BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair AB 581 (J. Perez) Hearing Date: 8/15/2011 Amended: 7/11/2011 Consultant: Katie Johnson Policy Vote: Ag. 6-0 Health 6-1 _________________________________________________________________ ____ BILL SUMMARY: AB 581 would establish the California Healthy Food Financing Initiative which would be intended to expand access to nutritious foods in underserved, urban and rural communities and to eliminate food deserts. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund CDFA administration $60 $120 $120 General CHFFI expenditures unknown, likely in the millions to tensGeneral/ of millions of dollars annually Federal/ Private _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. This bill would establish the California Healthy Food Financing Initiative (CHFFI) and would require the Department of Food and Agriculture (CDFA), in consultation with the California Department of Public Health (CDPH) and the Department of Social Services (DSS), and the State Treasurer's Office (STO), to administer the program, which would be modeled off of the National Healthy Food Financing Initiative. The national initiative is intended to expand access to nutritious foods in underserved, urban, and rural communities and to eliminate food deserts across the country within seven years. CDFA, in consultation with the departments above, would be permitted to coordinate efforts to maximize the funding opportunities provided by the federal 2010 Healthy Food Financing Initiative. This bill would establish the California Healthy Food Financing AB 581 (J. Perez) Page 1 Initiative Fund which would be comprised of federal, state, philanthropic, and private funds. The monies would be expended, upon appropriation by the Legislature, for the purposes of expanding access to healthy foods in underserved communities and to leverage other funding, including, but not limited to new markets tax credits, federal and foundation grant programs, incentives available to designated enterprise zones, the federal Specialty Crop Block Grant Program, and the private sector. This bill would require CDFA, in consultation with CDPH and DSS, by July 1, 2012, to prepare recommendations on promoting food access within California. CDFA would be permitted to establish an advisory group of not more than 21 members. Fiscal Impact The scope of the program is broad in its mission and it is unclear as to what activities the program would undertake. Therefore, the costs could be minimal or significant, depending on the type of program CDFA would design. However, a significant program would likely cost tens of millions of dollars. For example, Pennsylvania initially invested $30 million over a three year period in their healthy food initiative and California's population is roughly 3 times the size of Pennsylvania's. Costs to CDFA to provide staff to administer the program would be approximately $120,000 in General Fund annually ongoing. This program would sunset January 1, 2015. AB 581 is similar to AB 2720 (J. Perez, 2010), which was vetoed by Governor Schwarzenegger. The veto message stated, "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." Federal Healthy Food Financing Initiative In early 2010, the Obama Administration proposed the Healthy Foods Financing Initiative, which was to allocate over $340 million to the program to support projects that increased access to healthy, affordable food in communities that currently lack those options such as developing and equipping grocery stores, small retailers, corner stores, and farmers markets with healthy foods in these areas. AB 581 (J. Perez) Page 2 At the federal level, the United States Department of Agriculture (USDA), United States Treasury, and the Department of Health and Human Services (HHS) all have programs that would work together to eliminate food deserts using existing funding sources. The USDA is offering $50 million that would leverage more than $150 million in public and private funding in the form of loans, grants, promotions, and other programs designed to create healthy food options in food deserts. The United States Treasury plans to dedicate $275 million to support private sector financing of healthy foods in distressed urban and rural communities through the New Markets Tax Credit and financial assistance to Treasury-certified community development financial institutions. HHS proposes up to $20 million in Community Economic Development program funds for community-based efforts to improve the economic and physical health of people in distressed areas through competitive grants to support projects that finance grocery stores, farmers markets, and other sources of fresh, nutritious food.