The study recommends that the city open some kind of community store or stores – and finds that such stores could even be profitable. It also suggests that the city not try to run a supermarket itself, but partner with a for-profit operator, a nonprofit operator or a cooperative.

In an interview with the Tribune, city policy director S. Mayumi “Umi” Grigsby said internal and external task forces will work to develop a proposal for one or more stores. The city would then be prepared to apply for funding for such a project, including from a new $20 million state grocery initiative.

“We firmly believe that public action can improve access, affordability and services in areas where government should really step in and lead the way,” Grigsby said.

If Chicago successfully opens a grocery store, it would be the first major U.S. city to do so. Several smaller communities have already tried public stores. Earlier this year, Atlanta’s mayor put out a social media call for businesses interested in partnering on a municipal grocery store.

Chicago’s mayors have struggled in the past to achieve long-term success in their efforts to improve grocery store accessibility in the South and West neighborhoods, where private grocers have been forced to close a number of supermarkets.

Former Mayor Rahm Emanuel, for example, brought Whole Foods to Englewood with the help of $10.7 million in city grants, but the store closed after six years. Under former Mayor Lori Lightfoot, the city dabbled in land acquisitions, buying the site of an Aldi in West Garfield Park, which closed in 2021. The city is in the process of selecting a developer for the site where a grocery store will be built.

Some of the models and funding options proposed in the report reflect strategies the city has tried in the past, but others are likely new to Chicago – such as the possibility of the city offering direct grants to the grocer if needed.

The report states: “Decades of structural racism, segregation and disinvestment have led to reductions in population density, disposable income and community infrastructure,” making it difficult to attract and retain grocery stores in certain neighborhoods.

“Groceries retailers are typically unwilling to take on the market risk that these neighborhoods pose. Since there is no policy or commitment in the private sector to provide sustainable food options, the city must play a role in creating and maintaining food services in neighborhoods where there is no access to food,” the report said.

The grocery business is notoriously tough: operators have to contend with razor-thin margins, high overhead costs and perishable inventory.

Early critics of the city’s original announcement that it would explore creating a municipal grocery store expressed skepticism that Chicago would have the capacity or expertise to operate a store. The feasibility study echoes those concerns, noting that the city has no experience in the grocery business of its own. The study instead recommends that the city use public funds to partner with an outside operator to run a municipal store. For example, the city could act as a landlord and offer rent or utility subsidies to the independent grocer.

“We always wanted more of a collaborative scenario,” Grigsby said.

Last fall, the city said the feasibility study would be released to the public early this year. Grigsby said the city is still planning to do that, but declined to give a specific date.

The study suggests that a network of three stores could provide cost savings to the city, depending on the size. While a network of stores could cost more up front – $26.7 million, the study estimates – the project’s overall profit margin could improve. Grigsby said the city hopes to open more than one store.

The report, prepared by researchers at economic consulting firm HR&A, does not suggest specific neighborhoods or locations where one or more stores could be located, but it weighs the pros and cons of scenarios in which the city would partner with either a for-profit operator, a nonprofit operator or a cooperative.

While commercial operators bring expertise and experience from the food industry, the report says, they are “profit-driven and risk-averse” and have struggled to operate sustainably on the South and West Sides in the past. Nonprofits, the report says, are mission-driven and therefore likely to try to stay open even when budgets are cut. Cooperatives are described as having strong ties to the community, but are difficult to replicate and expand to multiple neighborhoods.

Andrew Lamas, a professor in the urban studies program at the University of Pennsylvania, described the feasibility study as “particularly open-minded” in an email to the Tribune.

“Typically, market studies of this type are biased in favor of for-profit operations,” Lamas wrote. “But given the long-standing success of the food cooperative sector in this country, it is commendable that this study advises Chicago to consider not only for-profit operations but also nonprofit and cooperative operations.”

In one of the scenarios proposed in the report, the city could pay a developer to build a new grocery store on city-owned land. In another scenario, the city could occupy an existing store space and sublease it to a private operator, with the city and operator each paying a portion of the rent. Both scenarios, the report says, would require high upfront costs, but these could be mitigated by accessing public grants and tax breaks.

“It’s really not a radical departure from what we’re already doing,” says Ameya Pawar, a former city councilman and senior adviser to the nonprofit Economic Security Project, which worked with the city on the report and commissioned HR&A.

“That might mean free rent – OK, that comes at a price, of course – but the investment in free rent or no property tax also pays off, in the form of increased life expectancy or a lower rate of chronic diseases. That return is exponential compared to today’s spending.”

Some of the tax incentives or grants – such as tax increment financing funds, community development grants and new market tax credits – listed in the report as possible sources of financing for a city-owned business have been used by the city in the past with varying degrees of success.

After Whole Foods announced its withdrawal from Englewood two years ago, Lightfoot’s administration provided $13.5 million to help grocer Yellow Banana reopen a Save-a-Lot in Auburn Gresham that closed in 2020 and renovate five other Save-a-Lots it already operated on the South and West Sides.

The Lightfoot administration first announced the Yellow Banana grant two years ago, but all six stores remain closed and the company is now targeting opening dates later this fall, Save-A-Lot spokeswoman Sarah Griffin told the Tribune.

Yellow Banana – which has also dismissed criticism from civic groups and residents who say the stores sell substandard and even spoiled products and provide a poor shopping experience – has about eight months left to open those stores and comply with its redevelopment agreement with the city. Griffin cited construction and equipment delays and said two stores have been without power for two months after vandalism.

The city awarded Yellow Banana another $4.87 million grant early last year to open a new Save-A-Lot in Altgeld Gardens. That funding still has to go through the City Council approval process, according to Peter Strazzabosco, spokesman for the Department of Planning and Development.

The city has also awarded public funds to nonprofits; for example, the Go Green Community Fresh Market in Englewood opened in 2022 with the help of $1.75 million from the Neighborhood Opportunity Fund.

After Aldi closed a store in West Garfield Park in 2021, the Chicago City Council authorized Chicago to purchase the property for $700,000 with public funds. A future redevelopment agreement with the developer selected for the site will include the sale of the property to the developer, Strazzabosco said.

A public option would be different from other strategies the city has pursued in the past, in part because the city would assume responsibility for keeping the store running, says Andrea Batista Schlesinger, managing partner at HR&A, who oversaw the team that wrote the report.

“Instead of figuring out how to force the private market to support marginalized groups, the city is entering the industry itself,” said Batista Schlesinger.