Defining Healthy Food Retail

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1 Introduction Nationally, healthy food access is emerging as one of the most important policy issue of the decade. Healthy food access is more than just about improving the health of individuals, but uniquely lies in the intersection between health, economic development, land-use, equity, and sustainability. As with many other resource-related issues, low-income and communities of color generally have worse access to healthy foods than affluent communities. Increasing healthy food options in historically underserved communities such as South Los Angeles, Westlake and Boyle Heights has been identified as a critical component of advancing economic, health and environmental equity in Los Angeles. In the City of Los Angeles alone, millions of dollars have been invested in improving healthy food access for marginalized populations through philanthropic, public and private sector funding. Furthermore, dozens of community-based organizations have developed in response to the need for improved health food access in underserved areas within the City. However, more support at the policy level is needed to overcome the immense barriers to healthy food access for the City s most vulnerable populations. Economically vibrant food retail establishments such as grocery stores, corner stores, farmers markets and other food enterprises can have a unique multiplier effect on retail corridors. Food retailers often serve as anchor tenants in larger commercial development projects that can catalyze additional development and investment in the neighborhood. By supporting the increased development of healthy food retail options, particularly in communities of need such as South and East Los Angeles, the City can more effectively address the immense disparities that face these areas. This report focuses on the ways in which a comprehensive policy solution for increasing access to healthy food retail in the City of Los Angeles can lead to catalytic improvements in communities of need. This report was developed by the Healthy Food Retail for Food Equity Working group of the Los Angeles Food Policy Council. This Council is a quasi-public entity that was created in 2011 by the Mayor s Office. The council is comprised of a 40-member Leadership Board and a full-time staff which serve as the backbone of the policy initiatives. Additionally, 500 individual stakeholders and over 150 organizations from the public, private, nonprofit and academic sectors extend the reach of LAFPC in the greater Los Angeles community through the LAFPC working groups. The Healthy Food Retail for Food Equity Working Group represents over 50 community based organizations, healthy food retailers and food social enterprises, nonprofits, policy organizations, community economic development firms, and other stakeholder groups throughout the City. 20 active members meet monthly to advance systems and policy solutions for healthy food access through corner stores and other healthy food retailers. Defining Healthy Food Retail There is no formal definition of healthy food retail. In this report, we attempt to define healthy food retail in the context of the Los Angeles Food Policy Council s core principles. This definition was also informed by components of definitions developed by other agencies. Out of these efforts, we created the following definition: Healthy food retail consists of venues that improve food offerings to customers so that healthy food and beverage choices are an option 1. Good healthy food retailers contribute to quality jobs, are dedicated to sustainable and local food systems, and aspire to promote health equity by improving access to healthy foods for all Los Angelenos, including those in underserved areas and communities of color. 1 P age

2 Large-scale healthy food retailers typically include traditional food retail outlets such as supermarkets and grocery stores. Small-scale healthy food retailers are more diverse and can include the following: corner stores, farmer s markets, food cooperatives, mobile food enterprises, and others. While healthy food retail can encompass both large-scale and small-scale retailers, the efforts in this study focus primarily on small-scale, local retail efforts as we envision these enterprises to have the largest potential for catalytic impacts in communities. Primarily, this report focuses on corner stores and small food business enterprises as tools by which substantive improvements in the City of Los Angeles can be obtained. Other definitions of healthy food retailers include more specific parameters regarding the percentage of floor space dedicated to healthy foods, nutrition guidelines for the food being sold or the proportion of staple foods sold at the venue. The above definition is intentionally kept broad because the parameters for how the healthy food retail definition gets implemented should be tailored to the unique healthrelated needs and desires of the communities in which the retail is serving. Identifying the Need for Healthy Food Retail Access & Health Research indicates that lack of access to affordable healthy food contributes negatively to childhood obesity and leads to poor health outcomes in communities of need. There are 0.45 full service grocery stores for every 10,000 residents in the historically underserved community of South LA, and 0.97 full service grocery stores for every 10,000 in the more affluent West LA community 1. To reach their preferred grocery store, 16% of South LA residents have to travel at least 20 minutes, while only 3% of West LA residents have to travel such a distance for groceries 2. While 91% of adults in West LA (and 90% in the County overall) feel that accessing healthy food is very or somewhat easy, in South LA the number of residents reporting easy access to healthy food drops to 51% 3. In parallel, South Los Angeles has the highest rates of nutrition-related diseases in Los Angeles including: obesity, diabetes and the number one cause of premature death in the county heart disease 4. These rates are also disproportionately high in the low-income communities of Boyle Heights and Westlake with the percentage of childhood obesity in these communities ranging between 26 35%, whereas in West LA, the childhood obesity rate is 15% 5. Studies show that improvements in the food resource environment can, in fact, change shopping patterns and health behaviors. Empirical studies have found that individuals living next to newly built supermarkets shop at supermarkets more, consume more fruits and vegetables, and self-report better physical health 6,7. Other studies have found no connection between grocery store proximity and health behaviors, however. Furthermore, additional research asserts that neighborhoods with higher Wrigley, N., D. Warm and B.Margetts (2003). Deprivation, Diet, and Food-Retail Access: Findings From the Leeds Food Deserts Study, Environment and Planning A 35: Cummins S., A. Findlay, M. Petticrew, and L. Sparks (2005). Healthy Cities: The Impact of Food Retail-led Regeneration on Food Access, Choice and Retail Structure, Built Environ 31(4): P age

3 concentrations of convenience stores and fast food restaurants than grocery stores and super markets have higher rates of obesity and diabetes 8. The outcomes of these studies suggest that increasing healthy food access through the development of grocery stores in communities with poor access to healthy foods could result in positive improvements in health outcomes, particularly for those who live in close proximity to the new developments. Poverty and Jobs A large body of empirical research asserts that poverty is one of the strongest social indicators of health outcomes i and has a strong relationship with nutrition-related health. A Los Angeles County Department of Public Health study indicates that economic hardship is strongly correlated with diabetes and mortality, and moderately correlated with obesity ii. Additional research indicates that as prices of food rises, obesity and diabetes rates continue to climb, specifically amongst individuals in poverty iii. This increase is due to a number of factors including the higher costs of healthier food per calorie than unhealthy food, and increases in stress which contribute to Nearly $120 million dollars spent on grocery retail is leaked outside of South and East Los Angeles EACH YEAR obesity as well iv. 50% or more of the population in South/Southeast Los Angeles, Westlake and Boyle Heights are living below the federal poverty level (1). About a third of the approximately 300,000 people living in extreme poverty in the City of LA are South LA residents. Based on the above information, food retailers that provide both healthy food options and good jobs in communities of need may contribute to more substantial improvements in the health and wellness of the local population. Despite prolific income disparities, significant demand and buying power for more healthy food retail options exists in low income communities. With an income density of over $180 million per square mile, South LA residents are estimated to spend almost $1.2 billion on food for the home, and over $213 million on fresh fruits and vegetables each year (2). Nearly $120 million dollars spent on grocery retail is leaked outside of South and East Los Angeles each year as local residents purchase foods from grocery stores in other communities. This dollar leakage weakens the already struggling local economy as could be utilized to support more employment or higher wages in these underemployed communities. Local government has an opportunity to retain these dollars by increasing the healthy food options residents available in South LA and in comparable communities. This paper explores the many healthy food retail P age

4 options that can help bridge this gap with a special focus on innovative healthy food retail enterprises and small-scale retailers. Map 1: Corner stores, small grocery stores in the City of Los Angeles Making the Case for Healthy Food Retailers While proximity to grocery stores has been connected to improved health outcomes (9), new supermarket and grocery store development faces a longer timeline for completion due to an extended approval process, high start-up costs, and difficulty locating land that is both legally viable and attractive to developers (3). Including Small-Scale Retailers as a Part of the Solution In the current retail environment, small-scale food retailers reach LA residents where largescale retailers like full-service grocers are hard to find. As Map 1 shows, thousands of small markets and corner stores independently owned by low-income to middle-income families in LA are concentrated in South LA, Westlake and East LA. In fact, small-scale retailers make up 94% of food retail in South LA. That s 12% more small markets operating in South LA than in West LA 9. Access to transportation plays an important role in healthy food access and underscores the importance of neighborhood markets as healthy food hubs. Low income people, people of color and renters rely on public transit at much greater rates than others 10. Westlake, South LA, Southeast LA, and Boyle Heights are home to the most families in the City without access to a vehicle for transportation 11. Low-income transit-dependent residents in these neighborhoods often look to small-scale retailers such as corner stores as an alternative to full-service grocery stores that is their homes. Empowering corner stores and other innovative food businesses mobile markets, produce trucks, farmer s markets, healthy street vendors and community supported agriculture (CSA) distributors to lead the way in bringing healthy food to their communities is a strategy with immediate impacts. It will stimulate the local economy and protect existing small business jobs. It will increase access to healthy food options quickly and sustainably. It will revitalize neighborhoods in the city that have experienced historic disinvestment, while stabilizing low to middle income families and businesses so that they can stay in their homes. Existing small businesses like convenience stores and neighborhood markets are sensitive to local residents needs for culturally relevant snacks and basic amenities. Supporting these food enterprises to expand their affordable, healthy snack or meal offerings is a parallel strategy that makes an immediate impact on food access, while grocery retail development is in progress. By investing in policies that support both small-scale and large scale healthy food retail development that P age

5 moves the City forward on its goals to improve equity, the City can cultivate a diversity of healthy food retail options in both the short and long term. Strengths of the Healthy Food Retail Policy Environment: Incentives at a National, State and Local Level Investments in food-anchored economic development initiatives are not unprecedented. Numerous policies have been developed on a national, state and local level to support the increased development of healthy food retail in recognition of the potential of healthy food retail development in overcoming challenges in health, economic and racial equity. This section overviews the strengths of the healthy food retail policy environment to demonstrate what has already been done, highlight the political momentum towards supporting healthy food retail, and present the foundations for which future policy initiatives can be developed. Many of these strengths are centered on incentives provided for healthy food retailers through financial, land-use and capacity-building incentives. The impact of healthy food financing and other incentives in various municipalities including the City of Los Angeles reiterates the role of healthy food retail as an economic development tool, specifically for the targeted communities of need where most of these investments take place. Healthy Food Retail Policies Nationally and in Other Jurisdictions According to the United States Department of Agriculture (USDA), approximately 30 million Americans struggle to access healthy and affordable nutritious food. Similar to Los Angeles, individuals living in lowincome areas or communities of color are less likely to have quality access to healthy foods. v Healthy Food Financing Initiative (HFFI) HFFI serves as the first federal initiative to improve access to healthy foods in communities of need throughout the U.S. The financing initiative provides capacity development, project funding and additional investments for businesses working to increase nutritious food options in low-income communities. HFFI provided over $140 million in federal funds more than 60 community development finance institutions (CDFIs) and community development corporations (CDCs) to: develop new and/or improve existing grocery stores, small-scale food retailers, healthy corner stores and farmers markets. Healthy Corner Stores A national healthy corner stores movement has been underway for more than a decade. Research has noted that corner stores, like fast food restaurants, proliferate in food desert communities, but could contribute to improving health outcomes by carrying healthier food. In 2004, The Food Trust created the Healthy Corner Store Initiative, a strategy that partnered with neighborhood markets to increase fresh fruits and vegetable marketing and availability in food desert communities, and with local schools to provide nutrition education and direct community demand toward healthy corner stores. Since then, healthy corner store conversion programs have risen up in cities around the country, including New York City, Minneapolis, Washington D.C., Baltimore, San Francisco, and Louisville, Kentucky, for the most part driven by public health funding. The Division of Community Health (DCH) at the Centers for Disease Control and Prevention (CDC) provides program grants and resources to numerous community level projects through federal programs including Communities Putting Prevention to Work (CPPW), Racial and Ethnic Approaches to Community Health (REACH), Community Transformation Grant (CTG), and the Healthy Communities Program. 5 P age

6 Healthy Food Retail Incentives in Other States & Municipalities States and municipalities around the country have developed innovative approaches to encouraging the development of healthy food retail through a myriad of incentives that extend beyond grant and loan financing. These incentives utilize land-use, zoning, tax breaks, technical assistance and expedited approval processes to assist healthy food retailers overcome the many challenges to developing in communities of need. Each of these incentives intend to reduce the time and financial costs of development. An overview of some successful programs implemented throughout the country can be seen below: Michigan instituted a property tax abatement program for property owners that include grocery stores in their redevelopment of commercial property. Property owners can qualify if the grocery establishments are located in an underserved rural area and sell food that meets specific nutrition standards. Washington DC created a grocery ambassador position that assists grocers in navigating the bureaucratic approval processes for developing new establishments. In addition to the ambassador, the jurisdiction provides business license exemption fees, expedited permitting and review, density bonuses, energy cost-saving strategies and additional zoning incentives for grocers as well. New York City established the Food Retail Expansion to Support Health (FRESH) program to provide a myriad of zoning incentives for developments that incorporate grocery stores in designate communities of need. These incentives include density bonuses, tax incentives and reduced parking requirements for stores that meet specific nutrition standards. New York City also innovated the Healthy Green Cart program which allows mobile food vendors selling healthy fruits and vegetables to sell in designated communities of need. In New York State, programs have been established to improve energy efficiency for new and existing supermarkets. San Francisco has a program that allows all public park property to permit farmers markets if they accept government food assistance vouchers such as Market Match and EBT. 6 P age

7 Healthy Food Retail Policies in California Obesity and diabetes cost Californians an estimated $41.2 billion in lost productivity and medical care expenses 12. Employers and taxpayers bear much of these costs. Strategies have been developed at a state level in an attempt to overcome some of these challenges. Many of these strategies include efforts to increase healthy food consumption through financing healthy food retailers throughout the state. Some of these incentives can be seen below: California FreshWorks Fund Modeled after the Pennsylvania Healthy Food Financing Initiative, the FreshWorks fund is a $260 million public-private partnership fund created to bring loan and grant financing to healthy food retailers in communities of need. The FreshWorks fund supports grocery stores, markets that offer fresh produce, and innovative healthy food enterprises and has invested over $20 million in grants and loans for healthy food businesses in the City of Los Angeles alone. Market Match & AB Nutrition Incentive Matching Grant Program Market Match is California s farmer s market voucher program that provides a one-for-one dollar match for farmer s market patrons using Electronic Benefits Transfer or EBT (formerly known as food stamps). This program targets families in poverty and helps to expose them to farmer s markets, more healthy food options and a greater diversity of fruits and vegetables. The program is administered by the Ecology Center, and has invested in over 150 farmer s markets generating over $1.5 million in fruit and vegetable sales throughout the state. Market Match is also estimated to have a multiplier effect of 1.6 in local jurisdictions as the money comes from the state but is spent in cities such as Los Angeles. In 2015, the California State Assembly passed AB 1321 (Ting) which would provide additional support for Market Match through State funding. Healthy Food Retail Initiatives in Los Angeles The California FreshWorks Fund has invested in over $20 million in grants and loans for healthy food businesses in Los Angeles Numerous initiatives throughout the City of Los Angeles have been dedicated to improving access to healthy foods for underserved populations in the City. Many of these initiatives involve incentives or support for healthy food retailers at the plan, policy or programmatic level. Despite the momentum for healthy food retail development at the City and County level, few policies have actually been implemented to increase the development of these establishments. This section overviews some of the most pertinent proposed policies and programs dedicated to encouraging healthy food retail development in Los Angeles s communities of need. Policies & Proposed Plans Plan for a healthy Los Angeles- Following a comprehensive community engagement process from , a new Health and Wellness Element was drafted for the General Plan for the City of Los Angeles. The Health Element, also known as PLAN for a Healthy Los Angeles (PHLA), establishes a new equity framework for development in the City, with a focus on health equity and wellbeing. PHLA contains a chapter titled Food that Nourishes the Body, Soul, and Environment which details the importance of resourcing a wide array of healthy food retail, including 12 Chenoweth, David. The Economic Costs of Overweight, Obesity, and Physical Inactivity Among California Adults. June P age

8 small community markets, corner stores, and healthy street vendors to increase access to fresh fruits and vegetables in food desert neighborhoods. Among suggested implementations programs for these health equity priorities, PHLA includes the establishment of a healthy corner store conversion program. In March 2015, PHLA was passed through the City Planning and Land Use Management Committee, and awaits hearing by the City Council. Recently, healthy food retail incentives have been identified by the planning department as one of four priorities for implementation of PHLA. South LA Area Community Plan Updates- The West Adams-Leimert Park-Baldwin Hills, South LA and Southeast LA community plans have undergone an update process since they were last revised in the late 1990s. The new plans have a stronger focus on health and contain both policy and zoning-level provisions that encourage the development of healthy food retail in these low-income areas and communities of color. The provisions in the plans include: parking reductions for healthy food retailers, prioritization of city-owned vacant land for the development of healthy food retail, allowing farmer s markets to be zoned in more areas and restrictions on the development of less healthy food establishments to preserve limited land for the development of healthier retail alternatives. Sustainability plan- The first of its kind in the City of Los Angeles, the Sustainability Plan sets forth a vision for future development in the City that supports the environment, economy and equity. The plan includes priorities that support the following: ensure that every low-income Los Angeleno lives within ½ mile of a grocery store, support the Neighborhood Market Conversion program, promote investment in grocery through the FreshWorks fund and encourage new healthy food retail development through land-use policies. LA City Council Action- September 25, 2013, the LA City Council instructed the CAO and CLA to report back to the Economic Development Committee on the feasibility of providing funding to the Community Market Conversion program to pay for plan check and permit fees, and additional market conversion projects. Funding would come from the US Department of Commerce Economic Development Administration s Industrial/Commercial Revolving Loan Fund. No substantive action on this initiative has taken place since the instructed report. Healthy Food Retailer Recognition at County Department of Public Health The LA County Department of Public Health is developing a healthy retailer recognition program in a historic inter-departmental collaboration between Substance Abuse Prevention Centers (SAPC), Nutrition Education Obesity Prevention (NEOP), and Tobacco Control. The recognition program will coalesce the recommendations of these three priorities of the County Department of Public Health under one comprehensive list of healthy food retailer guidelines, offer combined retailer incentives, and suggest a one-stop-at-the-shop enforcement method, so that corner stores are not faced with conflicting recommendations by representatives of different programs of the department. DWP Reduced Energy Rates- Through LA Department of Water and Power s (DWP) Food Service Program, store owners can reduce their electricity bills and the cost of 8 P age

9 new refrigeration equipment when they replace or retrofit existing refrigeration equipment with energy-efficient refrigeration technologies. These cost savings on equipment are offered through a rebate. Programs The Healthy Neighborhood Market Network- The Healthy Neighborhood Market Network program is coordinated by staff at the non-profit LA Food Policy Council (LAFPC) to provide small business development and leadership development trainings for corner store owners and other innovative food entrepreneurs who wish to succeed with healthy food retail. The program is funded by private foundation grants, and received an allocation of Community Development Block Grant funding through the City Housing and Community Investment Department for fiscal year It draws inspiration from the storeowner training conference held by the CMC team in 2012, and connects store owners to the LAFPC's greater network of food industry, government and community partners to offer skill building workshops, a healthy food vendor expo, and spur new community partnerships that position corner store owners to emerge as leaders of health and community economic development. In addition to these quarterly business trainings, HNMN program staff also provide ongoing resource referrals, individualized coaching to active store owners in the network, and technical consulting to community organizations interested in developing new market conversion programs. COMPRA Foods (COMmunity Markets Purchasing Real, Affordable Foods)- is a fruit and vegetable purchasing cooperative for neighborhood markets that is supported by a partnership between the Los Angeles County Department of Public Health and the Los Angeles Food Policy Council. This cooperative aggregates the buying power of small stores in low-income food desert neighborhoods to improve their access to distribution services and more affordable fresh produce for their stores. As small independently-operated businesses, many neighborhood markets lack quality and economically feasible distribution options for healthy food. This cooperative enables business owners to achieve economies of scale when sourcing local, nutritious food products, thereby maintaining affordability of healthy food low-income customers. COMPRA is currently in a pilot phase with 7 neighborhood markets and is targeted to expand to 30 markets over the next year. The LAFPC s Healthy Neighborhood Market Network is currently piloting the development of a purchasing cooperative among a cohort of 5-7 neighborhood markets in its network. This model will be scaled during the grant period. The Healthy Neighborhood Market Network is the only healthy food focused resource network for corner store operators in the City and County of Los Angeles. To date, the Network has touched over 400 stores, and over 200 store owners have 9 P age

10 participated in a training. This infrastructure is a prime launching pad for a city-wide small store purchasing cooperative. With its extensive network of engaged neighborhood markets, distributors and wholesalers, LAFPC is poised to establish the first healthy food purchasing cooperative for small neighborhood markets. Barriers While much support has been extended to existing and aspiring healthy food retail businesses, numerous barriers prevail that continue to inhibit healthy food access in vulnerable communities. Existing food retailers can provide rich insights into the challenges that they face in offering healthier food options in low-income areas. This knowledge can inform policy changes that overcome these barriers and motivate other retailers to provide healthier options as well. In 2012, the LAFPC healthy food retail working group administered surveys and a round table discussion to food retailers, assessing perceptions of the current policy landscape and learning about the obstacles store owners face in attempting to sell healthy foods. This section overviews some of the barriers identified in this research and highlights the experiences of some healthy food retailers attempting to overcome these challenges. Small Business Displacement Exemplary small business leaders like many healthy neighborhood market owners and operators face immense pressures of real estate development as they experience monthly rent hikes and other harassments by property owners that put them at risk of displacement. As investment and property values continue to rise, these healthy neighborhood market owners that already have small profit margins have to face rising expenses. The City must recognize that locally owned and operated healthy food enterprises contribute more than just tax revenue. These establishments are places of social capital, community building, public health prevention and employment in communities of need. More priority should be placed on small business retention strategies for healthy food retailers. For proposed solutions see recommendation R5 on page 24. Antiquated Sidewalk Vending Policies Healthy Food Retailer Profile Salva Market on 1 st Street in Boyle Heights is a small business leader in healthy food access. Store operators Abel and Alicia have been committed to working with community organizations and the County Department of Public Health to increase their healthy food options for over a year. Since 2013, they introduced over 10 new fresh fruit and vegetable options, as well as mixed nuts and other staple grocery options, and have stopped selling tobacco products, and have hosted two community events focused on healthy food promotion and nutrition education. The City of Los Angeles is one of few large metropolitan cities in the Country that do not have a legal sidewalk vending policy. Sidewalk vendors, or mobile vendors that sell food on sidewalk, can sell healthy food that accesses communities that are inaccessible by traditional food retail contributing to reductions high obesity rates and preventable nutrition-related chronic diseases in these areas. Sidewalk vending can also contribute economic and environmental benefits for communities of need. These vendors are generating economic revenue that recirculates back into struggling local economies. Moreover, the vendors are able to enter neighborhoods and meet folks where they are, reducing the need for them to 10 P age

11 drive 20 minutes to reach their closes grocery store or restaurant. This localism reduces the need for car trips, ultimately contributing to reduced congestion and air pollution. Many sidewalk vendors are forced to operate illegally to provide food for their families, especially in LA s harsh economic climate. Numerous sidewalk vendors also continue to sell foods in these communities due to the high demand and need for these types of enterprises in communities divested of other retail options. Unfortunately, many vendors have been harassed or have gotten their supplies thrown away by police and enforcement, despite their contribution of jobs, local economic revenue, healthy food and walkability to communities. The City should support policies that legalize sidewalk vending and a pathway for permitting that can ensure greater sanitation and health. For proposed solutions see recommendation R4 on page 18. Limited Land & Land Banking of Absentee Owners Traditional supermarkets and large grocery stores continue to struggle to develop in communities like South LA and East LA due to limited land available. The large parcels needed to develop these establishments are often owned by multiple absentee property owners and are difficult to acquire. The loss of the community redevelopment agency (CRA/LA) has impeded the City s ability to acquire land. The City of LA should support efforts to acquire large parcels of land either from other municipal agencies or from absentee and negligent property owners. For proposed solutions see recommendation R2 on pages Prevailing Stigma Despite positive changes taking place in many low-income areas and communities of color within the city, some healthy food retailers still choose not to invest in these neighborhoods due to prevailing stigma of crime, and perceptions of lack of demand for healthy options. The $120 million in grocery leakage from South and East Los Angeles each year contradict these assumptions, however. More resources at the City level should be utilized to market communities of need as under-recognized opportunity sites for development. Policies should be implemented that reward establishments for locating in communities of need. Furthermore, marketing materials should be established that highlight these communities assets, and emphasize the city s desire for promoting equity and reducing displacement. Target businesses should be those desiring to contribute to the existing community fabric, not change it. For proposed solutions see recommendation R2 on pages Healthy Food Costs LAFPC conducted a survey of corner store owners in the Healthy Neighborhood Market network to identify the prevailing challenges to selling health foods. One of the most dominant themes from the responses was the cost of healthy food. To compete with other stores, many large grocery chains sell their produce at extremely low prices, sometimes taking a loss. This is a luxury that small business owners do not have due to their already low profit margins. Strategies should be adopted by the City that support stores in purchasing foods at lower prices or offsetting the costs of healthy foods with other fee reductions. 11 P age

12 For proposed solutions see recommendations R1 and R4 on pages and page 19. Limited Business Expertise Due to limited resources and capacity, a number of small business owners such as corner store owners do not maintain effective store inventory and financial tracking practices. Many retailers do not have a Point-Of-Sale (POS) system and therefore have difficulty tracking which items in the store are good sellers or not and the profit that they make from these items. Technical business assistance could help to build the capacity of healthy food retailers to track their inventory allowing for more successful and sustainable establishments and improved quality of service at the stores. For proposed solutions see recommendations R1, R2 and R3 Store Infrastructure Selling healthy fruit and vegetables requires specific store infrastructure that traditional corner stores typically do not have. This includes specific refrigeration space that can be costly for small businesses with even smaller profit margins to acquire. Some support for reduced energy rates for store owners utilizing refrigeration equipment has been established, however, more resources can be dedicated to supporting infrastructure acquisition for healthy food retail enterprises at a local level. For proposed solutions see recommendation R2 on page Complicated Permitting and Approval Processes The permitting and approval process between the City and County of Los Angeles is both time consuming and costly for smaller and larger healthy food retailers. Despite the ability of many larger chain supermarkets to have staff dedicated to ensuring that their permitting applications matriculate through the approval process in an expedited manner, delays and additional costs still ensue. For smaller retailers, many of them do not have the luxury of dedicating time to overseeing the movement of their applications through the City s complicated approval process. This can be a deterrent to the expansions necessary to sell healthy foods for existing small retailers and an insurmountable obstacle for aspiring businesses to begin the business development process. The City and County should dedicate more staff and financial resources to supporting the permitting and approval process for healthy food retail enterprises. For proposed solutions see recommendations R1, R2, R3 on pages Access to Financing for New Business Enterprises Despite the efforts of the FreshWorks fund to invest $2 million in new healthy food business enterprises, many aspiring healthy food businesses identify access to financing as a prevailing struggle. Many of the community development financing institutions (CDFI s) administering these funds have requirements for acquiring funding that new business entrepreneurs struggle to meet. These requirements include: providing collateral, having prior business experience and BLANK. While the existing funding resources may be accessible for already established businesses, the financial hurdles currently in place are difficult for new businesses to overcome. Additional financing and grant resources should be provided for innovative healthy food retailers that have a commitment to serving communities of need and can access places in the City that traditional food retailers cannot access due to limited space. 12 P age

13 For proposed solutions see recommendations R1 & R2 on pages Opportunities There are additional initiatives and endeavors at the City level that are not directly connected to increasing healthy food retail development but could be in the future. We identify these initiatives as opportunities that can connect healthy food retail with other important and related efforts such as antidisplacement efforts and more multi-modally accessible streets or community design. In this section we highlight some of the opportunities with the greatest potential to have positive impacts on healthy food retail development in the City. The Mayor's I-Team: Revitalization Without Replacement Los Angeles was selected to receive up to $2,550,000 through a Bloomberg Philanthropies Innovation Grant to fund an innovation team, or i-team over a three year period beginning in With oversight from the Mayor's Budget and Innovation staff, the i-team will seek opportunities for neighborhood revitalization...that minimizes displacement and maximizes the economic and social benefits flowing to low-income residents of Great Street and Promise Zone neighborhoods -- including opportunities for starting or expanding local businesses and generating new and better jobs for local residents. (7) A formal relationship between the i-team and the Healthy Food Retail for Food Equity Working Group of the LA Food Policy Council would benefit. A pathway is needed for new resources and incentives to travel to healthy corner stores, existing small businesses that have demonstrated a commitment to healthy food retail, and mitigate the risks of their displacement in the midst of positive changes. The i- team could act as a conduit for converging resources in community economic development, health equity and small business assistance. Greet Streets Initiative LA Department of Transportation released a Strategic Plan for the Great Streets initiative in 2014 that directs streetscape improvements and resources for community events on the public right of way toward 15 major streets, one in each council district of the City. Corner stores located on or near Greet Streets corridors may qualify for façade improvements and other community economic development funds, and will benefit in the long term from improved bike paths, pedestrian walkways, parking and public transit options. Metro's Business Interruption Fund In 2014, the Metro Board established a Business Interruption Fund to provide economic compensation of up to $50,000 for small businesses directly impacted by rail construction at Metro rail project areas. Current projects include the Crenshaw/LAX Transit Project, the Little Tokyo area of the Regional Connector, and segment one of the Purple Line extension. This is an unprecedented use of public resources to directly address the financial losses and impact to vitality for small businesses near newly proposed transit hubs. 13 P age

14 Policy Recommendations There is no one-size fits all approach to overcoming the barriers that healthy food retail enterprises face in the City of Los Angeles. The City should create a comprehensive approach to supporting existing and aspiring healthy food enterprises that meets the unique needs of each of the establishments. These policies should encompass the wide range of healthy food retail options and provide assistance for traditional retailers as well as smaller business establishments. Promising policy approaches for supporting healthy food retail in Los Angeles should encompass the following two-pronged approach: 1) A proactive, specific, community-serving small business incentive package for healthy food retailers, including corner stores, and 2) A robust local food economic development strategy that promotes food equity and supports healthy food enterprises. The section below provides recommendations for the types of policies that embody this dualistic approach to increasing healthy food retail development in the City. In the discussion we connect the recommendations to the barriers identified earlier in this report, identify key departments and staff that should take a role in implementation and/or enforcement, and provide the foundations for the recommendations as evidenced by existing provisions in City plans and policies. R1: City Operated Corner Store Conversion Program Create a corner store conversion program, modeled after the former CRA/LA Community Market Conversion program and other national models and best practices, to increase fresh, affordable, and healthy food options while promoting small business development through convenience stores, corner markets and neighborhood markets. Program implementation shall prioritize stores in areas of the City with the highest needs based on the City Planning Department s Health Atlas. It shall prioritize partnering with the Los Angeles County Department of Public Health, relevant City staff and community-organizing experts, and promote strategies to ensure that healthy foods are prominently placed, priced competitively and look attractive to encourage the consumption of healthier items. The program will also house and support COMPRA, the cooperative purchasing collective aimed at reducing the procurement costs for healthy food items for corner markets in an effort to keep healthy food prices low for both stores and consumers. Program participants shall be required to accept CalFresh, EBT and WIC (if available). Program funds should be directed towards: Store Improvements: Provide architectural, external and interior façade improvements, capital upgrades for business that incorporate infrastructure for selling healthy foods including refrigeration. Marketing: Assistance with marketing healthy corner stores in the community, and providing support for product placement and marketing within the stores. 14 P age

15 COMPRA: Support the cooperative purchasing collective by helping to coordinate the procurement, purchase and distribution of healthy food options Additional Incentives: All incentives extended by the Healthy Food Zones policies (see R1) will be available to corner stores provided that they comply with healthy food retailer guidelines (see R4) Staff Support: The City shall provide the equivalent of two full-time program staff to administer the above provisions (see R3) Enforcement, Monitoring & Compliance The Corner Store Conversion program should be funded and administered through a partnership between the Housing and Community Investment Department (HCID), which distributes the Community Development Block Grant (CDBG) funding, and the Economic and Workforce Development Department (EWDD) which provides business support throughout the City. Each of the departments should dedicate the equivalent of one full-time staff person to serve as Healthy Food Retail Concierge or Ambassadors (see R1). Key organizational partners should include departmental members of the Restaurant Hospitality Express Program which is a partnership between the Department of Building and Safety (DBS), City Planning (LACP) and the LA County Department of Public Health (DPH). This program currently provides permitting support for restaurants as well as food retailers and should be the mechanism by which the expedited permit review takes place for the Corner Store Conversion Program. This program will ensure that there is adequate support to help stores navigate the cumbersome application processes between the City and County. The Los Angeles Food Policy Council will continue to provide support by helping to recruit corner store owners to participate in the program and disseminate information about the program to the community. The LAFPC will also work to connect stores with community stakeholders in an effort to continue to build demand for the healthier products sold at the stores. Existing Policy Levers Numerous plans policies exist that establish a precedence for supporting a corner store conversion program at the City level. These plans and policies have already been adopted by the City and are the responsibility of City departments to implement. The corner store conversion program can serve as a mechanism by which the following provisions can be implemented: Plan for a Health LA [Health and Wellness Element of the Los Angeles City General Plan] (Pg. 104): Business attraction programs- Continue to develop and fund a business attraction and assistance incentive programs, such as the BusinessSource Centers, that targets increasing access to jobs and healthy goods and services (grocery stores, federally qualified health clinics, daycare centers, and similar uses) and creating opportunities for small businesses and entrepreneurs in low-income and underserved communities. Plan for a Healthy LA [Health and Wellness Element of the Los Angeles City General Plan] (Pg. 113): Healthy neighborhood markets Create a corner neighborhood market conversion program, modeled after the former CRA/LA s and other national models and best practices, to increase access to fresh, 15 P age

16 affordable, and healthy food while promoting small business development through convenience stores, corner markets and neighborhood markets. Plan for a Healthy Los Angeles [Health and Wellness Element of the Los Angeles City General Plan] (Pg. 113): Collective food purchasing-establish partnerships among large and small food retailers to create a collective food purchasing program to reduce the cost-burden for small neighborhood markets in underserved neighborhoods to purchase fresh healthy food. West Adams Community Plan (Pg. 3-39): Healthy Food Sales Incentives- Utilize existing economic development incentives and/or create new incentives to encourage stores and restaurants to sell fresh, healthy foods such as produce in underserved areas. (P35, P145) Plan for a Healthy Los Angeles [Health and Wellness Element of the Los Angeles City General Plan] 4.5 Food security and assistance (page 67) Healthy food retailers and restaurateurs, farmers markets, and similar enterprises that receive public assistance should be required to universally accept CalFresh benefits to improve food security and increase the number of healthy options available to eligible participants. Plan for a Healthy Los Angeles [Health and Wellness Element of the Los Angeles City General Plan] 4.8 Food innovations (page 70) This policy supports food innovations such as street (sidewalk) vending, food cooperatives, pop-up markets and similar innovations that do not fit into the traditional brick-and-mortar storefront, farmers market, or community garden models, but are using innovation to respond to community demands for catalytic food and economic environments. R2: Healthy Food Zones Prioritize the investment of healthy food retail in communities of need utilizing the Healthy Food Zone model. Utilize the Health Atlas created by the Department of City Planning to identify communities of need that would qualify for the Healthy Food Zone (HFZ) designation. Healthy food retailers that desire to locate in these zones and comply with Healthy Food Retailer designation requirements will receive incentives including, but not limited to: Property tax abatement for property owners Gross Receipts Tax Abatement Expedited Permitting Business Licensing Fee Exemption Right of First Refusal for City-Owned Vacant Property Reduced Parking requirements Sales Tax Exemption- For purchases of designated materials and/or equipment Priority assistance from Ambassador (see R3) for food procurement, loan assistance, marketing assistance, legal assistance, lease negotiation assistance and individualized technical consulting Priority consideration for façade rehab program and CDBG funds Reduced energy costs Refrigeration equipment subsides 16 P age

17 The Healthy Food Retailer Designation requirements will be voluntary for businesses interested in receiving the Healthy Food Zones incentives. These requirements were informed by and are in alignment with the County of Los Angeles s Healthy Retailer Designation program requirements. Healthy food retailers desiring to receive incentives must comply by the following industry-approved standards: Grocery Store 13 : over 12,000 sq. ft. with o Substantial percentage of floor space dedicated to non-prepared foods and perishable goods; o 50% or more of store sales from healthy eligible staple foods OR o At a minimum 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. Neighborhood Market: 12,000 sq. ft. or less, with o At least 50% of canned items with no salt or sugar added o At least 7 varieties of fresh fruits and vegetables o Pricing strategies with seasonality o Produce and healthy items at checkout Farmers Markets: o Must accept EBT and/or CalFresh All retailers MUST: o Be located in a Healthy Food Zone o Meets minimum wage requirements for any staff o Consumer marketing and product placement favoring healthy food o WIC/CalFresh acceptance or application o Compliance with existing business requirements o Be certified through the Healthy Neighborhood Market Network Certification through the Los Angeles Food Policy Council s Healthy Neighborhood Market Network will include participation in a 5 module training on how to comply with the above standards. This training will connect aspiring retailers with departments and business that can assist in their efforts to meet these guidelines and will provide technical assistance in the application process. Enforcement, Monitoring & Compliance Standards for grocery stores and neighborhood markets were derived from existing guidelines. The grocery store standards were derived from the California Freshworks Fund s eligibility guidelines and the neighborhood market standards were derived from the Los Angeles County Department of Public Health s pilot Healthy Retail Recognition gold standards. This recognition pilot program is the result of a historic inter-departmental collaboration between Substance Abuse Prevention Centers (SAPC), Nutrition Education Obesity Prevention (NEOP), and Tobacco Control. The retailer recognition program coalesces the recommendations for responsible retail practices that support the priorities of the County Department of Public Health under one comprehensive list of healthy food retailer guidelines. The program will also offer incentives that the neighborhood markets can be eligible for through DPH. These standards have yet to be finalized or implemented through the department, however, the pilot standards have been heavily vetted and could be implemented by the City through the Healthy Food Retail Ambassador. 13 These standards are based on the California FreshWorks fund s standards for healthy food retail 17 P age