Mount Horeb Artisan Food Emporium Feasibility Study, July of 72

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2 2 of 72 TABLE OF CONTENTS A. Executive Summary Introduction/Project Overview Economic Feasibility Determination/Opinion Technical Feasibility Determination/opinion Market Feasibility Determination/Opinion Financial Feasibility Determination/Opinion... 8 Figure (1): Proposed Project Costs Management Feasibility Determination/Opinion Recommendations for Implementation B. Economic Feasibility Information regarding project site; site description and linkages Figure (2): Map Showing Location of Mount Horeb, WI Figure (3): Viking Plaza Site Plan Availability of infrastructure Availability of trained or trainable labor Figure (4): Madison, WI, Designated Market Area Figure (5): Designated Market Area Employment Profile Figure (6): Madison, WI Metropolitan Area Median Hourly Wage Overall economic impact; property taxes paid, tourism created, other local suppliers utilized, jobs created Agriculture Value & Economic Impact by Counties In Target Market Figure (7): Agriculture Impact in MHAFE Primary Geographic Market Shared Facilities, Incubator Space & Research Centers Figure (8): Shared Facilities, Incubator Space, and Research Centers Community Supported Agriculture (CSA) Programs Farmers Markets Wisconsin Food Processing Facilities Supplier Network Figure (9): Regional Supply Chain C. Market Feasibility Information on the organization and management Nature and extent of market and market area... 26

3 3 of 72 Figure (10): Range of Value-Added Food Processing Figure (11): 30 Mile Radius around Mount Horeb, WI Marketing plans for Community Outreach Secondary Market Research Figure (12): Blue Mountain Station Artisan Food Center Floor Plan Figure (13): Food Hub Value Chain Extent of competition including other similar facilities in the market area Figure (14): Location of the Viroqua Food Enterprise Center 83 Miles from Mount Horeb Figure (15): Location of the Madison Enterprise Center 30 Miles from Mount Horeb Figure (16): Baum Development Site Plan for Garver Feed Mill Primary Market Research Summary Survey Findings Survey Results Figure (17): What type of food production do you plan to do? Check all that apply Figure (18): Relative Importance of Building Features in Base Rent Figure (19): Expected Rent per Square Foot Figure (20): Proprietary Space Required Figure (21): Shared Space Required D. Technical Feasibility Suitability of the selected site for the intended use Facility design and/or process plan Figure (22): Preliminary Floor Plan Development costs and sources of assumptions Figure (23): Preliminary Project Budget Business Practices E. Financial Feasibility Three years projected balance sheets, income statements and cash flow statements Figure (24): Projected Profit and Loss Statement Figure (25): Projected Balance Sheet Financial Assumptions F. Management Feasibility Continuity and adequacy of management Conflicts of interest... 53

4 4 of 72 G. Acknowledgements Artisan Food Emporium Committee: Project Partners & Core Project Team: Planning Assistance: H. Partial List of Applicable Grant Programs I. Viking Plaza Real Estate Listing J. Survey Questions K. Mt Horeb Area Economic Development Corporation 2015 Annual Report l. Letters of Interest... 64

5 5 of 72 A. EXECUTIVE SUMMARY Funding for this project was made possible by the Local Food Promotion Program (LFPP), managed by the Agricultural Marketing Service, U.S. Department of Agriculture in addition to local matching funds. 1. INTRODUCTION/PROJECT OVERVIEW This study is the result of an interest by Southwestern Wisconsin Community Action, Inc. (SWCAP) and the Mount Horeb Area Economic Development Corporation (MHAEDC) in starting an artisan food emporium for local, organic, or sustainable food production or processing businesses in Mount Horeb, WI. The emporium would be called Mount Horeb Artisan Food Emporium (MHAFE). MHAFE would function as a virtual food hub to help local food producers or processors grow and prosper. The emporium would include both proprietary and shared space that developing and established local food businesses could rent to process and sell their products, as well as, take advantage of shared marketing and management services. The ultimate goal of the MHAFE is to be a catalyst, stimulating a vibrant agricultural food chain in southwestern Wisconsin. The vision is to support the creation and expansion of other food-related businesses in the region. MHAFE also intends to provide jobs and job training for low income people. At least ten established local producers and processors have expressed an interest in renting space in the new emporium, which will include common spaces for office and retail. This study showed that a shared facility is needed in the southwestern Wisconsin food production sector. In the proposed emporium, each participant may share in the financial and time burden for space planning, equipment acquisition, marketing, and trucking. These potential synergies would save participants both time and money. MHAFE intends to provide the following value-added services for participants: Marketing and promotion Facilitation of sharing opportunities and joint ventures Seeking grant funds

6 6 of 72 Promoting food tourism Forming strategic partnerships with outside organizations Facilitating vertical integration among MHAFE participants Supporting MHAFE participants with brand development and enhancement 2. ECONOMIC FEASIBILITY DETERMINATION/OPINION The Village of Mount Horeb has many valuable assets that make this proposed project economically feasible. Mount Horeb is in Dane County, WI, located on US Highway 151, a major traffic artery that runs through the states of Iowa and Wisconsin. The Village is part of the Madison Metropolitan Statistical Area, which consists of Dane, Columbia and Iowa Counties. Therefore, a large part of the MHAFE s consumer market is based in Madison. The geographic positioning of Mount Horeb, between rural food producers (in southwestern Wisconsin) and consumers (in Madison), makes it a good location for an artisan food processing emporium. There is an adequate supply of trained or trainable labor. The proposed site is the existing Viking Plaza shopping center located on Main Street in Mount Horeb, WI. This shopping center is 29,100 total square feet. There is vacant space amounting to 11,500 square feet currently available to lease, which is the former location of World of Variety. MHAFE has the potential to revitalize Viking Plaza and create meaningful synergies with other businesses in the mall and the Village. Its anticipated economic impact includes the following: Existing Business Expansion MHAFE will support the expansion of at least five established food production or processing businesses. MHAEDC is currently negotiating lease agreements with two participants that intend to expand their businesses to gross $6 to $10 million in annual sales. Jobs Created The local food producers or processors participating in MHAFE will create jobs. Two potential participants interviewed for this feasibility study indicated they will create 18 to 22 full-time and four to six seasonal jobs over five years.

7 7 of 72 Property Taxes Paid Real estate taxes paid for the proposed space are estimated at $9,000 per year. 1 Local Suppliers Utilized - Employees working in the MHAFE will create a multiplier effect and contribute to the local economy. They will buy houses, rent apartments, shop at local stores, buy gasoline, eat at restaurants, and purchase professional services. Participants in the space will contract for snow plowing and insurance in addition to other services. Tourism Created Mount Horeb, WI is a tourist destination because of its Norwegian heritage, vibrant downtown, proximity to Madison, and it strategic location on the US Highway 151 traffic corridor to southwestern WI. MHAFE is expected to increase interest in food tourism. Mount Horeb s main street already features at least two other local food producers, Fisher King Winery and Sjölinds Chocolate House. 3. TECHNICAL FEASIBILITY DETERMINATION/OPINION The technical advisors for this project were Craig Stanley, CCIM (Certified Commercial Investment Member), Broadwing Advisors, LLC, Madison, WI and building contractor Jeff Grundahl, NCI-Roberts Construction, Inc., Blue Mounds, WI. These technical advisors have inspected the site and developed construction budgets based on their assessment of the suitability of the proposed site. 4. MARKET FEASIBILITY DETERMINATION/OPINION There is an adequate market to support the proposed project. At this time, MHAFE has identified two potential anchor tenants, a frozen fish distributor and a local meat producer, and has started lease negotiations with them. Two other likely tenants, both cheese producers, have also expressed an interest in a shared space. In addition to production space, the meat producer would maintain a retail space that would sell products of other participating producers. 1 Equals total shopping center property taxes of $22,766 divided by 29,100 s.f. in the center times 11,500 s.f. proposed in the MHAFE

8 8 of 72 In November and December 2014, an survey was constructed using esurveyspro.com to determine whether local food producers or processors perceive a need for MHAFE. Seventeen questions were sent to 400 regional food producers or processors after testing the survey instrument with five sample respondents. There was a 10% response rate to the survey (40 responses were received). The survey results showed strong market demand for a place in Mount Horeb featuring a commercial kitchen, freezer storage, refrigeration, dry storage and marketing included in base rent not to exceed $12 per square foot. According to the survey, the typical food producer or processor has been in business more than five years, manufactures a branded local product, has three employees and would rent less than 500 square feet. Six respondents had a medium or high level of interest in relocating their existing business to MHAFE. These respondents are in addition to the four potential participants MHAEDC is currently negotiating with. Fourteen respondents said they would be willing to sign a non-binding letter of interest. Within MHAFE s geographic target market, there are current and planned facilities that relate to the operational area of MHAFE. However, none of them competes directly with MHAFE's proposed business model. For example, the focus of the anticipated Madison Public Market is largely retail. It lacks the business, marketing and value-added services MHAFE plans to provide. Although several local food production or processing businesses are located in The Madison Enterprise Center, it operates as a general business incubator for start-up companies. MHAFE plans to work primarily with established businesses. 5. FINANCIAL FEASIBILITY DETERMINATION/OPINION In order to offer what prospective participants perceive as affordable rent, MHAFE will need to seek a grant or other subsidy to fund all or part of an estimated net $329,750 in needed leasehold improvements (see Figure 1). Since all the comparable businesses reviewed for this feasibility study received substantial grants or subsidies in order to make their building rents more affordable for small food producers or processors, the real estate project gap identified for MHAFE is not unexpected.

9 9 of 72 The projected real estate project gap is based on total estimated project costs of $630,000 less $300,250 in assumed landlord provided improvements. The real estate project gap excludes approximately $170,000 of additional, tenant-specific costs which will vary according to the final tenant mix. It also excludes a commercial kitchen, which most survey respondents requested. MHAEDC has indicated it will add a commercial kitchen when funds become available. FIGURE (1): PROPOSED PROJECT COSTS Line Item Estimated Project Costs Interior Build-out $340,000 Refrigeration $125,000 Loading Dock Improvements $50,000 Design/Engineering $20,000 Water/Fire Protection Supply $20,000 Upgrade Electrical Service $25,000 Contingency $50,000 Base Project Cost $630,000 Less: Landlord Provided Items Bathrooms $(25,000) Loading Dock Improvements $(25,000) Floor Preparation $(40,250) Facade Makeover $(150,000) Signage $(20,000) Demising of Space $(40,000) Total Landlord Contribution $(300,250) Real Estate Project Gap $329, MANAGEMENT FEASIBILITY DETERMINATION/OPINION MHAEDC s Executive Director, Brad Murphy, will provide project management oversight. He is a senior executive with strong leadership skills including strategic planning, marketing and sales, board/committee relations, public speaking and business/project management. In its second full year of operations under Murphy s direction, the MHAEDC continues to have a positive impact on Mount Horeb in its mission to expand the business base, reduce the tax burden on existing businesses and residents, and increase employment opportunities. Its core group has now grown to over forty local business leaders who share ideas, networks and

10 10 of 72 resources. Successful projects include the Mount Horeb Innovation Center (October 2014) and the GrandStay Hotel and Suites (May 2015). In addition to Murphy s project management oversight, MHAEDC or its for-profit subsidiary, Mount Horeb Enterprises, LLC also intends to hire a part-time manager to coordinate and provide tenant services including but not limited to marketing, community outreach, grant writing and property management. 7. RECOMMENDATIONS FOR IMPLEMENTATION A business plan is normally developed when a firm direction for the business can be established and/or there is a need for outside financing that requires the development of a business plan. This feasibility study identified no factors that limit the ability to proceed to a business plan. It is therefore recommended that a business plan be developed for MHAFE. B. ECONOMIC FEASIBILITY 1. INFORMATION REGARDING PROJECT SITE; SITE DESCRIPTION AND LINKAGES Mount Horeb is a village in Dane County, WI, located on US Highway 151, a major traffic artery that runs through the states of Iowa and Wisconsin (see Figure 2). Mount Horeb is part of the Madison Metropolitan Statistical Area, which consists of Dane, Columbia and Iowa Counties. The nearest city with a population over 50,000 is Madison, WI (17.8 miles, population 208,054) and the nearest city with a population over 1,000,000 is Chicago (132.3 miles, population 2,896,016).

11 11 of 72 FIGURE (2): MAP SHOWING LOCATION OF MOUNT HOREB, WI The Mount Horeb resident population was 7,009 at the 2010 Census and 7,330 in Mount Horeb s population is younger and more affluent that the overall State; the median resident age was 35.5 years in 2012 (versus 42.6 years statewide) and the median household income was $66,426 (versus $51,059 statewide). 3 It is notable that the resident population has increased 25% since A regional tourist destination, Mount Horeb features cultural festivals, gift shops, galleries, and antique malls located in authentic, restored buildings and Victorian homes. Its 2 accessed 2/18/ accessed 2/18/15 4 The 2000 resident population was 5,860; see accessed 2/18/15

12 12 of 72 proximity to agricultural producers and processors in southwestern WI combined with its reputation as a tourist destination combine to make it a favorable location for an artisan food emporium. PROPOSED PROJECT SITE The proposed project site is Viking Plaza, a retail shopping center located on Main Street in Mount Horeb, WI. In addition to Viking Plaza, MHAEDC is also exploring alternative sites. Viking Plaza is a desirable site because it has enough vacant space for the intended purpose and a cost structure likely to result in tenant rents in the targeted range of $8 to $12 per square foot. It is also a recognized community hub since Miller s grocery store was formerly located there. Viking Plaza is 29,100 total square feet and two spaces are currently available, 1,956 square feet and 11,500 square feet, the proposed site for MHAFE (see Figure 3). The parking lot has over 100 parking spaces. Co-tenants are Viking Hardware, Weaver Auto Parts and Chang Jiang. The asking lease rate for the 11,500 square foot space is $5.95 per square foot. The building is also for sale for $1.8 million. It was constructed in 1979 and It is owned by a family trust, Field Family, LLC. Figure 3 shows a site plan for the proposed site. FIGURE (3): VIKING PLAZA SITE PLAN SOURCE: Commercialsearch.com

13 13 of AVAILABILITY OF INFRASTRUCTURE The shopping center currently has 400 amp/3 phase service. The landlord is willing to consider a new service to the space if the current service is not adequate. The premises would be separately metered for utilities and each tenant will be responsible to pay the cost of all separately metered utilities used inside the premises. 3. AVAILABILITY OF TRAINED OR TRAINABLE LABOR Mount Horeb, WI is part of the Madison, WI designated market area (DMA), which has an adequate population base to supply the necessary workforce. The DMA is 22 by 44 miles and includes 11 counties: Dane, Green, Lafayette, Grant, Richland, Sauk, Juneau, Columbia, Marquette, Rock and Iowa (see Figure 4). FIGURE (4): MADISON, WI, DESIGNATED MARKET AREA In 2010, the Madison, WI DMA included approximately 527,000 workers and over 60% of the labor force had at least some college education (see Figure 5).

14 14 of 72 FIGURE (5): DESIGNATED MARKET AREA EMPLOYMENT PROFILE 2010 Labor Force Estimate for Madison, WI Designated Market Area 5 Number Percent Blue Collar 118, % White Collar 324, % Service and Farm 83, % Total 526, % In December 2014, the unemployment rate for Madison, WI was 3.4% 6, one of the lowest in the nation. 7 In contrast, the national unemployment rate in January 2015 was 5.7%, down from 6.6% a year earlier. 8 Median hourly wages in the Madison, WI metropolitan area (defined by the Department of Labor Statistics as Dane, Iowa and Columbia counties) was $18.24 in May, 2013 (see Figure 6). This is about 10% higher than the state median of $ May 2013 Madison Metropolitan Area (Dane, Iowa and Columbia Counties) Median Hourly Wage 10 FIGURE (6): MADISON, WI METROPOLITAN AREA MEDIAN HOURLY WAGE Occupation Occupation Employment Median Code Title Hourly Mean Hourly Mean Annual All Occupations 342,930 $18.24 $22.49 $46,770 A stable workforce for MHAFE is supported by readily available community infrastructure including housing, schools, shopping, recreational facilities, hospitals and an airport. Madison is 5 Population aged over aged 16 by occupation classification, SRDS Media Solutions, Local Market Analyst 6 accessed 2/17/ accessed 2/17/ accessed 2/17/ accessed 2/17/15

15 15 of 72 the Wisconsin state capital and the University of WI-Madison is also located there. Madison, WI is consistently ranked as one of the best places in America to live for quality of life OVERALL ECONOMIC IMPACT; PROPERTY TAXES PAID, TOURISM CREATED, OTHER LOCAL SUPPLIERS UTILIZED, JOBS CREATED. MHAFE is expected to create significant economic impact. For example: Existing Business Expansion MHAFE will support the expansion of at least five established businesses. MHAEDC is currently negotiating lease agreements with two participants that intend to expand their businesses to gross $6 to $10 million in annual sales. Jobs Created The local food producers or processors that move to MHAFE will create jobs. Two potential participants interviewed for this feasibility study indicated they will create 18 to 22 full-time and four to six seasonal jobs over five years. Property Taxes Paid Real estate taxes paid for the proposed space are estimated at $9,000 per year. 12 Local Suppliers Utilized - Employees working in the MHAFE will create a multiplier effect and contribute to the local economy. They will buy houses, rent apartments, shop at local stores, buy gasoline, eat at restaurants, and purchase professional services. Participants in the space will contract for snow plowing and insurance in addition to other services. Tourism Created Mount Horeb, WI is a tourist destination because of its Norwegian heritage, vibrant downtown, proximity to Madison, and it strategic location on the US Highway 151 traffic corridor to southwestern WI. The proposed project is expected to increase interest in food tourism accessed 7/12/15 12 Equals total shopping center property taxes of $22,766 divided by 29,100 s.f. in the center times 11,500 s.f. proposed in the MHAFE

16 16 of AGRICULTURE VALUE & ECONOMIC IMPACT BY COUNTIES IN TARGET MARKET MHAFE will contribute to job creation and support economic development in the fivecounty area served by SWCAP: Iowa, Grant, Green, Lafayette and Richland. The primary geographic boundary where MHAFE can expect to attract participants can be defined as a 30-mile radius (45 minutes) around Mount Horeb and includes parts of the nine southcentral and southwestern counties of Dane, Green, Iowa, Rock, Sauk, Columbia, Lafayette, Richland and Grant. Family owned farms, food processors and agriculture-related businesses in these counties provide 48,225 jobs, account for $9.9 billion in business sales, contribute $2.9 billion to county income, and pay $281 million in taxes 13 (see Figure 7). FIGURE (7): AGRICULTURE IMPACT IN MHAFE PRIMARY GEOGRAPHIC MARKET Business Sales County Income Taxes Paid County Jobs (Billions) (Billions) (Millions) Columbia 4,527 $ $ $ 24.1 Dane 16,766 $ $ $ Green 5,911 $ $ $ 39.6 Iowa 2,765 $ $ $ 9.6 Lafayette 3,561 $ $ $ 19.9 Richland 3,699 $ $ $ 13.6 Rock 6,265 $ $ $ 36.5 Sauk 4,731 $ $ $ 20.4 Total 48,225 $ $ $ Columbia County has 1,585 farms including 158 dairy and more than 400 beef, sheep, hog and goat farms. It is home to the Arlington Agricultural Research Station, a 2,000-acre outdoor laboratory run by the University of Wisconsin s College of Agricultural and Life Sciences. Dairy is the main agricultural industry. Top commodities (sales by dollar value, 2007) are: 1. Grain - $69.2 million 2. Milk - $58.0 million 3. Cattle & calves - $20.5 million 13 Deller & Williams, The Economic Impacts of Agriculture in WI Counties, UW- Extension, March 2011, accessed 2/16/15.

17 17 of Poultry & eggs - $7.5 million 5. Vegetables - $3.3 million 14 Dane County is located in the center of southern Wisconsin and is among the state s most productive counties, ranking first in total value of agricultural products sold. It ranks 32 nd nationally in net cash farm income. Dane county is the No. 3 dairy producing county in the state and No. 23 in the nation. Top commodity agricultural products include grain, soybeans, corn for silage, cattle and calves, and tobacco. The county hosts the nation s premier dairy event, the World Dairy Expo, and is home to the country s largest producer-only farmers market, the Dane County Farmers Market. 15 Madison, WI features a very strong local foods movement and the City of Madison is planning to open a new public market. The vision is to create a multi-use district featuring a mix of food retail, wholesaling, and processing, as well as potentially arts/craft vending, community uses, events, and other activities. 16 Top commodities (sales by dollar value, 2007) are: 1. Milk - $206.2 million 2. Grain - $109.4 million 3. Cattle and calves - $46.4 million 4. Nursery & greenhouse - $13.5 million 5. Hogs & pigs - $5 million 17 Green County has the highest concentration of Master Cheesemakers in the state and is home to 13 cheese manufacturing plants, more than any other county in the state. These plants use milk from over 300 Green County Dairy farms to produce more than 65 specialty cheeses, including some that are not produced anywhere else in the US. Of the county s 1,534 farms, 49% list farming as their primary occupation. The average farm size is 200 acres. Green County ranks 14 accessed 2/16/ accessed 2/18/ accessed 2/18/ accessed 2/18/15

18 18 of 72 third in the state in sheep and goat production and in the top 10 for the production of corn, soybeans and alfalfa. 18 Top commodities (sales by dollar value, 2007) are: 1. Milk - $104.7 million 2. Grains - $50.9 million 3. Cattle & calves - $25.8 million 4. Hogs & pigs - $1.1 million 5. Sheep & goats - $0.88 million Iowa County farmers played a key role in developing Wisconsin s commercial farming industry by providing food for early mining communities. With more than 1,800 farms, Iowa County features agricultural diversity including dairy, beef, alfalfa, pasture and grain. Other commodities include poultry, sheep, hogs, goats, fruits, vegetables, forestry products and aquaculture. A growing number of Iowa County farmers use organic farming, community supported agriculture and direct marketing. The county has about 8% more farms than 10 years ago, with an average size of about 200 acres. 19 Top commodities (sales by dollar volume, 2007) are: 1. Milk - $81.0 million 2. Grains - $30.9 million 3. Cattle & calves - $30.2 million 4. Vegetables - $5.0 million 5. Poultry & eggs - $3.1 million Lafayette County is one of the most agriculture-dependent counties in the state, and the primary agricultural industries are cheese and dairy. It is ideal for dairy production because of its large pastures, access to cheese processing plants, good soil and favorable climate. Many specialty cheese makers base their operations in Lafayette County because they claim its grassland produces higher quality milk. This county is No. 2 statewide in sheep and goat 18 accessed 2/18/ accessed 2/18/15

19 19 of 72 production, No. 4 in swine production and No. 4 in cattle and calves. It is first in the number of bee colonies, second in the number of goats, third in alfalfa hay production, and forth in corn for grain. Lafayette County has about 1,340 farms, 11% more than 10 years ago, with an average size of 255 acres. 20 Top commodities (sales by dollar volume, 2007) are: 1. Milk - $100.6 million 2. Grains - $67.4 million 3. Cattle & calves - $38.3 million 4. Hogs & pigs - $6.3 million 5. Other crops & hay - $2.4 million Richland County is located in Wisconsin s Driftless Region. The eastern and southern parts of the county, with lower slopes and sandy soils, are well-suited to row and commercial vegetable cropping. The dairy industry provides a strong economic foundation for the county but agriculture also includes beef, Christmas trees, apple production, organic community supported agriculture, and timber. Richland County has about 1,545 farms, 14% more than a decade ago, with an average size of 164 acres, a 14% drop from Top commodities (sales by dollar volume, 2007) are: 1. Milk - $49.4 million 2. Cattle & calves - $13.8 million 3. Grains - $10.5 million 4. Other crops & hay - $1.9 million 5. Fruits & berries - $1.6 million Rock County is known as the gateway to Wisconsin because of its border with Illinois and US Highway 90, a major traffic artery to Chicago. Rock County ranks among the top Wisconsin counties in corn, soybean and food-grade soybean production. There is a strong livestock industry, including dairy, beef and pork production. Diverse industries include mint, tobacco, 20 accessed 2/18/ accessed 2/18/15

20 20 of 72 vegetable crops, nursery and greenhouse products, as well as a nationally recognized pheasant operation. Rock County is home to numerous food processors and agricultural supply companies. The county has 1,556 farms with an average size of 221 acres. 22 Top commodities (sales by dollar volume, 2007) are: 1. Grains - $105.9 million 2. Milk - $43.6 million 3. Cattle & calves - $17.2 million 4. Nursery & greenhouse - $8.3 million 5. Hogs & pigs - $4.7 million Sauk County agriculture depends on dairy, but also offers a wide range of other products including beef, swine, poultry, alfalfa, corn, soybeans, fruits, vegetables, Christmas trees, honey and many others. Sauk County is No. 2 in Wisconsin in the value of hogs and pigs and No. 9 in the value of cattle and calves. The county has 1,923 farms, 15% more than 10 years ago, with an average size of 187 acres. This county has a number of farmers markets and a growing agricultural tourism industry. 23 Top commodities (sales by dollar volume, 2007) are: 1. Milk - $94.9 million 2. Grains - $33.2 million 3. Cattle & calves - $26.7 million 4. Hogs & pigs - $10.2 million 5. Poultry & eggs - $5.8 million 6. SHARED FACILITIES, INCUBATOR SPACE & RESEARCH CENTERS Southwestern Wisconsin supports start-up and small companies through numerous shared facilities, incubator space and research centers. These facilities feature many small local 22 accessed accessed 2/18/15

21 21 of 72 food producers and processors since they tend to reflect the overall economy. Figure 8 provides a list and short description of these resources. 24 Name 100State Center for Dairy Research (CDR) Farley Center Farm Incubator Food Enterprise and Economic Development (FEED) Kitchens Food Enterprise Center (Viroqua) Gener8tor Janesville Innovation Center Madison Enterprise Center Main Street Industries Portage Enterprise Center Sector67 University Research Park (URP) FIGURE (8): SHARED FACILITIES, INCUBATOR SPACE, AND RESEARCH CENTERS Description Provides co-working space and mentorship to support entrepreneurial endeavors to help the community flourish The TURBO program at CDR is an innovation accelerator for companies developing products containing dairy related ingredients With a mission to expand small farmers growing capacity, aspiring farmers are supported with land, tools, education, and marketing assistance Supports local food entrepreneurs and development of foodrelated employment by providing commercial kitchen spaces for food processing Multi-tenant aggregation, storage, processing and distribution center for area producers and food industry Invests in community, capital, expertise, mentorship and networking for early-stage entrepreneurs with innovative business models The center provides infrastructure, education, training, mentorship, and a network of service providers to assist entrepreneurs to achieve success by encouraging technical innovation Office and light industrial business incubator, providing business assistance and resource-matching services Office and light industrial business incubator, providing business assistance and resource-matching services 32,000 square-foot business incubator with support for tenants including access to capital and business assistance Collaborative space dedicated to providing an environment to learn, teach, develop, build, and create next generation technology Home to more than 126 companies, this is an internationally recognized research and technology park supporting early-stage, 24 Gay, Michael, Proposals for Designation as a Manufacturing Community Madison Region Economic Partnership, April 19, 2014, page 12

22 22 of 72 growth-oriented businesses across multiple facilities: MGE Innovation Center, URP Accelerator, and Metro Innovation Center Wisconsin Innovation State inspected commercial kitchen and licensed food processing Kitchen facility owned by a center supporting people with disabilities, focusing on helping existing small food businesses create jobs and grow their businesses by offering preparation, packaging, and labeling Source: Madison Region Economic Partnership (MadREP) 25 Figure 8 also shows that southwestern Wisconsin already has significant infrastructure to support food processing facilities. In fact, these regional shared-use kitchens, food incubators, co-packing facilities, and food-related research and development centers serving the local and sustainable food market Comprise 40% of all like facilities in the state. Wisconsin Innovation Kitchen (Iowa County) is nationally recognized, and the largest small-batch co-packing facility in the state. It is also a major employment center for adults with disabilities. Studying the KTS (key technology sector) local food supply chain, analyzing and implementing a trucking logistics cooperative, and linking the Wisconsin Innovation Kitchen, FEED Kitchens, Vernon County Food Center, Kickapoo Culinary Center, Sharing Space Kitchen, Farley Center Farm Incubator and proposed Dane County Farm Incubator to the proposed Madison Public Market (MPM)/Wisconsin Food Hub food processing, storage and aggregation facility are major interwoven gaps in creating an efficient local KTS ecosystem COMMUNITY SUPPORTED AGRICULTURE (CSA) PROGRAMS Many of the region s small agricultural producers sell their produce through Community Supported Agriculture (CSA) programs. Fair Share CSA Coalition makes local food more accessible by linking local producers to consumers. A list of participating producers and pickup sites can be viewed on their website (see: 25 Gay, Michael, Proposals for Designation as a Manufacturing Community Madison Region Economic Partnership, April 19, 2014, pages Gay, Michael, Proposals for Designation as a Manufacturing Community Madison Region Economic Partnership, page 24, April 19, 2014

23 23 of FARMERS MARKETS The City of Madison provides a list of farmers markets in Madison on their website (see: The REAP Food Group also provides a list of other regional farmers market on its website (see: Farm Fresh Atlas: 9. WISCONSIN FOOD PROCESSING FACILITIES UW-Extension s Food Business Innovation Network has a list including contact information for many of Wisconsin food processing facilities (see: List of kitchen and co-packing facilities with contact information). The number of Wisconsin co-packing facilities, shared-use kitchens and food business incubators has grown in recent years and several new facilities are either operating or under discussion across the state. For example, the City of Madison is planning a new Madison Public Market (MPM) to support regional agriculture, grow new food-related businesses, increase food access for underserved residents, and build on existing assets in the city and throughout the region. Similar to the MHAFE business model, MPM would serve physically as a retail, wholesale, processing, and storage facility to serve the local food industry sector. However, since its focus is primarily retail, it is not expected to compete directly with MHAFE. Madison Region Economic Partnership (MadREP) has identified these infrastructure gaps in the region: 27 The Wisconsin Innovation Kitchen (WINK) needs an additional 30,000 to 40,000 square feet for increased intake, logistics, processing, dry, cold and freezer storage to accommodate large and small co-packing clients. The FEED Kitchen Incubator may purchase new equipment and expand operational capabilities to create a fully equipped meat kitchen with product packaging equipment. 27 Gay, Michael, Proposals for Designation as a Manufacturing Community Madison Region Economic Partnership, April 14, 2014, pages

24 24 of 72 Dane County and UW-Extension wants to create a Dane County Demonstration Farm that develops, demonstrates and teaches production techniques and business management skills to help new and experienced growers build sound farm businesses. This will fill gaps in the current supply of local foods in order to fill the needs of institutional food buyers and the regional restaurant market between Chicago and Minneapolis. The Food Enterprise Center of the Viroqua Economic Development Association (VEDA) seeks operational support to help pay for staffing to provide facility management and onsite technical assistance for start-up businesses in their EDA-funded, 100,000 square foot, food-based incubator and commercial kitchen. 10. SUPPLIER NETWORK The local food supply chain consists of vertically integrated products and services, from raw materials through finished goods and consumer sales. Southwestern Wisconsin produces both commodity and value-added food products such as fresh produce, cheese and meats. Key firms in the regional supply chain are identified by segment in Figure 9. Included in the list are many large companies that have national scale and scope Gay, Michael, Proposals for Designation as a Manufacturing Community Madison Region Economic Partnership, April 14, 2014, page 12

25 25 of 72 FIGURE (9): REGIONAL SUPPLY CHAIN Source: MadREP

26 26 of 72 C. MARKET FEASIBILITY 1. INFORMATION ON THE ORGANIZATION AND MANAGEMENT While MHAFE will function as a virtual food hub to help local food producers or processors grow and prosper, it will not be a legal entity or a business. The project is not expected to turn a meaningful profit from its operations. It should, however, have the goal of achieving operational sustainability with modest revenues to cover its operating costs. It is expected that this will be achieved by requiring each participant to sign a service agreement with MHAEDC or its subsidiary limited liability company for marketing, community outreach and/or other tenant services. The ownership of Viking Plaza is expected to remain with the Field Family, LLC. 2. NATURE AND EXTENT OF MARKET AND MARKET AREA The emergence of mid-level aggregation, distribution and processing facilities (food hubs) are in their nascent stage in southwestern Wisconsin. As such, they compete in a growing, immature market where operating efficiencies and best practices are still being developed. Many regional food processing facilities are currently under-utilized. This presents an opportunity for MHAFE to create a different business model. Public demand for locally grown, producer identified food continues to grow. For example, the Dane County Farmers Market is a strong destination, neighborhood farmers markets are growing, and CSA membership is high. Many Madison food retailers, both local stores and national chains, are sophisticated and realize the importance of featuring local products, i.e. Willy Street Coop, Metcalfe s, Copps, and Miller & Sons. Many small, local food producers still rely on direct consumer distribution channels such as farmers markets and community supported agriculture (CSA) programs to sell their produce. However, in order to scale-up and meet the needs of intermediate and institutional buyers for consistent, reliable produce deliveries, most small producers need to aggregate their produce and create value-added products. This scale-up requires a processing facility or food hub. Adding value or differentiation to commodity products may range from branding fresh produce and/or convenience packaging to processing and prepared foods as shown in Figure 10.

27 27 of 72 FIGURE (10): RANGE OF VALUE-ADDED FOOD PROCESSING Branding Convenience packed, not cut Minimal processing - FreshCut, washed Further processed - IQF, cooked, canned, pickled - single product Prepared foods - combined products, meal kit, soups, etc. GEOGRAPHIC TARGET MARKET The primary geographic area where MHAFE can expect to attract participants can be defined as a 30-mile radius (45 minutes) around Mount Horeb and includes parts of the nine southcentral and southwestern counties of Dane, Green, Iowa, Rock, Sauk, Columbia, Lafayette, Richland and Grant. Food producers or processors will need to travel from their homes to work at MHAFE since food production or processing cannot be done virtually. People want a reasonable commuting time to where their business is, which limits the primary geographic area. Figure 11 shows a 30-mile geographic radius around Mount Horeb. However, the actual geographic market area is likely to be more irregular and skewed southwest along the transportation corridor. Many Madison area residents perceive a psychological barrier in traveling between the east and west sides of Madison. It is thus unlikely, for example, that producers or processors will travel from Sun Prairie to Mount Horeb.

28 28 of 72 FIGURE (11): 30 MILE RADIUS AROUND MOUNT HOREB, WI 3. MARKETING PLANS FOR COMMUNITY OUTREACH MHAFE will need to actively promote its brand to attract and retain participants. It will also need to support participants by building a sense of community and promoting the local agricultural products produced there. Strategic positioning is important to ensure that communications are consistent in look and feel and that there is a strategic framework created that cohesively ties together all of MHAFE s efforts. Strategic market goals include 1) expanding participants market share; 2) building awareness and name recognition of MHAFE and its associated core messages and core products; and 3) providing a set of strategic messages that will result in a unified approach to communicating information about MHAFE and its local produce to target audiences. Messages such as these may help project the brand:

29 29 of 72 By buying locally-raised and natural food products, you will not only be getting nutritious taste, but also sustaining a local tradition and simpler way of life. Keeping farms viable is important. Buying locally produced food products from family farmers relieves fears about the quality and safety of what you eat. Pasture-raised animals get a lot of exercise and are consuming food that doesn t contain a lot of fat, thus the meat is lean and healthy. Poultry and animals are raised in a natural, kind environment and pasture-fed, resulting in firmer, tastier and juicier food products. MHAFE s food products are not only free of chemicals, hormones and antibiotics, but the fish, poultry and animals are humanely treated and have lived happy and stress-free lives, providing for great tasting food products. The MHAFE branding strategy should be designed to reach out to a variety of groups including intermediate buyers (institutions, schools, restaurants, grocery stores); growers or commodity producers (to attract new participants, develop loyalty, and leverage the brand); and the general public (to create public awareness about the brand and participants products). The objectives of creating a brand for MHAFE include: Helping to establish and cultivate a strong relationship with local food producers or processors to ensure ongoing, trusted communication Building loyalty for the MHAFE brand and telling the local story to consumers and community members Brands are shaped and MHAFE needs to be aware of the elements (touch points) that it can control: o Name/Logo o Packaging o Service o Personnel o MHAFE participants (leveraging their existing equity and marketing opportunities) o Quality of product

30 30 of 72 o Business operations o Advertising o Public Relations Established brands have value as they often serve to protect companies from market fluctuations and competitive demands by creating a value preference with the various target audiences. 4. SECONDARY MARKET RESEARCH Value-added local food production facilities are an emerging trend in economic development. Many food emporiums or innovation centers are located in business parks consisting of several buildings on a campus. 29 Mount Horeb has a similar idea for a communitybased model featuring multiple locations throughout the Village. MHAEDC s vision is that Mount Horeb, WI will gradually develop a cluster of buildings and function as a food processing destination over time. Other key findings from secondary market research include these: Artisan food centers may promote food tourism. For example, in addition to the food processing businesses at Blue Mountain Station in Dayton, WA (see Page 32), specialty food producers, craftsmen and artists are forming a cooperative to sell a variety of products including eggs, cheese, wine, photographs, wood furniture and handmade soap at an indoor market. The Blue Mountain Station building was designed with windows into the food processing bays, allowing the public to see how the different foods are made. MHAFE may create similar synergies. For example, the Mount Horeb farmers market may relocate to Viking Plaza and new local food restaurants or related retail stores may open in Viking Plaza or the Village. 29 For example, Bridgeton, NJ, has redefined their industrial parks as the Food-Business Parks of Bridgeton, featuring Food Business Park North which hosts the Rutgers Innovation Food Center and Food Business Park South, which is home to Buona Vita, Cumberland Freezers, Kintock Food Service Training Program and NJ Ethanol (see:

31 31 of 72 The decision to build-out expensive, shared leasehold improvements such as a commercial kitchen, freezer space or refrigeration should be carefully considered since many potential participants cannot afford to pay for these building features. Current plans for MHAFE exclude a commercial kitchen. Negotiating each tenant s rent individually may be an effective way to insure that costs are distributed fairly. In this way, each tenant would pay for the services that he or she uses. Various food innovation centers nationwide have formed strategic partnerships with universities or technical colleges to provide food industry training. For example, The Rutgers Innovation Center provides food safety training and on-line courses (see: UW Platteville Continuing Education has expressed similar interest in a partnership with MHAFE. The businesses reviewed for this market study received substantial grants or subsidies in order to make the building rents more affordable for participants. MHAFE may require a similar subsidy. For example: o Financing for the Food Enterprise Center in Viroqua included $2 million from the Federal Economic Development Administration, a $1.8 million Midwest Disaster Bond, and other loans and lines of credit through six area banks. 30 o Rents at the Madison Enterprise Center are subsidized by Madison Gas & Electric Company and there is a revolving loan fund where tenants can get $20,000 to buy equipment. Rents are $8.25 per square foot. o Blue Mountain Station in Dayton, WA received a $1 million grant from the Washington State Community Economic Revitalization Board accessed 1/1/15

32 32 of 72 o Central WI Agribusiness Innovation Center received a $4 million Public Works and Economic Development Program grant from the Economic Development Administration (EDA) in BLUE MOUNTAIN STATION, DAYTON, WA Opened in Dayton, WA in 2013, Blue Mountain Station is a new 28-acre food park. Infrastructure has been installed on the first eight acres and the first building, the Artisan Food Center, was completed in December of With this new business park, the Port of Columbia is creating a cluster of artisan food processors featuring food tourism. According to their website, the Port of Columbia is developing Blue Mountain Station as the world s very first destination eco-food processing park dedicated to the recruitment and marketing of artisan food processors, primarily in the natural and organic sectors. Blue Mountain Station intends to be the anchor of a vertically integrated brand program beginning with the farmer and extending to the processor, the wholesaler, the retailer and, ultimately, to the quality-minded, health-conscious consumer. The park will blend sustainable, locally-produced agriculture with artisan food processing and food tourism (see: The Blue Mountain Station Artisan Food Center is a 6,912 square foot building that houses five food processing spaces, a commercial kitchen, a small retail area, and a public restroom under one roof. This concept is very similar to plans for MHAFE, which also features five food processing spaces and a small retail area. At Blue Mountain Station, the building was constructed to LEED standards. Their commercial kitchen is available to rent by the hour. In addition to the food processing businesses, a group of Dayton area specialty food producers, craftsmen and artists are forming a cooperative to sell a variety of hand-crafted products. The building was designed with windows into the food processing bays, allowing the public a peek at how the different foods are made. Figure 12 shows their floor plan. The Port of Columbia announced plans for Blue Mountain Station in The following year, it received a $1 million grant from the Washington State Community Economic

33 33 of 72 Revitalization Board to buy 28 acres of land. In 2011, the port used part of the money to improve eight acres with parking, water, sewer and roads. The Artisan Food Center was completed in December, The $1.25 million Artisan Food Center incorporates the ecologically friendly construction techniques, making it energy efficient. The landscaping will feature native plants, making it attractive for people who care about the environment (see: FIGURE (12): BLUE MOUNTAIN STATION ARTISAN FOOD CENTER FLOOR PLAN SOURCE: Blue Mountain Station website, FOOD HUBS MHAFE is not a regional food hub since its management team will not actively coordinate supply chain logistics, a USDA definition. However, in aggregate, the participants of MHAFE will operate as a regional food hub under the refined definition developed by the National Food Hub Collaboration, A regional food hub is a business or organization that actively manages the aggregation, distribution, and marketing of source-identified food products primarily from local and

34 34 of 72 regional producers to strengthen their ability to satisfy wholesale, retail, and institutional demand. 31 Food hub distribution infrastructure often includes warehouse space, variable temperature storage units, and food processing equipment which will likely be included in MHAFE s business plan. In the future, MHAEFE may include multiple buildings and a commercial kitchen. Since food hubs are community based, they often carry out a number of community services consistent with the mission of SWCAP. These may include donating to food banks, increasing consumer awareness of the benefits of buying local food, organizing educational farm tours, and increasing healthy food access by establishing delivery mechanisms into underserved areas. Figure 13 illustrates a food value chain, which is a collaborative business network comprising food producers, processors, distributors, marketers, and buyers who jointly plan and coordinate their activities to achieve common financial goals while advancing an agreed-upon set of social or environmental values such as healthy food access. 32 MHAFE s participants are expected to coordinate with community groups in this way. 31 Regional Food Hub Resource Guide, USDA Agricultural Marketing Service, April 2012, page 4 32 Regional Food Hub Resource Guide, USDA Agricultural Marketing Service, April 2012, page 12

35 35 of 72 FIGURE (13): FOOD HUB VALUE CHAIN SOURCE: Regional Food Hub Resource Guide, USDA Agricultural Marketing Service 5. EXTENT OF COMPETITION INCLUDING OTHER SIMILAR FACILITIES IN THE MARKET AREA There are no directly comparable business models within MHAFE s primary geographic target market, approximately 30 miles around Mount Horeb, WI. The following facilities are either indirect competition or outside MHAFE s service territory. The new Madison public

36 36 of 72 market is excluded from this list because, as primarily a retail market, it is unlikely to provide direct competition for MHAFE. VIROQUA FOOD ENTERPRISE CENTER The Food Enterprise Center in Viroqua, WI, is 83 miles from Mount Horeb, as shown on Figure 14. MHAFE is not expected to compete directly with the Food Enterprise Center because of the distance between the two facilities. FIGURE (14): LOCATION OF THE VIROQUA FOOD ENTERPRISE CENTER 83 MILES FROM MOUNT HOREB Opened in 2012, the Food Enterprise Center is located in a 100,000 square-foot facility formerly operated by NCR Corporation. Vernon Economic Development Association (VEDA) acquired the building when NCR closed in 2009 and eliminated 81 jobs. VEDA put together a multi-million dollar plan to repurpose the NCR manufacturing plant as the Food Enterprise Center. The financing included $2 million from the Federal Economic Development Administration, a $1.8 million Midwest Disaster Bond, and other loans and lines of credit through

37 37 of 72 six area banks. Tenants are all are involved in either distributing food or producing value-added food products. The building is located on 15 acres of flat land at 1201 North Main Street, Viroqua, with frontage to US Highway 14/61 and State Highway 27. The building features loading docks, ample parking, value-added kitchens, and built-out tenant spaces. Rents are negotiated individually with each tenant. Viroqua Food Enterprise Center SOURCE: VEDA website, MADISON ENTERPRISE CENTER Located 30 miles from Mount Horeb (see Figure 15) at 100 S. Baldwin Street, Madison, WI 53703, Common Wealth Development s Madison Enterprise Center is an economic development business model and their mission is job creation. This facility is within MHAFE s geographic target market but it is not a direct competitor since it is a business incubator and MHAFE is not targeting start-up companies. Also, it does not target food production or processing companies, although many are located there. These food-related tenants may relocate to MHAFE when they outgrow or age out of the incubator space (see:

38 38 of 72 FIGURE (15): LOCATION OF THE MADISON ENTERPRISE CENTER 30 MILES FROM MOUNT HOREB The Madison Enterprise Center is a general business incubator but houses many food production/processing businesses because the tenant mix reflects the overall economy and food businesses are currently very popular. Their current food-related tenants include these: Daselito Enterprises (locally made hot sauces), Potters Fine Foods (organic handcrafted crackers), and Quince & Apple (small batch preserves from the Upper Midwest). Rents are subsidized by Madison Gas & Electric Company and there is a revolving loan fund where tenants can get $20,000 to buy equipment. Rents are $8.25 per square foot and inflate 3% per year. Since this is an incubator, tenants are only allowed to stay three-to-five years. Admission is competitive and their Business Development Committee screens business plans. The Madison Enterprise Center attracts tenants because of their location, the opportunity to network with other entrepreneurs, relatively low rent and the revolving loan fund.

39 39 of 72 Madison Enterprise Center SOURCE: Mike DeVries, Hive of Activity, captimes.com, June 10, 2015 GARVER FEED MILL ARTISAN FOOD EMPORIUM (PLANNED) The City of Madison is negotiating with Chicago developer Baum Development on a $19.8 million redevelopment of the historic Garver Feed Mill and surrounding five acres near Olbrich Gardens on Madison s east side (see Figure 16). The project is expected to be completed by November 2016 and would include unique micro-lodging units for short-term rental, averaging 250 square feet. The renovation will center on food processing, and additional spaces will include an event and meeting venue, with on-site catering featuring Made in Garver products. Before the building can be purchased, the project will require a traffic impact study, a site plan review and conditional use permits City committee selects developer for Garver Feed Mill property, Abigail Becker, WI State Journal, March 19, 2015

40 40 of 72 Proposed Garver Feed Mill Artisan Food Production Facility SOURCE: Amber Arnold, Wisconsin State Journal archives Bachmann Construction would be the general contractor for Baum and is proposing a Food Makers building that would house local businesses. According to their press release, Calliope Ice Cream, Just Coffee, Old Sugar Distillery, Wisconsin Urban Wood and Potter s Coffee have expressed interest in the project. The majority of the site would be restored to original vegetation and open to the public. orchards, hops or grapes. 34 It would include demonstration gardens consisting of 34 Garver food, liquor production project gains support, Mike Ivey, The Cap Times, April 16, 2015

41 41 of 72 FIGURE (16): BAUM DEVELOPMENT SITE PLAN FOR GARVER FEED MILL SOURCE: THE CAP TIMES, APRIL 16, PRIMARY MARKET RESEARCH In November and December 2014, an survey was constructed in esurveyspro.com to understand whether potential users of MHAFE perceive a need for it. Seventeen questions were sent to 400 food producers or processors in southwestern WI after testing the survey instrument with five sample respondents. There was a 10% response rate to the survey (40 responses were received). SUMMARY SURVEY FINDINGS The survey results showed strong market demand by food processors or producers for a building in Mount Horeb that features a commercial kitchen, freezer storage, refrigeration, dry storage and marketing included in the base rent not to exceed $12 per square foot. The typical customer has been in business more than five years, manufactures a branded local product, has three employees and would rent less than 500 square feet.

42 42 of 72 Six respondents have a medium or high level of interest in relocating their existing business to MHAFE. Fourteen respondents said they would be willing to sign a non-binding letter of interest to support the market feasibility of this project. SURVEY RESULTS 56% of respondents have been in business more than five years. The average number of employees per food producer or processor is % of respondents manufacture a branded local product (see Figure 17) 18% are interested in dry or cold storage for seasonal extension of local foods (see Figure 17) 16% brand commodity local foods (see Figure 17) 14% are interested in support for product distribution (see Figure 17) FIGURE (17): WHAT TYPE OF FOOD PRODUCTION DO YOU PLAN TO DO? CHECK ALL THAT APPLY. Activity % of Respondents Manufacturing a branded local product 38.60% Dry or cold storage for seasonal extension of local foods 17.54% Branding commodity local foods 15.79% Distribution 14.04% Aggregation 7.02% Co-packing or contract manufacturing 7.02% Figure 18 shows a significant majority of respondents want refrigeration (76%), freezer storage (64%), dry storage (61%), a commercial kitchen (65%) and marketing (67%) included in the base rent. The interest in marketing suggests an opportunity to brand the MHAFE, its participants and the products produced there. Retail space and loading docks were moderately important. Mentoring, delivery trucks, office space and meeting rooms are least important.

43 43 of 72 On a Likert Scale of 1 to 5 (where 1 is least important and 5 is most important), refrigeration, freezer storage, and a commercial kitchen all ranked 4 or higher (see Figure 18). The implication is that MHAFE may fail to attract a large portion of the market if it does not have a commercial kitchen. FIGURE (18): RELATIVE IMPORTANCE OF BUILDING FEATURES IN BASE RENT Importance of Building Features in Base Rent Office Space Meeting Rooms Non-refrigerated Delivery Trucks Refrigerated Delivery Trucks Mentoring Traiing Retail Space Loading Docks Dry Storage Marketing Processing Equipment Commercial Kitchen Freezer Storage Refrigeration Likert Scale: (1 is least import and 5 is most important) Although 15 people requested special food processing equipment, there was little consistency about the type of equipment needed. Figure 19 shows a significant majority (84% of survey respondents) said they would expect to pay base rent per square foot between $8 and $12; significantly, 63% said they want rents between $8 and $10 per square foot.

44 44 of 72 FIGURE (19): EXPECTED RENT PER SQUARE FOOT Expected Rent P.S.F. 70% 60% 50% 40% 30% 20% 10% 0% 63% 21% 0% 11% 5% 0% 0% $8 to $10 $10 to $12 $12 to $14 $14 to $16 $16 to $18 $18 to $20 More then $20 p.s.f. 57% of respondents said they had the ability to self-finance and/pay for any leasehold improvements particular to their business and 43% said they did not. 67% of respondents said they need less than 500 square feet of proprietary space (see Figure 20). 80% 70% 60% 50% 40% 67% FIGURE (20): PROPRIETARY SPACE REQUIRED Proprietary Space Required 30% 20% 10% 0% 22% 11% 0 to 500 s.f. 500 to 1,000 s.f. 1,000 to 1,500 s.f. 0% 0% 1,500 to 2,000 s.f. Over 2,000 s.f.

45 45 of 72 Similarly, 78% of respondents said they need less than 500 square feet of shared space (see Figure 21). FIGURE (21): SHARED SPACE REQUIRED Shared Space Required 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 78% 11% 0 to 500 s.f. 500 to 1,000 s.f. 1,000 to 1,500 s.f. 4% 4% 3% 1,500 to 2,000 s.f. Over 2,000 s.f. Six respondents reported a medium or high level of interest in relocating their existing business to MHAFE. 14 respondents said they would be willing to sign a non-binding letter of interest to support the market feasibility of MHAFE. D. TECHNICAL FEASIBILITY 1. SUITABILITY OF THE SELECTED SITE FOR THE INTENDED USE The technical advisors for this project are Craig Stanley, CCIM (Certified Commercial Investment Member), Broadwing Advisors, LLC, Madison, WI, and Jeff Grundahl, NCI-Roberts Construction, Inc., Blue Mounds, WI. They have inspected the proposed site and developed construction budgets based on their assessment.

46 46 of FACILITY DESIGN AND/OR PROCESS PLAN The preliminary floor plan (see Figure 22) shows the layout of the proposed 11,500 square feet of space in the Viking Plaza shopping center. At this writing, the Landlord s proposal anticipates $6.00 per square foot triple net for 11,500 square feet, with the Landlord providing floor preparation, demised space, zoned HVAC in good working order, upgraded electrical service if necessary, two bathrooms, half of the cost of a new loading dock, upgrade of the storefront facade, signage, lighting, and acoustical ceiling tile replacement. Since it is anticipated that the Landlord will continue to own the building, MHAEDC intends to negotiate the terms of each tenant s lease separately. MHAFE s business plan does not anticipate a master leaseholder. FIGURE (22): PRELIMINARY FLOOR PLAN

47 47 of DEVELOPMENT COSTS AND SOURCES OF ASSUMPTIONS The following preliminary project budget was provided by Craig Stanley on May 11, The base project cost is $630,000 and landlord provided items amount to $300,250. The real estate project gap is $329,750 excluding $170,000 of individual tenant-specific items, i.e. retail area casework, freezer system and blast freezer (see Figure 23). FIGURE (23): PRELIMINARY PROJECT BUDGET Preliminary Budget 11,500 SF Mt Horeb Artesian Food Emporium Viking Plaza, Mt Horeb, WI Project Costs Interior build out -(Includes: Demolition, and paint, acoustical ceilings, exposed concrete w/ vinyl base, flooring in retail area, hollow metal doors, frames and hardware, HVAC (includes zoning for BE meats and Cheese Cave) Electrical, Plumbing (floor drains and sinks) and fire protection system PSF $340,000 $29.57 Refrigeration for Black Earth Meats and Cheese Cave $125,000 $10.87 Loading dock improvements $50,000 $4.35 Design / engineering $20,000 $1.74 Water/Fire Protection supply $20,000 $1.74 Upgrade electrical service $25,000 $2.17 Contingency $50,000 $4.35 Base Project cost $630,000 $54.78 Landlord provided items Bathrooms ($12,500 x 2) $25,000 $2.17 Dock - 1/2 of total $25,000 $2.17 floor prep ($3.50 psf x 11,500 sf) $40,250 $3.50 Facade makeover (landlord) $150,000 $13.04

48 48 of 72 Signage (Tenant / Landlord) $20,000 $1.74 Demising of space (steel stud partition walls w/sound batt insulation, drywall or specialized walls) $40,000 $3.48 Total Landlord contribution $300,250 $26.11 Real Estate Tenant Project Gap $329,750 $28.67 Tenant's specific items / FFE -- Tenant responsibility Retail Area Casework (Good Meats LLC) $15,000 $1.30 Freezer -1,000 SF, includes removal of concrete and all new freezer system (Sitka Salmon) $125,000 $10.87 Blast Freezer 200 sf (Good Meats LLC) $30,000 $2.61 Tenant Totals $170,000 $14.78 Total Tenant Gap (detail) $499,750 $ BUSINESS PRACTICES To support its brand and local reputation, MHAFE should develop business practices for participants in the food emporium. Examples include these: o MHAFE specializes in locally-grown produce, both organically and conventionally grown, on small- to medium-sized farms. o MHAFE supports the economic, environmental, social and nutritional well-being of the region we live in. o MHAFE growers practice sustainable farming methods that promote biodiversity and human health, including field and crop rotation, and minimal to no use of chemical pesticides o Participants will do business in a manner that is economically viable for farmers and ensure they are paid a fair and equitable price for their products. o Participants should adhere to honesty in advertising and in all representations to the public concerning certifications or claims about products.

49 49 of 72 o Participants should constantly try to improve the quality of their services, products and operations and will maintain a reputation for honesty, fairness and respect for their communities and customers. o Producers should adopt Integrated Pest Management best practices as they apply to their own farms. o Participants should accurately represent and label their products. E. FINANCIAL FEASIBILITY 1. THREE YEARS PROJECTED BALANCE SHEETS, INCOME STATEMENTS AND CASH FLOW STATEMENTS MHAEDC or its subsidiary LLC plans to earn service fee income by providing value-added services for the participants and property management services for the Landlord. The goal is to earn a modest profit. The following projected financial statements show incremental income and operating expenses associated with the MHAFE project (see Figure 24). The common costs shared by MHAFE participants include payroll and benefits, lease costs, utilities, snow removal, building insurance, joint marketing and real estate taxes. The projections assume the food emporium project will obtain grant or a zero percent interest loan to fill the estimated real estate leasehold improvements project gap of $329,750. Additional grants or loans will be sought to cover as much as possible of the tenant-specific leasehold improvements of $170,000. MHAEDC has not completed negotiating a contract with any potential participant. Therefore, the mix of participants represented in these financial projections is merely a sample. The actual, future participants in the MHAFE project have not been determined.

50 50 of 72 FIGURE (24): PROJECTED PROFIT AND LOSS STATEMENT Mount Horeb Artisan Food Emporium Full Years > Good Meats, LLC 20,500 20,910 21,320 Sitka Salmon 51,250 52,275 53,300 Crème DeCoulee 10,250 10,455 10,660 Landmark Creamery 10,250 10,455 10,660 Conscious Carnivore 10,250 10,455 10,660 Total Revenue 102, , ,600 Payroll & Benefits 23,092 23,554 24,025 Lease Payments 57,500 58,650 59,823 Operating Expenses 16,787 17,122 17,465 Total Operating Expenses 97,379 99, ,313 % of Revenue 95.00% 95.00% 95.04% Operating Income 5,121 5,224 5,287 % of Revenue 5.00% 5.00% 4.96% Non-Operating Income (Expense) Interest Expense Depreciation Amortization (63,000) (63,000) (63,000) Net Income Before Tax (57,879) (57,776) (57,713) Depreciation Amortization 63,000 63,000 63,000 Principal Reduction Total Cash Flow from Operations 5,121 5,224 5,287 memo: cumulative cash flow 5,121 10,345 15,632

51 51 of 72 FIGURE (25): PROJECTED BALANCE SHEET FORECASTED BALANCE SHEET Mount Horeb Artisan Food Emporium Opening Year 1 Year 2 Year 3 ASSETS Cash - 5,121 10,345 15,633 Accounts Receivable Site Improvements Buildings Technology & Computer Equipment Office Furniture Vehicles Total Fixed Assets Less: Accumulated Depreciation Net Fixed Assets Amortizable Costs 630, , , ,000 Less: Accumulated Amortization - (63,000) (126,000) (189,000) Net Amort. Costs 630, , , ,000 TOTAL ASSETS 630, , , ,633 LIABILITIES Long-term debt TOTAL LIABILITIES EQUITY Beginning Balance 630, , , ,000 Income (Loss) (57,879) (115,655) (173,367) TOTAL EQUITY 630, , , ,633 TOTAL LIABILITIES AND EQUITY 630, , , ,633

52 52 of FINANCIAL ASSUMPTIONS The sample financial projections prepared for this feasibility study include these key assumptions: o 10,000 square feet is leased to five participants including 1,000 square feet of shared retail space plus 1,500 square feet of shared common area. o All participants pay a pro-rata share of maintenance, utilities, insurance and taxes estimated at $1.50 per square foot. Common area expense assumptions were based on the budget provided in the real estate listing. o The landlord lease cost is negotiated at $5 per square foot for 11,500 square feet including 1,500 square feet of common area. o MHAFE hires a part-time project manager to provide and support value-added participant services. o All participants pay for MHAFE master lease costs of $3.75 per square foot that includes all value-added services described previously in this report. o Participant cost per square foot amounts to $10.25 per square foot. o Income per square foot to the imputed master leaseholder amounts to $10.25 per square foot. o Annual inflation is 2%. o Projections assume full occupancy. It is likely that MHAEDC will need to obtain grants or low-cost loans in order to subsidize rents for participants in MHAFE. Funding for federal grants tends to be announced annually. There is typically a two-to-three month window to submit applications and a three-to-six month wait until grant funds are released. However, the format of the required applications typically does not change significantly from year-to-year. It is therefore an advantage to draft these applications before the announced due dates. For USDA programs administered by state offices, USDA staff are frequently available to pre-review the applications for eligibility.

53 53 of 72 F. MANAGEMENT FEASIBILITY 1. CONTINUITY AND ADEQUACY OF MANAGEMENT MHAEDC or its subsidiary LLC intends to hire a part-time customer service representative to provide tenant services including marketing, community outreach and grant writing. In addition, MHAEDC s Executive Director, Brad Murphy, will provide project management oversight. He is a senior executive with strong leadership skills including strategic planning, marketing and sales, board/committee relations, public speaking and business/project management. 2. CONFLICTS OF INTEREST No conflicts of interest were identified. G. ACKNOWLEDGEMENTS ARTISAN FOOD EMPORIUM COMMITTEE: Walter J. Orzechowski, Executive Director, Southwest WI Community Action, Inc. Tracy Thompson, Sjölinds Chocolate House Dave Hoffman, Health Care Consultant (retired) Bill Thousand, CPA Charyn Grandau, Project Assistant PROJECT PARTNERS & CORE PROJECT TEAM: Walter J. Orzechowski, Executive Director, Southwest WI Community Action, Inc. Craig Stanley, Broadwing Advisors Jeff Grundahl, NCI-Roberts Construction, Inc. Brad Murphy, Executive Director, Mount Horeb Area Economic Development Corporation PLANNING ASSISTANCE: Linda Davis, Virtual Management Solutions,

54 54 of 72 H. PARTIAL LIST OF APPLICABLE GRANT PROGRAMS Possible sources of real estate gap financing include these: USDA Local Food Promotion Program Implementation Grant: (An eligible applicant is ) An organization or business entity that functions as an intermediary between producers (farmers or growers) and buyers by carrying out one or more of the following local or regional food supply chain activities to meet market demand: Aggregating, Storing, Processing, or Distributing. Eligible activities can include but are not limited to training and technical assistance for the business enterprise and/or for producers working with the business enterprise; outreach and marketing to buyers and consumers; and nonconstruction infrastructure improvements to business enterprise facilities or information technology systems. The maximum grant award is $100,000 and there is a 25% match requirement. Funds may be used for outreach and marketing to buyers and consumers or non-construction infrastructure improvements to business enterprise facilities. Southwest WI Community Action Program, Inc. received a $25,000 LFPP planning grant in USDA Rural Business Development Grants (RBDGS): RBDG is a competitive grant designed to support targeted technical assistance, training and other activities leading to the development or expansion of small and emerging private businesses in rural areas that have fewer than 50 employees and less than $1 million in gross revenues. There is no maximum grant amount for enterprise type grants; however, smaller requests are given higher priority. Generally, grants range from $10,000 up to $500,000. There is no cost sharing (match) requirement. Uses may include: o Training and technical assistance, such as project planning, business counseling/training, market research, feasibility studies, professional/technical reports, or product/service improvements o Acquisition or development of land, easements, or rights of way; construction, conversion, renovation of buildings, plants, machinery, equipment, access streets and roads, parking areas, utilities

55 55 of 72 o o o o o o o o o o Pollution control and abatement Capitalization of revolving loan funds including funds that will make loans for startups and working capital Distance adult learning for job training and advancement Rural transportation improvement Community economic development Technology-based economic development Feasibility studies and business plans Leadership and entrepreneur training Rural business incubators Long-term business strategic planning This program combines the former Rural Business Enterprise Grant (RBEG) and the former Rural Business Opportunity Grant (RBOG) programs. Municipalities, nonprofits & tribes are eligible to apply for grants for economic development to assist small & emerging businesses. One of the eligible project uses includes the construction, conversion, enlargement, repairs or modernization of buildings, plants, machinery, equipment MHAFE could fit under this definition, as long as the MHAEDC was the applicant and the businesses served met the program definition. This program has one application cycle annually. The deadline for FY15 has passed; the FY16 Spring deadline has yet to be announced. Further details can be found on the USDA website (see: Rural Economic Development Loan and Grant Program (REDLG): The Rural Economic Development Loan (REDL) and Grant (REDG) programs provide funding to rural projects through local utility organizations. Under the REDLoan program, USDA provides zero interest loans to local utilities which they, in turn, pass through to local businesses (ultimate recipients) for projects that will create and retain employment in rural areas. The ultimate recipients repay the lending utility directly. The utility is responsible for repayment to the Agency. Up to $1 million in loans may be requested. Loan terms are

56 56 of 72 zero percent interest for 10 years. USDA funds are issued to the intermediary at project completion. Under the REDGrant program, USDA provides grant funds to local utility organizations which use the funding to establish revolving loan funds (RLF). Loans are made from the revolving loan funds to projects that will create or retain rural jobs. When the revolving loan fund is terminated, the grant is repaid to the Agency. REDLG intermediaries pass the funding to ultimate recipients on to eligible projects. Examples of eligible projects include: o Business incubators o Start-up venture costs, including, but not limited to financing fixed assets such as real estate, buildings (new or existing), equipment, or working capital o Business expansion WI Community Development Investment Grant: The WI Economic Development Corporation (WEDC) offers the Community Development Investment Grant (see: The following information is from their website: The Community Development lnvestment Grant Program (CDl) will support urban, small city and rural community redevelopment efforts by providing financial incentives for shovel-ready projects with emphasis on, but not limited to, downtown community driven efforts. Funded activities should lead to measurable benefits in job opportunities, property values and/or leveraged investment by local and private partners. The program will support local initiatives with a downtown emphasis and incentivize economic development for communities. Eligible applicants are municipalities (including counties, cities, villages and towns), tribal entities and other governmental authorities designated by a municipality to apply on its behalf.under the following restrictions: Grant recipients must provide a minimum 3:1 match investment in project costs

57 57 of 72 No more than 30 percent of the match investment may consist of other state and/or federal grant sources Applicants may only receive one CDI Grant per fiscal year o WEDC may reduce or waive the match requirements Eligible activities include building renovation, demolition, new construction, infrastructure investment and professional services. Eligible projects for high-impact project based competitions include infill development. In 2015, funding for this program was $4.5 MM and grants were limited to 25% of project costs up to $500,000.

58 58 of 72 I. VIKING PLAZA REAL ESTATE LISTING

59 59 of 72 Tenant Rent Roll Tenant Sq. Ft. Date of Occupancy Monthy Rate (NNN) Vacant (Previous tenant: World of Variety) 11,500 N/A $5,700 Viking Hardware 5, $2,790 Weaver Auto Parts 4, $1,300 Le Cork & Lounge (Aka: Liquor Post/Brown s Liquor) 3, $2,067 Chang Jaing 1, $678 Vacant (Previous tenant: Curves) 1,956 N/A $1,300 Total 29,100 $13,835 Estimated Annual Expenses Expense Item Yearly Cost Responsibility Trash Removal $0.00 Tenant Parking Lot Lighting $ Tenant Landscape/Grounds $ Landlord Snow Removal $8, Tenant Insurance $5, Tenant Real Estate Taxes $22, Tenant Professional Fees: A. Attorney B. Accounting $ $ Landlord Repairs/Maintenance $1, Landlord The estimated NNN charges are $1.30/sq. ft.

60 60 of 72 J. SURVEY QUESTIONS The survey consisted of the following questions: 1. Do you currently own or operate a food processing or food production business in southwestern WI? 2. How many years have you been in business? 3. How many employees do you currently have? 4. What type of food production or food processing do you plan to do? 5. On a scale of 1 to 5 (1 is least important and 5 is most important), please indicate the importance of including the following features in the base rent in the new building. 6. If the new building has a shared use kitchen, do you need any special food processing equipment? If yes, please indicate what type of food processing equipment you will need. 7. What level of base rent per square foot would you expect to pay in the Mount Horeb Food Emporium? 8. Do you have the ability to self-finance and/or pay for any leasehold improvements particular to your business? 9. How far do you live from Mount Horeb? 10. How much proprietary space would you need in the Mount Horeb Artisan Food Emporium? 11. How much shared space would you need in the Mount Horeb Artisan Food Emporium? 12. If you need shared space, what type of shared space would you need in the Mount Horeb Artisan Food Emporium? 13. On a scale of 1 to 5 (1 is least important and 5 is most important), please indicate your level of interest in relocating your existing business to the Mount Horeb Artisan Food Emporium. 14. Would you be willing to sign a non-binding letter of interest to support the market feasibility of this project?

61 61 of Would you like us to contact you to provide additional information about this project? 16. If you would like us to contact you, please provide your contact information. 17. Would you like to provide any other information concerning this proposed project?

62 62 of 72 K. MT HOREB AREA ECONOMIC DEVELOPMENT CORPORATION 2015 ANNUAL REPORT In its second full year of operations the MHAEDC continues to have a positive impact on the community in its mission to expand the business base, reduce the tax burden on existing businesses and residents and increase employment opportunities in the Mount Horeb area. Our core group has now grown to over forty local business leaders who share ideas, networks and resources to achieve our mission. Projects and ongoing efforts include the following: Mount Horeb Innovation Center In October 2014, Duluth Trading Company (DTC) began occupying their renovated space in the former bank building on Main & First Street in downtown Mount Horeb. Owner, Steve Schlecht, decided this space would be named Mount Horeb Innovation Center to reflect his passion for innovative business and marketing strategies. Currently there are 90 DTC employees occupying this building and we are working with them to explore additional options should they outgrow the facility in the near future. MHAEDC was instrumental in naming this building and facilitating a significant grant through the Wisconsin Economic Development Corporation (WEDC). GrandStay Hotel & Suites in TIF3 This beautiful new facility opened its doors on May 21, 2015, just fourteen months after MHAEDC introduced this idea to our community. Mount Horeb Hotel Partners LLC raised over $1.5 million in local equity, and now provides a means by which travelers and event coordinators may consider the Mount Horeb area as an overnight destination. Located in the TIF3 district on the east side of Mount Horeb, this location has now become a lightning rod for new businesses. Two newly constructed businesses are expecting to open their doors before the end of 2015, with more in the planning stages. MH Artisan Food Emporium Last year a working group of the MHAEDC submitted a planning grant proposal to USDA to conduct a feasibility study and complete a business plan for a new regional food-processing center to be located in Mount Horeb. This $25,000 grant was approved and extensive research and outreach has been underway since. Four anchor tenants have expressed a strong interest and negotiations continue to find an appropriate facility. An additional group of food producers/processors has been identified and may choose to participate if/when an appropriate facility is secured. MH Equity Partners Bringing together entrepreneurs and investors has already proven beneficial to our community. MHAEDC developed a set of guidelines whereby this synergy may assist land and business owners to start or grow new businesses in our area. Two informational seminars have been presented, last September and again in June, to help refine these guidelines. MHAEDC is taking an active role in negotiating for space for these new businesses and assisting them to raise the necessary equity capital to be successful.

63 63 of 72 New Business Opportunities A committee of MHAEDC is actively identifying land, in the Village and surrounding the Village of Mount Horeb, which may be available for development in the future. Two significant tracts of land were identified for potential business park development. Inquiries from businesses seeking a certain type or size of property have been answered with showings, introducing business owners to land owners. Existing Business Expansion MHAEDC is committed to assisting existing Mount Horeb area businesses to grow to reach their full potential. Over the past eighteen months, over 32 key business owners have been interviewed to learn more about their common needs and unique opportunities. These business retention and expansion conversations will continue under the leadership of another MHAEDC committee. Our Executive Director has consulted with at least 12 business owners to facilitate locating new businesses or growing existing businesses in the Mount Horeb area. Marketing and Communicating the Mount Horeb Area Story MHAEDC works closely with The Village of Mount Horeb and the Mount Horeb Area Chamber of Commerce to spread the word about business opportunities in our community. MHAEDC s website is directed primarily toward businesses considering the Mount Horeb area for expansion or relocation. MHAEDC donors are listed on the website, along with the features and benefits of the Mount Horeb area. See it at Challenges Facing the Mount Horeb Area in 2015 & 2016 Proactively attracting new businesses to the Mount Horeb area is a priority for MHAEDC. We have learned that we are facing extreme competition from other municipalities who have developed business/industrial parks with significant incentives offered to attract new businesses. Over this next year MHAEDC intends to work with the Village of Mount Horeb to ensure that we have identified the land and facilities desired by new businesses looking at our community and that we become attractive to the employers and their employees. Planning for 2016 Based on this challenge, MHAEDC intends to conduct its annual planning session in August 2015 to determine the highest priority needs, projects and resources needed for continued success in Thanks for Your Support MHAEDC coordinates closely with the Village of Mount Horeb and the Mount Horeb Area Chamber of Commerce. We appreciate their cooperation and support. We also appreciate the support of over three dozen businesses and business leaders, who provide support through donations of time and money to our non-profit organization.

64 64 of 72 L. LETTERS OF INTEREST BLACK EARTH MEAT MARKET, LLC PO Box Mills Street Black Earth, WI Ph# April 13, 2015 Brad Murphy, Executive Director Mount Horeb Area Economic Development Corporation 712 S. First Street Mount Horeb, WI RE: LETTER OF INTEREST IN THE MOUNT HOREB ARTISAN FOOD EMPORIUM Dear Brad: I would like to express my interest in the proposed Mount Horeb Artisan Food Emporium (MHAFE). As you know, we are a federal inspected meat processing company that until recently was operating in Black Earth, Wisconsin. When the Village of Black Earth ordered us to move our slaughter operations, we lost our financing and were forced to close. We are working on resolving that litigation, and are actively engaged in finding a new facility to pick up the work we had left off. Our interest in Mount Horeb is for our further processing plant post- slaughter work as that will give us the opportunity to support several retail stores and renew our wholesale distribution routes. A cooperative facility is a critical need in local food production, as each company can share in the financial and time burden for space planning, equipment, marketing, trucking, and other value added services, including: Marketing/promotion on behalf of MHAFE participants Facilitation of sharing opportunities/joint ventures among MHAFE participants Seeking grant/funding opportunities on behalf of all MHAFE participants Promoting Food Tourism Forming strategic partnerships with outside organizations Facilitating vertical integration among MHAFE participants Seeking donors/ grants for rent subsidies for needy MHAFE participants

65 65 of 72 Supporting MHAFE participants brand development and enhancement It is my hope that we can find a way to create a suitable space for processing. That is the missing link in most local food infrastructure redevelopment and one I am most excited to see MHAFE addressing. I believe it will be a tremendous boon to the community in Mount Horeb and to the overall Dane County area. We are looking at a basic food-safe infrastructure suitable for a restaurant or other similar facility. Specifically, we are in need of washable surfaces to maintain sanitary conditions, a greasetrap/food waste drain, extensive refrigeration (preferably with humidity control), and access to smokehouses (either built inside with ventilation, or accessible outside under a covered area). The specific design can be variable depending on the space we have available. If we can put in the suitable equipment, I expect to rehire ten to twelve employees, and rebuild a business that could handle $3 to $5M in business per year. Very truly yours, /s/ K. Bartlett Durand, Jr. K. Bartlett Durand, Jr. Managing Member

66 66 of 72 April 17 th, 2015 Brad Murphy, Executive Director Mount Horeb Area Economic Development Corporation 712 S. First Street Mount Horeb, WI RE: LETTER OF INTEREST IN THE MOUNT HOREB ARTISAN FOOD EMPORIUM Dear Brad: I would like to express my interest in the proposed Mount Horeb Artisan Food Emporium (MHAFE). My business is Crème de la Coulee Artisan Cheese. I produce a range of French-style soft-ripened cheeses which required specialized aging or affinage conditions. I am very enthusiastic about the proposed MHAFE because, in addition to leasing needed space to local food producers or processors, it will provide several value-added services for participants: Marketing/promotion on behalf of MHAFE participants Facilitation of sharing opportunities/joint ventures among MHAFE participants Seeking grant/funding opportunities on behalf of all MHAFE participants Promoting Food Tourism Forming strategic partnerships with outside organizations Facilitating vertical integration among MHAFE participants Seeking donors/ grants for rent subsidies for needy MHAFE participants Supporting MHAFE participants brand development and enhancement MHAFE has the potential to help expand my business by building a space dedicated to affinage. This will help increase inventory, improve quality control, and improve food safety. Certain improvements will need to be made to the space in order for it to be suitable for cheese affinage. These include Sanitary walls and flooring, to meet all applicable dairy processing requirements put forth by the Wisconsin Department of Agriculture, Trade, and Consumer Protection (WDATCP) Segregation from other units in the space, including separate air-handling with positive air pressure relative to common areas A de-contamination air-lock, where affinage workers will change out of street clothes/shoes into dedicated facility clothing and footwear Floor drains, with floors slopped to drains.

67 67 of 72 Hand washing sinks in areas where there is cheese handling Several separate rooms for affinage, which will allow for different environments with different humidities, temperatures, and air flow. A separate cut-and-wrap room, for cutting and wrapping cheese A separate washing area, with a dedicated floor drain, multi-compartment washing sinks, a Clean-Out-of-Place (COP) tank, and sanitation tank for ensuring all affinage equipment is kept in sanitary condition. A utility room located outside of the unit (and potentially shared with other tenants in the space) for providing hot water for the washing sinks and steam for the COP tank. Sincerely, Bill Anderson Cheese maker and Affineur Crème de la Coulee Artisan Cheese

68 68 of 72 Sitka Salmon Shares LLC 2900 West Main Street Galesburg, IL April 16, 2015 Brad Murphy, Executive Director Mount Horeb Area Economic Development Corporation 712 S. First Street Mount Horeb, WI Dear Brad, RE: LETTER OF INTEREST IN THE MOUNT HOREB ARTISAN FOOD EMPORIUM I would like to express our continued interest in the proposed Mount Horeb Artisan Food Emporium (MHAFE). As you know, we are a Wild Alaskan Seafood distribution company that is operating principally out of Galesburg, IL. Our interest in Mount Horeb is for opening a Wisconsin Fish-Hub that will allow us to better serve our regional clients throughout Wisconsin and Minnesota. Sitka Salmon Shares is very interested in the MHAFE and more broadly in Mount Horeb. Indeed, depending on how the final numbers work out, I feel strongly that Mount Horeb could be a top choice for our company due to its excellent strategic proximity to west Madison, LaCrosse and Minneapolis. At the same time, we must continue to do due diligence on other sites in Dane County. So far, we have received little information about what the ultimate cost per square foot on Viking Plaza/MHAFE will be. Without such information we cannot end our analysis of Mount Horeb or the other sites we are looking at in Dane County. The cost of the site will play a significant--if not THE most significant--role in our decision-making. The difference between Viking Plaza coming in at $5 per square-foot and $12 per square foot probably means the difference between a "lean yes" and a firm no, from our perspective. If we can first get to that lower square footage cost we will be looking to begin improvements immediately with a move in timeline of January 5, We are looking at basic food warehouse and distribution infrastructure suitable handling, storing and packaging frozen seafood. Our square footage needs are somewhere between 7,000 and 9,000 square feet which includes office space for 8-10 full time staff. More specifically, we are in need of washable surfaces to maintain sanitary conditions, a mop closet with a three basin sink,

69 69 of 72 extensive freezer space ( sq. ft.) The specific design can be variable depending on the space we have available. In total we anticipate a full operation to employ full time employees and 4-6 seasonal employees and gross $3-5M annually. Sincerely, Jason Croft Wisconsin Coordinator Sitka Salmon Shares

70 70 of 72 Trillium Natural Foods Community Co-op 513 Springdale Street Mount Horeb, WI March 4, 2015 Brad Murphy, Executive Director Mount Horeb Area Economic Development Corporation 712 S. First Street Mount Horeb, WI Re: Letter of Interest in the Mount Horeb Artisan Food Emporium Dear Brad: On behalf of the Board of Directors of the Trillium Grocery Co-op, I d like to express our interest in the proposed Mount Horeb Artisan Food Emporium (MHAFE). Our store in the downtown business district offers organic, local and bulk groceries and related items. Tracing roots through cooperatives and natural food outlets back to the 1970s, Trillium incorporated as an employeeowned co-op business in Two years ago this month, we reorganized as a member-owned co-op, and to date nearly 200 people, almost all local, have purchased $125 owner shares in the co-op. This week we ve initiated a membership drive to expand this committed core group, in conjunction with a member bond drive to fund expansion and relocation of our business. We are an established but struggling local business, poised to create an environment in which we can grow in order to continue employing people locally. We would most certainly benefit from several value-added services for MHAFE participants: Marketing/promotion, pursuant to another arm of our mission which we ve identified as needing expansion educating about nutrition ; Facilitation of sharing opportunities/joint ventures, as well as partnerships with outside organizations, some of which we might bring from the co-operative sphere; Seeking grant/funding opportunities; Promoting Food Tourism, already a segment of Trillium Co-op s sales but ripe for development; Facilitating vertical integration among MHAFE participants; Seeking donors/grants for rent subsidies, which we may initially need as well; Supporting brand development and enhancement. We would quite likely sell products which other vendors in the Emporium produce. In particular, our business would either use the kitchen ourselves to make grab and go deli items for which we