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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 2.
For Meeting of: September 29, 2015
Yakima public market / business incubator concept
Sean Hawkins, Economic Development Manager, 575-6274
In June of 2014, the Yakima City Council authorized a study to look at the feasibility of a public market /
business incubator concept for the City of Yakima. The project was recommended as part of the Downtown
Master Plan prepared by Crandall Arambula for the City of Yakima. The City hired BDS Planning for Seattle,
WA to lead the project that also included a team of Graham Baba Architects and ECONorthwest. The study
was funded through a combination of local funds and Yakima County's SIED funding program.
The team conducted outreach interviews with potential vendors and entrepreneurs, conducted public sessions
with the City's local food cooperative and conducted surveys over 600 local residents to determine if a
public market / business incubator concept would be feasible in Yakima and what elements the public wanted
to see in a such a market. ECONorthwest conducted an economic study to determine if there was enough
local spending power to support the concept within our trade area. Graham Baba Architects developed some
potential layout concepts and looked at the positive and negative aspects of potential locations for the market
throughout the downtown district.
This study session will present the consultant's findings and allow for Q&A from the Council and the public.
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Description
Yakima PubIllic Market. / IBusiness Unculbator (:ncept
Study
City Manager
Upload Date Type
9/24/2015
Omer Memo
Yakima Public Market
Business Concept
August 2015
Prepared for:
City of Yakima
BDS
PLANNING & URBAN DESIGN
ECONorthwest
ECONOMICS • FINANCE • PLANNING
GRAHAM BABA ARCHITECTS
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Acknowledgments
This report was produced for the City of Yakima by the
consulting team of BDS Planning & Urban Design,
ECONorthwest, and Graham Baba Architects.
City of Yakima
Micah Cawley, Mayor
Tony O'Rourke, City Manager
Sean Hawkins, Economic Development Manager
BDS Planning & Urban Design
Founded in 2009, BDS offers comprehensive community
development services, with emphasis on projects that
require building consensus and unlikely coalitions,
communicating complex information, demonstrating
leading ideas, and shaping policy. www.bdsplanning.com
ECONorthwest
For over 4o years ECONorthwest has helped its clients
make sound decisions based on rigorous economic,
planning, and financial analysis. www.econw.com.
Graham Baba Architects
Graham Baba Architects is a vibrant Seattle architecture
firm recognized for the successful place -making of
commercial, residential, artistic, institutional, and public
spaces. www.grahambaba.com
BDS ECONorthwest GRAHAM BABA ARCHITECTS i
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B D S ECONorthwest GRAHAM BABA ARCHITECTS ii
Table of Contents
SUMMARY V
1. INTRODUCTION 1
2. OUTREACH AND DEMAND FORECAST 3
2.1 OUTREACH RESULTS
2.2 DEMAND FORECAST
3. MARKET CONCEPT
3.1 LOCATION
3.2 DESIGN
3.2.1 Ground Floor
3.2.2 Mezzanine
3.2.3 Basement
3
6
11
12
12
15
15
11
4. OPERATING STRUCTURE 17
4.1 PUBLIC MARKET 17
4.2 COMMERCIAL KITCHEN 18
5. OPPORTUNITIES, CHALLENGES, AND BEST PRACTICES19
6. CONSTRUCTION AND FINANCING 23
6.1 CONSTRUCTION COST 23
6.2 FINANCIAL PLAN 23
7. OPERATING FORECAST 27
7.1 MODEL FRAMEWORK AND ASSUMPTIONS 27
7.1.1 Revenues 27
7.1.2 Expenses 28
7.2 FINANCIAL FORECAST 30
8. ECONOMIC IMPACTS AND BENEFITS 33
9. APPENDIX A: OUTREACH RESULTS 35
10. APPENDIX B: WORKSHOP SUMMARY 41
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B D S ECONorthwest GRAHAM BABA ARCHITECTS iv
Summary
During the fall and winter of 2014-15, the consulting team
of BDS Planning & Urban Design, ECONorthwest, and
Graham Baba Architects researched the feasibility of a
Public Market and Mixed -Use Incubator/Commercial
Kitchen in Yakima, Washington. The team determined
that the project was in fact feasible, given certain
conditions, which are included in the following summary
of the team's findings:
1. Sales: Market vendors would generate between
$4.2 million and $6.5 million in sales each year.
2. Size: The market would ideally encompass two
stories and a basement totaling 27,500 square
feet. The ground floor (15,000 square feet) would
house approximately 3o vendors and a communal
seating area. The mezzanine (5,000 square feet)
would accommodate a commercial kitchen, child-
care facilities, educational programming, and
small events. The basement (7,500 square feet)
would provide storage as well as space for
loading, unloading, and circulation.
3. Hours of Operation: The market would be
open at least Wednesday through Sunday and
remain open until at least 6:oo PM on weekdays.
4. Vendors: Food vendors' stalls would comprise
about 10 percent of the total area. Other vendors
would provide staple goods, large dry goods,
specialty goods, and competitively priced goods.
Priority would be given to vendors whose
products are local. In addition, vendors would
have access to a washing and packaging system.
5. Operating Structure: The market would be a
nonprofit entity, with access to public funding,
tax-exempt donations, and tax exemptions.
BDS ECONorthwest GRAHAM BABA ARCHITECTS v
6. Coordination: The market would coordinate
efforts and operations with the existing farmers'
market in a number of ways, e.g., by providing
discounts to vendors who rent space at both
markets.
7. Parking: Safe, free parking would be provided to
customers within two blocks of the market.
8. Costs: It would cost approximately $7,500,000 to
build the market, and this financing would be
accomplished before construction occurs.
Options for such financing include City and
County grants, private donations, sponsorships,
tax credits, block grants, and funds from State
and Federal Agriculture Departments. Pay for the
core employees—manager, assistant manager, and
bookkeeper—would be approximately $16o,o00
each year.
9. Revenues: The market would receive revenues
from vendors (approximately $28o,000 in rent
each year), operators of the commercial kitchen
and event spaces (approximately $82,000 each
year), and, potentially, corporate sponsors. Once
the market is stabilized in 2019, it would net
approximately $58,000 each year.
10. Impact: The market would increase local
employment, provide economic stability,
generate tax revenues, support development of
the local food-processing industry, draw visitors,
improve traffic to nearby businesses, and
motivate investment in the area.
B D S ECONorthwest GRAHAM BABA ARCHITECTS vi
1. Introduction
This is a report on the proposed development of a Yakima Public
Market. The report was based on extensive research (local as well as
national) and prepared by BDS Planning & Urban Design,
ECONorthwest, and Graham Baba Architects. It not only
demonstrates the feasibility but also describes how to implement
the building and operating of the market to the advantage of
Yakima's businesses as well as its citizens.
The primary recommendations of the report are to secure debt -free
funding for the market before construction and to establish the
market as a nonprofit entity. More detailed recommendations can
be found in the Summary.
What needs to happen next includes the following:
■ Establish an entity and delineate procedures to implement the
recommendations.
■ Secure the appropriate permits for the market as well as for
parking space.
■ Build and maintain partnerships with individuals and groups
who can help finance, operate, and publicize the market.
The team of BDS Planning and Urban Design, ECONorthwest, and
Graham Baba Architects remains accessible to help pursue these
objectives.
BDS ECONorthwest GRAHAM BABA ARCHITECTS 1
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B D S ECONorthwest GRAHAM BABA ARCHITECTS 2
2. Outreach and Demand Forecast
To establish the feasibility of a Pubic Market and/or Mixed -Use
Incubator / Commercial Kitchen in Yakima, the consultant team
reached out to interested communities in Yakima and also forecast
demand by comparing Yakima's socio-economic characteristics
with the requirements of typical public markets and commercial
kitchens.
2.1 Outreach Results
The Project Team reached out to several different populations in
order to determine to what extent and how the project should
proceed. These efforts included 1) a survey administered to
members of the Yakima community in the winter of 2015, 2) a day-
long workshop in the fall of 2014, 3) a meeting with a Food Artisan
group in August 2014, and 4) meetings with market vendors, also in
August 2014.
2.1.1 Survey
The purpose of the survey was primarily to identify the buying
habits of local residents and the characteristics of a public market
that residents would favor. Here are the highlights:
■ The vast majority of respondents patronize grocery stores for
food and beverages. They go several times a week and two-
thirds of them spend X75-$1oo a week.
■ Respondents consider local production their top criterion for
choosing what and where to purchase food and beverages,
followed by price and then convenience.
■ Almost half of respondents patronize a farmers market or
specialty food market at least once a month; about a fifth of
them go at least once a week.
■ Respondents like the farmers market or specialty food market
primarily because the produce is local and fresh. If they don't
like anything about them, it's the price.
■ Fully 83% of respondents would like to see a public market in
Yakima. About half would like to see it in downtown Yakima.
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They'd like the market to include food and beverage vendors
(94%), prepared foods (8o%), restaurants (66%), event space
(6o%), a commercial kitchen (52%), and educational programs
(47%).
The survey was given to about 600 people, about three-quarters of
whom lived in the local area. The results indicate a strong desire
for a public market, preferably in downtown Yakima. See
Appendix A for more details about survey results.
2.1.2 Workshop
The Project team toured potential sites for a public market,
brainstormed options, considered existing plans and data from
previous research, and identified priorities. Here are the highlights:
■ There is strong demand from the City of Yakima for downtown
revitalization and strong demand from potential vendors for a
public market and commercial kitchen.
■ Successful public markets around the country maintain an
appropriate size, charge reasonable rents, include a variety of
vendors, take advantage of iconic urban buildings, benefit from
a commercial kitchen, have a strong operating entity, and are
free from debt.
The team made the following recommendations:
■ The City should proceed with planning a public market and
commercial kitchen conjoined with the public plaza in
downtown Yakima; this location would benefit the new market,
the existing market, and the community as a whole.
■ The market would be 15,00o -20,00o square feet, not including
2,000-4,000 square feet for a commercial kitchen and
additional space for storage.
■ Stalls would be 12 feet x 12 feet, which would accommodate as
many as 3o vendors.
■ Funding sources would include public agencies and private
sponsors, as well as tax credits. Revenue would accrue from
vendor rentals and other charges.
■ Criteria for site selection would be transparent.
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■ Both public and private advocates for the market would be
identified and brought on board to help with development and
operations.
2.1.3 Meeting with Food Artisan Group
Brian Scott facilitated this meeting with 25 business owners and
others concerned and knowledgeable about small businesses. The
discussion focused on the proposed public market: the
characteristics they'd like to see, the logistics they thought were
necessary, and the concerns they had. The highlights follow.
Characteristics of a proposed public market:
■ A variety of goods for sale, including "gourmet" as well as
economically priced items
■ A downtown location
■ A co-op kitchen
■ Local products
■ An affordable kitchen
■ 24-hour access
■ Open year-round
■ Locked, refrigerated, dry, and temperature -controlled storage
■ Variable fee schedule
■ Effective management
■ Food trucks
■ "Business incubator" with support services
■ Logistics:
o Need for parking
o Truck access
o Scalable loading area
o Connection with tourism in the Yakima valley
■ Concerns:
o Sufficient room for expansion
o Limited consumer base
o Need to create excitement
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2.1 .4 Meetings with Market Vendors
Individual meetings took place with various market vendors on
Sunday, August 10, in Yakima, and Saturday, August 16, in
Wenatchee. Again, the topic was the proposed public market. In
general, vendors seemed eager to know more about the market,
especially how it might affect the current public market of which
they were a part. Highlights:
■ Many vendors wanted a venue in which they could sell their
products throughout the year.
■ They placed a high priority on effective management (some
seemed displeased with current management of the public
market).
■ They expressed concern that a new market might displace the
current one.
■ They were very interested in a commercial kitchen, particularly
if it was accessible and reasonably priced.
■ They considered parking essential.
■ Vendors from outside Yakima were less interested in a second
market.
■ Some vendors thought that a market friendly to children was
important.
■ Many vendors emphasized the desirability of ancillary events,
such as food demonstrations, cooking classes, and even
weddings.
2.2 Demand Forecast
The purpose of this section is to demonstrate the feasibility of a
public market, given conditions in the target area. It focuses on the
market itself, based on the assumption that the project's success or
failure will depend first and foremost on the ability of its vendors
to capture a share of the market.
To determine what share of spending would occur at the Yakima
Market, members of the Project team calculated the size of the
existing specialty food market sector, estimated the number of
visitors and average visitor spending at businesses in this sector,
B D S ECONorthwest GRAHAM BABA ARCHITECTS 6
and then estimated Yakima Market's share of those visitors and
spending.
Due to the potential variability in what vendors the market will
offer, we calculated a range of total sales for the market. At the high
end, we estimate that vendors at the market would generate $6.5
million in sales. At the low end, we estimate that vendors at the
market would generate $4.2 million in sales.
2.2.1 Market Estimate
The Yakima public market will cater primarily to local patrons. For
the purposes of this study, we assume the local market consists of
households residing within a 32 -mile perimeter of downtown
Yakima.
Income and spending characteristics. According to 2013
estimates from Nielsen/Claritas, a nationally recognized market
research data firm, 93,020 households live within 32 miles of
downtown Yakima. Twenty-five percent are upper middle income,
upper income, or affluent. Almost half of the households are lower
middle income or middle income. The remaining 3o percent are
low income.
Table 1: Household Counts and Shares by 2013 Income
2013 Household Income
Number Percent
Less than $25,000
$25,000 to $50,000
$50,000 to $75,000
Over $75,000
Total households within 32 miles
Source ECONorthwest with data from Nielsen/Claritas.
28,167 30%
24,921 27%
16,885 18%
23,047 25%
93,020 100%
Using the most recent (2012) U.S. Bureau of Labor Statistics'
consumer expenditure survey by household income, we
determined that households in the market area spent over $382
million on food for consumption at home and $229 million on food
and beverages consumed outside of home. Total spending was $672
million for area households.
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Table 2: Household Food and Beverage Spending by Distance from Downtown Yakima,
2012 MM$
Food and beverage purchases by resident households
Under2
miles
2to4
miles
4to8
miles
8to16
miles
16to32
miles
32 mile
radius
Food purchased at stores & markets for use at home:
Cereal products: flour, pasta, rice, etc.
$2.9
$5.6
$1.6
$0.9
$5.3
$16.2
Bakery products
5.6
10.9
3.1
1.8
10.3
31.7
Beef
3.5
6.9
2.0
1.1
6.5
20.0
Pork
2.7
5.1
1.5
0.8
4.9
15.0
Other meat products: Iamb, deli meats, sausage, etc.
1.9
3.7
1.1
0.6
3.5
10.9
Poultry
2.5
4.9
1.4
0.8
4.7
14.3
Fish & seafood
1.9
3.9
1.1
0.6
3.6
11.1
Eggs
0.9
1.6
0.5
0.3
1.6
4.8
Dairy Products
6.5
12.9
3.7
2.0
12.0
37.1
Fresh fruits
4.0
8.0
2.3
1.3
7.4
22.9
Fresh vegetables
3.5
6.9
2.0
1.1
6.5
20.0
Processed fruit: juiced, dried, canned, frozen, fresh prepared
1.8
3.5
1.0
0.6
3.3
10.1
Processed vegetables: canned, frozen, fresh prepared, etc.
2.1
4.0
1.1
0.7
3.8
11.7
Sweet products: sugar, syrup, jams, candy, artificial sweeteners
2.3
4.5
1.3
0.7
4.2
13.0
Fats & oils: includes salad dressing, margarine, peanut butter
1.8
3.5
1.0
0.6
3.4
10.3
Miscellaneous foods
10.9
21.5
6.2
3.4
20.2
62.2
Alcoholic beverages
6.4
14.0
4.0
2.0
12.0
38.4
Nonalcoholic beverages: soda, water, coffee, tea, mixes
5.8
11.3
3.3
1.8
10.8
33.1
Total food & beverages bought for use at home
$66.8
$132.8
$38.3
$21.1
$123.9
$382.9
Food from stores & markets for use out of town
3.0
5.9
14.5
27.2
9.7
60.3
Food & beverages away from home (restaurants, carts, etc.)
38.3
82.7
23.8
12.2
72.0
229.0
Total household spending on food & beverages
$108.0
$221.4
$76.6
$60.4
$205.6
$672.1
Source ECONorthwest with data from Nielsen/Claritas.
Specialty food market sector. According to the U.S. Bureau of
Labor Statistics, there are 37 specialty food stores in Yakima
County. Specialty Food Magazine reported that the average
specialty food store is 5,010 square feet. Assuming that, on average,
these stores are comparable in size to other specialty food stores
across the nation, then there are approximately 185,370 square feet
of specialty food stores in the county.
On a square foot basis, the Yakima Market would increase the
volume of specialty food stores by ten percent. The specialty
vendor component of the market includes the entire first floor
(15,000 square feet) plus the vendor storage space in the basement
(4,000 square feet). Once open, the Yakima Market would
comprise nine percent of the specialty food sector in the County.
Number of visits. The Project team used data from the
community survey on how frequently households shop at specialty
markets to determine the number of likely visitors to the Yakima
Market. Based on the number of households by income level (Table
1) and the frequency at which people at that income level shop at
public markets, we determined that existing markets receive 1.5
million visits by households each year.
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The Yakima Market would likely receive 11 percent of those visits,
which equates to its fair share of the market (based on the square
footage ratios)' and a marginal increase to account for the
convenience and unique experience of shopping with multiple
vendors at once. In total, the Yakima Market would receive 156,063
visits from households each year.
Table 3: Household Visitors to the Yakima Market
Shopping Frequnecy
Assumed Visits Per
Year
HH Population by
Visit Frequency
Total Number of
Visits
Yakima Market
Capture
Visits to Yakima
Market
Never
0
7,976
0
0
Once per year
1
14,204
14,204
1,519
Once every 3 to 6 months
3
13,992
41,977
4,488
Once every 2 to 3 months
6
12,708
76,249
11%
8,152
Once per month
12
24,200
290,399
31,048
Once per week or more
52
19,940
1,036,879
110,857
Total number of visits
93,020
1,459,707
156,063
Source ECONorthwest with data from the U.S. Census Bureau, Specialty Food Magazine, and the
community survey.
Spending. Due to the potential variability in what vendors the
market will offer, we calculated a range of total sales for the
market. If the market offers a diverse range of products, including
a dry goods store, more people will shop at the market who
otherwise would have gone to a grocery store for the convenience
factor. Therefore, it will capture a share of food and beverage
spending at grocery stores, and vendor sales will likely reach the
high end of the range. If the market offers solely specialty and
prepared foods, it will capture a smaller share of food and beverage
spending and total vendor sales will likely fall in the low end of the
range.
At the high end, we estimate that vendors at the market
would generate $6.5 million in sales. This figure equals the
total number of household visits to the market multiplied by an
average transaction size of $41.49, which is the average value of a
specialty food transaction in the U.S., according to Specialty Food
Magazine.
1 Specialty food stores vary in patronage and revenues depending on a range of
factors, including quality and variety of products, cost, location, and other
characteristics. For the purposes of this assessment, we need to understand only
the total estimated volume of specialty food store activity to estimate the share of
activity that Yakima Market could capture.
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At the low end, we estimate that vendors at the market
would generate $4.2 million in sales. This estimate assumes
that one-third of the households that visit the market would make
a large volume of food and beverage purchases (an average
transaction of $41.49). It assumes that the other two-thirds would
make prepared food and quick service restaurant purchases, which
would total $2o per household visitor.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 10
3. Market Concept
The consulting team for the Public Market/Mixed Use Incubator
Feasibility Study met in Yakima for a one -day workshop on
October 27, 2014. They collaboratively evaluated the previous
outreach and analysis, toured potential sites, brainstormed
options, and presented a synthesis of options to the Steering
Committee, City Manager, Council members, and others. This day-
long workshop provided the basis for the market concepts related
to location and design presented here. See Appendix B for a
summary of the workshop.
3.1 Location
The Consulting Team assessed seven sites selected by the City of
Yakima for the feasibility study. After a tour, the Consulting Team
discussed the pros and cons of each site. They also considered two
sites of their own choosing. The Team considered each site in
relation to its location and size, existing buildings/infrastructure,
lighting, ambiance, parking, and adjacency to the proposed plaza,
among other criteria.
Each of the sites considered had merits for a Public Market and/or
a Commercial Kitchen. Most of the sites could be physically
adapted to support these uses. A primary issue, however, is the
relationship of the Public Market and Commercial Incubator
Kitchen to the Public Plaza. Downtown Yakima already struggles to
compete economically. Successful commercial districts function
best when their destination uses are close together to focus and
reinforce the attraction of the whole district. As such, the
consulting team strongly suggests that the Public Market be co -
located with the Public Plaza in order to reinforce the community's
investments and draw more activity.
The consulting team also looked at the co -location of a commercial
kitchen with the public market using the same criteria. The Team
agreed that there is not a definitive answer to whether these
facilities should be co -located. Given the local enthusiasm for both,
however, the opportunity for one to reinforce the other should be
seriously considered.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 11
3.2 Design
There is no "one size fits all" approach to public market design.
Broadly, Yakima Public Market would be a year-round indoor
market located in the heart of Yakima. It would be a place for the
community residents and visitors to shop at and support local
businesses as well as experience a unique venue, and for local
businesses to grow and thrive. The Project team has developed a
carefully thought out plan for the specific components of the
market based on its experience in public market design in
conjunction with feedback from potential vendors and the
community at large.
The team envisions a two-story and basement, 27,500 square foot,
public market building. The ground floor (15,000 square feet)
would be the heart of the market. It would house the vendors and a
communal seating area. A mezzanine level (5,000 square feet)
would include a commercial kitchen and small event space. The
basement (7,500 square feet) would provide substantial cold and
dry storage for both the vendors and the commercial kitchen
tenants.
We recommend that the market initially be open five days per
week, Wednesday through Sunday. Maintaining regular and
convenient operating hours is always a challenge with markets
consisting of small businesses. To maintain consistency, which is
an important factor in building customer loyalty, the market
should require vendors to be open during set business hours. To
serve close -in residents, it should require vendors to stay open past
6:00 PM on weekdays.
Prepared food vendors who cater to the lunchtime crowd may wish
to be open seven days per week, to offer lunch to office workers in
the area. The Yakima Public Market could facilitate this by
providing direct outdoor access to prepared food vendor stalls via a
food service window or garage door (the latter also offers an
opportunity to have market activities spill out onto the sidewalk
during favorable weather).
3.2.1 Ground Floor
The ground floor of the market would be approximately 15,000
square feet. We recommend housing all of the vendors on this
B D S ECONorthwest GRAHAM BABA ARCHITECTS 12
floor, so that all benefit from the same volume of foot traffic. This
floor should also include a common area with seating for patrons
who wish to sit and enjoy food or beverages on-site, and perhaps
space for a musician on the weekend or special occasions.
The sketch below shows one possible design for the space. It allows
for 8,360 net rentable square feet of vendor space. This share of
floor space is in line with other public markets that we researched.
Figure 1: Ground Floor Market Concept
WASHROOM
WASHROOM
STAIRS &
ELEVATOR
STAND 01
2400
now Goods
STAND 02
210,1
KMMa Sapphet
STAND 03 STAND 04 STAND 05
710+1 240,I 710.1
1116,61664 soots Wen
Shop
STAND 08
moo
6w
STAND 17
600,1
them Shop
STAND 16
600.1
pmvnons
STAND 1 5
6000
060
STAND 14
neral Markt
The ground floor sketch shows space for 18 vendors, but the actual
number of vendors will vary depending on vendor demand. Given
the relatively high portion of vendor survey respondents that had
an idea for a business or were just starting a business, the team
recommends providing a higher number of small vendor spaces
(e.g., 72 or 144 square feet), which will increase the total number of
vendor stalls. To begin, we recommend that the market offer 3o
vendor stalls ranging in size from 6 by 12 feet to 36 by 36 feet.
STAND 10
50041
X01
STAND 11
5OO
Meoeam
STAND 12
50041
Gown
STAND 13
1200,1
wmeBar & Sky,
GRAHAM BABA ,i1; '1 I
B D S ECONorthwest GRAHAM BABA ARCHITECTS 13
Table 4: Recommended Vendor Stalls by Size
Stall size
Number of vendors
Total square feet
6x 12 12x 12 12x24 24x24 36x36
8 12 4 4 2
576 1,728 1,152 2,304 2,592
Total
30
8,352
Ideally, as incubator or other startup businesses mature, they will
purchase larger spaces, which may again shift the size of the
vendor stalls and total number of vendors. We recommend a
flexible interior design with mobile partial walls dividing vendor
spaces, which would allow management to easily adapt the market
space to meet changing demand.
In addition to the size of vendor stalls, management must also pay
close attention to the types of vendors. Vendor diversity is important
to the success of the market. Team members conducted interviews
with a number of market operators across the country regarding how
they structure their vendor mixes. Using this research, in conjunction
with interviews of potential local vendors, we developed an example
vendor mix for the Yakima Public Market.
A few recommendations about the vendor mix:
• Limit the number of prepared food vendors to
approximately ten percent of the total square
footage. Otherwise, the market will feel more like
a food court, which has been a detriment to other
markets in the U.S.
• Customers, particularly those in Yakima (based
on the community survey) like one-stop
shopping. So, try to provide a variety of staple
goods. Providing a large dry goods space (which
may be offered by a local full service grocer) is
one way to achieve this outcome.
• Offer items at a range of price points. For
example, select one produce vendor that offers
more expensive local, organic, or hard -to -find
produce and another produce vendor that stocks competitively
priced produce. More than two-thirds of households in Yakima
County make under $50,000 per year. These households still
shop at specialty markets according to our research, but they
will be more price -conscious.
Eleven percent of
community survey
respondents stated that one
of the major drawbacks to
specialty food markets in
Yakima is the lack of variety.
Table 5: Vendor Mix
Cate ory
Bread, Bakery, Pastry
Book, News
Cafes
Cheese
Coffee, Tea
Flowers, Garden
Meat, Poultry, Charcuterie
Seafood
Produce
Specialty Foods
Ethnic Foods
Prepared Foods
Dry Goods
Wine, Beer, Spirits
Total
Number
2
1
2
2
1
1
2
2
2
4
4
5
1
1
30
B D S ECONorthwest GRAHAM BABA ARCHITECTS 14
3.2.2 Mezzanine
The mezzanine would consist of a commercial kitchen and a small
event space. The Project team urges the co -location of the market
and commercial kitchen for two reasons. First, public markets and
commercial kitchens have a symbiotic relationship. They require
many of the same ancillary facilities (i.e., loading areas and cold
and dry storage space); vendors that opt to use both facilities will
have lower transportation costs, as they will no longer need to
transport goods from their current production facility to their
retail location. They target similar consumer groups, and can
engage in cross marketing at low to no cost. New markets
scheduled to open in Pittsburgh and Portland will include
commercial kitchens.
Second, the two facilities benefit one another. Most respondents
across vendor outreach surveys have an idea for a business or are
just starting a business. These individuals likely do not have a
product ready to sell and could benefit from an incubator that
would provide them with the strategic support and facilities
required to start and manage their business. These individuals
might start by working in the commercial kitchen (if it were part of
an incubator experience) to develop and test their products. Once
their products were ready to sell, they could easily rent a space in
the market.
The event space should be non-specific, to allow for a variety of
uses. On the weekends, we recommend using the event space for
childcare. Childcare will attract families to the market and keep
them shopping longer. The event space would also be suitable for
educational programming, which would tie into the mission of the
market.
3.2.3 Basement
Vendors and commercial kitchen users need both cold and dry
storage. They rent this additional space on a per square foot basis
to store excess inventory; they can keep their booths tidy and
organized, and consolidate the number of deliveries. Among
markets that reported sufficient storage for tenants, the average
market provided 81 square feet of cold storage and 90 square feet of
dry storage per tenant. We recommend building 4,000 square feet
B D S ECONorthwest GRAHAM BABA ARCHITECTS 15
of storage space. The remaining space in the basement should be
used for loading, unloading, and circulation.
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4. Operating Structure
Possible management and operating structures—and their
associated costs and benefits—will vary depending on the size and
scope of each market segment. The market has two unique
components that have different objectives and operating needs: the
public market and the commercial kitchen. The purpose of this
section is to describe the options available to the City and to
provide a bottom line assessment of the feasibility of each.
4.1 Public Market
There are several operating models to consider for the public
market.
Nonprofit. Most public markets are nonprofit owned and
operated. A board of directors would govern the organization. An
executive director with the support of a small staff would manage
the operations. The benefits of a nonprofit model include: access to
public funding, access to tax-exempt donations, and potential tax
exemptions. The drawbacks to a nonprofit model include: a group
of citizens required to sit on a Board of Directors and stay engaged
for the long haul, and potential difficulty in raising funds for
construction and ongoing maintenance.
For Profit. The City may choose to find a private entity to
construct, own, and manage the public market. The benefits of a
for-profit entity include: access to traditional sources of bank
financing and private equity to fund construction, responsiveness
to operational challenges, and energy. The drawback to a for-profit
entity is a priority of profit over mission.
Public Ownership. The City of Yakima could choose to own and
operate the market as a City venture. The benefits of City
ownership include: access to public funds and the ability to run it
as a mission -based organization. The drawbacks to City ownership
include: annual competition for funding with other city
responsibilities and potential changes in city priorities over time.
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4.2 Commercial Kitchen
Due to the number of Yakima residents with an interest in starting
a food -related business or who have just started a food -related
business, we recommend that a separate entity operate the
commercial kitchen as part of an incubator/accelerator. This entity
would pay a flat rate per month to the public market owner to lease
the commercial kitchen and a portion of the storage space. This
entity might also master -lease a set number of vendor spaces from
the market. It would manage or contract with the market to
manage the sub -leasing and operations of those spaces.
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5. Opportunities, Challenges, and Best
Practices
This section highlights opportunities, challenges, and best
practices for the Yakima Public Market. It draws on both the
primary research conducted by the Project Team and secondary
research conducted by ECONorthwest. The secondary research
drew from analyses of public markets and commercial kitchens, as
well as studies from the USDA and other relevant sources.
Research focused on the following markets and kitchens, as they
are in a region with many similar characteristics or have
demonstrated success:
■ Eastern Market (South Hall), Washington, DC
■ Findlay Market, Cincinnati, OH
■ Granville Island Public Market, Vancouver, BC
■ Lexington Market, Baltimore, MD
■ Melrose Market, Seattle, WA
■ Pike Place Market, Seattle, WA
■ Pittsburgh Public Market, Pittsburgh, PA
■ Pybus Public Market, Wenatchee, WA
■ Reading Terminal, Philadelphia, PA
■ Rochester Public Market, Rochester, NY
■ Soulard Market, St. Louis, MO
■ Sprout Regional Food Hub, Springfield, MO
■ The Starting Block, Hart, MI
This section highlights the best practices that emerged from this
research, which may inform market operations.
Capital funding. Public market and commercial kitchen
facilities are expensive, both to construct and to operate. In its
early years, a public market is lucky if it generates net operating
income. If a market or commercial kitchen has debt obligations on
top of operating costs, it may be unable to provide an adequate
B D S ECONorthwest GRAHAM BABA ARCHITECTS 19
level of maintenance and service. In such cases, the facility will
lose customers as it ages, which will ultimately lead to a further
decline in vendor sales and vendor rents. Markets or commercial
kitchens that use debt financing for their capital facilities often
find themselves in this position. The Yamhill Market in Portland,
Oregon, is one such example. Unable to service debt, physical
deterioration followed and, after several years, the market closed.
Creative destruction. An economic principle explains why
most public markets succeed. These markets allow for rapid, cost-
effective "creative destruction" — an economics term describing
the process of incessantly creating new businesses and destroying
old ones that become uncompetitive. That is, public markets
rapidly respond to changing customer demand and interests. It
costs relatively little to change out vendors. A vendor, new or
existing, who has an innovative product or idea, can more easily
execute it in a public market, which is designed for easy set-up and
attracts large numbers of potential customers. Likewise, a vendor
with a product or cost structure that consumers view unfavorably
can fail and be replaced quickly within the confines of the market.
Fixed stores and restaurants lack this flexibility. Thus, a market
that is capable of accommodating changes quickly can better
satisfy consumers' interests.
Farmers market partnership. A number of survey respondents
indicated concern regarding competition between the proposed
public market and the existing farmers market. Due to the
proximity of these two projects and the small size of the market, we
strongly urge the two ventures to work together. One option would
be for the farmers market to serve as an extension of the public
market on Sunday mornings. Another is for vendors who rent
space at both markets to receive a discount. A third opportunity for
collaboration is for the two to invest in joint branding and
marketing to improve visibility and market penetration for both.
Parking. While a number of customers will walk, bike, or take
public transit to the market, most customers will drive. There must
be safe parking within two blocks of the market and it must be free
to the customer while they shop. Recall that most sales will come
from households with children, and such families are unlikely to
use public transportation, as it is expensive and difficult to manage
when carrying packages.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 20
Social gathering. A major feature that attracts people to public
markets is the social gathering phenomenon. People find safe,
familiar, busy places very appealing. The market design should
maximize this effect. For example, it could offer a children's play
area, a central square with ample seating, and occasional events.
Accessibility. The market must be easily visible and attractive
from afar (beacon effect). For drivers, pedestrians, and public
transit riders to find their way to the market, it should provide
clear signage for parking and entrances.
Local first. Two-thirds of community survey respondents said
that "local" was the first or second most important factor in their
food purchasing decisions. Therefore, we recommend that market
management prioritize vendors whose products are local, and that
they focus advertising on this point.
Pricing. Most of the spending on food for home use comes from
households earning less than $8o,000. These households are price
sensitive, so successful markets must offer competitive values. To
do so, markets must have strong retail efficiencies: good, safe truck
access; plenty of secure storage; and enough easily accessible
parking to ensure a large flow of customer traffic.
Packaging. The value of consumer time is exemplified by the fact
that 7o percent of the lettuce bought in America today is pre-
packaged. Such pre-packaged goods represent one out of every six
dollars spent on vegetables today. In this form greens are mixed,
washed, and ready to use. It saves buyers time and offers greater
variety. As one option for this growing genre of customers,
consider having a washing and packaging system that farmers
could share at the market.
Childcare. To attract families to the market and keep them
shopping longer, the market may consider providing free childcare.
The market should also have one or more features that would
appeal to children of various ages. Doing so would reduce adult
consumer friction when deciding where to shop.
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6. Construction and Financing
GBA produced a construction cost estimate for the market and
ECONorthwest provided an explanation of potential funding
sources.
6.1 Construction Cost
GBA produced a cost estimate for the Yakima Market that applies
to new construction or rehabilitation of an existing structure . The
estimate is for a facility with a 15,000 square foot ground floor
footprint, a 7,500 square foot basement, and a 5,o0o square foot
mezzanine. The total cost to construct the facility would be
$7,522,056.2 This cost includes both hard costs and project
development/soft costs. It reflects anticipated costs for a basic,
metal -framed, warm shell, and core complete with basic heating,
washrooms, power distribution, and basement storage space that is
critical to tenant operations.
The cost to open does not include tenant improvements, such as
electrical within the spaces, finishes, and lighting. The Market may
wish to offer a tenant improvement allowance to help cover these
costs. An allowance for a test kitchen is included. The model is very
similar to the Pybus Market building in Wenatchee.
This cost figure would apply for a new structure on a clear, flat site
or the adaptive reuse of an existing structure. Given the vintage of
buildings in the area, structural work for either scenario would be
relatively equal. Any building that is suitable will require a full
seismic retrofit as well as ADA and energy code compliance.
6.2 Financial Plan
Most successful public markets are debt -free on the capital side
and focus their longer term funding and financing plans on
ongoing operations. The pro forma indicates that the project
2 Source: The Robinson Company. Yakima Public Market, Order of Magnitude
Cost Estimate: December 19, 2014 (Rev. 1/8/2015), with supplemental email
between GBA and ECONorthwest (March 19, 2015).
B D S ECONorthwest GRAHAM BABA ARCHITECTS 23
should generate positive earnings once stabilized, so the primary
challenge will be to finance the total development costs of the
facility (site acquisition, design, engineering, permitting, securing
financing, and actual construction).
Having recently gone through this exercise on the capital side,
we've become familiar with a portfolio of possibilities that range
from public agency and private foundation grants to tax credits
and crowd funding. The options available to the market will
depend on what entity owns and manages the market, what are the
competing priorities for public dollars, and how much risk the
public sector is willing to take in providing and/or pursuing
alternative financing among other factors, so an in-depth
assessment of financial options is inappropriate at this stage. We
recommend completing a robust finance strategy once the market
concept and management structure are complete.
Some options include:
■ City and County grants. The state has some prohibitions on
lending of credit, but the market may qualify for these general
funds or general obligation bond funds if it serves a "public
purpose."
■ Private donations. Most public markets rely heavily on private
donor contributions (individual, foundation, and corporate
donation, and crowd funding). Markets organized as 5oi(c)(3)
organizations may have an easier time soliciting donations, as
they are tax-deductible.
■ Sponsorships and naming rights. Corporations and individuals
may be willing to pay for naming rights for a specific segment
of the market. This payment may occur one time or be ongoing.
■ New Markets Tax Credits. If the market is in a "very distressed"
census tract, it may qualify for these tax credits. Competition is
stiff, however, so it is not necessarily a dependable source of
funding.
■ Historic Tax Credits. If the market is in a historic building, it
can obtain tax credits for up to zo percent of the qualified
rehabilitation cost. This source of funding may be accessible if
the City selects a historic building with adaptive reuse
potential.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 24
■ Community Development Block Grants. If the activities of the
market benefit low- and moderate -income people, then the
market may be eligible for Community Development Block
Grants. The U.S. Department of Housing and Urban
Development provides these funds to the City and County.
■ State and Federal Agriculture Department Funds. Agriculture
Departments at both the state and federal levels offer funds
that can support public market development. The James Beard
Public Market in Portland has successfully solicited
Agriculture Department funds for capital construction of its
market.
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7. Operating Forecast
The operating forecast shows the revenues, costs, and earnings of
the Yakima Market.
7.1 Model Framework and Assumptions
This section summarizes the Yakima Market financial model
framework and describes key assumptions for both its revenues
and costs. It assumes that all revenues and costs will rise with
inflation. Unless otherwise specified, all dollar values are in 2015
dollars.
7.1.1 Revenues
The Yakima Market will receive revenues from two definitive
sources: (1) market vendors (stall and storage space leases), and (2)
operators of the ancillary elements (commercial kitchen and event
space). It may also receive revenues from corporate sponsors.
ECONorthwest did not forecast revenues from corporate
sponsorships, as the market may exhaust this source in the near
term during its capital financing campaign.
Market Vendors. Table 6 shows annual vendor lease rates and
revenues at stabilization for the market. These rates are "all -in"
rates, meaning that they include common area maintenance (CAM)
and property tax charges. They do not include utilities, for which
we recommend the market individually meter and bill, as vendors
that prepare food on site will have higher utility usage. Assuming a
vacancy factor of 6 percent at stabilization (in line with other
markets), vendors at the market will pay $280,872 in rent each year.
Table 6: Annual Vendor Lease Rates and Revenues at Stabilization, 2015 $
Variable
6 x 12
12 x 12
12 x 24
24 x 24
36 x 36
Total
Number of units
8
12
4
4
2
30
Rent per unit per year
$3,300
$6,300
$11,700
$21,000
$33,000
Total rental revenue, 100% occupancy
$26,400
$75,600
$46,800
$84,000
$66,000
$298,800
Vacancy factor (6%)
(1,584)
(4,536)
(2,808)
(5,040)
(3,960)
(17,928)
Total rental revenue, at stabilization
$24,816
$71,064
$43,992
$78,960
$62,040
$280,872
ECONorthwest developed lease rates based on consultations with
other public markets as well as with commercial real estate broker
Alex Hughes of Debbie Thomas Real estate in Portland, Oregon.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 27
Mr. Hughes specializes in unique real estate. Rent rates are a
function of projected sales revenues.
In addition to the unit leases, Yakima Market will also receive
revenues from vendors for storage space. The model assumes that
each vendor would require on average 63 SF of cold storage and 7o
SF of dry storage. On an annual basis, storage would command
revenues of $33 per square foot for cold storage and $12 per square
foot for dry storage. Both the demand figures and lease rates reflect
averages for several markets surveyed.
Table 7: Annual Storage Space Lease Rates and Revenues at Stabilization, 2015 $
Variable
SF Lease rate/SF Revenue
Leased storage space (94% occupancy)
Cold 1,781 $33.00 $58,775
Dry 1,979 12.00 23,747
Total 3,760 $82,522
Ancillary Market Components. This analysis assumes an all -
in lease rate of sio per square foot per year for the commercial
kitchen and event spaces in the market. Given 4,000 leasable
square feet, these components will generate $4o,00o per year in
lease revenues.
Given the uniqueness of both the commercial kitchen and event
space, the potential for these spaces to be used for
educational/incubation purposes, and the lack of true comparable
facilities in the market, this rate should be viewed as a placeholder.
We recommend that the market explore partnership opportunities
in the next phase of its analysis.
7.1.2 Expenses
This section summarizes the assumptions used for operating and
other expenses in the financial forecast.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 28
Payroll and Benefits. Table 8 presents the number and cost of
the staff required to operate the Yakima Market. In total, it will
require 2.5 full-time equivalent (FTE) employees. Using wage data
from the Washington State Employment and Security Department
and a benefit load of 3o percent, ECONorthwest calculated that
these employees would cost a total of $i6o,55o in wages and
benefits. All of these employees are integral to the successful
operation of the market from day one, so there is no ramp -up
period for staff.
Table 8: Employees and Annual Payroll and Benefits, 2014 $
Position
FTEs Annual Wage Total Payroll
Total Pay and
Benefits
Manager
Assistant manager
Bookkeeper
Total
1 $75,000
1 30,000
37,000
0.5
2.5
$75,000
30,000
18,500
$123,500
$97,500
39,000
24,050
$160,550
This is a lean staffing model that assumes the facility will contract
out marketing, janitorial, and maintenance services. We also
recommend that the market offer incentive pay to the manager
based on the manager's ability to lease up vendor stalls and
support vendor revenues.
Utilities. ECONorthwest adjusted utility consumption data for a
Portland branch of Whole Foods as the basis for its utility cost
estimate. It adjusted this cost to account for the smaller Yakima
Market size and lower cost of utilities. The analysis estimates that
utilities, including electricity, gas, trash, recycling, and compost,
will cost an average of $o.48 per square foot per month, or $5.76 per
square foot per year.
The Yakima Market likely will only cover the cost of utilities for
common areas and other non -leased SF; it will pass on the cost of
utilities for leased space to vendors and the operators of other
ancillary components. Therefore, the total cost of utilities for the
Market itself would be $87,000.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 29
Pest Control, Office, Legal, and other Professional.
ECONorthwest used data from other public market business plans
to estimate the pest control, office, legal, and other professional
costs to Yakima Market. It reduced these costs marginally to
account for the lower cost of services in Yakima. On an annual
basis, we assume that Yakima Market will pay sii,000 for pest
control, $15,000 for general office and other expenses, and $5,000
for legal and other professional expenses.
Janitorial and Maintenance Services. To minimize the
operating expenses, ECONorthwest recommends that the market
contract out janitorial and maintenance services. We assumed this
cost would equate to roughly the cost of hiring a full-time
maintenance employee, $40,000 per year. The actual cost will
depend on if the market uses two separate contractors (e.g., one for
janitorial and one for maintenance) and how frequently it requires
service.
Marketing. The analysis assumes that the market will spend
$2o,000 on marketing each year. This figure reflects the per square
foot expenditures of Seattle's Pike Place Market.
Insurance. ECONorthwest obtained an insurance quote for
Yakima Market from a commercial insurance broker in the James
Beard Public Market in the Portland area, and adjusted the policy
and premium for the construction cost estimate for the Yakima
Market. ECONorthwest estimates that insurance will cost sii,000
per year. This quote assumes that vendors and other lessors would
have their own insurance, and that the market would be
responsible solely for the building and any property inside that is
not leased.
7.2 Financial Forecast
This section shows the financial performance of Yakima Market
over a ten-year period. The analysis assumes that the market opens
in January 2017 and reaches stabilization by January 2019.
Therefore, our financial statements show performance from 2017
through 2026. Both the earnings and cash flow statements indicate
that Yakima Market, if it is successful in attracting and retaining
customers, will be a profitable enterprise.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 30
Table 9 provides the earnings before interest, taxes, depreciation,
and amortization (EBITDA) statement for Yakima Market. The
EBITDA statement is a good indicator of organizational
performance, as it shows the net operating profit, while
eliminating the effects of financing and accounting decisions.
In its first two year of operations, Yakima Market will have small
net losses as it ramps up. At stabilization in 2019, the market will
generate positive earnings of $58,501. EBITDA will rise at about the
rate of inflation in each year thereafter, as this analysis assumes
that both lease rates and expenses (with the exception of property
taxes) rise with inflation.
Table 9: Earnings Statement, 2018 - 2027, Current Dollars
2017 2018 2019 2020 2021 2022
Occupancy and Lease Rates
Vendors
Leasable SF, indoor and outdoo 8,352 8,352 8,352 8,352 8,352 8,352 8,352 8,352 8,352 8,352
Occupancy rate 75% 80% 94% 94% 94% 94% 94% 94% 94% 94%
Leased SF 6,264 6,682 7,851 7,851 7,851 7,851 7,851 7,851 7,851 7,851
Average lease rate, $/SF, all in $37 $38 $39 $40 $41 $42 $43 $44 $45 $46
Commercial Kitchen and Event Space
Leasable SF 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000
Occupancy rate 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Leased SF 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000
Average lease rate, $/SF, all in $10 $11 $11 $11 $11 $12 $12 $12 $13 $13
Storage
Cold
Leasable SF 1,895 1,895 1,895 1,895 1,895 1,895 1,895 1,895 1,895 1,895
Occupancy rate 50% 75% 94% 94% 94% 94% 94% 94% 94% 94%
Leased SF 947 1,421 1,781 1,781 1,781 1,781 1,781 1,781 1,781 1,781
Average lease rate, $/SF, all in $34.23 $35.00 $35.85 $36.75 $37.67 $38.61 $39.58 $40.57 $41.58 $42.62
Dry
Leasable SF 2,105 2,105 2,105 2,105 2,105 2,105 2,105 2,105 2,105 2,105
Occupancy rate 50% 75% 94% 94% 94% 94% 94% 94% 94% 94%
Leased SF 1,053 1,579 1,979 1,979 1,979 1,979 1,979 1,979 1,979 1,979
Average lease rate, $/SF, all in $12.45 $12.73 $13.04 $13.36 $13.70 $14.04 $14.39 $14.75 $15.12 $15.50
Revenues
Vendors $232,484 $253,510 $305,165 $312,794 $320,614 $328,629 $336,845 $345,266 $353,898 $362,745
Commercial Kitchen 41,497 42,421 43,460 44,546 45,660 46,801 47,971 49,171 50,400 51,660
Storage 45,537 69,828 89,659 91,901 94,198 96,553 98,967 101,441 103,978 106,577
Total revenues $319,518 $365,760 $438,284 $449,241 $460,472 $471,984 $483,783 $495,878 $508,275 $520,982
Cash Operating Expenses
Payroll and benefits $166,557 $170,269 $174,436 $178,797 $183,267 $187,849 $192,545 $197,358 $202,292 $207,350
Yakima utilities 90,255 92,267 94,525 96,888 99,310 101,793 104,338 106,946 109,620 112,360
Pest control 11,412 11,666 11,951 12,250 12,556 12,870 13,192 13,522 13,860 14,206
General office and other 15,561 15,908 16,297 16,705 17,122 17,550 17,989 18,439 18,900 19,372
Legal and professional 5,187 5,303 5,432 5,568 5,707 5,850 5,996 6,146 6,300 6,457
Janitorial and maintenance 41,497 42,421 43,460 44,546 45,660 46,801 47,971 49,171 50,400 51,660
Marketing 20,748 21,211 21,730 22,273 22,830 23,401 23,986 24,585 25,200 25,830
Insurance 11,412 11,666 11,951 12,250 12,556 12,870 13,192 13,522 13,860 14,206
Cash operating expenses $362,628 $370,710 $379,783 $389,277 $399,009 $408,984 $419,209 $429,689 $440,432 $451,442
EBITDA 443,110 44,950 $58,501 $59,964 $61,463 $62,999 $64,574 $66,189 $67,843 $69,539
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8. Economic Impacts and Benefits
The market will have a range of beneficial impacts on local
governments, the regional economy, and the local community.
Economic Impacts. Suppliers of goods and services to the
market, including farmers, wholesalers, and shippers, will see
demand from the market and its vendors, thus increasing their
employment. Those are indirect impacts. More importantly, the
earnings going to employees, vendors, and farmers because of the
market will be spent and re -spent throughout the region. These
induced impacts would be significant.
Fiscal Impacts. In addition to economic impacts, the market will
have fiscal impacts in the form of tax revenues to state and local
governments. The $4.2 to $6.5 million in sales each year would
generate substantial sales tax revenues. If a private entity or
nonprofit owns the Market, it would pay property tax revenues.
Dynamic Impacts. Over the long-term, the market will have
dynamic impacts on the economy. Dynamic impacts are qualitative
and long-term. Over time, and particularly if the market has an
incubator/accelerator component, it will support development of
the local food processing industry. Agricultural producers and local
entrepreneurs will have the opportunity to produce value-added
products, which have higher margins. As the number and size of
these businesses grow, so too will the region's brand, drawing more
food- and beverage -related businesses from outside the area.
Eventually, we would expect Yakima to develop a robust food and
beverage cluster.
Community and Economic Development Impacts. The
Market will draw visitors from across the County to downtown. If
it is located adjacent to the public plaza, the Market may increase
pedestrian traffic to the plaza and nearby businesses. As a result,
we would expect new businesses to locate downtown and invest in
its revitalization.
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B D S ECONorthwest GRAHAM BABA ARCHITECTS 34
9. Appendix A: Outreach Results
During the winter or 2015, the City of Yakima conducted an online
community survey to ask residents about their shopping habits
and interest in a public market in Yakima.
Respondents to the survey were overwhelmingly supportive of a
public market, and most favor locating it in downtown Yakima.
The opportunity for local fresh produce was by far the greatest
appeal, followed by variety and quality. A summary of survey
findings follows below.
On your most recent grocery shopping trip ...
WHERE DID YOU GO?
Most shop for groceries at a grocery (84%) or grocery/department
(38%) store.
For "Other," Costco was named 29 times out of 1o5 responses (28%).
HOW MUCH DID YOU SPEND?
Most spent between $5o and si5o (62%).
RANK THE FOLLOWING CONSIDERATIONS IN ORDER OF IMPORTANCE TO
YOUR PURCHASING DECISIONS
Rankings of Locally Produced, Price, Convenience, and Organic,
respondents' rankings were very balanced, with locally produced
and price at the top and organic at the bottom.
Score Consideration
2.91 Locally Produced
2.87 Price
2.40 Convenience
1.82 Organic
B D S ECONorthwest GRAHAM BABA ARCHITECTS 35
OVERALL, HOW SATISFIED WERE YOU WITH YOUR MOST RECENT GROCERY
SHOPPING EXPERIENCE?
Respondents were largely satisfied (80%) with their grocery
shopping experience.
Those not satisfied had various comments about why, including:
Not Local (30/121) 25%
Low Quality Produce (24/121) 20%
Not Fresh (21/121) 17%
Not Organic (15/121) 12%
Price / Too Expense (12/121) 10%
Not Specialty (7/121) 6%
Don't like Walmart (6/121) 5%
Want a Farmers Market (5/121) 4%
Low Quality (5/121) 4%
Want a Trader Joes (4/121) 3%
For food and beverage shopping in the last two weeks
WHERE DID YOU GO?
Grocery store (e.g. Safeway) 89% 473
Grocery/department store (e.g. Walmart) 37% 211
Convenience store 10% 55
Farmers market 8% 47
Specialty foods market 19% 108
Other (please specify) 19% 105
Other:
Costco (27/105) 26%
Restaurant (22/105) 21%
HOW MANY TIMES DID YOU PURCHASE FOOD OR BEVERAGE IN THE LAST
TWO WEEKS?
61% Three or more times
29% Twice
HOW MUCH DID YOU SPEND?
Over $100 78%
Over $150 56%
Over $200 32%
Over $250 16%
HOW MANY TIMES DID YOU VISIT A FULL SERVICE OR FAST-FOOD
RESTAURANT IN THE PAST TWO WEEKS?
Average of twice for both full-service and fast food.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 36
HOW MUCH DID YOU SPEND IN THE LAST TWO WEEKS AT RESTAURANTS?
65% spending less than sioo.
HOW FREQUENTLY DO YOU VISIT FARMERS MARKETS OR SPECIALTY FOOD
MARKETS?
48% once a month or more, including 19% once a week or more
WHAT DO YOU LIKE ABOUT THE FARMERS MARKETS OR SPECIALTY FOOD
MARKETS YOU VISIT?
With almost all survey respondents answering the question, about
half named "local," half named "fresh," and almost a third named
"produce" as what they like about farmers markets or specialty
food markets. "Variety," "quality," "organic," and "price" were also
common responses.
Local (256/505) 51%
Fresh (238/505) 47%
Produce (157/505) 31%
Variety (63/505) 12%
Quality (46/505) 9%
Organic (37/505) 7%
Price (19/505) 4%
WHAT DO YOU NOT LIKE ABOUT THE FARMERS MARKETS OF SPECIALTY FOOD
MARKETS YOU VISIT?
Price or cost was the number one answer by respondents to what
they do not like about farmers markets or specialty food markets,
at 13%. Other issues mentioned frequently included "selection,"
"hours/schedule," and "inconvenience." Notably, just as many
people responded with "nothing" that they do not like as to most of
the negative responses.
Price/cost (60/460) 13%
Selection (42/460) 9%
Nothing (37/460) 8%
Hours/schedule (32/460) 7%
Inconvenience (27/460) 6%
B D S ECONorthwest GRAHAM BABA ARCHITECTS 37
WOULD YOU LIKE TO SEE A PUBLIC MARKET IN YAKIMA?
Respondents overwhelmingly like the idea of a public market in
Yakima, with 83% supporting the idea, and only 9% against.
Yes 83%
No 9%
Don't know 8%
IF NO, PLEASE EXPLAIN ...
Of those responding no to a public market in Yakima, the most
common reason was that there is "no need" for it. Parking was also
a common response. Notably, several people mentioned taxes (or a
poor use of tax dollars) to this open-ended question.
No need (36/46) 78%
Parking (27/46) 59%
Taxes (5/46) 11%
WHAT WOULD BE AN IDEAL LOCATION FOR A PUBLIC MARKET IN YAKIMA?
With almost everyone answering the question, the overwhelming
favorite location for a public market in Yakima was "downtown,"
with 45% mentioning downtown in this open-ended question,
although a handful of respondents made strong statements against
locating a public market downtown (mostly because of problems
with the downtown area). Several people mentioned locating the
market in combination with Millennium Plaza and/or the new
plaza.
B D S ECONorthwest GRAHAM BABA ARCHITECTS 38
WHAT WOULD YOU LIKE TO SEE IN A PUBLIC MARKET? (CHECK ALL THAT APPLY)
When asked what they would like to see in a pubic market, almost
all respondents chose food and beverage vendors and prepared
foods. Two-thirds selected restaurants, and almost as many
selected an event space. About half (53%) selected a commercial
kitchen, and almost half (47%) selected educational programs.
Food and beverage vendors 94% 496
Prepared foods 80% 425
Restaurants 66% 350
An event space 59% 314
A commercial kitchen 53% 278
Educational program 47% 249
Other (please specify) 32% 167
WHAT IS YOUR ZIP CODE?
Most respondents were from local ZIP codes, with 74% from 98908,
98902, or 98901.
98908 155
98902 137
98901 64
98942 32
98903 26
Other 69
483
HOW OLD ARE YOU?
Respondents were from a solid cross section of ages, with 76%
falling between 25 and 64 years of age.
Under 18 0% 1
18to24 14% 72
25 to 34 23% 123
35 to 44 22% 115
45 to 54 15% 80
55 to 64 16% 83
65 or older 10% 55
529
B D S ECONorthwest GRAHAM BABA ARCHITECTS 39
HOW MANY PEOPLE LIVE IN YOUR HOME (INCLUDING YOURSELF)?
Respondents came from a variety of household sizes, with two -
person households by far the most common (42%), followed by
three- and four -person households.
1 57
2 221
3 96
4 88
5 43
6 12
7 4
8 2
9 2
525
WHAT IS YOUR ANNUAL TOTAL HOUSEHOLD INCOME?
Respondents' incomes were higher than Yakima's population as a
whole, with 47% having a household income over $75,000 per year.
Less than $25,000 9% 47
$25,000 to $50,000 19% 100
$50,000 to $75,000 24% 126
Over $75,000 47% 245
518
B D S ECONorthwest GRAHAM BABA ARCHITECTS 40
10. Appendix B: Workshop Summary
B D S ECONorthwest GRAHAM BABA ARCHITECTS 41
Public Market/Mixed Use Incubator Feasibility Study
Options Workshop Summary
October 27, 2014
Executive Summary
The following is a summary of options for a public market/mixed-use incubator as presented to the City of Yakima on
October 27, 2014.
During this daylong workshop, the consulting team toured potential sites and brainstormed options, while
considering existing plans and findings from previously completed outreach with potential vendors. These activities
helped the team identify priorities for a public market and/or mixed-use incubator in Yakima.
Existing plans and key findings from initial outreach:
• The City of Yakima has identified downtown revitalization as a community priority;
• Conceptual design is complete and fundraising is underway for an iconic public plaza in downtown Yakima;
• There is strong demand in Yakima and nearby communities from potential vendors in a public market;
• There is also strong demand for a commercial kitchen from food artisans in the Yakima area.
Successful public markets have many of the following characteristics in common:
• They are 'right sized' for their communities;
• Vendors are charged reasonable rents and have an option to rent more than one space to meet their needs;
• They have a mix of vendors selling local produce and prepared foods;
• Their success is, in large part, related to the number and diversity of vendors they have;
• They have taken advantage of iconic buildings or features;
• They are debt free (which allows for reasonable rents); capital costs were funded up front through allocations
from public agencies, fundraising, crowdsourcing, and use of applicable tax credits;
• They have a strong operating entity to oversee development and on-going operations;
• They sometimes include and benefit from a fully equipped, licensed, and accredited commercial kitchen that
may or may not be operated by the same entity.
Based on the above, the Consulting Team recommends that the City of Yakima:
• Proceed with planning for a Public Market and Incubator Kitchen to capitalize on and accelerate existing
momentum in downtown Yakima;
• Consider the above characteristics when making decisions about the future of a public market;
• Conjoin the Public Market and Incubator Kitchen with the Public Plaza to reinforce both investments.
These findings, characteristics, and recommendations will inform the remaining phases of the feasibility study.
Introduction
The consulting team for the Public Market/Mixed Use Incubator Feasibility Study met in Yakima for a one -day
workshop on October 27, 2014. They collaboratively evaluated the previous outreach and analysis, toured potential
sites, brainstormed options, and presented a synthesis of options to the Steering Committee, City Manager,
Councilors and others.
This summary highlights options for a public market and/or mixed-use incubator for the City of Yakima.
BDS
PLANNING & URBAN DESIGN
Yakima -Options Workshop-Summary-v4-20141027.docx 12/5/14
Public Market/Mixed Use Incubator Feasibility Study
OPTIONS WORKSHOP SUMMARY 2
Public Market Concepts
Ron Paul is a public market expert who is leading the charge to build the James Beard Public Market in Portland, Oregon as
a year-round, food focused venue. Ron also brings his unique expertise as a former chef, restaurateur, and chief of staff to a
Portland City Councilor (who is now mayor of Portland).
Ron portrayed some of the essential characteristics of successful public markets. A public market requires a critical
mass and mix of vendors who sell local products and prepared food whenever possible, but understand that the
regional growing season can limit those offerings. Selling accurately labeled foods from elsewhere in the world is a
necessity for the public market to succeed. The space needs to be 'sized right' for the community. Iconic public
markets have a vibrancy and sense of community that attracts vendors, consumers, and visitors—they tell the story
of the local people, their food, and their culture.
A teaching kitchen, or accelerator/incubator kitchen, can help people learn more about food in general. More
importantly, a commercial kitchen allows small businesses to prepare their products and expand their product lines
in a fully equipped, licensed, and accredited space.
The Consulting Team previously discussed the variables of co -locating a public market with an accelerator kitchen in
the City of Yakima. The Team agreed that a public market and accelerator kitchen should be co -located if possible,
but could also be developed close to each other for synchronicity if not necessarily in the same building.
Based on comparably sized cities across the country, the City of Yakima might consider a public market that:
• Is 15,000-20,000 square feet in space (gross), ideally with an additional 2,000-4,000 square foot (gross)
accelerator kitchen for vendors, and additional space for storage;
• Uses a 12' x 12' stall module design to accommodate as many as 30 vendors, which can result in higher
sales at lower overhead; some vendors will be happy with a small space. Others will want more space based
on their business (e.g. produce) to showcase their products; and
• Has, on average, 25-30 vendors.
Pybus Market in Wenatchee, by comparison, is 25,000 square feet with 17 vendors.
Economics & Funding
Abe Farkas has over three decades of experience in planning and developing a wide variety of mixed-use, sustainable
projects and structuring successful public-private partnerships that have improved urban neighborhoods, downtowns,
business districts, and university environments. Abe's work at ECONorthwest, as well as his past experiences at the Portland
Development Commission and City of Eugene, include analyzing the financial feasibility for a number of diverse projects,
including the Portland Public Market Feasibility Analysis and Business Plan.
Abe provided a brief overview about the economics of successful public market. Fundamentally, a public market
needs to start out debt -free on the capital side.
Additionally, successful markets have a strong operating entity (can be non-profit, public or private) to oversee
development and on-going operations. It is possible that the development overseer and the on-going operator might
be different entities, but they do need to coordinate from the beginning.
Procuring and evaluating tenant interest depends largely on how rent is explained to them. It is better to talk about
rent on a daily or monthly basis, rather than per year or per square foot. The key is getting tenants to consider what
they might expect in gross revenues on a daily basis, and relating that to a percentage of rent paid daily or monthly.
The numbers used in the examples are orders of magnitude only, and meant solely to stimulate thinking. They are
ranges; and could be more, or less, depending on the situation. Construction may cost $200 to $300 per square foot;
this includes hard and soft costs. Various soft costs are often estimated up to 20%-35% because they include
architecture, building fees, technical fees etc. A 15,000-20,000 square foot public market for Yakima could cost
between $3.5 and $5.1M to build.
BDS
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Public Market/Mixed Use Incubator Feasibility Study
OPTIONS WORKSHOP SUMMARY 3
In order to remain debt free on the capital side, potential sources of capital funding should include:
• Allocations from public agencies, city, county, state, and federal government;
• Fundraising, naming rights, short and long-term sponsorships, and crowdsourcing; and
• Rehabilitation or adaptive reuse tax credits for historic buildings.
Site Assessment
Brian Douglas Scott is Principal of BDS Planning & Urban in Seattle. He has more than 30 years of experience in
comprehensive community development. Brian's past experience includes 15 years as President and Executive Director of
the Oregon Downtown Development Association. As project director of the Ankeny/Burnside Redevelopment Framework in
Portland, he helped facilitate a permanent home for the Portland Saturday Market in conjunction with more than $30M in
related public and private development.
Brian explained how the Consulting Team assessed the seven sites selected by the City of Yakima for the feasibility
study. After a tour, the Consulting Team discussed the pros and cons of each site. They also considered two sites of
their own choosing. The Team considered each site in relation to its location and size, existing
buildings/infrastructure, lighting, ambiance, parking, and adjacency to the proposed plaza, among other criteria. The
pros and cons of each site were identified.
Possible Public Market/ Commercial Kitchen Sites--n^,cit Ma:—,nr�e:'.I�.
Left: Sites considered for Public Market
Below: Summary of Co -location & Site Evaluations
0
0
0
U
Incubator Kitchen
Co -Locate Separate
• Synergy
• Focus
•Cheaper
•Simpler
• Cost
•Space
• Complicated
• Missed
opportunity
Public Market Locations
North Front South Front Hellison Food Court Wilson K&K Dragon Inn Plaza Plaza
co -located adjacent
Ambiance
•Adjacencies
•Visibility
• Distant
•Small
• Ownership
•New
construction
• Size & shape
• Distant
• Parking
•Adjacencies
• Ownership
•New
construction
• Building
• Market "feel"
• Distant
• Parking
• Expensive to
retrofit
• Location
• Facilities
• Opportunity
to change
• Nonadjacent
Ambiance
•Small
•Adjacencies
•Image
• Location
•Tax credits
•Small per
floor
• Complexity
• Expensive to
retrofit
• Location
• Parking
• Size
•Light
• Availability
• Residential
adjacencies
•Tax credits
• Nonadjacent
• Not iconic
• Mixed-use
challenges
• Expensive to
retrofit
• Location
•Adjacent
• Activating
•Tax credits
•Tough
building
• Loss of
existing uses
• Requires
whole bldg.
• Location!
•Adjacent
• Activating
• Ownership
•New
construction
• Displace
parking
• Location!
•Adjacent
• Activating
•Availability?
• Size?
BDS
12/5/14
Public Market/Mixed Use Incubator Feasibility Study
OPTIONS WORKSHOP SUMMARY 4
Each of the sites considered had merits for a Public Market and/or a Commercial Kitchen. Most of the sites could be
physically adapted to support these uses. A primary issue, however, is the relationship of the Public Market and
Commercial Incubator Kitchen to the Public Plaza. Downtown Yakima already struggles to compete economically.
Successful commercial districts function best when their destination uses are close together to focus and reinforce
the attraction of the whole district. As such, the consulting team strongly suggests that the Public Market be co -
located with the Public Plaza in order to reinforce the community's investments and draw more activity.
The consulting team also looked at the co -location of a commercial kitchen with the public market using the same
criteria. The Team agreed that there is not a definitive answer to whether these facilities should be co -located. Given
the local enthusiasm for both, however, the opportunity for one to reinforce the other should be captured.
Market Concept
Brett Baba, co-founder of Graham Baba Architects in Seattle in 2006, is an architect with over 30 years of experience with
residential and public projects. The firm's best-known project is the nationally recognized, multi -use Melrose Market, which
opened in Seattle in 2010. Graham Baba also designed the Pybus Public Market in Wenatchee, which provides an excellent
precedent and successful model for a public market in Yakima.
Brett described the need for a public market to have iconic character. Pybus Market had the space already, along
with iconic buildings (war -time steel manufacturing). Another popular market is the Ferry Terminal in San Francisco.
Left (above & below):
Pybus Public Market,
Wenatchee, WA
Right (above & below):
Ferry Terminal Market
San Francisco, CA
To be a long-term success, a public market has to be a place that has iconic character. For some of the possible sites
for the Yakima Public Market, building facades would need to be dramatically enhanced, which can be very
expensive. Brett explained the Consulting Team's discussion about the need for an iconic feeling as reinforcement for
the recommendation that the Public Market be located in conjunction with the Public Plaza.
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Public Market/Mixed Use Incubator Feasibility Study
OPTIONS WORKSHOP SUMMARY 5
Discussion
Below are highlights from the concluding discussion:
• A close relationship between a public market and the farmers market will benefit both markets and community.
• Previously completed outreach suggests there is a high level of interest from vendors in a public market.
• A compelling vision and location for a public market will catalyze demand and community excitement.
• To be debt free, a market will need to be funded by donors, grants, allocations, applicable tax credits etc.
• The operating budget for the market would be funded through vendor rentals and other generated
revenue. Additional vendor interviews would be needed to determine a threshold for possible rents.
• If the City moves forward with a public market, transparent criteria for site selection will be needed.
• If the City moves forward with this project, public and private champions for the public market will be
required both for development and for operations.
BDS
12/5/14