HomeMy WebLinkAboutCSD-08-043 - Preferred Market Option & Governance Process
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Community Services
Report To:
Date of Meeting:
Submitted By:
Prepared By:
Ward(s) Involved:
Date of Report:
Report No.:
Subject:
Community Services Committee
June 16, 2008
Keith Baulk, Director of Enterprise
Market Options Project Team
Ward 2
June 11 , 2008
CSD-08-043
PREFFERED MARKET OPTION & GOVERNANCE
PROCESS
RECOMMENDATION:
That the Small Independent Vendors Option be ratified as the preferred go forward model for
the upper level of the Kitchener Market, and
That the business case for this option as appended to CSC Report 08-043 be ratified and the
recommendations contained therein serve as the implementation plan; including commencing
the process of leasing space to those vendors who have expressed interest in the full time
market, and,
That staff implement the short term improvement strategy previously circulated and develop an
aggressive marketing campaign focused on vendor recruitment, and
That a task force be established to review options and make a recommendation for future
governance of the Market as outlined in CSC Report 08-043.
EXECUTIVE SUMMARY:
The Saturday market has been a successful venture since the new market opened in 2004. In
addition the private sector Marche Lofts are virtually sold out. However, the full time market has
not performed as expected and that is partly the reason the market did not achieve the financial
targets originally envisioned.
In order to address the vacant space on the upper level market, Council directed staff to
investigate six options. Three options were related to functional uses. The goal was to
investigate and recommend one of the three options. The options were: arts and culture uses;
re-visit the original vision of small independent vendors; or take no action until a mid-scale
grocer could be recruited to rent the space. Three other options were related to governance
including: vendor led co-op, sell the market or private sector management.
After a lengthy public process, staff is recommending the following:
Report No: CSD-08-043
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1. Re-implement the original vision option (including small owner-operated vendors and/or
a mini-market concept) and commence the process leading to leasing space to those
who have expressed interest.
2. Immediately implement a six month improvement plan focusing on implementation of
critical activity beyond just leasing space to improve the overall market operation.
3. Since the sell and private sector management options were eliminated from further
consideration, staff are recommending a task force to consider alternative governance
for the market and make a recommendation by December 2008.
The small independent vendor option is being proposed because it best fits the ranking criteria
supporting Council's vision of what could lead to a successful market and this option was
overwhelmingly supported by our citizens during the public consultation process held in April
2008. In addition, there are currently nine potential vendors who have expressed interest in
owner-operated stands and there is a vendor/neighbourhood collaborative that is interested in
investigating the potential of a unique local, fresh food mini-market concept. What makes
vendor involvement different now versus unsuccessful attempts by the initial full time vendor
group is the following:
Development of the east end of the downtown has progressed with the market loft
project completed and a number of larger businesses now established. Other potential
developments are on the horizon.
The nine potential vendors are expressing interest in fulltime space with the knowledge
of the current business situation at the market. They are prepared to be part of a new
solution knowing that challenges are still ahead.
These vendor business models are not solely food based and some of the vendors are
proposing mixing on-site production, education and/or retail to maximize the
effectiveness of the space.
A renewed emphasis by the public for local, fresh or organic foods as proposed by the
Kitchener Market Collaborative and as recently promoted in the One Book, One
Community publication titled "The 100 Mile Diet".
If Council approves the recommendation, staff will begin working with the potential vendors and
proponents to commence or fine tune their business plans prior to finalizing any leases.
It is imperative that the success measures for the market be recalibrated under this new
initiative. Staff are proposing that success will be based on the following factors:
1. Full time vendors begin moving in on a phased basis between the next 3 -12 months.
2. The upper level market is operating near capacity in 12 months to 18 months.
3. Rents are phased in at $9/sq.ft in 2009, $13/sq. ft in 2010 and $17/sq. ft in 2011.
4. The market subsidy is stabilized at its current level over this three-year period.
BACKGROUND:
A number of major success measures for the market block have been achieved as originally
envisioned. The market block as a major catalyst project is built out and the private sector retail
components are being leased. The 68 unit market loft development is approaching 100 per cent
sold. The Saturday market is operating at 100 per cent capacity with almost no vendor turnover
and these vendors are patronized by thousands of shoppers each week. Measurable
improvements were also seen at 2007 year end in the market's financial performance.
However, the City has not achieved all of its objectives with regard to the market block. One
issue that remains is the fulltime market has not advanced as expected. A process to address
the issue ultimately resulted in Council directing staff to undertake a public consultation on three
Report No: CSD-08-043
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options for the future of the upper level market. Staff was asked by Council to bring back a
recommendation in June of 2008 on a single preferred option following the consultation and also
to develop a process to consider an alternative management model for the Market. This report
and the recommendations contained herein address those requests.
The direction to short-list the investigation of the three options evolved from a lengthy process
as follows:
In June 2007 staff circulated report CSD-07-063 recommending that staff investigate the
concept of an interim Arts and Culture Centre to immediately maximize use of the upper
level of the market. The concept was based on the Arts Centre as a temporary use of
the empty space on the upper level to support the transition to a vibrant permanent
urban market facility on that level in approximately three to five years. At that meeting,
Council directed staff to investigate the option of an interim Arts and Culture Centre but
also directed staff to investigate other options. Two additional options were put forward.
Staff was directed to determine whether there would be interest by a private
management firm to operate the facility and also revisit the concept of a mid-scale
grocer filling the unused space.
In September 2007, Council met to review the results of the 2008 budget public
consultation. During this meeting, it was recommended that staff investigate the
potential of selling the market outright to the private sector.
The original vision of utilizing the upper level to support a collection of small independent
grocery vendors was also retained as an option. While staff did report in June 2007 that
a request for proposals coordinated by the City's consultant, Cam Hawkins and
Associates did not produce enough viable, quality vendors to support moving in this
direction at that time, it was felt it should remain an option.
On November 5th, 2007, Community Services Committee approved another option at the
request of a collection of current market vendors; a vendor based co-operative operating
the market facility.
As a result, staff had a total of six options to investigate. A summary of the options and
actions are as follows:
1. Develop a business case to determine the viability of the upper market as an Arts
and Culture Centre.
2. Investigate the potential of private sector management of the market
business/facility.
3. Re-test the original concept of having a number of small independent retailers to
fill the space.
4. Investigate whether a mid-scale grocer or deli may be interested in leasing the
space.
5. Determine the viability of the sale of the market.
6. Permit a collection of market vendors to submit a proposal for a vendor co-op.
A number of project teams were formed to investigate the potential of each option and
develop option specific reports. For example, a needs assessment was completed and a
project team was struck to work on the business case for the arts centre concept, a
stakeholder based task force was formed to develop the RFP document for private
sector management, and the Project Administration Division began work on the market
"sell" option.
Information on each of the six options was presented to Community Services Committee
on March 3rd, 2008 in CSD Report 08-022. In addition, a vendor collaborative concept
was presented by a group of vendors and citizens known as the Kitchener Market
Collaborative (KMC) addressing #6 above.
Report No: CSD-08-043
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At the Council meeting of March 3rd, 2008, staff was directed to take no further action in
regard to the private sector management option and the sell option. The vendor
collaborative proposal was considered to be a form of the original vision of small
independent vendors (with a more focused product goal and a different product
distribution model). As a result, three options remained for the upper level of the Market;
Arts and Culture uses on an interim basis, Small Independent Vendors (representing the
potential combination of the original vision of owner-operated stands and a vendor co-op
mini-market) or taking no action until a mid-sized grocer or larger non-food retailer was
recru ited.
Staff was then directed to undertake a public consultation process to receive feedback
on the three remaining potential solutions.
Staff was asked to report back to Committee within 90 days with the results of the
consultation and a recommendation for the next steps. This report outlines the outcome
of the public consultation along with a recommendation to implement a preferred option
for the market along with a process to consider future governance of the market.
In conclusion, on September 24, 2007, Community Services Committee supported four key
outcomes developed by the Market RFP Task Force. The four key outcomes ratified by
Committee were as follows:
1. Continue with the successful Saturday market.
2. Provide a vibrant urban full-time market on the upper level that may include food or other
uses compatible with the viability of the downtown and service to its citizens.
3. Improve the financial position over time.
4. Create a destination that could continue to support re-urbanization of east end
downtown.
While these outcomes were developed initially to provide deliverables for potential private sector
operators, these are useful in that they provide measures against which each of the three
remaining options for the upper level can be ranked. The report summarizes the outcome of the
rankings.
REPORT:
This report provides detailed information on four key actions used to develop the report
recommendations as follows:
1. The results of the public consultation on the upper level market.
2. A summary of two business cases on the action options - arts and culture uses and
original vision of small independent vendors.
3. The rankings used to propose the staff recommendation regarding the preferred option
for the future use of the upper level of the market.
4. A process to consider alternative management models for the market.
The goals of this report are as follows:
1. To receive direction from Council so staff can focus on implementing one option to move
the upper level market forward.
2. To establish revised operational and financial targets for the market based on the
preferred option while acknowledging the reality of the current business situation.
3. To begin the process of reviewing governance of the market through a stakeholder task
force.
Report No: CSD-08-043
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Results of Public Consultation
At the direction of Council, City of Kitchener staff conducted a public consultation process from
April 5-15, 2008 on the three remaining options identified for the use of the vacant space on the
upper level of the market.
In an effort to make it as convenient as possible for residents to participate in the consultations,
several opportunities for providing feedback were made available including: market shopper
surveys (collected on two consecutive Saturdays), an online survey, two public information
sessions; regular mail, email and a dedicated telephone line.
As a result of these efforts, 200 responses were received from the general public. The majority
of respondents - 84.9 per cent - were in favour of the Small Independent Vendor Option (this
option promoted both the original vision of owner-operated small independent vendors and the
mini-market concept advocated by the Collaborative). An additional 10.8 per cent of
respondents chose the Status Quo Option, while the remaining 4.3 per cent were in favour of
the Arts and Culture Option.
A more complete accounting of the results of the public consultation process is attached to this
report as Appendix 1 .
Business Cases
You will recall that the last report to Council on March 3rd included a Business Case for Arts and
Culture Uses on the upper level of the market. The business case was tabled with no action
being taken pending additional information on the other options, including the results of the
public consultation. In the interim, a business case for small independent vendor uses has been
developed and is attached to this report as Appendix 2.
A summary of the two business cases (Arts and Culture uses and Original Vision of Small
Independent Vendors) is outlined below:
1. Interim Arts and Culture Uses
An in-depth business case was presented to council on March 3rd, 2008 for the arts and
culture uses model for the vacant space in the upper market. The business case
demonstrated support for arts and culture uses as an interim strategy to assist in the
transition to a fully-functioning market over time. However, a needs assessment indicated
the original concept of creating tenanted space for working artist's production as a primary
use was not found to be an overwhelming desire at the market location. What was
suggested in the needs assessment is that the space be used in adaptive, flexible and
creative ways by multiple users. The programs in the space would be provided by
community arts and culture partners providing activities such as workshops, arts summer
camps, meetings, gallery exhibits, and performance or rehearsals. In essence, the arts and
culture concept would be modeled much like the City's neighbourhood centres. Community
arts groups would develop the programming and utilize space on a rental basis the same
way the neigbourhood groups use community centres. Some of this space could continue
to be used for active selling by artisan or craft vendors on Saturdays.
The business case indicated there was little impact on the market operating budget. Annual
subsidies would likely continue to increase at the rate of inflation. Capital costs in the range
of $150,000 were required to outfit the space but some of the capital investment was for
portable features that could be transferred to other locations at the end of the interim period.
Report No: CSD-08-043
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2. Small Independent Vendors - Oriainal Vision
The original vision for the new market was to lease the upper level to a number of small
independent vendors who would provide food retail services 5 - 6 days per week. This
concept created some initial success when the market opened, however for various
reasons, within 15 months all these vendors closed their shops.
The business case demonstrates that there is renewed interest by small independent
vendors in a fulltime capacity at the market. A total of nine vendors have completed
application forms expressing interest in entering into further dialogue about being a fulltime
vendor at the Market. These applications represent a range of food and non food vendors
and artisans. What is positive is that they are expressing interest knowing full well the status
of the current shopper traffic during the week.
It should be noted that there is overlap in product in some of the applications, so in reality
there are only a potential of seven vendors. Of the seven applications, two currently are
operating on short-term month to month agreements. However the seven could represent
the potential of filling nearly 50 per cent of the available 5,700 square feet of leasable space.
The cost of implementing this proposal would be in the maximum range of $50,000 -
$75,000 to provide blunt services to the new vendor areas (depending on the type of
vendor/concept ultimately included).
From an operating budget perspective, this proposal would stabilize the market operating
subsidy at current levels.
While the initial interest from vendors and the Kitchener Market Collaborative is positive,
there are some risks as follows:
It will take some time to fully-lease out the space (although space can be used on
a one off rental basis for community purposes in the interim)
There is no 100 per cent guarantee of success
Undoubtedly there will be turn-over of both current food vendors and new
vendors over time (especially as firm operating hours need to be established and
phased rents increase)
This option has the potential to work in unison with the potential mini-market being proposed
by the Kitchener Market Collaborative. Staff will continue to work with the Kitchener Market
Collaborative in fleshing out the potential of what could be a very good concept. Their
concept focuses on utilizing a portion of the upper level for local, fresh and organic food all
grown or produced with-in a 100 mile radius of the market.
Rankinas of the Options
The three options ("arts and culture uses", "small independent vendors - original vision/ mini-
market" and "status-quo") were ranked on their impact as it relates to the following criteria as
previously approved by council:
Support and continue with a successful Saturday market
Provide a viable vibrant fulltime market operation on the upper level
Improve the financial position over time
Create a destination that would support the re-urbanization of the east end of downtown
Report No: CSD-08-043
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A more detailed ranking formula was created by the market project team based on these four
main success measures. The ranking summary is attached as Appendix 3. The rankings show
the best option is utilizing the upper level of the market for small independent vendors with the
potential of some space for a mini-market concept as advocated by the collaborative. This
aligns well with the results of the public consultation where an over-whelming majority of the
citizens expressed the desire for City to re-implement the small independent model.
Market Governance
Staff was directed to develop a process to review options for governance for the market. The
review was to include representatives from the vendors, stakeholders and citizens at large and
commence once the upper strategy was determined.
Attached as Appendix 4 is a Terms of Reference outlining the process for assignment and the
role of a task force. The task force would bring forward a recommendation to Council regarding
the form of future governance for the operation. It is recommended the task force be lead by a
third party facilitator who has some experience in governance issues and would include the
following members:
Vendor representatives - one upper/one lower (2)
Neighbourhood representative (1)
Citizen-at-Iarge (1)
Kitchener Downtown Business Association representative (1)
Community Services Department staff (1)
Economic Development staff (1)
Facilities Management staff (1)
Legal (ex-officio)
Administration support would be provided by the City. The Legal Department would serve as a
resource to the committee attending all meetings.
It is expected that the task force would bring a recommendation to Council by December of
2008.
COMMUNICATION:
A significant public consultation took place to receive citizen feedback on potential options for
the underutilized space on the upper level of the Kitchener Market. The consultation took place
between April 5th and April 15th and included:
Two (2) public open houses
Material distribution and feedback forms and booths at two Saturday markets
Dedicated feedback phone line
Dedicated web-site for comments
Comment email and mail-in options
The results of the public consultation are included in the report in Appendix 1
FINANCIAL IMPLICATIONS:
Attached as Appendix 5 is the Market Option Phase II Operation Financial Estimates from 2009
to 2011 showing additional upper market rental revenues at 30 per cent to 90 per cent capacity.
Report No: CSD-08-043
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Currently upper level vendors are paying $6 per square foot. The additional upper market has
5,700 net square feet of space available for rent at $9, $13 and $17 per square foot in 2009,
2010 and 2011 respectively. The lower market rental revenue, general unclassified revenue and
expenses are based on the 2008 budget increased by 3 per cent annually. The overall subsidy
for the market from the City of Kitchener will remain around the $700,000 range. In the best
case scenario in 2011 at 900/0 capacity, it is anticipated that the market will show a loss of
$681 ,824 which is near the current subsidy level. This matches the financial goal of stabilizing
the subsidy as advocated in this report.
Also the business case indicates there will be a one time capital investment required to provide
the blunt services to the stands. The maximum fit out of the vendor areas could be upwards of
$50,000 to $75,000 (Class C estimate) depending on the type of vendor eventually recruited
and their specific service needs. The budget for this expenditure currently exists in the Market
Capital envelope, so no further funding is required.
CONCLUSION:
Approving the recommendations contained in this report will allow staff to begin the process of
moving the upper level of the market forward. However the following must be acknowledged:
1. It will take some time for the market to fully evolve
2. The financial goal will be to stabilize the subsidy at it's current level for the next three to
five years
3. There will be vendor turnover on the upper level fulltime market until the right mix of
vendors evolves.
Regardless, the proposal is clearly supported by the citizens as shown through the public
consultation. It also stays true to original vision of providing product through small independent
vendors operating throughout the week on the upper level of the Market. Most importantly
approving the recommendations leads to positive action - work commences immediately on
developing and implementing solutions to move the market forward.
Keith Baulk
Director of Enterprise
CSD-08-043
Appendix 1
Results of Market Options Public Consultation. April 5-15. 2008
At the direction of Council, City of Kitchener staff conducted a public consultation
process on the three options identified for the use of the vacant space on the upper level
of Your Kitchener Market.
· Small independent vendors: Either a vendor collaborative; owner-operated
vendor space, or a combination of the two.
· Arts and Culture Centre: a 3-5 year solution with eventual replacement by a
mid-sized grocer or larger non-food retailer.
· Status Quo: Remain as is until a mid-size grocer or larger non-food retailer can
be secured.
The public consultation process ran from April 5-15, 2008. The process was advertised
in The Record and media coverage was received on both its launch, and on the public
information sessions.
Residents were informed that their feedback would be used in assisting the Market
Options Work Group in making its final recommendation to Council later this spring.
As a result of the city's efforts, 200 responses were received from the general public via
several venues including: market surveys, online survey, two public information sessions
(with 22 participants); regular mail, email and a dedicated telephone line.
The Market Shopper Surveys - which were conducted at a staffed booth on the upper
level of the market on two consecutive Saturdays - were the most popular method of
feedback. The on-line survey was a close second.
Total responses per venue:
Venue # of comments received
Online responses 72
Market shopper survey responses 110
Public information session responses
(17 people attended over two nights) 10
Voice Mail responses 6
Regular mail/email responses 2 (one of each)
TOT AL # OF RESPONSES RECEIVED 200
Exclusions:
1. The majority of respondents ranked the three options in order of their
preference. A total of 12 or 60/0 of the total 200 respondents provided
responses that were not clear as to which option they preferred. These
responses were not included when calculating the percentage of respondents
in favour of each option.
1
CSD-08-043
Appendix 1
2. Two respondents - or 1 % - did not provide their name and address as
reauested. These responses were not included when calculating the
percentage of respondents in favour of each option.
Preferred ODtion:
SmalllndeDendent Vendors and/or Collaborative
84.9 per cent of 186 respondents ranked Option 1 - Small Independent Vendors and/or
Vendor Collaborative - as their preferred option.
The following is the breakdown of the responses:
NOTE: All percentage calculations are based on the 186 respondents who ranked either
all three options or at least indicated their most preferred option - and who provided their
name and address as requested.
Independent Arts and Culture Status Quo
Vendors
Total: Total: Total:
158 or 84.90/0 8 or 4.30/0 20 or 1 0.80/0
Comment Themes:
The following sections indicate the general themes of the comments recorded by
consultation participants.
THEMES: Preferred option = Small Independent Vendors:
· Supports farmers and local business/buy local, fresh food. (38)
· Small independent vendors retain the original identity and quality of the
market/homegrown alternative/keep it as it was meant to be (32)
· Convenience/access for downtown residents to five-day grocery shopping / could
buy fresh all week long. (22)
· Vendors have a vested interest in making it work/ are best able to make it work.
(16)
· Grocery store on the upper level would compete against vendors/does not fit with
market concept. (10)
· Offers most variety for the customer. (6)
· Small independent vendor option takes environment into account/ reduces
vehicle usage. (3)
· Arts and culture fix is temporary/won't appeal to people (2)
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CSD-08-043
Appendix 1
THEMES: Preferred Option = Status Quo
· Large size grocer is really needed/would bring people to the area. (8)
· Doesn't require a capital expense. (2)
· Concern that a full-time market wouldn't be able to generate enough interest for
vendors/customers. (2)
· Difficult to get rid of small vendors or artists when a suitable retailer becomes
interested.
· Market is finally busy/doesn't need to be fixed.
· Want market to stay as a market.
· Arts and culture only appeals to limited numbers.
· Market hasn't had time to develop in its new venue.
THEMES: Preferred Option = Arts and Culture:
· There is a need for craft vendors at the market.
· Focuses on current trends in consumer behaviour.
· Market should be community driven. Arts and Culture is the only option that
represents and provides for community/ will be successful in creating community
interest in downtown.
· Doesn't see vendor collaborative/mini market working - central cashier who may
know little about the product and would be issues with freshness.
· Would foster the development of local talent.
Other:
Comments from those who didn't rank the options:
· Could market be used as a new library? (2)
· Close the market and move on/why aren't we selling it (2)
· Parking is the problem - can't get parking on Saturdays; parking problem is the
reason for a lot of downtown issues (ie Theatre and Co.)
· If the market was open during the week, I'd shop there at least 3 times a week.
· Other options offered will not generate the necessary traffic.
Other aeneral comments:
· Suggest combining small independent vendors with arts and culture option (6)
· Make market more visible/advertise more (4)
· Change the name from "Your Kitchener Market" to something else (4)
· Love the Kitchener Market as it is... (3)
· Do not follow the Waterloo Market idea (3)
· There are lots of places to get groceries in the city, the market needs to offer a
unique experience to shoppers. (3)
· Keep it alive, even if it costs money/has to be subsidized (2)
· Many suggestions in the comments re: new event/promotion ideas, ideas for
improving the piazza, name changes. (Market staff to review)
· Market is critical to the downtown revitalization, specifically in downtown east.
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Community Services Department
Appendix 2
Business Case
Your Kitchener Market
Small Independent Vendors
PAGE 1
Table of Contents
Executive Su m mary .................................................................................................................... 3
Backg ro u nd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
Challenage .............................................................................................................................. . . . . . . . . .. 7
Cu rre nt Situ ati 0 n .............................................................................................................................. . . . .. 9
Project Description ...................................................................................................................... 9
Project Description .............................................................................................................................. . .. 9
Sco pe .............................................................................................................................. . . . . . . . . . . . . . . .. 9
Anticipated Outcomes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1 0
Stakeholders .............................................................................................................................. . . . . . .. 11
Strategic Alignment................................................................................................................... 14
Project R is k Asse ss m e nt .......................................................................................................... 1 5
Risk of Project and each Alternative (Not i ncludi ng Status Quo) ................................................................................ 1 5
Risk of Not Proceeding with Project (Status Quo) ............................................................................................... 16
Financial Impact. .............................................................................................. .15
Co n c Ius ion s .............................................................................................................................. . 1 8
PAGE 2
Executive Summary
Your Kitchener Market
Small Independent Vendors
On March 3,2008, Council recommended that staff investigate the concept of "Small Independent
Vendors" as one of three (3) options to maximize the use of the upper level of the Market. This
concept was based on the 'Original Vision' that was introduced to the Market in the fall of 2004
with full time vendors in various categories such as; meat, produce, baked goods, dairy products,
flowers and more utilizing the space to accommodate a weekday clientele. However the original
vision was based on a food only mandate - the new approach includes the potential for non food
market-type vendors.
A business case has been written that demonstrates the level of interest of potential small
independent vendors for full time occupancy (5 days / week) for the upper level of Your Kitchener
Market. It also includes an implementation strategy.
In summary, there is an interest from 9 small independent vendors to set up full time businesses
on the upper level floor of Your Kitchener Market. The interested parties submitted expressions of
interest and are made up of a number of vendor types offering items such as; produce, grocery
items, baked goods, fair trade products, a variety of artisan works and more.
However of the 9 vendors there is overlap in two categories which likely means only 7 vendors of
the 9 applicants will be included once the vendor business cases are reviewed. In spite of this
there is the potential of 500/0 of the leasable space being filled if the remaining applicants were to
all to become full time vendors.
PAGE 3
Executive Summary (Cont'd)
Proiect Parameters and Financial Impact
The upper level of Your Kitchener Market presently consists of 3,000 sq. ft. leased out space of
restaurant style vendors and approximately 5,700 sq. ft of un-leased space that is the essence of
this business case. The goal of this project is to determine whether small independent vendors,
similar in nature to the original vision can now succeed and if so how will the plans be
implemented.
The restaurant style vendors occupy the west half of the upper market. While this half is currently
operating at capacity these vendors are experiencing various degrees of success. These vendors
are all paying rent at $6 per square foot and have been given the latitude to choose individual
operating hours until the rest of the upper market plan begins to evolve. There may be some
turnover of these restaurant style vendors when firm operating hours are adopted. It will partly
depend on the ability of any new small independent vendors to generate shopper traffic. Of course
this depends on the strength of the new small independent vendors that are ultimately recruited.
Therefore recruiting viable, appropriate market style food and non food vendors is the goal for the
remaining east half of the upper Market. There is a total of 5,700 sq. ft. of leasable space (of 9,000
sq. ft of total area in that half of the upper market) available in the vacant area.
In order to prepare and outfit the vacant space for the small independent vendors to start
operating, there would be a one time capital cost to the city. Upon maximum build out of the 5,700
sq. ft. the city can anticipate a capital cost that could be upwards of $50, 000 to $75,000 (class 'c'
estimate) depending upon the type of vendors and their services needs. The budget for this
expenditure rests in the current market capital envelop.
In terms of the operating impact, this business case will demonstrate that the annual market
subsidy will be stabilized at current levels.
Therefore the ultimate goal is to fill up the vacant space on the upper market level while continuing
the market experience throughout, support continued enhancement of the downtown core and
stabilize the present Market subsidy.
PAGE 4
Executive Summary (Cont'd)
Recommendation
The following recommendations are proposed should Council support the 'Original Vision of Small
Independent Vendors' as the preferred option:
1. That staff commence the process of lease negotiations with the selected small
independent vendors of the current applicants. (See Appendix 1)
2. That a business plan and marketing strategy be developed to assist in recruitment
and retention of additional small independent vendors.
3. That staff continue with the recruitment process for additional small independent
vendors.
4. That the unused space on the upper market level be utilized for community use until
additional vendors can be secured.
PAGE 5
Background
Your Kitchener Market - Small Independent Vendors
In May 2004, the new location for Your Kitchener Market opened to the public on Saturdays and
Wednesdays during the summer months. In the fall 2006, the upper level of the market opened
full-time 5-6 days per week. The original vision for the upper level market was to extend the
vibrancy of the Saturday market into the weekdays but on a smaller basis. This concept achieved
initial success with full time vendors in the following categories - baked goods, candy, dairy
products, flowers, produce, seafood and specialty sauces. These vendors occupied approximately
3,500 square feet on the upper level of the Market. Unfortunately within 15 months these vendors
had closed their business for various reasons..
In October 2006, the City of Kitchener hired Cameron Hawkins and Associates who conducted a
recruitment exercise by surveying potential vendors. While there was some interest expressed by
a few vendors, in staff's opinion there was not a critical mass of sufficient quality to be sustainable
in the long term.
In the fall of 2007, Council directed staff to investigate six options for Your Kitchener Market, one of
which was the Small Independent Vendor similar to the original vision for the market.
In March 2008, Council supported the direction to proceed to determine if there were a new group
of small independent vendors interested in leasing space in the upper market on a full time basis
as owner-operators. Staff undertook an expression of interest process, worked with the Waterloo
Region Small Business Centre and hosted a seminar specifically for the interested vendors
focusing on starting a business at Your Kitchener Market. These potential vendors were given a
brief background about the present situation, options that are currently being discussed along with
business requirements that would be helpful to them in order to succeed. Interested candidates
were asked to submit an application for full time tenancy for the upper level. A total of nine
applications have been received to date (See Appendix 1). Some duplication of vendor type have
been submitted and through the negotiations period, there may be a reduction in the number of
applications.
Following negotiations and elimination of duplicate vendor types from the above mentioned
applicants, it is expected that 250/0 - 500/0 of the vacant space on the upper level of the Market
could be leased by fall 2008.
PAGE 6
Background (Cont'd)
During the vendor development period staff also undertook a public consultation. Between April 5
- 15, 2008, staff conducted a public consultation process on the three options identified for the use
of the vacant space on the upper level of Your Kitchener Market. The three options are as follows:
· Small independent vendors: Either a vendor collaborative; owner - operated vendor
space, or a combination of the two.
· Arts and Culture Centre: a 3-5 year solution with eventual replacement by a mid-sized
grocer or larger non-food retailer.
· Status Quo: Remain as is until a mid-size grocer or larger non-food retailer is secured.
The results of the public consultation are highlighted in the chart below:
Venue # of comments received
Online responses 72
Market shopper survey responses 110
Public information session responses
(17 people attended over two nights) 10
Voice Mail responses 6
Regular mail/email responses 2 (one of each)
Total # of Responses Received 200
Preferred Option:
Small Independent Vendors and/or Collaborative
84.9 per cent of 186 respondents ranked Option 1 - Small Independent Vendors and/or Vendor
Collaborative - as their preferred option.
PAGE 7
Background (Cont'd)
THEMES: Preferred option = Small Independent Vendors:
· Supports farmers and local business/buy local, fresh food. (38)
· Small independent vendors retain the original identity and quality of the
market/homegrown alternative/keep it as it was meant to be (32)
· Convenience/access for downtown residents to five-day grocery shopping / could buy
fresh all week long. (22)
· Vendors have a vested interest in making it work! are best able to make it work. (16)
· Grocery store on the upper level would compete against vendors/does not fit with
market concept. (10)
· Offers most variety for the customer. (6)
· Small independent vendor option takes environment into account/ reduces vehicle
usage. (3)
Challenge
The traditional Saturday farmers market operates virtually at full capacity and continues to be
successful. The market provides its patrons with many benefits such as competitive prices, local
fresh meats and produce and a vibrant social environment. Presently, the Saturday market
continues to be an tremendous experience with 1000's of shoppers visiting many long time
vendors each and every week..
However the upper level full time market is only partially occupied. The west half of the upper
market is fully occupied with restaurant style vendors providing international cuisine for eat-in,
take-out and catering services as well as two full time temporary vendors. These vendors are
experiencing various degrees of success - some may not be well suited for the long term and
there may be some turnover.
The remainder of the upper level is underutilized and therefore has not achieved the objectives of
original vision, thereby affecting financial performance and image of the facility.
The goal of this business case is to demonstrate if the Original Vision of Small Independent
Vendors can improve the upper full time market, creating a successful overall venture with an
improved image and stabilized subsidy.
PAGE 8
Project Description
Current Situation
During the past year, City staff has re-tested the concept of the original vision. There is support for
this concept as evidenced through the outcome of the public consultation process and the current
number of applications received for leasing vendor space. This clearly demonstrates there is an
interest in the concept of re-visiting the concept of small independent vendors as the go forward
solution for the upper level market.
Project Description
There is approximately 5,700 square feet of leasable space available on the upper level of Your
Kitchener Market. This project incorporates.
· Re-testing the original vision: (small independent owner operated vendors)
· Establishing an implementation strategy if this option were to be adopted.
· Setting revised goals for the operation including revised financial goals if this were to be
approved.
Scope
This scope of the Small Independent Vendors project as a solution on the upper level of Your
Kitchener Market includes the following:
· Full use of the upper level of the Market by small independent vendors
· Stabilize the present Market subsidy by offsetting the increase in annual expenses through
phased rent increases.
PAGE 9
Project Description
Anticipated Outcomes
The use of the vacant space on the upper level of the market as a combination of small
independent vendors will have several projected outcomes, such as:
· Increase customer traffic during the week
· Regulate market hours for the upper level Tuesday - Friday 10 am - 6pm and Saturdays 7am
-2pm
· Stabilize the present Market subsidy in step increases to offset the increase in annual
expenses by phasing in rent increases over 3 years
· Provide the Market experience on a consistent basis
· Provide shopping convenience to Kitchener residents and the downtown business community
· Establish and maintain relationships between market vendors and market neighborhoods
· Increase the sales for the current International Cuisine vendors
· Add to the vibrancy of the downtown
· Develop a business plan/marketing strategy encompassing both the upper/lower market
· Enforce consistent hours of operation for all vendors
PAGE 10
Project Description (Cont'd)
Stakeholders
Stakeholders: Overview of Business Requirements
Primary -Internal
Council More active use of the facility & stabilize Market subsidy
Market Staff Additional daily responsibilities
Primary - External
Taxpayers Stabilize subsidy to the facility, improve operation and image
Present market Vendors Increased traffic, potential to increase sales
New Independent Vendors Provide space to conduct business
Secondary - Internal
Facilities Management Approvals, Permits
Legal Agreements, Leases, etc.
Licensing BusinessNendor Licenses
Marketing & Communications Advertising, Marketing
Parking Potential increase in revenue
Secondary - External
Market Shoppers Market experience on a consistent basis, convenience
Market Neighborhoods Strengthens linkages between the market and the surrounding
neighbourhoods
PAGE 11
Project Team
Project Description (Cont'd)
Keith Baulk Enterprise
Kathy Weiss Economic Development
Ingrid Schiller Your Kitchener Market
Karen Killeen Your Kitchener Market
Rob Morgan Project Administration
Jamie Mahony Finance
Hans Gross Project Administration
Cheryl Calic Marketing &
Communications
Doug Hergott Facilities Management
Jana Miller Marketing &
Communications
Cheryl York Community Services
PAGE 12
Timelines
Project Description (Cont'd)
Activity
Date
Business case to Community June 16, 2008
Services Committee
Council Approval
June 23, 2008
Business Plan work period for End of June to Mid August
Small Independent Vendors 2008
Selection of vendors
Mid/End of August 2008
Initial meetings with selected Mid August to beginning of
vendors, approve drawings September 2008
* the plans for some vendors
may be less complex thereby
reducing the time to
commence operations
Renovations begin September 2008
Recruitment for additional August 2008
vendors continues
Note - staff provides support through all phases of the process. Sections involved include the
Market, FM, Building, Small Business Centre, Licensing, Financial Services and
Communications.
PAGE 13
Strategic Alignment
Goal Alignment
Corporate Plan Community Vision - Together we will build an innovative, caring
and vibrant Kitchener with safe thriving neighbourhoods.
Plan for a Healthy We do recognize that to continue all of the services that our city
Kitchener provides it is not without its challenges as local governments
struggle to do more with fewer dollars. But what we must do is
more, not less. To enhance the quality of life and economic
vibrancy of our city. To make further progress as a healthy
community. To attract and retain more residents willing to make
Kitchener their home - and willing to invest their future in ours.
Kitchener's Downtown Downtown Kitchener is a community amongst nine adjacent
Strategic Plan neighbourhoods. The downtown's success is vital to these
neighbourhoods. And their success is vital to the downtown.
For these people in these neighbourhoods, downtown Kitchener
will be an extension of where they live. It will be the place where
they come to work, to do their banking, to shop, to be entertained
and to do their day-to-day chores. They not only have a vested
interest in its future but a belief that it will succeed.
Economic Growing small business with our entrepreneurial
Development Strategy philosophy that will encourage innovation and employment to
advance economic resilience.
PAGE 14
Project Risk Assessment
Risk of Proceeding with the Small Independent Vendors
Risk Probability Impact General Mitigation
Strategy
Not enough · Market the concept to a
interested/qualified broader user base
small independent Medium High · More space for
vendors to populate community use
the space · Develop a strategic
plan/marketing strategy
Development of the · Ensure all costs, both
upper level with small City and vendor are
independent vendors anticipated
may cost more than Low Medium · Prioritize & defer other
anticipated less essential projects
with the Market capital
envelope
Vendor turnover as a · Continue to recruit new
result of the strict Medium Low vendors to fill in the
hours of operation vacant space
PAGE 15
Project Risk Assessment (Cont'd)
Risk of Not Proceeding with Project
Risk Probability Impact General Mitigation
Strategy
· Continue with
recruitment efforts to fill
Space remains vacant Medium Medium the vacant space
· Utilize space for
community space
· Continue with
Frustrated taxpayers recruitment efforts to fill
Medium Medium the vacant space
· Utilize space for
community space
Loss of some of the · Continue to pursue other
International Cuisine High Medium Market related tenants
vendors
PAGE 16
Financial Impact
Appendix 2 contains the Market Option Phase II Operation Financial Estimates from 2009 to
2011 showing additional Upper Market rental revenues at 300/0 to 900/0 capacity. The
additional Upper market has 5,700 square feet available for rent at $9, $13 and $17 per
square foot in 2009, 2010 and 2011 respectively. The lower level market rental revenue,
general unclassified revenue and expenses are based on the 2008 budget increases of 30/0
annually. The overall subsidy from the City of Kitchener will remain around $700,000. In the
best case scenario in 2011 at 900/0 capacity, the Market is still expecting to show a loss of
$681 ,824.
It is also anticipated that it there would be a capital cost of approximately $50,000 -$75,000
(Class C estimate) funded from the current market capital envelop to provide blunt services to
the new stands.
PAGE 17
Conclusions
In March 2008 Council recommended that staff re-visit the concept of the 'Original Vision' of small
independent vendors participating full time, 5 days a week at the market as one of three options.
Through a recruitment process, staff was able to determine that there is renewed interest from
potential vendors for full time tenancy on the upper market level. A total of 9 vendors have
completed expressions of interest. Moving forward staff would continue to recruit new vendors until
the remainder of the empty space is completely occupied.
Important factors to consider in order to move the market in a new direction include:
· Consistency in hours of operations, vendor attendance, and development of standard
operating policies for all vendors
· Develop a short term business and marketing strategy that includes a business attraction
and retention model
· Ensure the Market is integrated into the downtown strategic plan and is seen as an integral
part in the evolution of Downtown Kitchener
· A diverse selection of vendors selling goods that attract all demographics and meet the
daily needs of consumers
· Continue to sell local, fresh produce, especially in season
· Maintain the legacy of the Market
Recommendations
Should Council support the Original Vision - small independent vendors as the preferred option,
staff recommends the following:
1. That staff commence lease negotiations with the selected small independent vendors of the
current applicants. (See Appendix 1)
2. That a business plan and marketing strategy be developed to assist in recruitment and
retention of additional small independent vendors.
3. That staff continue with the recruitment process for additional small independent vendors.
4. That the unused space on the upper market level be utilized for community use until
additional vendors can be secured.
PAGE 18
List of Appendices
Appendix 1 Potential second floor vendors
Appendix 2 Market Option Financial Impacts
PAGE 19
APPENDIX 1
Category Products Requirements from the
Market
Fair Trade & socially Oil, sugar, flour, snacks, · Requires 400 sq. feet
conscious products baking needs, etc.
Grocery stand Organic products, · Requires 750 sq. feet
diabetic, vegan, gluten
free & vegetarian food.
Sale of household items,
based on the needs of
the local neighborhood.
Health, wholesale treats Organic breads, pies, · Requires 300 sq. feet
shop cookies, muffins, jams,
freshly squeezed juices,
teas, cakes and more.
Personal care products Candles, hemp apparel, · Requires 350 sq. feet
and fai r trade gifts fair trade drums, books,
lotions, incense and
more.
Produce sales Local and imported fruits · Requires 1 ,000 sq. feet
and vegetables.
Craft vendor Hand made jewelry, · Requires 180 sq. feet
hand knitted items and
unique gifts.
Yarn vendor Natural and luxury fine · Requires 250 sq. feet
yarns and knitted
products.
Craft vendor group Candles, glassware, · Require 250 sq. feet
birdhouses, jewelry and
other products
Bakery Breads, croissants, · Requires 1 ,000 sq. feet
cookies and other baked
goods
Also potentials
Vendor/neighbourhood
collaborative
Fresh, locally produced
meats, goods & produce.
.
Requires approximately
1 ,400 s . feet
PAGE 20
Appendix 2
Market Qotion Phase II Qoeratina Financial Estimates
Upper Market Total Based 0 n Upper Market Total Based 0 n Upper Market Total Based 0 n
Budget 30% Capacity 30% Capacity 60% Capacity 60% Capacity 90% Capacity 90% Capacity
2009 2009 2009 2009 2009 2009 2009
~
Lower Market Rental Rental Revenue 406,539 406,539 406,539 406,539
Upper Market Rental Revenue (Notes 1, 2,3, & 4) 27,585 15,390 42,975 30,780 58,365 46,170 73,755
General Unclassified Revenue 10,547 10,547 10,547 1 0,547
Total Reven ues $444,671 $15,390 $460,061 $30,780 $475,451 $46,170 $490,841
Exoenses
Market Operations
Salaries & Wages $413,809 $413,809 $413,809 $413,809
Administration 47,560 47,560 47,560 47,560
Insurance 45,773 45,773 45,773 45,773
Security-Off Duty Police 16,480 16,480 16,480 16,480
Advertising & Publicity 160,908 160,908 160,908 160,908
Miscellaneous 2,101 2,101 2,101 2,101
$686,631 $0 $686,631 $0 $686,631 $0 $686,631
Building Operations
Salaries & Wages $78,921 $78,921 $78,921 $78,921
Additional Part-Time Building Attendants 16,765 16,765 16,765 16,765 16,765 16,765
Maintenance materials & equip 146,406 146,406 146,406 146,406
Additional Buildi nglCleaning Supplies 5,000 5,000 5,000 5,000 5,000 5,000
Electricity 91,881 91,881 91,881 91 ,881
Heat 56,791 56,791 56,791 56,791
Water 7,455 7,455 7,455 7,455
Square maintenance/snow removal 41 ,200 41,200 41 ,200 41 ,200
Security (Note 5) 34,151 34,151 34,151 34,151
Alarm Servi ces 1,167 1,167 1,167 1,167
Taxes 24,720 24,720 24,720 24,720
$482,693 $21,765 $504,458 $21,765 $504,458 $21,765 $504,458
Total Expenses $1 ,169,324 $21 .765 $1 ,191 ,089 $21 ,765 $1 ,191 ,089 $21.765 $1 ,191 ,089
Net Income (Loss) ($724,653) ($6,375) ($731 ,027) $ 9 ,01 5 ($715,637) $24.405 ($700 .247)
Notes
1. Current Upper Market Vendor Rental Sqr Ft 3065
2. Additional Upper Market Vendor Rental Sqr Ft 5700
Year 2008 Year 2009 Year 201 0 Year 2011
3. Rental Revenue Per Square Foot $6 $9 $13 $17
4. Capacity Percentages Expected 30% 60% 90%
5. In 2006 Facilities Management did not distinguish security between facilities other than Enterprises.
Therefore 2008 to 2011 are based on a 3% annual increase.
6. Capital Cost For Setting Up Additional Vendors in 2009 is esti mated at $13.16 per Sqr Ft.
PAGE 21
Appendix 2
Market Ootion Phase II Ooeratino Financial Estimates
Upper Market Total Based 0 n Upper Market Total Based On Up per Market Total Based On
Budget 30% Capacity 30% Capacity 60% Capacity 60% Capacity 90% Capacity 90% Capacity
2010 2010 2010 2010 2010 2010 2010
~
Lower Market Rental Rental Revenue 418,735 418,735 418,735 418,735
Upper Market Rental Revenue (Notes 1, 2,3, & 4) 39,845 22,230 62,075 44,460 84,305 66,690 106,535
General Unclassified Revenue 10,864 10,864 10,864 10,864
Total Reven ues $469,444 $22,230 $491,674 $44,460 $513,904 $66,690 $536,134
Exoenses
Market Operations
Salaries & Wages $426,223 $426,223 $426,223 $426,223
Administration 48,987 48,987 48,987 48,987
Insurance 47, 146 47,146 47,1 46 47,1 46
Security-Off Duty Police 16,974 16,974 16,974 16,974
Advertising & Publicity 165,735 165,735 165,735 165,735
Miscellaneous 2,164 2,164 2,164 2,164
$707,230 $0 $707,230 $0 $707,230 $0 $707,230
Building Operations
Salaries & Wages $81,288 $81,288 $81,288 $81,288
Additional Part-Time Building Attendants 17,268 17,268 17,268 17,268 17,268 17,268
Maintenance materials & equip 150,798 150,798 150,798 150,798
Additional Building/Cleaning Supplies 5,150 5,150 5,150 5,150 5,150 5,150
Electricity 94,638 94,638 94,638 94,638
Heat 58,495 58,495 58,495 58,495
Water 7,679 7,679 7,679 7,679
Square maintenance/snow removal 42,436 42,436 42,436 42,436
Security (Note 5) 35,176 35,176 35,176 35,176
Alarm Servi ces 1,202 1,202 1,202 1,202
Taxes 25,462 25,462 25,462 25,462
$497,174 $22,418 $519,591 $22,418 $519,591 $22,418 $519,591
Total Expenses $1 ,204,403 $22,418 $1,226,821 $22,418 $1,226,821 $22,418 $1,226,821
Net Income (Loss) ($734,960) ($188) ($735,147) $22,042 ($712,917) $44,272 ($690,687)
Notes
1. Current Upper Market Vendor Rental Sqr Ft 3065
2. Additional Upper Market Vendor Rental Sqr Ft 5700
Year 2008 Year 2009 Year 201 0 Year 2011
3. Rental Revenue Per Square Foot $6 $9 $13 $17
4. Capacity Percentages Expected 30% 60% 90%
5. In 2006 Facilities Management did not distinguish security between facilities other than Enterprises.
Therefore 2008 to 2011 are based on a 3% annual increase.
6. Capital Cost For Setting Up Additional Vendors in 2009 is estimated at $13.16 per Sqr Ft.
PAGE 22
Appendix 2
Market Ootion Phase II Ooeratino Financial Estimates
Upper Market Total Based On Upper Market Total Based On Upper Market Total Based On
Budget 30% Capacity 30% Capacity 60% Capacity 60% Capacity 90% Capacity 90% Capacity
2011 2011 2011 2011 2011 2011 2011
~
Lower Market Rental Rental Revenue 431,297 431,297 431,297 431,297
Upper Market Rental Revenue (Notes 1, 2,3, & 4) 52, 105 29,070 81,175 58,140 110,245 87,210 139,315
General Unclassified Revenue 11 , 190 11 ,190 11 , 1 90 11 ,190
Total Reven ues $494,592 $29,070 $523,662 $58,140 $552,732 $87,210 $581,802
Exoenses
Market Operations
Salaries & Wages $439,010 $439,010 $439,010 $439,010
Administration 50,457 50,457 50,457 50,457
Insurance 48,561 48,561 48,561 48,561
Security-Off Duty Police 17,484 17,484 17,484 17,484
Advertising & Publicity 170,707 170,707 170,707 170,707
Miscellaneous 2,229 2,229 2,229 2,229
$728,447 $0 $728,447 $0 $728,447 $0 $728,447
Building Operations
Salaries & Wages $83,727 $83,727 $83,727 $83,727
Additional Part-Time Building Attendants 17,786 17,786 17,786 17,786 17,786 17,786
Maintenance materials & equip 155,322 155,322 155,322 155,322
Additional Building/Cleaning Supplies 5,305 5,305 5,305 5,305 5,305 5,305
Electricity 97,477 97,477 97,477 97,477
Heat 60,250 60,250 60,250 60,250
Water 7,909 7,909 7,909 7,909
Square maintenance/snow removal 43,709 43,709 43,709 43,709
Security (Note 5) 36,231 36,231 36,231 36,231
Alarm Services 1,238 1,238 1,238 1,238
Taxes 26,225 26,225 26,225 26,225
$512,089 $23,090 $535,179 $23,090 $535,179 $23,090 $535,179
Total Expenses $1,240,536 $23,090 $1,263,626 $23,090 $1,263,626 $23,090 $1,263,626
Net Income (Loss) ($745,944) $5,980 ($739,964) $35,050 ($710,894) $64,120 ($681,824)
Notes
1. Current Upper Market Vendor Rental Sqr Ft 3065
2. Additional Upper Market Vendor Rental Sqr Ft 5700
Year 2008 Year 2009 Year 2010 Year 2011
3. Rental Revenue Per Square Foot $6 $9 $13 $17
4. Capacity Percentages Expected 30% 60% 90%
5. In 2006 Facilities Management did not distinguish security between facilities other than Enterprises.
Therefore 2008 to 2011 are based on a 3% annual increase.
6. Capital Cost For Setting Up Additional Vendors in 2009 is estimated at $13.16 per Sqr Ft.
PAGE 23
Community Services Department
Appendix 2
Business Case
Your Kitchener Market
Small Independent Vendors
PAGE 1
Table of Contents
Executive Su m mary .................................................................................................................... 3
Backg ro u nd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
Challenage .............................................................................................................................. . . . . . . . . .. 7
Cu rre nt Situ ati 0 n .............................................................................................................................. . . . .. 9
Project Description ...................................................................................................................... 9
Project Description .............................................................................................................................. . .. 9
Sco pe .............................................................................................................................. . . . . . . . . . . . . . . .. 9
Anticipated Outcomes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1 0
Stakeholders .............................................................................................................................. . . . . . .. 11
Strategic Alignment................................................................................................................... 14
Project R is k Asse ss m e nt .......................................................................................................... 1 5
Risk of Project and each Alternative (Not i ncludi ng Status Quo) ................................................................................ 1 5
Risk of Not Proceeding with Project (Status Quo) ............................................................................................... 16
Financial Impact. .............................................................................................. .15
Co n c Ius ion s .............................................................................................................................. . 1 8
PAGE 2
Executive Summary
Your Kitchener Market
Small Independent Vendors
On March 3,2008, Council recommended that staff investigate the concept of "Small Independent
Vendors" as one of three (3) options to maximize the use of the upper level of the Market. This
concept was based on the 'Original Vision' that was introduced to the Market in the fall of 2004
with full time vendors in various categories such as; meat, produce, baked goods, dairy products,
flowers and more utilizing the space to accommodate a weekday clientele. However the original
vision was based on a food only mandate - the new approach includes the potential for non food
market-type vendors.
A business case has been written that demonstrates the level of interest of potential small
independent vendors for full time occupancy (5 days / week) for the upper level of Your Kitchener
Market. It also includes an implementation strategy.
In summary, there is an interest from 9 small independent vendors to set up full time businesses
on the upper level floor of Your Kitchener Market. The interested parties submitted expressions of
interest and are made up of a number of vendor types offering items such as; produce, grocery
items, baked goods, fair trade products, a variety of artisan works and more.
However of the 9 vendors there is overlap in two categories which likely means only 7 vendors of
the 9 applicants will be included once the vendor business cases are reviewed. In spite of this
there is the potential of 500/0 of the leasable space being filled if the remaining applicants were to
all to become full time vendors.
PAGE 3
Executive Summary (Cont'd)
Proiect Parameters and Financial Impact
The upper level of Your Kitchener Market presently consists of 3,000 sq. ft. leased out space of
restaurant style vendors and approximately 5,700 sq. ft of un-leased space that is the essence of
this business case. The goal of this project is to determine whether small independent vendors,
similar in nature to the original vision can now succeed and if so how will the plans be
implemented.
The restaurant style vendors occupy the west half of the upper market. While this half is currently
operating at capacity these vendors are experiencing various degrees of success. These vendors
are all paying rent at $6 per square foot and have been given the latitude to choose individual
operating hours until the rest of the upper market plan begins to evolve. There may be some
turnover of these restaurant style vendors when firm operating hours are adopted. It will partly
depend on the ability of any new small independent vendors to generate shopper traffic. Of course
this depends on the strength of the new small independent vendors that are ultimately recruited.
Therefore recruiting viable, appropriate market style food and non food vendors is the goal for the
remaining east half of the upper Market. There is a total of 5,700 sq. ft. of leasable space (of 9,000
sq. ft of total area in that half of the upper market) available in the vacant area.
In order to prepare and outfit the vacant space for the small independent vendors to start
operating, there would be a one time capital cost to the city. Upon maximum build out of the 5,700
sq. ft. the city can anticipate a capital cost that could be upwards of $50, 000 to $75,000 (class 'c'
estimate) depending upon the type of vendors and their services needs. The budget for this
expenditure rests in the current market capital envelop.
In terms of the operating impact, this business case will demonstrate that the annual market
subsidy will be stabilized at current levels.
Therefore the ultimate goal is to fill up the vacant space on the upper market level while continuing
the market experience throughout, support continued enhancement of the downtown core and
stabilize the present Market subsidy.
PAGE 4
Executive Summary (Cont'd)
Recommendation
The following recommendations are proposed should Council support the 'Original Vision of Small
Independent Vendors' as the preferred option:
1. That staff commence the process of lease negotiations with the selected small
independent vendors of the current applicants. (See Appendix 1)
2. That a business plan and marketing strategy be developed to assist in recruitment
and retention of additional small independent vendors.
3. That staff continue with the recruitment process for additional small independent
vendors.
4. That the unused space on the upper market level be utilized for community use until
additional vendors can be secured.
PAGE 5
Background
Your Kitchener Market - Small Independent Vendors
In May 2004, the new location for Your Kitchener Market opened to the public on Saturdays and
Wednesdays during the summer months. In the fall 2006, the upper level of the market opened
full-time 5-6 days per week. The original vision for the upper level market was to extend the
vibrancy of the Saturday market into the weekdays but on a smaller basis. This concept achieved
initial success with full time vendors in the following categories - baked goods, candy, dairy
products, flowers, produce, seafood and specialty sauces. These vendors occupied approximately
3,500 square feet on the upper level of the Market. Unfortunately within 15 months these vendors
had closed their business for various reasons..
In October 2006, the City of Kitchener hired Cameron Hawkins and Associates who conducted a
recruitment exercise by surveying potential vendors. While there was some interest expressed by
a few vendors, in staff's opinion there was not a critical mass of sufficient quality to be sustainable
in the long term.
In the fall of 2007, Council directed staff to investigate six options for Your Kitchener Market, one of
which was the Small Independent Vendor similar to the original vision for the market.
In March 2008, Council supported the direction to proceed to determine if there were a new group
of small independent vendors interested in leasing space in the upper market on a full time basis
as owner-operators. Staff undertook an expression of interest process, worked with the Waterloo
Region Small Business Centre and hosted a seminar specifically for the interested vendors
focusing on starting a business at Your Kitchener Market. These potential vendors were given a
brief background about the present situation, options that are currently being discussed along with
business requirements that would be helpful to them in order to succeed. Interested candidates
were asked to submit an application for full time tenancy for the upper level. A total of nine
applications have been received to date (See Appendix 1). Some duplication of vendor type have
been submitted and through the negotiations period, there may be a reduction in the number of
applications.
Following negotiations and elimination of duplicate vendor types from the above mentioned
applicants, it is expected that 250/0 - 500/0 of the vacant space on the upper level of the Market
could be leased by fall 2008.
PAGE 6
Background (Cont'd)
During the vendor development period staff also undertook a public consultation. Between April 5
- 15, 2008, staff conducted a public consultation process on the three options identified for the use
of the vacant space on the upper level of Your Kitchener Market. The three options are as follows:
· Small independent vendors: Either a vendor collaborative; owner - operated vendor
space, or a combination of the two.
· Arts and Culture Centre: a 3-5 year solution with eventual replacement by a mid-sized
grocer or larger non-food retailer.
· Status Quo: Remain as is until a mid-size grocer or larger non-food retailer is secured.
The results of the public consultation are highlighted in the chart below:
Venue # of comments received
Online responses 72
Market shopper survey responses 110
Public information session responses
(17 people attended over two nights) 10
Voice Mail responses 6
Regular mail/email responses 2 (one of each)
Total # of Responses Received 200
Preferred Option:
Small Independent Vendors and/or Collaborative
84.9 per cent of 186 respondents ranked Option 1 - Small Independent Vendors and/or Vendor
Collaborative - as their preferred option.
PAGE 7
Background (Cont'd)
THEMES: Preferred option = Small Independent Vendors:
· Supports farmers and local business/buy local, fresh food. (38)
· Small independent vendors retain the original identity and quality of the
market/homegrown alternative/keep it as it was meant to be (32)
· Convenience/access for downtown residents to five-day grocery shopping / could buy
fresh all week long. (22)
· Vendors have a vested interest in making it work! are best able to make it work. (16)
· Grocery store on the upper level would compete against vendors/does not fit with
market concept. (10)
· Offers most variety for the customer. (6)
· Small independent vendor option takes environment into account/ reduces vehicle
usage. (3)
Challenge
The traditional Saturday farmers market operates virtually at full capacity and continues to be
successful. The market provides its patrons with many benefits such as competitive prices, local
fresh meats and produce and a vibrant social environment. Presently, the Saturday market
continues to be an tremendous experience with 1000's of shoppers visiting many long time
vendors each and every week..
However the upper level full time market is only partially occupied. The west half of the upper
market is fully occupied with restaurant style vendors providing international cuisine for eat-in,
take-out and catering services as well as two full time temporary vendors. These vendors are
experiencing various degrees of success - some may not be well suited for the long term and
there may be some turnover.
The remainder of the upper level is underutilized and therefore has not achieved the objectives of
original vision, thereby affecting financial performance and image of the facility.
The goal of this business case is to demonstrate if the Original Vision of Small Independent
Vendors can improve the upper full time market, creating a successful overall venture with an
improved image and stabilized subsidy.
PAGE 8
Project Description
Current Situation
During the past year, City staff has re-tested the concept of the original vision. There is support for
this concept as evidenced through the outcome of the public consultation process and the current
number of applications received for leasing vendor space. This clearly demonstrates there is an
interest in the concept of re-visiting the concept of small independent vendors as the go forward
solution for the upper level market.
Project Description
There is approximately 5,700 square feet of leasable space available on the upper level of Your
Kitchener Market. This project incorporates.
· Re-testing the original vision: (small independent owner operated vendors)
· Establishing an implementation strategy if this option were to be adopted.
· Setting revised goals for the operation including revised financial goals if this were to be
approved.
Scope
This scope of the Small Independent Vendors project as a solution on the upper level of Your
Kitchener Market includes the following:
· Full use of the upper level of the Market by small independent vendors
· Stabilize the present Market subsidy by offsetting the increase in annual expenses through
phased rent increases.
PAGE 9
Project Description
Anticipated Outcomes
The use of the vacant space on the upper level of the market as a combination of small
independent vendors will have several projected outcomes, such as:
· Increase customer traffic during the week
· Regulate market hours for the upper level Tuesday - Friday 10 am - 6pm and Saturdays 7am
-2pm
· Stabilize the present Market subsidy in step increases to offset the increase in annual
expenses by phasing in rent increases over 3 years
· Provide the Market experience on a consistent basis
· Provide shopping convenience to Kitchener residents and the downtown business community
· Establish and maintain relationships between market vendors and market neighborhoods
· Increase the sales for the current International Cuisine vendors
· Add to the vibrancy of the downtown
· Develop a business plan/marketing strategy encompassing both the upper/lower market
· Enforce consistent hours of operation for all vendors
PAGE 10
Project Description (Cont'd)
Stakeholders
Stakeholders: Overview of Business Requirements
Primary -Internal
Council More active use of the facility & stabilize Market subsidy
Market Staff Additional daily responsibilities
Primary - External
Taxpayers Stabilize subsidy to the facility, improve operation and image
Present market Vendors Increased traffic, potential to increase sales
New Independent Vendors Provide space to conduct business
Secondary - Internal
Facilities Management Approvals, Permits
Legal Agreements, Leases, etc.
Licensing BusinessNendor Licenses
Marketing & Communications Advertising, Marketing
Parking Potential increase in revenue
Secondary - External
Market Shoppers Market experience on a consistent basis, convenience
Market Neighborhoods Strengthens linkages between the market and the surrounding
neighbourhoods
PAGE 11
Project Team
Project Description (Cont'd)
Keith Baulk Enterprise
Kathy Weiss Economic Development
Ingrid Schiller Your Kitchener Market
Karen Killeen Your Kitchener Market
Rob Morgan Project Administration
Jamie Mahony Finance
Hans Gross Project Administration
Cheryl Calic Marketing &
Communications
Doug Hergott Facilities Management
Jana Miller Marketing &
Communications
Cheryl York Community Services
PAGE 12
Timelines
Project Description (Cont'd)
Activity
Date
Business case to Community June 16, 2008
Services Committee
Council Approval
June 23, 2008
Business Plan work period for End of June to Mid August
Small Independent Vendors 2008
Selection of vendors
Mid/End of August 2008
Initial meetings with selected Mid August to beginning of
vendors, approve drawings September 2008
* the plans for some vendors
may be less complex thereby
reducing the time to
commence operations
Renovations begin September 2008
Recruitment for additional August 2008
vendors continues
Note - staff provides support through all phases of the process. Sections involved include the
Market, FM, Building, Small Business Centre, Licensing, Financial Services and
Communications.
PAGE 13
Strategic Alignment
Goal Alignment
Corporate Plan Community Vision - Together we will build an innovative, caring
and vibrant Kitchener with safe thriving neighbourhoods.
Plan for a Healthy We do recognize that to continue all of the services that our city
Kitchener provides it is not without its challenges as local governments
struggle to do more with fewer dollars. But what we must do is
more, not less. To enhance the quality of life and economic
vibrancy of our city. To make further progress as a healthy
community. To attract and retain more residents willing to make
Kitchener their home - and willing to invest their future in ours.
Kitchener's Downtown Downtown Kitchener is a community amongst nine adjacent
Strategic Plan neighbourhoods. The downtown's success is vital to these
neighbourhoods. And their success is vital to the downtown.
For these people in these neighbourhoods, downtown Kitchener
will be an extension of where they live. It will be the place where
they come to work, to do their banking, to shop, to be entertained
and to do their day-to-day chores. They not only have a vested
interest in its future but a belief that it will succeed.
Economic Growing small business with our entrepreneurial
Development Strategy philosophy that will encourage innovation and employment to
advance economic resilience.
PAGE 14
Project Risk Assessment
Risk of Proceeding with the Small Independent Vendors
Risk Probability Impact General Mitigation
Strategy
Not enough · Market the concept to a
interested/qualified broader user base
small independent Medium High · More space for
vendors to populate community use
the space · Develop a strategic
plan/marketing strategy
Development of the · Ensure all costs, both
upper level with small City and vendor are
independent vendors anticipated
may cost more than Low Medium · Prioritize & defer other
anticipated less essential projects
with the Market capital
envelope
Vendor turnover as a · Continue to recruit new
result of the strict Medium Low vendors to fill in the
hours of operation vacant space
PAGE 15
Project Risk Assessment (Cont'd)
Risk of Not Proceeding with Project
Risk Probability Impact General Mitigation
Strategy
· Continue with
recruitment efforts to fill
Space remains vacant Medium Medium the vacant space
· Utilize space for
community space
· Continue with
Frustrated taxpayers recruitment efforts to fill
Medium Medium the vacant space
· Utilize space for
community space
Loss of some of the · Continue to pursue other
International Cuisine High Medium Market related tenants
vendors
PAGE 16
Financial Impact
Appendix 2 contains the Market Option Phase II Operation Financial Estimates from 2009 to
2011 showing additional Upper Market rental revenues at 300/0 to 900/0 capacity. The
additional Upper market has 5,700 square feet available for rent at $9, $13 and $17 per
square foot in 2009, 2010 and 2011 respectively. The lower level market rental revenue,
general unclassified revenue and expenses are based on the 2008 budget increases of 30/0
annually. The overall subsidy from the City of Kitchener will remain around $700,000. In the
best case scenario in 2011 at 900/0 capacity, the Market is still expecting to show a loss of
$681 ,824.
It is also anticipated that it there would be a capital cost of approximately $50,000 -$75,000
(Class C estimate) funded from the current market capital envelop to provide blunt services to
the new stands.
PAGE 17
Conclusions
In March 2008 Council recommended that staff re-visit the concept of the 'Original Vision' of small
independent vendors participating full time, 5 days a week at the market as one of three options.
Through a recruitment process, staff was able to determine that there is renewed interest from
potential vendors for full time tenancy on the upper market level. A total of 9 vendors have
completed expressions of interest. Moving forward staff would continue to recruit new vendors until
the remainder of the empty space is completely occupied.
Important factors to consider in order to move the market in a new direction include:
· Consistency in hours of operations, vendor attendance, and development of standard
operating policies for all vendors
· Develop a short term business and marketing strategy that includes a business attraction
and retention model
· Ensure the Market is integrated into the downtown strategic plan and is seen as an integral
part in the evolution of Downtown Kitchener
· A diverse selection of vendors selling goods that attract all demographics and meet the
daily needs of consumers
· Continue to sell local, fresh produce, especially in season
· Maintain the legacy of the Market
Recommendations
Should Council support the Original Vision - small independent vendors as the preferred option,
staff recommends the following:
1. That staff commence lease negotiations with the selected small independent vendors of the
current applicants. (See Appendix 1)
2. That a business plan and marketing strategy be developed to assist in recruitment and
retention of additional small independent vendors.
3. That staff continue with the recruitment process for additional small independent vendors.
4. That the unused space on the upper market level be utilized for community use until
additional vendors can be secured.
PAGE 18
List of Appendices
Appendix 1 Potential second floor vendors
Appendix 2 Market Option Financial Impacts
PAGE 19
APPENDIX 1
Category Products Requirements from the
Market
Fair Trade & socially Oil, sugar, flour, snacks, · Requires 400 sq. feet
conscious products baking needs, etc.
Grocery stand Organic products, · Requires 750 sq. feet
diabetic, vegan, gluten
free & vegetarian food.
Sale of household items,
based on the needs of
the local neighborhood.
Health, wholesale treats Organic breads, pies, · Requires 300 sq. feet
shop cookies, muffins, jams,
freshly squeezed juices,
teas, cakes and more.
Personal care products Candles, hemp apparel, · Requires 350 sq. feet
and fai r trade gifts fair trade drums, books,
lotions, incense and
more.
Produce sales Local and imported fruits · Requires 1 ,000 sq. feet
and vegetables.
Craft vendor Hand made jewelry, · Requires 180 sq. feet
hand knitted items and
unique gifts.
Yarn vendor Natural and luxury fine · Requires 250 sq. feet
yarns and knitted
products.
Craft vendor group Candles, glassware, · Require 250 sq. feet
birdhouses, jewelry and
other products
Bakery Breads, croissants, · Requires 1 ,000 sq. feet
cookies and other baked
goods
Also potentials
Vendor/neighbourhood
collaborative
Fresh, locally produced
meats, goods & produce.
.
Requires approximately
1 ,400 s . feet
PAGE 20
Appendix 2
Market Qotion Phase II Qoeratina Financial Estimates
Upper Market Total Based 0 n Upper Market Total Based 0 n Upper Market Total Based 0 n
Budget 30% Capacity 30% Capacity 60% Capacity 60% Capacity 90% Capacity 90% Capacity
2009 2009 2009 2009 2009 2009 2009
~
Lower Market Rental Rental Revenue 406,539 406,539 406,539 406,539
Upper Market Rental Revenue (Notes 1, 2,3, & 4) 27,585 15,390 42,975 30,780 58,365 46,170 73,755
General Unclassified Revenue 10,547 10,547 10,547 1 0,547
Total Reven ues $444,671 $15,390 $460,061 $30,780 $475,451 $46,170 $490,841
Exoenses
Market Operations
Salaries & Wages $413,809 $413,809 $413,809 $413,809
Administration 47,560 47,560 47,560 47,560
Insurance 45,773 45,773 45,773 45,773
Security-Off Duty Police 16,480 16,480 16,480 16,480
Advertising & Publicity 160,908 160,908 160,908 160,908
Miscellaneous 2,101 2,101 2,101 2,101
$686,631 $0 $686,631 $0 $686,631 $0 $686,631
Building Operations
Salaries & Wages $78,921 $78,921 $78,921 $78,921
Additional Part-Time Building Attendants 16,765 16,765 16,765 16,765 16,765 16,765
Maintenance materials & equip 146,406 146,406 146,406 146,406
Additional Buildi nglCleaning Supplies 5,000 5,000 5,000 5,000 5,000 5,000
Electricity 91,881 91,881 91,881 91 ,881
Heat 56,791 56,791 56,791 56,791
Water 7,455 7,455 7,455 7,455
Square maintenance/snow removal 41 ,200 41,200 41 ,200 41 ,200
Security (Note 5) 34,151 34,151 34,151 34,151
Alarm Servi ces 1,167 1,167 1,167 1,167
Taxes 24,720 24,720 24,720 24,720
$482,693 $21,765 $504,458 $21,765 $504,458 $21,765 $504,458
Total Expenses $1 ,169,324 $21 .765 $1 ,191 ,089 $21 ,765 $1 ,191 ,089 $21.765 $1 ,191 ,089
Net Income (Loss) ($724,653) ($6,375) ($731 ,027) $ 9 ,01 5 ($715,637) $24.405 ($700 .247)
Notes
1. Current Upper Market Vendor Rental Sqr Ft 3065
2. Additional Upper Market Vendor Rental Sqr Ft 5700
Year 2008 Year 2009 Year 201 0 Year 2011
3. Rental Revenue Per Square Foot $6 $9 $13 $17
4. Capacity Percentages Expected 30% 60% 90%
5. In 2006 Facilities Management did not distinguish security between facilities other than Enterprises.
Therefore 2008 to 2011 are based on a 3% annual increase.
6. Capital Cost For Setting Up Additional Vendors in 2009 is esti mated at $13.16 per Sqr Ft.
PAGE 21
Appendix 2
Market Ootion Phase II Ooeratino Financial Estimates
Upper Market Total Based 0 n Upper Market Total Based On Up per Market Total Based On
Budget 30% Capacity 30% Capacity 60% Capacity 60% Capacity 90% Capacity 90% Capacity
2010 2010 2010 2010 2010 2010 2010
~
Lower Market Rental Rental Revenue 418,735 418,735 418,735 418,735
Upper Market Rental Revenue (Notes 1, 2,3, & 4) 39,845 22,230 62,075 44,460 84,305 66,690 106,535
General Unclassified Revenue 10,864 10,864 10,864 10,864
Total Reven ues $469,444 $22,230 $491,674 $44,460 $513,904 $66,690 $536,134
Exoenses
Market Operations
Salaries & Wages $426,223 $426,223 $426,223 $426,223
Administration 48,987 48,987 48,987 48,987
Insurance 47, 146 47,146 47,1 46 47,1 46
Security-Off Duty Police 16,974 16,974 16,974 16,974
Advertising & Publicity 165,735 165,735 165,735 165,735
Miscellaneous 2,164 2,164 2,164 2,164
$707,230 $0 $707,230 $0 $707,230 $0 $707,230
Building Operations
Salaries & Wages $81,288 $81,288 $81,288 $81,288
Additional Part-Time Building Attendants 17,268 17,268 17,268 17,268 17,268 17,268
Maintenance materials & equip 150,798 150,798 150,798 150,798
Additional Building/Cleaning Supplies 5,150 5,150 5,150 5,150 5,150 5,150
Electricity 94,638 94,638 94,638 94,638
Heat 58,495 58,495 58,495 58,495
Water 7,679 7,679 7,679 7,679
Square maintenance/snow removal 42,436 42,436 42,436 42,436
Security (Note 5) 35,176 35,176 35,176 35,176
Alarm Servi ces 1,202 1,202 1,202 1,202
Taxes 25,462 25,462 25,462 25,462
$497,174 $22,418 $519,591 $22,418 $519,591 $22,418 $519,591
Total Expenses $1 ,204,403 $22,418 $1,226,821 $22,418 $1,226,821 $22,418 $1,226,821
Net Income (Loss) ($734,960) ($188) ($735,147) $22,042 ($712,917) $44,272 ($690,687)
Notes
1. Current Upper Market Vendor Rental Sqr Ft 3065
2. Additional Upper Market Vendor Rental Sqr Ft 5700
Year 2008 Year 2009 Year 201 0 Year 2011
3. Rental Revenue Per Square Foot $6 $9 $13 $17
4. Capacity Percentages Expected 30% 60% 90%
5. In 2006 Facilities Management did not distinguish security between facilities other than Enterprises.
Therefore 2008 to 2011 are based on a 3% annual increase.
6. Capital Cost For Setting Up Additional Vendors in 2009 is estimated at $13.16 per Sqr Ft.
PAGE 22
Appendix 2
Market Ootion Phase II Ooeratino Financial Estimates
Upper Market Total Based On Upper Market Total Based On Upper Market Total Based On
Budget 30% Capacity 30% Capacity 60% Capacity 60% Capacity 90% Capacity 90% Capacity
2011 2011 2011 2011 2011 2011 2011
~
Lower Market Rental Rental Revenue 431,297 431,297 431,297 431,297
Upper Market Rental Revenue (Notes 1, 2,3, & 4) 52, 105 29,070 81,175 58,140 110,245 87,210 139,315
General Unclassified Revenue 11 , 190 11 ,190 11 , 1 90 11 ,190
Total Reven ues $494,592 $29,070 $523,662 $58,140 $552,732 $87,210 $581,802
Exoenses
Market Operations
Salaries & Wages $439,010 $439,010 $439,010 $439,010
Administration 50,457 50,457 50,457 50,457
Insurance 48,561 48,561 48,561 48,561
Security-Off Duty Police 17,484 17,484 17,484 17,484
Advertising & Publicity 170,707 170,707 170,707 170,707
Miscellaneous 2,229 2,229 2,229 2,229
$728,447 $0 $728,447 $0 $728,447 $0 $728,447
Building Operations
Salaries & Wages $83,727 $83,727 $83,727 $83,727
Additional Part-Time Building Attendants 17,786 17,786 17,786 17,786 17,786 17,786
Maintenance materials & equip 155,322 155,322 155,322 155,322
Additional Building/Cleaning Supplies 5,305 5,305 5,305 5,305 5,305 5,305
Electricity 97,477 97,477 97,477 97,477
Heat 60,250 60,250 60,250 60,250
Water 7,909 7,909 7,909 7,909
Square maintenance/snow removal 43,709 43,709 43,709 43,709
Security (Note 5) 36,231 36,231 36,231 36,231
Alarm Services 1,238 1,238 1,238 1,238
Taxes 26,225 26,225 26,225 26,225
$512,089 $23,090 $535,179 $23,090 $535,179 $23,090 $535,179
Total Expenses $1,240,536 $23,090 $1,263,626 $23,090 $1,263,626 $23,090 $1,263,626
Net Income (Loss) ($745,944) $5,980 ($739,964) $35,050 ($710,894) $64,120 ($681,824)
Notes
1. Current Upper Market Vendor Rental Sqr Ft 3065
2. Additional Upper Market Vendor Rental Sqr Ft 5700
Year 2008 Year 2009 Year 2010 Year 2011
3. Rental Revenue Per Square Foot $6 $9 $13 $17
4. Capacity Percentages Expected 30% 60% 90%
5. In 2006 Facilities Management did not distinguish security between facilities other than Enterprises.
Therefore 2008 to 2011 are based on a 3% annual increase.
6. Capital Cost For Setting Up Additional Vendors in 2009 is estimated at $13.16 per Sqr Ft.
PAGE 23
CSC REPORT #08-043
APPENDIX 4
MARKET GOVERNANCE REVIEW
TASK FORCE TERMS OF REFERENCE
Task Force Purpose
· To review the pros and cons of various management models for the Market and make
a recommendation to Council as to the most appropriate model for the ongoing future
development and management of the facility and business.
Potential Governance options to be Considered
· City Department (as is)
· City Department with Advisory Group
· Vendor managed
· Municipal Service Board
· Incorporated Board
· Others?
Task Force Membership
· Vendors - one upper/one lower (2)
· Citizen at large (1)
· N eighbourhood rep (1)
· KDBA rep (1)
· CSD staff (1)
· Economic Development staff (1)
· FM staff (1)
A third party facilitator, engaged by the City will develop the agenda, process and chair
the meetings. Administration support would be provided by the City of Kitchener and
the Legal Department would serve as a resource to the Committee with one staff
attending all meetings.
Meetings
The Task Force would meet on a regular basis and address the following issues:
development of options
review of options; pros and cons
impacts and feasibility of each option
identification of preferred option
process required to implement preferred option and identify an
implementation team
development of report with recommendations for Council approval
The Task Force will strive to prepare a recommendation by December 2008 and disband
upon Council approval of the preferred option.
J
2008 Short-Term Strategic Plan
Prepared by: Kathy Weiss
Director of Business Development
June 12, 2008
2008 Short-Term Strategy
Your Kitchener Market
TABLE OF CONTENTS
A. I NTRO D U CTI 0 N ..................................................................................................... 2
B. 0 BJ E CTI V ES .......................................................................................................... 3
C. SHORT-TERM STRA TEGI ES ................................................................................. 4
D. LONG - TERM OUTLOOK .......................................................................11
2008 Short-Term Strategy
Your Kitchener Market
A. Introduction
The vision of Your Kitchener Market at its inception was to become an instant landmark and
serve as an anchor for the district and an eastern entrance feature for the downtown. It was
to be the hub of culture, shopping and tourism with expectation to be a catalyst that would
promote change, bring new investment and present new business opportunities. But most
of all, people would shop 6 days a week at an exciting and unique place to buy a wide
range of fresh foods produced in Ontario from the people who make them.
A number of major success measures for the Market block have been achieved as
originally envisioned. The private sector retail components are operational and the 68 units
in Market Lofts are approaching 1000/0 sold. The Saturday Market is operating at 1000/0
capacity with 980/0 vendor retention and thousands of shoppers visit each week. However
the City has not achieved all it's objectives in which the full time Market has not advanced
as expected.
Effective June 2, 2008, the responsibility of the Kitchener Market was transferred to
Economic Development under the leadership of the Director of Business Development. As
a result, a Short-Term Strategic Plan was developed to move the Market forward while the
process is underway to determine a Governance model for the Market.
The goals of the plan are aligned with the vision and corporate objectives of the City of
Kitchener as outlined in the "Kitchener Market Management Expression of Interest"
released July 2007.
These include:
· A continuing successful Saturday Market
· Provide a vibrant urban fill time Market on the upper level that may include food or
other uses compatible with the viability of the downtown and other services to its
citizens.
· Improved financial position of the Market over time
· Create a destination that could continue to support re-urbanization of east end
downtown
Other goals include:
· Restoring image of market to its historic Farmers' market roots
· Develop short- term Marketing strategy that compliments the short-term Strategic
Plan
2
2008 Short-Term Strategy
Your Kitchener Market
B. Objectives
The Your Kitchener Market Short-Term Strategic Plan has been developed to identify short
term strategic priorities for the next six months. Once the governance solution is in place, it
is recommended that a strategic plan be developed along with a 3 year business plan
supported by an aggressive marketing strategy.
This plan contains 20 strategic action items related to issues that have been identified as
impediments, obstacles or necessities in establishing a vibrant and successful Market
outside the successful Saturday Farmers Market.
Those issues represent strategic initiatives within the areas of: infrastructure, partnership
development, staff resources, business attraction, marketing, programming, policies and
procedures for Vendors and fiscal management.
Implementation plans for each of the strategic goals will be developed based upon formal
input from Council, staff as well as collaboration with constituents including the Kitchener
Market Collaborative.
These implementation plans will include goals that can be measured throughout the short-
term period and reported back to Council.
As a result of the process currently underway to determine the Governance structure of the
Market, other long-term strategies are not addressed or included in this list of short-term
priority areas however it is recommended that they be incorporated into a long term plan by
the new governance body.
3
2008 Short-Term Strategy
Your Kitchener Market
c. Short-term Strategies
The strategic issues outlined in this section have been identified as short-term priorities.
The expectation for these strategies is that considerable progress can be achieved in these
areas over the next six months. Implementation plans will be developed for each of these
strategic areas, which will also identify resources needed for the achievement of strategic
goals.
INFRASTRUCUTRE - Maintain a quality facility that will enhance the vIsion of
attracting vendors, customers and the public and provide for a safe and secure
environment.
The need to preserve and maintain the current infrastructure within the Market building is
imperative to; ensure City of Kitchener's financial investment is sustained; provide
aesthetically pleasing environment that will bring new investment and shoppers.
Implementation of the proposed capital upgrades have been previously approved and are
supported in the 2008 Capital budget.
Action: Market floor - Replace painted finish
The floor on both levels of the market is worn and leaves the perception of a shabby facility.
The tendering process was complete in 2007 and a contractor was selected based on city
purchasing policy. A committee was struck to determine and select the most appropriate
and best material to finish the Market floor. Re-establish contact with the contractor of
choice and work with Facilities Management to develop an appropriate schedule to
complete the floor repair.
Timeline: Immediate
Action: Install P.A. System
The need for a P.A. system is warranted for the purpose of piping in music to create a warm
and vibrant atmosphere and as a necessary security tool, if the need arises.
In 2007, three quotes were obtained as per City of Kitchener purchasing policy, for a
system that would support the interior market up to and including the parking garage and
exterior piazza. Follow up with Facilities Management and Market staff to select appropriate
supplier and determine schedule for installation of system.
Timeline: Immediate
4
2008 Short-Term Strategy
Your Kitchener Market
Action: Market Finishing
The opportunity exists to enhance the fagade, both interior and exterior, that would improve
the surroundings and encourage an inviting atmosphere.
Considerations could include:
· External Signage
· Remove modern artwork currently in place which conjures up images of a restaurant
and replace with replicas of old photographs of the market to celebrate the
successful history of the market
· Add large banners on the walls to create perception of a lower ceiling
· Add "Green" to front of the Market
· Establish Street Marquee over the entrance to draw attention and bring people in
· Have visible banners outside on lamp posts
Encourage input from all groups and work with Facilities Management and Market staff, in
order to ensure opportunities for improvement are warranted and feasible.
Timeline: 3 - 6 months
PARTNERSHIP DEVELOPMENT - Work with the Kitchener Market Collaboration
(KMC) over the summer months to find a solution for Upper Market Mini-Market
concept; continue to build and maintain relationships with existing Vendors.
There is an interest in such a model due to the growing interest in local, fresh and organic
food allover the country as witnessed by such books as the "100 Mile Diet" and "Defense of
Food". Such concepts as "food desert" recently publicized in Kitchener on Chanel 13 TV
and the new Kitchener outlet promoted in the Waterloo Record on June 4, 2008 known as
"Our Farmers Choice" selling food products from local farmers including organic meats also
supports this trend.
Action: Develop partnership with Kitchener Market Collaborative
The Kitchener Market Collaborative arose out of a desire to support a vendor-led initiative
with two goals:
1) A successful vendor co-operative mini farmers' market that would operate on a full
time basis in the upstairs portion of the Kitchener Farmers Market and;
2) The desire for direct representation of vendors of the current Saturday market in the
operation of the market.
5
2008 Short-Term Strategy
Your Kitchener Market
Although the KMC was scheduled to present a business case on a Kitchener Mini Farmers'
Market on June 16th at CSC, preliminary discussions have taken place between the new
Director and the KMC in which they have agreed in principal to withdraw their report. The
intent is to continue dialogue over the summer on working together in the establishment of
a concept that supports the interest in local, fresh and organic food for the Upper Level of
the Market.
Timeline: Immediate
Action: Build relationships with current vendors
While the current Market staff have embraced the development of these relationships, as
new management to the facility dialogue will commence that will communicate the strategic
direction going forward and collecting their input along the way.
Timeline: Immediate
STAFF RESOURCES - Ensure staff have defined roles, establish specific, concrete
and clear objectives that compliment skills and maximize quality and quantity of
work; review temporary and contract personnel composition to ensure roles and
functions are pertinent to the operations of the Market.
Action: Create PDQ's for full-time staff
There are no formal job descriptions currently in place for the full-time staff at the Market.
While overlap is unavoidable between the Manager and Supervisor of Business
Development in certain circumstances, there is a sense of ambiguity as to functions of each
role. Contact Human Resources to start the process of developing PDQ's for all full time
staff.
Timeline: Immediate
Action: Provide direction and establish goals and objectives for Market staff
Clearly specify priorities, establish specific, concrete and clear objectives and develop
appropriate courses of action in order to meet the goals of the Short-term Strategic Plan
and the long-term vision of the Market. Work with Market staff and other groups for input to
the process.
Time line: Immediate
6
2008 Short-Term Strategy
Your Kitchener Market
Action: Develop relationships with KDBA and downtown businesses
In order to advance the programming initiatives of the Market, it is imperative that the
Market staff establish a working relationship with the KDBA and downtown businesses.
Investigate Manager of the Market to sit on KDBA Board of Directors; encourage
Supervisor of Business Development to promote events and other activities through site
visits.
Timeline: 1-3 months
Action: Determine if staffing levels are required for temporary/contract staff
Review roles of temporary/contract staff to ensure duties are not overlapped, duplicated or
unnecessary. Create impact analysis if determination is warranted for redundancies.
Timeline: 3-6 months
BUSINESS ATTRACTION - Develop a focused business attraction strategy for
vendor recruitment; explore opportunities for corporate sponsorship at the Market
Action: Work with Supervisor, Business Development to attract Small Independent
Vendors to Upper Market
The expectation of the recruitment process is to fill up the vacant space on the upper
market level while at the same time working with the KMC in the concept of Mini Farmer's
Market. This will involve but not limited to visits to other market sites, attendance at
events/programs of interest, cold calling and follow through on opportunities not yet
explored.
Timeline: Immediate
Action: Research opportunity to establish "Market Place" (flea market) on
Wednesdays
In early 2008, staff was approached by an organizer of a consortium of Flea Market
vendors who travel as a "Business" to different cities, committing specific days to each.
While they are committed for most days through out the Province, they had an opening for
Wednesdays and were wiling to come to Kitchener Market.
Many flea markets have become a local favorite destination. While the original vision of the
Kitchener Market was to steer clear of the flea market concept similar to St. Jacob's Market,
an opportunity presents itself to revive Wednesdays with this potential service.
7
2008 Short-Term Strategy
Your Kitchener Market
This could be referred to as a "Market Place" rather than Flea Market and be located on the
first floor. Advantages to supporting this concept are:
· No cost to the City as space is available and already divided up for vendor use
· Space used all year on Wednesdays
· Increased revenue for Market
· Increased traffic on Wednesdays which could encourage more food vendors to
participate as well as new programming activities.
Conduct further dialogue with Council to determine if this is a viable opportunity and if
supportive, contact consortium to discuss further.
Timeline: Immediate
PROGRAMMING - Ensure programming is targeting defined markets and enhancing
current events within the City; marketing and promoted appropriately to ensure
participation
Action: Wellness Wednesdays
Target Market: Downtown business people
Secondary Market: Business people outside downtown
This program is currently underway whereby every other Wednesday beginning July 9th, a
theme around Wellness is chosen for a 1.5 hour session with experts in a particular field
speaking from 12:15pm to 12:45pm. Information will be displayed on the topic and a new
initiative will be underway to solicit tradeshow participation from vendors who support that
particular field. This will generate revenue to help offset related expenses for the event.
On the off weeks, in working with the KDBA, experts/mentors will be solicited from the
KDBA membership and/or the Waterloo Region Small Business Centre to present topical
issues that would be of interest to the target markets.
A marketing strategy has been initiated with posters, radio advertising as well as
advertisements in the Record, commencing June 27th.
Action: Establish partnership with Media
The local CTV station in London hosts their morning Breakfast Television show from the
London Market everyday. Explore opportunities with CTV and local radio stations to
broadcast from the Market.
Timeline: 1-3 months
8
2008 Short-Term Strategy
Your Kitchener Market
Action: Review current programming scheduled at the Market
Look at best practices for exciting and innovative events that would attract people to the
Market on days other than Saturday.
Timeline: Immediate
MARKETING - Ensure a plan is in place that will give the Market a fresh new start in
awareness, image, branding and promotion
Action: Review Branding of the Market
An aggressive marketing strategy needs to be undertaken for the Kitchener Market. This
includes:
· Re-branding - currently the printing, colours and font on website, advertising,
shopping bags, signage, collateral are all different
· Signage - New messaging and design for signage
· Website - Completely different brand than logo and other marketing collateral
· Messaging - Currently no messaging for Wednesday.
· Revisit Name - New strategy, new vision, new branding, new management, new
name
Begin dialogue with Communications to move forward with input from other groups
including public and COK staff.
Timeline: immediate
Action: Develop advertising plan for remainder of 2008
Revisit the current advertising activities for the remainder of 2008 and determine best use
of the budget to suit the needs of the short-term strategy. Begin dialogue with
Communications to move forward.
Timeline: Immediate
Action: Review Signage location opportunities
The lack of signage is a serious impediment to the Kitchener Market. It is a constant
criticism that people do not know that they have arrived at the Market until they have driven
past. The sign bylaw needs to be visited to determine opportunities to put signage in
strategic locations that will benefit the potential customer. This includes signage along King
Street from the 401 up to the Market location.
Timeline: Immediate (pending branding)
9
2008 Short-Term Strategy
Your Kitchener Market
POLICIES/PROCEDURES FOR VENDORS - Ensure agreements and procedures are
in place for all Vendors to ensure a consistent level of service that will enhance the
marketing efforts going forward.
Action: Compose Legal Agreements for all Upper Storey Vendors
It is essential for the Upper Market Vendors to have formal agreements that determine
conditions and obligations as a vendor in the upper floor space of the Market. This includes
terms such as defined hours of operations, space allotment, city services provided, liability
insurance waivers, violation policies etc. Work with COK Legal Department and Vendors to
put in place in a reasonable timeframe.
Timeline: 3-6 months
Action: Enforce consistent hours of operation for all Vendors specifically on the
upper floor of the Market
Currently, some vendors on the upper level of the Market work hours that are suitable to
their needs rather than needs of the Market. The hours of operation during the week are
advertised from Tuesday thru Friday, 8:00 am to 4:00 pm, however it is a regular
occurrence for the public to arrive during off peak times to find a food vendor closed for the
day.
If the focus is to develop a full-time Market that includes a business attraction and
marketing strategy, a commitment is required on behalf of the Vendors to provide a level is
service that is conducive to the efforts being put forth in turning the Kitchener Market into a
vibrant thriving destination of choice.
Timeline: 3-6 months
Fiscal Responsibility - Enforce diligent fiscal and operations management and look for new
opportunities to generate revenue for the Kitchener Market
Action: Look at opportunities for corporate sponsorships to generate revenue
To date, this has not been considered as a revenue generator for the Market. Work with
Supervisor of Business Development for opportunities such as advertising on banners,
signage etc.
Timeline: 3 to 6 months
Action: Put budgets in place for each new activity and ensure target are met
Timeline: immediate
10
2008 Short-Term Strategy
Your Kitchener Market
D. Long-Term Outlook
Strategic planning, by its very nature, is an ongoing, continuous process. Consequently,
there is a need to set in motion methods for implementation efforts, performance
measurements and ensure that the basic goals of the plan are achieved. It would also
provide the necessary link to the budget process in which, for obvious reasons, strategic
planning plays such a critical role.
We must continue to build strong new relationship with vendors, suppliers, constituents,
customers and stakeholders. We must work hard to improve the image of our Market and
we must take the steps to ensure we are providing a service that is expected.
We have a tremendous opportunity before us to ensure the future success by embarking on
the development of :
A full Strategic Plan
3 year Business plan
Marketing Strategy
Communications Plan
Business Attraction/Retention Strategy
Ongoing Fiscal Management
As we travel through this journey of revision and change, the challenges and opportunities
create a vision of hope and excitement of making the Kitchener Market a vibrant full-time
destination of choice.
11
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