresh Food Financing Initiative, Brown’s stores have received funding from the Pennsylvania Redevelopment Assistance Capital Program and the federal New Markets Tax Credit program.

“The whole thing boils down to — it’s not really racism, it’s really a gap, and this is what government does,” Brown said. “When the capitalist system fails to work, like in this case, the government intervenes to come up with an intervention because it’s causing more harm not fixing it than fixing it.”

Brown noted that, even with government assistance, he took significant risks in opening his first stores in underserved areas, with his business responsible for millions in loans and costly long-term leases for an unproven model. He and his family have invested or secured financing on the order of $150 million to $200 million in his business over the years, he said.

“This is my work,” Brown said. “This is the food desert work that took us from one of the worst cities in the country to one of the best.”

When he launched his mayoral campaign, Brown said he had offloaded the majority of his stake in the business to his family and would not collect a paycheck or be involved in running the stores.

The Food Trust, a Philadelphia nonprofit, kick-started the effort to tackle the region’s food deserts by convening meetings with government officials and supermarket proprietors more than 20 years ago. They found that living in an area without access to grocery stores can cut two decades off a person’s life, and that treating health issues for people with poor diets costs the economy billions.

The organization avoids using the term “food desert” in part because it implies that the lack of healthy food in certain neighborhoods is a natural phenomenon instead of the result of “structural racism and red-lining,” said Julia Koprak, the Food Trusts’ associate director for nutrition incentives.

“The lack of grocery stores didn’t exist in a bubble,” Koprak said. “They’re often neighborhoods that experience high rates of poverty and unemployment that have been part of communities being marginalized.”

The Food Trust’s work culminated in Evans’ Fresh Food Financing Initiative, a public-private partnership with the nonprofit Reinvestment Fund. And the first store was Browns’ ShopRite of Island Avenue in Eastwick.

In his autobiography, Evans credits Brown for immediately embracing the program when other supermarkets didn’t want to get involved.

“Once he got wind of our idea, Jeff made his own leap of faith: He began rehabilitating an old supermarket in southwest Philadelphia even before we had the funding set aside,” Evans wrote.

Evans declined to comment for this article, but said in a statement that he “appreciates “the many private-sector partners whose involvement has helped to make the Pennsylvania Fresh Food Financing Initiative a reality.”

“Support from the next mayor and city administration will be key to continued success in Philadelphia for these vital initiatives, and I would not want to politicize these initiatives by commenting at this time on the involvement of any of the current candidates for mayor,” Evans said.

ShopRite stores are owned in a co-operative model similar to franchising, while other grocery chains have a top-down corporate governance structure. Brown said that gave him the flexibility to explore a risky idea.

Brown says the first store’s success had two ingredients: securing public subsidies and being a smart entrepreneur, which in this case meant meeting the needs of the neighborhood.

He stocked the shelves with halal food and West African ingredients for the local Muslim and immigrant communities. He created a community room that could be used by neighborhood groups, and eliminated some security measures that were seen as patronizing, such as locking up health and beauty products.

“Basically, they gave us a wish list, and we did it all,” he said.

That success led Brown to open other stores in underserved areas. Brown’s company owns 12 stores. Of those, at least five received government economic development funding.

Brown’s stores raised his profile in Philadelphia years before he launched his mayoral campaign, and they helped him build relationships in diverse neighborhoods that are critical to his chances of winning.

Former first lady Michelle Obama, whose signature program was the “Let’s Move” campaign to combat childhood obesity, highlighted Brown’s efforts and helped launch a national version of the Fresh Food Financing Initiative.

Brown has included video footage of Obama praising him in campaign ads, a potentially significant feather in the cap of a white candidate hoping to win support from Black voters. Obama, however, criticized Brown through a spokesperson for ”manipulating old appearances” to make it appear that she was supporting his mayoral bid when she has not weighed in.

Brown made his first splash in city politics when he criticized Kenney’s beverage tax. After it took effect, he closed a ShopRite in West Philadelphia, saying the tax made it unprofitable by driving customers to the suburbs.

“I built these stores to help people live healthier, longer lives,” Brown said. “This is taking a success and destroying it.”

Since launching his mayoral campaign, however, Brown has said repealing the tax, which funds educational programs and improvements to rec centers, is “not a priority” if he becomes mayor.

“I don’t know that we can rescind it because of our financial situation,” he said last week.

Staff writer Anna Orso contributed to this article.