LOS ANGELES — The California FreshWorks Fund — which will make money available to companies that increase access to healthy food options in underserved communities around the state — will challenge retailers by requiring them to meet a series of guidelines.
The fund, announced two weeks ago by First Lady Michelle Obama, is a $200 million public-private partnership designed to incentivize supermarkets, farmers' markets, mobile trucks and other businesses to move into underserved communities with healthy food options.
Backed by The California Endowment, a private health foundation, the fund will provide a combination of predevelopment grants and loans, acquisition loans, equipment financing and construction, and permanent loans in areas where infrastructure costs and credit needs cannot be filled solely by conventional financial institutions.
To qualify, retailers will be required to devote “a substantial percentage of floor space” to perishables and non-prepared foods, with at least 50% of sales coming from the sale of eligible staple foods.
Projects must also meet a combination of other guidelines, according to the fund, with each guideline assigned between one and four points; to qualify, a retailer must score a total of at least 10 points, with priority given to companies with higher scores.
The guidelines include encouraging healthy choices through product placement, pricing and promotions (4 points); creating local jobs in the community (4 points); promoting community and economic development (3 points); providing menu labels on prepared foods (2 points); offering at least one junk-free checkout aisle (2 points); supporting regional food systems (2 points); choosing not to sell cigarettes (2 points); reusing historic buildings (1 point); and consuming energy at a level that will qualify for the Energy Star program (1 point).
In addition, applicants will have to demonstrate “reasonable financial projections” supported by detailed, market-based assumptions, and a track record of consistent prior performance and to show how the project will maintain an operating surplus and repay the debt without having to rely on uncommitted fund raising.
They will also have to provide data on the social impact of the project, including demographic information, the number of jobs the project will create, how many jobs will employ people living in the community and how many jobs will go to high-risk populations.
The fund hopes to see approximately 100 stores open in the state's food deserts over the next five years.
The fund is comprised of a combination of 21 banks, philanthropic groups, community agencies, health agencies and industry groups that will work with The California Endowment to distribute money to participating retailers.
The program will start with $30 million in debt capital and $3 million in grant dollars. Organizers said the fund will provide flexible capital that will allow for longer break-evens so operators will have the opportunity to generate the kind of sales they need to cover expenses and be sustainable over the long run.
As previously reported, among those working with the fund are the California Grocers Association and Unified Grocers, the Los Angeles-based member-owned cooperative.
