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Income & Employment / 2013

Organizing Social Enterprise Urban Farm in South Los Angeles

Organizing Social Enterprise Urban Farm in South Los Angeles

Idea submitted in the My LA2050 Maker Challenge by ImPact Farms, Inc.

ImPact Farms, has a plan to develop underutilized property and building rooftops in South Los Angeles into Hydroponic/ Aquaponic Urban Farms. These high tech soilless Urban farms are capable of producing 10 to 20 times more produce per sq. ft. as compared to traditional soil farms. The increased yield is the result of an extended growing season, controlled environment and growing in three dimension and are essential to supporting investment in Urban Farms. As a triple-bottom-line Social Enterprise, ImPact Farms replaces outsourced manufacturing with agricultural technology while directly and indirectly supporting a potential of 30 local permanent, family-supportive-wage jobs per acre. At ImPact Farms, we define family-supportive-wage as the income required to support three people as established by the city of Los Angeles and then add health and other benefits. As a matter of policy, base wages will be adjusted for inflation using the US Census Cost of Living Index. In addition employees are eligible to participate in a profit sharing pool committed at 20% of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). ImPact Farms founders are committed to converting profit sharing into 40% employee ownership within 15 years, using the latest models, definitions, and ideas for ownership transfer and classifications from the Sustainable Economies Law Group (SELC) in their policy group's public comment for the proposed Worker Cooperative Statute to be put into the CA Corporations Codes. Although it is in the drafting process, we have included this to show Impact Farms' commitment to creating fair and meaningful worker ownership. Los Angeles, benefits from keeping more of our “food dollar” circulating in the Local economy. Meeting Los Angeles nutritional requirements locally by 2050 could retain as much as $10 billion annually representing over 90,000 permanent local jobs. Even community groups will benefit from profit sharing at 10% of EBITDA for nutritional, education and to fulfill other group defined quality of life objectives. ImPact Farms is able to sell its organic, locally grown, fresh and therefore highly nutritive vegetables, fruit and fish at an affordable rate in South LA community and offer the above mentioned benefits by selling its produce at a premium price in wealthier neighborhoods and bringing revenue and income back into the inner city. Our one day harvest to table direct delivery to households will be specially helpful to single-parent families and those who have no or limited access to transportation, saving them time from shopping they can use the time to prepare fresh food and enjoy quality time with family members. For example, to further ease access to fresh food, ImPact Farms in cooperation with LAUSD will provide CSA produce and eventually meals at school sites for parents to pick up when they pick up their children. Our goal is to create jobs that allow the community to build wealth and equity that will help create a middle class in the poorest neighborhoods of Los Angeles as opposed to creating many minimum-wage jobs that barely raise people above the poverty line. A middle class strata has the economic power to impact the real estate economy through home purchase and improvement, leading to higher property and income taxes that benefit the city and higher buying power that will bring more economic movement to the ancillary and surrounding businesses. ImPact Farms solution directly addresses Los Angeles existing income disparity.

What are some of your organization’s most important achievements to date?

While yet to begin operations, we have engaged and raised the passion of many of our stakeholders such as local government offices, community organizations, property owners and individuals through presentations that demonstrate ImPact Farm’s alignment with quality of life objectives ranging from jobs, health and environment to growing Local Economies. ImPact Farms is currently organized as a Delaware corporation and plans to become a California Benefit/Flexible Purpose corporation with the award.

In addition, we have identified and are in discussion with 3 sites in South Los Angeles where we are considering for development.

Please identify any partners or collaborators who will work with you on this project.

We have presented our business plan to the following agencies and organization and are fortunate to have their support and count on them as partners and collaborators.

• The 9th district city council office • The 9th district neighborhood association/ CAANDU • South Los Angeles Industrial Tract (BID) • Economic Development Agency • Genesis LA, Community Development Institute, Funding source • Evergreen Cooperative, Cleveland Ohio • Emerging Markets, Inc. • PV Jobs, A job training and placement agency • Slow Money, National org. encouraging investment in local food • Community Services Unlimited, a community organization working to increase access to healthy food in South Central Los Angeles. • Sustainable Business Council • Green LAVA

Please explain how you will evaluate your project. How will you measure success?

Urban farming is a capital-intensive undertaking requiring organizational capital, property and improvements to achieve economies of scale. As such ImPact Farm’s success depends on our ability to raise additional capital to move into production and for growth. Offering triple bottom line returns, we understand capital is available from Socially Responsible Investors (SRI) and public through a Direct Public Offering (DPO) under California exemptions.

As such our first measure of success is completion of a Social Enterprise legal structure, positioning ImPact farms for a successful DPO of $1 million or more. A grant of $100k empowers us to establish our company as a “Benefit or Flexible Purpose” corporation in California and create a successful marketing and branding campaign that will enable us to establish a successful DPO campaign. A DPO structure allows for those with small capital to invest in a local company where they see the direct impact to the community and where they have a role in the growth of their capital. Imagine empowering these small investors in Los Angeles to participate and engage in a company that is dedicated to shaping their region. Imagine middle class and low income families becoming small investors and having ownership in a local company that directly affects their livelihood and health.

Impact Farms commits to taking the B Corporation impact assessment within a year of start of operations. B Corporation is a set of third party standards that attempts to measure social and environmental impact in four major areas: Governance, Workers, Community and the Environment, with reporting and measurement of KPIs (Key Performance Indicators) in each category. Whether it is B Corp or another third party standard, Impact Farms commits as a matter of policy to annual reporting on social and environmental impact using some set of third party standards.

A second measure of pre revenue success is the number of community members and organizations enrolled in becoming a part of our cooperative business development and distribution programs. Stakeholders and community will be able to engage ImPact farms through our website, twitter, Facebook and proprietary internet systems developed to manage the community organizational process. We are looking to engage 2,000 people by the end of 2013.

How will your project benefit Los Angeles?

Income and Employment:

Over 525K households and 1.9M people reside within six (6) miles of Impact Farms in South LA, a community consisting primarily of African Americans and Latino populations whose unemployment rate is 18.3% and 13.3% respectively.

Median household income of $54,314 for a family of four, suggests almost 950,000 people within a six mile radius did not earn enough to cover basic expenses. That 80,000 households within a mile of ImPact Farms, have median household incomes of less than $35K, suggest that over 170K people are living on less than 67% of established minimum requirements.

ImPact Farms policies will prioritize hiring and training local community members including troubled youth and those needing a second chance. We will also target local source vendors.

Every acre developed will directly and indirectly generate up to 30 full time permanent jobs. Half of these positions are internal and include seeding, managing the growing environment, harvesting, packaging, maintaining fluid systems and caring for fish. Indirectly ImPact Farms wis looking to develop local vendors for operational requirements and will offer funding and training to start ancillary cooperatives related to Impact Farm’s business such as distribution, packaging, and food preparation, potentially adding an additional 15 positions. Together the ImPact Farms network can generate 30X the jobs of a comparatively sized space and cost of a photovoltaic electricity system.

In addition, greening and upgrading existing fields and buildings for farming operations will require ImPact Farms to invest $1.5 -$2.5 million per acre in addition to the cost of the property. While some components will be imported our intention is to engage local companies, social enterprises and cooperatives to perform work. As such, estimating labor at 30%, creates local wages for the improvements between $250-750K.

Together, bringing the farm closer to the table, every 5 acres developed represents $4-5 million in annual local wages and benefits and an additional $2.5 million in improvement wages.

Health: Clearly, more and more studies show that eating a variety of whole, fresh food void of toxins is our best defense against chronic diseases through improving our immune and defense mechanisms. It is in this background of food desert caused mainly by lack of access to a wholesome diet that ImPact Farms makes another important contribution. Improved health via access to affordable fresh vegetables and fruit through community supported agriculture (CSAs), local, corner stores and ImPact Farms store front.

Environmental Quality: Compared to traditional soil agriculture, for every acre of production ImPact Farm saves: • 8+ million gallons of water • 40+ tons of CO2 from farms and food transportation • 90+ tons of CO2 consumed locally by plants These estimates are based on farm studies, reported water saving @70% and calculations of plant C02 absorption for 1M pounds of produce.

What would success look like in the year 2050 regarding your indicator?

Becoming food secure by 2050, Los Angeles has created jobs allowing members of the poorest neighborhoods to build wealth and equity to move into middle class. The middle class has the economic power to impact the real estate economy through home purchase and improvement, leading to higher property and income taxes that benefit the city and higher buying power that will bring more economic movement to the ancillary and surrounding businesses.

ImPact farms does this by developing the technical, social responsibility and distribution leadership as a foundation for Los Angeles to become food secure by 2050. If every Billion dollars of imported goods cost local economies 9,000 jobs (Economic Policy Institute), becoming food secure would eliminate $10 billion of food and food product imports and create the opening for 90,000 local Family-supportive-wage jobs in Los Angeles.

Imagine a South Central that has become a bustling economic center with beautiful, renovated architecture, access to plenty of organic, locally grown fresh food, a local food system (distribution, preparation and packaging) run by cooperative companies owned by the local residents. The rates of Obesity, diabetes, depression and violence are comparable to those of the more affluent neighborhoods in Los Angeles as a result of access to fresh food and improved economic vibrancy. Furthermore, health care cost has reduced in LA. The local schools Academic Performance Index are comparable to those of the affluent neighborhoods and healthy, thriving children are learning and increasingly attending higher education institutions.