NonProfit News Pod: Alchemist Public Market Continues Construction, Funding Gap Improves

Jeff Holden: [00:00:00] Welcome to this nonprofit podcast, NewsPod, where we amplify the voices of nonprofit leaders and their organizations making a difference in their communities. I'm joined today by Sam Greenlee, CEO at Alchemist CDC, to share the latest on the Alchemist Public Market. Sam, welcome. 

Sam Greenlee: Thank you, Jeff. Pleasure to be with you.

Jeff Holden: I'm looking forward to this update. I understand we've got some encouraging news that we'd like to share on the progress being made in this short-term funding gap that's recently gotten quite a bit of attention. But before we get there, could you give us a brief orientation of the project and some of the talking points that are, are really significant, starting with the necessity for the project, the need for the project, how long this project has been in play?

'Cause I don't think everybody understands the nuance of where we [00:01:00] are today and how we got here. 

Sam Greenlee: Absolutely. I appreciate the question 'cause the project is the whole reason that we're doing the work. So yes, Alchemist Public Market is a project six years in development for Sacramento's River District, so just above the rail yards.

A lot of people are familiar with that development coming in. And this is a project that combines all the work that we at Alchemist CDC do in the food system for equitable food access, inclusive economic development, and then place-making for the community. So the project's a little less than an acre, and it will house...

It'll be an all-electric campus, really getting ahead of things, uh, and climate forward issues in alignment with state goals. It'll have a commissary kitchen that supports about 40 to 50 small businesses who are starting out, letting them safely, legally produce food for sale. An outdoor courtyard where another eight small restaurants can launch and incubate, serving directly to the public for a few years while they build their business and get ready to move on to a space of their [00:02:00] own, so that space will always be cycling in new businesses.

But it'll also house a cornerstone or grocery market that can accept WIC and CalFresh in a neighborhood that's three miles from the nearest grocery store that accepts those benefits. And as well as a coffee shop and community events that really fill a need in that neighborhood. So it's a really important project for the region as an economic development driver, helping cultivate new small businesses who eventually move out into vacant storefronts throughout all of our communities and hire our neighbors.

But for the River District especially, as it goes from being a historically industrial neighborhood to an increasingly residential neighborhood, it's going to provide a lot of the necessary components to make up a neighborhood that the people there need in order to go from just living near one another to really being neighbors.

Jeff Holden: And aside from just the sheer mission and purpose of what Alchemist CDC is, you are becoming an oasis in [00:03:00] what is today a food desert for those people. 

Sam Greenlee: Absolutely. Yeah. There are not very many true food deserts left in our region, which is great, but the River District is one, and so this will fill a really important need, both with the corner store and with, you know, hosting a weekly certified farmers market on site.

Jeff Holden: So many neat things, which is why the project was approved in the first place. Tell us a little bit about the funding and what that looks like. Many people don't really understand what it takes to put something like this in a community. 

Sam Greenlee: Yes. Yeah, the, the project is pretty complex as a development project, pushing the boundaries a little bit as an all-electric campus with effectively nine all-electric commercial kitchens in one site.

Jeff Holden: So you've gotta be a darling for SMUD. 

Sam Greenlee: Absolutely, yes. We're helping meet a lot of goals. But that has... You know, that's come... We're, we're trying to do everything as well as we can. So it's, it's a federally compliant project. You know, it's prevailing wage. We're planting it with native plants. [00:04:00] You know, really trying to be kind of forward-thinking in, in every element to be a model of what a project can be when you're layering benefits You know, that, that combines into a significant cost.

And so we've been very fortunate. In 2023, we were awarded two major grants from the state of California and the US Economic Development Administration for a combined $12 million on top of another roughly $1 million that we had already raised for the project. And so- Wow ... it's well-funded, but it is, it's an interesting beast when it comes to cash flow.

Jeff Holden: Sure. And th- those are, those are commitments. Those are money held that's there for you on draw, let's say. It, it's available as a reimbursable piece of the project. 

Sam Greenlee: Absolutely. These are both contracted grants. Every step, you know, we've had th- these grants for three years, everything has been satisfied, so they are both secure and ready for reimbursement, ready for [00:05:00] us to draw down.

Jeff Holden: And therein lies the glitch. Just what? Maybe a few months ago, shovels were in the ground, celebration of groundbreaking, the project is underway, and then uh-oh. 

Sam Greenlee: Yes. So one of the big challenges that we face, and people may not be familiar with this, but in public grants, typically they are, especially around construction, are reimbursement-based.

So you get a month of construction done, your contractor submits their invoice, you pay that, you get... submit for reimbursement, and public agencies take 45, 60 days to turn that around and get you paid back. So it makes sense. Reimbursement's a great way to help prevent misuse of funds and that sort of thing.

So it's a good governance structure, but it's very hard for a nonprofit like us to do this when we don't have, you know, a massive reserve to, to use as our cash flow to spend that, 'cause effectively, if you have a month of construction at a time and it takes two months to be paid back, at any given time, you might [00:06:00] be fronting two months of construction costs, which can really add up.

And so that was not-- That wasn't a new insight to us. That was something that we recognized all the way back in 2023 when we began to learn the structure of how the grant would be delivered, and we've been raising that alarm bell and had various, uh, folks talk to us about possible solutions for it all the way through, but none of those actually ended up materializing.

And so it came to a head recently once we actually were under construction. 

Jeff Holden: And I can appreciate that there may be expectation, anticipation And I can appreciate and understand how there might have been some expectations, you know, based on conversations that you were in good shape, uh, until it came to the actual ask, and all of a sudden you find out that, "Oh my gosh, this...

There, there's a miss here, so we'll have to, uh, we'll have to figure out what to do," unfortunately came as you were under construction. So it really puts a sense of urgency and pressure on the entire project. This was a couple of [00:07:00] weeks ago, I think, when you actually realized that was the situation. Tell us what's been happening these last couple of weeks, 'cause I understand you've made some significant progress.

Sam Greenlee: Absolutely. Yeah, we're really heartened by everything that's happened the past couple of weeks. We have gotten just an overwhelming response from the community and from people who we didn't even know were tracking this project over the years, who heard this project was facing challenges and facing potentially very serious challenges, who wanted to help.

And so in the past couple weeks, we've raised $770,000 in a mixture of direct private loans, zero interest loan and a major charitable gift to help provide cash for that liquidity over the, the life of the project. And we also had a major breakthrough involved both the EDD grant managers of the state and our general contractor where they both kind of stepped in on, from their own side and provided an efficiency for us that really helps [00:08:00] address some of the issues around the process of cash flow.

You know, we, we had announced at one point that June 2nd, June 3rd would be kind of a decision point on whether or not the project could proceed, and it's June 12th now. We're still under construction, so we found what we needed to keep moving forward, but we do still have, you know, some existing need that we're working on.

Jeff Holden: And what is that ultimate goal? What would be the, you know, the, the right number to have in reserve for this gap funding? 

Sam Greenlee: Yeah. You know, I think we've been saying from one to $1.5 million. More would... 1.5 would give us a whole lot of flexibility, make sure that we, we don't have to be quite as careful in maybe slowing down construction for a couple of weeks for, to manage cash flow.

But you know, honestly, a million dollars more really would provide what is needed. The federal grant does not have the same efficiency, but the state has now worked out with us, and so that presents maybe our longer term need to really find the additional liquidity. [00:09:00] So around $1 million, although I'll say that every loan, every contribution of any size really does help move that forward.

Jeff Holden: So 770 and another million makes it a comfortable situation. And, and again, these are short-term bridge loans, gap loans. So once this project is done, which is anticipated to be the end of the year, early next year, correct? 

Sam Greenlee: Yeah. Construction should be completed by the end of next March 2027. So, you know, realistically, let's say by the end of April 2027.

You never know how construction will go. We have a contracted delivery date for that, so yes, it will be early 2027. And we're looking for fund... You know, financing that will carry us through, uh, so that the end of that construction and then the, the additional dates it will take to get the final reimbursement.

So looking about 12 months from now. 

Jeff Holden: So these are not really long-term loans. They're short-term, you know, interim loans. It's not something that has to be tied [00:10:00] up for another three, four, five years before there's reimbursement to those who are supporting it, unless they choose to keep some of that money in there for the organization itself, uh, of which I'm sure unrestricted funds would be a very welcome contribution.

Always. But for anybody who's listening who has an understanding of this and possibly an interest That's what we're looking at, and we're talking about something that's gonna be completed in the next year. So it's not a long-term overwhelming amount of money, although anything is when you don't have it, so we can appreciate that.

Sam Greenlee: Yeah. Like you said, it-- we're really looking for a 12 months on that, you know, not looking at two years, anything along those lines. And this is money that's going to be used to spend and reimburse repeatedly to draw down, you know, the remaining $9.4 million in available fe- federal and state grants. So the money is there to pay these back at the end of that loan.

We really just need to be able [00:11:00] to use it or lose it, right? We're running up against grant deadlines in the next year, and so we need to spend it through and execute. We also, of course, have... We're fully permitted. We're under construction, and so that's a, a factor too, is that, you know, once you get to that point, you don't want work stoppages and, you know, you really can't handle major work stoppages 

Jeff Holden: at that point.

Well, I think to your point of it, it's use it or lose it, and that's money coming into our community. Those are jobs that are coming into our community. That's economic development into our community, into an area that's quickly developing. You know, we've got the stadium going up, we've got the hospital going up, and we have the need for that community to have the facility that you're building.

So everything else aside, all of this is favorable. And when I think about the pieces and the way that this works, uh, just to reiterate, construction starts, contractor does his work, obviously needs to get paid because he's gotta pay his employees and, and any materials and supplies and that sort of thing.

Certainly [00:12:00] understandable. You have to pay them with something. The grant isn't reimbursable until you've already done that. So it's that piece in the middle that needs to be funded so that you can continue with the work and the construction and the contractors and everybody doing their thing. And a- as simply as I can in my, you know, naive sense of it all, just lay that out for anybody else that's hearing the same story going, "Oh, now I get it.

I know somebody." And that's really the premise of this news spot, is to say if there is an interest from somebody who's hearing it or somebody who might know of somebody who might have an interest in supporting the cause It's not a long-term deal. It's not a contribution. It's not a donation to the operations of the entity.

This is literally a short-term opportunity to help something happen in Sacramento that is not only sorely needed, but that [00:13:00] has been approved every step of the way, and really excited about the impact that it's going to create in the community. 

Sam Greenlee: Absolutely. And you know, it can be structured as a loan, but I know there are also, there are charitable instruments available.

You know, if somebody is a holder of a donor-advised fund or part of a family foundation or something along those lines, it's actually simpler to structure things as what's called a recoverable grant, where, you know, a contract can be developed, an MOU to grant the funds for this period with whatever terms, and it can even bear interest, with the expectation of repayment at a certain date, you know, at a certain milestone.

But, you know, that can often be much simpler avenue for people who have already locked money up in the charitable system through, uh, a foundation of some sort. 

Jeff Holden: Not unlike our, our community foundations, whether they be in El Dorado, Sacramento, Yolo, Placer, et cetera. 

Sam Greenlee: Absolutely, yep. DAF funds could be distributed and, you know, a handful of folks who have those accounts [00:14:00] could team up and, and meet the entire need, you know, or meet...

There are people who could do it alone. So it's really a great opportunity for somebody who wants to make a very tangible impact on a project that effectively a sure thing. You know, there's... It's permitted. It's under construction. I think, you know, the federal grant that it received is the type of thing that typically helps fund a stretch of sewer line for a city that's, you know, trying to build a new treatment plant.

You know, it's meat and potatoes economic development projects and that was How this was evaluated and, and awarded 

Jeff Holden: Well, I am so glad you brought that up with the donor-advised funds too as being, you know, recoverable 'cause that's a- again, a thought process that maybe somebody, someone ha- th- they di-didn't have initially.

You know, and now they're like, "Oh wait. Oh yeah, I could... I can think of a few people we can get together and do that." This is a great cause. And should anybody have an interest, Sam, what, what's the best way to get the most information for the situation? 

Sam Greenlee: I would invite [00:15:00] anybody to reach out to me or to reach out to Shannon Stein on our team.

Yeah, so you can email me at sam@alchemistcdc.org. That's S-A-M at A-L-C-H-E-M-I-S-T cdc.org, or you can write Shannon, whose name is S-H-A-N-N-I-N, @alchemistcdc.org. 

Jeff Holden: And I will put that in the show notes too to make it easy should anybody have any interest. Sam, I applaud you for how far you've gotten on this and, and certainly for the update that there's, there is contribution, there is support from the community, there are people who are interested.

And I truly believe it's, it's not a matter of if, it's just a matter of when. It's getting it to the right people and enough people telling the story and hearing and understanding what it is you're trying to accomplish. You're going to get there. And anything we can do to help, we're happy to. Hopefully, this newsp- news pod will get you some, some attention.

But I, I do appreciate so much what you're doing [00:16:00] and the mission and purpose of Alchemist CDC has, has already been shared on the platform once. If anybody wants to go back, they can hear the whole story. And, uh, I think that was a few months ago when we did the, the episode where we were teeing up the fact that, you know, the public market is coming.

It's just a few months away from groundbreaking. Here we are with all the excitement. The groundbrea- groundbreaking has been done, and construction is underway. Let's just keep that construction going. Sam, thank you so much. I appreciate all you're doing. I, I, I can only imagine, you know, the, the stress that you're under to try to get this taken care of.

So let's, let's hope the community can find a way to, uh, to get it rectified. 

Sam Greenlee: Well, thank you Jeff for having me on. I appreciate you bringing a spotlight to this and appreciate all that you do. 

Jeff Holden: Thanks for listening. If you like our program, please subscribe, give us a positive review, and share with someone you know.

This Nonprofit Podcast News Pod is a production of Hear Me Now [00:17:00] Studio.