THE FRESH FOOD FINANCING INITIATIVE (FFFI), the Pennsylvania program that has sparked development of supermarkets throughout the state, encompasses a cross-section of private and public funding.
It started in 2004 with a grant of $30 million from the state that extended over three years. The Reinvestment Fund, a community investment group based in Philadelphia, “pledged to match the public money 3-to-1 with private resources,” said Patricia Smith, TRF's director of special initiatives. To date, the group has raised more than $117 million in private funds earmarked for supermarket development, she said; so far $72.9 million in loans and $11.3 million in grants have been approved.
The state grant was used in part to create a $40 million pool of loan capital from six financial institutions, managed by JP Morgan Chase bank. TRF has also provided $1.4 million from its own Core Loan Fund. In addition, TRF was also able to attract private investment from food retailers and developers by incorporating the federal New Markets Tax Program, which enables companies to get federal tax credits for investing in projects in economically distressed communities. “We were able to create tax credit pools that spread out the risk among a number of investors,” Smith said.
Retail operators and developers also contributed to the program in return for direct grants. “An applicant has to put some money on the table,” Smith said.
Start-up costs are the chief target of FFFI financing. “If we can help operators and developers overcome that barrier, it levels the playing field,” Smith said.
Smith pointed out that the success of the program stems from its flexibility. “We worked closely with operators and developers to see what their financial needs were and come up with the right mix of financial products to address their needs,” she said.