According to the Knoxville News Sentinel, the City of Knoxville's $4 million investment of local and federal taxpayer funds at the Five Points Village Plaza isn't paying off. Owners of a grocery store, the anchor tenant there, say that after only five months in operation they are losing money and will probably have to close the store by November.

This is surprising to me, and apparently a lot of other people. You'd think that people in the community would support a neighborhood grocery. Where are they shopping instead? And why?

You may also recall that the Five Points grocery ran into trouble once before, when the original investment/management team dropped out of the project just as it was being completed.

Maybe this is another clue why nobody seems to want to open a grocery store in the downtown area. The deal to open one in the former Watson's building on the Market Square seems to have evaporated.

More history of the Five Points grocery after the jump...

From the City of Knoxville:

Thompson's BDT Development & Management LLC, as majority owner of the Village Plaza, recruited the family-owned Cox & Wright Food Center to operate the grocery store as a joint venture with his company. The firms are buying out the interest of D&W LLC, which was to have been a joint venture of John Davis and Jim Woods.

"We have all worked very hard to see this project through, and I'm committed to completing this project and running a successful community-based grocery store," said LeRoy Thompson, president of BDT Development & Management. "We are focused on getting the doors open as quickly as possible."

John Davis, and his wife, Pilar, which had operated the Express Mart on the site, were among those who sold their property to Knoxville's Community Development Corporation for the redevelopment project.

Mr. Davis partnered with Jim Woods, president of the grocery chain Smith and Woods, to operate the grocery store. Mr. Woods was to provide initial working capital and management expertise. Woods notified the City of Knoxville and Davis that financial and health issues prevented Mr. Woods from continuing with the project.

"I am disappointed that I have had to end my involvement in this project, but I simply had no choice," Mr. Davis said. "I did not have the financial backing or the management expertise to do this project alone.

[..]

"Our first goal in supporting this project has been to create a community grocery store that provides quality service, specialized products and creates employment opportunities," said Renee Kesler, the City's director of community development. "Secondly, we wanted to encourage strong minority participation and ownership in the project. I believe this new agreement will accomplish both goals."

From the Knoxville Community Development Corp.:

The grand opening of Five Points Plaza was held May 5th. This is a public-private partnership that is the cornerstone of what is hoped to be a larger development of the Five Points area (where our Walter P. Taylor Homes property is located). The key business housed here is a Metro Village Market IGA. This market is a welcome addition to an area where there has been almost no available shopping unless community residents travel several miles out on Magnolia. KCDC’s main role in the project was preparing the Five Points Comprehensive Redevelopment Plan and assembling the land for the Five Points Village Shopping Center, which involved relocating community residents and clearing the site for redevelopment. KCDC conveyed the land to the Industrial Development Board, enabling them to provide a P.I.L.O.T. (payment in lieu of taxes) as a subsidy for the project. The Grocery Store project also received about $4 million in subsidy from the City, County, and Federal Government.

From the City of Knoxville:

"The redevelopment of this block is intended to stimulate additional investment in commercial and residential property in this area," Mayor Haslam said. "This project became a reality because of the collaboration among many institutions and individuals. By continuing to work together, Five Points can be a thriving community once again."

The project has received funding from the federal Empowerment Zone program, city of Knoxville, Knox County, KUB, and a federal grant awarded to the Partnership for Neighborhood Improvement. The developer, BDT Development & Management LLC and grocery store operator, BDT-Cox & Wright Partnership, are also making significant investments in the center.

Congressman Duncan stated, "This is a great day for our citizens. I believe the revitalization of the Five Points area will bring jobs and services that will greatly benefit the community's growing economy."

From a HUD press release:

"All this doesn't work unless we shop here," Knoxville Mayor Bill Haslam told the crowd of more than 400 area residents, elected officials and businesspeople that turned out for the ribbon cutting and speech-making. "Buy your groceries here and buy your gas here - the folks at Pilot will be all right without it," the Mayor said with a smile, referring to the convenience store and travel center business his family founded and of which he was president before becoming mayor.

State rep. Joe Armstrong, whose district includes the Five Points neighborhood in East Knoxville, led the crowd in the Pledge of Allegiance and then added his "pledge to shop at the village." Congressman Jimmy Duncan (R-2nd Dist) also spoke, calling the shopping center representative of the good things happening in Knoxville. Success of the new shopping center will lead to continued investment and revitalization of Five Points and other inner city communities, several elected officials said.