Food City Gets $6 Million Corporate Welfare

by Lewis Loflin

In another dirty backroom deal hidden from the public Food City will receive $1 million from Washington County taxpayers (the funds will be borrowed and cost over $2 million) and another $3 million from the Virginia Tobacco Commission. This is to help them move their corporate offices a few blocks down the street in Abingdon. They claim they will "retain" 350 jobs and are supposed to hire 25 new people. Thus officials proclaim this as 375 new jobs.

No they are not new jobs, but simply moving jobs around within the community, clearly against Tobacco Commission rules. Were they blackmailed for the funding on some threat they would relocate the company elsewhere? Who knows with no public records and the people and press barred from knowing the details. There's also rumors they got the old Johnson Memorial Hospital for nothing after they just spent $175 million to move to a new location in I-81.

Update December 28, 2011. The full extent of this latest backroom deal between Washington County, the Town of Abingdon, and K-VA-T (Food City) has been revealed. To quote the local press,

That incentive package consists of a $3 million grant from the Virginia Tobacco Commission and another $3 million worth of incentives from Washington County and the town of Abingdon. The county, in addition to $1 million in cash, is providing a special $650,000 redevelopment tax credit over 15 years.

The new corporate headquarters is to be built on the site for the former Johnston Memorial Hospital, which is being demolished. The Washington County Board of Supervisors voted in the fall to create the tax credit, which applies exclusively to the 19 parcels that make up the former hospital campus, in light of the K-VA-T project...

According to a resolution passed by the board of supervisors in December, in exchange for the $6 million incentive package, K-VA-T's investment in the building must top $20 million, and the company must continue to employ at least 375 people, with a quarterly payroll of more than $4 million...

In other words they created a special tax exemption just for this company. That is why Southwest Virginia is called the most corrupt part of the State. This again was conducted in secret and we still may not know all the costs of K-VA-T moving their offices around in the same town. Continue to employ? What the hell happened to the 25 new jobs this was supposed to create? One can also bet the employment provisions will never be enforced.

December 10, 2011 the Bristol Herald Courier is reporting the Haven of Rest Rescue Mission (, a shelter and residential rehabilitation center in Bristol, Tennessee just received a generous donation of $12,596.94 from Steve Smith, Food City's president and CEO. On the same day the Greenville Sun is reporting "Holston Home Receives Donations Of $22,596 From Food City." To quote,

Holston United Methodist Home For Children was presented with two checks totaling $22,596 on Friday, including $12,596 from the "Food City Family Race Night" benefit concert last Aug. 25 in Bristol..."The passion for this organization just exudes from him," said Steven C. Smith, president and CEO for K-VA-T Food Stores, owner of 105 Food City outlets in the tri-state region, including two in Greene County.

I guess Steve is feeling real generous from his very profitable grocery chain. I'm a regular shopper at Food City myself, but lately prices have been climbing steeply I seldom shop there today. Perhaps it's to pay for their new store on Euclid Ave. in Bristol, Virginia that will locate across the street from their old store. The City isn't saying yet what kind of "incentive package" (corporate welfare) if any they are getting. Every hotdog stand seems to get a taxpayer incentive package if they have the political connections.

Spare me the "jobs retained" nonsense, if those 25 new jobs ever materialize that's a cost of $160,000 per job. Giving is such a wonderful thing, but receiving can really pay off for Mr. Smith. For the record, according to The New York Times corporate welfare costs state/local taxpayers over $80 billion a year.

Update December 2013: Our good fiends at Food City-KVAT announced their part time employees (7800 of 13,000) to 28 hours or less per week. This was to evade Obamacare. Mr. Smith is the typical example of how business operates in this community. Also note I longer shop at Food City - after their remodeling campaign food prices are simply to high for us to afford.

Professor Larry Sabato:
"The most corrupt region is Southwest Virginia"

Operation "Big Coon Dog" took place in Buchanan County when a group of contractors and County officials conspired to rip-off government money related to clearing flood damage to the Hurley community. Convicted of racketeering and other charges, about 16 people were sent to prison. That was only one in a string of corruption cases across the region due to the secrecy they operate under and a general culture of corruption in the region due to being a giant welfare state.

At the time the Bristol Herald Courier in the article "Former special prosecutor, analyst cite past corruption," (6/26/04) notes these comments from U.Va. government professor Larry Sabato and from lawyer Gerald Gray about political corruption in Southwest Virginia:

"I have family in Southwest Virginia and I love Southwest Virginia, and it's painful to accept one reality. . . . The most corrupt region is Southwest Virginia. Over the years, more indictments for political and public office corruption have happened in this region than all other parts of the state combined."