SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Food Deserts Act of 2016''.

SEC. 2. GRANT PROGRAM TO ESTABLISH GROCERY STORES IN UNDERSERVED 
              COMMUNITIES.

    (a) Establishment of Grant Program.--The Secretary shall establish 
a program to provide capitalization grants to States for the purpose of 
establishing revolving funds to support the establishment and operation 
of grocery stores in underserved communities.
    (b) Administration.--A State receiving funds under this Act shall 
administer the revolving fund of the State through an instrumentality 
of the State with such powers and limitations as may be required to 
operate such fund in accordance with the requirements of this Act.
    (c) Projects and Activities Eligible for Assistance.--Amounts in a 
revolving fund shall be used for the purpose of making loans--
            (1) to open a grocery store in an underserved community, 
        except that such loan may not be used for the purpose of new 
        construction;
            (2) to support the operations of an existing grocery store 
        in an underserved community;
            (3) to facilitate the fair market value purchase of an 
        existing grocery store in an underserved community; or
            (4) to support the operations of a program participant that 
        is located in a community that would be an underserved 
        community if the program participant was not located in such 
        community.
    (d)  Grocery Stores Eligible for Assistance.--
            (1) Required criteria.--A State receiving a capitalization 
        grant under this Act may only make a loan from the revolving 
        fund of the State to an entity that the State determines--
                    (A) is a grocery store or will be a grocery store 
                after opening;
                    (B) emphasizes or will emphasize unprocessed, 
                healthful foods;
                    (C) provides or will provide a variety of raw 
                fruits and vegetables;
                    (D) provides or will provide staple foods;
                    (E) has a plan to keep such foods in stock to the 
                extent possible;
                    (F) charges or will charge prices at or below 
                municipal averages; and
                    (G) is sufficiently qualified to operate a grocery 
                store.
            (2)  Priority criteria.--
                    (A) Nonprofit or municipally owned entities.--A 
                State shall prioritize an application for a loan from 
                the revolving fund of the State from a nonprofit 
                organization or municipally owned entity that the State 
                determines--
                            (i) hires or plans to hire workers who 
                        reside within the underserved community that 
                        would be served by the entity;
                            (ii) provides or plans to provide classes 
                        or other educational information about a 
                        healthful diet;
                            (iii) sources or plans to source food from 
                        local urban farms and gardens;
                            (iv) does not or will not sell alcohol or 
                        tobacco products;
                            (v) demonstrates existing supply chain 
                        relationships in the grocery industry; or
                            (vi) demonstrates expertise in the grocery 
                        industry.
                    (B) For-profit entities.--A State shall prioritize 
                an application for a loan from the revolving fund of 
                the State from a for-profit entity that the State 
                determines meets any of the requirements in clauses (i) 
                through (iv) of subparagraph (A).
    (e) Application.--An entity that desires a loan from a revolving 
fund of a State shall submit an application to the State at such time, 
in such manner, and containing such information as the State may 
require.
    (f) Loan Conditions.--
            (1) In general.--A loan distributed from a revolving fund 
        by a State may be used by a program participant only for the 
        purposes specified in subsection (c).
            (2) Interest rates.--A loan distributed by a State from a 
        revolving fund shall be made at or below market interest rates, 
        including an interest free loan, at terms not to exceed the 
        lesser of 30 years or the projected useful life (as determined 
        by the State) of the project to be financed with the proceeds 
        of the loan.
            (3) Structure of loan.--A loan may be distributed from a 
        revolving fund by a State to a program participant in a lump 
        sum or in multiple distributions over a period of years.
            (4) Loan amount.--A State may not provide a loan to a 
        program participant from the revolving fund of the State in a 
        fiscal year that exceeds 10 percent of the amount available 
        from the fund for making distributions in that fiscal year.
            (5) Payments.--Annual principal and interest payments on a 
        loan received from a revolving fund of a State shall commence 
        not later than 1 year after the loan is disbursed to the 
        program participant and all loans will be fully amortized upon 
        the expiration of the term of the loan.
            (6) Revenue for repayment.--A program participant shall 
        establish a dedicated source of revenue for repayment of a loan 
        received from a revolving fund of a State.
            (7) Crediting revolving fund.--A revolving fund of a State 
        shall be credited with all payments of principal and interest 
        on all loans made from the revolving fund.
    (g) Administration Costs.--A State shall charge a program 
participant an administrative fee of not more than 4 percent of the 
loan amount. The State shall use the fees to administer the revolving 
fund and conduct administration activities under this Act.
    (h) Technical Assistance.--The Secretary shall provide technical 
assistance to program participants to assist with sourcing of food, 
food storage, and other operational requirements.
    (i) Bankruptcy.--In the case of the bankruptcy of a program 
participant, amounts owned on a loan from a revolving fund shall be 
afforded precedence over other debt.
    (j) Grocery Store Earnings.--Earnings of a nonprofit organization 
or municipally owned program participant that are attributable to a 
loan received from a revolving fund of a State shall be used for 
reinvestment into the program participant or to support the continuity 
of operations of the program participant.

SEC. 3. CAPITALIZATION GRANTS TO FUND STATE REVOLVING FUNDS.

    (a) Eligibility of State for Capitalization Grant.--To be eligible 
for a capitalization grant, a State shall--
            (1) establish a revolving fund that complies with the 
        requirements of this Act;
            (2) establish a process for applications and criteria for 
        making loans from the revolving fund, subject to the 
        requirements in section 2(d); and
            (3) match no less than 20 percent, from non-Federal 
        sources, of the amount of the capitalization grant provided to 
        the State.
    (b) Upon Receipt of Capitalization Grant.--Upon the receipt of a 
capitalization grant, a State shall deposit such capitalization grant 
into the revolving fund of the State.
    (c) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this Act--
            (1) $150,000,000 for fiscal year 2017; and
            (2) such sums as may be necessary for subsequent fiscal 
        years.
    (d) Distribution.--For a fiscal year, the Secretary shall apportion 
amounts made available for capitalization grants under this section 
among the States eligible under subsection (a) in the ratio that--
            (1) the population of underserved communities in each State 
        eligible under subsection (a); bears to
            (2) the population of underserved communities in all States 
        eligible under subsection (a).

SEC. 4. DEFINITIONS.

    In this Act:
            (1) Capitalization grant.--The term ``capitalization 
        grant'' means a grant made to a State under the program.
            (2) Healthful food.--The term ``healthful food'' means food 
        that reflects the most recent Dietary Guidelines for Americans.
            (3) Grocery store.--The term ``grocery store'' means a 
        retail store that derives income primarily from the sale of 
        food for home preparation and consumption.
            (4) Program.--The term ``program'' means the program 
        described in section 2(a).
            (5) Program participant.--The term ``program participant'' 
        means an entity that has received a loan under the program.
            (6) Revolving fund.--The term ``revolving fund'' means a 
        fund established by a State for use as a depository for a 
        capitalization grant.
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Agriculture.
            (8) Staple food.--The term ``staple food'' has the meaning 
        given the term in section 243(b) of the Agricultural Act of 
        2014 (7 U.S.C. 6953(b)).
            (9) State.--The term ``State'' means States of the Union, 
        the District of Columbia, Puerto Rico, the Virgin Islands, 
        Guam, American Samoa, and the Northern Mariana Islands.
            (10) Underserved community.--The term ``underserved 
        community'' has the meaning given the term in section 
        301B(g)(9)(A)(ii) of the Consolidated Farm and Rural 
        Development Act (7 U.S.C. 1932(g)(9)(A)(ii)).
Food Deserts Act of 2016  This bill establishes a Department of Agriculture program to provide grants to states for revolving funds to support the establishment and operation of grocery stores in underserved communities.  An underserved community is a community that has: (1) limited access to affordable, healthy foods, including fresh fruits and vegetables, in grocery retail stores or farmer-to-consumer direct markets; and (2) a high rate of hunger or food insecurity or a high poverty rate.  States must use the funds to make loans to support grocery stores in underserved communities, including for:    opening a store (excluding new construction),   supporting an existing store,   purchasing an existing store, or   supporting a store located in a community that would be underserved without the store.   States may only make loans for qualified grocery stores that:    emphasize unprocessed, healthful foods;  provide staple foods and a variety of raw fruits and vegetables;   have a plan to keep the foods in stock; and  charge prices at or below municipal averages.   States must prioritize loan applications from entities that meet criteria, including:    hiring workers from the underserved community,   providing classes or educational information about a healthful diet,  sourcing food from local urban farms and gardens,  not selling alcohol or tobacco products, or demonstrating existing supply chain relationships or expertise in the grocery industry.  
Food Deserts Act of 2016