II 112th CONGRESS 1st Session S. 1926 IN THE SENATE OF THE UNITED STATES November 30, 2011 Mrs. Gillibrand (for herself, Ms. Stabenow, Mr. Harkin, Mr. Tester, Mr. Franken, Mr. Casey, Mr. Sanders, Mr. Lautenberg, Mr. Schumer, Mr. Brown of Ohio, and Mr. Merkley) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry A BILL To amend the Department of Agriculture Reorganization Act of 1994 to establish in the Department of Agriculture a Healthy Food Financing Initiative.

1.

Short title

This Act may be cited as the Healthy Food Financing Initiative.

2.

Findings

Congress finds that— (1)(A)the United States faces an obesity epidemic in which 30.5 percent of children ages 10 through 17 are overweight or obese; (B)the obesity epidemic contributes to increasing rates of chronic illness, including diabetes, heart disease, and cancer; and (C)the obesity epidemic cost the United States $147,000,000 in medical expenses in 2008, and this cost is expected to rise in the future; (2)the Reinvestment Fund estimates that almost 25,000,000 people in the United States live in low-income communities with limited access to supermarkets and grocery stores; (3)more than 130 studies show that— (A)access to healthy food is particularly a problem in hundreds of low-income, rural, and urban communities, as well as communities of color in the United States; and (B)the opportunity to access healthy food in is linked to lower levels of obesity, diabetes, and other food-related chronic illnesses, leading to better health outcomes; (4)(A)children from low-income families are twice as likely to be overweight as children from higher income families; and (B)African-American and Hispanic children are more likely than Caucasian children to be obese; (5)studies show that when healthy foods are available, people will increase consumption of fruits and vegetables; (6)leading public health experts, including the Centers for Disease Control and Prevention, the American Heart Association, the Institute of Medicine, and the American Public Health Association, agree that providing improved access to supermarkets and grocery stores is needed to improve public health and prevent obesity; (7)developing high-quality fresh food retail outlets creates jobs, expands markets for agricultural producers in the United States, and supports economic vitality in underserved communities; (8)(A)supermarkets and grocery stores often face barriers to opening stores in food deserts; (B)the supermarket industry operates on an historically thin profit margin; (C)according to the 2011 National Grocers Association Independent Grocers Survey, the average net profit margin before taxes for independent grocers in 2010 was 1.08 percent; (D)urban operators face barriers, including— (i)increased real estate costs or limited availability of suitable commercial real estate in the community; (ii)increased employee training needs and costs; (iii)elevated security expenses; and (iv)often zoning restrictions; (E)supermarkets and grocery stores in rural food deserts also face barriers, including increased food delivery costs due to distance from distributers, dispersed customer base, and low volume; and (F)access to affordable capital is a significant problem for both rural and urban projects; (9)by providing seed capital and technical assistance, the Federal Government, through time-limited investments, can— (A)attract private sector investment to create and retain much-needed jobs; and (B)provide long-term, sustainable solutions to the decades-old problem of limited access to healthy food in underserved, low-income urban and rural communities; and (10)legislation establishing a national fund modeled on the successful Pennsylvania Fresh Food Financing Initiative will help address the obesity epidemic while also creating much-needed jobs and economic revitalization, and solving the healthy food access problem in hundreds of communities across the United States.

3.

Healthy food financing initiative

(a)

In general

Subtitle D of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 6951) is amended by adding at the end the following:

242.

Healthy food financing initiative

(a)

Purpose

The purpose of this section is to establish a program to improve access to healthy foods in underserved areas, to create and preserve quality jobs, and to revitalize low-income communities by providing loans and grants to eligible fresh, healthy food retailers to overcome the higher costs and initial barriers to entry in underserved, urban, suburban, and rural areas. (b)

Definitions

In this section: (1)

Community development financial institution

The term community development financial institution has the meaning given the term in section 103 of the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4702). (2)

Food access organization

The term food access organization means a nonprofit organization with expertise in improving access to healthy food in underserved communities. (3)

Initiative

The term Initiative means the Healthy Food Financing Initiative established in the Department by subsection (c)(1). (4)

Local funds

The term local funds means the allocation of national funds and any other forms of financial assistance (including grants, loans, and equity investments) that are raised by partnerships to carry out the purposes of this section. (5)

National funds

The term national funds means any Federal appropriation made to carry out this section and any other forms of financial assistance (including grants, loans, and equity investments) that are raised by the national fund manager to carry out the purposes of this section. (6)

National fund manager

The term national fund manager means a community development financial institution in existence as of the date of enactment of this section and certified by the Community Development Financial Institutions Fund of the Department of the Treasury that is designated by the Secretary to manage the Initiative for purposes of— (A)raising private capital; (B)providing financial and technical assistance to partnerships; and (C)funding eligible projects directly at the request of partnerships to attract fresh, healthy food retailers to underserved urban, suburban, and rural areas, in accordance with this section. (7)

Partnership

(A)

In general

The term partnership means a regional, State, or local public and private partnership that is organized to improve access to fresh, healthy foods by providing financial and technical assistance to eligible projects. (B)

Inclusions

The term partnership includes— (i)an unit of State, local, or tribal government or a quasi-public State or local government agency; (ii)a food access or community health organization committed to improving access to healthy foods; (iii)a community development financial institution or other organization that is capable of administering a loan and grant program in accordance with this section; and (iv)other organizations interested in improving access to healthy foods in underserved areas. (c)

Establishment

(1)

In general

There is established in the Department a Healthy Food Financing Initiative. (2)

Management

Not later than 1 year after the date of enactment of this section, the Secretary shall select and enter into a grant agreement with a national fund manager who shall be responsible for the management of the Initiative nationally. (3)

Eligible projects

(A)

In general

Subject to the requirements of this paragraph, the national fund manager shall establish the eligibility criteria for projects to be assisted by the Initiative. (B)

Requirements

To be eligible to receive assistance through the Initiative, a project shall— (i)include a supermarket, grocery store, farmers market, or other fresh, healthy food retailer; (ii)consist of a for-profit business enterprise, a member- or worker-owned cooperative, or a nonprofit organization; (iii)meet the eligibility criteria established under this section; (iv)continue to be a viable business enterprise with a financial viability plan; (v)require an investment of public funding to move forward and be competitive; (vi)operate on a self-service basis; (vii)in accordance with subparagraph (C), expand or preserve the availability of healthy, fresh, high quality unprepared foods, particularly fresh fruits and vegetables, in underserved areas; and (viii)agree to accept benefits under the supplemental nutrition assistance program established under the Food and Nutrition Act of 2008 (7 U.S.C. 2011 et seq.). (C)

Requirements

(i)

Definitions

In this subparagraph: (I)

Perishable food

(aa)

In general

The term perishable food means food that is fresh, refrigerated, or frozen. (bb)

Exclusion

The term perishable food does not include canned goods. (II)

Staple food

(aa)

In general

The term staple food means food that is a basic dietary item, including bread, flour, fruits, vegetables, and meat. (bb)

Exclusions

The term staple food does not include snack or accessory food (such as chips, soda, coffee, condiments, and spices) or ready-to-eat, prepared food. (III)

Variety

The term variety means an assortment of different types of food items. (ii)

In general

For purposes of subparagraph (B)(vii), to expand or preserve the availability of fresh fruits and vegetables in underserved areas shall mean, with respect to a project, that the project maintains a store that— (I)carries a full line of fresh produce, as defined by the national fund manager to reflect differences in project size and overall store size; (II)sells food for home preparation and consumption; and (III)at a minimum— (aa)offers for sale at least 3 different varieties of food in each of the 4 staple food groups (bread and grains, dairy, fruits and vegetables, and meat, poultry, and fish), with perishable food in at least 2 categories, on a daily basis; or (bb)has a store at which at least 50 percent of the total sales of the store (including food and nonfood items or services) are from the sale of eligible staple food. (D)

Income criteria

Each eligible project shall be located in— (i)a low- or moderate-income census tract, as determined by the Bureau of the Census of the Department of Commerce; (ii)a population census tract that is treated as a low-income community under section 45D(e) of the Internal Revenue Code of 1986; or (iii)an area that significantly serves an adjacent area that meets the criteria described in clause (i) or (ii), as approved by the national fund manager. (E)

Underserved criteria

(i)

In general

Each eligible project shall be located in an underserved area, as determined by the partnerships according to criteria established by the national fund manager. (ii)

Factors

In determining whether an area is an underserved area, the following factors shall be taken into consideration: (I)Population density. (II)Below average supermarket density or sales. (III)Car ownership. (IV)Geographical or physical barriers, such as highways, mountains, major parks, or bodies of water. (iii)

Locations

On an annual basis, the national fund manager shall collect data and publish maps that show the location of underserved areas. (4)

Priority projects

(A)

In general

Priority shall be given to projects that— (i)are located in severely distressed low-income communities, as defined by the Community Development Financial Institutions Fund of the Department of the Treasury; and (ii)include 1 or more of the following characteristics: (I)The project will create or retain quality jobs in the community, as determined in accordance with subparagraph (B). (II)The project has community support in terms of store quality, affordability, site location, and coordination with local community plans or other programs promoting community and economic development. (III)The project supports regional food systems and locally grown foods, to the extent available. (IV)In major metropolitan areas, the project is associated with a transit-oriented development project. (V)In areas with public transit, the project is accessible by public transit. (VI)The project involves the reuse of a building that is listed in or eligible for the National Register of Historic Places. (VII)The project involves a brownfield or grayfield (as those terms are used in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et seq.)). (VIII)The estimated energy consumption of the project, calculated using building energy software approved by the Department of Energy, will qualify the project for designation under the Energy Star program established by section 324A of the Energy Policy and Conservation Act (42 U.S.C. 6294a). (IX)The project involves women- and minority-owned businesses. (B)

Quality jobs

For purposes of subparagraph (A)(ii)(I), a quality job is a job that— (i)provides wages that are comparable to or better than similar positions in existing businesses of similar size in similar local economies; (ii)offers benefits that are comparable to or better than what is offered for similar positions in existing local businesses of similar size in similar local economies; and (iii)is targeted for residents of neighborhoods with a high proportion of persons of low income (as that term is defined in section 102(a) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a))) through local targeted hiring programs. (d)

Duties of the Secretary

(1)

In general

The Secretary shall— (A)designate a national fund manager to manage national funds; (B)oversee the Initiative nationally; (C)work closely with the designated national fund manager— (i)to ensure that funds are used appropriately and in the most effective manner practicable; and (ii)to develop the program strategy into a detailed work plan, program, and operating budget; (D)review and approve the operating budget for the national fund manager to ensure that the administrative costs are— (i)reasonable (not more than 5 percent of the total budget); (ii)connected to the costs of operations; and (iii)reflect efficient operations by the national fund manager; and (E)make available to the public an annual report, using data obtained from the Department of Agriculture, the Department of Health and Human Services, and the Community Development Financial Institutions, that describes the impacts of the Initiative, including tracking health and economic development indicators at the local, State, and national levels to determine the impacts of individual projects and the collective impact in local areas and statewide of funded projects and the Initiative overall. (2)

National fund manager

The Secretary shall— (A)select the national fund manager through a competitive process from among community development financial institutions that have a proven and recent track record of success and effectiveness in— (i)attracting private capital; (ii)developing and managing programs that provide grants and loans to support supermarkets and other fresh, healthy food retail business enterprises in low- and moderate-income communities, including the development of grocery stores, farmers markets, and other fresh, healthy food retail models; (iii)making and servicing loans that are similar to loans proposed in the Initiative or having a record of otherwise successfully investing in fresh, healthy food retail development projects; (iv)effectively managing multiple contracts and subcontractors; (v)effectively managing large capital pools, of at least $100,000,000; and (vi)providing or contracting for the provision of technical assistance; and (B)administer the Initiative by approving the disbursement of funds to the national fund manager in a manner that facilitates the implementation of the overall Initiative. (3)

Coordination

(A)

In general

Not later than 45 days after the date of receipt of an award, the national fund manager shall develop, with guidance from and in consultation with the Secretary, and submit to the Secretary, a detailed work plan. (B)

Approval required

The Secretary shall review and approve the work plan, program budget, and administrative costs under subsection (e)(4)(C) prior to entering into an agreement with the national fund manager to administer the Initiative. (4)

Performance targets

(A)

In general

The Secretary shall conduct financial audits of, and establish performance targets for, the national fund manager, which shall include, at a minimum, the requirements described in this paragraph. (B)

Geographic spread

Partnerships funded by the Initiative shall be geographically diverse and representative of the underserved areas across the United States. (C)

Focus on low-income communities

A substantial portion of the projects funded by partnerships shall serve very low- and low-income communities, as defined by the Bureau of the Census of the Department of Commerce. (D)

Financial effectiveness of the national fund manager

The national fund manager and any local financial institution involved in a partnership shall demonstrate on-going capacity and timeliness in raising private capital and disbursing funds as required under the Initiative. (E)

Technical assistance effectiveness of the national fund manager

The provision of technical assistance by the national fund manager shall be evaluated based on— (i)the responsiveness of the national fund manager to requests for assistance; and (ii)the ability of the national fund manager to craft programs that develop needed new capacities in partnerships. (F)

Impact

Performance targets shall address the allocation of funds by the national fund manager to partnerships and the tracking and reporting of the impacts of the funds in improving access to fresh, healthy foods and in achieving other related impacts. (e)

Duties of the national fund manager

(1)

Allocation of funds

(A)

In general

The national fund manager shall— (i)allocate at least 70 percent of any Federal appropriation made to carry out this section to partnerships that are selected based on the criteria described in paragraph (3); and (ii)retain not more than 30 percent of any Federal appropriation made to carry out this section to undertake financing activities described in subparagraph (C), including a reasonable amount for administrative costs (not to exceed 5 percent) approved by the Secretary in accordance with paragraph (4)(C). (B)

Use of the national funds by partnership programs

(i)

In general

As a condition on the receipt of funds, each partnership shall use— (I)the national funds received from the national fund manager under subparagraph (A)(i) to create 1 or more revolving loan programs or other revolving pools of capital or other products to facilitate financing of local projects as determined by the agreement between the partnership and the national fund manager; and (II)any remaining funds for grants, or, as approved, for innovative financing mechanisms. (ii)

Limitations

(I)

In general

Use of funds for administrative costs and other purposes shall be— (aa)limited in accordance with the terms of the agreement negotiated between the national fund manager and partnerships; (bb)based on whether administrative costs are reasonable, connected to the costs of operation, and reflect efficient operations by the partnership; and (cc)determined using criteria including geographic coverage, program duration, and total funding amount. (II)

Goal

The goal of this clause to limit administrative costs to the maximum extent practicable, but in no case may the amount used for administrative costs exceed 10 percent of the Federal funds allocated. (C)

Use of the national funds by the national fund manager

The national fund manager shall use national funds described in subparagraph (A)(ii) to undertake financing and other activities to enhance and maximize the effectiveness of the Initiative, as determined by the agreement with the Secretary, including— (i)attracting other forms of financial assistance to match or leverage the national funds; (ii)awarding national funds to partnerships in accordance with paragraph (3); (iii)creating and managing pools of grant or loan capital that blend or leverage national funds with other forms of financial assistance, including capital in the form of tax credits under section 45D of the Internal Revenue Code of 1986, for the benefit of partnerships; (iv)creating and managing pools of grant or loan capital that blend or leverage the national funds with other forms of financial assistance, including capital in the form of tax credits under section 45D of the Internal Revenue Code of 1986, to finance eligible local projects identified by partnerships or the national fund manager that have special or unique characteristics; (v)providing loans or grants directly to eligible local projects as matching funds if requested by a partnership; (vi)providing credit enhancement or other financial products and instruments for the benefit of partnerships or eligible local projects; (vii)providing technical assistance; and (viii)funding reasonable administrative costs approved by the Secretary in accordance with paragraph (4)(C). (2)

Responsibilities of the national fund manager

The designated national fund manager shall— (A)raise other forms of financial assistance to match or leverage the national funds; (B)use administrative funds to develop appropriate training programs and offer technical assistance services to— (i)partnerships; (ii)State, local, and tribal governments; (iii)the food retail industry; and (iv)food access and health advocacy organizations to augment local capacities; (C)develop financial products such as loans, grants, and credit enhancement tools that can be used by partnerships to incentivize and support the development and retention of supermarkets and other fresh, healthy food retail in underserved areas; (D)award Initiative funds to eligible partnerships through an annual competitive process in accordance with paragraph (3); (E)contract with a national food access organization to assist in the review of applications from partnerships and to provide technical assistance to local food access organizations in the proposed partnerships; (F)award and disburse funds to partnerships or eligible local projects in a timely manner; (G)create and meet performance benchmarks and reporting guidelines, as approved by the Secretary, including for— (i)the amount of capital raised and leveraged from financial institutions, partnerships, and other resources; (ii)the geographic diversity of partnerships; and (iii)the proportion of projects funded by the partnership that are in severely distressed low-income communities; (H)develop program guidelines and operating procedures for the Initiative, including— (i)maximum grant and loan amounts for projects; (ii)eligible uses of funds; (iii)prudent underwriting criteria; (iv)performance targets; (v)reporting guidelines; (vi)limits on administrative costs; and (vii)implementation milestones; (I)monitor the performance of partnerships; and (J)collect data, compile information, and conduct such research studies as the national fund manager determines to be relevant to the successful implementation of the Initiative, including— (i)to assess national and local market conditions; (ii)to determine barriers to market entry; and (iii)to identify opportunities for the development or retention of supermarkets and other fresh, healthy food retail enterprises in underserved communities. (3)

Criteria for awarding national funds to partnerships

(A)

In general

The national fund manager shall award national funds to partnerships through a competitive process on an annual basis. (B)

First round priority

In the first round of funding, the national fund manager shall give priority to a limited number of existing partnerships that have demonstrable capacity to implement fresh food financing programs in underserved areas quickly, and for which there is demonstrable, significant need for improved access to healthy food. (C)

Additional rounds

Additional rounds shall be designed to promote geographic diversity. (D)

Criteria

In awarding national funds to partnerships, the national fund manager shall consider— (i)the amount of funds and other resources pledged by a partnership to match or leverage national funds; (ii)the degree of State, local, or tribal government support of the partnership as evidenced by matching grant and loan funds or other types of support, such as allocation of tax-exempt bonds, loan guarantees, and coordination of resources from other State or local economic development programs; (iii)the capacity of the partnership to successfully develop and manage loan and grant programs; (iv)the lack of supermarkets and other fresh, healthy food retail enterprises in low- and moderate-income areas that would be served by the partnership; (v)the experience of the food access or community health organization of the partnership in outreach about access to healthy foods and local healthy food access issues; (vi)the degree of community engagement and support in the development and retention of supermarkets and other fresh, healthy food retail enterprises; and (vii)the contribution of the program of the partnership to the overall geographic diversity of the Initiative. (4)

Administrative costs

(A)

In general

Not later than 45 days after the date of receipt of an award, the national fund manager shall submit to the Secretary for approval a 3-year program and operating budget and detailed work plan that shall include— (i)costs for research and evaluation, technical assistance, and training; and (ii)program and operating costs. (B)

Earned revenues

Earned revenues from loan fees and interest may be expended on program and operating costs in accordance with the budget approved by the Secretary. (C)

Basis of review

The Secretary shall base the review under subparagraph (A) on— (i)the likelihood of the plan and expenditures to further the purposes of this section; and (ii)whether the administrative costs are reasonable, connected to the costs of operation, and reflect efficient operations by the national fund manager. (f)

Partnerships

(1)

In general

Each partnership that receives assistance through the Initiative shall provide financial and technical assistance to eligible fresh, healthy food retail projects in underserved areas within the defined communities of the partnership. (2)

Administration

Each partnership shall designate a community development financial institution or other organization that is capable of administering a loan and grant program— (A)to execute grant agreements with the national fund manager; and (B)to serve as the manager of local funds. (3)

Responsibilities of partnerships

A partnership shall— (A)raise other forms of financial assistance to match the national funds received by the partnership; (B)provide marketing and outreach to communities, the supermarket industry, other fresh, healthy food retailers, State and local government officials, and civic and public interest organizations— (i)to solicit applications from underserved areas from across the State or locality to be served by the partnership; and (ii)to inform the communities and other persons about the availability of grants, loans, training, and technical assistance; (C)review and underwrite projects to determine whether— (i)a proposed project meets the criteria for eligible projects under subsection (c)(3); and (ii)a proposed project meets the criteria for priority projects under subsection (c)(4); (D)provide technical assistance services to eligible fresh, healthy food retail operators and developers; (E)track and report outcomes, including— (i)the number of jobs created or retained; (ii)the quantity of fresh, healthy food retail space created or retained; and (iii)such other health and economic indicators as are required by the national fund manager; (F)monitor and audit funded projects to ensure compliance with the Initiative, the national fund manager, and partnership program requirements for a period of at least 3 years; (G)submit an annual report to the national fund manager that describes— (i)the activities of the partnership; (ii)the expenditure of local funds; and (iii)success in meeting performance targets and satisfying such other terms and conditions as are specified in the agreement between the partnership and the national fund manager; and (H)coordinate with the national fund manager for the smooth operation of the Initiative. (4)

Administrative costs

(A)

In general

As a condition on the receipt of assistance under this section, each partnership shall submit to the national fund manager for approval a 3-year budget and plan for all program and operating costs, including— (i)costs for research and evaluation, technical assistance, and training; and (ii)administrative and operating costs. (B)

Earned revenues

Earned revenues from loan fees and interest may be expended on program and operating costs in accordance with the budget approved by the national fund manager. (C)

Basis of review

The national fund manager shall base the review under subparagraph (A) on the likelihood of the budget and plan to further the purposes of this section. (g)

Evaluation and monitoring

(1)

In general

Program evaluation and financial audits shall occur at all levels of the Initiative to ensure that— (A)national and local funds are used properly; and (B)the objectives of the Initiative are met. (2)

Program evaluation and financial audits

(A)

In general

The Secretary shall— (i)conduct periodic program evaluations and financial audits of the national fund manager, partnerships, and projects funded by the Initiative; and (ii)share with the national fund manager the results of the evaluations and audits. (B)

Funded projects

The Secretary or the national fund manager shall evaluate partnerships to assess the health and economic impacts of projects funded by the Initiative. (C)

Other impacts

(i)

Secretary of health and human services

The Secretary of Health and Human Services shall conduct research studies and evaluate the health impacts of the Initiative. (ii)

Community development financial institutions

Representatives of the Community Development Financial Institutions shall conduct research studies and evaluate the economic impacts of the Initiative. (D)

Partnerships

(i)

In general

Each partnership shall— (I)conduct periodic administrative and financial audits of projects funded by the Initiative; and (II)share with the national fund manager the results of the audits. (ii)

Failure of partnership

In a case in which a partnership fails, the national fund manager shall take over the portfolio of the failed partnership. (h)

Administrative provisions

(1)

In general

Not later than 180 days after the date of enactment of this section, the Secretary shall promulgate regulations— (A)for the conduct of a rigorous performance evaluation to determine the impact of the Initiative at the end of the initial 5-year period, which the Secretary shall submit to Congress; (B)to establish metrics for evaluating the effectiveness of the Initiative; and (C)under which the Secretary shall assess whether the Initiative should be extended at the end of the initial 5-year period. (2)

Termination of contracts for cause

The Secretary may promulgate regulations under which the Secretary may terminate contracts for cause if the Secretary determines that to be necessary. (i)

Authorization of appropriations

There is authorized to be appropriated to the Secretary to carry out this section $125,000,000, to remain available until expended.

. (b)

Conforming amendment

Section 296(b) of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 7014(b)) is amended— (1)in paragraph (6)(C), by striking or at the end; (2)in paragraph (7), by striking the period at the end and inserting ; or; and (3)by adding at the end the following: (8)the authority of the Secretary to establish in the Department the Healthy Food Financing Initiative in accordance with section 242. .