Contracostatimeslogo BYLINE: James Temple, CONTRA COSTA TIMES

Through the first half of the past century, Fruitvale was a bustling retail corridor, commonly called Oakland’s second downtown.

But it suffered the fate of many inner-city districts in the post-war period: middle-class suburban flight with businesses on their heels. The neighborhood fell into disrepair, crime skyrocketed and bars went up on remaining shop windows.

Then, sometime in the late 1990s, conditions began to shift. Violent crime fell and businesses started to return or expand.

Today, Fruitvale is in full recovery. Banks, a grocery store and fresh produce markets now dot the district, offering residents fiscally and physically healthy alternatives to the payday advance lenders and expensive corner stores that had cropped up.


Retail vacancy along International Boulevard, the main thoroughfare, is less than 1 percent, compared to 50 percent in the early 1990s, according to the Unity Council, a nonprofit community development group. Property values are rising faster than in any other section of the city.

Fruitvale’s revitalization was no fluke. It was the result of an ambitious, long-term and far-reaching effort by residents, nonprofit groups, city leaders and businesses to clean up the neighborhood.

The successful effort also offers a model — although not the only one — for countering the high cost of being poor: the heavy burden on low incomes levied by the payday lenders, rent-to-own shops, pawn brokers and liquor stores that thrive in poor neighborhoods.

Today’s story, the last in a three-part series on the high cost of being poor, explores approaches to two of the most common reasons the poor pay more: the lack of low-cost financial services and the scarcity of affordable and nutritious food.

Some are working well, some have hit stumbling blocks. For others, the results remain to be seen.


Kayode Powell lived on the streets of Oakland from 1989 to 1992. This October, he and his wife, Charlene, unlocked the doors to their second home and made preparations to rent out their first.

Powell largely attributes his transformation to a mentor who helped him find a job, a "relationship with Jesus" and his wife.

But he also credits Operation Hope, a so-called social investment bank that opened a Fruitvale branch in partnership with Bank of the West in 2003. Los Angeles-based Operation Hope provides credit counseling, small business training and home-buying guidance to poor individuals and families.

Traditional banks, even those advertising products for low-income borrowers, weren’t patient enough to work with a couple who first needed help fixing their credit, Powell said. But Operation Hope created a step-by-step plan to pay down their debt and boost their credit scores.

When the time was right, their counselors helped locate a lending agent willing to take some necessary extra steps, including a pitched battle with a title company over the home’s paperwork.Hope_client_kayode_powell_dangles_keys_t_1

"We don’t have a lot of liaisons and advocates in the financial world," said Powell, whose father is African-American and mother is Swedish. "They don’t talk Ebonics in the bank."

Many low-income districts don’t have traditional banks at all. This, and the fact that such banks often don’t provide products that meet the specific needs of the working poor, has allowed a host of second-tier financial providers to step in and exact high fees and interest rates from the customers least able to afford them.

Payday lenders, subprime auto and home loans, check cashing services and tax refund advances cost borrowers more than $25 billion per year, according to the Washington, D.C.-based Center for Responsible Lending.

Operation Hope is just one organization endeavoring to help the working poor escape these costs by drawing them into mainstream banking.

Monument Futures, a nonprofit economic development group in Concord, shows area immigrant day laborers how to set up checking and savings accounts and provides them additional financial training. The goal is to help these workers establish credit early on, to enable home buying and entrepreneurship down the road.

The San Francisco-based California Reinvestment Coalition, meanwhile, is lobbying traditional banks to offer two products that it believes will more effectively compete with check cashers, payday lenders, pawnshops and the like.

The so-called essential bank account is a "gateway into the financial mainstream," with features designed to accommodate and attract the 20 percent of the population who can’t or have chosen not to open bank accounts.

It offers free money orders in lieu of personal checks, which many landlords in poor districts don’t accept, and can be opened using only foreign government identification papers such as Mexico’s Matricula Consular.

The "quick consumer loan" product, meanwhile, is designed to lure customers away from payday lenders, where they are often caught in a cycle of debt.

It charges a 30 percent annual percentage rate, versus rates of more than 300 percent at payday lenders. It also provides loans for two months, compared to what is o
ften two weeks or less, and doesn’t allow customers to take out loans for a third consecutive month.

"In some ways, I think we agree with the payday lenders when they say that the banks are not providing that service and that there is a demand for short-term loans," said Kevin Stein, associate director with the California Reinvestment Coalition. "We think that the banks should be providing that product at a lower cost to the benefit of consumers who have a need for short-term financing."

To Stein’s surprise, several banks have agreed to test these products in pilot programs. Citibank has opened several hundred bank accounts with most of the "essential" features in San Diego, and Washington Mutual has agreed to roll out a nearly identical product statewide sometime next year.

It remains to be seen how effective these products will be at steering low-income consumers away from predatory institutions. In any case, they are of little good if the banks don’t first locate branches in neighborhoods where residents most need them.

Consequently, the city of Oakland has employed outreach, incentives and legislation to lure traditional banks back into poorer neighborhoods.

City Council President and mayoral candidate Ignacio De La Fuente, for instance, sponsored a law, passed late last year, that limits the concentration of payday lenders by requiring that new operations be at least 1,000 feet from an existing check cashers or payday lenders and 500 feet from schools, banks, recreation centers and liquor stores.

The rationale is that banks are less likely to locate in neighborhoods already awash with competitors.

In the past 18 months, Oakland has landed a handful of new banks in East Oakland and Fruitvale.

"The more that we encourage and the more that we attract the traditional lending institutions," De La Fuente said, "the more we can get our citizens into the mainstream financial system."


Studies have found that the food sold at the corner markets and liquor stores that populate poorer neighborhoods charge on average 10 percent more than traditional supermarkets.

Because there are few traditional grocery stores in these areas and because food typically represents an individual or families’ second-largest expense, this can add up to a big difference. It leaves less money for other goods and services, or for simply getting ahead.

The obvious solution is attracting supermarkets to these neighborhoods, as San Leandro-based developer Gray & Reynolds Properties Inc. was eventually able to do with Lucky Stores (later acquired by Albertsons) at the Fruitvale Station Shopping Center. The site, at Fruitvale Avenue and the Nimitz freeway, is where the massive Del Monte Cannery closed decades earlier.

"It was a really tough sell at the time," company co-owner Daniel Gray said. "Oakland for years was not a success story."

He helped make the case with an economic analysis that showed incomes in the area, as well as other demographics prized by retailers, were better than companies had thought.

Still, security remained a big concern. Gray & Reynolds only clinched the deal after agreeing to build a fence around the development and taking on a higher-than-normal portion of security costs. To land another retailer at the development, the company provided a rare "out" clause in the lease if shoplifting rates exceeded a specified level.

More than a decade after opening, the center has been a success, with very little tenant turnover. Meanwhile, the broader revitalization helped draw back several markets and a handful of ethnic produce vendors to the Fruitvale area.

West Oakland, however, stands in stark contrast.

Liquor and convenience stores crowd the neighborhood, charging anywhere from 30 to 100 percent more than supermarkets, according to People’s Grocery, a community nonprofit group. The closest traditional store is the Pak n Save Foods in neighboring Emeryville.

A handful of organizations are working to address the district’s lack of affordable food on several fronts, with mixed results.

A West Oakland task force — including the city of Oakland’s Human Services Department, Councilwoman Nancy Nadel’s office, the Alameda County Public Health Department and others — has focused on improving the aesthetics and selection at corner markets.

They are encouraging liquor store owners to become "green grocers" that carry more fresh produce and healthy fare, as well as less liquor and tobacco. The nutrition division of the Public Health Department has offered to train owners on how to buy, store and display fruits and vegetables.

California Food Policy Advocates suggested just such a solution in a January 2003 report. It noted that attempts to draw supermarkets into poorer districts have largely proven futile, as the economics often don’t work, so the best approach is to improve the businesses already there.

But the West Oakland initiative has hit several obstacles, not least losing critical state funding several months ago. Separately, many stores are reluctant because tobacco and liquor have a high mark-up and long shelf life, while selling produce can be risky.

"They feel that because the food is so perishable, if it is not bought in one to two to three days, they take a loss on it," said Valerie Street, a Public Health Department employee who works with the task force.

One store that had some initial success, Friendly Market on West Street, lost momentum after the business changed hands.

Two other local organizations are working to meet West Oakland’s food demands directly. The Mandela Farmers Market, held Saturdays at 7th Street and Mandela Parkway, features fresh produce grown by the region’s African-American farmers. The People’s Grocery conducts classes on healthy cooking, grows fresh organic fruits and vegetables and sells them and other merchandise from a "mobile market."

This red and purple biodiesel bus — whose sound system, freezers and refrigerators are powered through solar panels — sells healthy and affordable groceries at appointed spots throughout West Oakland three days a week.

The inspiration for the 4-year-old People’s Grocery was the "epidemic" proportions of food-related diseases in West Oakland, including diabetes, high blood pressure, cancer and heart disease, said co-director Malaika Edwards.

"When people have access to healthy, affordable food and start monitoring their diets, their health improves dramatically," she said, noting that a handful of people in their cooking classes have slashed the number of medicines they take.

The classes and bus are both gaining popularity. But none of these solutions can serve more than a small fraction of the area’s more than 25,000 residents, a quarter of whom still depend on food emergency programs.

"It’s definitely a very small portion of what the community needs in terms of access to healthy, affordable food," Edwards said.

It’s difficult to lure back the businesses necessary to address such problems short of a broader revitalization effort, said Arabella Martinez, former CEO of the Unity Council, who is widely credited as instrumental in Fruitvale’s resurgence.

The 15-year running effort there started with crime watches, park improvement projects, neighborhood clean-up efforts and facade and street improvements. Before they could lure back the businesses residents needed, they had to counter the perception of Fruitvale as a dilapidated and crime-ridden district, Martinez said.

"Our work with merchants, work with the city, work with parks and work with the Police Department, all these things really changed the physical, the economic and the social dynamics of the neighborhood,
" she said.

James Temple is a staff writer for the Contra Costa Times. Reach him at 925-977-8534 or


For more information on housing, including affordable housing, equity-stripping scams, housing discrimination or reverse mortgages, contact ECHO Housing at (510) 581-9380, Housing Rights Inc. at 510-261-2298 and the Housing Authority of Contra Costa County at (925) 957-8000.

For legal help, contact the Contra Costa Senior Legal Services at (510) 374-3712 or (925) 706-4852, the Law Center in Walnut Creek at 866-543-8017 or the John F. Kennedy Elder Law Clinic at (800) 696-5358.

For information about nutrition and healthy food preparation, call the People’s Grocery at (510) 652-7607, the Alameda Public Health Department, nutrition services, at 510 595-6458 or the American Dietetics Association at

For help choosing a housing contractor or to report problems with one, contact the California Landscape Contractors Association at or (916) 830-2780, or the Contractors State License Board at or (800) 321-2752, or the Better Business Bureau at

For information about or to report elder abuse, financial or otherwise, contact the Alameda County Department of Adult and Aging Services at (510) 577-1900 or the Contra Costa County Department of Aging and Adult Services at (877) 839-4347.

To report fraud or scams, contact the Alameda County District Attorney’s Office at (510) 272-6222 or the Contra Costa County District Attorney Office at (925) 646-4500.

For advice on financial fraud, predatory lending and tax return preparation, contact Consumer Credit Counseling Services of the East Bay at (866) 889-9347, Consumer Action at (415) 777-9635; or ACORN in Oakland at 510-834-4111.

For assorted social services, including for the elderly, hungry, homeless, immigrants, refugees, victims of violence, at-risk youth and those living with HIV/AIDS, contact Catholic Charities of the East Bay at 510-768-3100 in Oakland, (925) 825-3099 in Concord, (925) 308-7775 in Brentwood and 510-234-5110 in Richmond.

THE HIGH COST OF BEING POOR: Many of America’s working poor have been forced into a separate and unequal economic system, in which — in a cruel twist — those least able to afford it pay higher prices for goods and services than their more fortunate fellow citizens. This series examines that disparity and looks at some possible solutions.

Sunday: A lack of other options often compels the poor to use high-cost financial services such as payday lenders and check cashers.

Monday: The poor pay more — or a significantly higher portion of their income — for everyday expenses such as housing, transportation and food.

Today: Advocacy groups, businesses and politicians are pursuing or proposing various solutions to the high cost of poverty.

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