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Funding Sources For Healthy Food Retail : Category - Businesses

California Department of Housing and Community Development (HCD)

Enterprise Zone (EZ) Program

This program promotes business investment and job creation strategies in economically troubled areas through 15-year partnerships between local governments and private companies. There are 42 enterprise zones (areas targeted for economic revitalization) throughout the state. Incentives include tax credits for job creation and machinery purchases, deduction allowances for businesses and local lenders, preference on state contracts, and carrying forward of net operating losses for up to 15 years.

A number of incentives included in this program may benefit food retail development:

Eligibility: 

Both for-profit and nonprofit businesses located in a California EZ community are eligible for benefits.

California Public Employee Pension Funds

The California Public Employees Retirement System (CalPERS) created the California Urban Real Estate Initiative (CURE) in 1995 to focus investments drawn from its statewide employee retirement program into underserved California communities.  By 2005, CURE had $3.4 billion in total assets, $1.2 billion of which was invested in 12 different projects throughout California.

Eligibility: 

CalPERS works with local developers and nonprofit organizations on projects.

Project Example: 

Los Angeles, California
A partnership between CalPERS and the CIM investment group helped bring the first supermarket in 80 years to downtown Los Angeles.

U.S. Department of Agriculture (USDA)

Rural Development Value-Added Agriculture Producer Grants (VAPG)

VAPG may fund one of two activities: (1) developing feasibility studies or business plans (including marketing plans) to establish a viable value-added marketing opportunity for an agricultural product; or (2) acquiring working capital to operate a value-added business venture or an alliance that will allow agricultural producers to better compete in markets. Farmers' markets often sell value-added products as well as fresh fruits and vegetables, and add value to producer goods by providing a direct market for these products.

Eligibility: 

Independent producers, farmer and rancher cooperatives, agricultural producer groups, and majority-controlled producer-based business ventures are eligible.

Project Example: 

Milwaukee, Wisconsin: The Rainbow Farmer's Cooperative
The cooperative received $150,000 to develop a business marketing plan to support an innovative value-added venture that works with socially disadvantaged and limited resource producers by providing an alternative outlet for fresh and healthy food to urban and rural markets.

 

U.S. Department of Commerce

Economic Development Administration (EDA)

The Economic Development Association provides grants to communities to leverage commercial and industrial investment and job creation. It is designed to serve rural and urban areas experiencing high unemployment, low income, or other indicators of severe economic distress. The EDA has several grant programs that could support food retail projects.

Project Example: 

Mendocino County, California: Round Valley Indian Tribes Retail Project
The EDA awarded $437,000 for construction of a retail establishment to serve the Round Valley Indian Tribes, creating new jobs and generating private investment in excess of $1 million.

 

U.S. Department of Health and Human Services (HHS)

Empowerment Zone / Enterprise Community (EZ/EC) Program

The Empowerment Zone/Enterprise Community program directs federal funding to economic and community development projects in distressed urban and rural geographical areas. The program offers special tax incentives, local hiring incentives, and regulatory relief for businesses locating in a designated empowerment zone (EZ) or enterprise community (EC).

Eligibility: 

Communities and businesses located within a designated EZ or EC can obtain these benefits. To determine whether a business is located in a designated EZ or EC area, contact your local office.

Project Example: 

Harlem, New York: Pathmark Supermarket Complex
EZ/EC funds helped to create the East 125th Street Pathmark Project, a full-service supermarket completed in 1999. The project site is a city-owned parcel in Manhattan that created about 200 construction jobs and 275 permanent, unionized full- and part-time jobs, 75 percent of which were hired from the local community.

 

U.S. Department of Housing and Urban Development (HUD)

Renewal Communities (RCs)

Since 2002, HUD has designated 40 areas around the country as Renewal Communities (RCs), making them eligible for $17 billion in funds to stimulate economic development, affordable housing, and job creation. An estimated $6 billion in incentives are available exclusively to Renewal Communities, with another $11 billion available through Low-Income Housing and New Markets Tax Credits.

Eligibility: 

There are five RCs in California-in San Francisco, San Diego, Los Angeles, Parlier, and Orange Cove. Businesses of all sizes located within these RCs are eligible to receive incentives to open, to expand, and to hire local residents.

Project Example: 

San Francisco, California: Harvest Urban Market
The Harvest Urban Market is an 11,000-square-foot store that sits on the ground floor of an affordable housing development. The Citizens Housing Corporation and the Tenderloin Neighborhood Development Corporation secured a $4.6 million loan from the San Francisco Redevelopment Agency (SFRA) to purchase land for the market, housing, and a childcare center and after school facility. The Market also used a $1.2 million commercial revitalization deduction available to businesses locating in the renewal community to reduce its overall investment costs. In addition to fresh meat and produce, the market offers a variety of healthy, prepared meals that can be eaten onsite. San Francisco, California: Harvest Urban Market
The Harvest Urban Market is an 11,000-square-foot store that sits on the ground floor of an affordable housing development. The Citizens Housing Corporation and the Tenderloin Neighborhood Development Corporation secured a $4.6 million loan from the San Francisco Redevelopment Agency (SFRA) to purchase land for the market, housing, and a childcare center and after school facility. The Market also used a $1.2 million commercial revitalization deduction available to businesses locating in the renewal community to reduce its overall investment costs. In addition to fresh meat and produce, the market offers a variety of healthy, prepared meals that can be eaten onsite.

U.S. Department of Housing and Urban Development (HUD)

Rural Housing and Economic Development (RHED) Program

RHED grants are targeted at economic development and innovative housing strategies in rural areas. Two types of funding are available through this program:

Eligibility: 

Local rural nonprofit groups, community development corporations (CDCs), federally recognized Indian tribes, state housing finance agencies (HFAs), and state community or economic development agencies are eligible for these grants.

Project Example: 

Pendleton, Oregon: Mission Market
In 2001 the Confederated Tribes of the Umatilla Indian Reservation received a RHED grant of $400,000 to construct and operate a $983,600 grocery.

U.S. Department of the Treasury

New Markets Tax Credits (NMTC)

Through this program-one of the largest federal economic development programs-privately managed investment institutions known as community development entities (CDEs) make loans and capital investments to businesses in underserved areas. These designated CDEs must use at least 85 percent of these proceeds to make qualified low-income community investments. As of November 2007, the NMTC program had given 294 awards totaling $16 billion to CDEs. Loans and other funds available through these entities may vary.

Eligibility: 

An organization wishing to receive funds under the NMTC program must be certified as a CDE by the US Department of the Treasury. To qualify as a CDE, an organization must:

  • Be a domestic corporation or partnership
  • Have as its primary purpose serving or providing investment capital for low-income individuals or communities
  • Be accountable to low-income communities through residents being represented on a governing or advisory board

Private for-profit and nonprofit businesses in geographically targeted communities may receive loans from these CDEs.

Project Example: 

Milwaukee: Lena's Food Market
New Markets Tax Credits were used in 2005 to expand Lena's Food Market to an additional location by redeveloping a 33,000-square-foot building in Milwaukee with an additional 50,000 square feet of warehouse space.

Minneapolis: Midtown Global Market
The Market, which opened in 2006, is an 80,000-square-foot public marketplace where 50 local businesses offer a variety of internationally themed fresh and prepared foods. It supports local entrepreneurs and provides 200 permanent jobs. The NMTC program was essential in lending this project initial credibility and helping it attract additional private investment.

Philadelphia: Island Avenue ShopRite
ShopRite, a 57,000-square-foot supermarket, opened in 2005 with support from New Markets Tax Credits (as well as Pennsylvania's Fresh Food Financing Initiative). Most of the supermarket's 258 quality jobs, many with attractive employee benefits, are filled by local residents.

U.S. Small Business Administration (SBA)

Rather than offering grants, the Small Business Administration serves as guarantor of a variety of loans available to small businesses. The SBA also provides a range of services, including contract opportunities, counseling, and legal assistance. The SBA's primary lending program, the 7(a) Loan Guaranty Program, has a maximum amount of $2 million available to small businesses.

Eligibility: 

Small businesses (as defined by the SBA) may apply for these services. The SBA also has special assistance programs for women- and minority-owned businesses.

Project Example: 

Harlem, New York: Bravo Supermarket
The first black-owned supermarket in Harlem opened in the late 1990s with loan approval assistance from the SBA.