KANSAS HEALTHY FOOD INITIATIVE Guidebook
STATEMENT OF PURPOSE Every Kansan should have access to healthy, affordable food, but more than 800,000 do not have access within a reasonable distance from their home. More than 30 percent of Kansas counties are considered food deserts according to the U.S. Department of Agriculture. To help create a system that supports efforts improving food access, the Kansas Health Foundation, or KHF, has provided $4.2 million for the Kansas Healthy Food Initiative, also known as KHFI. Healthy food projects and investors will be able to leverage KHF funds with other funding opportunities to sustain or create food access points in areas of great need. Approved KHFI efforts could include the development or renovation of a grocery store, improving food distribution to rural grocers, offering technology or energy-efficient improvements to grocers, or seeking innovative solutions for food access points in food deserts. Kansas State University s Center for Engagement and Community Development will serve as the food access organization helping to implement the KHFI by working directly with retail outlets and organizations, reviewing all applicants to the program for eligibility, as well as connecting to available technical assistance resources. K-State has been a leader in improving food access in areas that need it most, launching the Rural Grocery Initiative in 2007. The Food Trust, a national organization focused on food retail for underserved populations, will assist K-State with best practices and evaluation. NetWork Kansas will provide the program with a strategic financial partnership as KHFI projects are created across the state. IFF, a nonprofit community development financial institution, manages the loan/grant pool for food access projects across Kansas and will provide financing to eligible applicants. APPLICATION PROCESS Applicants for financing will be evaluated and approved on a rolling basis while funds remain available. As the food access organization, the Center for Engagement and Community Development will review each application to determine whether the proposed project meets program goals and will work in tandem with NetWork Kansas to determine the financial viability of each project. Applying for financing from the Kansas Healthy Food Initiative is a two-step process: 1. Intake Application: Before moving forward with financial evaluation, the applicant must complete an Intake Application, which can be found at kansashealthyfood.org/. The intake is used to determine that the proposed project aligns with KHFI s goals and objectives by serving low-to-moderate income, underserved communities and meets additional eligibility criteria including community support. The programmatic eligibility criteria are outlined in Section 3: Eligibility Criteria. 2. Application for Financing: Once a project s programmatic eligibility is determined, the applicant will receive notice of its eligibility status and, where appropriate, an invitation to apply for financing. To continue the process and apply for funding, the applicant must complete an Application for Financing, which will be provided.
ELIGIBILITY CRITERIA Types of Entities: An eligible applicant may be a for-profit business enterprise, including a corporation, limited liability company, sole proprietor, cooperative or partnership; not-for-profit corporation; agricultural cooperative corporation; public benefit corporation; municipal corporation; regional market facility; or a food cooperative open to the general public without a membership fee. Types of applicants include the following: Grocery store developer and/or owner (national chain, regional chain, singular retail outlet, small neighborhood store, etc.). Food distributors. Local food producers. Innovative food access projects. Alternative food project, such as farmers market or food hub.* * Food hubs are defined as a facilitator of aggregation, processing, storage and distribution of locally grown foods. They are often intermediaries between small farmers and consumers, gathering local food and getting it to retailers, wholesalers and institutions. Purpose To be eligible to participate in the program, the applicant must meet one of the following requirements: Plan to open or renovate a supermarket or other grocery retail outlet primarily selling affordable fresh produce, seafood, meat, dairy and other groceries. Develop an alternative food project such as an affordable healthy neighborhood food store, farmers market or food hub. Improve an existing market s ability to stock and sell a variety of affordable fresh fruits and vegetables where fresh produce carrying capacity had previously been limited or nonexistent. Real estate projects which have multi-tenant uses beyond a supermarket tenant may be eligible if: The development project has been split into separate footprints, allowing the KHFI grant or loan to focus only on the supermarket tenant portion. The retail development intends to lease space to retailers of fresh foods not sold in limited assortment grocery stores. The viability of the development site and proposed supermarket is contingent on ancillary nonfood tenants and that those nonfood tenants do not represent more than 50 percent of the building area square footage. Applicant Experience The applicant or members of the applicant s management team must demonstrate capacity and experience managing a grocery store or fresh food retail outlet that is similar to the proposed project. A minimum of three years of comparable management experience is recommended. A more comprehensive analysis of business plans and management capacity is undertaken during financial review/underwriting.
Ineligible Activities Applicants that fail to demonstrate a commitment to providing fresh, healthy foods in the judgment of program administrators. Multi-tenant projects leasing space to businesses involved in the following: entertainment of a prurient sexual nature, gambling, illegal activity or pyramid sales. Location The applicant s project must be: In a location that meets low- to moderate-income, or LMI, criterion described below. In a location that meets underserved criterion, also described below. LMI Criterion Eligible projects must primarily serve an LMI community by one of the following: Locating in an LMI census tract. Demonstrating that a significant number of customers live in LMI areas. Underserved Criterion A location is considered underserved if there are no comparable fresh food markets or full-service grocery stores within an applicant s trade area. We examine the trade area to determine if the project is in an underserved community by evaluating whether there are any existing comparable markets within the trade area radius, or whether residents must travel outside the trade area to meet their grocery needs. This helps ensure that we do not fund projects where stores already exist and ensures program dollars impact underserved communities. Trade areas are used to approximate the service area of a store and are developed in collaboration with the grocery industry and community leaders. Community Fit and Other Criteria The proposed project must be assessed for project scope, community impact, accessibility of the site location to disadvantaged populations and local support. The qualitative assessment examines several characteristics, including: The presence of community support in terms of store quality, affordability and site location. A store concept that demonstrates financial sustainability and meets program goals further examined during financial underwriting. A demonstrable positive impact on the economy or well-being of the neighborhood, community or region, inclusive of minority and/or high-priority populations. A management team with demonstrated capacity see Applicant Experience section. Additional criteria can increase consideration and lead to prioritization of projects. These criteria include: The project will result in a substantial increase in revenues for the state, the host municipality or the market region. The project adheres to sound land-use principles, energy efficiency, historic preservation or local/sustainable sourcing. The project has identified a gap of capital requiring the use of flexible funding to move forward, to create impact, or to be competitive with similar projects in the region. The project is working in conjunction with other programs or initiatives promoting community development. The project will positively impact economic conditions in an economically distressed census tract in Kansas.
FINANCING Once the above eligibility criteria have been considered and a project has been deemed eligible for the program, IFF will invite the applicant to submit a financial application. If IFF assesses the financial application and is satisfied that the project will be financially viable, it may approve the application for a financial package. IFF will create financial packages based on eligible applicants need and financial viability, as indicated in their application materials. Financing may be in the form of loans, forgivable loans, grants or a combination of the three. Loan Purpose Loans from the KHFI program will fund costs associated with real estate acquisition, predevelopment, construction or rehabilitation, equipment, and infrastructure. Loans will be made in instances where conventional financial institutions either do not offer financing, or the conventional financing offered is insufficient or on terms which are a detriment to the feasibility of the project. The loan applicants will be required to contribute 5 percent equity to the subject project being financed through this program. LOAN PARAMETERS $10,000 to $2.5 million (case-by-case larger loans available through bank/cdfi partnerships). Terms: 1 to 15 years. Interest Rates at 5 to 6.5 percent interest (interest only available in early years as needed). Flexible loan structure including: - Can be secured with first mortgage, second mortgage, or lien on equipment or leasehold. - No appraisal necessary. - No prepayment penalty. Flexible project types and use of funds. Grants Grants may be awarded to eligible applicants. Grants will be awarded to projects that meet a significant amount of the stated program criteria and can clearly demonstrate the but-for necessity of the requested funds. Additionally, preference will be given to programs/projects that have leveraged additional financial resources. Limits are in place on the amount of grant funding that can be awarded to one operator overall. GRANT PARAMETERS Most grants will range between $5,000-$100,000. Preference is given to projects that have: - High-impact ratings. - Leveraged other financial sources (especially for larger grant requests). May use grants for: - Loan credit enhancement (i.e. loan loss reserves). - Capital improvements. - Equipment. - Predevelopment. - Fund start-up working capital. - Scaling production/distribution.
Center for Engagement and Community Development 324 Nichols Hall 702 Mid-Campus Drive South Manhattan, KS 66506 785-532-6868 khfi@k-state.edu kansashealthyfood.org