HomeMy WebLinkAboutItem 01 NEDCO Update and Discover Downtown Springfield AGENDA ITEM SUMMARY Meeting Date: 3/21/2016
Meeting Type: Work Session Staff Contact/Dept.: Courtney Griesel, Economic
Development Staff Phone No: 736-7132
Estimated Time: 45 minutes
S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Community and Economic Development and
Revitalization ITEM TITLE: NEDCO UPDATE AND DISCOVER DOWNTOWN SPRINGFIELD
ACTION REQUESTED:
Provide feedback on NEDCO staff presentation of organizational goals and focus
moving forward.
ISSUE STATEMENT: Neighborhood Economic Development Corporation (NEDCO) staff will present a detailed discussion of the recent transitions impacting the Neighborhood Economic
Development Corporation (NEDCO), the future direction of the organization and
upcoming opportunities in the Downtown Springfield area. This memo will cover;
• Existing Project and Program Partnerships Between the City of Springfield and
NEDCO
• Goals Moving Forward for NEDCO
ATTACHMENTS: Attachment 1 – State of Neighborhood Economic Development Corporation
Attachment 2 – NEDCO/City Partnership Funding Overview Attachment 3 – Springfield Mobile Food Vending Program Update
DISCUSSION/ FINANCIAL
IMPACT:
The City of Springfield has been in an ongoing, substantial, partnership with NEDCO
for nearly ten years in several key areas;
• Community Economic Development; includes SPROUT!, Main Street
Program Management, Nonprofit business incubator, Springfield Farmers
Market and Springfield Mobile Food Vending Program management.
• Personal Asset Building; includes affordable home ownership development
and microenterprise business support.
Over the course of the partnership, these projects have utilized Community
Development Block Grant (CDBG) funds and SEDA Downtown Urban Renewal funds.
Currently, there are no ongoing SEDA funded partnerships with NEDCO.
NEDCO has experienced substantial change and growth in recent years, notably the last year as Emily Reiman has assumed the role of Executive Director. These changes and
growth have redirected past NEDCO priority initiatives to key focus areas for the future. Significant changes, which will be presented and discussed among others,
include:
• The recent withdrawal of NEDCO resources to support the Discover
Downtown program – While NEDCO is no longer managing the Discover
Downtown (MainStreet) program, City staff is currently working with businesses to organize and implement a ‘signature’ spring-time downtown
event as well as an ongoing business-to-business consulting program. NEDCO
is no longer receiving funds from SEDA for this program.
• The City proposes to partner with NEDCO to develop a two-year program plan
for the Mobile Food Vending Program. This would include developing a recommendation for long-term oversight of the program and exploring impacts
of transitioning management from NEDCO to the City. Staff proposes to bring
this issue and any recommendations for program changes, to Council for discussion in June. It should be noted this program does not currently, and has
not historically, received funds for ongoing program management.
This item is intended to provide an update on these past activities and their current status and to discuss the directions and goals for the NEDCO in the future with a focus
on City partnership areas.
March 21, 2016
To: Mayor Lundberg and the Springfield City Council
From: Emily Reiman, Executive Director, NEDCO
Re: Overall NEDCO Organizational Update and Status Report on City of Springfield Partnership
Dear Mayor Lundberg and Councilors,
Thank you for the opportunity to delve this deeply into NEDCO, the work we do, and our transitions over
the past year. We are grateful for our partnership with the City of Springfield, and it is our sincere hope
that this partnership becomes stronger in the years ahead.
This update comes as I approach my one year anniversary as Executive Director, and it has been a year
of significant transition and realignment as an organization. NEDCO experienced incredible growth in the
five years from 2010-2014. In many ways, that growth changed the face of NEDCO - increasing our
breadth of programming, geographic reach, and organizational structure. Much of the growth was
positive, addressing very real community needs and contributing to incredible impacts. But it was not
without serious challenges. We struggled to build capacity fast enough to fulfill new obligations; secure
revenue streams to support multiple new program areas; retain staff in an ever-changing and always
fast-paced environment; and most of all, understand our strengths and limits as an organization. It’s
these challenges that the board, management team, and I have focused on in the last year.
I want to openly acknowledge the fact that, unfortunately, the area in which we struggled the most –
Community Economic Development – was the very area in which we work most closely with the City of
Springfield. As a result, that CED partnership experienced more than its fair share of bumps and
disappointments. (And much of our other work in Springfield has been overshadowed by these areas.) It
has been - and remains - a high priority for me to change that dynamic and ensure that NEDCO is a full
and valuable partner for the City and this community.
We have worked hard over the last year to communicate regularly with city staff and key community
partners, honestly evaluate our capacity and priorities, and make the changes (including difficult budget
decisions) necessary to ensure that NEDCO is a stronger, more financially sustainable, cohesive, and
highly effective organization moving forward.
My goal for this presentation is to give the Council a complete overview of NEDCO’s programs and
services (including a bit of historical context), explain the transitions we have made in the last year,
highlight our impact on the Springfield community, and introduce our plans for the next few years. This
packet provides initial information, and I will provide more detail and in-depth analysis on the 21st. I also
look forward to a collaborative conversation about the ways in which the City and NEDCO can partner in
the years to come. We’re excited to be a key partner on signature events, including Fresh Hops Fest and
Harvest Fest; to work with other downtown businesses to create special promotions around holidays; to
participate in community initiatives around housing, business development, and education partnerships;
and many other activities rooted in making Springfield and even stronger community.
Attachment 1, Page 1 of 8
MISSION: To collaboratively build human and capital assets to strengthen neighborhoods and broaden
participation in community ownership and governance
GEOGRAPHIC REACH: Lane, Marion, Clackamas Counties
KEY PROGRAM AREAS:
• Personal Asset Building
• Community Economic Development
• Property Development (primarily acquisition, rehab, management; limited new construction)
• Community Development Lending (consumer and micro/small business)
KEY HISTORY:
1979 – 1990: NEDCO was founded by residents of the Whiteaker neighborhood. Early work established
roots in both housing and commercial revitalization: acquiring dilapidated single family housing and
converting into co-ops or land trusts; purchasing commercial buildings and recruiting local businesses;
bringing a grocery store back to the neighborhood; etc.
1990 – 2008: Shift in focus to affordable homeownership as a long term asset building strategy for low
income families. Initial focus on building affordable single family homes (scattered site and small
neighborhood developments), with expansion into financial literacy and homebuyer education and
coaching for families interested in purchasing NEDCO homes. Generally 3-5 staff members.
2008 – 2014: Housing crisis and funding realities make single family development more difficult. Shift
back toward community economic development (CED), first with Springfield Farmer’s Market and
relocation to downtown Springfield. New Executive Director, Claire Seguin, hired in 2010, builds on CED
efforts with Main Street, Sprout, and microenterprise services. NEDCO founds Community
LendingWorks as an affiliate nonprofit to provide consumer and small business lending services.
Homeownership counseling expands rapidly during crisis to include foreclosure prevention counseling.
2008 expansion to Marion County (request of peer affordable housing agencies for
homeownership/foreclosure services). 2012 expansion to Clackamas (request of state for foreclosure
services). Financial literacy becomes standalone service, not just for homeownership candidates.
Increase from 5 to 40 staff, primarily during two-year rapid expansion in 2011-12.
2014 – 2015: Change in leadership as both Claire Seguin and Sarai Johnson (Assistant Director) leave in
2014. Organization running at an operating deficit, led by Sprout and other CED programs as loss
leaders. Board and management team undertake strategic downsizing to eliminate/modify several
financially unviable programs and reduce staff to reach better sustainability point. Sprout programs,
slow to get up and running, take off in 2015. Community LendingWorks begins rapid growth.
Foreclosure prevention and Asset Building programs continue at a steady pace. First multi-family rental
project of 12-unit complex for young adults aging out of foster care. 28-30 staff
GUIDING PRINCIPLES LOOKING FORWARD:
Prioritize areas of expertise, strength, and stable funding; focus efforts on fewer projects and services;
integrate our programs to leverage impact; increase collaborative projects with community partners.
NEDCO ORGANIZATIONAL SUMMARY
Attachment 1, Page 2 of 8
NEDCO HISTORICAL GROWTH SNAPSHOTS
2009-10
Annual Expenses: $770,000 Staff: 7
Homeownership
Centers $366,000
Prop Dev
$207,000
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2014-15
Annual Expenses: $3.7 million Staff: 38 Counties: Lane/Marion/Clackamas
Personal Asset Building
Expenses: $2 million
Community Econ Dev
Expenses: $1.3 million
Prop Dev
$255,000
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2016-17
Annual Budget: $2.9 million Staff: 29 Counties: Lane/Marion/Clackamas
Personal Asset Building
Budget: $1.4 million
Econ Dev
$500,000
Prop Dev
$420,000
Lending
$560,000
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Attachment 1, Page 3 of 8
PROGRAM OVERVIEW - PERSONAL ASSET BUILDING
DEPARTMENT GOALS:
To help low income individuals and families
• Reach financial stability
• Build economic opportunity
• Gain and preserve assets.
GEOGRAPHIC LOCATIONS:
Lane, Marion, Clackamas Counties
MAJOR PROGRAMS:
Foreclosure Prevention
Services: Education, counseling, mediation, mortgage payment assistance
Funding sources: State and federal fee-for-service contracts
Budget bottom line: Break even
Outlook: Finally scaling down; probably 2 year time horizon
Financial Literacy
Services: Entry and intermediate classes, one-on-one coaching, workplace and social
service partner programs
Funding sources: United Way, private grants, fee-for-service
Budget bottom line: Requires subsidy (sources: grant funding generally available)
Outlook: Area of increasing need and interest; ability to scale up according to funding
First Time Homeownership
Services: Classes, one-on-one coaching, down payment assistance
Funding sources: Oregon Housing and Community Services grants, HUD grants
Budget bottom line: Break even
Outlook: Will remain a small service area, to stay within available funding sources
Microenterprise Business Support (moved from Community Economic Development)
Services: Classes, one-on-one coaching
Funding sources: Eugene and Springfield CDBG grants
Budget bottom line: Requires subsidy (sources: no clear path…ongoing effort)
Outlook: Funding sources declining and increasingly difficult to use; ability to maintain
probably linked to Community LendingWorks expansion
Individual Development Accounts
Services: Matched savings program (3:1) for low income clients saving toward first home,
business, car, or higher education
Funding sources: State IDA network (funded through state tax credit)
Budget bottom line: Break even
Outlook: Stable at current size; demand far outstrips resources, but limited by funding
PROGRAM DEVELOPMENT AREAS:
• Expand workplace-based financial literacy programs delivered as an employee benefit
• Develop new program area around financing college with minimal student debt
Attachment 1, Page 4 of 8
DEPARTMENT GOALS:
To help low income neighborhoods and communities
• Build economic opportunity and vibrant sense of community
• Support locally owned and emerging businesses, especially in the food/beverage sector
GEOGRAPHIC LOCATIONS:
Lane County (Focus Community: Downtown Springfield)
MAJOR PROGRAMS:
Sprout
Services: Commercial kitchen, food business incubation program, indoor farmer’s market,
locally-owned anchor food/beverage businesses, event space, office space
Funding sources: Space rent, event rentals, program fees
Budget bottom line: Requires substantial subsidy
Original business plan estimated five-year investment period prior to break even.
Currently in 4th year.
Outlook: Significant progress in the last year, but income-generating potential limited by
mission to support community and low-income/start-up businesses. Will not
likely reach self-sufficiency; will probably require ongoing subsidy.
Springfield Farmers Market
Services: Management and space for year-round farmer’s market
Funding sources: Booth fees
Budget bottom line: Requires subsidy (sources: NEDCO general operations, occasional small grants)
Outlook: Exploring ways to minimize costs to make more sustainable; interest in moving
to outdoor market during summer months.
RECENTLY RETIRED PROGRAMS:
Main Street
Services: Main street coordinator position; façade improvement grant coordination
Funding sources: City of Springfield
Budget bottom line: Required subsidy (sources: NEDCO general operations)
Outlook: Unable to spin off as independent non-profit; would have required sustained
subsidy. City will take the lead in future, and NEDCO will participate as partner.
Nonprofit Business Incubator
Services: Classes, one-on-one coaching
Funding sources: Eugene and Springfield CDBG grants
Budget bottom line: Required subsidy (none identified, program closed)
Outlook: Program initially launched without viable ongoing funding sources; potential
interest in reviving in future, if funding available.
PROGRAM DEVELOPMENT AREAS:
• Continued effort to reach funding sustainability at Sprout! Top priority for NEDCO Board.
• Better alignment of Community Economic Development program with Property Development
and Community LendingWorks, to leverage multiple resources on behalf of targeted projects
• Longer term: Identify second Focus Community in either Marion or Clackamas County
PROGRAM OVERVIEW - COMMUNITY ECONOMIC DEVELOPMENT
Attachment 1, Page 5 of 8
DEPARTMENT GOALS:
• Create safe, affordable, high quality housing for low income individuals and families
• Rehabilitate and repurpose commercial real estate to promote vibrant businesses and activity
in underserved and low income neighborhoods
GEOGRAPHIC LOCATIONS:
Lane County
MAJOR PROGRAMS:
Small-scale Multi-Family Rental
Services: Acquisition and rehab of small, older market-rate apartment complexes;
targeted at underserved populations (former foster youth, etc.)
Funding sources: HOME, CDBG, private loans and grants, possibility of state tax credits / bonds
Budget bottom line: Income generating (developer fees, rents)
Outlook: Good niche for NEDCO: can utilize funding that is difficult for larger projects;
serve smaller special-needs populations.
Single Family Rental
Services: Acquisition and rehab of abandoned/REO properties during the foreclosure
crisis; targeted as housing for families displaced by foreclosure or short sale.
Funding sources: HOME, CDBG, private loans, possibility of federal Hardest Hit Funding
Budget bottom line: Income generating (developer fees, rents)
Outlook: Probably 2-3 more years as a focus (similar sunset to foreclosure counseling
program); could have occasional project after that.
Commercial Development
Services: Acquisition and rehab of vacant or underutilized commercial buildings
Funding sources: CDBG, government grants, private grants, social investments, private loans,
possibility of New Market Tax Credits
Budget bottom line: Break even (develop fees and rents)
Outlook: Significant interest in expanding this area once Sprout finishes development
phase;
PROGRAM DEVELOPMENT AREAS:
• Expanded commercial development, especially in focus communities of our CED work
• Return to affordable homeownership development through “cottage home” clusters
• Small multi-family projects in rural Marion County, in partnership with Housing Authority
PROGRAM OVERVIEW - PROPERTY DEVELOPMENT
Attachment 1, Page 6 of 8
PROGRAM OVERVIEW - COMMUNITY LENDINGWORKS
DEPARTMENT1 GOALS:
• Enable low income individuals and micro/small businesses to build economic opportunity
through access to safe, affordable credit
GEOGRAPHIC LOCATIONS:
Official CDFI2 Target Markets: Lane, Linn, Marion Counties
Current Expansion: Clackamas County and Southern Oregon
MAJOR PROGRAMS:
Consumer Lending
Loan Products: Credit-builder, personal, auto, energy efficiency, deposit assistance loans
Funding sources: CDFI grants, private and public investments
Budget bottom line: Break even (fees and interest)
Outlook: Our primary mission-driven loan area – only 30% by dollar, but more than half
by number of loans. Growing, but on a slower curve than business loans.
Micro/Small Business Lending
Loan Products: Business loans up to $50,000; target populations include artisan/farmer’s
market vendors, low income, minority, and woman-owned businesses
Funding sources: CDFI grants, private and public investments (USDA, Oregon Growth Board),
private grants
Budget bottom line: Income generating
Outlook: Fastest growing product line at CLW – currently 70% of loan by dollar. Likely to
triple in volume in the next 1-2 years.
Business Technical Assistance / Referral
Services: Consultation and assistance for businesses interested in applying for a loan. Can
include informal advice, business plan assistance, referral (and facilitated
application) to other loan programs
Funding sources: CDFI grants, government grants (typically matched with loan for capital)
Budget bottom line: Break even
Outlook: Probably the future direction on most of our microenterprise technical
assistance programming.
PROGRAM DEVELOPMENT AREAS:
• Significant expansion of capital base and lending volume (current portfolio is just $1 million;
anticipated portfolio of $3 million within 18 months)
• Current geographic expansion to Clackamas County and Southern Oregon underway
• Potential for additional loan products in response to community needs
1 CLW is actually an independent nonprofit, with its own 501(c)3 status, but is formally affiliated with NEDCO
through our bylaws and a management agreement. In business lingo, it’s a wholly-owned subsidiary of NEDCO. 2 CLW is a certified Community Development Financial Institution (CDFI) through the US Treasury Department.
Attachment 1, Page 7 of 8
SPRINGFIELD-SPECIFIC IMPACT REPORT (2011-2015)
PERSONAL ASSET BUILDING
• 442 Homeowners at risk of foreclosure received education, counseling, and/or support in the
state’s foreclosure mediation program
• 296 Homeowners received Mortgage Payment Assistance (MPA) totaling $3.04 million in
direct assistance
o 95% of MPA recipients statewide are still in their homes
• 249 Low income families received one-on-one coaching about first time homeownership;
o 119 bought their first home
• 372 Low income families received financial literacy education
• 64 Low income residents are saving to buy an asset using an Individual Development Accounts
(IDAs), and will earn $398,700 in match when they graduate.
o 11 additional residents are approved to open accounts in the next funding round
COMMUNITY ECONOMIC DEVELOPMENT / SPROUT
• 80 Community events were held at Sprout in 2015, bringing more than 6200 people to
downtown Springfield
• 5 retail food and beverage businesses operate permanently from Sprout!
• 50 food and beverage businesses utilized the commercial kitchen at Sprout! in 2015
PROPERTY DEVELOPMENT
• 5 formerly foreclosed homes were rehabbed and are now affordable rentals for families
displaced during the foreclosure crisis
• 8 Businesses are now located upstairs at Sprout!
• 12 Businesses are now located at the remodeled 405 A St building (formerly vacant) across the
street from Sprout
o 8 of those businesses are new to Springfield
COMMUNITY LENDINGWORKS
• 81 Consumer loans were made to residents, for a total of $142,942
• 47 Business loans were made to Springfield entrepreneurs, for a total of $467,845
Attachment 1, Page 8 of 8
NEDCO & CITY PARTNERSHIP FUNDING OVERVIEW;
Outstanding and Past/Closed
The below listed projects are a snapshot of current and past funding partnerships and obligations between the City of Springfield and the Neighborhood Economic Development Corporation
(NEDCO). Current/outstanding funding partnerships are monitored and managed by City Housing
staff.
Outstanding CDBG funding:
Year funded Recipient Project Award Amount Status of funds
2013
2014
NEDCO Hatch Microenterprise Business Incubator
Program
$30,000 grant
$66,879 grant
(CDBG)
$30,000 and $66,879 remaining
to be drawn.
Update: NEDCO has declined the 2013 Hatch Microenterprise grant of $30,000, which allows the City to reallocate these funds toward other CDBG-eligible projects. Per HUD’s requirement, City
staff is currently working with NEDCO to amend the 2014 contract to reflect a new rate model for invoicing. Once that contract is amended, NEDCO will bill for expenses incurred this past year.
Year funded Recipient Project Award Amount Status of funds
2012 NEDCO Façade Improvement
Program
$25,000 grant
(CDBG)
$12,500
remaining to be drawn down.
Update: The grant to NEDCO for this project stipulated that half of the award ($12,500) would be
put toward offering loans to businesses. As of now, NEDCO has not been able to find any businesses willing to take on a loan. City staff is working with NEDCO to close out this project by providing the funds back to the City for reallocation of the $12,500 to other CDBG-eligible projects.
Year
funded
Recipient Project Award Amount Status of funds
2015 NEDCO Sprout! Code improvements $100,000 grant
(CDBG)
$100,000 remaining to be drawn.
Update: NEDCO identified the Sprout! building occupancy use as a violation of fire code, and
would need significant code improvements to be used as an event space. In May 2015, NEDCO was awarded a $100,000 CDBG grant to put toward the project. NEDCO estimated the total cost of the
rehabilitation to be $190,000. Staff completed the environmental review of the project in the Fall, allowing NEDCO to start incurring costs toward the project as of December 1, 2015. NEDCO reported they are currently finalizing the plans for the renovation work with the architect.
Attachment 2, Page 1 of 2
Page 2
Closed CDBG funding:
Year funded Recipient Project Award Amount Status of funds
2012
NEDCO Hatch MicroEnterprise Mobile Food Vendor
Program Development
$23,033
(CDBG)
Fully Expended by 2013
Overview: In 2012 NEDCO partnered with Springfield Housing staff to develop guidelines for the Springfield Mobile Food Vending Program. Funds were allocated from CDBG specifically for the
staffing of program development, resulting in the creation of a final outline of rules and a handbook
to be approved by City Council. The program was reviewed and approved by Council in 2013 and adjusted to further encourage vendor participation in 2014. NEDCO currently funds the management
of the program with funds collected from program fees. There are no additional CDBG, City or
SEDA funds allocated to this program.
Retired Urban Renewal funding:
Overview: In 2010, NEDCO approached the City of Springfield to partner in designating Downtown Springfield as a Main Street program area. Main Street is a national organization promoting ‘grass-
roots’ redevelopment of downtown areas. The designation includes the adoption of an organizational structure which includes a Main Street Coordinator/Manager. The City and Springfield Economic
Development Agency approved the funding request of $25,000 annually to support the staffing of a
Downtown Manager to be hired and managed by NEDCO. This position was funded with Downtown Urban Renewal funds from 2012 to 2015, when the Main Street manager position was eliminated by
direction of the NEDCO Board of Directors. No further funds have been requested by NEDCO for
this work and in February 2016, NEDCO officially withdrew formal partnership as the Downtown Springfield Main Street Program parent organization.
Year funded Recipient Project Award Amount Status of funds
2012
NEDCO Discover Downtown
(Main Street) Program
Manager
$25,000
(SEDA, Downtown
Urban Renewal)
Not Funded.
Last funded FY
2015
SPRINGFIELD MOBILE FOOD VENDING PROGRAM UPDATE
2016
Program Startup (2013)
In 2013, Council adopted Ordinance 6298 which authorized a Food Cart Program on City-owned streets,
sidewalks, rights-of-way and public open spaces in the downtown core. The City Manager was made the
administrator of the program with the power to delegate the administration to another agency. With
the assistance of a CDBG allocation, the Neighborhood Economic Development Corporation (NEDCO)
partnered with the City to draft program guidelines and administer the program.
The program guidelines are framed around several key areas:
• Streamlining the process for vending truck/cart to vend in the right of way in downtown
Springfield
• Being mindful to existing brick and mortar businesses in Downtown
• Promoting aesthetic, safety, and public access considerations
Vendors through the City program are required to:
• Carry liability insurance naming the City and program administration organization as additional
insured
• Be licensed; valid Oregon Food Handlers card, possess Lane County Environmental Health
Mobile Food Unit License
• Be at least 16 years old
• Serve from a mobile, on wheels at all times, unit
• Be operational without hard-wired electrical or piped connection to waster service
• Display signage clearly identifying business name
• Provide a complete accounting of intended products to be sold
• Keep areas around their business clean and tidy
• Display permits at all time
Program Adjustments (2014)
After piloting the program for the first year, and with feedback from vendors and Council, staff directed
NEDCO to adjust several program guidelines. These adjustments are reflected below.
Initial Rules Adjusted Rules
Monthly Rental Fees Spring/Summer: $200
Autumn/Winter: $150
Flat $150 monthly rental fee
Power Source Non-generator only: temporary plugin No restriction
Hours of Operation 3-5 Hours p/day
5 Days p/week
20 Days p/month minimum
No minimum operation
requirement
ATTACHMENT 3, PAGE 1 OF 3
Program Progress and Current Lessons Learned (2015 to Current)
Since guideline drafting and program implementation and program adjustments, two cart businesses
and one food truck have submitted applications to participate in the program. All were approved.
Based on the limited implementation window and mobile food vendor business interactions, we have
identified several keys to successful vending in a downtown or community area. Additionally, we
understand better the costs and barriers associated with mobile food vending.
Keys to Start-up:
- High demand/area clientele base – The high concentration of employment and daily foot traffic
within an identified clientele base is critical for a successful mobile food vendor business. In
remaining consistent with a truly mobile vending model, it is important that the vendor travel to
the client base opposed to expecting clients to travel long distances to them. This client base is
likely to be a vibrant mix of shoppers and employees and possibly residents, located in a
concentrated area.
- Low food and labor costs – Low food and labor costs is not about cheap food and labor, rather
efficient purchasing and utilization of product and effective training of quality employment.
- Owner is operator, does not require high salary - In many cases, food vendors are unable to hire
staff during initial start-up years, instead paying themselves minimal salaries. This commitment
to owning and operating their own business not only generates labor savings, but also provides
an opportunity for the building of consistent product.
- City has minimal requirements – Entry into a city must be made clear and include an easy to
navigate, streamlined, process. Vending in the public right of way has generated a mix of
support and opposition from the community. While excitement around the positive activity has
been widely expressed, concern around public liability, fairness and safety has also been
expressed. For this reason, even with a goal for a streamlined and easy to access program,
requirements ensuring safety in the ROW are an important regulation.
Summary
Staff believe due to low client traffic volumes in downtown Springfield, the Springfield Mobile Food
Vendor Program has struggled to take-off and thrive. Initial start-up costs for equipment purchases and
product development are, while in some place less expensive than a ‘brick and mortar’ establishment,
expensive often barriers to entry into an unknown or untested market like Springfield. Within the
region, the often popular vending model results in the food truck or cart operator locating a ‘plug-in
ready’ site which allows the truck or cart to remain in place for an indefinite amount of time at a low
monthly rent rate. While this is often a highly successful, and even desirable, model it is not a true
‘Mobile’ Food Vending Program, as the Springfield ordinance and Program was written.
ATTACHMENT 3, PAGE 2 OF 3
EXAMPLE START-UP AND OPERATIONAL COSTS OF
MOBILE FOOD VENDING
ANNUAL COSTS OF FOOD CARTS/TRUCKS
Actual Daily $ % sales NOTES
Starting Daily Sales $312 2 customers/10 minutes @ 6.50
p/customer w/4 hour day
- Raw Food Costs $120 38% Higher than restaurant
- Packaging/Paper $19 6% Higher than restaurant
Gross Profit $173
- Labor $86 9 Hours of Daily Minimum Wage
- Fuel $15
- Maintenance/Cleaning $10 3%
- Admin Overhead $6 2%
Net Daily Profit $56
TYPICAL DAY (Single Mealtime Service)
Load truck/drive/set-up 2 Hours
Service 4 Hours
Takedown/drive/unload/next morning prep /clean-up 3 Hours
TOTAL 9 Hour Day
FOOD CART START-UP ESTIMATES OF FOOD CARTS/TRUCKS
LOW HIGH NOTES
Cost of Truck/Cart
w/large Equipment
$50,000 $125,000 Lower than restaurant ownership
Small Wares $1,200 $6,000 Similar to restaurant of scale
License Fees $200 $1,500 Comparable to business license of
restaurant
Insurance $2,500 $2,500 Higher than restaurant
Training $800 $800 Similar to restaurant
Rent $1,200 $7,500 Lower than restaurant
Other $7,500 $25,000 Legal, Branding, etc.
Total $63,400 $168,300 Lower than brick & mortar restaurant
start-up costs
ATTACHMENT 3, PAGE 3 OF 3