Food Deserts Act of 2016

To authorize the Secretary of Agriculture to make grants to States to support the establishment and operation of grocery stores in underserved communities, and for other purposes. 1. Short title This Act may be cited as the Food Deserts Act of 2016 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. 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). 4. Definitions In this Act: (1) Capitalization grant The term capitalization grant (2) Healthful food The term healthful food (3) Grocery store The term grocery store (4) Program The term program (5) Program participant The term program participant (6) Revolving fund The term revolving fund (7) Secretary The term Secretary (8) Staple food The term staple food 7 U.S.C. 6953(b) (9) State The term State (10) Underserved community The term underserved community 7 U.S.C. 1932(g)(9)(A)(ii)

Summary: 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.