Nevada lawmakers this year initially approved $10 million to fund a loan program to attract grocery stores to underserved communities.

During the last days of the legislative session and the accompanying scramble among competing interests for funding, however, the money was taken out. As passed, Assembly Bill 326 instead relies on a combination of existing state and federal tax credits to attract financing for fresh food retailers to neighborhoods without grocery stores.

“This was the best method to move ahead with the bill and serve the most communities,” said Democratic Assemblyman William McCurdy, the bill’s sponsor. “I’m pleased with what we were able to do to make sure the intent of the bill remained intact.”

But without the additional sweetener of state funding, it is unclear how much investment will be attracted to efforts to establish grocery stores in low-income neighborhoods just by giving investors credits against their tax bills.

The United States Department of Agriculture has identified 40 food deserts in Nevada, with 154,623 Nevadans meeting the criteria of living in underserved communities⁠ — areas where a significant number (at least 500 people), or at least 33 percent of the population live more than one mile from the nearest supermarket, supercenter, or large grocery store in an urban area.

While campaigning in his North Las Vegas district last year, McCurdy said one of the top issues raised by his constituents was the lack of grocery stores and fresh food.

Food deserts are common throughout Nevada, not just in McCurdy’s district. In communities with limited access to nutritious foods, people often rely on fast foods, and populations in areas designated as food deserts tend to have higher rates of obesity and diabetes.

The original version of the bill, which included the $10 million financial assistance program, was co-sponsored by two Republicans, Assemblyman Jim Wheeler, who represents parts of Lyon, Douglas and Storey counties, and Tom Roberts, whose district is on the northwest edge of the Las Vegas metro area. Both districts contain census tracts identified as food deserts.

The original bill passed the state Assembly with only four legislators voting against it. The Senate approved the bill with only one legislator, Republican Ira Hanson, opposed.

“There is a shared belief that people deserve access to fresh food and I believe that is strongly represented in the type of support we were able to get as the bill made its way through the legislative process,” McCurdy said.

But in the Legislature’s final days, as lawmakers were juggling to make ends meet in the budget, the $10 million was amended out of the bill, leaving only language that clarifies grocery stores are eligible for an existing state tax credit program.

In the bill as enacted, the state tax credits would be allocated under the Nevada New Market Jobs Act (NMJA), a program established in 2013 to provide credit against insurance premium taxes in exchange for investing in “Community Development Entities (CDEs)” which then provide low interest loans to businesses located in economically distressed communities in order to create jobs and stimulate economic growth.

At present, the Nevada New Market Jobs Act has additional funding thanks to Assembly Bill 446, signed by Gov. Steve Sisolak, which provides an additional $200 million allocation to the program over the next 7 years.

New tax credit allocations will be available for distribution next year, according to Karen Schnog, the management analyst for the State of Nevada Department of Business and Industry, which administers and monitors the program.

McCurdy said the next step is to identify CDEs that will help funnel funds to fresh food grocers and work to inform any interested businesses about the program.

“This is where advocacy comes in,” McCurdy said. “I will look to play a part and help as much as I can to identify those who are most suited to utilize these tax credits in a way that’s going to benefit the most vulnerable populations.”

Grocery stores traditionally left out

Since the inception of the Nevada New Market Jobs Acts in 2013, there have been seven national CDEs that have participated in the state program. None have invested in fresh food grocers.

“I can tell you that for the Nevada program to date there have been no food grocer investments,” said Karen Schnog, a management analyst for the State of Nevada Department of Business and Industry. “Possibly this new bill adding them to the definition may encourage that.”

Bill Arent, the director of the City of Las Vegas Economic & Urban Development Department, which oversees the only Nevada based CDE— the Las Vegas Community Investment Corp— says an issue with national CDE’s is their lack of connection to the state.

“These national investors are based in LA, New York, Chicago, and they’re just not here week-in week-out in our community to understand our need for capital in certain projects and don’t have someone on the ground full-time working on developing these projects,” Arent said.

Rather than participating in the Nevada New Market Jobs Acts, the Las Vegas Community Investment Corp has relied on separate federally allocated new market tax credits. Arent said that while they have attempted to fund some fresh food grocers it has never panned out.

“It’s extremely difficult,” finding investors Arent said, describing the difficulty of using new market tax credits to finance grocery stores in low-income neighborhoods. “The grocery business is a low-margin business — high overhead, low returns. Nationally in the industry, the large grocers have gotten bigger and the small ones have generally been pushed out.”

“In Las Vegas, by and large, you have to truck a lot of the food in and there’s a big expense to that, so if you don’t have a certain amount of stores when you bring the trucks in, it’s just too expensive to do just for one store. That’s been a real barrier to entry to try and get fresh food to some of these underserved areas as well,” Arent said.

The U.S. Department of Treasury has allocated $45 million in New Market Tax Credits to Nevada through the Las Vegas Community Investment Corp since 2013, which has gone mostly to fund construction, including renovations for the West Las Vegas’ Westside Grammar School, the Nevada Supreme and Appellate Courts building in Downtown Las Vegas, the Blind Center of Nevada, the construction of a charter school in East Las Vegas, and the East Las Vegas Library.

“We are certainly looking to do projects in food deserts and fresh food programs,” Arent said.

“The bill helps. Anytime you have local or state government … bring incentives to the community I think it helps tremendously,” Arent said, adding they are working on combing the state and federal new market tax credit allocations in order to utilize resources more effectively. “The clarification that the state program can be used for fresh food retailers really helps.”