Warren approaches Hope & Main incubator vote

Lisa Raiola goes over plans for the Hope & Main kitchen incubator Friday morning. Lisa Raiola goes over plans for the Hope & Main kitchen incubator Friday morning.

Lisa Raiola goes over plans for the Hope & Main kitchen incubator Friday morning.

In two weeks, Warren voters will head to the polls to decide the fate of the Hope & Main kitchen incubator project, which would bring $3 million in federal investment to the shuttered Main Street School.  The project would bring the state’s first kitchen incubator — and according to proponents, hundreds of jobs — to Warren. Town officials have supported the project for three years now, and the non-profit’s founder, Lisa Raiola, has high hopes for the vote. She and other proponents will host an open house at the school from 7 to 9 p.m. next Thursday, Oct. 11, and the public is welcome to attend. Here’s a primer:

 What is a kitchen incubator? It’s a culinary business incubator offering space to chefs, farmers, fishermen and others who want to start or grow a food-based business. There will be four commercial-grade kitchens accessible by an elevator to be installed in the rear.

Incubees will be given training, access to office equipment, storage and market space. There will be a demonstration kitchen for cooking classes, and a 2,000-square-foot event center for events and seminar. Out back, the plan is to have a farmer’s market every Saturday at which Rhode Island farmers, fishermen and food producers can sell their wares.

How will it create jobs? Hope & Main estimates that the incubator will produce the equivalent of 236 full-time jobs in various employment sectors. That includes direct jobs from people being able to market their wares, to indirect ones, which stem the impact Hope & Main will have on existing businesses (food suppliers, etc).

Who can use it? Anyone with an idea and a product. Potential incubees will be required to submit a business plan, and they will be required by Rhode Island law to undergo food safety training, have a food processing license and have product liability insurance.

How much will it cost? The plan is to charge incubees approximately $22 to $25 per hour. Said Ms. Raiola: “That is extremely affordable for people in a startup mode. We’re looking for business ideas where incubees would be using at least 10 hours a week. That seems to be the point where it would be viable.”

Is there financial aid for those who can’t afford the fee? Yes. Warren residents will be able to tap into a $110,000 micro-enterprise revolving loan fund. The money was obtained by town planner Caroline Wells through a CDBG (Community Development Block Grant). It will be used for low to moderate income residents who wouldn’t otherwise be able to afford training, specialized materials, or other required costs and fees.

What’s the sale price for the school? The Warren Town Council has signed a purchase and sale agreement to buy the school for $125,000, contingent on Financial Town Meeting Approval on Monday, Oct. 15. Until last month, the most recent valuation of the property was done by the town’s appraisal firm, Northeast Appraisal Group, in 2006. At that time, while the school was still occupied, the firm valued the building and land on which it sits at $1.113 million. Last month, town treasurer Cathy Maisano commissioned an updated tax assessment based on current market conditions. The updated value came in at $350,000, or $250,000 for the vacant building and $100,000 for the land.

Is the sale price low? Town officials said the price doesn’t tell the whole story. For instance, the building was first advertised for sale or lease in 2009, and Warren received just one proposal — from Hope & Main. In the years since, the local market has become gutted with several decommissioned schools, vacant mills, storefronts and other spaces.

“Hope & Main is borrowing money from the USDA to redevelop the Main Street School and start a business,” a town informational sheet reads. “They will need to pay back this loan with interest. We want them to succeed and demanding a higher purchase price makes their effort less stable.”

Couldn’t Hope & Main turn around and “flip” the building for profit once it buys it? No. The USDA, which is supplying the $3 million loan, requires that the property to serve as collateral for the loan. Thus, the building cannot be “flipped” for profit.

How much is the town paying to maintain the building? It currently costs the town about $22,000 to maintain the building. If the sale goes through, those costs would be borne by Hope & Main.

Will Hope & Main be taxed? Hope & Main would pay the state about $15,000 in tangible taxes (taxes on equipment). These taxes depreciate over time as equipment ages, but town officials  estimate Hope and Main will pay about $70,000 in tangible taxes over a 10-year period. Those taxes must be paid by state law, so this is not on the negotiation table.

In addition, Hope & Main will pay land taxes of about $2,000 per year (the land does not have a lot of value). The negotiation point is the taxes on the building itself. The town expects the building’s value to increase over the current $250,000 with the addition of an elevator and loading dock, but they are not adding more square footage so it won’t be a huge increase.

Wasn’t the original plan to lease? Lisa Raiola’s original vision for Hope & Main was a partnership between her group and the Town of Warren, in which Hope & Main would lease the building and share proceeds with the town. For a small outfit dependent in large part on loans and grants, the lease arrangement was originally a crucial part of the plan, as “front loading” the business with debt from the start would make the project difficult, Ms. Raiola said. Town officials agreed, too, and months ago signed a memorandum of understanding with Ms. Raiola in which both sides spelled out what they would bring to the table if the building were to be leased long-term.

Then why buy? Hope & Main was obliged to accept debt after all when it became clear that the United States Department of Agriculture required ownership, not a lease, in order to release a $3 million low interest loan to the group.

“I never wanted to get into the Real Estate business,” Ms. Raiola said Friday. “We had planned a lease arrangement all along.”

Is the project still viable with this debt? Yes, Ms. Raiola said. The project is getting a 40-year loan for $2,999,900, at a 3.5 percent rate.

“The cash flow projections we have can handle that note,” she said. “The board will not take on the responsibility of a $3 million note without feeling that we can pay it. The original plan didn’t have a debt obligation of this size, but we traded all of that off to get the full amount of funding. (Apart from tuition) we are a 501-C3 non profit organization, so we can fund-raise for a certain percentage of our revenue.”

Why is the USDA supporting this project? The federal agency has come up with a five year agricultural plan for the State of Rhode Island which concludes that an area of concern in the state is the lack of infrastructure for local food producers. Though farming and local food production is one of the biggest areas of growth for the state, Rhode Island lacks the infrastructure to support it. Thus, locally made products are leaving the state. USDA officials would like to change this trend.

Who will run Hope & Main? The organization is run by a 13-member board of directors. Among the directors are EDB chairman Brandt Heckert, Ms. Wells, Todd Blount of Blount Fine Foods, Joe Simione from the Sunnyside, David Frerichs, an architect and others.

Will Ms. Raiola be paid? No. Ms. Raiola is the assistant vice president for university relations at Roger Williams University in Bristol, has no plans to leave that job, and will not be compensated for her role in Hope and Main.

Then what’s her motivation? A cancer survivor, Ms. Raiola originally sought to establish a program to deliver healthy, local food to cancer patients, expanding that idea into a kitchen incubator after hearing about similar outfits elsewhere.

“I thought, what a great opportunity,” she said. “I’m not a developer, I’m just a person who thought, ‘What a great idea for the community, for the state, what a great way to employ people who are chronically unemployed or under-employed.’”

When is the open house? The open house runs from 7 to 9 p.m. next Thursday, Oct. 11, at the school. There will be local food, beer and wine, as well as demonstrations and tours.

When is the vote? What’s required? The town will hold a special Financial Town Meeting on Monday, Oct. 15, at Warren Town Hall. In order for the vote to take place, a quorum of 125 qualified voters much be reached. Of that 125, a majority must vote for the sale in order for the sale to pass.

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