Albany’s South End grocery store defaults on loans, future in question
The future of Albany's South End Grocery may be in jeopardy after the store defaulted on loans.
When the Rite Aid store at 310 South Pearl Street permanently closed in 2018 it effectively rendered the long stretch of South Pearl Street in Albany's South End a “food desert” after stores McDonalds and Golden Fried Chicken also moved out. No longer was there a place residents could go to buy something to eat. Nowhere nearby to shop for bread, milk and other basic necessities.
In early 2021, the African American Cultural Center of the Capital Region announced plans to bring a full-service grocery store to the old McDonald’s site. The shop would offer fresh fruits and vegetables, meats, dairy, gluten-free and vegetarian products, kitchen supplies and hygiene essentials.
In December 2022, the South End Grocery opened its doors at 106 South Pearl. It was hoped that the Black-owned non-profit would stimulate the neighborhood economy, and the business appeared to be a beacon of hope for the local community of mostly low-income residents, including many seniors and people of color.
Today the grocery's future is up in the air. Travon Jackson, is president of BlueLight Development Group representing the African American Cultural Center of the Capital Region, which owns the store. He says he was surprised to learn from a newspaper that the shop was in financial trouble over defaulted loans.
"The article, I think, like everyone else, caught me by surprise, especially the tone and comments, [by those] who were supposed to be our partners at the county, the issues and challenges, of course, could never be a surprise to me," said Jackson.
Jackson says there was a "handshake agreement" with lenders to pause payments, in recognition of the limited availability of funds, the losing business model, and the Center's ability to subsidize it privately and charitably.
"We actually have three lenders, and they work under something called an intercreditor agreement. Essentially, all it says is that every action taken needs to be done in unison, agreed to by all three, which means one or two, can pocket veto any course of action simply by not agreeing to it or not enforcing it, which is how we ended up being able not to pay since February, because our private lenders agreed that we should be able to pause our payments," Jackson said. "Why would private lenders agree that someone could pause their payments? It's because the private lenders and the county knew that the county initially promised $640,000 to the project and their economic development department. That was on a commitment letter from our most sterling partners at the county, Executive [Dan] McCoy, as well as Legislative Chair [Andrew] Joyce. The Economic Development Department did not satisfy that commitment, and returned with only $200,000 of debt. Despite this we closed and bought the property anyway."
County Executive McCoy was not available for comment. Joyce still has faith in Jackson and the South End Grocery.
“We determined as we went through the process that that $600,000 figure (roughly) was not feasible," Joyce said. "And that's what prompted Travon to go to a lender and go to different organizations for the rest of the funding, but that was essentially just to let the Housing Authority know that we were interested in purchasing the property. Because we had heard that, you know, other individuals were interested in as well. And we wanted to signal our intent. But the amount that we settled on to purchase the property was determined feasible. And that's what prompted Mr. Jackson to work with lenders to get the remaining [amount] of the funding. But we've been committed to the project, from the get go, I remain committed to it.”
Jackson says after the initial funds were spent, all of the money to improve the property, operate the store and pay workers' wages came directly from BlueLight's pocket. Those workers are now gone, with Jackson, his wife and two sons staffing the grocery store.
"We are underbanked, underleveraged, no lines of credit, no operating working capital, no purchasing lines of credit," Jackson said. "And for us to be a charity and a nonprofit, it’s especially difficult because that means I pay cash for everything. And the only cash I have is for money I either directly fundraise or take out of my family's own pocket."
Jackson says if not for the necessity of obtaining the loans to launch the market, South End Grocery would be offering free nourishing food to neighbors.
The store closed in July, after an employee accidentally set off a fire extinguisher. It reopened in August with posted store hours Monday through Saturday 10 a.m. to 6 p.m. A sign on the door Wednesday said the grocery was closed for roof repair.
Jackson says he is pinning his hopes for the South End Grocery's future on Congressman Paul Tonko's grant commitment of $1.5 million for BlueLight to develop the South End Economic Development Center, a mixed-use community center and expansion of the African American Cultural Center. Jackson notes that BlueLight has committed to donate any and all federally eligible fees directly to the South End Grocery project. Tonko spokesman Jonah Cohen tells WAMC the grant is one of 15 local projects the Congressman selected to receive directed federal funding next year. Here's Tonko
“The appropriations committee to which I presented these projects have a very distinct and deliberate process and a use for the monies that accompanies that. And it's really governed by a lot of transparency and accountability. So, you know, any of these projects will get the hard programmatic efforts with their process. So, you know, I can't utilize the funds beyond their intended purposes,” said Tonko.
Cohen adds "the grant as well as funding for other Community Project Funding requests are contingent on Congress passing the 2024 federal budget, and negotiations on a final budget agreement are still at least a few weeks ahead of us." He says the grant is for BlueLight, specifically for the community center, and as such may not constitute allowable use of the funds for South End Grocery, something which has yet to be determined.
The Downtown Albany Business Improvement District did not have anyone available for comment.