NMTCs Bring Mission-Driven Healthy Foods Grocer to Oakland, Calif.

Published by Mark O’Meara on Tuesday, July 9, 2019
Journal cover thumb July 2019

The neighborhood of West Oakland, Calif., got a much-needed grocery store with a healthy foods focus, which was financed partly by a new markets tax credit (NMTC) investment. 

However, it isn’t an ordinary grocery store chain. Instead, Community Foods Market is an independent grocery store looking to improve public health and economic opportunities in the community. 

“We are characterized as a social enterprise. Our genesis and purpose is to address problems arising in neighborhoods with a severe lack of access to healthy, fresh affordable foods,” said Brahm Ahmadi, president and CEO of Community Foods Market. 

Ahmadi has worked in West Oakland for many years, founding People’s Grocery in 2002 and serving as the executive director until 2010. People’s Grocery blends grassroots organizing, health education and youth development with social entrepreneurship and sustainable agriculture. Community Foods Market grew from this endeavor. 

While running People’s Grocery, Ahmadi did a lot of community engagement and built a network of relationships. “Through that, we saw the need for more scale to meet the needs of the neighborhood,” said Ahmadi. “We needed to provide a brick-and-mortar store. … This neighborhood hasn’t had a supermarket since the 1970s.” 

Community Foods Market is 14,000 square feet and has seven aisles of groceries and a large produce department, which will carry imperfect produce. Ahmadi said this is important because 40 percent of fruits and vegetables never leave the farms because of their aesthetics. 

The store also includes a deli, meat and seafood counter, dairy products and an assortment of traditional groceries. There are three categories of each major grocery product, including a national brand, a value item and a specialty item. There is a wall of value where seasonal discounted grocery items are for sale in larger quantities. “The groceries are there for a convenience factor,” said Ahmadi. “Our focus is fresh foods and perishables.” 

Community Foods Market also features the Front Porch Café, which is accessible from inside the store and also has a separate entrance. The café serves hot meals for lunch and dinner and has live music and entertainment. “Folks want a destination in the neighborhood to have social experiences,” said Ahmadi. 

Ahmadi believes his independent grocery store is better suited for West Oakland than a larger chain store. 

“Independent grocery stores can curate a specific product mix for the neighborhood they are a part of. Most chains don’t do a good job of listening to the community. But, we can listen,” said Ahmadi. “Independent grocery stores have tremendous flexibility. They can put new products on shelves in 48 to 72 hours.” 

“We are confident because the project is so grounded in community impact. It’s such a well-informed idea,” said Catherine Howard, director of strategic initiatives at Community Vision (formerly the Northern California Community Loan Fund), which provided an array of financing to this development. 

Ahmadi strives to be much more than a profit-driven grocery store. “I wouldn’t do this if it were just a pure profit play. I am passionate about serving this neighborhood,” said Ahmadi. “This neighborhood has a long history of neglect and disinvestment, both by the government and the private sector.” 

Ahmadi wants Community Foods Market to improve access to fresh and healthy foods and become, “A real resource for the community, an anchor for public health.” 

“Just opening a store in an underserved neighborhood doesn’t translate into better outcomes,” said Ahmadi. “It’s a balance between getting the right project with a way to engage and educate.”

Ahmadi plans to do plenty of community engagement, from working with nonprofits to offering education programs and health services such as prescreenings paired with nurse practitioner appointments who can provide recommendations for diet and lifestyle changes. 

Community Foods Market will have programs for people of all ages. There will be a kids fruit card program where local children come to the store with their card and get a free piece of fruit. Ahmadi said this will be an impactful program as 90 percent of the local elementary school children qualify for free or reduced lunch at school. 

There will be a senior day every Tuesday. Ahmadi said seniors will receive discounted groceries and there will be a social aspect. Ahmadi envisions getting volunteers to come to the store Tuesday to socialize with the seniors, help them shop and walk the seniors home with their groceries–there are two senior centers about a block from the grocery store. 

Ahmadi would also like to create a point-of-sale platform through a membership program, where the grocery store could send information and promotions to each customer along with targeted coupons, recipes and newsletter information. He said this model may be implemented later on. 

Community Foods Market opened June 1. 


The development was financed with a complex capital stack, including NMTCs. Capital One was a community development entity and investor, providing a $1.5 million NMTC allocation and a $3.6 million NMTC equity investment. “Capital One had an opportunity to make an investment to help feed the neighborhood through healthy foods. This area of Oakland has been struggling. lt’s been 30 to 40 years since this neighborhood had a grocery store,” said Bert Holland, senior vice president of tax credit finance at Capital One Commercial Banking. “There was a strong need for credits to help round out the capital stack, and the ‘but for’ test for the investment was strong and aligns with Capital One’s investment priorities.” 

Community Vision provided a $10.7 million NMTC allocation, a $6.1 million leverage loan and a $3.5 million construction loan. “This is just tremendous impact from a new markets perspective,” said Ross Culverwell, chief lending officer at Community Vision. “Community Foods Market will hire people from the local community and provide good wages. There will be 40 full time jobs, 75 percent of which will go to low-income people with preference for West Oakland residents.” Culverwell said employees working three-quarter time or more will get health benefits. 

Through California FreshWorks, Community Vision also provided credit enhancements for its $3.5 million construction loan, Self Help’s $2 million construction loan, and the NMTC leverage loan. California FreshWorks is a healthy food financing initiative that has invested more than $85 million in improving healthy food access in California’s low-income communities. Community Vision and FreshWorks also provided two challenge investments totaling $150,000 to help raise money during Community Foods Market’s direct public offering, as well as a $25,000 grant for predevelopment architecture work outside of the NMTC financing structure. 
“We needed to provide the credit enhancement. This truly is a start up, so there is risk there,” said Community Vision’s director of strategic initiatives Howard, who manages California FreshWorks. “We definitely like to bring all our assets together on projects as relevant.” Howard stressed the importance of balancing debt and equity funds on this project and not being overly depend on debt. “It’s important not to put an immediate burden on the operating business,” said Howard. 

Community Foods Market raised $2.3 million through a direct public offering. The store has 650 shareholders. 

“This development is a great fit for the NMTC program,” said Bryan Hung, partner in the Long Beach, Calif., office of Novogradac, whose team assisted in structuring the multilayered financing and consulted on the financial closing process. “The Community Foods Market provides jobs, brings fresh, healthy foods to a food desert and creates a place for community engagement.” 

Journal July 2019 NMTC Community Foods Financing