New Haven Food Co-op - A Model for Downtowns

New Haven is the second largest city in Connecticut and the home to 5 universities and colleges, including Yale University, which is located in the heart of downtown. It is a city of 130,000 people with a very diverse population ethnically, racially and economically. Over 55,000 people live within downtown and its adjacent neighborhoods. Well-known as a “foodie” town, with more than 50% of its retail tenants being restaurants, New Haven boasts having invented the hamburger and is considered to have the best pizza in the country.

However, until recently New Haven was also a ‘food desert”, with only one large grocery store in town. New Haven has been a “food desert” for some time, so 6 years ago when the City of New Haven put out an RFP for the development of a large downtown parcel that hadn’t been developed in over 20 years; it mandated that a grocery store be located on the retail level. I applauded the city’s economic development administrator for having the forethought to make this requirement, but I was somewhat skeptical. After all, many urban downtowns much larger than New Haven had been struggling for years to interest a full scale grocery store (for example, in downtown Los Angeles it took more than 50+ years to get a supermarket to open and it’s only been open for about 4 years).

So let me tell you a little bit about the site, formerly a department store, and the development. The site was a 1.6 acre brownfield lot, located adjacent to a downtown train station, one block from the center of downtown, and three blocks from Yale University. In the 1960s, the site was razed and converted to a surface parking lot. It is also located in struggling section of downtown. The City chose developers Becker & Becker to develop a high density, mixed-use, transit-oriented project consisting of 500 market-rate and affordable residential apartments. This would be the largest private development project in the history of downtown New Haven.

The developer broke ground in late 2008 and was opened and renting to residents in late 2010. Notably, the building is LEED Platinum certified and uses 50% of the energy of a typical urban apartment building. In addition to a variety of energy efficiency features, it is one of first multi-family buildings to utilize a fuel cell CHP system to provide power, heat, and hot water to meet the building’s demand.

While Becker and Becker were building and renting (the building is currently fully occupied), they were also marketing to grocery store chains, including Whole Foods and Trader Joe’s, to no avail. Interestingly, during this time, the one supermarket in town, Shaw’s, closed its New Haven store, leaving the city without any supermarket for over a year (since then Stop & Shop has re-opened). Becker and Becker began to look at the food co-op model.

Based on City Market/Onion River Food Coop in downtown Burlington, VT, the developers worked with a dedicated community group, the Core Leadership Group, to start a co-op to locate in the 12,000 square feet ground level space. The demand for a full service grocery store became even more evident as the group worked on the project. The first month of the membership drive recruited 325 members; a good 1 ½ years before there was even a store! In addition to creating a membership based co-op, the developer and the Core Leadership Group had to raise $7,000,000 in start-up capital which came from the following sources:

- $4,000,000 from a 15 year- 5.1% loan from Webster Bank, which had an 80% USDA loan guaranty

-$1,500,000 in preferred equity (paying a 6.25% dividend) from local institutions and individual "social investors"

-about $150,000 from 750 member-owners investing $200 each

-the balance from a landlord tenant improvement (the landlord is a large pension fund) allowance and vendor credit and grocery free-fill

It took the developer and the leadership group (now the board) 1 ½ years to get the store opened, which it did in November 2011. It is a hybrid store with 15% conventional items, and 85% organic, natural, local or regional.

Anyone is able to shop at Elm City Market, but membership offers benefits such as patronage refunds, periodic discounts on select products, and year- end dividends once the store is profitable. Just a few days ago, a woman saved over $250 with her member discount! Elm City Market also accepts food stamps, gives membership discounts and offers other affordable options. It has hired 100+ employees and offers a very competitive salary and benefits package. The Elm City Market now boasts 1200 members and counting. In addition to grocery store items, the store caters to the downtown office and university population with convenience foods; pick up items, a 30 ft. hot bar, salad bar, sandwich bar and a burrito bar. It carries many of the downtown businesses’ specialties like bread from the bakery a few blocks away and homemade square donuts from a luncheonette around the corner.

The Elm City Market has been open for almost three months now and it continues to meet its sales projections. The neighborhood is seeing some new activity. There is interest from retailers to locate in the neighborhood. Developers are encouraged to build more downtown residential housing as they’ve seen 500 units so quickly absorbed into the market. Downtown New Haven has a high quality, healthy food option for its burgeoning residential population.

http://www.elmcitymarket.coop/