On July 11, 2017, the Community & Economic Development Committee of the Oakland City Council approved $2.8 million in financing for our project. This milestone, coming just a month after we secured approval from the Oakland Planning Department, gives our project even greater momentum toward completing the final stage of construction financing that remains.
This financing from the City of Oakland comes from the New Markets Tax Credit (NMTC) program, a federal program designed to stimulate investment in distressed communities by providing private investors with tax credits. Learn more about the NMTC program.
In addition to providing our project with funding we potentially couldn’t otherwise get (as a startup food business planning to serve a low-income community), financing through the NMTC program also strengthens our community business by providing a very low interest rate, an interest-only period of 7 years, and debt forgiveness (at which time it becomes equity to the business).
Click here to read the Oakland City Council Resolution authorizing this financing. Please note that People’s Community Market is not directly mentioned in the Resolution. Rather references are made to Neighborhood Assets LLC, (the entity we will form to receive this financing) and “a grocery store at 3103 Myrtle Street”.
You’ll also note that the Resolution states “an allocation of up to $14 million of New Market Tax Credits”. This is because the NMTC program has a very complex structure involving investors, lenders and other entities and, as a result, requires a larger amount of tax credits to put an entire deal together. The project/business typically receives 20% of the total allocation which, in our case, is $2.8 million. Here’s an article about how the NMTC program works.
With this feather in our hat we’re now working through approvals with the Oakland Public Works and Building Depts., as well as the Alameda County Public Health Dept. We’re also going through underwriting for a construction loan for between $3.5M – $4.6M.
We want to extend gratitude to our partners, allies and, especially, our Founding Shareholders who have backed this project with critical seed funding that has enabled us to reach this and preceding milestones. Thank you for investing in a better West Oakland.
We look forward to sharing our next big milestone with you.