Receive update on Yolo Regional Food Hub Project and consider approval of a subaward agreement in the amount of $2,000,000 for land acquisition and preliminary build-out costs in substantially the form provided, subject to approval by the County Administrator and County Counsel to ensure compliance with federal regulations, or provide alternative direction to staff. (No general fund impact) (Rinde/Will)

Receive update on Yolo Regional Food Hub Project and consider approval of a subaward agreement in the amount of $2,000,000 for land acquisition and preliminary build-out costs in substantially the form provided, subject to approval by the County Administrator and County Counsel to ensure compliance with federal regulations, or provide alternative direction to staff.

ARP Background
On September 28, 2021, the Board of Supervisors (Board) approved the initial American Rescue Plan (ARP) Expenditure Plan, which included $2 million allocated for the Yolo Regional Food Hub project (Project) under the Priority Project category. The nonprofit New Season Community Development Corporation submitted this proposal to Yolo County staff, which was reviewed and considered by the Board on multiple occasions. The Project would seek to develop a regional food hub in Esparto, in partnership with the Yolo Food Bank, Fiery Ginger Farm/SPORK Food Hub, and Capay Valley Farm Shop and would require obtaining sizable state or federal grants in addition to the County contribution to bring the full vision to reality. The Project plans to develop and expand existing facilities for aggregating, processing, storing, and distributing farm produce grown in Yolo County and surrounding areas and recovered food, as defined by Senate Bill 1383. The need for a regional food hub has been long recognized, but the COVID-19 pandemic has enhanced the urgency to develop this Project to provide relief to local farmers, promote healthy childhood eating habits, improve regional food security, increase employment and job opportunities, and stabilize local food markets. Furthermore, the Project supports the County's 2020-2025 Strategic Plan in the areas of Flourishing Agriculture, Sustainable Environment, Robust Economy, and Safe Communities.

Staff and the Project team have continued to communicate and meet to progress this work, and staff returned to the Board on January 11, 2022, with an item to approve the first phase of work for the Project. This initial first phase included $888,350 for land acquisition, Environmental Site Assessment Phase 1 & 2, grant application/fundraising assistance, and bookkeeping expenses. This amount was anticipated to be drawn down from ARP revenue reimbursement, in order to avoid eligibility challenges for using ARP funds in the case of other matching federal grants. However, in the Final Rule issued by the US Treasury in February 2022, it was indicated that general federal provisions (2 CFR Part 200) still apply to projects undertaken with revenue reimbursement funds.

Current Status
In the months between January and now, staff has worked with the Project team to develop a plan to site the project as well as a business plan. Many changes have occurred during this time, and the original property planned for purchase received an offer from an outside entity that the seller accepted, thus prompting the Project team to determine new sites and also an updated business operating model. With the changes in proposed sites, the anticipated agreement between the County and the Project team has been altered as well to reflect award of the full $2 million dollars to be used for land acquisition of the Food Hub site and preliminary build-out costs, including site assessment and related consultant expenses. Regardless of whether a project is ARP eligible or uses revenue reimbursement as a source of funds, the County still must comply with certain federal requirements when dealing with property acquisitions and projects of a certain size and scope. The proposed Subaward Agreement for the Project is included as Attachment C to this staff report and is in a substantively final form; however, the final form will be agreed upon with County Counsel prior to execution and there may be minor changes and modifications. 

Updated Statement of Work
The attached Subaward Agreement includes an updated Statement of Work for the Project as follows:

The Project will purchase land on which to construct a regional food hub, undertake an environmental assessment on and for that land, initiate design and construction work to improve a portion of the property, support fundraising for future construction and other costs, and contribute to the expense of administering the aforementioned activities. The future food hub will include facilities for aggregating, processing, storing, and distributing farm produce grown in Yolo County and surrounding areas. The need for a regional food hub has been long recognized, but the COVID-19 pandemic has enhanced the urgency to develop this project to provide relief to local farmers, promote healthy childhood eating habits, improve regional food security, increase employment and job opportunities, and stabilize local food markets. Furthermore, the Project supports the County's 2020-2025 Strategic Plan in the areas of Flourishing Agriculture, Sustainable Environment, Robust Economy, and Safe Communities.

New Season Community Development Corporation will use the $2,000,000 from the County for land acquisition and preliminary build-out costs, including site assessment and related consultant expenses. Funding for remaining facility design and construction, equipment purchases, and business operations will come from other sources.

Business Plan
The Food Hub team provided the County with an updated business plan (Attachment A); however, the County had limited time to review it at the staff level (due to receipt on April 21) and thus have attached to this Board item. The time schedule has been accelerated due to the desire to promptly complete the agreements to give the Food Hub proponents an opportunity to secure this property (and attempt to avoid circumstances similar to the prior property which was removed from the market due to a pending sale with an alternative buyer).

The business plan attached establishes business objectives, outlines the market demand for the facility, and defines the proposed business model, which includes hub services and activities, partners, and financing resources. The proposed business objective for the Food Hub is: “Provide a business model, financial feasibility analytic tools and business plan for a self-sustaining mid-scale aggregation and distribution operation – a food hub with aspects of processing functions – to serve regional specialty crop producers, including small to medium-sized growers, especially those who lack the capacity to access business and institutional markets. The tools and plans have been developed by SACOG as a resource for entrepreneurs, jurisdictions, investors and other interested stakeholders to advance the development of this infrastructure.“ This matches the 2014 Sacramento Regional Agricultural Infrastructure Project.

More information regarding the financing plan and partnership opportunities may be found in Attachment A of this staff report. 

Performance Measures & Training
As with all ARP projects, the Food Hub is required to submit performance measures and outcome measures to the County so that local and federal requirements are met. The performance measures for the Project may be found as part of the contract in Attachment C of this staff report. One additional requirement that many ARP projects are subject to is a training in federal compliance that is run by County staff. If the contract is approved by the Board, staff would provide this training to the Project team at the earliest time possible.

Recommended Action
The project team will present to the Board at the meeting on April 26, which will cover the business plan, site plan, and acquisition for the Project. This presentation is intended to ensure the Board is aware of the current status of the Project since it was approved back in September. After receipt of the presentation, the Board can approve the subaward agreement subject to final approval as to form by the County Administrator and County Counsel if satisfied that the revised plan still meets the original vision approved or may continue the item and direct staff to continue working with the Food Hub if that is determined necessary to address any Board concerns that arise. 

The attached version of the subaward agreement is the latest draft completed as of the release of this staff report. A few issues remain under discussion between the County Counsel's office and the project proponents, and the proponents may request additional substantive edits. The attached agreement will be replaced with an updated version prior to the Board meeting if it is revised.