Nick Swartsell

Despite a reputation as one of Cincinnati's hippest and most livable neighborhoods, Northside is lacking a fundamental feature: A place to get a bag of oranges, shampoo or some bread.

For five years, residents have been pushing hard to establish a cooperative grocery store in the community. But just as it looked like the project was about to become concrete, the effort has hit significant roadblocks with financing, its organizers say, and will need to retool if it is to continue.

At a meeting in South Cumminsville, members of the Apple Street Market board told more than 70 of the project’s 1,279 shareholders that a large chunk of the project’s financing has fallen apart just before implementation.

In late January, Columbus-based Finance Fund withdrew $900,000 in seed financing from the project because Apple Street had not yet raised enough operating capital. But that was just the start of the bad news.

The market this month was supposed to close on New Market Tax Credits worth $1.5 million in financing for development costs. But PNC, the investor in those credits, is withdrawing from many of its 2019 new market projects due to devaluation in the credits caused by tax reforms passed by Congress in 2017. CityBeat explored the ways in which those reforms could impact tax credits for affordable housing construction in this story.



The Cincinnati Development Fund holds the credits. Because of the financing difficulties, CDF must now allocate them to other projects, though Apple Street organizers say CDF could commit future tax credits to the project should it win a new round this year.

“We’re in a totally new situation at this moment,” Board President Kristen Barker says. “Losing that tax allocation is a very big deal. Grocery stores in low- to moderate-income neighborhoods — while they can be very successful long-term —they need subsidy in the short term.”

The loss of funding from the tax credits has potentially toppled another domino.

Northside’s community development corporation, Northsiders Engaged in Sustainable Transformation, last November received $500,000 from the City of Cincinnati to purchase the former Save-A-Lot at 4145 Apple St. that has been floated as the market’s home since the low-cost grocer pulled out of the building in 2013.

The building has been asbestos abated and the market was ready for construction, but now, with its plans in traction, NEST must release a request for proposals for other developers interested in the building. NEST’s deal with the city requires that the property be in development for a project that benefits the community within two years of its purchase date.

Apple Street could apply for that RFP, but it will need to raise money to build out the former Save-A-Lot, pay employees, stock the store and tackle other expenses.

So far, the effort has raised about $500,000 — $141,000 in owner shares, another $111,400 in owner loans, $85,000 in grants and donations, $30,000 in loans from institutions and $14,000 in sales. But it has spent $377,000 between June 2014 and January this year on expenses like paying three employees (including $130,000 to a general manager over that time); conducting outreach efforts, a market study and retail planning; paying for design and engineering costs; and paying membership dues to Associated Wholesale Grocers, a major cooperative food wholesaler.

The effort has about $120,000 left, most of it in the form of a $100,000 Interact for Health Grant that must be spent purchasing equipment.



At this point, the board says, investors would not be able to get their money back if the project ceased.

Apple Street Market needs $3 million to become a functioning, brick-and-mortar grocery store. A million dollars of that can come from debt, but another $2 million must come from grants, tax credits or new owner share dues, Barker says. In order to demonstrate that the project still has legs and open up financing opportunities like that presented by the Finance Fund, organizers say, it needs to raise $800,000.

“If we could get the money super-fast, by like June, we could have an incredible opportunity to get the (NEST) RFP,” Barker says. But that is a steep hill to climb.

How difficult would it be to raise the needed money? One-fifth of the project’s current owners would need to loan Apple Street an additional $3,200 to raise the necessary funds that way, organizers say. About 70 to 75 percent of the money raised from owners could be put into escrow, but the rest would not be returnable if the project failed.

Hanging over Apple Street, at least in the eyes of some skeptics, are the difficulties of another cooperative project, Clifton Market, a couple miles up the road. That market started out as a community-owned effort, but struggled with sales and debt and was eventually sold to a private owner earlier this year. Apple Street boosters have argued that their sales projections are much more conservative than Clifton Market's, and that their model is different.



The mood at the meeting about Apple Street's future was glum, but many in attendance felt the project isn’t dead yet.

“If you look at this community, it's doable,” one owner said. “Some folks here could really pull it off.”

The market’s bylaws did not allow for a formal vote on whether to continue moving forward with the project — that will come soon, organizers say. But the board did take a number of questions — mostly about fundraising possibilities and next steps — and attempted to feel out the temperature of the owners present. More than 60 green stickers lined a large sheet of paper hung on a wall that read “move forward.” Four owners placed red stickers on another sheet that read “stop.”

The diverse neighborhood has seen a wave of new real estate investment and development in the past few years but is still home to a number of low- and moderate-income residents. New and old residents alike live in a place many say is one of Cincinnati's food deserts. That, Apple Street boosters say, needs to change.



Heather Sturgill, a former Apple Street board member, pledged $100,000 from a retirement fund for the project, saying she wanted to invest in an alternative to large, corporate grocers that could bring living wages and fresh food to an under-served community. The nearest grocery, two miles away in Spring Grove Village, takes a ride on two separate Metro buses for most Northside and South Cumminsville residents.



“I know everyone out here is feeling like they’ve been punched in the gut. I know I feel that way,” she said, noting that the surrounding areas desperately need a grocery store. “But I think so many people in South Cumminsville and Northside are social-justice oriented. This project, to me, addresses so many social justice issues.

“This is frankly terrifying,” she said of the monetary commitment. “But I challenge everyone in this room to do what they can. We’re putting our money where our mouth is.”