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FEASIBILITY STUDY OF A VERTICAL FARM AS A SOCIAL ENTERPRISE IN POMONA, CALIFORNIA A Thesis Presented to the Faculty of California State Polytechnic University, Pomona In Partial Fulfillment Of the Requirements for the Degree Master of Science In Regenerative Studies By José Wilfredo Mejía 2020 SIGNATURE PAGE THESIS: FEASIBILITY STUDY OF A VERTICAL FARM AS A SOCIAL ENTERPRISE IN POMONA, CALIFORNIA AUTHOR: José Wilfredo Mejía DATE SUBMITTED: Spring 2020 John T. Lyle Center for Regenerative Studies/ College of Environmental Design. Steven Archambault, Ph. D. Thesis Committee Chair College of Agriculture Agribusiness & Food Industry __________________________ Management/Agriculture Science Aaron Fox, Ph.D. __________________________ Department of Plant Science Olukemi Sawyerr, Ph.D. Office of Academic Innovation __________________________ Division of Academic Affairs ii ACKNOWLEDGEMENTS I would like to thank God first. I would like to thank my mother, Telma Ramírez who has been the one who has helped me from the time I decided to take on this challenge. My mother taught me to face my fears and challenges with vigor. There are no words to describe how much I appreciate her and how much I love her for always being there for me when I needed her. I would also like to thank my sister, Rosaura Mejía who without hesitation helped me on a very critical time during the first year of Master’s program, she moved to Los Angeles to babysit my sons for a whole month while I attended school, if she wouldn’t have come, I would have been forced to drop out. I would also like to thank my aunt, Sandra Castro for allowing my kids and I to live in her house when we became homeless. I like to also thank my twin sons, Marsello and Maximiliano for always cheering me up when I needed it, for understanding my frustrations and always smiling with whatever life threw at us. I thank my brother Kevin Bovee for his encouragement and support. I thank my committee, Dr. Olukemi Sawyerr and Dr. Aaron Fox for sticking with me and taking the time from their busy schedules to help me in my academic endeavors. I would also like thank Jill, Karen, Debbie, Dr. Brown, Dr. La Roche, Dr. Bahr, Patricia and Dr. Smith, they all played a vital role in the completion of this degree, whether they know it or not. Special thanks to Dr. Steven Archambault for taking on the role no one else was willing to take on, as the chairperson to my thesis committee halfway through the process, he gave me hope when I didn’t have any, thank you. iii ABSTRACT This case study is a proposal for an urban vertical farm as a social enterprise, in Pomona, Los Angeles County, California. The goal of the study is to create a detailed and focused plan on how to start and maintain a successful social enterprise. The approach takes the two most common types of urban agriculture and combines them into a hybrid organization. A community garden (nonprofit) model it’s combined with a vertical farms (for-profit) model, creating a hybrid model (Kaufman, 2000). Utilizing the strength and minimizing weaknesses, it is projected to lead to the formation of an economically sustainable and socially conscious enterprise. The opportunity for innovation lies on the fact that both current models have challenges. Part of the study focuses on the reasons why to establish a social enterprise model in an urban setting. A full business plan is also provided to expand the possibilities of the model and it also includes strategies on how to target intended markets. Using case studies, a financial analysis provides information on the break-even point and the required financial goals. Financial analysis also includes the first six years balance sheet, providing necessary data to determine ROI Return on investment. It analyzes social challenges: lack of jobs, good food; affordability, availability, education and community involvement. The study is intended to be a tool for investors, entrepreneurs, city planners and residents researching the possibilities of a vertical farm as a business and/or a social benefit or a combination of the two. The study evaluates and analyzes potential strategies proven to have worked in other studies and real-life models. iv TABLE OF CONTENTS Signature page..……….…………………….……………………………….………….ii Acknowledgements.…………………………………………………………………….iii Abstract.…………………………………………...……………………………...……..iv List of tables……………………………………………...…….……………………......vi List of figures.……………………………………...…………….…………...……......viii Chapter 1 Introduction....……………………………….….…………………..............1 Chapter 2 Literature review and background information...……….…….…………17 Chapter 3 Economic development challenges in Pomona...…….......…….………80 Chapter 4 Business plan.…………….………………………………………………..97 Chapter 5 Discussion and conclusion.…………………………………….………..166 References.……………….……………….…………………………….……………175 v LIST OF TABLES Table 1. City of Pomona Youth Characteristics……………………………….…….83 Table 2. City of Pomona Elderly Characteristics...………………………………....85 Table 3. City of Pomona Education Characteristics……………………….….…….88 Table 4. City of Pomona Employment Characteristics……………………………...89 Table 5. City of Pomona Household Characteristics………………………............90 Table 6. Pomona Income Characteristics…………………………………….……..91 Table 7. Plant parameters….…………………………………………….…….…....108 Table 8. Crop Growth Area……………………………………………….……...….109 Table 9. Summary of Power and Energy consumption of all subsystem……….144 Table 10. Seed costs per year of the plant………………………………………….147 Table 11. Nutrient, fish feed and water consumption and cost………….……….150 Table 12. Edible biomass yield for the VF crops (monocrop) case production....152 Table 13. Initial non-recurring cost with 20% margin………………………….…..153 Table 14. Initial cost & repayment with 20% margin analysis…………………….154 Table 15. Recurring Costs……………………………………………………...……154 Table 16. Production capacity: Sky Greens & DLR………………………….……155 Table 17. Analysis of minimum requirement……………………………………….155 Table 18. Tabulation of expenses vs. fixed price…………………………………..155 Table 19. Lettuce: Year one projected sales & cost / Data 2018 USDA………..157 Table 20. Six years projections………………………………………………...……158 Table 21. Net Present value (20 years).…………………………………………….158 vi Table 22. Annual Consumption, Production and Subsidies for 4,245 Residents.161 Table 23. Recurring costs of Small Empty Lots Vertical Farms…………………..164 vii LIST OF FIGURES Figure 1. Hydroponics inner workings.………………………………………………53 Figure 2. Aeroponics inner Workings.………………………………...……………..55 Figure 3. Opportunity Zone.…………………………………………………………118 Figure 4. Map of location 246 E. Center St, Pomona, CA.………………………119 Figure 5. Blueprint of Location chosen for facility.…………………………..……121 Figure 6. Vertical Farm floor distribution…………………………………………..138 Figure 7. Outer and inner structures of DLR vertical farm study………………..139 Figure 8. Rendition of Sky Greens inner workings.………………………………141 viii CHAPTER 1 Introduction General problems In the decades to come, conventional agricultural practices will have forced us to deal with the consequences of human beings who considered only the best interests of their own species. Conventional agriculture and farming have been the status quo for the last century, with little to no change. The changes that have been implemented have been primarily for the purpose of increasing production and reducing expenses (Lyle, 1994). The side effects of such practices have become all too familiar: among them are problems with ecological and environmental justice, the lack of fair social development on the global scale, the dependency on fossil fuels, the lack of interest in sustainable innovations, the disregard of issues of food insecurity, and the correlation with poverty and inequality (Besthorn, 2013). Global warming, elevated frequency of cataclysmic natural disasters such as hurricanes, and the connection between the environment and economic decline are, according to Besthorn, a result of humans’ environmental manipulation in the interest of producing more food (Besthorn, 2013). Although conventional agriculture provides food for the masses, it has severely affected humanity’s connection to one another and to nature. The concepts and practices of conventional agriculture continue to threaten the ecological carrying capacity of the planet, thus making the future of all species uncertain. 1 Although the side effects are many and they all demand immediate worldwide attention, one has become the most pressing and immediate concern for communities around the world—affecting underdeveloped, developing, and developed countries just the same. According to the United Nations Food and Agriculture Organization (UNFAO), the greatest challenge humanity is currently facing is the insecurity of safe, adequate, timely, healthy, and affordable food (UNFAO, 2011). This feasibility study suggests, presents, and compares regenerative sustainable concepts and practical applications in the conventional system of food production and distribution. The study proposes a possible alternative to alleviate, improve, and raise awareness of healthy food insecurity in low-income communities in the United States. Regenerative sustainability concepts are innovative solutions to challenges such as that mentioned above. The solutions take into consideration all stakeholders in the matter and, as a result, produce a model capable of resolving the problem while maintaining balance in the environment (Lyle, 1994). Regenerative sustainability concept Regenerative sustainability can