The New Race to Take on Food and Pharmacy Deserts
How to stop chain stores from cutting off communities.
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Last week, the Washington State House Committee on Consumer Protection held an initial hearing on a bill that is part of a rapidly-expanding effort to tackle the problem of food and pharmacy deserts. Were it to become law, the bill would make Washington the first state to ban a tactic that big box retailers use to deprive communities of grocery stores and pharmacies: Restrictive land covenants, or deeds that specify that a property abandoned by a big retailer can’t host a new grocery store or pharmacy.
But Washington has some stiff competition in the race to become the inaugural state with such a ban: In Rhode Island, Lt. Gov. Sabina Matos has been aggressively pushing legislation of her own, and I know some other large states have bills in the drafting stage. (Stay tuned!)
As I’ve written before, these efforts address a serious problem: Big box stores and major retailers and grocers routinely employ restrictive deeds and sales contracts stipulating that, when they sell or otherwise abandon a store, no new grocery store or pharmacy can utilize that vacant property. Some of these restrictions last 10, 15, 20, or even 50 years, meaning a community can be deprived of a store on that site for a generation.
Research shows that food deserts are the result of corporate power and consolidation, which allow dominant grocers to ignore underserved areas in the name of driving business to existing stores elsewhere, and make it impossible for small, local entities to get into the market and compete. Restrictive covenants, which are also known as “negative use” restrictions, are one of the most obvious and effective ways in which that power manifests.
As the International Association of Assessing Officers, a trade group for property assessors, says, “It is certain that deed restrictions, by design, are imposed to limit competition and force a change in highest and best use.” Indeed, that’s the whole point of restrictive deeds: To ensure that a dominant retailer can abandon a property and drive business to its other already existing locations without fear that a new store might come in and vie for local business.
A 2010 report said that Walmart alone had 250 properties locked down under restrictive deeds. One law professor referred to these restrictions as “scorched-earth covenants,” because the retailers that employ them “are metaphorically salting the fields as they retreat to the suburbs to make sure that no other supermarket can spring up and sell food at that location to local residents.”
Restrictive deed shenanigans aren’t limited to groceries: Retailers such as Walmart also use them to limit pharmacies, requiring that no other store providing pharmaceuticals can use the same location. Some retailers also simply buy up vacant land near their existing locations, never build on it, and then sell it on with a restrictive covenant as a proactive way to eliminate competition.
Again, this is all in the name of monopolizing local markets, excluding competition by rendering unusable the land on which a competitor might locate.
Since the 1950s courts have generally — though not always — upheld negative use restrictions, with judges insisting that grocers won’t open in certain areas if they can’t use restrictive deeds to safeguard their investments. So several cities, including Chicago, Madison, Wisconsin, and Washington, D.C., have made these kind of restrictive deeds illegal, saying the only time a dominant retailer can impose one is if they are literally moving to a new location in the same neighborhood and intend to open that new location within a short window of time.
In response to an investigation by then-Washington State Attorney General Bob Ferguson, who has since won election to the state’s governorship, several cities in that state — Bellingham, Kent, and most recently Seattle — have taken the same step. (Kent beat Seattle to it by just four days.)
While it’s great that several cities have taken such a step, a whole state implementing a ban would be a more significant one politically, as it would give other state lawmakers permission to pursue the same policy. As I’ve noted before, many lawmakers are hesitant to be the first in the country to implement a new policy, but are happy to do so once other dominos start toppling over.
Also, in elite policy circles recently there’s been some tension between the more anti-monopoly-inclined folks (like myself) and those in what’s known as the “abundance” movement — which focuses more on supply-side and regulatory restrictions instead of concentrated private power — over the role corporate actors play in limiting access to things such as housing, food, and energy.
Eliminating negative-use covenants should appeal to both camps, as it addresses an anti-competitive tactic typically (but not always!) used by large, dominant retail corporations, and frees up land for new developments that can be anchored by the sort of retail that enables walkable, transit-oriented neighborhoods.
Addressing anti-competitive tactics is also far superior to the usual policy response to food and pharmacy deserts, which is to throw tax breaks and other incentives at major grocery chains in an effort to bribe them into opening new stores, even though that approach has never actually delivered at any level of government. Instead, dominant grocers are happy to pocket massive subsidies and then simply close down the stores that received them once the public funding runs out.
To be clear, I’m not arguing that eliminating negative use deeds is the sole step that will prevent food and pharmacy deserts. Nothing is ever that simple. Doing so, after all, doesn’t address rampant consolidation in the grocery sector or the ability of dominant suppliers such as Pepsi to collude with big stores like Walmart to hike prices and reduce margins for other businesses. Nor does it address the power of pharmacy benefit managers to undermine independent pharmacies.
But it will certainly help, and I hope all the lawmakers who have introduced bills in their respective states this year feel some urgency to be the first to finish the job.
SHAMELESS SELF-PROMOTION: I was on NBC News to talk about how corrupt nondisclosure agreements help accelerate data center deals. You can watch it here.
SIMPLY STATED: Here are links to a few stories that caught my eye this week.
Entergy, a Louisiana electric utility, wants $237 million in tax breaks to build infrastructure to support a Facebook data center.
A new study finds “no clear evidence” that data centers support local tech industry jobs.
New Jersey Gov. Mikie Sherrill fulfilled a campaign promise by declaring a state of emergency and freezing utility rates.
“How the 2026 FIFA World Cup Will Cost Cities Millions”
The music platform BandCamp banned music “generated wholly or in substantial part by AI.”
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— Pat Garofalo
This came up when a YMCA abandoned a downtown location in Rochester, a devastating blow to the community. The media reported it cannot become anolther fitness center as part of the sale. But what about when tax dollars are involved in supporting these entities? It seems that if you get a PILOT or other massive subsidies, the public interest should outweigh these restrictions on property use.