Chasing a Midtown supermarket, St. Pete mayors missed signs of trouble

A customer surveys the cold drink selection at Three Brothers Groceries in St. Petersburg. Similar markets dot Midtown, where larger chain grocery stores have struggled.
A customer surveys the cold drink selection at Three Brothers Groceries in St. Petersburg. Similar markets dot Midtown, where larger chain grocery stores have struggled.
Published Feb. 7, 2017

ST. PETERSBURG — For the past 15 years, a key issue in mayoral elections has been the success of a single grocery store in the low-income, predominantly black Midtown community.

In a city where one in four residents is black, no mayor of St. Petersburg can get elected without the black vote. And few things mean more to key black leaders in the city than efforts to improve Midtown.

Since race riots gripped the area in 1996, there has been no more visible symbol of those efforts than the bids by Mayors Rick Baker, Bill Foster and Rick Kriseman to lure and keep a supermarket there, at 22nd Street and 18th Avenue S.

There also has been no city project in Midtown that has been more ill-fated than the grocery store in Tangerine Plaza.

Twice since 2005, major retailers have opened there, and twice they closed. Most recently, a Walmart Neighborhood Market opted to pull out last month, raising questions about whether the city will be able to attract another retailer to take its place.

A Tampa Bay Times examination of the collapsed grocery store deals shows that city leaders haphazardly pulled the initial arrangement together and then missed key opportunities to reconsider it.

City leaders entered into a deal in which a local businessman would build and then rent out space in Tangerine Plaza, even though he had never managed the lease of a grocery store before. Under the deal, the city owned the land, but the businessman, Larry Newsome, effectively served as landlord. He set the lease rates and kept the monthly rent payments from the grocery store to operate his own companies.

Then, rather than force him to abide by the original lease, the city allowed Newsome to change the terms in a way that left the city exposed if the store failed.

After Sweetbay, the first grocery store to try its luck in Midtown, pulled out in 2013, city leaders wooed Walmart despite clear signs Newsome was unable to pay his bills — and was running the management deal into the ground.

Three years later, the lease was in foreclosure and its future uncertain as Walmart was weighing whether to stay in Midtown or pull out. It pulled out in January.

Now the lease to operate the shopping center is set to be sold at auction in March, and Mayor Rick Kriseman's administration says it intends to get it back.

If they don't, whoever walks away with the lease will be able to move onto the city property and potentially operate a non-grocery business there, rent-free, until 2044. That's because Newsome, the original property manager, got a sweetheart deal — a 40-year lease at $5 per year that he paid up front.

Asked about the city's decision-making over the past 15 years, Kriseman acknowledged mistakes.

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"I think in hindsight, and again this is hindsight, you look at everything that happened and clearly there were things that were done or not included in an effort to get it there that probably shouldn't have been done," the mayor said. "There was such an overwhelming desire, I think, to get something for that community."

Midtown's residents are still among the poorest in the county, still among the least likely to own a car — and once again without a neighborhood grocery store.

Missed opportunities

City leaders would sink more than $2 million into it, but the plan to bring a grocery store to Midtown wasn't administered carefully from the start.

First, there's no record of city leaders ever doing a market study to ensure people in the area could spend enough money to keep a grocery store in business.

That's something other big cities do to measure risk in similar deals, said Donald Spivack, a retired deputy chief of the Community Redevelopment Agency of Los Angeles. "You get some sense as to where people are buying stuff now and how far are they traveling to get it," Spivack said. "If for no other reason to get a sense how risky the investment was, on the part of the public dollars they put in."

Instead of doing such a study, city officials said they met with potential grocers. Those grocers "indicated it would be a viable location," said Bruce Grimes, the city's real estate director.

After deciding to move ahead, the city awarded a lease requiring Newsome, a local financial executive, to develop city land into a shopping plaza in a deal funded through low-interest loans.

That entitled Newsome, who had never managed tenants in a large shopping center before, to 99 years of operating the new complex at a cost to Newsome of $5 per year.

Despite Newsome's inexperience, city leaders said they were reassured that several major development companies, including the Sembler Co., had signed on to his proposal.

But city leaders only reluctantly agreed to go along as Newsome started changing the terms of the deal.

Newsome's original lease included a promise that the grocery would never close. If it did, the city could take back its lease.

But Newsome told city leaders in 2005 that his prospective tenant, Sweetbay, wouldn't agree to those terms. He said he'd already negotiated a less-stringent deal that would allow the grocer to shut down without breaking its lease.

Grimes said was he taken by surprise. City leaders responded by reducing Newsome's lease from 99 years to 40 years. But they didn't hold him to the original terms. Instead, they essentially let him rewrite his own lease to be more lenient.

A decade later, Sweetbay had closed, Walmart had opened in its place, and city leaders knew Newsome was falling deeper and deeper into financial trouble, unable to pay the loans he had taken out to finance the shopping center deal.

Still, they didn't step in.

Instead, they stood by as he went into foreclosure. In August, they had to ask the City Council to set aside $2.2 million, in a bid to buy the lease back from Newsome's lenders.

City officials told the Times they "had no right or duty" under the lease agreement to monitor Newsome's finances.

In August, Newsome told City Council members he had asked Kriseman's administration for help and was refused.

Newsome couldn't be reached for comment despite repeated calls to his cellphone. His voicemail box was full.

Signs of trouble

Then, once the store was opened, city leaders put varying degrees of effort into checking up on the grocer.

When Sweetbay opened, Baker said his deputy mayor, Goliath Davis, kept close tabs on Sweetbay's daily operations. But Foster, Baker's successor, fired Davis in March 2011. Davis declined to comment for this story.

After Sweetbay left, a company spokeswoman told the Times that officials met with Foster in April 2011 and warned him business was bad.

Foster disputes that, saying he had no warning before Sweetbay closed in early 2013. He said the closing was part of a massive company reorganization.

After Walmart came in, history repeated itself.

Kriseman designated an economic development official to meet with Walmart managers. That official met with store officials regularly in 2014 and 2015.

During those two years, Walmart repeatedly told the official that they were struggling to make enough money, records show. In March 2014, two months after the store opened, Walmart representatives started telling the city that the store wasn't meeting its revenue targets in the last week of each month, according to the city's notes from the meeting.

They were still telling the city something similar 20 months later, when the store was described as "near the break-even point" in November 2015.

Three months after that, the city stopped having face-to-face meetings with Walmart.

Instead, Kriseman spokesman Ben Kirby said, "dozens" of phone calls were exchanged and city volunteers and officials were regularly at a police substation next door to the store.

Kriseman said he was surprised when Walmart ultimately left. He learned when the city received a "curt" fax, Kirby said.

Walmart declined to comment for this story. But in a meeting last month with state and local officials, Monesia Brown, a Tallahasee-based lobbyist for the retailer, said Walmart had no choice but to close the Midtown store. "It's not on the course we hoped it would be," she said. "We've tried everything we can do."

After riots convulsed St. Petersburg in 1996, Midtown residents began delivering city leaders with a consistent message: The community lacked basic services. It needed a bank, a post office and a grocery store.

"A grocery store was by far the first choice," said Rick Mussett, a former longtime senior city development administrator.

Making good on a promise to deliver a grocery store to Midtown gave Baker a lift in his re-election bid in 2005, when he carried 91 percent of the vote in the Midtown area.

There was no disputing that things in Midtown needed to be improved. The area was gripped by poverty and crime. Census records show that rates of car ownership in the area were lower than elsewhere in the city, meaning access to a neighborhood grocer was more important there than in other places.

But beyond the symbolism of the city investing in Midtown, it wasn't clear that adding a grocery store would do much to alleviate entrenched problems in the low-income area. Researchers have shown grocery stores have little effect on such larger problems.

A 2014 study of a newly opened grocery store in a Philadelphia food desert found that only one in four residents adopted it as their main grocer, and that it made no measurable change to their health, or fruit and vegetable intake.

Another study in a section of the Bronx, N.Y., found that 13 percent of people in the neighborhood reported shopping at a new supermarket after it opened.

Neither study identified the grocery store they studied, making it unclear whether either is still in business.

Poverty remains

In Midtown, little has changed since Tangerine Plaza opened, Census records show. Poverty rates remain stubbornly high, with as many as half of the households in the area adjacent to Tangerine Plaza living below the poverty line.

In 2013, while the city scrambled to bring Walmart into the space vacated by Sweetbay, a team at the University of South Florida St. Petersburg published a study on access to food in St. Petersburg's poor neighborhoods.

Their research showed that even with the Sweetbay grocery store open, many Midtown residents still had limited access to fresh, nutritious food.

The closure of Walmart didn't surprise associate professor of geography Rebecca Johns, who co-authored the study. The problems in Midtown, she said, came down to poverty. And being close to a grocery store does little to alleviate that, she said.

"There are underlying structural problems that need to be addressed," she said. "Bringing in private entities to solve it is just a band-aid."

With Walmart closing, City Council member Lisa Wheeler-Bowman, who was elected in 2015 and represents much of Midtown, said the failures of the grocery stores should be a lesson.

"Before we put anything in there, we need to get with residents and see what they want," Wheeler-Bowman said. "It's important we ask them this time. We always ask the community leaders, but we need to ask the regular people who are actually going to patronize these stores."

In the community, the reaction to the store's closing was mixed.

Some Midtown residents said they only rarely visited the Walmart. Frazier Williams, 57, said the closure didn't faze him. "I take a bus to the north end of town to do groceries" at the shops there, he said.

Willie Young said he avoided the Walmart even though he lives only a few blocks away, because he doesn't like the crowds there. He added that he shops for groceries just once a month, when he buys rice and chicken. "I eat cheap," he said.

Mohammad Ittayem, who runs a small meat shop not far from Walmart, said it didn't surprise him that Walmart was closing. "The area is just not big enough for big businesses and small businesses together," said Ittayem, whose shop also carries canned goods, sugary sodas, potatoes, lettuce, peppers and lemons. "I have loyal customers who come back here."

Others said the closure was the latest in a string of broken promises to Midtown.

"They promised to revitalize the Southside," said David Hughes, 52, who grew up in the Gas Plant neighborhood before it was demolished to make way for Tropicana Field. "That was a lie."

Others, like Charles Carter, said they'll miss the market sorely.

As news of the pull-out spread through the community late last month, Carter sat on a folding chair in front of his house on Queensboro Avenue, just around the corner from Tangerine Plaza, and reflected on what the closure meant for him.

A 75-year-old retired truck driver, Carter doesn't own a car, and the nearby market meant he could make regular, quick trips.

Now he'll have to take a bus to a more distant store and stock up on frozen foods.

"I'm going to have to buy more when I go shopping now, and it's going to have to last longer," he said. "I'm just trying to survive."

Contact Charlie Frago at Contact Nathaniel Lash at Contact Adam Playford at