We asked LISC practitioners Schirra Hayes and Sonja Dean about their experience funding the Church Hill Grocery Store in Richmond and the People’s Food Coop in Kalamazoo, respectively. As both projects were established in neighborhoods where additional options for healthy and affordable food were needed, Schirra and Sonja worked closely with community partners on these projects.
Read the Q&A to learn more about how Schirra and Sonja’s got these deals done, as well as the impact that Church Hill Grocery Store and People’s Food Coop had on the surrounding community.
How did you become aware of the People’s Food Co-op project and what was LISC's involvement?
Kalamazoo is a relatively small community with a lot of interconnections between people and deep relationships. I became aware of the People’s Food Co-op project in 2009 early in their planning through a personal relationship with the store manager. He approached me during the conceptual stage of the project to talk about where I thought he could find financial support for a construction project. The concept was very much in the preliminary stage of design development, and we shared information about potential financial products.
About a year later after initially discussing the project with the manager, a borrower and a community bank emerged that were interested in supporting the project, but could not wrap their arms around the aggressive business projections and debt coverage ratio. They asked if we would also finance the project, and, through a series of negotiations, landed on a structure that resulted in a shared first lien position. Construction began in 2011, and, by all accounts, the store has been a rousing success, including the installation of a small addition in 2017 with café seating for customers.
What's your perception of grocery store projects generally? Had LISC Kalamazoo invested in this type of project before? What type of guidance did you provide on this project specifically?
Co-op grocery stores are a well-established model nationally, with industry-specific technical support and assistance from national trade association partners. While LISC was certainly able to provide guidance and expertise gained from our prior experience in financing the North Park Street commercial center, which included the Felpausch Market, this People’s Food Co-op project tapped into a diverse array of support and resources from their existing state and national partners, as well as the City of Kalamazoo and LISC. This project was truly a community initiative, and we became comfortable with the partners and project structure relatively quickly.
Was the technical assistance needed for this project different than what you typically provide?
No, not really. All partners, but especially those that are smaller, newer developers, need a varying degree of hand-holding when they get started and often come to LISC before the project is fully fleshed out. Early technical assistance is often in establishing what the project is, what tools and resources are needed to move a project forward into the varying stages of development, and where our tools can add value to community-based initiatives. Grocery stores in general need a different type of financial analysis than, say, a housing development project, but in general the tools and resources we are able to bring to a project are similar, and the technical assistance provided doesn’t vary dramatically. We always want to know whether this is addressing a community need, if the proforma and projections make sense, whether we have a reasonable assurance that our financing can and will get repaid and what mitigants are needed to get comfortable with the project if it is a projections-based financial analysis.
The recent Center for Food Innovation Center is also spurring economic growth in Kalamazoo by increasing food access and creating jobs in food production. Can you speak more about how the Center came about and the value in a multi-layered investment to a community like Kalamazoo?
The Kalamazoo Valley Community College (KVCC) Food Innovation Center was the realization of a long-term commitment and desire by our local community college system to be rooted in and invested in Kalamazoo. It is the third urban campus developed by KVCC over the past 25 years outside of their main campus in Kalamazoo Township. My recollection was that development of this campus was originally considered in the central downtown area, but the land assembly and logistics did not work as intended in that area, and KVCC made a strategic decision to place this campus on property just south of downtown in the Edison neighborhood, Michigan LISC’s Building Sustainable Communities target area.
It is a deep partnership project between three anchor institutions, KVCC, Kalamazoo Mental Health and Substance Abuse Services and Bronson Hospital which helped assemble and provide the property needed to build the three facilities in the project: the Food Innovation Center, Allied Health building and KCMHSAS facilities. We invested in the Food Innovation Center portion of the project, which also used New Markets Tax Credits. LISC has since provided AmeriCorps support, and is currently reviewing a grant request to support deployment of a neighborhood-centered urban farming program to help entrepreneurs start or expand urban agriculture efforts in the city. Multi-layered investment is needed in this project, like all projects. Investors rarely want to be the only skin in the game, taking on all of the financial risk of a project. And in Kalamazoo, like all communities, LISC prefers to see broad interest and commitment from a variety of supporters, both financially and conceptually, as it frequently demonstrates some level of community buy-in and alignment with a broader vision.
Read the first part of the Q&A to learn more about the Church Hill Grocery Store in Richmond with practitioner, Schirra Hayes.