BILL ANALYSIS Ó
AB 581
Page 1
Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 581 (John A. Perez) - As Introduced: February 16, 2011
Policy Committee: AgricultureVote:
9 - 0
Health 18 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes the California Healthy Food Financing
Initiative (CHFFI) and Fund for the purpose of expanding access
to healthy foods in underserved communities. Further, it
requires, by July 1, 2012, specified agencies to prepare
recommended actions to be taken to promote food access within
California. This authority remains in effect until January 1,
2015. Specifically, this bill:
1)Requires that by July 1, 2012, the California Department of
Food and Agriculture (CDFA), in consultation with the
Department of Public Health (DPH) and the Department of Social
Services (DSS) prepare recommendations to the Legislature
regarding actions that need to be taken to promote food access
in the state.
2)Permits the creation of an advisory group to assist in
developing recommendations.
3)Requires CDFA, in consultation with DPH, DSS, and the State
Treasurer, to implement CHFFI.
4)Creates the CHFFI Fund in the State Treasury to be comprised
of federal, state, and private funds and requires them to be
used to expand access to healthy foods in underserved
communities.
5)States that money in the fund should be used to leverage other
funding including new markets tax credits, federal and
foundation grant programs, and incentives provided to
AB 581
Page 2
designated enterprise zones.
6)Sunsets these provisions on January 1, 2015.
FISCAL EFFECT
Given the size of the state and its large number of food
deserts, a significant food financing initiative would likely
cost tens of millions of dollars. The state of Pennsylvania
initially invested $30 million over a three year period in their
healthy food initiative. California is close to three times the
size of Pennsylvania.
COMMENTS
1)Rationale . This bill is intended to begin exploring strategies
for increasing access to fresh, healthy foods. This bill, the
author notes, is mirrored after successful healthy food
financing programs in the states of Pennsylvania and New York
and addresses the issue by encouraging the active pursuit of
opportunities to increase the number of grocery stores, farm
stands, farmers' markets, direct farm to institutions and
consumer markets, and community gardens in underserved urban
and rural communities.
2)Federal Healthy Food Financing Initiative . In early 2010, the
Obama Administration unveiled the Healthy Foods Financing
Initiative (HFFI) which proposes to allocate over $340 million
to the program to support projects that increase access to
healthy, affordable food in communities that currently lack
these options. Through a range of programs at (USDA), the
U.S. Treasury, and the federal Department of Health and Human
Services (HHS), HFFI will expand the availability of
nutritious food, including developing and equipping grocery
stores, small retailers, corner stores, and farmers markets
selling healthy food.
USDA's proposed 2011 budget includes a funding level of $50
million that will support more than $150 million in public and
private investments in the form of loans, grants, promotions,
and other programs designed to create healthy food options in
food deserts across the country.
AB 581
Page 3
The U.S. Treasury plans to dedicate $275 million to support
private sector financing of healthy foods options in
distressed urban and rural communities: Through the New
Markets Tax Credit (NMTC) and financial assistance to
Treasury-certified community development financial
institutions (TCDFIs), the U.S. Treasury has a proven track
record of expanding access to nutritious foods by catalyzing
private sector investment. The budget requests $250 million
in authority for the NMTC and $25 million for financial
assistance to TCDFIs.
HHS proposes up to $20 million in Community Economic
Development (CED) program funds for community-based efforts to
improve the economic and physical health of people in
distressed areas: Under the CED program, HHS will award
competitive grants to Community Development Corporations to
support projects that finance grocery stores, farmers markets,
and other sources of fresh nutritious food. These projects
will serve the dual purposes of facilitating access to healthy
food options while creating job and business development
opportunities in low-income communities, particularly since
grocery stores often serve as anchor institutions in
commercial areas.
3)Healthy Food Financing Initiatives in Other States . The
Pennsylvania Fresh Food Financing Initiative is designed to
increase the number of supermarkets or other grocery stores in
underserved communities across Pennsylvania. The initiative
serves the financing needs of supermarket operators that plan
to operate in these underserved communities where
infrastructure costs and credit needs cannot be filled solely
by conventional financial institutions.
The Pennsylvania legislature created the Pennsylvania Fresh
Food Financing Initiative, a grant and loan program designed
to encourage supermarket development in underserved
neighborhoods throughout the state. Pennsylvania appropriated
$30 million over three years to the program and the
Reinvestment Fund leveraged the investment to create a $120
million initiative.
In 2009, the city of New Orleans created the Fresh Food Retail
Incentive Program and the Louisiana legislature passed the
Healthy Food Retail Act. This legislation created the
structure for a financing program that will provide grants and
AB 581
Page 4
loans to supermarkets, farmers' markets and food retail
providers to improve access to fresh fruits and vegetables in
underserved communities in Louisiana and was modeled on the
Pennsylvania Fresh Food Financing Initiative.
In July 2009, Illinois established the Illinois Fresh Food
Fund, modeled on the Pennsylvania Fresh Food Financing
Initiative, with a $10 million dollar investment to encourage
supermarket development in underserved areas.
4)Program Detail Lacking . Nothing in this legislation defines
California's food financing initiative. If the author intends
for California's initiative to be similar to those undertaken
in other states or to that proposed by the federal government
in 2010, he may wish to consider outlining the basic
components of the initiative in the bill.
5)Related Legislation . AB 2720 (J. Perez) in 2010 was
substantially similar to AB 581. That bill was vetoed. In
his veto message, Governor Schwarzenegger wrote, "While my
administration shares the same goals as the author when it
comes to promoting healthy and affordable food access for
low-income communities in California, the Healthy Food
Financing Initiative has not yet been acted on by Congress.
Unless and until those important federal funding details are
known, this bill is both premature and unnecessary."
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081