Property Tax Post: States Use Tax Breaks to Fight Food Deserts


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There’s not enough food in Washington, D.C. In a town that covers less than 70 square miles and is surrounded by some of the wealthiest communities in the country, it’s hard to fathom that food might be scarce. Unfortunately for some residents of the nation’s capital, affordable, nutritious food is hard to find. However, this—along with eligible property owners’ tax liabilities— may change soon.

Last month, Congress approved legislation passed by the D.C. Council and the city’s mayor in December that extends real property and personal property tax exemptions to supermarkets that remain or locate in certain areas designated as food deserts. Sales tax exemptions are also available for materials used to construct a supermarket in those areas.

A “food desert” generally refers to a geographic area, typically a low-income community, in which access to healthy and affordable food is limited. The Department of Agriculture’s Economic Research Service is responsible for measuring and mapping across the United States who is impacted by such limited access and where they live. In DC, food deserts are found in high-poverty neighborhoods like Wards 7 and 8, according to D.C. Hunger Solutions.

The District’s property tax code already provides real and personal property tax exemptions for up to 10 years to supermarkets located in areas deemed to be underutilized business zones. The recent law, D.C. Act 21-560, extends those exemptions to grocery stores located in additional areas of the city. The legislation’s stated purpose is to “provide[] a supermarket tax exemption to incentivize supermarkets to remain or locate in food deserts and provide fresh food options to District residents.”

In a further effort to promote better access to better food, D.C. Mayor Muriel Bowser signed and sent to Congress last month, legislation that encourages residents to establish food buying clubs and produce markets. If Congress approves the act, a 90 percent real property tax abatement is available to property owners in the District for the portion of their real estate that is used as an urban farm. The tax break is limited to $20,000 per tax year for each qualifying parcel of real property. The act defines an urban farm as property “that is used for growing, cultivating, processing, and distributing of produce” like fruits and vegetables, grains, nuts, seeds and even honey.

Washington, D.C. is not alone in the mid-Atlantic region to try to address food affordability and access concerns through tax incentives. Just two years ago, Maryland’s legislature authorized the city of Baltimore—only about 50 miles north of the District—to grant property tax credits to supermarkets that locate stores in “food desert retail incentive area[s].” As a result, Baltimore now offers a personal property tax credit of 80 percent for 10 years to supermarkets that locate or renovate in those areas in need.

The Centers for Disease Control and Prevention (CDC) issued a report analyzing 12 states (including the District) that have implemented initiatives, including offering tax incentives, to improve access to healthier food. Michigan, for example, provides a property tax exemption to “qualified retail food establishments,” which include supermarkets or grocery stores that sell affordable healthy food in food desert areas.

As the CDC report illustrates, policy makers have taken a number of approaches to try to expand their citizens’ access to healthier food, including providing grants, loans, and tax breaks to incentivize food retailers. State and local officials might consider another option: placing in state houses and city hall buildings publicly accessible “garden spheres,” created by the folks at IKEA and “designed to sustainably grow enough food for an entire neighborhood,” as the Huffington Post reports. It’s just an idea.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Is granting tax incentives an effective means of improving access to healthy, affordable food in food deserts and similarly challenged communities?

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By René Y. Blocker