INCUBATING A VIBRANT FOOD ECONOMY IN AMSTERDAM, NY May 2017

good food is good business

PREPARED FOR The Montgomery County Business Development Center

BY

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PROJECT TEAM

Karen Karp & Partners Founded in 1990 as Karp Resources, Karen Karp & Partners (KK&P) is a food business consultancy with two divisions: Our Good Food is Good Business division supports the healthy development, execution, and operations of food businesses and initiatives in the public and private sectors. Our services include strategic sourcing, feasibility analysis, market research, business planning, project management, and evaluation. KK&P’s clients include corporations, government agencies, small businesses, non-profits, and educational organizations. For more than 20 years, KK&P has spearheaded and has been integral to the development and execution of food businesses, policies, and partnerships in the United States and in the United Kingdom.

BJH Advisors BJH Advisors, LLC (BJH) is an economic development advisory firm, founded by Kei Hayashi, with expertise in planning, project management, finance, and Federal/State/City incentives. BJH works with private clients to analyze and structure real estate development opportunities that have a public partnership component. Prior to founding BJH, Kei was a Vice President with Bay Area Economics, a real estate advisory firm, and prior to that she spent 13 years at the New York City Economic Development Corporation (NYCEDC), most recently as Executive Director of the New York City Industrial Development Agency administered by NYCEDC.

Elan Planning & Design Elan, Inc. was created by Lisa Nagle and Jere Tatich based on a desire to provide land planning and design services that are sensitive to environmental and economic conditions while addressing the unique needs of their clients. Since the firm’s inception, their reputation for quality projects has become Elan’s trademark. Their enthusiasm for land planning and design is reflected in their project portfolio. Elan works with communities, private entities and institutions to explore progressive ways to bring their projects to reality.

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CONTENTS

Executive Summary 4 Project Background And Overview 5 Findings 8 Success Factors For Food Business Incubation 8 Amsterdam And The Region 11 Potential Incubator Participants 11 The Consumer Base 13 Summary Of Key Findings 14 The Incubator 16 Guiding Objectives And Vision 16 Facility And Program Overview 17 Operating Model 20 Conditions For Success 26 A Roadmap To Launch 28 Appendix 37

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EXECUTIVE SUMMARY

Amsterdam’s Southside neighborhood is undergoing a renewal, recently advanced by the opening of the Mohawk Valley Gateway Overlook pedestrian bridge, which has drawn increasing numbers of visitors to the area. The neighborhood is known as a tightknit community with unique character and a high density of food businesses. Beyond the Southside, Amsterdam and the Mohawk Valley region are home to diverse ethnic communities and a rich agricultural heritage. The idea of a Southside culinary incubator has been proposed to capture the food traditions of the region and to support emerging food entrepreneurs while contributing to the Southside’s identity as a food destination. Karen Karp & Partners (KK&P), along with partners BJH Advisers and Elan Planning & Design, were retained by the Montgomery County Business Development Center (MCBDC) to assess the feasibility and develop a preliminary concept for a culinary incubator in Amsterdam’s Southside. Research consisted of extensive stakeholder and expert interviews, focus groups, demographic and economic analysis, and business modeling.

“When I think of the Southside, I think of food, so it would make sense for the incubator to be here.”

-Focus group participant

The KK&P team found support for the idea of a Southside culinary incubator, from food entrepreneurs as well as potential customers; economic and demographic analysis also found that there is likely to be untapped demand for restaurant service in Amsterdam and in a larger 25-mile radius region. However, the community lacks a well- supported and well-connected network of food entrepreneurs, which will be required for a successful incubator; this network can and must be cultivated through a range of efforts until an incubator is launched. The team also identified other conditions for success that should be achieved before or in tandem with the launch of an incubator, including complementary infrastructure in the Southside, buy-in from the city and county, and strong partnerships. Based on their assessment, the team has outlined a concept for a non-profit incubator in the Southside that responds to existing conditions and identified needs, and would be an attraction for locals and visitors alike. The incubator concept includes two kitchens, a food hall featuring four restaurateurs, a small retail shop, multi-purpose event space, and an outdoor farmers’ market, teaching garden, and seating area. The concept also includes educational programming and business services offered through collaborations with partners such as Fulton Montgomery Community College, the Center for Agricultural Development & Entrepreneurship, Schenectady County Community College, and the Capital Loan Fund of the Capital Region. A proof-of-concept Profit and Loss framework demonstrates a model that can be sustained annually on generated revenue alone in an over-performing scenario, or with moderate subsidy or fundraised revenue ($22,000-$79,000 annually, through grants or fundraising) in more conservative scenarios. The City of Amsterdam recently reached an agreement with KCG Development to create a mixed-use residential development on Bridge Street in the Southside; this agreement includes a set-aside of approximately 15,000 square feet for the culinary incubator. KK&P has thus outlined a two-and-a-half-year roadmap, tied to that development’s proposed timeline, balancing ambition with a pragmatic and incremental approach to guide the development of the incubator for a public opening in Summer 2019. This roadmap is designed to help the County, City, and stakeholders seize the opportunity to cultivate a vibrant ethos of food entrepreneurship, cultural diversity, and delicious food in Amsterdam’s Southside.

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PROJECT BACKGROUND AND OVERVIEW

In April 2016, Montgomery County released a Request for Proposals (RFP) to undertake a proposed feasibility analysis and develop a conceptual plan for a culinary incubator in Amsterdam, NY. The incubator was envisioned to capitalize on and highlight the ethnic culinary traditions and agricultural heritage of Amsterdam and its surrounding region, while contributing to the development of Amsterdam’s Southside neighborhood as a destination for visitors from Montgomery County, the Capital Region, and beyond. The RFP specifically referenced the rich cultural and ethnic diversity of Amsterdam and the larger region, with significant Latino, Northern and Southern European, and African American communities, along with many others. The RFP framed culinary entrepreneurship as a forward- looking catalyst for greater economic opportunity in the area. In Amsterdam, as in many other former cities with manufacturing bases, the creative economy, driven by many small businesses, is a growing proven strategy for urban revival. The RFP detailed an ambitious vision for an incubator consisting of multiple facilities and programs, including restaurant locations, educational and administrative space, a farmers’ market and community garden, and restaurant supply shops. The incubator would be bolstered by other developments and programmatic linkages in and around Amsterdam, including the new Mohawk Valley Gateway Overlook bridge, efforts to create a multimodal transportation center on the north side of the footbridge, investments on West Main Street in Amsterdam, and nearby parks. Funding secured from the USDA Rural Business Enterprise Grant program funded the study. A team led by Karen Karp & Partners (KK&P), a national food and agriculture consultancy, with collaborators BJH Advisors and Elan Planning and Design, was selected to complete the study. The KK&P team commenced their work in August 2016.

METHODOLOGY The KK&P team conducted their research through stakeholder engagement, interviews with experts and potential partners, review of secondary data, scans of relevant literature, real estate analysis, and financial modeling. Stakeholder engagement and expert interviews were done in person over the course of three visits to the area (Sept. 19-20, Oct. 6-7, and Nov. 10-11), as well as by phone. Engagement began with a list of stakeholders compiled and provided by the client, with additional leads from KK&P’s professional network. As research progressed, this stakeholder list was expanded through recommendations from interviewees. The team individually interviewed 26 stakeholders, experts, and potential partners. The team also held a series of focus groups during their third visit to the area, Nov. 10-11. The first focus group was for residents of Amsterdam’s east side and members of the city’s Latino community, and was attended by three individuals. This focus group was conducted partly in Spanish, and was facilitated by Eleni Fischer. The second focus group was for food and beverage entrepreneurs and businesses from across the Capital Region, and was attended by seven individuals, with facilitation by Ben Kerrick. This focus group also had two participants that are current Southside business owners. The third and final focus group was for young professionals from the region, and was organized in partnership with the Fulton-Montgomery Chamber of Commerce Young Professionals Network. This meeting was facilitated by Ben Kerrick and was attended by nine individuals. Demographic data was studied to assess population characteristics and measure change over time. Data sources include the U.S. Census (2000 and 2010) and the American Community Survey 5-Year Estimates (2010 and

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2014). Demographic data was analyzed for the City of Amsterdam and the benchmark area, which was defined as the 129 census tracts that fall 50% or more within a 25-mile radius of the City of Amsterdam. Employment data was collected using Esri Business Analyst (2016) and the U.S. Census OnTheMap Application (2004-2014) for the City of Amsterdam and the benchmark area, which includes the 59 zip codes that fall 50% or more within a 25-mile radius of the City of Amsterdam. Business composition data was collected using Esri Business Analyst (2016), the U.S. Census Zip Code Business Patterns (2004-2014), and the U.S. Census Economic Census (2002, 2007, and 2012). Census business data was collected for the zip code within which the City of Amsterdam is located (12010) and the benchmark area, which includes the 59 zip codes that fall 50% or more within a 25-mile radius of the City of Amsterdam. Esri Business Analyst business data was collected for the City of Amsterdam and the benchmark area, which includes the 59 zip codes that fall 50% or more within a 25-mile radius of the City of Amsterdam. A retail gap analysis was conducted using Esri Business Analyst’s Retail MarketPlace data, which uses the latest population and market statistics and Infogroup business information to estimate retail sales and demand by North American Industry Classification System (NAICS) industries. The analysis was conducted for selected retail categories within the City of Amsterdam and the 25-mile radius benchmark area to estimate the extent of unmet retail demand. Food categories measured include grocery stores; specialty food stores; beer, wine & liquor stores; full-service restaurants; limited-service eating places; special food services; and drinking places. The analysis estimates whether there is a gap between current and potential retail spending within the study area. This gap estimates the relative strength of retail demand, as well as the specific retail industries that may be underrepresented. A gap is identified if the actual retail sales fall below potential retail sales, indicating that the area could support additional retail establishments in a particular retail category (i.e. leakage). If actual retail sales are above potential sales, the data indicates that the area is attracting individuals from outside of the area for retail purchases (i.e. surplus). To identify characteristics of tourism/destination-based demand, similar food business concepts across the country were described in detail through five case studies. Glacial Hills Food Center (Horton, Kansas) and the Starting Block (Hart, Michigan) were selected as examples of two rural kitchen incubators. Smallman Galley (Pittsburgh, Pennsylvania) was selected as an example of an innovative chef incubator. Midtown Global Market (Minneapolis, Minnesota) was highlighted as an internationally themed public market and food hall. Avanti Food & Beverage (Denver, Colorado) was chosen as a unique food hall and restaurant concept. Information on these food business concepts came from their respective websites, news articles, and scholarly articles. A high-level survey of the real estate market in Amsterdam was conducted, with a focus on the commercial and retail sectors, to provide input and support for the feasibility analysis. Two site visits were completed, which included visual inspection of the major areas of the City. The Rte. 30 corridor was evaluated as it is the strongest retail area and sets the bar for commercial projects. Downtown Amsterdam and the Southside also reviewed, as those areas are most relevant to the potential project. Commercial databases were accessed. Interviews were conducted with real estate brokers, property owners and developers active in the area to determine approximate rental rates and other real estate metrics.

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PROJECT OBJECTIVES The objectives of this study, as framed by the research team in response to the original RFP, were:

• To determine and characterize the current state of the culinary/food sector in Amsterdam. • To identify opportunities for sector growth and job creation that would be aligned with other downtown revitalization and tourism attraction efforts.

Pursuit of these objectives would inform the development of a concept for a culinary incubator that is responsive to the needs, opportunities, and conditions present in Amsterdam and the surrounding region. As initially outlined in the project RFP and reframed by the research team, the overarching thematic objectives of the Amsterdam culinary incubator are:

• Local Food Culture: Highlight the food traditions and agriculture of Amsterdam and the region • Economic Development: Support food entrepreneurship as a lever for economic development • Placemaking: Advance Amsterdam’s Southside as a food destination

These three themes underscored the team’s approach to research, stakeholder engagement, and concept development. While the potential “catchment area” for food culture and entrepreneurship was considered at a regional scale (Mohawk Valley or Capital Region), the specific location of Amsterdam’s Southside neighborhood was the focus of where any eventual incubator concept would be located – with potential partnerships and networking to expand its reach and impact.

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FINDINGS

The key findings from our interviews, focus groups, data analysis, and literature review are described below.

SUCCESS FACTORS FOR FOOD BUSINESS INCUBATION Food business incubators can support new, emerging, and growing food businesses through a range of supports and services. Many incubators (but not all) are non-profits that gain at least some of their funding through fundraising: a 2016 study found that 39% of all incubators are structured as non-profit entities, and of those, 70% receive grant funding1. The services they provide respond to needs that every growing food business has:

• Access to markets and customers: A new venture will need access to potential customers for exposure and for testing of new products or concepts. As the venture grows, it will need increasing exposure, a growing and consistent customer base, opportunities to refine concept and processes, and access to new markets. • Space, infrastructure and equipment: When a food business starts out, its space and infrastructure needs may be minimal: for example, a shared kitchen space with shared equipment may be an appropriate solution. As the business grows, shared kitchen space may continue to suffice for some time, but many food businesses ultimately grow to a point where their own dedicated space becomes both necessary and financially feasible. Equipment needs are also likely to become more intensive in tandem with business growth. Many businesses grow to a point where their own public-facing retail space or outlet increases exposure, visibility, and access to customers, while providing an additional income stream. • General business support: Like any business, a food business requires general support and services, such as business planning, legal consulting, and accounting. Food businesses also need services that are specific to their sector, including nutrition analysis and assistance navigating state health codes and regulations.

Incubators, therefore, function as both commercial operations selling goods (meals, food products, e.g.) and as education, entrepreneurship and workforce development mission-driven organizations. Successful incubators offer a range of approaches, though generally do not attempt to meet every need for businesses at all stages of growth. Like all smart operations, they require focus, strategy, goals and targeted outcomes. Incubators can help meet the needs of food businesses in the following ways: Access to markets and customers

• Events provide an excellent opportunity for new and emerging food businesses to test and/or debut a concept while gaining exposure to a high number of potential customers. Events like Smorgasburg, a weekly pop-up food vendor event in Brooklyn, NY, lower the barrier to entry for businesses by providing them with guaranteed exposure to a high-volume potential customer base for very little up-front cost. • Brick-and-mortar retail space can also connect businesses to customers. Restaurant incubators like Berg’n in Brooklyn and Smallman Galley in Pittsburgh house clusters of food businesses in a single space to create a destination for customers. Other incubators, like La Cocina in San Francisco and Union Kitchen in Washington, D.C. have retail outlets for packaged food products created by their incubated businesses. • Other “softer” marketing efforts can also increase exposure to potential customers. For example, an incubator could promote its participants’ products on its website or through other promotional outreach.

1 American Communities Trust. U.S. Kitchen Incubators: An Industry Update, March 2016.

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Union Kitchen hosts quarterly tasting events for the press, market buyers, and industry representatives to sample products created by its members. • Connection to wholesale and catering customers is another service that incubators can provide. La Cocina provides a catering service, curating a selection of menu items for corporate and other clients. Union Kitchen has a wholesale distribution network that sells its participants’ products to a network of existing wholesale customers.

Space, infrastructure and equipment

• Shared kitchen space is perhaps the most common model for food business incubators. Kitchen space can be rented hourly or daily, with users paying an according rate; some incubators instead offer a monthly membership fee that includes some number of hours of access. According to a 2016 study, there are over 200 shared kitchen facilities nationwide2. • Dedicated kitchen space supports more established food businesses that have outgrown their ability to work in a shared space. The Berkeley Kitchens (CA) are a good example of this approach: that project converted a former industrial building into fifteen tailored rental kitchens for small to medium-scale food businesses. • Specialized equipment beyond the common equipment found in most shared kitchens can diversify an incubator’s offerings. For example, Glacial Hills Food Center in Horton, KS, has a grain mill available for rent, and the Central Louisiana Business Incubator has packaging and bottling equipment for entrepreneurs. • Retail or restaurant space like that offered by Smallman Galley builds on the support provided by production space by also providing shared dining space for customers. • Office/administrative space is also crucial for growing businesses. Many incubators offer shared or dedicated office space for incubator program participants.

General business support

• Many incubators provide a mix of business services that are valuable to growing businesses, such as business planning, legal consulting, and accounting. These services are often provided for free or for a discounted rate.

Education

• In addition to the supports and services described above, many incubators have an explicit and robust focus on education for food business entrepreneurs in the form of classes, workshops, and/or mentorship. These education offerings might be limited to incubator “members” or participants, or be offered to the public at large. Some programs, such as La Cocina, offer a progressive curriculum of classes and benchmarks; participants eventually “graduate” from the program, at which point La Cocina helps them find a permanent home for their business.

“Food halls” are a popular trend across the U.S. (as evidenced by a recent Cushman Wakefield report that identified 96 currently operating food halls and many more planned), and although most do not identify as incubators, many function in that way by aggregating several food businesses under a single roof, thus lowering the barrier to entry for emerging businesses. Berg’n and Smallman Galley are previously mentioned examples of such an approach; the

2 American Communities Trust. U.S. Kitchen Incubators: An Industry Update, March 2016.

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recently opened Troy Kitchen in Troy, NY is an even more relevant model for Amsterdam, given its geographic proximity and its location in a smaller town (though still larger than Amsterdam). The general model of these food hall-incubators is to have 4-6 small dedicated finishing kitchens, each occupied by a single business. These businesses may have access to a larger shared kitchen and prep space in the back. The front of house is a shared dining area, such that a group of diners can purchase meals from different vendors but sit together. Resident food businesses may pay a flat or a percentage rent, while the facility operator generally operates a café and/or bar and thus captures the revenue from beverages.

FOOD BUSINESS INCUBATORS ACROSS THE U.S. We evaluated a range of food business incubation models from across the U.S. A few highlights are described below; more detailed case studies are provided in the appendix to this report. CADE / SUNY Cobleskill Farm & Food Business Incubator / Cobleskill, NY Just a 45-minute drive from Amsterdam, this incubator is a new partnership between SUNY Cobleskill, which will offer food processing facilities (commercial kitchen, meat processing, and creamery), and CADE, which offers educational workshops and classes for entrepreneurs. This incubator does not have any public-facing or retail component, and focuses on value-added agricultural products. CADE is a potential partner for offering their business curriculum to entrepreneurs in Amsterdam. Glacial Hills Food Center / Horton, KS The Glacial Hills Food Center is a shared use kitchen incubator structured as a non-profit organization. It has core partnerships with Kansas State University and Washburn University which allow the incubator to provide its participants with a range of services, supports, and education. The incubator’s building was donated by a community partner, and revenue is generated in part through facility rental fees from entrepreneurs. Glacial Hills Food Center does not have a public-facing retail component. La Cocina / San Francisco, CA One of the most successful and well-regarded food business incubators in the U.S., La Cocina focuses its services and programming on low-income immigrant women entrepreneurs. In addition to its shared use kitchen, it has a progressive curriculum that builds business skills and technical knowledge over the course of a few years, before entrepreneurs “graduate”. Upon graduation, La Cocina helps each business find a permanent location or take other appropriate next steps. In addition to its facility and education, La Cocina also helps its participants access markets through a catering service, food festivals, and a retail kiosk at the San Francisco Ferry Plaza. Smallman Galley / Pittsburgh, PA Unlike the incubators described above, which are non-profit and focus on back-of-house needs, Smallman Galley is a for-profit business that focuses on incubating chefs and restaurant concepts. It offers 18-month residencies to chefs in a food hall-type setting that seats 200. In addition to its facility, the incubator program provides mentorship, education, and business support services to its resident chefs, and also assists them in site selection and financing at the completion of their residency. In reviewing these and other examples of food business incubation from across the country, a few key characteristics emerge as fundamental qualities of successful incubators: Strong partnerships: Many incubators are made possible through strong partnerships with local government, educational institutions, and community stakeholder groups or organizations. These partnerships are crucial to the success of incubators, and often allow for a higher level of service and support for participating entrepreneurs. Support for food businesses: Although an incubator’s facility, whether a commercial kitchen or a food hall, is its most visible component, the education and support services provided by an incubator are at least as important. A strong and comprehensive support program will nurture and maximize the success of participating entrepreneurs, which will in turn contribute to the success of the incubator. Public support: Successful incubators are acknowledged for their role in creating a public good through economic development in their communities. Thus, they often receive public support in the form of grant funding, financing, tax credits, land/facility donation, and/or other collaborative relationships.

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While many incubators do not have a public-facing component, a food hall-inspired approach would effectively meet this project’s objectives for placemaking by creating a public destination in Amsterdam’s Southside while also building a culture and an economy of food entrepreneurs in Amsterdam and Montgomery County. Thus, stakeholder engagement and concept development focused on having a food hall concept be part of the incubator. Other incubator functions of education, business support, and infrastructure were also explored and assessed.

AMSTERDAM AND THE REGION The population of Amsterdam has remained essentially static since 2000; in 2014 it was estimated at 18,348. The median income was estimated at $36,961 that year, and the unemployment rate was 13.2%, an increase from 5.6% in 2000 and 11.5% 2010. The Latino share of the city’s population has grown since 2000, and is significant, at 27.7%; about one-fourth of Amsterdam speaks a language other than English at home, and more than 20% of the population identifies as a race other than White. About four-fifths of the population has achieved a high school diploma, and 15% have a bachelor’s degree or higher. About 5% of Amsterdam’s population is foreign-born, with the more significant countries of origin being in Europe (Poland, Italy, Croatia, Ukraine), Latin America (Dominican Republic, El Salvador, Costa Rica, Jamaica, Cuba), and Asia (China and India). Although Amsterdam’s population is relatively small, it is situated close to some much larger population centers, especially Albany and Schenectady. Thus, a secondary region of a 25-mile radius around Amsterdam was also evaluated for this research. This region has a population of nearly half a million people, and about 60% of its population earns $50,000 or more per year (compared to less than 40% in Amsterdam). It is more predominantly White and non-Latino than Amsterdam, and has higher educational attainment.3 The more qualitative context of the region indicates some ways in which Amsterdam, and the Southside in particular, would be well suited to host a culinary incubator. Our research revealed no culinary or kitchen incubators within the 25-mile region. There are complementary programs emerging further afield, such as the CADE/SUNY Cobleskill Farm and Food Business Incubator and a food and beverage education center in Oneonta (a project KK&P has developed), which indicate a growing regional interest in supporting food businesses. A restaurant- and culinary- focused incubator would complement these existing and emerging initiatives without being duplicative. The region’s educational resources, such as Fulton Montgomery Community College and Schenectady County Community College’s culinary department, could be leveraged to support a vibrant incubator program. Amsterdam and the Southside could offer low startup costs for businesses in a unique waterfront location that is undergoing new development (such as the footbridge); and, of course, an incubator would contribute to the vibrancy of the Southside and spur more activity in the town of Amsterdam.

POTENTIAL INCUBATOR PARTICIPANTS Through our interviews and stakeholder engagement, which gathered the perspectives of 45 people, it became clear that Amsterdam and “There is not a lack of ideas Montgomery County lack a vibrant and well-networked culture of food for new businesses here, but entrepreneurship. This is not at all to say that individual entrepreneurs people don’t have the skills and the potential for many more do not exist, but that these or knowledge to get started.” entrepreneurs are not part of a culture or political mindset that seeks -Interviewee out and encourages new entrepreneurs. On the one hand, this bodes well for the potential impact of a culinary incubator, as it will serve as a hub of food entrepreneurship activities and

3 Analysis for these two paragraphs based on data from the U.S. Census and the American Community Survey.

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encourage future food entrepreneurs to use its services. On the other hand, the lack of a current food entrepreneur network indicates “Long-term leases, keeping up that identifying potential entrepreneurs to participate will require with the building code, and active outreach (to identify), engagement (to create connections and other regulations have made build the network) and support (education, access to services, and opening a brick-and-mortar capital, and promotion.) location difficult for me.”

Our research uncovered some high potential incubator participant -Area entrepreneur pools, including:

• Culinary schools: Schenectady County Community College, CIA, and other regional programs. New or recent graduates as well as current students will be prime candidates to launch new restaurant or food business concepts. • Area farms and farmers: By adding value to their raw agricultural product through minimal to advanced processing, packaging and marketing strategies, farmers can capture more of the value of their product. Farmers participating in an incubator will develop or test new value-added products, such as salsas, pickles, or cheese, in an approved commercial kitchen facility. Other food businesses will develop relationships with local farmers as suppliers to feature and highlight locally grown product. o Regional farmers’ market vendors are a prime target group for participation in an incubator, such as those from the successful and popular Schenectady Greenmarket. • Immigrant communities: Food businesses are a common entry-point for immigrant entrepreneurs, and the hyper-local economies of immigrant communities frequently allow small businesses to thrive. For consumers within and outside of these cultural pockets, entrepreneurs’ knowledge and talent in distinctive international cuisines, incubated well, will serve both a local and regional population. The ethnic diversity of Amsterdam is a great asset to leverage for culinary entrepreneurship. We learned that in Amsterdam’s Latino community, there are individuals preparing food for concessions at local football games and other events. As demonstrated by Census data as well as our conversations with stakeholders, Amsterdam’s Latino community is not monolithic, with communities hailing from Puerto Rico, the Dominican Republic, El Salvador, Colombia, Cuba, and elsewhere in Central and South America. We also learned that the Polish community sells ethnic food items on a semi-regular basis through their community organizations. Outreach to Amsterdam’s immigrant and ethnic communities will tap into communities that are not currently operating as regular businesses, and will provide technical assistance and infrastructure to interested entrepreneurs. For the Latino population, many of whom are more recent arrivals to the United States, support in Spanish will be critical. Additionally, improved public transportation to the Southside will facilitate the participation of Amsterdam’s Latino immigrant population, many of whom do not have consistent access to a car, according to our interviewees and focus group participants.

Conversations with local entrepreneurs revealed some key considerations that a new incubator program should consider:

• Businesses that are incubated need continued tailored support past their opening day; businesses face a new set of challenges after they open, and some have benefited from pre-opening support only to fail after opening because that support was no longer available to them. • Businesses and entrepreneurs also need a collaborative, supportive relationship with their local governments. In particular, navigating the regulatory environment for a food business can be daunting, and

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city and county governments are well positioned to assist new businesses through those challenges, but sometimes do not act in concert. Focus group participants commented that they had received conflicting messages from the city and county governments on which regulations they were required to comply with, so an incubator should provide clear guidance on the regulatory environment in Amsterdam. • Events are an effective way to build visibility, customer base, and brand; a skilled event organizer and a collaborative relationship with the city and other local businesses are crucial to successful execution. • Direct outreach to Amsterdam’s Latino community (primarily in the east side) will be crucial to identifying promising homegrown entrepreneurs there; other minority groups are to be embraced and engaged with as well. • Existing Southside food businesses, and new businesses that want to locate in the Southside but are independent from an incubator, would benefit from a community-wide strategy that supports every business in the neighborhood, not just those that are located within the incubator. These supports might include tax abatement or incentive programs for food businesses within a proscribed area, or inclusion in a marketing campaign that positions the Southside as a food destination. An incubator will have more opportunities for success if it is part of a neighborhood or cluster strategy for food-related enterprises. • Significant advertising and marketing efforts will be crucial to the success of an incubator with a determined retail focus.

Entrepreneurs and other stakeholders who participated in this study were optimistic about the potential for an incubator to be populated with a “Finding working distinctive mix of entrepreneurs representing the diversity of the region, and to capital is hard, but create a successful destination that would attract customers from beyond applying for it is not.” Amsterdam. -Interviewee THE CONSUMER BASE Understanding the potential consumer base is another key consideration in assessing the potential success of a public-facing culinary incubator. A retail leakage assessment found that in the full-service restaurant sector, Amsterdam sees leakage of nearly $7 million annually, or about 60% of the city’s total full-service restaurant demand. In other words, Amsterdam residents only spend about 40% of their restaurant dollars within the borders of Amsterdam. At the level of the 25-mile radius region, leakage in the same sector is over $108 million, which amounts to 20% of total demand. These numbers indicate that there is potential for restaurant businesses to capture more restaurant spending from residents of Amsterdam and the larger region – and that’s to say nothing of spending that may come from even further afield.4 Stakeholder interviews (26 interviews) and focus groups (19 participants) revealed additional dynamics of the potential consumer base for a Southside culinary incubator:

• Lodging is a crucial need for Amsterdam to build its capacity as a tourist destination. • Younger residents across the region expressed enthusiasm for Amsterdam and its potential to revitalize the Southside as well as its downtown.

4 Retail leakage assessment based on data from Esri and Infogroup. Retail MarketPlace 2016 Release 1 (2015 data in 2016 geography) Copyright 2016 Infogroup, Inc. All rights reserved.

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• More events and festivals on the Southside will help build momentum in anticipation of launching an incubator. In interviews and focus groups, there was confusion over even the number of farmers’ markets that exist in Amsterdam, and when and where they are held. Unifying the farmers’ market branding and launching a Southside market could be a good first step to generating buzz and momentum for an incubator. Family-oriented events will be especially popular. Tying food to recreational uses of the trails and river can help build momentum. • Focus group participants also noted other features of an incubator that will make it successful in Amsterdam, including parking, to-go meal options, reasonable price points, cooking classes, a performance space, and internationally focused cuisine.

The general theme of our inquiries around potential customer base (including secondary data analysis, interviews, and focus groups) is that the potential customers are there, and if done right, a vibrant incubator would successfully draw them to Amsterdam. Part of a successful launch, however, would be a strategic marketing plan to build momentum and profile even before the incubator is open, as well as attention to meeting the ancillary needs in Amsterdam, such as for lodging, and leveraging the Southside’s existing assets, such as the bridge and the existing cluster of food businesses there. Most of the people we spoke with lauded Amsterdam as a great place to live, raise a family, and have a business, and are very supportive of ways to further improve the quality of life and showcase to the larger community all that Amsterdam has to offer. They hope that projects like the culinary incubator would also attract new residents to Amsterdam, including young professionals and families. Amsterdam got a lot of publicity and visitors with the opening of the footbridge, and hosted other successful festivals with a regional draw in 2016 such as the Italian Festival. Building on the popularity of these existing assets in Amsterdam will help to draw visitors to the incubator.

SUMMARY OF KEY FINDINGS A successful incubator on Amsterdam’s Southside will contribute to the development of the neighborhood as a destination, while also supporting new food businesses and entrepreneurs in the region. Based on our research, we conclude that the following will be key components of an incubator’s success:

• Buy-in from the city and county: Montgomery County and the city of Amsterdam will be able to support a culinary incubator in different ways, and their common endorsement of and support for the incubator will be crucial to its success. This alignment might include tax abatement, financing, business services, active engagement and support for new businesses, event sponsorship, etc. • Simultaneous complementary development of the Southside: An incubator alone will not single-handedly drive development on the Southside, or guarantee the success of new or next-stage entrepreneurs. Indeed, it may likely fail if it were the only new development. Complementary efforts, such as additional lodging and/or housing nearby, events and programming for the neighborhood, and continued efforts to maximize the use of the waterfront will all work in tandem with an incubator to contribute to the success of the neighborhood. • Cultivation of entrepreneurship for food-based businesses: As previously described, there is not an existing well-supported culture of food entrepreneurship in the region, which will be a vital foundation to a successful incubator. Events, networking, services, and education programs can begin to develop this culture of entrepreneurship even before an incubator is built.

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• Active engagement with Latino and other immigrant communities: Comprising more than a quarter of Amsterdam’s population, the Latino community in Amsterdam represents a vital pool of both potential customers and potential participants for a culinary incubator. They also face challenges in participating in a potential incubator, such as language barriers, transportation challenges, and general economic and political disenfranchisement. An incubator initiative that can overcome these barriers to fully include Latino and other immigrant residents will maximize its community impact and potential economic success. • Multi-pronged business support: Different food businesses at different stages of growth have different needs. An incubator program that can meet the needs of a range of businesses, and responsively tailor its support to a diversity of entrepreneurs, will have the greatest impact in the region’s food economy. • Attracting customers from across the region: The population of Amsterdam and existing visitor traffic to the footbridge will not suffice to support a culinary incubator. A marketing approach that successfully attracts increasing numbers of visitors from Schenectady, Albany, Saratoga Springs, Utica, and beyond, will be required to support the growth of an incubator.

Our team thus concludes that there is potential for a successful culinary incubator in Amsterdam’s Southside, with proper planning and strategy. The following section outlines a concept for such an incubator, and outlines some of the key “conditions for success” that will make an incubator viable.

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THE INCUBATOR

GUIDING OBJECTIVES AND VISION Based on our research, the team has developed a high-level incubator concept that is appropriately scaled and responsive to the economic, cultural, and entrepreneurial conditions in Amsterdam and the region. Our guiding objectives in the development of this concept were as follows:

• Build on and connect with other Southside placemaking efforts, especially the Mohawk Valley Gateway Overlook; • Cultivate an environment of food entrepreneurship in Amsterdam and the surrounding region; • Support food business entrepreneurs from across the region through a mix of education, business support, access to capital, and events that increase customer exposure; • Offer an attractive amenity that allows visitors to Amsterdam’s Southside neighborhood to experience the food culture of the community and the region in a memorable, distinctive setting.

We have translated these principles into a vision statement for the incubator:

Amsterdam Culinary Incubator: The Vision The Amsterdam Culinary Incubator will attract and provide support to diverse food businesses in a range of stages, from new to established, from across the Capital/Mohawk Valley and Upstate New York, while developing and solidifying the Southside neighborhood’s reputation as a destination for food and culture. The incubator will be:

• A hub of activity that combines multiple functions of dining, education, food production, events and festivals, retail, and business support within a concentrated geographic area • A flagship for the Southside’s identity as a food destination, with highly visual, immersive, and delicious experiences to be had by visitors • An engine for the Southside’s development as a food and culture destination, nurturing food businesses that will graduate beyond the incubator, many of which may seek to establish permanent homes in the Southside

IMAGINE A visitor, perhaps just after a stroll across the Mohawk Valley Gateway Overlook footbridge, will be greeted with a rich texture of sights, sounds, smells, and tastes. Outside, near the base of the bridge, a farmers’ market with cooking demos might show how to transform Montgomery County’s latest bumper crop into a fresh and delicious meal, while nearby, school children learn about the county’s agricultural heritage in a small teaching garden. Inside the incubator space, this visitor will be presented with a range of distinct dining options – all expressing the character of the region, and all under one roof – Thai, Caribbean, Polish, Italian and contemporary farm-to-table might all be offered side by side. Live music from an adjacent event space wafts into the restaurant area. Behind the scenes, other food entrepreneurs develop products and hone their business acumen in a shared kitchen and educational space – their products, such as pickles, salsas, and sauces, are sold at a small retail outlet in the incubator space. The incubator, integrated into a larger residential development and embracing the waterfront context, is a buzzing hive of activity, with assets to offer both entrepreneurs and visitors.

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FACILITY AND PROGRAM OVERVIEW The incubator will achieve this vision with an anchor facility and a mix of programs. The facility will include indoor and outdoor space, some of which will be accessible to the public and some of which will be “back of house” space for food production and administrative functions. The public components of the facility will include:

• Food hall featuring four restaurateurs and a cafe/bar: Inspired by the model of food hall-incubators like Smallman Galley and Troy Kitchen, the food hall will be the anchor public-facing component of the incubator. It will feature four restaurateurs that will offer individualized and culturally expressive dining experiences, all under one roof. Each vendor will have a small dedicated and customizable finishing space visible to the public. The food hall may incorporate a combination of both dedicated (for each restaurant) and shared seating space. A café/bar operated either by the incubator or by an independent vendor will also be included in the food hall space. • Food retail shop: A small retail shop will feature packaged food products with an emphasis on locally produced items. • Multipurpose event space: A large event space will expand the capabilities of the incubator facility. By being adjacent to the food hall with a flexible room divider, the event space can function independently or as an extension of the food hall. Performances and other public events will draw customers to the space. The event space can also host an indoor winter farmers’ market. • Farmers’ market: Covered outdoor space will house weekly summer farmers’ markets and other events. • Community/teaching garden: A small public-facing garden can highlight the agricultural heritage of the region, while playing host to educational programming for children and adults. • Outdoor seating: Public outdoor seating space will expand the seating capacity of the food hall and event space while making the most of the Southside’s memorable waterfront backdrop.

The back-of-house portions of the facility will include:

• Shared commercial kitchen: One large shared kitchen will be available to the food hall vendors for preparation, and to other food businesses and entrepreneurs as well, for rent by hour or day.

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• A smaller catering kitchen will be available for an anchor long-term catering tenant. • Administrative space: The incubator will include dedicated office space for programming staff and shared office space for incubator participants (food hall vendors and kitchen users). • Classroom / teaching space: Classroom and teaching space will host educational programming for incubator participants, such as business classes, financing workshops, and professional chefs’ roundtables. • Storage for various programs: The facility will house storage space (including cold storage) for its various programs, including food hall vendors, kitchen users, anchor caterer, and farmers’ market vendors.

Given its potential function as the public hub and “flagship” of Amsterdam’s Southside, we envision an additional key facility component that could maximize the incubator’s impact and usage:

• Amsterdam Welcome Center: A small indoor welcome center could provide educational programming about Amsterdam’s history (a thematic link to the footbridge) and direct visitors to the neighborhood’s attractions, including the incubator and other restaurants in the area. This welcome center could be operated and funded by the city, county, or Chamber of Commerce/Tourism Department, and would not necessarily require full-time staffing (i.e. it could function as a standalone visual display and kiosk with brochures and other info about the area).

The table below provides an overview sketch of proposed square footage for each facility component.

Indoor SF Indoor SF-Storage Outdoor SF Shared Kitchen(s) Kitchen 1: Anchor caterer 600 1,000 - Kitchen 2: Entrepreneurs, food hall restaurants 600 1,000 - Food Hall Vendors (4 @ 150 SF) 600 - - Café/Bar vendor space 200 200 - Shared dining/seating 800 - 500 Event Space Multipurpose event/performance space 1,000 1,200 - Food Retail Retail shop 500 500 - Farmers' Market Market space and storage - 500 1,500 Administration Office space for facility mgmt, restaurant and caterer, other partner org office 750 - - Learning space / classroom(s) 500 - - Community Garden / Teaching Garden Outdoor garden space and shed - - 3,000 Additional Functions Circulation (hallways, etc.) 500 - - Amsterdam Welcome Center 250 - - Restrooms 250 - - Outdoor Patio - - 5,000 TOTAL 6,550 4,400 10,000

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The components of built infrastructure described above define just the architecture of the incubator; this architecture will be activated by a robust mix of programming described below. Unless otherwise noted, these programs will be made available to food-related businesses from across the region or county, not just those that are “in residence” at the incubator. Programs will include: • Festivals and events, which are a vital programming strategy for building a culture and environment of food entrepreneurship, creating entry-level opportunities for new entrepreneurs to test concepts and get exposure, and attracting visitors to Amsterdam. Amsterdam’s existing roster of successful events (such as the Italian Festival) provides a strong foundation for a more robust and curated event lineup. Quarterly/seasonal food festivals (e.g. “Summer Flavors of the Mohawk Valley”) would more explicitly put the spotlight on food and flavor, while one-off events that take advantage of performances or other attractions will provide additional opportunities for both entrepreneurs and customers. • Financing resources: Access to capital is a key concern for virtually all new and emerging entrepreneurs. The incubator can function as a clearinghouse for financing resources by maintaining up-to-date knowledge about grant opportunities, interested investors, and appropriate financing resources for entrepreneurs. The Community Loan Fund of the Capital Region would be well suited to partner by offering their expertise and knowledge, and have expressed interest in the project. • A one-stop shop for businesses: Other communities, including NYC, have greatly streamlined the startup process for businesses by providing a “one-stop shop” that allows them to navigate licensing, regulations, and other legal requirements under one roof and with the guidance of a knowledgeable navigator. • A diverse mix of educational programming: Business classes, technical assistance, trainings, and mentorship will support the development of early-stage entrepreneurs as well as more established businesses. Partners like CADE and FMCC can offer their educational programs, while chefs and other experts can be engaged to lead workshops and trainings. These programs can be offered to incubator participants as well as the public at large. • Specific programming for food hall vendors: Because the food hall restaurateurs will be the anchor users of the incubator site, it will be in the best interest of the incubator to provide them with comprehensive support and training. Facilitated mentorship from established chefs, progressive educational programming, and one-on-one access to business support will contribute to their success. • Support for existing and new food businesses in the Southside: An ancillary objective of the incubator will be to create a broader neighborhood identity around food and beverage businesses in Amsterdam’s Southside. Financial incentives, such as tax abatement or low-interest financing, joint marketing campaigns to draw visitors to the neighborhood, and streetscape improvements will help develop the Southside as a destination neighborhood known for its cluster of diverse food options. These supports are external to the incubator and are typically provided by municipal agencies aligned with the incubator’s mission and programming. • A community of experts and chefs: The larger region, including Albany and Schenectady, is home to many successful chefs, businesspeople, and other experts. The incubator can tap into this tremendous resource by identifying and building a network of experts who are willing to give back to the community by offering their mentorship and expertise in the service of new and emerging entrepreneurs. • Amsterdam Southside Farmers’ Market: A successful and well-regarded farmers’ market will be a key part of building the food identity of the Southside. A re-imagined Amsterdam farmers’ market should prioritize the following objectives:

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o Partnership and buy-in from the city and from neighboring businesses o Leadership by a board of community members o Producer-only market o At least 15 vendors o Accept EBT/SNAP

This mix of programming provides an integrated strategy for achieving the following objectives: • To generate opportunities and offer support for food entrepreneurs at a range of stages of business growth; • To create a Southside destination that will connect visitors with entrepreneurs who embody the food culture of the region; • To advance to the Southside’s identity as a locus of food culture.

OPERATING MODEL The culinary incubator model we are presenting and recommend is inspired by successful, community-focused models such as the Glacial Hills Food Center (KS), La Cocina (CA), and the Starting Block (MI), not to mention most public markets and farmers’ markets across the U.S. That model presumes an umbrella non-profit organization that holds the lease and is responsible for management of all aspects of the facility, including tenants, customers, programming, physical plant, and governance. The use of a non-profit organization as the umbrella management entity has the following advantages:

• Mission Alignment: A non-profit aligns and prioritizes its mission with the community, and assumes that “profit” will be slow and incremental, rather than a driver for investment in the traditional sense. • Funding: A non-profit is legally and operationally set up to receive grant moneys as well as other forms of revenue. “Profits” are reinvested into the entity to grow programs and outcomes. Sources of grant funding are likely to come from funders committed to small business mentorship, MWBEs, regional agriculture, and economic development. • Educational Partnerships: A non-profit is a natural partner for educational institutions, for initiatives such as youth mentorship programs and business skills training. • Tenant Advocacy: A non-profit will more naturally collaborate with and protect the interests of the resident businesses, rather than compete with them in the pursuit of profitability.

The umbrella non-profit entity — effectively the operator of the Amsterdam Culinary Incubator — would cultivate a group of for-profit businesses as sub-tenants, each of which would operate under a standard vendor agreement. That agreement would establish parameters such as payment of rent, revenue share, or occupancy fees as each relationship dictates; expectations and standards for food quality and customer service; and the facility’s rules, requirements and termination conditions. The principal component of the non-profit’s mission will be driving the success of the overall facility. That will include managing the performance of the sub-tenants, finding new business occupants as vacancies arise, and assisting the resident businesses in achieving success. Insofar as success may entail a resident business outgrowing the facility’s offerings and moving to a stand-alone location, there is a natural mission alignment between the managing non- profit entity, the resident businesses, and the city and county. In the non-profit model we recommend, a program

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director would lead the organization, assuming roles of business manager, fundraiser and programmer, with oversight from a board of directors. The non-profit does not replace the goal of profitability of the incubator tenant business, but rather reduces their barrier to entry as public-facing businesses through reduced rent and other overhead costs, through developing a supportive “cluster” environment, and through education and business support services. Assumptions We begin our modeling for the incubator with several assumptions. The following categories account for all expected traditional (cash) revenue streams in the incubator:

• Rent & Revenue-Share Tenants: Caterer (1), Prepared food vendors/restaurateurs (4), Café/bar (1), Retail store (1) • Rent / Fee Tenants: Shared kitchen users (used at 50% occupancy), Welcome center (1), Farmers’ market vendors (15) • Other Revenue Sources: Event space rental

Rent and fee revenue is based on the following assumptions:

• Rent Income: Base rent, $6 per square foot; Common area management (CAM), $2 per square foot • Revenue Share: 5% of gross revenue for caterer, vendors, café/bar, retail store • Shared kitchen: Shift rental, $150 per shift (assumes 10-hour shift) • Welcome Center: All-in rent, $8 per square foot • Farmers’ Market: Booth rental, $100 per season • Event Space: Full room rental, $1000 per day

P&L Modeling Applying those assumptions to a flexible model that factors daily covers, check averages, seasonal traffic, food and beverage cost, labor carry, and other standard expenses, we establish a one-year income and expense forecast for the operations of the four full-time tenants of the incubator (note: four vendors are treated as one entity for purposes of model). This is a baseline, middle-of-road scenario based on standard assumptions.

Caterer Vendors Café Retail Income $408,240 $769,500 $256,500 $256,500

Total COGS $122,472 $230,850 $51,300 $102,600 Gross Profit $285,768 $538,650 $205,200 $153,900 Total Expense $250,738 $508,938 $153,488 $131,838 Net Ordinary Income $35,030 $29,713 $51,713 $22,063

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The occupancy charges from those tenants, as well as rent revenue from the other occupants and customers feed into the income side of the culinary incubator P&L. The expense side is comprised of standard assumptions for the facility’s operations, labor, administrative, and other costs; key assumptions include:

• Payroll aggregate is based on an assumption of three FTE staff: one program director or executive director at approximately $60,000-$65,000; one facility manager at approximately $35,000-$40,000; and one janitorial staff at $25,000. The over-performing scenario allows for increased payroll. • Programming fees will cover all range of public events and educational programming. This budget line does not account for any revenue generating programs, even though many or most are likely to generate some revenue, whether a small public admission fee for a musical performance in the event space, or a workshop fee for a business class (which would be shared with the program provider, e.g. CADE). Beyond the programming fees included in this budget, we expect programming revenue and expense to scale up in lockstep in a generally break-even model.

We yield the model that follows, with a baseline middle-of-road scenario on the left, an over-performing scenario in the middle, and an under-performing scenario on the right.

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Annualized P&L Baseline Overperform Underperform Tenant Occupancy Income Caterer 30,012 42,788 21,183 Vendors 55,275 64,590 46,500 Café / Bar 16,425 19,530 11,520 Retail 18,825 21,930 13,425 Other Income Incubator $108,000 $142,560 $71,280 Event Space $68,850 $119,475 $30,375 Welcome Desk $2,000 $2,000 $2,000 Farmers’ Market $1,500 $2,000 $800 Total Income $300,887 $414,873 $197,083 Gross Profit $300,887 $414,873 $197,083 Expense Business Development $7,522 $8,297 $3,942 Direct Operating Expenses $30,089 $37,339 $19,708 General & Administrative $30,089 $37,339 $23,650 Marketing $12,035 $14,521 $9,854 Occupancy $36,000 $36,000 $36,000 Payroll Aggregate $126,373 $143,131 $124,162 Professional Fees $12,035 $14,521 $9,854 Programming Fees $45,133 $62,231 $29,562 Repairs & Maintenance $12,035 $14,521 $9,854 Service & Finance Charges $- $- $- Utilities $12,035 $14,521 $9,854 Total Expense $323,347 $382,419 $276,441 Net Ordinary Income - $22,460 $32,454 - $79,358

P&L Rationale The P&L above is a proof-of-concept tool. This one-year model is built on many assumptions that, though reasonable and standard in the food and beverage industry, have not been pressure-tested in the context of Amsterdam or Montgomery County business conditions.

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Nevertheless, the baseline scenario shows how the proposed culinary incubator may be operated with a moderate “loss”, which as a non-profit entity, would be expected to be compensated for by grants (education, e.g.) and fundraising. A high-performing scenario would generate a net positive balance sheet. Accomplishing a sustainable model relies largely on three factors:

• Full-time food, beverage, and retail tenants: Financial success of the four principal full-time tenant categories (caterer, vendors, café/bar, retail) yields a consistent baseline of rental and revenue share income for the facility, as well as a critical mass of daily customers. • Event space: Success in marketing the facility’s event space and achieving regular occupancy yields significant direct revenue for the facility. • Culinary incubator participants: Success in maintaining regular occupancy of the culinary incubator slots yields significant direct revenue for the facility and serves to develop the next generation of food, beverage, retail, and catering tenants as they grow.

In the under-performing scenario, we show how an underutilized facility results in lower rent, revenue share, and direct income for the culinary incubator. The outcome is a facility that will require additional subsidy to stay afloat. Furthermore, the core full-time tenants may turn over more quickly due to the low revenue and profit, which puts the facility’s rental revenue at risk. In the over-performing scenario, we show how higher revenue for the core full-time tenants, along with strong performance of the event space and culinary incubator programs result in additional profit for the facility. This additional profit serves as a cash-cushion for seasonal variability (Q1 and Q2 especially) and may be reinvested in programming, facility improvements, and other initiatives. Potential Capital Funding Feasibility This incubator is conceptualized as a project that would be undertaken by the public stakeholders in the City of Amsterdam and Montgomery County, perhaps in partnership with the business community and educational institutions. The operating model presented above provides a way to gauge the broad economic potential of this concept. At a high level this concept could support itself on an annual basis with moderate grant funding with the baseline operating assumptions borne out and stakeholder agreement on the proposed level of programmatic expense. Our baseline model illustrates an annual fundraising need of $22,460. A lower performing incubator would require additional grant funding for operations. A high-performing incubator could generate a surplus that might be applied toward future programming (e.g., increase marketing, training, expansion). The operating proforma analysis has assumed in all cases that the facility can pay its own occupancy cost that is consistent with typical operating expenses for a hospitality facility of this type. This expense — essentially a form of rent — is available to support debt service that would fund development and construction of the facility. The operating proforma posits that the facility would support a real estate occupancy cost of approximately $3.25 per square foot, or $36,000. This is consistent with the lower end of real estate rates in Amsterdam, where the best retail/restaurant space along Route 30 rents for in the $20s per square foot, and recognizes that space is readily available in downtown Amsterdam for both retail/restaurant uses and production (e.g. catering, processing) in a range of $2 to $7 per square foot. As the facility is at a concept design stage only it is impossible to create a detailed development budget. However, we have prepared a very high level budget to “size the challenge”. The following table presents the analysis:

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PROGRAM SPACE SF Building Area 10,950 Outdoor Space 10,000 Total Project Square Footage 20,950

DEVELOPMENT COSTS PSF Total Land - $0 Base Building $180 $1,971,000 Outdoor Space $30 $300,000 Kitchen Fit-Up & Equipment n/a $450,000 Contingency 20% $544,200 Total Project Development Costs $298 $3,265,200

CAPITAL SOURCES Total Project Capital Required $3,265,200 Rental Income (toward debt) $36,000 Debt – 6% of Rental Income $600,000 Total Gap Funding / Capital Grant $2,665,200

Based on the concept developed by the team, the hypothetical building would be approximately 11,000 square feet, with 10,000 square feet of outdoor space split between an area for the farmers’ market, a garden and possibly parking. For purposes of this analysis, land is assumed to be provided at no cost to the project by the City of Amsterdam or another of the public sector stakeholders. Determining a construction cost on a facility at this concept level is necessarily imprecise, but developers, architects and construction company representatives were interviewed to establish an approximate development cost of $180 psf and an estimate of $30 psf for outdoor space. KK&P asked a kitchen construction company to prepare a detailed estimate of the cost of the kitchens that would be required for this project, which yielded a hard cost estimate of approximately $370,000. With design fees and contingency, as well as an allowance for scope change, the kitchen budget was increased to $450,000. A contingency on the overall project of 20% was applied. Combined, the estimate of the cost of a hypothetical incubator of this scale would be approximately $3.27 million. As discussed above, rental payments from the tenants could be passed through the incubator operating entity to support debt service. Without having more certainty about the structure of the operator — whether a non-profit entity established for this purpose, a public agency, or other arrangement — it is not possible to make detailed and definitive financing assumptions. However, assuming a 6% cost of capital, a rental payment of $36,000 would support debt of approximately $600,000. The remainder of the facility cost of approximately $2.67 million would

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thus need to be funded through grants, either from the public sector, the business community, or through charitable fundraising. While this “gap” may appear daunting, it is not inconsistent with the widespread national model where public markets and business incubators are substantially funded for their capital costs by the public sector, and that operating programming is supported substantially by fees and site income, as is assumed in the operating proforma.

CONDITIONS FOR SUCCESS The success of the incubator will not occur in a vacuum; indeed, we see the incubator as one node in a constellation of initiatives that will contribute to economic development in Amsterdam and the Southside neighborhood. Thus, the successful launch and ongoing activity of the incubator will rely on both infrastructural and programmatic efforts; we consider these the incubator’s “conditions for success”, described below. Infrastructural Conditions

• Lodging in Amsterdam: As was noted in several interviews, Amsterdam currently lacks quality lodging for visitors, which will be a crucial requirement for the development of Amsterdam, and the Southside in particular as a tourist destination. The Amsterdam Castle, if reopened as a hotel or bed and breakfast as planned, will be an important asset and will contribute to the success of the incubator. • Residential development in the Southside: A potential residential development on the Chalmers site in the Southside would also contribute to the incubator’s success. The development (which may itself include the incubator) would have a synergistic relationship with the incubator: the residents could form a key segment of the incubator’s customer base, while the incubator would be an appealing amenity for the development. • Additional attractions to the Southside: The Southside has many assets to set it apart as a destination. The new footbridge has already begun to draw more visitors to the neighborhood, and there are many other opportunities to additionally leverage the area’s potential. The waterfront could be activated as a promenade that integrates with the bike/snowmobile path, and an Amsterdam or Southside Welcome Center and public restrooms (described above) would provide additional amenity to anchor the footbridge, waterfront, and incubator. A year-round event schedule could make the most of the Southside’s distinctive setting. Other retail businesses (not necessarily food-oriented) would diversify the neighborhood’s offerings for visitors. • Marketing to drivers on NY-30 and the New York Thruway: The traffic on NY-30 and the NY Thruway will be a valuable source of customers for the incubator. Signage that lets drivers know about the incubator could be an effective marketing strategy. This signage will be just one component of a more comprehensive marketing strategy. Programmatic Conditions

• A vibrant environment for home-grown food entrepreneurship: As discussed in our research findings, the Amsterdam region’s community of food entrepreneurs is not well networked or supported. The county and the city, in collaboration with partners, can and should cultivate an environment of entrepreneurship for food businesses. The city’s event lineup, for example, can be expanded to include more food-centric events, while the county can highlight successes and opportunities for food entrepreneurs in its newsletters, and offer targeted programming and resources for food businesses.

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• Strong partnerships: Key potential partners have been identified over the course of this study. Strong and collaborative partnerships with these entities will be crucial to the success of an incubator. These partners include: o Fulton-Montgomery Community College (FMCC): FMCC’s Business program and faculty could offer classes, training, and consulting to incubator participants, while the incubator will offer a real-life laboratory for the program’s students to workshop business planning, marketing, and other skills. o Center for Agricultural Development & Entrepreneurship (CADE): CADE already offers a curriculum of workshops and programs for participants in their Farm & Food Business Incubator, which is a partnership with SUNY Cobleskill. Most of their educational programs are currently offered in Oneonta or Delhi, but they have expressed openness to offering their programs further afield for a critical mass of food business entrepreneurs. o Schenectady County Community College (SCCC): SCCC’s Culinary program is less than 30 minutes from Amsterdam, and as such will be an important resource for culinary expertise as well as potential incubator participants. Willing faculty can offer trainings or consulting to participating entrepreneurs, and current students could intern with the incubator or its participants. Recent graduates will provide a pool of potential entrepreneurs that could benefit from business incubation. o Carmel’s Diner: Although its continued progress is contingent on additional funding, if Carmel’s Diner advances, it will be a key community partner for the incubator, providing a direct connection to Amsterdam’s east side community. One of the diner’s programming initiatives, a community kitchen, could function as a direct feeder to the incubator, for community members who discover interest in food entrepreneurship and want to take the next step from community kitchen to business launch. o Centro Civico: Centro Civico will be another important connection to Amsterdam’s east side and Latino community. Although the organization does not have a food business focus, it is well positioned to identify potential entrepreneurs and speak to the unique needs and challenges of emerging businesspeople from the Latino community. o Community Loan Fund of the Capital Region (CLFCR): CLFCR will be a valuable resource for business expertise, technical assistance, and knowledge of capital resources for entrepreneurs. o Liberty: As operator of the Liberty Fresh Market, Liberty has demonstrated success in operating a food retail market that highlights local entrepreneurs while creating employment opportunities for people with disabilities. We envision Liberty as a potential operator of the incubator’s retail shop; there may also be additional employment opportunities and partnerships for Liberty’s constituents with other components of the incubator. o City of Amsterdam: Buy-in from the city of Amsterdam will be crucial to the incubator’s success. In addition to incorporating the incubator into its public event programming, the city can lend its support by vocally endorsing the project and striving for a collaborative and supportive relationship with the incubator and its participants. • Engagement of the region’s chefs: According to some interviewees, established chefs from across the region, including in Albany and Schenectady, would be willing to lend their expertise and guidance to a culinary incubator and its participants. This expertise would be a crucial asset and foundation for an incubator program, and would extend the incubator’s reach through these experts’ professional and personal networks. • An effective and dynamic program director: The incubator will require a dynamic and engaged program director who has deep knowledge of what it takes to run a successful food business and who will work to

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build the networks and partnerships that will make the incubator successful. Required experience and expected activities include: o Five-plus years of experience in food service management or food entrepreneurship as well as ample experience managing and/or communicating with staff, services, vendors, and customers. o Have access to and be prepared to develop the professional networks, food and entrepreneurship sector partnerships, and community relationships that will be vital to the success of the facility. o Oversee the activities of the facility manager, the janitorial staff, the incubator participants, and the tenant vendors. o Develop an exciting and effective culinary incubator program to cultivate the next generation of food entrepreneurs for Montgomery County. o Build educational and entertainment programming, both as revenue streams and free community events. o Market the Amsterdam Culinary Incubator effectively to keep event spaces, programming activities, incubator program and vending positions optimized and occupied. • A comprehensive marketing strategy: Getting the word out to all potential customer bases, including but not limited to Amsterdam residents, residents of the larger region, tourists, travelers on NY-30 and the Thruway, etc., will be vital to the success of the incubator. • Financial resources for incubator participants: Access to capital is a perennial concern for new and growing businesses. A suite of capital resources, such as small grants, loans, and lines of credit, will enable the success of the incubator’s participating businesses. MCBDC and CLFCR will be central to identifying and aggregating these resources.

A ROADMAP TO LAUNCH Concurrent with the development of this study and report, Montgomery County and the City of Amsterdam have engaged in negotiation with KCG Development for the transfer of property on Bridge Street (the “Chalmers” site) to KCG for the construction of a mixed-use residential development5. This development provides an ideal opportunity to realize the vision for this incubator, while also dramatically reducing the upfront capital requirements laid out in our more generic development cost and capital projection above. The City of Amsterdam and KCG signed a Letter of Intent in April, which included language regarding KCG’s intent to devote 15,000 square feet of the development for the culinary incubator and event space, as well as sufficient outdoor space for the functions we describe in our program concept. Some of the most significant early obstacles to realizing the vision for this incubator are thus overcome, and we encourage Montgomery County and the City of Amsterdam to build and maintain momentum and begin laying the groundwork for the incubator program and facility. According to a conversation with KCG Development (April 28, 2017), the development’s timeline will target a construction start date in Q2 of 2018, with a projected public opening approximately 15 months later, in Q3-2019. KCG has indicated that it will strive to structure a deal under which it would build and fund- possibly with public grant support (to be determined) - the cost of the incubator space, thus relieving the public sector and incubator sponsor/management entity of up to the entire capital cost. One of the critical near-term decision points will be how to structure an agreement between the developer and the City of Amsterdam as to the ultimate ownership structure of the incubator. KCG has expressed a willingness to work with the public sector to determine the optimal ownership structure. The two most likely options are a scenario under which KCG owns the entire building and

5 https://dailygazette.com/article/2017/04/06/housing-banquet-hall-planned-at-chalmers-knitting-mill-site

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provides a long-term lease to the incubator at a subsidized rate (Lease Scenario), or a scenario under which a condominium ownership structure is implemented for the project, so that at construction completion the incubator unit could be conveyed at nominal cost to the incubator sponsor entity (Condo Scenario). An advantage of the Lease Scenario is that it may be simpler to arrange up front. The major advantage of the Condo Scenario is that with fee ownership there is a physical asset owned by the sponsorship entity, and fee ownership may make the project eligible for funding sources that it would not qualify for otherwise. While the incubator concept potentially could thrive under either scenario, the Condo Scenario if correctly structured would give the project the greatest certainty and stability because it would be bolstered by all the rights of ownership. While the development costs will depend largely on how the agreement is structured between the incubator, developer, county and city, the kitchen fit-out costs will remain fairly fixed. Our estimate of $450,000 for kitchen fit- out includes equipment, plumbing, HVAC, electrical, and surfaces, with a built-in contingency. It does not include architectural design or engineering. Based on the construction timeline described above, we have outlined a 2.5-year roadmap, broken into five six- month phases, with the crucial steps to guide the incubator from the current vision to its realization. This roadmap assumes a public opening in summer 2019, and is necessarily more detailed in phases 1 and 2, as later phases will be significantly dictated by decisions and progress made in earlier phases. Because the development design process is already in motion, we want to stress that the first three actions in Phase One – formation of a steering committee, identification of potential operators, and engagement with the development architect – are critical and necessary immediate steps to maintain momentum and, especially, to allow those driving the incubator to have a role in finalizing its architectural design. PHASE ONE: MONTHS 1-6 (MAY-OCTOBER 2017)

• Convene a steering committee to guide the development and realization of the incubator. As Montgomery County acknowledges, neither the county nor the city have deep food business expertise built into their staffs. We thus recommend the formation of a small (4-6 member) steering committee that will offer its expertise as the concept development continues. We recommend that this committee meet every 1-2 months until the formation of the non-profit (or other operating entity) is complete, at which time the role of the committee would be taken over by this entity and its board of directors (though we encourage as many committee members as possible to continue their role by becoming board members). If funding is available, we encourage the county to compensate steering committee members with honoraria. Although the county may wish to consider other candidates, we suggest the following individuals as well- suited steering committee members: o Congressman Paul Tonko: Congressman Tonko has driven the vision for the incubator since its inception. His enthusiasm, leadership, and commitment will be invaluable to the process of bringing the vision to reality. o Alex Henderson, Fulton-Montgomery Community College Business Program: With a background in restaurant management and culinary education, Alex will be knowledgeable about the needs of food entrepreneurs and will also represent FMCC, a crucial potential partner for business education offerings for incubator participants. o David Brough, or another representative of the Schenectady County Community College Culinary Program: The SCCC culinary program will be another crucial partner, and culinary school students and graduates will be a key source of incubator participants.

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o Lissa d’Aquanni, Paul Stewart, or another representative of the Community Loan Fund of the Capital Region: CLFCR has extensive knowledge about the technical and financing obstacles faced by entrepreneurs and the range of resources that are available to them. o Ladan Alomar, Centro Civico: Ladan is knowledgeable of the barriers-to-entry faced by immigrant entrepreneurs, and will provide insight into the perspectives of Amsterdam’s Latino immigrant communities. o Cory Nelson, Troy Kitchen: As operator of this recently opened food hall in Troy, Cory will have detailed knowledge about the potential successes and pitfalls in opening an incubator space, as well as the needs of tenant businesses; he will also be tapped into the network of the region’s food entrepreneurs. o Yono Purnomo, Yono’s: Yono is a successful and well-regarded chef in the Capital region, and is known for his willingness to “give back” to the community. He will provide knowledgeable culinary and business perspective. o Jennifer Jennings, Schenectady Greenmarket: Jennifer will provide expertise about the needs and perspectives of value-added agriculture producers in the region, and will help the incubator concept connect to the region’s agriculture sector. With the exceptions of Cory and Yono, we engaged with each of the above individuals during our research process. If any of those listed above are unable or unwilling to participate, we encourage the other core steering committee members to suggest other individuals that could contribute similar perspectives. The formation of the steering committee will be one of the first steps the county can take in this roadmap. We suggest that the county invites and finalizes the committee membership within one month of the kickoff of this timeline, with the committee’s first meeting within one month following. • Identify potential operators. The identification of an operating entity for the incubator will be a critical and decisive milestone in its development. The steering committee’s expertise and professional networks will be helpful in identifying potential operators. The county, city, and steering committee should consider the following avenues: o An existing non-profit: An established non-profit with a proven track record and a relevant mission, such as the Community Loan Fund of the Capital Region, could be an excellent potential operator. o Creation of a new non-profit: In the absence of a qualified and interested non-profit, the county may create a new non-profit organization. If the county decides to go this route, the identification of a dynamic and well-qualified program director will be key to its success. One of the advantages of a new non-profit will be the ability to tailor its mission and structure for the incubator and its context. Robert LaValva, a market expert who founded and ran NYC’s New Amsterdam Market 2005- 2014, is an example of someone with the experience and expertise to run an incubator non-profit. o A private operator: The preliminary operating model we describe in this report is based on a non- profit structure, and that is likely to be the most appropriate model for the incubator. However, if a willing, enthusiastic, and qualified private operator (in the mold of, for example, Cory Nelson of Troy Kitchen) emerges during the early stages of concept development, we encourage the county and steering committee to consider the benefits and risks of going that route and possibly adjust course accordingly.

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• Engage with development architect. KCG Development has already engaged an architect who has preliminary conceptual schematic designs for the development, including the incubator space. It will be critical for the steering committee to engage with this architect as soon as possible, and to maintain open communication and review of iterative designs as they are developed; any potential operator should also be included in these conversations as early as is reasonable. During the design and contracting process there are many decisions to be made, some great and some small, which will impact both the function and attractiveness of the incubator. The design nuances of kitchen, restaurant, and other food business spaces are highly specific and critical to their functionality and customer draw, so it is crucial that real-world food business expertise and experience is brought to bear on the design process as soon as possible. We encourage the steering committee and operator to establish a format and process (such as biweekly or monthly calls with the architect) for informing the design process as soon as is feasible. • Build and maintain a list of food entrepreneurs. The identification of food business entrepreneurs in the region is an important first step in building a foundation for the incubator. Outreach through partners such as SCCC, area farmers’ markets, and community organizations will help identify potential incubator participants. Maintaining a contact list of these entrepreneurs will be a simple but effective step. Our team has built a preliminary contact list of entrepreneurs that we encountered during our process. We will share this list with the county as a foundation for further outreach. The county and/or steering committee can start by spreading the word through their networks, and collecting the names, emails, and other relevant information (such as type of business or product) of interested individuals via, for example, a Google form or other info collector. • Engage with the Fulton-Montgomery Farmers Market Association (FMFMA). In the time since our team’s primary research was completed, the Saturday Amsterdam Farmers Market announced that it was coming under the auspices of the FMFMA6. Part of this transition includes a greater commitment to locally grown/produced products, and greater clarity and coordination from a marketing perspective – both of which are positive developments for the Amsterdam markets. If the Southside culinary incubator includes a farmers’ market, as we recommend, it will ideally do so in partnership and coordination with the FMFMA. Therefore, we recommend that the county or steering committee engage with the FMFMA to develop a plan for bringing a farmers’ market to Amsterdam’s Southside. The relocation of a farmers’ market has many implications, which are beyond the scope of this study – such as the impacts on populations that have come to rely on a market in its current location. Therefore we also recommend that as conversations progress regarding the placement of a market in the Southside, considerations are given to those issues. • Hold 1-2 food-oriented public events. Amsterdam’s public events, such as the Italian Festival, already have significant momentum. Adding food-centric events, such as quarterly or semi-annual food festivals, will provide opportunities and visibility for emerging food businesses while drawing visitors. A late summer or early fall food festival – e.g. “Summer Flavors of the Mohawk Valley” – would be timed with the peak of summer harvest, and could serve as a kind of public launch event for the culinary incubator program, letting people know what’s to come, engaging with culinary entrepreneurs from the broader region, and highlighting culturally diverse specialty foods. • Engage additional potential partners. Many of the lead partners (as outlined under “Strong Partnerships”, above) will ideally be represented on the steering committee. For those that aren’t, such as CADE, we

6 http://www.leaderherald.com/news/local-news/2017/03/amsterdam-farmers-markets-combine-efforts/

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encourage the county and steering committee to engage with them as early as the committee has aligned on the shape of the potential partnership. The potential partners described above have all expressed a willingness to collaborate with a culinary incubator in Amsterdam. These conversations can and should continue as planning for the incubator progresses; formal or specific partnership roles will be an important step in successful collaboration. • Cultivate a network of chefs. The willingness of the region’s chefs to support the incubator through mentorship, knowledge-sharing, and advisement will be a vital asset. Identifying this network and codifying chefs’ interests and potential roles will form a foundation for their inclusion in the incubator program. We expect that the incubator team can leverage their professional networks to develop a list of 10-20 established chefs in the area who are willing to offer their expertise to emerging food entrepreneurs.

PHASE TWO: MONTHS 7-12 (NOVEMBER 2017-APRIL 2018)

• Finalize the incubator’s operator, program director, or operating entity. Phase One will culminate in the identification of a potential operator or operating entity. The agreement with the operator can be specified in detail and finalized early in Phase Two, ideally by the end of 2017. If the operating model requires a newly hired Program Director, we encourage the team to fill that position as quickly as possible. • Contribute to architectural design process in collaboration with developer and architect. A functional, distinctive, and well-designed space will be critical to the success and usability of the incubator. As the design process continues in Phase Two, the operator and/or program director should be extensively involved. Although the tenant restaurateurs will rotate out over the life of the incubator, the potential needs and concerns of these restaurateurs should especially be considered in the design process. We encourage the team to a pursue a design that maximizes flexibility and fluidity. • Develop plan for educational offerings. The educational programs offered by the incubator will be key to its success. These might include classes, mentorship, workshops, etc. We recommend that the project team (county, city, and steering committee) work with educational partners including FMCC, SCCC, and CADE to establish the framework for the incubator’s educational offerings and fee structure. We envision an approach where educational partners offer programs through a cost/revenue-share model with the culinary incubator, with most programs offered to the public for a fee, and with free or discounted rates for incubator participants (i.e. tenant restaurateurs or shared kitchen renters). • Develop a more robust event schedule for Summer 2018. The off-season of Winter 2018 will provide the team an opportunity to incorporate learnings from any events held in 2017 to develop a more ambitious schedule of events for Summer 2018. These events can be at a range of scales – from a large summer food festival, to smaller tasting events or entrepreneur meet-and-greets. The event lineup could also include non-public business-to-business trade show events that allow the region’s food entrepreneurs to meet retailers, restaurants, and other potential customers, collaborators, suppliers, or mentors. These events will continue to build momentum and profile for the incubator even before it opens, and will contribute to the region’s food entrepreneur culture. • Finalize and launch a plan for the Southside Farmers’ Market. Building on the Phase One engagement with FMFMA, the incubator team can finalize and announce a plan for a Southside Farmers’ Market. Perhaps the Saturday market will move to the Southside, or perhaps a new Sunday Southside market will be launched – or another approach entirely. In any case, we encourage the Southside Farmers’ Market to be integrated into both FMFMA and incubator marketing strategies.

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PHASE THREE: MONTHS 13-18 (MAY-OCTOBER 2018)

• Pilot the offering of classes or workshops in partnership with FMCC, CADE, and/or SCCC. The incubator’s educational programs do not require a permanent space; until an incubator facility is built, classes and workshops can be offered at MCBDC or at community partner locations, such as Centro Civico. Piloting a few educational programs, in partnership with FMCC, CADE, or SCCC, will test the draw of such programs while contributing to the development of the region’s entrepreneur network. This pilot will be an outgrowth of the education plan developed in the previous phase. • Oversee construction, buildout, and equipping/furnishing of incubator space. The operator will need to be heavily involved in the construction and buildout of the space, and will execute the outfitting of the space with kitchen equipment and furnishings. The operator will play a key role in translating the needs of tenant businesses into functional architectural design and equipment acquisition and placement. This task will continue through to opening in Phase Five. • Finish design of program for tenants. The programmatic design of offerings and support for tenant businesses – including the tenant restaurateurs and shared kitchen renters – will be important in the recruitment of tenants. This program design might include free or discounted classes, mentorship from successful chefs or businesspeople, business consulting services, and/or access to tailored financing resources. Developing a one-pager or other outreach piece that explicitly summarizes this program design will help draw motivated entrepreneurs. • Begin tenant recruitment for café and restaurant spaces. As the program design and facility design are developed and finalized, recruitment of tenant restaurateurs can begin. The food entrepreneur contact list developed in Phase One can be notified of the opportunity, as well as SCCC, CIA, and other culinary or food business programs in the region or beyond. Clarity about the business model, educational programs, facility, and other offerings and obligations will be critical to a successful recruitment process. The steering committee and operator/program director can develop a set of evaluation criteria to rank and prioritize proposals from restaurateurs. • Assemble and codify a clearinghouse of information and resources for food business entrepreneurs. As described in our program outline, the culinary incubator can play a valuable role as a “one-stop shop” for food businesses. The incubator operator can work the county, city, and state (especially the state health department) to gather and codify the various licensing, regulations, and other legal requirements faced by food businesses, as well as financing and other resources. The operator, county, city, and steering committee (or board of directors) will all have knowledge to share in the creation of this information clearinghouse, which may take the form of a website and/or a series of informative one-pagers. • Develop Southside food district-wide strategy and approach. The incubator is intended as a flagship and lightning rod for a larger food-oriented district in the Southside – leveraging a neighborhood identity that is already in place. Although a district-wide approach will need to be executed by the City and County rather than the incubator itself, we suggest that the City and County consider offering supports and incentives for both new and existing food businesses located in the Southside. These might include: o Low-interest financing options available only for food businesses and within a specified zone o Match funding for streetscape or frontage improvements that adhere to consistent design guidelines o Tax abatement incentives

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o Joint marketing campaigns that include the incubator and individual businesses located in the Southside o Preferential or discounted access to the incubator’s educational or business support programs Specifying and marketing these incentives will contribute to the area’s development as a food destination.

PHASE FOUR: MONTHS 19-24 (NOVEMBER 2018-APRIL 2019)

• Finalize tenant recruitment. Continuing the recruitment efforts begun in Phase Two, the incubator operator will finalize and confirm incubator tenants for the restaurant spaces, café/bar, and anchor caterer. We recommend that the selection and curation of the restaurateurs and café operator strive for a mix of cuisines and cultural expressions with affordable price points. The overall tenant mix should be considered as well as the individual qualifications of each business, including product quality, business plan, brand, etc. As tenants are confirmed, they can be incorporated into the incubator marketing plan. • Develop and launch marketing plan. A successful marketing plan, especially leading up to the grand opening and continuing momentum for the months immediately following, is of critical importance. The marketing plan will have several potential channels: o the incubator entity will market itself as a destination o each of its tenant businesses will individually market their offerings through social media and other outlets as they choose o the incubator can tie into a larger Southside food district marketing plan that includes other food business residing in the neighborhood. Each of these marketing channels can and should be coordinated to achieve a cluster effect and critical mass of food-oriented activity to draw increasing numbers of visitors to the incubator and the Southside. Marketing efforts can include web and social media, advertising in local media outlets, signage to capture drivers on NY-30 and the NY Thruway, listings in tourism publications across the region, and targeted marketing (print or web) to nearby employers, such as Target and Beech-Nut. Discounts and special events, such as tastings and performances, can drive traffic during the critical period after opening to the public. • Launch outreach to shared kitchen renters. By Phase Four, the incubator team/operator will likely have an extensive contact list of food entrepreneurs in the region (begun in Phase One). As an opening date for the incubator is finalized, outreach to publicize the shared kitchen opportunity can begin by notifying these entrepreneurs. Outreach can include an informative one-pager and website that summarize the fee schedule, available equipment, scheduling process, and other incubator resources that are available to kitchen renters.

PHASE FIVE: MONTHS 25-30 (MAY 2019-OCTOBER 2019)

• Hold a grand opening for the incubator’s public launch. Based on current information, we expect the incubator to fully launch in summer 2019, in Phase Five. After a “soft launch” period during which restaurateurs can work out kinks and refine their processes, a grand opening with events, performances, and other activities can announce the culinary incubator’s arrival to the region. This grand opening could be integrated with a larger Southside food festival, featuring food carts and promotions for the neighborhood’s existing food businesses and restaurants. A successful and high-profile public launch will set the stage for sustained momentum in the months and years to come.

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• Define and track metrics. Tracking the growth of the incubator will be key to defining future directions and program refinements, as well as successfully seeking funding. We encourage the incubator operator to consistently track the following data: o Foot traffic / visitors to restaurant hall o Sales by restaurant vendors and anchor caterer o Participation in educational programs o Entrepreneur usage of shared kitchen o Public events and festivals: number of visitors, number of participating food entrepreneurs o Success stories from participating/supported food businesses As the program develops, other relevant data points are likely to emerge as indicators of success. • Experiment and refine. We encourage the incubator operator and team to approach the incubator’s first 6-12 months as an experimentation phase and period of intense learning and refinement. Unforeseen challenges and opportunities are sure to emerge. As the incubator operator and tenant businesses progress through their first year, informed by the tracked data listed above, they will be able to refine their approaches for greater success and sustainability.

A visual summary overview of this roadmap can be found on the following page. Our team sees the opportunity to cultivate a vibrant ethos of food entrepreneurship, cultural diversity, and delicious food in Amsterdam’s Southside, as an expression of the larger region’s food culture. Seizing this opportunity will require time, strategic investment and nurturing of the region’s assets. The vision and roadmap we outline here balances ambition with a pragmatic and incremental approach that will over time foster and cultivate an environment of food entrepreneurship and creativity in the region.

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ROADMAP OVERVIEW

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APPENDIX

Benchmark Case Studies (following pages)

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Glacial Hills Food Center Horton, Kansas

Key Facts • Glacial Hills Food Center is a shared-use, incubator kitchen • The food center is owned by Glacial Hills Resource Conservation and Development Region Inc., a nonprofit rural development organization that supports local entrepreneurship through business development programs • It has a partnership with two universities • Year Opened: 2011 • Horton has 1,751 residents and a median household income of $33,657

Goals and Logistics • The goals of the food center are to keep food and money local, allow local farmers to add value through product development, encourage healthy eating, and offer education. • The Food Center works with the Value Added Food Lab at Kansas State University’s Food Science Institute to analyze recipes and nutritional content, provide labeling information, and determine shelf-life for free or reduced rates. • The kitchen can be used by farmers market vendors, new or existing food processors, caterers, special event vendors, home canners, family groups, or restaurant owners. • The food center building was donated by the Horton Community Hospital.

Services Offered • Shared and fully-equipped commercial kitchen • Assistance in food licensing through Kansas State Department of Agriculture and process authority through Kansas State University’s Food Science Institute • ServSafe classes for food handling procedures • Supply orders (jars, bulk food, etc.) • Storage • Workshops and classes • Business support services including business plan writing, accounting/bookkeeping, distribution/marketing, capital access, product formulation assistance, fax/copier, labeling design, nutritional analysis, recipe conversion, etc.

Sources: Clarke Davis, 2011; Glacial Hills Food Center, 2016; Glacial Hills Resource Conservation and Development Region, Inc., 2016; Connie Pantle, 2012

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Glacial Hills Food Center Horton, Kansas

Resource Partners • Northeast Kansas Rural Business Development Program – a program that provides business support services to entrepreneurs starting or expanding their businesses • Northeast Kansas Enterprise Facilitation Initiative – provides free and confidential business management coaching to businesses; during its eight years in existence, it has assisted 700 clients from 90 businesses that have created 275 jobs • Washburn University Small Business Development Center – offers one-on-one consulting for business planning as well as low-cost and free workshops on business ownership • Kansas State Research & Extension at Kansas State University – shares research-based information and expertise regarding Kansas-related issues, specifically related to food and agriculture Equipment Offered • Kansas Department of Commerce – promotes economic • Convection oven development through a variety of programs • Six-burner industrial stove • Kansas Department of Agriculture • Industrial stand mixer • Division of Food Safety & Lodging – regulates • Three-vat sink production and sale of food in Kansas • Hand wash sink • Simply Kansas Program – offers marketing and business development help to food and agriculture • Commercial dishwasher businesses • Stainless steel prep tables • Specialty Crop Program – provides grant funds to • Commercial refrigerator strengthen and grow the specialty crop sector in Kansas • Commercial freezer • Packaging machine • Food processors • Canning equipment • Specialty equipment (juicer, fermenting crock, grain mill, food mill, etc.)

Kitchen Rates Food businesses $15/hour, and a $50 deposit Home canners/family groups $15/hour Grain Mill Rates Use of grain mill to grind flour $10/day Sources: Clarke Davis, 2011; Glacial Hills Food Center, 2016; Glacial Hills Resource Conservation and Development Region, Inc., 2016; Connie Pantle, 2012

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The Starting Block West Michigan Regional Kitchen Incubator Hart, Michigan

Key Facts • The Starting Block is a non-profit regional kitchen incubator with a fully-equipped commercial kitchen and entrepreneurial center • # of Staff: 3 • # of Tenants: approximately 30 • Year Opened: 2006 • Hart has a population of 1,904 and a median household income of $43,250

Logistics Funding • The facility is 10,900 square feet comprised of around • The Starting Block cost $400,000 to open. Initial half individual offices and classrooms for rent, 2,500 funding included a federal USDA Rural Development square feet of shared-use commercial kitchen, 600 grant of $238,700, state grants from Michigan Food & square feet of a smaller catering kitchen, and Farming Systems and the Michigan Economic approximately 2,000 square feet of warehouse/storage Development Corporation for $40,000, and $30,000 space. A 1,280 square foot meat production facility was from six nearby counties. added in 2014. • Partners include: Michigan Works, Michigan Economic • Kitchen use is billed in ¼ hour increment, reserved on a Development Corporation, Michigan Food & Farming first-reserved first-served basis. Systems, Michigan Manufacturing Technology Center, • Facilities can be accessed at any time, day or night, and Michigan State University Product Center, Score for the time is recorded using an honor system. Life of Your Business, Michigan Department of Agriculture and Rural Development, United States • The incubator serves an eight county region, with businesses traveling from 90-100 miles away for Department of Agriculture, City of Hart, and West Shore occasional kitchen use. Community College.

Sources: Jennifer Buckley, Dr. H. Christopher Peterson & Dr. Jim Bingen, 2011; Karen Edwards, 2010; The Starting Block, 2016

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The Starting Block West Michigan Regional Kitchen Incubator Hart, Michigan

Services Offered Equipment Offered • Properly equipped, licensed, and inspected food • 4 Convection Ovens processing kitchens • 6-burner range • USDA-inspected meat processing incubator facility • 2 40-gallon Steam Kettles • Warehouse and storage • Tilt Braiser • Office rental equipped with computer, internet, and • Buffalo Chopper phone • 60 and 20 quart Hobart Mixers • Product development including advice on food • Vat Pasteurizer production, pH testing, recipe batching, packaging, and • Piston Filler labeling • • Education and classes on small business management, Volumetric Dry Filler networking, and individual business guidance • Candy Panner • Expert resources through partnership with Michigan • Scale State University Product Center • Heat Sealer • Stainless steel work tables • Pots, pans, mixing bowls and many other small wares

Kitchen Rates Tabletop use $12/hour General kitchen use/catering $15/hour Meat processing kitchen $15-20/hour Storage Rates Dry pallet storage $10 per pallet/month Cooler/freezer storage $75 per pallet/month or $1.50 per cubic foot/month Cabinet storage $8 per cabinet/month

Office Rates (includes utilities, desk, computer, internet access, phone, shared fax and copier, use of conference room and shipping/receiving area, office support, etc.)

90 square feet $100/month 200 square feet $250/month 225 square feet $275/month

Sources: Jennifer Buckley, Dr. H. Christopher Peterson & Dr. Jim Bingen, 2011; Karen Edwards, 2010; The Starting Block, 2016

27 East 21st Street, 3rd Floor T: 212.260.1070 kkandp.com New York, NY 10010 F: 917.591.5104 P. 41

Smallman Galley Pittsburgh, Pennsylvania

Key Facts • Smallman Galley is a chef incubator, cultivating aspiring restaurateurs by providing them with a space to practice and expand their restaurant concept within a low-risk and low-cost infrastructure • The facility is 6,000 square feet, which includes a full bar, coffee & espresso bar, and four restaurants • 200 seats with a mix of communal seating, 2-4 person seating, 6-person booths, and high-top tables • Year Opened: 2016 • Pittsburgh has a population of 305,704 and a median household income of $40,009

Operating Logistics • Each chef selected for Smallman Galley operates their restaurant for 18 months. The first class began January 2016 and will graduate in June 2017. Mentoring services include restaurant operations, credit building, marketing, business plan drafting, and financing. • Smallman Galley is closed to the public on Mondays for chef training. Local entrepreneurs, chefs, marketing experts, and bankers are hosted at the site to share their knowledge with the aspiring chefs. • Each chef has a 14 x 10 foot kitchen with the following equipment: a 10-burner oven, 2 convection ovens, a salamander, a 23-cubic foot refrigerator, a 67” prep table with an undercounter refrigerator, an undercounter freezer, a prep sink and front prep table, and a hand sink. • Chefs must bring their own cookware, knives, pots, pans and other ovenware. They must be able to show two months of capital for projected operating expenses. • In the final six months of the chef’s term, Smallman Galley assists with site-selection and financing for the next stage of their career, with the goal of having each chef in their own stand-alone restaurant within six months of departing. Smallman Galley has a range of partnerships, including with real estate developers and financiers interested in new restaurant concepts. • Restaurants pay 30% of revenue to Smallman Galley in place of rent. Chefs keep the other 70% for inventory, staff people, and to pay themselves. Marketing, advertising, equipment maintenance, space upkeep, and utility costs are covered by Smallman Galley.

Other Venue Logistics Financing • “Beyond the Menu” is a series of events, talks, and • Smallman Galley cost $900,000 to develop. The gatherings to discuss and celebrate food and beverage partners obtained the following funding, in addition to culture in Pittsburgh. Classes are free or low cost, in private and owner equity: a $350,000 Bridgewater order to remain accessible to the community. Capital loan, a $100,000 Southwestern Pennsylvania • There is a special event room for smaller events, and Commission loan, and a $150,000 loan from the Urban the entire venue is additionally available for private Redevelopment Authority. events with tailored menus. $10

$9 Bridgewater Capital Loan

x 100000 $8 $7 $3.50 Urban Redevelopment $6 Authority Loan

$5 $1.50 $4 Southwestern Pennsylvania $1.00 Commission Loan $3 $2 $3.00 Private and Owner Equity $1 $-

Sources: Conde Nast Traveler, 2016; Melissa McCart, 2015; Smallman Galley, 2016

27 East 21st Street, 3rd Floor T: 212.260.1070 kkandp.com New York, NY 10010 F: 917.591.5104 P. 42

Midtown Global Market, Minneapolis, MN

Key Facts • Midtown Global Market is an internationally-themed 71,000 square foot public market and food hall, with an additional 12,000 square feet of other retail/service uses • # of Vendors: 42 • Approximately 25,000 weekly visitors • Year Opened: 2006 • Minneapolis has a population of 394,424 and a median household income of $50,767

History Financing • In 2004, the City of Minneapolis granted Ryan • The total development cost for Midtown Global Market Properties the rights to redevelop the Midtown was $16.51 million. Funding included $7.45 million in Exchange, one of the city’s largest buildings. Ryan leveraged New Market Tax Credits (NMTC) Structure, Properties renovated the mixed-use property, which $8.91 million in additional project loans, and $0.16 now includes 418,000 square feet of office space, million from other sources. 200 units of mixed-income housing, and a 136-room hotel. The Market was purchased by the “MGM $18 Development Team,” comprised of four non-profit organizations, who renovated the space into the current $16 market. Millions $14

$12 $8.91 Logistics AddiMonal Project Loans • The Market is operated by the Neighborhood $10 Development Company (NCD) and the Powderhorn/ Leveraged NMTC Structure Phillips Cultural Wellness Center, which provide offsite $8 entrepreneurial and small business courses, one-on- one business coaching, technical assistance, and small $6 Other Sources business financing to vendors. $7.45 $4 • The international theme of the market provides opportunities for entrepreneurship and employment $2 for residents of the low-income and large immigrant population of the Lake Street community where the $- $0.16 market is located. • The market also hosts an assortment of community programs and classes.

Revenue • Vendors pay $3 per square foot in rent • $13 million in projected sales in 2016 • $102 million in sales over 10 years • Additionally, the market created 474 construction jobs and 206 permanent jobs

Sources: AS-COA/FPI, 2015; Midtown Global Market, 2016; Novogradac & Company, 2012

27 East 21st Street, 3rd Floor T: 212.260.1070 kkandp.com New York, NY 10010 F: 917.591.5104 P. 43

Avanti Food & Beverage Denver, Colorado

Key Facts • Avanti Food & Beverage (Avanti F&B) is a 10,000 square foot food hall with seven restaurant concepts and two bars • Restaurants work out of shipping-container kitchens, approximately 160 square feet each • A second floor roof deck shows off attractive panoramic views of Coors Field and downtown Denver • Seating capacity is 335, in a communal dining atmosphere • Year Opened: 2015 • Denver has a population of 633,777 and a median household income of $51,800

History and Logistics • Avanti F&B is located in a historic building – first a variety store, then the Avanti Print and Graphics Building, originally constructed in 1898. • Restaurant owners can lease their spaces for one to two years to test out their concept and see how well it is received before opening up their own location. • Avanti F&B built out the kitchen and covers utility costs. • Meals are affordable, with maximum lunch entrees of $9 and maximum dinner entrees of $15. • Avanti F&B donates a portion of its annual sales to three local bilingual elementary schools. • Each kitchen is equipped with cooking ranges, flat grills, press tables, storage, and refrigeration. • There is a common area shared by vendors for food preparation, dishwashing, and storage. • Vendors pay an upfront fee of $10,000 to $15,000, followed by a flat monthly rental fee and a small percentage of sales. • Avanti F&B management offers mentoring and business plan assistance to chefs in order to aid them in concept growth • Cuisine has a global focus, with the vendor mix including sushi, pizza, arepas, tortas, shawrma, and tapas.

Sources: Avanti F&B, 2016; Colleen O’Connor, 2015; Economic & Planning Systems, Inc., 2016; Mark Antonation, 2015; Meridian 105 Architecture, 2016

27 East 21st Street, 3rd Floor T: 212.260.1070 kkandp.com New York, NY 10010 F: 917.591.5104 P. 44