HomeMy WebLinkAboutAgenda - 02-12-2008-2ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: February 12, 2008
Action Agenda
Item No. _~__
SUBJECT• Regional Value-Added Shared Use Food & Agricultural Processing Center
DEPARTMENT: Economic Development PUBLIC HEARING: (YIN) No
ATTACHMENT(S):
1. Orange County Ag Preservation INFORMATION CONTACT:
Board Letter & Recommended Noah Ranells 245-2330
Resolution and Action Items Willie Best 245-2300
Schedule
2. 12/17/07 Meeting Summary
3. Feasibility Report /Executive
Summary (Under Separate Cover)
PURPOSE: To consider Orange County's participation in the Regional Value Added Shared
Use Food & Agricultural Processing Center and review, provide comments, and express support
for a proposed resolution and concurrence with Proposed Feasibility Action Items.
BACKGROUND: On November 30, 2007, a feasibility study was completed. The study
included 62 completed surveys which resulted in a significant justification for the creation of a
regional value added shared use food processing center as well as a strong "buy local"
component. During a four county search of Alamance, Chatham, Durham, and Orange
Counties for a possible site location, consultant Smithson Mills recommended the former
Orange Enterprise Building on Valley Forge Road in Hillsborough as the most competitive site.
During a November 27, 2007 meeting in Hillsborough, commissioners from Alamance,
Chatham, Durham, and Orange counties expressed their appreciation for the feasibility report
and agreed to address the report at their respective commissioner meetings as well as the
relevant advisory boards. It was agreed also that each respective board of county
commissioners would indicate its interest to proceed as part of a regional partnership to develop
the center. It was agreed that the regional partnership consider hiring a project developer to
steward the project through fundraising, facility renovation, equipment acquisition, and
developing targeted programs for clients.
On December 11, 2007, the Orange County BOCC was presented with the Feasibility Report
and directed staff to schedule a work session to explore options for Orange County's
participation in this project. Many partners and stakeholders have reviewed the feasibility study.
On February 4, 2008, the Alamance County Board of Commissioners voted in favor of a
resolution supporting the project. Chatham and Durham Counties will be evaluating the project
at their upcoming meetings during the month of February.
2
The Feasibility Report noted 13 action items to address the development phase of the Center in
the upcoming 18 to 24 months.
FINANCIAL IMPACT: There are no financial costs associated with discussion of this item.
However, there will be cost implications attributed to the renovation of the facility and
development cost over a 3-year period based upon the Board's direction. After its first year of
operation, it is anticipated the facility will generate more than $150,000 in fees. During the
second and third years, the facility is projected to generate between $800,000 and $1.2 million
in profit per year. Financial grants will be sought to defray costs as much as possible.
The Feasibility Report does recommend "a $1/yr lease agreement for the facility between the
county and the management entity, active upon securing the certificate of occupancy or on
opening for business". The Board may wish to discuss this proposal in further detail as the
facility moves closer to operation.
RECOMMENDATION(S): The Manager recommends that the Board:
1) reconfirm Orange County's participation in this project;
2) provide comments and express support for the proposed resolution with the
concurrence of the Feasibility Report Action Items and formally consider the Orange
Enterprise Building, 500 Valley Forge Road, with formal approval of the resolution
and any other actions to be scheduled for consideration at an upcoming BOCC
regular meeting; and
3) provide any further direction to staff.
.~
County of Orange Agricultural Preservation Board
Memorandum
To: Board of County Commissioners
Laura Blackmon, County Manager
Prom: Elizabeth Walters, Chair, Agricultural Preservation Board
Date: January 18, 2008
Subject: Value Added Processing Center Resolution
Thank you for the opportunity to comment on the proposed Piedmont Regional Shared Use,
Value Added, Food and Agricultural Processing Center. We have reviewed, with interest, the
consultant's report and would like to express the Agricultural Preservation Board's (APB)
support for this important facility.
As Orange County farmers continue to diversify from traditional commodities to vegetables and
specialty crops the need for new farm-related infrastructure will become increasingly important.
The proposed value added processing center has the potential to serve two important
components of this infrastructure.
1) The facility will provide a place for farmers to bring raw products for some level of
processing-washing, chopping, freezing, turning into sauces, etc.-which will allow the
farmer to sell the product at a higher price, thus adding value to the crop.
2) The facility will also serve as a hub for storage and distribution, an important part of the
brokering equation to get these improved products to markets. The Orange County
location will only facilitate the potential for future partnerships with institutional
consumers/buyers and alarge-scale consumer base.
The Agricultural Preservation Board believes that the value added processing center is the
linchpin.that will help/energize local farmers to transition into a new phase of agriculture, one
that will allow the region to retain an active farming community and take steps toward the long-
term goal of food security. Please find the attached resolution, which we have modified slightly
to better reflect Orange County's needs. We ask the Board to sign the resolution in support of
this important facility: Thank you.
Copies: Dave Stancil, Environment & Resource Conservation Director
Tina Moon, Cultural Resources Specialist
ORANGE COUNTY BOARD OF COMMISSIONERS
Resolution
Support for a
Piedmont Regional Shared Use, Value Added,
Food and Agricultural Processing Center
WHEREAS, the recent tobacco~buyout program has left many farmers seeking economically
profitable alternative enterprises to allow them to remain farming; and,
WHEREAS, the proximity of Alamance, Chatham, Durham, and Orange counties to markets for
value added products is significant given existence of local farmer's markets, grocers,
restaurateurs, and food service managers that buy local farm products; and,
WHEREAS, added value products provide a means to retain economically viable, thriving farms
in Alamance, Chatham, Durham, and Orange counties, benefiting our rural character and
agricultural heritage, and contributing to the health and high quality of life; and,
WHEREAS, shared use value added processing centers require careful planning and strong
collaborations to be successful; and,
WHEREAS, a feasibility study funded by Alamance, Chatham, Durham, and Orange counties, as
well as Weaver Street Market and Whole Foods, was completed in November 2007, and,
WHEREAS, the survey respondents included 36 percent fruit and vegetable growers, 27 percent
livestock producers, and 28 percent specialty food producers, caterers, or restaurateurs, who
together currently produce 74 food items, and in the future desire to produce 112 distinct
products, and,
WHEREAS, the feasibility study indicates client use at the facility can reach 142 production hours
per week in'one year and would generate more than $150,000 in fees in years 2 and 3 of
operation, and gross income generated by clients using the facility would be between $800,000
and $1.2 million per year; and
WHEREAS, the feasibility report detailed 13 action items that will ensure that the center can open
in 2009.
NOW, THEREFORE BE IT RESOLVED that the Orange County Board of Commissioners
1) Pledge to continue their strong support of the implementation of the Feasibility Report to
ensure operation by Winter 2009;
2) Will consider their ability to contribute resources and leverage grant funds, as well as
State and Federal legislative allocations, to implementation of this effort;
3) Authorize Orange County to continue to serve as the fiscal agent and, with guidance from
an advisory group, hire a project developer to pursue grant funds and assist in the
development of policies for the center.
This the 16th day of January 2008.
Barry Jacobs, Chair
Orange County Board of Commissioners
G"
Feasibility Report Action Items Entity Target
Date
1. Formally allocate the former Orange Enterprises building for Orange County Feb. 15,
development of a regional value-added food and agricultural Board of 2008
processing facility Commissioners
2. Pass resolutions for formal commitments to project Alamance, Feb. 15,
participation by county commissions in Alamance, Chatham, Chatham, 2008
Durham, and Orange counties Durham, &
Orange
Commissions
3. Pursue initial grant funding to secure the services of the lead Alamance, Feb. 15,
project developer Chatham, 2008
Durham, &
Orange
Commissions &
Staff
4. Contract with the lead project developer for services Orange County Apr. 2008
to act as fiscal
5. Continue pursuing grant funds necessary to complete facility agent for project Now
renovations and equipment acquisition and installation until anon-profit through
management Jan. 2010
6. Upon securing facility renovation funds, hire an architect to entity is formed Sep. 2008
develop blueprints and oversee bidding for construction
services from a general contractor
7. Working with county commissions and the community Project Oct. 2008
advisory committee develop plans for creation of a nonprofit Developer and to Jan
management entity to own and oversee operations of the Advisory Group / 2009
project Non-Profit
Management
8. File articles of incorporation and approve board members Entity Jan. to
and bylaws for the management entity Mar. 2009
9. Oversee the bid process and contract award for a general Jul. 2008
contractor to undertake facility renovations and through
improvements Jan. 2010
10. Acquire phase one equipment needed for opening Jul. to Dec.
2009
11. Establish a $1/yr lease agreement for the facility between Orange County. Jul. to Dec.
the county and the management entity, active upon Project 2009
securing the certificate of occupancy or on opening for Manager, and
business non-profit
management
enti
12. Secure start-up funds for hiring an executive director of the Project Jan. to
management entity Manager, and Apr. 2009
non-profit
13. Hire an executive director between 3 and 6 months before management Jul. to Oct
the facility is open for business entity 2009
CENTER OPENS FOR BUSINESS Jan. 2010
Meeting Summary (D
Regional Value Added Shared Use Food and Agricultural Processing Center
December 17, 2007
Introductions: Fletcher Barber, Willie Best, Gerry Cohn, Eddie Culberson, Sam Groce, Barry Jacobs,
Mike Lanier, Bill Lelekacs, Judy Lessler, Kelly May, Nekeidra Morrision, Noah Ranells, Dianne Reid,
& Glenn Woolard
The purpose of this meeting was to review the feasibility report and specifically consider the 13 steps
proposed towards the creation of the value added shared use food and agricultural processing center.
General Comments on the Report
1. Very thorough and comprehensive feasibility report.
2. Discussion on the meat value added processing to be considered after initial startup;
Chatham meat processor expanding -will this effort be in sync with that effort?
Consideration that meat storage capacity was included in the proposed design; Other meat value
added projects are seeking grant funds;
Presentations of the feasibility report
November 27, 2007 Commissioners Heron, Ingle, Jacobs, and Vanderbeck and staff met with
consultant
December 7, 2007 Durham Farmland Advisory Board
December 11, 2007 Orange County Board of Commissioners
At the November 27th meeting, it was agreed that the respective commissions would be presented
with this project during the next month and an indication of their interest in continuing as partner
counties would be formalized by resolution by February 15, 2008.
In addition, it was agreed that the respective county ag advisory boards consider the report and provide
feedback to their respective commissions. Finally, it was requested that the Advisory Group meet to discuss
the report and provide feedback.
A grant proposal was submitted to the NC Agricultural Development and Farmland Protection Trust Fund on
December 14, 2007 for $141,000 to begin renovation of the proposed facility.
A motion was made by Kelly May and seconded by Judy Lessler: The Advisory Group endorses the
feasibility study and urges the respective partner county commissions to take the necessary steps to move
this project forward.
A motion was made by Judy Lessler and seconded by Diane Reid: The Advisory Group requests that
Orange County act as fiscal agent for the project until anon-profit management entity is developed.
The 13-step process outlined in the feasibility report was reviewed and milestone dates were proposed and
presented on the following page
The American Farmland Trust SE director attended the meeting but voluntarily left the room to allow open
discussion regarding the project developer discussion. It was agreed that a formal scope of work be
developed for the project manager to include 1) Application for and Implementation of grant funds, 2)
development of non-profit management entity, and 3) supervision of renovation and equipment acquisition. In
addition, it was requested that the project manager submit a proposed fee and percent FTE dedicated to this
project prior to a contract being signed. The feasibility report suggested a 10% fee for the project developer,
an estimated $75,000 based on $400,000 for renovation and $350,000 for initial equipment.
The Advisory Group will meet next in late February 2008
Report on the Feasibility of Establishing a
Regional Shared Use Food Agricultural
Processing Facility
Serving
Alan~ance, Chatham® ®urharn and ®range
Counties
Prepared for the
County Commissioners
By
Smithson Mills
November 2®07
This Project Received Support From
ai4 ~yyyc ~ ~er~ "~~
~wrti/t ~~ ~~ m n rte' `*.
~r~.,~~/~~ ~~r i i ~5~, ~,,1 ,,,, CH.AT7i1hT ~:nTIM1'Tl'
Acknowledgements
The author gratefully acknowledges the support of the following organizations and
individuals:
Alamance County
Chatham County
Orange County
Durham County
Weaver Street Market
Whole Foods Markets
Bill Lelekacs, NCDA&CS Property & Construction Division
Mary Lou Surgi, Blue Ridge Food Ventures
Chatham Marketplace
Carolina Farm Stewardship Association
Alamance Community College
Rebecca Knight, Mars Hill College
Ashley Reed, Mars Hill College
2
Table of Contents
Executive Summary .............................................................................4
Section One: Introduction ...................................................................7
Section Two: Secondary Data and the Local Food and
Agricultural Economy ...............................................................10
Section Three: Market Demand ................................................18
Section Four -Equipment ........................................................28
Section Five. -Site Review ......................................................36
Section Six -Facility Design ....................................................43
Section Seven -Project Development Recommendations......48
Section Eight -Facility Management and Client Use Policies..51
Section Nine: Conclusion and Proposed Development
Sequence ..................................................................................54
Appendix A: Survey Instrument
Appendix B: Blue Ridge Food Ventures
Client Use Forms and Policies
Appendix C: Blue Ridge Food Ventures
Operational Forms and Policies
Appendix D: Resume, Gerry Cohn
American Farmland Trust
3
Executive Summary
From June to November 2007, a feasibility study was conducted on establishment of a
regional shared use food and agricultural processing center serving Alamance, Chatham,
Durham, and Orange counties by Mr. Smithson Mills of Mars Hill College. Contracted
deliverables included measuring community demand, identifying suitable physical sites
for project development, and identifying organizations and individuals able to lead
development of the project. Estimated overall cost of project development and ongoing
operational costs after the facility is open for food processing were also determined.
The four-county area has several positive characteristics for the development of a
regional value added food and agricultural processing facility, including:
• A strong entrepreneurial presence;
• An existing local food production, distribution and sales system;
• Awell-established "buy local" movement;
• Aculinary-education program at the community college level;
• A lack of available approved manufacturing space for entry-level food businesses;
• Measured strong demand from potential facility clients.
Over a three month period, 62 valid surveys were returned from small businesses and
individuals wishing to commercially manufacture food products at a shared use facility.
These include farm-based producers, restaurateurs, caterers, and food entrepreneurs
manufacturing shelf stable foods for wholesale distribution. The quantity and quality of
the survey responses indicates that the region has sufficient demand for development of a
regional facility with a wide range of food processing equipment and that is scalable for
future expansion. Business development support and education, especially training in
starting afood-based business, developing business plans, and meeting food safety
requirements, are needed components of a shared use facility.
Based on survey responses, client use at the facility is estimated at 142 production hours
per week after the end of the first year of operation. On a 50-week basis and at an average
use fee of $22 per hour, the facility maybe able to generate more than $150,000 in fees in
its second or third year of operation. In the same timeframe, gross income for clients
manufacturing at the facility should range between $800,000 and $1.2 million per year.
Survey responses show demand for the most commonly used equipment found in
regional shared use food processing centers throughout the country. Equipment needed
for first phase acquisition is listed and priced at $354,756. This cost maybe substantially
reduced with donated equipment from area supermarkets and restaurants.
Sixteen farm-based local meat producers requested value added meat processing at a
shared use facility. Because regulatory oversight for meat processing is quite demanding
4
the project should move cautiously towards limited value added meat processing only
after opening the facility for FDA and county health inspected processes. This will allow
the facility to establish management policies and begin to interact with regulatory
officials before "jumping in" to the much more stringent meat regulatory environment.
A building located at 500 Valley Forge Road in Hillsborough is recommended as the site
for project development. This 10,400 sq.ft. metal structure meets all criteria for project
development, including ample utilities, a loading dock, offices, and adherence to modern
building codes. Most importantly, it is owned by the county and the potential for low cost
acquisition is areal possibility. No other public or nonprofit-owned building in the four-
county area was identified that could host this project.
A proposed facility floor plan is presented in this report with a facility renovation~cost
estimate of $401,940.
With confirmed community demand and the identification of a viable location, the
researcher recommends that stakeholders move forward with project development
immediately. A project developer is recommended to lead efforts until the facility opens
for entrepreneurial development. This individual will be responsible for overseeing every
part of the development phase, including fundraising, facility renovation, equipment
acquisition, and developing targeted programs for clients.
A strong candidate for this position is Mr. Gerry Cohn, Southeast Regional Director for
the American Farmland Trust (AFT). Development of this project by AFT will ensure
that farm-based producers are served in their efforts to produce locally grown value-
added products, and will allow AFT to pursue an innovative grass-roots strategy to
increase the economic viability of small farms in the four-county region. As a nonprofit
organization, in certain cases AFT can serve as a fiscal agent during the fundraising and
construction period. A reasonable rate for project management compensation is in the
range of 10% ofpre-opening development costs.
After opening for business, the project will require the services of a highly qualified
executive director. This individual should be hired before the doors open and have
significant experience in food processing as well as strong interpersonal skills. The
project will rely heavily on support from existing service providers, including cooperative
extension, small business centers, and the ACC culinary program. Estimated base annual
operating cost for this facility, including salaries, utilities and maintenance, is $121,905.
Annual equipment acquisition is recommended at $50,000 per year.
A nonprofit agency is recommended to own the project and oversee staff and program
development after opening. The board of this organization should include representation
from all key stakeholders, including appointees from participating county commissions
and producer representatives. The board should support funding development and general
project oversight, with daily management authority allocated to the executive director.
5
Upon conclusion of this feasibility study, project stakeholders are encouraged to pursue
the following action items over the development period, estimated at 18 to 24 months:
1. Formally allocate the former Orange Enterprises building for development of a
regional value-added food and agricultural processing facility;
2. Pass resolutions for formal commitments to project participation by county
commissions in Alamance, Chatham, Durham, and Orange counties;
3. Pursue initial grant funding to secure the services of the lead project developer;
4. Contract with the lead project developer for services;
5. Continue pursuing grant funds necessary to complete facility renovations and
equipment acquisition and installation;
6. Upon securing facility renovation funds, hire an architect to develop blueprints
and oversee bidding for construction services from a general contractor;
7. Working with county commissions and the community advisory committee
develop plans for creation of a nonprofit management entity to own and oversee
operations of the project;
8. File articles of incorporation and approve board members and bylaws for the
management entity;
9. Oversee the bid process and contract award for a general contractor to undertake
facility renovations and improvements;
10. Acquire phase one equipment needed for opening;
11. Establish a $1/yr lease agreement for the facility between the county and the
management entity, active upon securing the certificate of occupancy or on
opening for business;
12. Secure start-up funds for hiring an executive director of the management entity;
13. Hire an executive director between 3 and 6 months before the facility is open for
business.
Total development costs over a three year period are estimated at $1,172,000, with
project income estimated at $275,000. After the third year of operations, the project
should approach or achieve current-account break-even status.
Finally, stakeholders are encouraged to continue working together to ensure the project is
developed as a truly regional project, enlisting support across political jurisdictions and
defined service areas. Projects of this scale should serve clients from within a 75 mile
radius; economically speaking, county lines and city limits should not become barriers to
developing a truly regional value added food and agricultural processing center.
6
Section One: Introduction
I. Background
In February 2006, the lead researcher and author of this report gave a presentation at the
Orange County Agricultural Summit on the development of shared use food and
agricultural facilities in North Carolina, with particular focus on the development of Blue
Ridge Food Ventures, a regional shared use facility that opened that same month in
Asheville. Following this presentation, Orange County economic development personnel
began discussions with Mills on the process of establishing a similar facility in the region
west of Research Triangle Park. Over the next 12 to 15 months, a consortium of fenders
(including county commissions from Orange, Alamance, Durham, and Chatham
Counties, as well as Weaver Street Market and Whole Foods Market) allocated resources
necessary to conduct a feasibility study on developing such a facility in a four county
region including Orange, Alamance, Durham, and Chatham.
In May 2007, Orange County entered into a contract with Smithson Mills to lead the
feasibility study over a six month period, with a final report on findings to be submitted
by October 3 1, 2006. The terms of the grant funded period and the length of the contract
were subsequently extended to November 30, 2007. As lead researcher for this project,
Mr. Mills worked closely with economic developers and agricultural extension personnel
in the region, as well as personnel in the North Carolina Department of Agriculture &
Consumer Services' Property and Construction Division. Additional research support was
provided by individuals and organizations in the regional food and agricultural economy.
II. Scope of Services
Mills was contracted to lead a feasibility study that would address each of the following
items:
1) Provide third-party verification of research methodologies and analysis of primary
data gathered by participating counties, including potential client surveys and
market surveys.
2) Identify production lines that respond to the documented need/desire to produce
given products.
3) Provide guidance on legal organization structure such as incorporation,
acquisition of product liability and personal injury insurance.
4) Establish protocols for client management, including recommended facility use
policies, proper interface with regulatory agencies including the county health
inspectors and NCDA Food & Drug inspection, and provide guidance on the
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viability of limited meat processing under USDA or NCDA certification.
Recommendations would also include storage fees and production fees.
5) Identify all costs associated with facility operations (not including facility
development costs), with a recommended plan for achieving current-account
break-even.
6) Review proposed facility layout and design, including cold and dry storage and
food production segregation.
7) Provide estimates of total cost of facility build-out and equipment acquisition.
8) Provide fmal feasibility study organization and presentation in the manner and
frequency and to the entities requested by the County.
9) Conduct three area visits and interviews with community partners.
10) Instruct participating counties on conducting area publicity, primary data
gathering, and organization of meeting and visits with potential project
collaborators.
III. Report Layout
This report focuses on outcomes derived from executing the scope of services outlined
above.
Section Two examines secondary data pertaining to the four-county region, and identifies
essential support services and aspects of the local food and agricultural economy that
may contribute to the positive development of the project.
Section Three reviews results of a community wide survey of potential users of a shared
use food processing facility and determines the viability of such a project based on
measured community demand.
Section Four analyzes survey results to recommend food processing and handling
equipment needed for identified potential user profiles to succeed in expanding or starting
value added food businesses at a shared use food processing facility. Estimates of
equipment acquisition costs are presented.
Section Five reviews site selection in the four county area and makes recommendations
for optimal sites.
Section Six presents a proposed facility design and floor layout for a shared use food and
agricultural processing facility in a 10,000 sq. ft. building located in Hillsborough.
Estimates of potential fixed-asset facility renovation costs are discussed.
8
Section Seven reviews potential site development processes and recommends options for
lead agency development and project oversight. Estimated project development oversight
costs are presented.
Section Eight provides recommendations for facility management and client use policies
after the development phase is complete and the facility is open for entrepreneurial
development. Estimated post-opening project management costs are discussed.
Section Nine summarizes study findings and recommends next steps for project
development following conclusion of the feasibility study.
The appendices of this report include the primary research survey instrument, examples
of client use forms, examples of facility management forms, and the resume of a
candidate for project development. Finally, a case study on the development of Blue
Ridge Food Ventures prepared in February 2007 for the North Carolina Rural Economic
Development Center is included in the final appendix.
9
Section Two: Secondary Data and the Local Food and
Agricultural Economy
The research region has a wide range of services and organizations, as well as positive
economic and social trends, that bode well for the development of a regional value added
food and agricultural processing facility.
I. General Demographics
The region encompassing Alamance, Chatham, Durham, and Orange counties had a
population estimated at 569,709 in 2006. Durham is by far the largest and most urban in
nature, with 246,896 people, followed by Alamance (142,661), Orange (120,100), and
Chatham (60,052).
Select demographics for each county are presented in the following tables:l
Table: Durham County
Population
Population 2006 246,896
Population Density 2000 768
Percent Population Change 1990-2000 22.8%
Median Age 32.2
Percent Born in NC 54.8%
Income and Poverty
Median Household Income 2000 $43,337
Per Capita Income 2000 $23,156
Population in Poverty 2000 28,557
Poverty Rate 2000 13.4%
Education
Percent with Less Than High School 17.0%
Education
Percent with High School Diploma 19.2%
Percent with Bachelor's Degree or Higher 40.1 %
Graduation Rate 68.8%
Labor Force and Employment
Percent Working Age Population 67.4%
Unemployment Rate 2006 3.9%
Agriculture and Natural Resources
1 Source: North Carolina Rural Economic Development Center
10
Total Agricultural Receipts $7,329,000
Total Farms 2002 238
Percent Family Owned Farms 96.6%
Average Farm Size 2002 109
Tobacco Dependency Ranking Low
Table: Alamance County
Population
Population 2006 142,661
Population Density 2000 303
Percent Population Change 1990-2000 20.9%
Median Age 36.3
Percent Born in NC 69.9%
~ _
4 _.
Income and Poverty
Median Household Income 2000 $39,168
Per Capita Income 2000 $19,391
Population in Poverty 2000 14,183
Poverty Rate 2000 11.1 %
Education
Percent with Less Than High School Education 23.5%
Percent with High School Diploma 31.2%
Percent with Bachelor's Degree or Higher 19.2%
Graduation Rate 66.7%
Labor Force and Employment
Percent Working Age Population 62.1%
Unemployment Rate 2006 5.5%
:
-
_.
Agriculture and Natural Resources =
_
Total Agricultural Receipts $36,038,000
Total Farms 2002 831
Average Farm Size 2002 117
Tobacco Dependency Ranking Medium
Table: Orange County
Population
Population 2006
Population Density 2000
120,100
295
11
Percent Population Change 1990-2000 26.0%
Median Age 30.4
Percent Born in NC 46.4%
Income and Poverty
Median Household Income 2000 $42,372
Per Capita Income 2000 $24,873
Population in Poverty 2000 15,318
Poverty Rate 2000 14.1 %
Education
Percent with Less Than High School Education 12.4%
Percent with High School Diploma 15.9%
Percent with Bachelor's Degree or Higher 51.5%
Graduation Rate 81.1%
Labor Force and Employment
Percent Working Age Population 71.3%
Unemployment Rate 2006 3.3%
Agriculture and Natural Resources
Total Agricultural Receipts $29,199,000
Total Farms 2002 627
Percent Family Owned Farms 90.6%
Average Farm Size 2002 113
Tobacco Dependency Ranking Low
Table: Chatham County
Population
Population 2006 60,052
Population Density 2000 72
Percent Population Change 1990-2000 27.3%
Median Age 38.8
Percent Born in NC 62.7%
~ _ _--- - --- ~T_ __ -
L --- __ -- '- __- __ __ _ _. _ --' ___
Income and Poverty
Median Household Income 2000 $42,851
Per Capita Income 2000 $23,355
Population in Poverty 2000 4,723
Poverty Rate 2000 9.7%
Education
12
Percent with Less Than High School Education 22.1%
Percent with High School Diploma 26.7%
Percent with Bachelor's Degree or Higher 27.6%
Graduation Rate 67.1%
Labor Force and Employment
Percent Working Age Population 62.3%
Unemployment Rate 2006 3.9%
Agriculture and Natural Resources
Total Agricultural Receipts $134,480,000
Total Farms 2002 1,128
Percent Family Owned Farms 94.7%
Average Farm Size 2002 105
Tobacco Dependency Ranking Low
The region recorded 2,824 farms in 2002, with an average farm size of between 105 and
110 acres. Over 90% of those are classified as family farms. The largest number of farms
are found in Chatham (1,128), followed by Alamance (831), Orange (627), and Durham
(238).
The region enjoys several strong locally managed farmers markets operating during the
growing season in Hillsborough (Wednesdays and. Saturdays), Carrboro (Wednesdays
and Saturdays), Chapel Hill (Thursdays), Fearrington Village (Tuesdays), Pittsboro
(Thursdays), Durham (Saturdays- year round), and Burlington (Thursdays and
Saturdays). The region is situated between two of the state-run farmers markets, in
Raleigh and Greensboro.
While the number of farms in a given area is not necessarily an indicator of viability, for
projects of this type, the documented existence of such farms, coupled with the existence
of a healthy direct-to-consumer market for locally grown foods, does indicate that several
farm-based producers should have an interest in value-adding their production to extend
seasons or access new markets. This was borne out in the results from the survey
respondents.
II. Local Support and Infrastructure
The clients for this research formed a community advisory committee to provide input
and guidance to the researchers. Noah Ranells, agricultural developer for Orange County
Economic Development Commission, convened the first meeting of the advisory
committee on June 6~' at the Orange County office of the N.C. Cooperative Extension
Service. The following individuals were invited to discuss the feasibility study-and
understand the process that would be undertaken:
13
Fletcher Barber, Director Rett Davis, Director
Orange County Center Alamance County Center
N.C. Cooperative Extension Service N.C. Cooperative Extension Service
Mike Lanier, Agent Judy Lessler
Orange County.Center Carolina Farm Stewardship Association
N.C. Coo erative Extension Service
Roger Cobb, Agent Kelly May
Alamance County Office Alamance County Chamber of Commerce
N.C. Cooperative Extension Service
Barry Jacobs Sheila Neal, Director*
Orange County Commissioner Carrboro Farmers Market
Erin Kauffman, Director Noah Ranells, Agricultural Developer
Durham Farmers Market Orange County Economic Development
Commission
Paul Wallcer, Agent Dianne Reid, Director*
Alamance County Center Chatham County Economic Development
N.C. Cooperative Extension Service Commission
Marti Day Andrea Reusing, Owner/Chef*
Area Extension Agent, Dairy Lantern
N.C. Cooperative Extension Service
Nick Didow Scott Rockafellow
Kenan-Flagler School of Business NC Small Business Technology &
University of North Carolina at Chapel Hill Development Center
Sam Groce Mac Williams, Director*
Chatham County Center Alamance County Chamber of Commerce
N.C. Cooperative Extension Service
Bill Lelekacs, Engineer Glenn Woolard*
Property & Construction Division Chatham County Center
NC Department of Agriculture & Consumer N.C. Cooperative Extension Service
Services
Jesse White Debbie Roos, Agent*
Office of Economic & Business Chatham County Center
Development N.C. Cooperative Extension Service
UNC-Cha el Hill
Ruffin Slater, CEO* Dan Thomas, Chapel Hill Store Manager*
Weaver Street Market Whole Foods Market
Bo Carson* ~ Amy Turnquist*
Research Triangle Partnership Sage & Swift
??? Conner* Eddie Culberson*
Durham Chamber of Commerce Durham Soil & Water Conservation
District
Dub Gulley, Director*
Sma11 Business Center
Durham Technical Community College
14
* Indicates not in attendance
Over the following month, some other service providers were contacted to also help
support the project, especially in disseminating a potential users' survey. These include
the following individuals:
Milele Archibald, Director Doris Schomberg, Director
Small Business Center Culinary Program
Alamance Communi Colle e Alamance Community College
John Parker Penny Hawkins, Owner/Chef
Good Work The Carolina Gourmet
The members of the advisory committee represent a broad cross-section of agricultural
and business service providers located throughout the four-county region, culinary
professionals, directors of two area farmers markets, and chief officers of two of the
largest local food retail outlets. The level of involvement from the community speaks
well of this project's inclusiveness, as well as the success in soliciting for surveys from
community members who might be interested in accessing a shared use food processing
center.
The region has a remarkably strong, diversif ed economy, as well as a strong food
infrastructure that is willing and able to support local value added food production. Two
major food retailers in the natural/local food market were active participants and provided
monetary support for the feasibility study. Decision makers at Whole Foods Markets and
Weaver Street Market expressed strong interest in sourcing products from local food
entrepreneurs and farms manufacturing at a value added food processing center. Dan
Thomas, the market manager of the Chapel Hill Whole Foods, met with the lead
researcher and was enthusiastic about sourcing high quality value added food items made
locally. Weaver Street Market assisted the project by giving researchers their. local
vendor list. Over 100 Weaver Street vendors .were mailed a potential users survey.
Other retail outlets including the new Chatham Marketplace in Pittsboro, and a planned
locally owned supermarket in Burlington, expressed interest in the project and assisted in
disseminating surveys to potential users. Area restaurants owners, most notably Andrea
Reusing of Chapel Hill's Lantern Restaurant, actively promoted the feasibility study
through word of mouth and informing other independent restaurants of the project.
Geographically, the four counties are not a distinct social or economic area. They are
instead a part of a much larger, mostly urban region usually identified with Research
Triangle Park (RTP), one of the largest high technology business parks in the country and
located in eastern Durham and western Wake counties. Raleigh, located just to the west
of RTP, is the state capital and the second largest city in the state. The North Carolina
Rural Economic Development Center reports that Wake County had a population of
786,522 in 2006.
15
Toward the west is the area usually referred to as the Piedmont Triad Region, which
includes the cities of Greensboro, Winston-Salem, and High Point. Alamance. County is
often associated with the eastern edge of this small megalopolis, but is in many ways
characterized as the point where the "Triangle" meets the "Triad." Guilford County, just
west of Alamance, had a population of 4S 1,905 in 2006. Within a fifty mile radius of
Chapel Hill, there are an estimated 1.8 million people.
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The area enjoys a highly developed transportation system. The most important
transportation arteries are Interstate 40 and Interstate 8S. Interstate 40 is one of the
nation's most important east-west highways, running all the way from Wilmington, NC
to Barstow, CA. Interstate 8S is a major north-south transportation route for the nation's
16
East Coast. In North Carolina, I-85 is the major connector between Raleigh and
Charlotte, the state's two largest cities.
Interstates 40 and 85 merge in Orange County near Hillsborough and run together
westward through Alamance County.
Another important part of the region's infrastructure is the presence of several large
colleges and universities. The University of North Carolina's flagship campus is located
in Orange County's Chapel Hill, with a student population in 2006 of approximately
27,700 and a faculty population of 3,200. Duke University, located in Durham, had a
2006 student population of 12,824 and a faculty population of 2,664. In Alamance
County, Elon University had a 2006 student enrollment of 5,230 and 291 full time
faculty. Through working with faculty and students, these campuses maybe ready
venues for sales of specific food items manufactured in a shared use facility.
The area is also home to three campuses of the state's community college system:
Alamance Community College in Graham; Durham Technical Community College in
Durham; and Central Carolina Community College's Pittsboro Campus.
Alamance Community College's Culinary Technology program is a potentially important
community asset for the development of a shared use food and agricultural processing
facility. Chef Doris Schomberg, Department Chair, was an active participant in meetings
during the feasibility study and has expressed a keen interest in steering her students to
such a facility.
17
Section Three: Market Demand
This section reviews results of a community wide survey of potential users of a shared
use food processing facility and determines the viability of such a project based on
measured community demand.
A key component of this study was assessment of local market demand, defined as a
measurable need or wish on the part of prospective clients to use ashared-use food and
agricultural processing facility. Several characteristics of the region, coupled with results
of a community survey of prospective facility users, indicate that there will be sufficient
demand to support and justify the development of a shared-use facility in the four-county
region:
• A strong entrepreneurial presence;
• An existing local food production, distribution and sales system that includes
small farms and food entrepreneurs;
• Awell-established "buy local" movement that supports local producers at direct
retail establishments, supermarkets, and restaurants;
• A culinary education program at the community college level;
• A lack of available approved manufacturing space for entry-level food businesses;
• Measured strong demand from potential facility clients.
When compared to other communities where shared use food and agricultural facilities
have succeeded, the four-county region of this study has stronger positive characteristics
than any other area that the lead researcher is aware of.
I. Methods
Market demand was primarily measured through the use of a potential user's survey,
which profiled prospective users according to selected characteristics and documented
potential facility usage, including equipment needed and hours of anticipated use.
The survey instrument (Attachment A) was titled "Piedmont Regional Value Added
Shared Use Food Processing Center 2007 Needs Survey for Prospective Users," and was
based on an instrument presented in the publication Establishing aShared--Use
Commercial %itchen, authored by Dr. Cameron Wold and used in feasibility studies
throughout the country.
From early June to early September, the survey instrument was widely distributed by
members of the community advisory committee through direct mail and email, and was
publicized in regional media outlets including the Triad Business Journal, the Chapel Hill
News, the Carrboro Citizen, the Chapel Hill Herald, the Durham Herald-Sun, and the
North Carolina Department of Agriculture and Consumer Services' Agriculture Review.
Area retailers, including Chatham Marketplace and Weaver Street Markets, assisted in
having surveys sent to local vendors. The Alamance and Orange Centers of the NC
Cooperative Extension Service mailed surveys to prospective users and/or identified
potential users from lists supplied by their respective county environmental health
inspectors. The Carolina Farm Stewardship Association, a nonprofit organization based
18
in Pittsboro, distributed the survey via emails to its members. Additionally, a list of
licensed meat handlers in the region was accessed from NCDA&CS, and these businesses
and individuals were mailed surveys to their listed addresses.
IT. Survey Results
A total of 67 surveys were returned to researchers within a timeframe of just over 3
months. Of that number, 2 surveys were determined to be invalid due to no contact
information being supplied. Two other surveys showed respondents reporting. that they
would not use a facility if it were available in their region, and another survey respondent
wanted to use a facility for slaughtering poultry (a use for which shared use food
processing facilities are not designed).
Researchers classified the remaining 62 completed surveys into 3 tiers, with tier one
respondents being deemed highly likely to make use of a shared use facility, tier two
respondents being somewhat likely to make use of the facility, and tier three respondents
being least likely to make use of the facility. Tier designations were based on
respondent's thoroughness in completing the survey, their expressed levels of intent to
use the facility, their specific stage of business preparedness, and specific production
activity. Twenty four respondents were identified as tier one potential facility users,
followed by 20 tier two potential users, and 18 tier three potential users.
Responses to some of the most important questions in the survey are discussed below,
with questions pertaining to equipment needs discussed in Section Four: Equipment.
Respondents were given a list of business types to choose from to describe their
activities, and were allowed to select all that applied to their business operations. The
identified business activities were as follows:
19
Question l: Indicate your current business activity, how long you have been in
S ecial /Gourmet Food Producer 3 (7%)
Church/School /Civic Grou 1 (2%
Caterer 3 (7%)
Restaurateur 1 (2%)
Other 3 (7%)
Farmer, Ve etable and Fruit 10 (31%)
Farmer, Livestock & Poultry 10 (31 %)
Farmer, Value Added Meats 2 (6%)
Farmer, Value Added Non-Meat 0
S ecialty/Gourmet Food Producer 4 (12%)
Church/School /Civic Grou 1 (2%)
Caterer 1 (2%)
Restaurateur 1 (2%)
Other
Farmer, Vegetable and Fruit 3
34 (9%)
(30%
Farmer, Livestock & Poultry 24 (21 %)
Farmer, Value Added Meats 7 (6%)
Farmer, Value Added Non-Meat 7 (6%)
S ecialty/Gourmet Food Producer 11 .(10%)
Church/School /Civic Grou 2 (2%)
Caterer 10 (9%)
Restaurateur 10 (9%)
Other 9 (8%)
Well over fifty percent of all business types selected involved farming of some type, with
the most common selection being "farmer, vegetable and fruit." Most respondents who
selected farming as their business operation also selected more than one type of farming.
Among tier one respondents, 44% of selections were for some type of farming, with 19%
being restaurateurs, 16% being specialty/gourmet food producers, and 14% being
caterers.
Eleven of 24 tier one respondents chose some type of farming as their business type,
followed by 15 of 20 tier two respondents and 13 of 18 tier three respondents. Tier one
respondents were more heavily represented by restaurateurs, gourmet food producers and
caterers then was found among all respondents. This was because many of these business
types exhibited a greater degree of understanding of the use of a shared use food
processing center than other business types, and exhibited a stronger interest in using the
facility on a weekly or ongoing basis. Many farmers in tiers two and three said they
would only use a facility occasionally or seasonally for a few hours each year.
20
Only 7 of the 62 valid surveys were from individuals or organizations that were purely in
the planning stage of their business, with 55 respondents currently engaged in some form
of food or agricultural production. Many identified farm-based producers indicated
planning for expanded business activities including gourmet food production, catering,
and value added meat and non-meat processing.
Question 2: What food item(s) are you now or would you be interested in
re arin ?
ee~
Bake Items 23 9 14
Catered Meals 11 9 2
Sauces/Salsa/Condiments 30 11 19
Jams/Jellies 16 4 12
Pasta 5 2 3
Dry Mixes 9 3 6
Herbal su lements 7 2 5
Value-added fruits/ve etables 15 3 12
Chuine 4 1 3
D' 7 4 3
Beef 12 5 7
Poul 16 6 10
Pork 13 6 7
Seafood 5 3 2
Other- not s ecified 1 1
Other- esto 1 1
Other- chocolates 1 1
Other- cre a flllin s 1 1
Other- herbal teas 1 1
Other- hone 1 1
Other-lamb 1 1
Other- wild, ame 1 1
Other- sous 1 i
Other- recooked meals 1 1
Other- oat 1 1
Other- ravens 1 1
Other -flour 1 1
Respondents identified 74 types of food products that they are, currently producing, and
112 foods that they are interested in preparing.
Most food preparation types listed are under the regulatory jurisdiction of the FDA and
the NCDA&CS Food & Drug Safety Division. However, 16 farmers indicated a desire
for value-added meat processing. This type of activity is regulated by the US Department
of Agriculture and the NCDA&CS Meat & Poultry Inspection Division. Eleven
respondents indicated a desire to prepare catered meals, which is under the jurisdiction of
county-level environmental health departments. Regulatory issues are discussed in
Section Eight: Recommendations for Facility Management.
21
Question 3: What facilities or services are you currently using to meet your food
processing needs (e.g., church kitchen, rental kitchen, restaurant, home kitchen)?
From question 3, we see that 21 of the 62 respondents said they are not currently
processing. This indicates that not more than 41 of the total respondents are currently
engaged in value added food & agricultural processing. Of those who are processing, 20
indicated their production space as their home kitchen. These respondents may not be in
compliance with state and federal regulations pertaining to food manufactured for
wholesale or direct retail. Six of the seven respondents who said they are using a co-
packer indicated they were having locally grown animals processed for meat.
Renfal Kitchen: 1
Restaurant: 11
Home Kitchen: 20
Co-packer: 7
Not Currently Processing: 21
Other: Client's kitchens
Other: Has 800 sq.ft commercial kitchen
Other: catering service
Other: On-site preparation
Other: office dehydrator
Other: commercial kitchen bakery
Other: mill & blending plant
Question 5: Are you interested in buying locally-grown ingredients for your
business?
Yes: 43
No: 14
Many respondents to question 5 indicated that they are active participants in the area's
local food movement and will source locally-grown ingredients for their:value added
food products. Several respondents indicated that price and availability would be
important factors in whether or not they will source locally.
Estimated Facility Usage
Respondents varied widely in their responses to questions pertaining to their estimated
usage of a shared use food & agricultural processing facility. Only 45 of 62 valid
respondents gave any clear indication of hourly usage. In some cases, for purposes of
analysis, responses were pro-rated to a weekly basis, such as when a respondent wrote
"10 hours each month," the response was interpreted as 120 hours per year, equaling 2.4
hours per week in a 50 week work year.
In order to more accurately gauge potential weekly usage, the researcher has weighted
responses according to whether they are from tier one, two, or three. Under even the best
of circumstances, hourly use and participation by potential clients will be far lower than
22
what is reported on a written survey. The sum of tier one hourly use estimates is weighted
by multiplying the sum by 50%. Tier two usage amounts are multiplied by 25%, and tier
three usage is multiplied by 10%.
Nineteen tier one respondents reported they would use a facility 169 hours per week,
nineteen tier two respondents reported they would use a facility 192 hours per week, and
seven tier three respondents reported they would use it 103 hours per week. Using the
formula explained above we have the following estimate:
Question 7: How many times and hours per week might you be interested in using
this facility? Weighted results.
Reported
Use/Week Weighting
Formula Total Estimate
Tier One 169 X 50% 84.5
Tier Two 192 X 25% 48
Tier Three 103 X 10% 10.3
Total 142.8
Among existing shared use food processing centers in North Carolina and nationwide, a
common hourly use fee is $22 per hour for actual food manufacturing hours, not
including hours spent packing jars in boxes or applying labels. Based on survey
responses, and using an average of 142.8 hours of weekly usage, and with a standard fee
of $22 per hour, the facility can estimate an annual use fee income at $156,200.
Question 8: Are you interested in using a facility for long term or short term
storage? If yes, please describe duration, volumes, and type of product needing
storage:
Twenty-eight respondents answered that they would need long term or short term storage.
Several indicated they would like long-term storage for locally grown frozen meats.
Yes: Meat: 7
Yes,,general: 17
Yes: frozen fruit
Yes: frozen filled pasta
Yes: freezer
Yes: ice cream
No: 15
Question 10: What type of a business are you planning to run?
Part Time 11
Non-profit 4
Hobby/Gifts 1
Full-Time 35
Supplemental income 19
Other: Expansion of current full time business
Other Agritourism on-site sales and seminars
23
Estimated Sales Goals
Survey respondents were asked "What is your annual sales goal for products
manufactured at a shared-use facility?" Only 38 of 62 respondents answered this
question, with several saying it was difficult to give an estimate. Fourteen tier one
respondents reported an aggregate annual sales goal of $616,000. Seventeen tier two
respondents reported an aggregate sales goal of $1,870,000. Finally, seven tier three
respondents reported $165,000 in annual sales.
Using the.same weighting formula for sales goals as used for hourly usage gives the
following output value estimate:
Question 11: What is your annual sales goal for products manufactured at a shared-
use facility?
Tier One $616,000 X 50% $308,000
Tier Two $1,870,000 X 25% $467,500
Tier Three $165,000 X 10% $16,500
Total $792,000
In order of value, the 38 respondents answered as follows:
1,000 (2)
2,000 (1)
5,000 (3)
6,000 (2)
10,000 (8)
15,000 (3)
20,000 (4)
30,000 (1)
35,000 (1)
50,000 (5)
60,000 (1)
90,000 (1)
100,000 (3)
150,000 (1)
500,000 (1)
1,000,000 (1)
The median estimated annual production value, where half of respondents reported less
and half reported more, is between $15,000 and $20,000 per year and is in line with
experiences at other shared use facilities in the country.
24
Question 13: Do you have a business plan?
Yes: 27
No: 28
Of 55 respondents to this question just under 50% said they have a business plan. Those
clients accessing ashared-use facility may benefit from business planning assistance.
Question 14: Would you be interested in sharing services in addition to the food
processing facilities?
Phone answering 14
Personal com uter ~ 12
Food brokering and sales 20
Secretarial 7
Postage meters 10
Co y machine 21
Offices ace 11
Fax 14
Highs eed internet 13
Marketing website 25
Shi in 18
Retail consignment store 20
Other: Gra hic designer 1
Other: Bookkeenin~ service 1
Question 15: Would any of the
seminars or classes be of interest to
Pre aring a business lan for a food related business 27
Marketin assistance for a food related business 30
Microente rise and self-em to ent o ortunities 18
Meeting health regulations for food preparation and food product 38
distribution
Nutritional considerations for re ared meals or food roducts 14
Starting a business legally 16
Obtaining and using credit 9
Questions 14 and 15 indicate that most respondents understand they will need additional
business development services beyond simple access to processing equipment and space.
To succeed in creating new jobs and increased income, shared use facilities must provide
comprehensive training and educational services to their clients. Seminars, workshops,
and ongoing training programs are integral parts of these projects' activities.
25
County of Orrin
~
.
.. .-
_
Orange
19
__ _
Alamance 19
Chatham 10
Durham 6
Wake 2
Caswell 1
Fors h 1
Rowan 1
Guilford 1
Wa ne 1
Of 55 respondents, 19 were from Orange County and Alamance County each. Most
Orange County respondents listed an address located in the northern half of the county,
while most respondents from Alamance were from the eastern side of the county. Among
respondents from Chatham County, about half were from the Srler City are and half were
from the Pittsboro area.
Question 19: How far would you be ~
villing to drive to use a processing center?
~, .. .-
.. .i-
2 1
10 2
11 1
12.5 1
15 5
17.5 1
20 8
25 7
30 13
40 2
45 2
50 8
55 1
75 1
100 1
230 1
Fifty five respondents reported how far they would be willing to drive to access a
processing center. The average distance reported was 34.4 miles. The median average,
where half of respondents would drive less and half would drive more, was 25 miles.
Experience at other facilities in North Carolina and nationwide shows that serious food
entrepreneurs are often willing to drive 75 to 100 miles to access the equipment and
services they need to succeed. The outlier who reported 230 miles is a current user of
Blue Ridge Food Ventures in Asheville who lives in Durham.
26
III. Market Demand Conclusion
The survey responses clearly indicate sufficient demand to justify the development of a
regional shared use food processing center in the four-county region. Farmers, food
entrepreneurs, and caterers are all well-represented among the respondents.
It is important to note that the primary purpose of a potential user survey is to gauge the
level of existing community demand within a given time frame, in this instance the 'time
period from June to September 2007. While several of the individuals and businesses
who responded may ultimately be clients of the facility if it is built, the survey is intended
to be a sort of snap shot in time that demonstrates the level of community demand during
the feasibility study period of time. It is not intended to generate a list of future users of a
facility. However, respondent contacts maybe useful to keep the community informed of
developments should the project move forward to an implementation stage. The results
are a useful guide to the demographic profile of the types of individuals and businesses
who are likely to use a facility of this nature in the future. The individuals may change
over time, but the kind of user base as demonstrated in the surveys is likely to remain
essentially the same for several years forward.
27
Section Pour -(Equipment
This section recommends food processing and handling equipment needed for identified
potential user profiles. to succeed in expanding or starting value added food businesses at
a shared use food processing facility. Estimates of equipment acquisition costs are
presented.
The potential user survey asked respondents to select from a list of common food
processing equipment those items they need to process their food products. Using a tiered
valuation system based on the quality of survey responses, demand for specific pieces of
equipment is presented below. In highest demand are arange/oven, acutter/mixer, food
processors, awalk-in cooler, and packaging equipment. In lowest demand are dairy
pasteurization, a cider press, a rack oven, and a pie maker.
Chart 1: Equipment Demand Matrix
Equipment Demand Matrix: Valuation Total
35 -
25 -
20 II i ~ II - I ~~
15
10 ~ _ _
_ _
T
,eo `~~~ o~e~ yon tio~ aeo ~e~ `oo, ,~° o'o ey5 ~~A `~A .\~~ ,~o~ mot `~° `~0
~~° t~6` °° o°e~ ~~e° o~ oho `z~ti ~~ `tia'O e~Q~ °`~a~ ,o°'~`~ 4e55 ~a~a ~ a ~°r o;,~i,
a~°j o'ze ~.~`O Q~ '`O °'~~ to r ~~~ wo° o`a Q~ ~° a°r Q~ . e~ ~~
c o ~a o°a ~a~`E! c~~ \~,~5 y'~ Q,~S e~~,Q .° o,~a'o
~ o° ~p~ ~~c1 d` ~~A
a
Survey responses show demand for the most commonly used equipment found in
regional shared use food processing centers throughout the country. The exception is a
measured demand for meat processing equipment, including a smoker and other value-
added meat processing systems. In all 16 farm-based producers out of the 62 valid
respondents expressed a desire for meat processing:
While meat processing must be considered for this project;~it is important to understand
that meat processing, either raw or cooked, for retail and wholesale distribution comes
under an entirely different set of regulations than either non-meat products or catered
meals. While most shared-use food processing centers come under the purview of county
health inspection and FDA regulations, very few have met state or federal regulations for
value added meat processing. In this case, the relevant regulatory authorities are the
USDA's Food Safety Inspection Service and the NCDA&CS's Meat & Poultry
Inspection Division. Regulatory oversight for meat is quite demanding and it is
questionable whether regulatory official in North Carolina would support meat
processing at shared-use facilities.
28
The researcher therefore recommends that the project move cautiously towards limited
value added meat processing only after opening the facility for FDA and county health
inspected processes. This will allow the facility's director to establish clear client
management policies and begin to interact with regulatory officials before "jumping in"
to the much more stringent meat regulatory environment. Equipment for meat processing
is therefore not recommended for first phase equipment acquisition.
The table below shows recommended equipment for acquisition, whether such equipment
should be bought new or used, and estimated total costs of acquisition:
EQUIPMENT FOR A REGIONAL SHARED USE FOOD PROCESSING FACILITY
Used Total Unit Total
E ui merit Essential Desired Or New Comments Units Cost Cost
Needed E ui merit for First-Phase Ac uisition
Versatile,
water bath
Braisin pan, tilt X Used for canning 1 4,000 4,000
Brooms X New 6 10 60
Can openers -
Edlund #1 - mnl o X New 3 85 255
Carts - 30"x60" More if
flat bed X Used ossible 3 350 1,050
Chairs -
Meeting/Break Used/
Room X New 24 25 600
One in each
Cooler - 2 door production
reach in 2X 2X New room 4 2,500 10,000
Cooler -produce
walk in 18 x 20,
exterior
com ressor X New 1 22,000 22,000
Cooler -meat
walk in 12x18,
exterior
com ressor X New 1 12,960 12,960
Manager and
batch code
Com uters X New tinter 2 1,000 2,000
Cutter Mixer -
(HCM 30 qt. Used 1 3,000 3,000
Used if For coolers
Dunna a racks X available and freezers 20 75 1,500
29
Used Total Unit Total
E ui ment Essential Desired Or New Comments Units Cost Cost
Exhaust hoods w/ If used,
fire suppression then 60
& makeup air, 50% of linear
riced er foot X cost feet 1,000 60,000
Code Quoted
requirement, with Facility
bid with GC Renovation
E e wash stations X New Plumbing 4 24 Estimate
New,
Used
Filler, Simplex hard to Double head,
e iston X find for wet ack 1 8,750 8,750
First aid kits X New 2 32 64
Floors uee ees X New 5 20 100
Forklift, 5000 Ib.
Electric or gas X Used 1 15,000 15,000
Freezer -sub
zero,
16' x 20' X New ~ ~ 2 27,200 54,400
Hand Truck X New 2 65 , 130
Vacuum Sealer -
double chamber Modified air
-w/map capability X New packaging 1 8,000 8,000
Ice Machine -
3 tons er da X New 1 5,000 5,000
Keypad entry
controls stem X New 2 500 1,000
Label applicator
'ars and bottles Used ~ 1 3,000 3,000
Lockers -men's &
women's, 1/2
sized
w/6 er bank X .New Nice to have 10 60 600
Maintenance tools
and spare parts X New set 3,000 3,000
Microwave,
commercial rade X New Nice to have 1 950 950
Mixer - 80 qt.
with bowl dollies,
M802 w/
stainless bowl X Used 3-phase 1 8,000 8,000
Mixer 20 qt.,
stainless bowl X Used 1 4,000 4,000
30
Used Total Unit Total
E ui ment Essential Desired Or New Comments Units -Cost Cost
Mop Buckets w/
wrin ers X New 2 85 170
Make sure
Mo floor sink X New it's a bi one 1 375 375
Mo s X New- 3 15 45
Oven -deck,
double deck w/
roasting floor,
gas fired X Used 1 4,500 4,500
Double -
Oven convection stacked are
full pan size, space
gas fired X New efficient 2 4,000 8,000
Pallet jacks,
2 1/2 ton capacity
manual o eration X New 2 400 800
25' linear
feet, double
Pallet racking X Used stack 2,500 2,500
Proof cabinet -
double rack 1 X 1 X New 2 900 1,800
Pulper/Siever, Fruit and
Robo-Cou e e X New ve etables 1 6,000 6,000
One in each
Range - 6 burner, production
gas fired X New kitchen 2 2,286 4,572
RoboCoupe,
or similar X Used 1 900 ~ 900
Rolling racks -
full size sheet
ans X Used 4 125 500
Security cages -
drystorage
sized for pallet, Dog Kennels
rice er allet X will work 13 75 975
Security cameras
w/ monitor X New , 5,000 5,000
Shelving, wire Dry and cold
rack, triple deck X storage 20 100 2,000
Sinks - 2 comp
X washin 3 350 1,050
Sinks - 3 X Utensil 6 500 3,000
31
compartment washing
Used Total Unit Total
E ui ment Essential Desired Or New Comments Units Cost Cost
Quoted
Sink Hand Wash Code with Facility
with Foot requirement, Renovation
Activation X bid with GC 6 500 Estimate
Slicer, model 2612 X New 1 3128 3,128
Self=
Steam kettle contained
- 40-50 al. w/ tilt X Used boiler 1 10,000 10,000
Steam kettle - Self-
70=80 gal w/ contained
ti out a itator X Used boiler 1 14,000 14,000
Self-
Steam kettle, contained
tabletop 20 qt. X Used boiler 2,000 2,000
Tables - 5 foot
stainless Used or
on wheels X New 5 300 1,500
Tables - 6 foot
stainless Used or
on wheels X New 8 450 3,600
Tables -break Used or
room/meetin X New 5 200 1,000
Waste cans -
32 al. W/dollies X New 6 75 450
Water heater w/
storage system, Quoted
250 gal./hour cap. with Facility
gas fired Renovation
w/circulation ump X New Bid with GC 1 8,000 Estimate
Wire cooling racks
on wheels -
4 tier 24x60x4 X Used 4 300 1,200
Subtotal 308,484
15% Installation
& Ship ing 46,272
TOTAL, NEEDED
EQUIPMENT 354,756
32
Equipment for Consideration
Automated Bottling Line Equipment
Accumulator table
-fillip line Used - 1 4,000 4,000
Conveyor -
fillin line New 1 4,500 .4,500
Depends on
Shrink tunnel New bottlin line 3300 3,300
Food pump and
stainless pipe
fittings
aukesha a New 1 7,000 7,000
Scrambler table Depends on
-filling line New bottling line 4000 4,000
255
Batch Code
printer, excluding
computer New 1 5,000 5,000
IVleat Proce ssin
Smoker, 16 Cubic
Convection a Feet 1 10,000 10,000
Hobart Slicer Used 1 3,000 3,000
Meat bandsaw Used 1 1,500 1,500
Commercial Meat
Grinder Used 1 3,000 3,000
Commercial
sausa a filler New Manual 1 1,500 1,500
Other Possible E ui ment
Continuous
Blancher New 1 8,000 8,000
Mixer - 60 qt.
with bowl dollies,
Used 1 6,000 6,000
Only if
Dehydrator -rack demand
T e small New increases 1 700 700
Vegetable polisher
(potato/carrot),
roller type, Can buy Depends on
conve or feed used cro s 1 45,000 45,000
Steam generator Needed if
- 20-30 h New kettles are 10,000 10,000
33
not self-
contained
Only if lots of
Dough Divider New bakers 1 4,000 4,000
Only if lots of
Dou h sheeter New bakers 1 8,500 8,500
Filling dry
Filler, auger pe New materials 1 20,000 20,000
Small of
medium dry
Filler, wei h ack New materials 1 9,500 9,500
Blast Freezer Vegetables
10 X 16 New and Fruit 1 24,000 24,000
Box taping High speed
machine New packagin 1 4,000 4,000
Fryer - 2 basket,
w/wheels & quick
disconnect,
as fired 1 3,500 3,500
Short, 5'
Hard Vegetable rollers, 3'
Wash Line Used wide 1 20,000 20,000
Size reduction
equipment
Urschel Used 1 24,000 24,000
Pulper, One step up
Langsenkamp from Robo-
e New Cou e 1 20,000 20,000
Griddle Used 1 2,100 2,100
Subtotal 256,100
15% ,Shipping
and Installation 38,415
TOTAL EQUIPMENT FOR CONSIDERAT ION $294,515
TOTAL, ALL EQUIPMENT $649,271
The total estimated cost of equipment to be acquired and installed in the first phase of
development is $354,756. Not included in this list are meat processing equipment, an
automated bottling line, and an automated vegetable washing and grading line. While
such equipment may be in demand from some users, the researcher recommends taking a
cautious approach to investing in these expensive systems until sufficient experience in
daily management is gained, regulatory officials have been thoroughly consulted, and a
clear demand that justifies investments is verified.
34
Space for a vegetable washing and grading line is included in the facility design shown in
Section Five. The possibility does exist that demand for this line maybe justified through
meetings with prospective users and other developments during the project development
phase and before the doors open. In this case, and with support from the project
developer, area service providers, farmer organizations, and the community advisory
committee, the project may choose to invest in this line in the first round of equipment
acquisition. Estimates for a small, used hard vegetable wash line are in the range of
$15,000 to $25,000.
35
Section Five -Site Review
I. Characteristics of Successful Sites
The researcher was charged with leading an effort to identify the most feasible site for
development of a shared-use food and agricultural facility in the four-county area.
Several key factors were used to evaluate if certain sites might be suitable for the project,
based upon characteristics of successful examples elsewhere in the country.
Characteristics of successful sites include form of site ownership, affordability (including
acquisition costs and renovation costs), access to utilities, suitability and size of floor
plan, location in proximity to users and ease of access, and proximity to service providers
and others who could provide project support.
Site Ownership
All of the successful shared use food processing centers the researcher is aware of are
owned by local governments, state governments, or nonprofit agencies. There are many
good reasons for this. First of all, benefits from these projects are designed to accrue
primarily to the clients who access the facility for services, and not to the owner of the
project or site. Regional shared use facilities struggle to break even from user fees, even
when the clients themselves are able to make profits, expand their businesses, and create
jobs and income. There is an inherent tension between the project's need to charge
reasonable use fees and its clients who desire to minimize costs and increase business
profits. The tension is further exacerbated if a landlord desirous of profitable rents also is
introduced to the mix.
Additionally, projects that will rely on grants from foundations and governments are at a
disadvantage when the physical infrastructure is owned by afor-profit entity: Most grant
funds are eligible only to 501-c-3 nonprofit corporations or governmental entities. Very
few grant making organizations would be willing to invest in fixed infrastructure
improvements at a site owned by a private entity. Furthermore, a project will likely need
to secure along-term (ca. 10-year or more) lease or other legal agreement to entice grant
makers to invest in any project, whether or not the site is owned by a nonprofit or
governmental agency.
On a balance sheet, securing a site on a nominal long-term lease is very favorable from
the perspective of grant makers. In this case, the existing physical infrastructure can be
considered a committed asset of the project, and in certain cases the valuation of the
building and land can be counted as a match toward grants. In a traditional private lease
agreement, the value of the rent cost is a liability rather than an asset to the project, and
funds would be necessary to secure rent before income from use fees .begin.
Cost
Two important site costs must be considered before securing the project location:
acquisition costs and physical infrastructure improvement costs.
In most existing cases, initial acquisition costs for shared use food processing centers
have been either nominal (such as a $1/year lease), or far below market rates. Project
36
developers should avoid any situation that would require borrowing money to purchase or
lease a commercial site. Experiences at earlier projects have shown that loans most likely
cannot be repaid with future grant funds, and' mortgage payments will significantly drain
project income from client use fees that would otherwise be spent on project operations
including utilities and payroll. A "free" building, even one requiring significant
renovations and upgrades; is preferable to an acquisition that might cost the project
several hundred thousand dollars.
Almost any site chosen for this project will require significant renovations and upgrades.
Installation of floor drains and HVAC systems, construction of food grade walls and
ceilings, and plumbing and' electrical upgrades are among the most common site
improvements needed. Site~renovation, even more than equipment acquisition and
installation, will likely be the most expensive single investment the project will make.
That said, a site that has been recently used for a commercial purpose and that meets
current building and safety codes can cost much less to renovate than a very old building
that has sat idle for a long period of time. Unforeseen renovation costs, such as replacing
a worn-out roof, rewiring the entire electrical system, or building handicap accessible
entrances and bathrooms, can quickly derail a project's budget projections.
Utilities
Large regional shared-use facilities must have access to modern commercial-grade
utilities, including sewer lines, three-phase electricity, potable water, and (preferably)
natural gas. High speed Internet access will make a facility much more effective in
assisting clients for marketing or researching technical issues surrounding production.
Many key pieces of equipment, including ranges and boilers, work best on natural gas.
While gas lines are not an absolute necessity, they are preferable to powering many
pieces of equipment on electricity or propane and can help reduce ongoing utility costs.
Floor Plan
A regional facility such as the one contemplated in this research will require not less than
7,500 square feet of usable heated space, and ideally would have not less than 10,000
square feet. At least two-thirds of the space will be needed for production areas and
storage. Many projects significantly underestimate the amount of cold and dry storage
space needed, and must resort to facility expansions shortly after opening for business.
Short of acquiring a fully developed FDA food processing space, the project will be best
served by acquiring a well built commercial building with strong floors, high ceilings,
and lots of open space. An effective development strategy is commonly referred to as the
"kitchen in a box" development, where FDA production rooms (kitchens) are built
entirely within an existing open commercial space such as a former warehouse or factory
floor. The four production rooms at Blue Ridge Food Ventures in Asheville, for example,
were built inside an existing 7,000 sq.ft. room that had served as the main research and
development factory of a former textile mill.
37
A desired site should also have ample space for offices, break rooms, and meeting rooms.
Acquiring a building with existing offices will help reduce renovation costs.
Proximity to Users and Ease of Access
Results of the community survey indicate the average distance potential users are willing
to drive is just over 34 miles. A site located in the four-county area should take into
account the greatest demands of use from specific counties and communities. The survey
results show a large concentration of potential users near the interstate corridor between
Hillsborough in Orange County and Graham in Alamance County. While serious food
entrepreneurs are not likely to be intimidated by longer commutes, new startups and
farmers will be more likely to use a facility that is within a half hour or so of their homes
or primary places of business.
Optimal sites should have easy road access for commercial trucks and other vehicles.
Much of the equipment installed will be delivered by truck, and either a loading dock or
on site use of a forklift are essential.
Proximity to Service Providers
A key determinant of this project's success may be the degree to which existing business
and agricultural service providers assist clients and project managers in delivering a full
. range of business development services. Extension personnel, culinary trainers, small
business center directors, and others will be able to play a meaningful role in the project
if they can access the facility with minimal travel.
One inherent advantage this project enjoys is relatively close proximity to Raleigh, the
state capital and headquarters for many state service agencies including NC State
University, the North Carolina Department of Agriculture & Consumer Services, and the
North Carolina Department of Commerce. LTNC-Chapel Hill, located in Orange County,
may also be a source for important business development assistance from the Kenan-
Flagler School of Business. F
II. Review of Potential Sites
The researcher spent several days in the four-county region investigating the availability
of potential sites that meet most or all of the criteria discussed above. Visits were made to
all four counties but focused largely on the area with highest measured community
demand, in northern Orange County and eastern Alamance County. A brief discussion of
other locations is first presented below.
Chatham County
Chatham County enjoys a strong presence of small farms, established nonprofit
development agencies (RAFI-USA and Carolina Farm Stewardship Association), and
Eastern Carolina Organics, the largest organic produce cooperative in the state. The
community is largely rural, but is also somewhat divided between the more urban
northern and eastern side, centered on Pittsboro, and the western side near Siler City. A
lack of sufficient water supplies and other infrastructure needs, as well as the county's
38
relative distance from most identified potential users, makes this county a low priority
area for potential site development.
Durham County
By far the most urban part of the research area, downtown Durham has many
underutilized former factory warehouse buildings that could be renovated for food
processing. However, recent renovations of former tobacco handling facilities has raised
real estate prices and ushered in a wave of urban residential redevelopment. Durham is
home to one of the largest food bank centers for the Food Bank of Central and Eastern
North Carolina. The researcher met with FBCENC directors as well as Dr. Nicholas
Didow of the Kenan Flagler School of Business, to discuss potential areas of
collaboration between the food bank and a regional shared-use food processing center.
The possibility of co-location for a new food bank center with a processing facility was
discussed. However, no consensus among participants was reached.
Food banks and shared use commercial processing facilities may be able to fmd common
areas of interest, including shelf stabilization of donated foods through further
processing, need for significant cold storage, and a desire to distribute foods to a local
community. However, their missions are extremely different. Whereas a shared use food
processing center strives to create jobs and income for local food based businesses, a
food bank strives to efficiently deliver food to low income families and individuals who
are threatened by lack of food security, Hunger, and malnourishment. The profit motive of
food entrepreneurship is really not in line with the culture of food bank operations, and
while mutually beneficial relationships may be established, co-location or co-
management of the two is.not recommended.
The Durham Food Cooperative was also contacted about potential partnerships. The
manager of the co-op expressed some interest in hosting a shared use kitchen at the
current co-op site. However, the building is approximately three thousand square feet on
two floors and the floor plan is not suitable for large commercial kitchens and storage.
The researcher detected a relatively low level of interest in this project from Durham
service providers. No sites that are government or non-profit owned were identified in
Durham County that could host a regional shared use food processing center.
A bright area of interest in this project came from South Eastern Efforts Developing
Sustainable Spaces, Inc (SEEDS), a Durham nonprofit that promotes urban community
gardens in the city. SEEDS submitted a survey to use a shared use facility and may
provide a valuable link to low-income communities and individuals in Durham.
Chapel HilUCarrboro
The southern half of Orange County is economically centered on Chapel Hill, home to
IJNC-Chapel Hill, and Carrboro, a former mill village adjacent to Chapel Hill. While
several positive factors are associated with this area, including a strong local foods
movement, the flagship store of Weaver Street Markets, and the Carrboro Farmers
Market, this area has some of the highest real estate demands anywhere in the four-
39
county region. Several service providers confirmed that low cost sites for project
development are unavailable in this area.
The most viable areas with the study region are Alamance County and northern Orange
County.
Alamance County
Alamance County enjoys several positive factors, including the culinary training program
at Alamance Community College (ACC) in Graham, many small farms, and many
abandoned or underutilized former factory buildings. Nineteen of 62 completed surveys
came from individuals and businesses in Alamance County. Additionally, county service
providers and community leaders have exhibited strong support for the project. The
Alamance County Center of Cooperative Extension was helpful in disseminating surveys.
The director of the Small Business Center at ACC met with the researcher and mailed
surveys to her clients, and the Alamance Chamber of Commerce was extremely helpful in
arranging tours of potential sites. Because Alamance has one of the lowest per capita
incomes in the region, the county maybe eligible for certain types of federal, state, or
private foundation grants unavailable to other counties. Finally, the researcher discovered
that efforts have already been underway to determine the feasibility of a shared use
kitchen facility in the county. Penny Hawkins, a culinary professional and resident of the
eastern Alamance town of Mebane, conducted secondary research into shared use
facilities in 2005 and worked closely with ACC Sma11 Business Director Milele
Archibald to measure community support for a facility.
Kelly May; Director of Research and Communications for Economic Development at the
Chamber, gave aday-long tour of potential project sites to the researcher. Sites visited
included the former Hopedale Mills in Haw River, Glencoe, White Furniture in Mebane,
612 Main Street in Burlington, and Saxapahaw.
One fact is clear from the tour: Alamance County has a large number of potentially
available commercial buildings for project development. However, none of the facilities
identified meet the optimal size range (7,500 to 15,000 square feet), and all are privately
owned. Discussions with leasing agents and real estate managers indicated that the
average asking price for commercial warehouses and abandoned factories is a lease of
$3.00 per square foot per year. No owners or representatives expressed an interest in
selling sub-divided areas of far larger buildings. Finally, all spaces identified as potential
sites were in poor condition, requiring substantial investments to upgrade or renovate for
food production use.
In sum, while many positive factors exist, Alamance County does not appear to have a
location that meets all or most of the criteria for site selection discussed above.
Hilisborough/Northern Orange County
Hillsborough and northern Orange County enjoy several of the same positive factors
associated with Alamance County: Many small farms, active support from local service
providers, and measured demand from potential facility clients. Additionally,
40
Hillsborough is centrally located in relation to other counties and their county seats (see
maps below), and is located at the merger of Interstates 8S and 40.
Like the rest of Orange County, Hillsborough enjoys a strong economy, and real estate
pressures are intense. Initially, the researcher was unable to locate a site that would meet
most or all of the criteria for a shared use facility. Fortunately, Noah Ranells of the
Orange County EDC showed the researcher a building located at S00 Valley Forge Road
and approximately half a mile from Interstate 8S on the eastern side of Hillsborough. This
building, a 10,400 square foot metal industrial structure, is the former site of Orange
Enterprises, Inc., anon-profit agency in Hillsborough, N.C., that employs people with
disabilities and subcontracts services to other businesses for mailing and packaging. The
building is owned by Orange County government and now houses election materials.
The Orange Enterprises building is able to meet all of the key criteria for development as
a regional shared use food processing facility. It is owned by the county and is a modern
commercial building that meets code, including handicap-accessible bathrooms and
entrances. The building consists of a large warehouse-type area on concrete slab (ca.
6,500 square feet), a loading area and storage room with a dock (ca. 1,500 square feet),
and multiple ofFces and meeting rooms (ca. 2,000 square feet). The building has access
to all major utilities.
The building is located in the part of the four-county region with the highest level of
measured demand for a facility, and is easily accessed from both I-40 and I-8S. Service
providers from Orange County Government and the county's Cooperative Extension
Center are housed just minutes away.
Distance to County Seats
Belo
w: Driving Distance, Pittsboro to Orange Ente rises, 32.76 T
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41
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Development costs for the former Orange Enterprises building are discussed in the next
chapter.
t
42
Section Six -Facility Design
This section presents a preliminary facility design and floor layout for a shared use food
and agricultural processing facility in a 10,400 sq. ft. building located at 500 Valley
Forge Road in Hillsborough. Estimates of potential fixed-asset facility renovation costs
are discussed. The former Orange Enterprises Building in Hillsborough is the most
optimal location identified for development of a~regional shared-use food processing
center.
The existing building measures 80' by 130'. It includes a parking lot and a loading dock,
and is sited on approximately 4.66 acres (Orange County parcel PIN#: 9874315787).
The building is comprised of three general areas: A ca. 2,000 sq.ft. office area in the front
of the building that includes nine offices and two pairs of men's and women's restrooms;
a large warehouse/shop area in the middle of the building that measures approximately
6,500 sq.ft., and a loading and storage area in the rear that measures approximately 1,500
sq.ft. All three areas are serviced by three large HVAC systems that appear to be in good
working order. The existing electrical boxes indicate the building is equipped with 3-
phase electricity capable of powering food production equipment.
The preliminary layout is designed to meet the overall needs of prospective users in terms
of layout, workflow and equipment, and to accommodate future expansion of use,
especially to meet the measured potential for USDA value added meat production. It is
important to remember that shared use facilities cannot meet all needs of all users.
Experienced facility managers have noted that the best shared use food processing
facilities meet the needs of 80% of their clients 80% of the time. Specialized or expensive
equipment cannot be secured for the use of only one or two users. Similarly, special
design elements or certifications (such as gluten-free or kosher certified) are best
avoided. Organic production, however, can be conducted in the same facility with
conventionally processed foods.
The design of the facility was developed with a "best fit" approach to the existing floor
plan of the Orange Enterprises building. Given a preexisting site, certain special
considerations are dictated by the site and the renovations required.
Bi11 Lelekacs, an engineer with the NCDA&CS Property and Construction Division,
assisted researchers in developing a proposed facility layout which is presented below.
Please note that equipment shown in the floor plan is for illustration only and does not
specifically match recommended equipment. The proposed renovation includes the
following key floor changes for the three sections of the building:
Front Office Area
Merger of two large offices to create a meeting and employee welfare room
measuring 15' 11" x 36' 10"
Creation of an open space retail area from two existing offices
43
Middle Warehouse/Shop Area
• Construction of a 29' 10" x 33' wet kitchen, 10' ceiling height with food grade
panels (ca. 987 sq.ft.)
• Construction of a 29'9" x 32'2" dry kitchen (bakery/prep room), 10' ceiling as
above (ca. 960 sq.ft.).
• Construction of a 19' x 22' mixed use food grade room (future expansion space,
418 sq.ft.).
• Construction of a 7' x 12' utility/boiler room.
• Construction of a 11' x 12' equipment storage room
• Prepared space for installation of two walk-in coolers, 18' x 20' produce cooler
and 12' x 18' meat cooler (ca. 1140 sq.ft.).
• Prepared space for installation of two walk-in freezers, 16'6" x 19'4" each (ca.
1280 sq.ft.).
• Construction of new roll-up door and loading dock.
• Prepared space for installation of 450 sq.ft. of pallet racks (901inear feet, double
stacked).
Rear Loading/Storage Area
• Preparation of 22' x 34' produce wash/grade/pack area (ca. 748 sq.ft.).
• Preparation of 22' x 44' dry storage area (ca. 968 sq.ft.)
The proposed design is intended to allow maximum flexibility in use of production
spaces, and to maximize availability of cold and dry storage. Altogether, the 10,400
square foot facility has 3113 square feet of production space, 1140 square feet of cooler
space, 1280 square feet of freezer space, and 1550 square feet of dry storage space
comprised mostly of 6' x 6' storage cages and 5' x 5' pallet storage racks. Additional dry
storage space can be utilized in the existing offices and leased to clients in need of regular
office space. The facility can accommodate a number of concurrent production types and
minimizes potential of cross-contamination through use of separate, self-contained
production areas.
Wet Processing
The "wet kitchen" is approximately 987 square feet, and is intended to be especially
useful for sauce, salsa, jam, jelly, soup, and other types of production. Equipment is
positioned to permit a relatively efficient production flow while maintaining a significant
amount of open floor space. This permits use by other manufacturers at the same time,
and allows for moving needed equipment in and out of the production area according to
client needs. Experience at other shared use- facilities indicate this will be the most
commonly used production space.
Dry Processing
The "dry kitchen" is approximately 960 square feet that contains equipment commonly
used in dry types of production. Items such as cakes, pies, cookies, burritos, dry rubs, and
herbs can be processed and mixed in this space. Standard convection ovens are
recommended rather than rack ovens to maximize production times and to regulate utility
44
use depending on production volumes. Where possible, equipment is recommended to
have casters to allow needed equipment to be moved in and out according to client needs.
Vegetable Wash Line
The facility includes a space for inclusion of a small automated vegetable wash and grade
line. This line could be used by a number of farm-based producers for consolidated
packing of fresh produce to meet wholesale distribution, direct retail, or institutional
sales. There is a growing interest in institutional purchases of locally grown produce,
however a lack of unified washing, sorting, and grading often precludes local growers
from accessing these accounts. Before installing a vegetable washing, grading, an
packing line, the project is recommended to incorporate a targeted institutional sales
program, in conjunction with marketing specialists with the NC Department of
Agriculture and specialized area agents of the NC Cooperative Extension Service. A
useful model for replication is the Madison Farms project in Madison County, NC, where
up to 25 farms pool their production at a shared use wash line to serve institutional clients
including the public schools, area colleges, and the regional hospital.
Mixed Use Room
The mixed use room measures 418 square feet and is designed to accommodate light
packaging needs. This room can be later retrofitted to provide USDA or state-inspected
value added meat processing. Certified meat smoking, sausage production, or preparation
of primal cuts for locally grown meats could be conducted in this room, upon
development of sanitary operating procedures and plans for hazard analysis and critical
control point management (commonly referred to as HACCP plans). Meat processing is
not recommended until after the project has been open for a substantial period of time.
The Orange Enterprises site also has a fairly spacious gravel parking lot able to
accommodate between 20 and 25 parking spaces. While a paved surface is optimal, the
investment in paving is a low priority compared to internal renovation needs.
Development Costs
Development cost estimates are based on experiences at Blue Ridge Food Ventures and
takes into account potential inflation of certain construction activities. A table showing
estimated development cost ranges, not including equipment, is presented below:
45
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Estimated Facility Renovation Costs
Former Orange Enterprises Building
General Conditions
5u envision 17,000
Dis osal 2,000
Bld Permit 1 % 3,465
Glean-u 2,000
Demolition & Patch
General 3,000
Slab 16,500
Roof Cuttin 7,000
Clean and Seal Slab 20,000
Framin & D all 55,000
Roof Patchin 5,000
Caulkin and Sealants 1,000
Doors & Hardware 7,000
Acoustical Ceilin s 12,000
Paintin 10,000
FRP Board 5,000
Fire Extin uishers 2,000
HVAC Extension 12,000
Fire S rinkler Extension 7,000
Fire Alarm S stem Extension 3,000
Plumbin -Drains & Su I 70,000
Sink Hand Wash x 6 3,000
Circulatin Hot Water Heater 8,000
Electrical 35,000
Floor thin and slo in 44,000
GC Overhead 10% 34,650
GC Profit 5% 17,325
TOTAL ESTIMATE $401,940.00
The total estimate for fixed asset facility improvements is $401,940. This amount may be
reduced through directly contracting with skilled craftsmen for certain components such
as floor tiling and sloping and installation of doors and hardware.
47
Section Seven -Project Development Recommendations
The project development phase is a necessary precursor to project implementation as an
economic catalyst for farmers and food entrepreneurs in the four-county region. Based on
measured levels of community demand, and the successful identification of a suitable
building, the project should be developed as a full-scale regional value added center, fully
staffed with comprehensive support and targeted business development services for its
clients. The projected economic impacts of this project amply justify the necessary
expense of project development.
Because the building is owned by Orange County, allocation of the site for project
development is necessarily a political decision to be made by the elected representatives
of the county who serve on the Orange County Board of Commissioners. As active
clients of this study, the Commissioners are presumably aware of the interest in
establishing this facility and should have some indication of potential economic benefit to
the greater community. Allocation of the building for this use on a nominal long-term
lease agreement with a nonprofit management entity is therefore recommended as a
viable option.
I. Project Developer
Before a legal management entity is established, the development of the site must be
managed by an individual with the necessary skills to take the project from feasibility
stage to full project implementation. This individual should be hired on a short-term (ca.
24 month) period, presumably under contract to Orange County and under general
oversight and direction of the community advisory committee. It is important to note that
this individual is not to be tasked with post-opening facility management. That individual
is described in the following chapter and requires skills different from those of the project
developer.
Project development should be led by an individual able to accomplish the following
tasks:
• Work well with regional stakeholders and the advisory committee to achieve
consensus on project development;
• Develop a funding strategy, write grant requests, and successfully lobby for
financial support from elected officials, state and federal government grant-
making agencies, and private grant-making foundations;
• Manage grant funds for project development and adhere to all reporting
requirements;
• Work closely with relevant regulatory agencies during facility renovations and
equipment acquisition, including the local health department, NCDA&CS's Food
and Drug Protection Division, the US Food & Drug Administration, USDA's
48
Food Safety Inspection Service, and NCDA&CS's Meat and Poultry Inspection
Division.
• Promote the project's development to potential users and the general public in the
primary service area of Alamance, Orange, Durham, and Chatham counties;
• Work as the "owner's representative" and negotiate services with architects,
general contractors, and specialized construction personnel before and during
facility renovations;
• Negotiate purchase and installation of key equipment needed to open for business;
• Lead a search for the permanent facility manager/executive director and identify
strong candidates for the job;
• Develop a legal management structure for the facility as a 501-c-3 nonprofit
corporation.
A strong candidate for this position is Mr. Gerry Cohn, Southeastern Regional Director
for the American Farmland Trust (AFT). Mr. Cohn has expressed interest in leading the
project development phase as a component of his duties at AFT (See Mr. Cohn's resume
attached). In October, the researcher held a conference call with Mr. Cohn and his
supervisor at AFT headquarters in Washington, DC, and the interest in supporting local
farms and food entrepreneurship through the development of this project was confirmed.
AFT is a logical choice for project development for several reasons. First, AFT as an
organization is recognized as a strong advocate for farming nationwide. The mission of
American Farmland Trust is to stop the loss of productive farmland and to promote
farming practices that lead to a healthy environment. Development of this project by AFT
will ensure that farm-based producers are served in their efforts to produce locally grown
value-added products, and will allow AFT to pursue an innovative grass-roots strategy to
increase the economic viability of small farms in the four-county region.
Secondly, AFT (through Mr. Cohn's representation) has an established presence in the
region and has worked closely with leaders in Alamance, Orange, and Chatham counties.
Mr. Cohn's office has recently moved from Graham to Hillsborough, and he should be
able to incorporate project development duties into his normal work schedule.
As a nonprofit organization, in certain cases AFT can serve as a fiscal agent during the
fundraising and construction period. As circumstances permit, AFT could directly apply
for several pools of grant funds, allowing grant management to be handled by the same
entity overseeing project development. It is important to note that several organizations,
including participant counties, service providers, and nonprofit agencies can also apply
for and receive grant funds that can be used for the project's development. A
demonstration of broad community support, especially across political boundaries, is a
strong positive factor for many successful grant applications.
49
Compensation for the project developer must be negotiated with stakeholders, especially
the participating county commissions. A reasonable rate for project management
compensation is in the range of 10% of overall development costs, including facility
renovations and equipment acquisition and installation. The very first grant requests
should incorporate funds necessary to hire the project developer, and subsequent requests
should build in compensation for project management during the development phase.
The County is encouraged to consider a one year lease at $1/year, with at least nine one
year renewal options, contingent upon the project's economic viability and ability to
cover utilities and associated maintenance costs. The lease should begin upon opening of
the facility to entrepreneurial development and food processing services. By securing the
facility at a nominal lease, the intrinsic value of the building can be considered a match
for some types of grant funds, and demonstrates a tangible investment of resources at the
local level (a common requirement for securing grant funds).
One attractive feature for the County of the $1/year lease option is the likelihood that
facility fixed-asset renovations should substantially increase the value of the building.
Following renovation the building should be worth far more than before additions of
floor drains, processing rooms, expanded loading docks and improved storage areas.
SO
Section Eight -Facility Management and Client Use Policies
I. Regulatory Compliance
Following project development, the facility is recommended to open as an FDA approved
food processing center able to accommodate a wide range of processing needs. The
facility design has purposely left sections of the floor plan open to future expansion of
production types as specific demand is justified.
Pursuing USDA or state-inspected value-added meat processing is not recommended
until after the facility is open and client use policies are well-established. Regardless of
who is hired for the position, the facility manager will have a steep learning curve in
understanding how to meet county health and FDA inspection regulations. An
understanding of the local regulatory environment and relationships with regulatory
officials will need to be established before the more burdensome task of value-added
meat processing is contemplated.
No products containing more than 3% meat are allowed for manufacturing under FDA
regulations. Meat preparation is allowed for catering, including those preparing hot meals
for festivals, food carts, and other prepared dinners. These clients are subject to county
health inspection regulations, just like restaurants or other establishments serving food
hot and ready to eat.
YI. Project Executive Director
The project will best succeed by hiring an executive director with significant food
production and culinary experience. This individual should be hired a few months before
the facility is open for entrepreneurial development. Key skills and training
recommended for this position include:
• Experience working in food and agricultural production environments;
• Formal training in food systems management or the culinary arts, or equivalent
experience;
• An understanding of small scale food processing and food-based business
management;
• Certification for acidified foods processing and graduation from a recognized
Better Process training program;
• Strong interpersonal. skills and an ability to work well with service providers,
community leaders, farmers, and food entrepreneurs;
• Meticulous detail to sanitary operating procedures and an ability to enforce strict
sanitary policies in the facility;
• Good public speaking skills and an ability to promote both the project and
products manufactured by clients;
• A strong work ethic and an ability to work long hours and on weekends as
necessary.
51
.III. Pro-Forma Operating Costs
Estimated year one post-opening project management costs are outlined below:
Estimated Year One O eration Costs
Cate o Cost
SALARY- EXECUTIVE
DIRECTOR
45,000
SALARY FRINGE 13,500
LEGAL AND ACCOUNTING 2,000
STATE FILING FEE 205
OFFICE SUPPLIES 1,000
CLEANING SUPPLIES 2,500
WASTE BIN FEE 1,000
MARKETING 5,000
MAINTENANCE-LABOR 5,000
MAINTENANCE-PARTS 5,000
CLEANING .SERVICES 3,500
STAFF TRAVEL 1,000
TELEPHONE 1,200
CELL PHONE 1,000
Building Maintenance and Utilities 32,000
INSURANCE 3,000
Base Cost of O erations 121,905
EQUIPMENT ACQUISITION 50,000
Total Ex eases 171,905
Operational costs can be managed best through enlisting support from other service
providers, including Cooperative Extension offices in each participating county,
marketing and project development support from the Orange County EDC, and business
development support for clients from the Small Business Technology Development
Center and offices of the small business centers at Alamance Community College,
Central Carolina Community College in Pittsboro, and Durham Technical Community
College. Instructors and students at Alamance Community College's Culinary
Technology program may also provide key assistance in training and education for
prospective clients.
52
Project leaders should pursue the possibility of incorporating the duties of a cooperative
extension agent for support of the project, especially in working with prospective clients
on business planning and marketing.
All clients accessing the facility for production should be required to carry a minimum if
$2 million in product liability insurance. The facility itself should also have this
coverage, as well as personal injury insurance in the event of on-site accidents. Advice
and guidance on securing this insurance is available from other facility directors in the
state.
Client management policies and operational forms used by Blue Ridge Food Ventures are
found in appendix _ of this report.
Over the first year of operations, the executive director will need to codify and establish
firm client use policies. Fortunately, a large body of information is available from
existing projects, especially those at Blue Ridge Food Ventures in Asheville and Creative
Food Ventures in Jefferson. Facility directors are in regular communication with each
other via conferences, listservs, and informally via telephone and email. Most are more
than willing to share best practices and experiences with particular challenges in their
daily work. This informal network of shared use facility directors may evolve into a more
formal organization in the future to advocate for greater state support for shared use
facilities throughout the state.
53
Section Nine: Conclusion and Proposed Development Sequence
The feasibility study phase of this project's development is now complete. The researcher
has found sufficient demand, a viable location, and a willing individual and entity to take
on the arduous task of leading the project development phase. This project will benefit
greatly from the previous efforts to develop shared use food processing centers elsewhere
in North Carolina. Advice on proper management, regulatory compliance, equipment
maintenance and acquisition, and market development is readily available from facility
directors and other research publications currently in the public domain.
Project leaders are encouraged to access and read the following research reports to gain
more insight into developing these kinds of projects:
Feasibilitj Study For Establishing ashared-use value adding agricultural
processing/commercial kitchen facility, by Cameron Wold (NCDA&CS, 2002).
Available from the North Carolina Department of Agriculture & Consumer Services,
Division of Marketing, Agribusiness Development Office.
DevelopingLShared-use Food and Agricultural Facilities In North Carolina, by Smithson
Mills (North Carolina Rural Economic Development Center, 2007). Available upon
request from the NC Rural Center, or from Mr. Mills.
Upon conclusion of this feasibility study, project stakeholders are encouraged to pursue
the following action items over the development period, estimated at 18 to 24 months:
1. Formally allocate the former Orange Enterprises building for development of a
regional value-added food and agricultural processing facility;
2. Pass resolutions for formal commitments to project participation by county
commissions in Alamance, Chatham, Durham, and Orange counties;
3. Pursue initial grant funding to secure the services of the lead project developer;
4. Contract with the lead project developer for services;
5. Continue pursuing grant funds necessary to complete facility renovations and
equipment acquisition and installation;
6. Upon securing facility renovation funds, hire an architect to develop blueprints
and oversee bidding for construction services from a general contractor;
7. Working with county commissions and the community advisory committee
develop plans for creation of a nonprofit management entity to own and oversee
operations of the project;
8. File articles of incorporation and approve board members and bylaws for the
management entity;
9. Oversee the bid process and contract award for a general contractor to undertake
facility renovations and improvements;
10. Acquire phase one equipment needed for opening;
11. Establish a $1/yr lease agreement for the facility between the county and the
management entity, active upon securing the certificate of occupancy or on
opening for business;
54
12. Secure start-up funds for hiring an executive director of the management entity;
13. Hire an executive director between 3 and 6 months before the facility is open for
business.
55