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Project costs for Commercial Kitchen Incubator just under $1 Mil

Options and estimated costs for setting up a Commercial Kitchen Incubator (CKI), which is expected to create jobs and income for local residents, have been outlined in a CKI feasibility study, carried out in two phases by US based Mary Lou Surgi, Inc., and Smithson Mills and funded by the US Economic Development Administration.

 

Prepared for the Development Bank of American Samoa (DBAS), the more than 200-page study was released earlier this year. DBAS contracted last June with the lead researcher for the study, which was divided in two phases, with the first one assessing the need or demand for such a facility.

 

The second phase, the report says, focused on the physical, legal, and operational infrastructure necessary to build and operate such a facility.

 

Results from the first phase showed “a measurable demand for improved access to commercial kitchen facilities, along with demand for more advanced processing and packaging equipment that can help professionalize both existing and new food businesses in the territory,” the report notes.

 

Based on the two surveys and follow-up interviews, the report says, it appears that a total of 28 respondents or groups of respondents “are deemed likely or somewhat likely to use a CKI” in the territory.

 

“This measured demand suggests that the development of such a facility would positively impact new business development, job creation, and income for residents of the Territory and are sufficient encouragement to justify further project development,” the report says but noted that much groundwork needs to be developed to make this into a viable project.

 

The report recommends that project leaders consider a site that is convenient to users, and has easy access for deliveries. For example, Tafuna Industrial Park would be preferable.

 

It suggests construction of a building of about 3,600 square feet with two production kitchens, cold and dry storage areas, office space and a meeting/training room. The cost for this base structure that meets federal standards is estimated at $637,000.

 

An alternative for dispersed locations would be to utilize one or more modular (i.e.  shipping) containers retrofitted to meet production needs, the report suggests, adding that these could cost between $10,000- 12,000 unequipped, and up to $160,000 fully equipped and ready for production.

 

For the project to succeed, the report recommends hiring an executive director with significant food production and culinary experience, and this individual should be hired a few months before the facility is open for services.

 

Key duties of this individual will include facility strategic management, daily operations management, billing and bookkeeping, educational outreach, consulting, and technical assistance, it says.

 

The study “highly recommends” that the project develop a Memoranda of Understanding to be implemented for technical assistance from experts at the University of Hawaii and the Honolulu-based Pacific Culinary Incubator.

 

“We estimate the total project development cost to get the facility built, equipped and ready for users to be $953,671,” the study says. The cost includes project development oversight, equipment acquisition and installation, base facility construction plus contingency, architectural design and permitting fees.

 

Additionally, the base cost of operating this facility is estimated at $101,700 for the first year of operation, rising gradually with an increase in users over the next four years. By the end of the fifth year of operation, “we calculate a shortfall of about $13,000.”

 

“As with many other incubators, continuing support from a local government body, or committed grant funds will be required for many years,” the study points out, and noted that the estimated timeline for project development is three years from the conclusion of this study and submission of the Final Report.

 

This is contingent on first meeting the three requirements: setting clear goals; finding a project champion; and identifying a managing entity.

 

Once these issues are settled and clear, successful fundraising and securing a necessary site are key.

 

The study estimated that the total amount of investment required, including facility development and post-opening operations support, is approximately $1.5 million over an 8-year period.

 

However, it emphasized that the “estimates... are just that, estimates. It is quite possible that reductions in each area of expense could be made as designs can be modified, new partners found, and new sources of support step forward.”

 

“Such strategic partnerships may make the difference between success and failure of this project,” according to the study report, which covers in detail a wide range of areas, including a business plan for a proposed CKI; proposed facility plans; project development, costs estimates; operating budgets and sustainability plan; and developing a funding strategy.

 

The study report is available online: www.dbas.as