Renaissance Center Feasibility Study

THE RENAISSANCE CENTER FEASIBILITY STUDY
| C R E AT E D J A N U A R Y 2013
PA G E I N T E N T I O N A L LY L E F T B L A N K
SPECIAL THANKS TO: M T. Z I O N B A P T I S T C H U R C H L O C A L I N I T I AT I V E S S U P P O R T C O R P O R AT I O N B U S I N E S S O W N E R S H I P I N I T I AT I V E
SUPPORTING PARTNERS
INDIANA UNIVERSITY HEALTH INDIANAPOLIS NEIGHBORHOOD RESOURCE CENTER IVY TECH COMMUNITY COLLEGE THE CHILDRENS MUSEUM OF INDIANAPOLIS

TA B L E O F C O N T E N T S
UNDERSTANDING
1 | BACKGROUND
[ CHURCH AND BUILDING ] [ MID-NORTH COMMUNITY ] [ NNDC & BOI ] 9 9 10
THE CONCEPT
1 | COMPARING OPTIONS
[ COMMUNITY SERVICES ] [ COMMERCIAL KITCHEN ] [ OFFICE SPACE ] 13 13 14
2 | PROJECT PARAMETERS
[ ASSUMPTIONS ] 10
2 | EMERGING CONCEPT
[ ENTERPRISE CENTER CONCEPT ] [ COMMERCIAL KITCHEN ] 11 11 11 11 [ OPERATIONS ] 14 17 17
3 | INPUTS
[ NEIGHBORHOOD ] [ SERVICE PROVIDERS & TENANTS ]
3 | FEASIBILITY
[ CAPITAL IMPROVEMENTS ] [ MARKET POSITION ] [ SPACE ANALYSIS ] [ LEASING STRUCTURE ] [ OPERATING BUDGET ] [ FEASIBILITY ] [ OPERATING SHORTFALL ] 18 20 21 22 24 24 24
[ INDUSTRY EXPERTS ] [ RESEARCH & LEARNING ]
RENAISSANCE CENTER FEASIBILITY STUDY
C R E AT E D J A N U A R Y 2013

TA B L E O F C O N T E N T S
4 | ORGANIZATIONAL PLAN
[ GOVERNANCE/BOARD ] [ OWNERSHIP ] [ INTERMEDIARIES ] 29 30 30
NEXT STEPS
1 | ALTERNATIVE DIRECTIONS
[ IMPLEMENT AT RENAISSANCE CENTER ] [ ENTREPRENEURIAL COMPONENT ] [ STABILIZATION FOR RENAISSANCE CENTER ] 30 31 31 34 35 35
5 | FINANCIAL RESOURCES
[ CHARITABLE FOUNDATIONS ] [ FEDERAL, STATE, & LOCAL GRANTS ]
APPENDIX
[ APPENDIX A ] [ APPENDIX B ] 37 39 40 44 45
[ PRIVATE LENDING ]
6 | CRITICAL ISSUES
[ SECURE KITCHEN TENANT ] [ NON-REVENUE TENANTS ] [ CAPITOL IMPROVEMENTS ] 32 32 33
[ APPENDIX C ] [ APPENDIX D ] [ APPENDIX E ]

| C R E AT E D J A N U A R Y 2013
[ INTRODUCTION ]
With the urging of several community partners and in collaboration with Business Ownership Initiative (BOI), Near North Development Corporation (NNDC) undertook the task of analyzing and determining the feasibility of repurposing a former nursing home facility into a contributing community asset that would provide opportunities to the Mid-North community. The following report, funded by Local Initiatives Support Corporation (LISC) is based on the collection of interviews, discussions, analysis, data, and recommendations that occurred from April 2012 to December 2012. Over the course of nearly a year, the communityled initiative held interviews with individuals, representatives of community organizations, and business owners in search of the optimal mix of tenants, uses, and services that would create a sustainable business model for the facility. While the group uncovered various entities and organizations that would add to the richness of the concept and benefit the community, the real standout in the whole process was the demand and support for increasing access to entrepreneurial opportunities. With this information in hand, the group shaped a concept dubbed the Enterprise Center, focused on providing support and services to entrepreneurs and small-businesses through the development of affordable, flexible office spaces that connected tenants to built-in supportive services including educational workshops, one-on-one business counseling, and networking events. This report portrays the research, data, and anecdotal evidence that led to the recommendation to repurpose the facility into an enterprise center.
U N D E R S TA N D I N G | 1
1 | BACKGROUND
[ CHURCH AND BUILDING ]
The Mt. Zion Renaissance Center originally operated as a 106-bed nursing home facility, built in the 1960s, they were forced to cease operations in the late 1990s. In spite of this setback, the Mt. Zion Baptist Church (MZBC) congregation continued to maintain the building and look for a new user. Currently, the church operates the facility as low cost office space, allowing organizations, business, and church entities
IMAGE 1: The exterior of the Mt. Zion Renaissance Center (2012). The single-story stone building, owned and operated by the church, was once a 103-bed nursing home and currently serves as office and community space.
[ MID-NORTH COMMUNITY ]
Over the last 2 years, the six Mid-North neighborhoods collaborated to create the MidNorth Quality of Life (QOL) Plan. This planning process and action-oriented implementation plan allowed the community to prioritize needs and identify organizations, individuals, and community groups responsible for implementation. In support of the QOL, a group of community leaders saw potential to transform the former nursing home into an asset. The configuration of the building lends itself to house various organizations and small businesses and sparked initial ideas ranging from offerings in healthy cooking classes, health and wellness services, to entrepreneurial space available to local start-ups. Community priorities pointed to five key areas that warranted further examination. The action items were taken from the QOL and included: Foster Development of Local Business & Encourage Entrepreneurship; Create Low Cost Incubator Space with High Value Amenities;
to rent space at very-low cost or no cost. With sporadic occupancy, many of the building systems have grown outdated, in disrepair, or in need of costly renovations to bring the building up to current standards. With the kitchen gone and attracting very few tenants, representatives from MZBC approached various community organizations to take a look at the space and see how it could be re-purposed into an asset to the Mid-North community.
1 | U N D E R S TA N D I N G
Connect Residents to Educational Opportunities; Improve the Financial Aptitude of Residents; and Increase Residents Access to Wellness Services.
2 | PROJECT PARAMETERS
[ ASSUMPTIONS ]
Early on, a set of parameters or principles was established to guide the feasibility study. assumptions and considerations include: Do no replace or overlap with existing services in community; High up front capital improvements must come from grants & contributions: unlikely to be supported by operating revenue; Operations must be financially sustainable; MZBC will continue to be long-term property owner; Kitchen is central to the concept, unique attractive element; and Daycare remains at no cost. The
Mt. Zion Baptist Church

Mt. Zion Baptist Church is located at 3500 Graceland Avenue in the Crown Hill Neighborhood. Since its founding, the church established ministries and closely held nonprofit subsidiaries to fulfill the needs of its community from the cradle to the grave including: Senior Housing Complexes, Daycare & After-School Program, and a Certified Credit Union.
[ NNDC & BOI ]

Led by Near North Development Corporation (NNDC), a series of collaborative brainstorming sessions ensued and the group determined further analysis was necessary to understand the opportunities at this facility. In April of 2012, the group applied for and was awarded a $10,000 Catalyst Grant from the Local Initiatives Support Corporation (LISC) to investigate the potential of the building. In partnership with Business Ownership Initiative (BOI), NNDC set out to determine the optimal mix of tenants that would create a financially feasible model.
To learn more about their work in the community visit www.mzbchurch.org.
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U N D E R S TA N D I N G | 1
3 | INPUTS
[ NEIGHBORHOOD ]
Tapping into the existing QOL community network, meetings were held with the Business Development Action Team (BDAT) to gather input and test concepts with the group engaged in entrepreneurial activities. Additional open-invitation public meetings were held to update community members to the ongoing progress of the feasibility study and provide opportunities for feedback.
IMAGE 2: Julie Grice (BOI) discusses the entrepreneurial opportunities related to the Renaissance Center with members, Wili DeLarosa and Ron Gilbert, of the Business Development Action Team (BDAT) at a public meeting.
[ INDUSTRY EXPERTS ]
Multiple discussions with industry experts took place over the course of the project, including real estate brokers, kitchen tenants, kitchen operators, entrepreneurial and small business, development specialist, and nonprofit management. These conversations provided insight into the market potential of various models considered, filling in the gaps where data is hard to obtain.
A weekly update
e-newsletter was distributed, briefly summarizing the progress of the study.
[ SERVICE PROVIDERS & TENANTS ]

Fifteen (15) interviews were conducted in August and September of 2012. Interviews were targeted towards organizations that expressed interest as potential tenants or ability to bring financial support to the center. To see a complete list of interviews and meetings held in conjunction with this project see Table 1A.
[ RESEARCH & LEARNING ]

In addition to anecdotal evidence, research was gathered for the core components - community space, commercial kitchen, business incubator, and commercial office. Local and national coworking and business center models were explored. Comparable lease rates and office occupancies were gathered, supplementing the information gleaned from industry experts.
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1 | U N D E R S TA N D I N G
TABLE 1A: KEY DATES

Table 1A notes key dates of interviews and meetings related to the project which started in April 2012 with an initial brainstorming session and concluded with the submission of this report in early 2013. A majority of the interviews took place from August through September with public meetings occurring on a nearly monthly basis.
DATE
EVENT / INTERVIEW
DATE
09|12|2012 09|19|2012 09|20|2012 09|21|2012 09|21|2012 09|23|2012 09|25|2012 10|02|2012 10|10|2012 10|22|2012 10|24|2012 11|07|2012 11|02|2012 01|03|2013
EVENT / INTERVIEW
TKC/Pangea MFCDC IU Health Citizens Energy MLK Center Ivy Tech, Culinary Program Public Meeting #2 MZBC Ivy Tech MZBC Stakeholder Meeting Public Meeting #3 Real Estate Broker MZBC
04|19|2012 Brainstorming Session Kick-Off 07 20|2012 Stakeholder Meeting 07|31|2012 MZBC Health & Citizens 08|01|2012 IU Energy 08 |06|2012 INRC 08|07|2012 IU Health Museum of 08|08|2012 Childrens Indianapolis 08|14|2012 Private Caterer 08|23|2012 KI ECO Center 08|29|2012 Private Business 08|30|2012 Ivy Tech Meeting/Public 09|11|2012 BDAT Meeting #1 09|12|2012 Butler University
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THE CONCEPT | 2
1 | COMPARING OPTIONS
This section takes a deeper look at each of the core components - community services, commercial kitchen, entrepreneurial or business incubator, and commercial office space - to understand the viability and allocation of space dedicated to each component.
[ COMMERCIAL KITCHEN ]
Initial thinking indicated endless options for the reuse of the kitchen, topics that garnered the most attention were healthy food initiatives, cooking classes, availability to home-based chefs and bakers, food trucks, repass dinners, and catering kitchens. Two types of kitchen operations were investigated. The first option allows for space to be leased in small time increments for use by multiple tenants. Market demand for this type of space was found to be limited, but the community supported this as a way to encourage small business growth. The more viable option looked at leasing the space to a single kitchen tenant, who in turn had the ability to sublease space to individual users as described above. Discussions with potential tenants including chefs, caterers, and home-based cooks, as well as representatives from Ivy Techs Culinary Program, indicated the space was ideal for this use.
[ COMMUNITY SERVICES ]
IMAGE 3: The Renaissance Center is an unique facility due to the availability of commercial kitchen space. A majority of the equipment was liquidated, but the major systems are still in place and provide the opportunity to re-establish the kitchen for community or entrepreneurial use.
Research found that very little market demand exists for space for community services and initial interest in the space waned once lease rates at or near market rates were required. Additionally, there is an abundance of community services already offered in and near Mid-North, housing them at the Renaissance Center would be redundant and duplicative of existing services. While space for community services is an appropriate use, it should be kept to a minimum to ensure the facility supports a sustainable business model.
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2 | THE CONCEPT
There is opportunity to support leasable kitchen space, but the optimal approach is to attract a single-tenant kitchen operator with an established business generates a consistent revenue stream.
2 | EMERGING CONCEPT
[ ENTERPRISE CENTER CONCEPT ]
To establish a facility focused on incubating entrepreneurship within the Mid-North area, the use of a shared working environment offering small, flexible work space combined with training and support from a variety of business, education, and community-based organizations provides the greatest opportunity to meet the goal stated in the Mid-North QOL Plan. This concept goes beyond a traditional co-working space to include a supportive, educational component that provides an added level of support for start-ups to increase their probability of success. This concept, dubbed the Enterprise Center shown in Figure 2A, is part co-working space, part incubator; integrating beneficial aspects of both models to create a supportive, collaborative environment to help local entrepreneurs and small businesses flourish. The Enterprise Centers major attractor
[ OFFICE SPACE ]
The general office market is saturated with Class C space similar to what could be offered at the Renaissance Center. To limit competition and redundancy, the facility needs to offer space that is attractive to a growing niche market - entrepreneurs. This subset of the office market is currently underserved and research suggest this market will continue to grow. The use becomes even more attractive when small, flexible space is offered in conjunction with supportive and shared services. Demand for small, flexible space marketed towards entrepreneurs is in high demand. With very few facilities available to meet this growing demand, a majority of the space should be dedicated to this use in an attempt to establish the facility as a center for entrepreneurial growth.
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THE CONCEPT | 2
FIGURE 2A: ENTERPRISE CONCEPT

Figure 2A represents the various components of the Enterprise Concept. To fully take advantage of this idea, both shared space and services must be paired with the entrepreneurial support and training.
CO-WORKING + SHARED SPACE

AFFORDABLE OFFICE SPACE BACK OFFICE & SERVICES CONFERENCE ROOMS FLEXIBLE WORK SPACE
ENTREPRENEURIAL SUPPORT
TRAINING & EDUCATION NETWORKING & EVENTS
ENTERPRISE CENTER
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2 | THE CONCEPT
revolves around the idea of built-in entrepreneurial provisions. By tapping into the existing network of business support services, tenants have access to a wide array of classes, workshops and networking events at no additional cost. Organizations such as Business Ownership Initiative (BOI) and Ivy Tech Community College are among those who already expressed interest in collaboration. By providing many of the necessities of a typical office, the Enterprise Center reduces the overhead start-up cost; eliminating the financial barrier many entrepreneurs face when starting a business. Shared services reduce the up-front cost of operating a business and many are included with the monthly membership fees. Services include flexible and low-cost office space, common area office infrastructure, conference rooms and private meeting space, access to college interns, continuing education, small business services, WiFi, Telecom and IT services, secured, monitored access,
entrepreneur - focused programming, networking events, and a supportive community environment. The cost of these services would be shared among tenants, providing access to higher cost amenities not offered in standard office leases. Additional onsite amenities include access to food services and low cost child care. While research showed an abundance of office space in the Downtown Indianapolis market, the ability to rent very small offices is limited. The Enterprise Center will target this underserved market by offering a variety of small, flexible spaces offered at several affordable rent levels, suiting the varying needs of independent workers, start-ups, at-home businesses, web-based companies and traveling sales persons. In addition to the flexible office space, the decision was made to include areas that encourage crosscollaboration and networking between tenants. Tenants of the Enterprise Center will have access to an open, coffee shop-like atmosphere where they can unwind, socialize with other tenants, and
IMAGE 4: The dining area of the Renaissance Center would be repurposed to create a cafe space for the enterprise center, providing flexible co-working space and increasing opportunities for tenants to network.
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THE CONCEPT | 2
meet with clients. (In addition to the supported networking events, these opportunities for
suggestions for the kitchen space at the Renaissance Center is available in Appendix A The most consistent revenue stream was determined to come from a single tenant user, most likely a caterer, who would have the opportunity to lease out the secondary portion of the kitchen as rental revenue for their business. This operator would have the exclusive rights to provide meals for the adjoining daycare and the Enterprise Center provides multiple captive markets through its event, meeting, and cafe space. Other possible clients include the church and the adjacent Crown Hill Cemetery to supply space for repass meals or social gatherings.
What is an Enterprise Center?

The best way to ensure the stainability of small businesses and spark the fuse of entrepreneurship in the community is to bring people together in a collaborative work environment. What it offers: low-cost office space, common area and office infrastructure, conference and private meeting rooms, onsite daycare, a commercial kitchen, access to education, small business services, WiFi, monitored access, entrepreneur - focused programming, and regular networking events.
accidental interactions provide a unique asset not found in most traditional office space, but is becoming popular among many of the countrys most forward thinking companies like Google and Facebook, and many more are imitating this concept within their own office structures.) The ability to interact with peers increases creativity and outsidethe-box thinking, while lending an additional level of support for the tenants who understand their peers struggles and concerns.
[ COMMERCIAL KITCHEN ]
Considered a critical component of the project, the possibility of re-establishing the commercial kitchen is an attractive endeavor that would blend well with the Enterprise Center concept. To further understand the opportunities related to it, the services of a kitchen design consulting firm were contracted. Based on their knowledge of the industry and work on similar projects, they suggested the space could efficiently be repurposed as two production kitchen suites. Their initial review and
[ OPERATIONS ]
The management of a multi-tenant, multi-use facility is complex, requiring dedicated staff people to manage the various components. The facility will need a property manager to lease space and coordinate rental and event functions. Independently operated from the remainder of the building, the kitchen would be managed by the tenant with the ability to sublease to additional kitchen users. Separately from the property
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2 | THE CONCEPT
management staff, the Enterprise Center requires a dedicated person to provide on-site support to tenants and assist with back office functions. The provision of entrepreneurial services and support would be coordinated through this staff person and they would be responsible for scheduling and coordinating workshops, classes, and networking events with various businesses and organizations. There is a potential to supplement these services by creating internships or learning programs in partnership with local universities. Ivy Tech representatives were interested in how this opportunity might align with their School of Hospitality, Entrepreneurial studies, and various business programs during initial conversations on the topic. Funding for both positions is included in the projected expenses detailed in Appendix B.
3 | FEASIBILITY
[ CAPITAL IMPROVEMENTS ]
The feasibility confirmed initial assumptions that capital improvements would not likely be recaptured through tenant leases. Because of this, all capital improvements will need to be funded separately, employing an aggressive capital improvements fundraising campaign prior to the implementation of the Enterprise Center concept. This report breaks down the capital improvements into three compounding groups of improvements that must be completed to maximize the impact of the Enterprise Center concept. An itemized list of recommended improvements is available in Figure 2B. The first and most basic level of improvement is required building system upgrades. On the initial walk-through of the facility, general contractors identified approximately $250,000 in repairs, mainly to the roof and HVAC systems. These baseline repairs are not optional and must be undertaken if any portion of this concept is to be implemented.
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THE CONCEPT | 2
FIGURE 2B: CAPITAL IMPROVEMENTS

Figure 2b shows the compounding levels of capital improvements that align with the
ESTIMATED COST
Required Building System Upgrades Suggested Kitchen Improvements Interior Space Improvements* TOTAL $250,000 $400,000 $500,000 $1.15 M
MAJOR COMPONENTS
roof repairs, replace damaged A/C unit, HVAC upgrades, removal of individual units from each room, and bathroom facilities purchase and install food service equipment including walk-in cooler, dish machine, cooking equipment, and exhaust security and controlled access, telecom and network upgrades and installation, repairs to ceiling, walls, and floors as needed, and buildout of tenant space
repurposing of space to accommodate a commercial kitchen and enterprise center concept. Each level of improvement is considered necessary to implement the concept, however, cost for tenant improvements may vary depending on level of finishes.
* Tenant Improvements are subject to change depending on the level of finishing, number of tenants, upgrades, and additional costs.
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2 | THE CONCEPT
With the kitchen identified as a crucial element to the success of this plan, the cost of installing a commercial kitchen must be undertaken. Many of the systems may still be in place and retrofitting those could decrease the amount needed to make the suggested upgrades. The following figures are not actual cost, but approximations based on estimates provided by industry experts. The projected cost to create two (2) kitchen suites would be in excess of $400,000. The estimated cost of equipment ranges from $150,000 to $200,000, with the additional funds going towards installation. Supplementary improvements and upgrades to the building are necessary to create an atmosphere that appeals to tenants, increases the efficiency of the building, and provides controlled access and security. Interior space improvements could potentially drive the overall price of the capital improvements to well over one million dollars. Keeping in mind that some improvements will be more valuable than others, an analysis of specific improvements and their ability to affect the marketability of the space should be conducted and weighed against the groups ability to raise additional capital funds.
Additional discussions outside of this report will be needed to finalize the exact capital improvement plan and budget, but a conservative estimate is one million dollars. Potential sources for capital improvement funds are reviewed in the Financial Resources section.
[ MARKET POSITION ]
While this study does not offer a full analysis of the Indianapolis office market, assumptions were derived from discussions with real estate brokers, industry experts, and entrepreneurs to develop the rent structure for the Enterprise Center concept. Comparable market rates are aggregated across a variety of sizes and would likely reflect higher costs for smaller spaces. There are a number of significant limitations on rent. The over supply of Class C Office space coupled with the unsuitable location exert a downward pressure on rent, resulting in a capped rental rate around ten dollars ($10) per square foot. This pricing includes all the supportive and shared services, making it an attractive option for the intended users entrepreneurs and small businesses.
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THE CONCEPT | 2
The average rent for Class C Office space in Downtown Indianapolis for the second quarter of 2012 was just over fifteen ($15) dollars a square foot, with rates significantly decreasing as you move away from the core of the Central Business District (CBD.) Rents near the Renaissance Center fall between ten ($10) dollars and thirteen ($13) dollars for full service office space. The buildings location is not suitable to attract market rents. The ability to compete in the market must be done with the additional level of services offered to tenants, not through reduced rental rates. Pricing office space in the facility below market rates would offer small, affordable space; however, research indicates that there is an abundance of Class C Office Space in the market. The former Chamber of Commerce Building for example, located along Meridian Street just minutes from the CBD, offers small office suites for just over sixteen ($16) dollars a square foot. Using the method of discounting rent to attract tenants will not deliver the occupancy needed to offset the additional cost of services and support recommend for the Enterprise Center and is not a suggested option for this concept.
[ SPACE ANALYSIS ]
Looking at the building as a system of interchangeable components, the Renaissance Center has fifty-two (52) units, a large commercial kitchen, dining area, and additional multi-purpose space. For this analysis, the multi-purpose space was not considered as optional space for additional units, but instead is assigned as space for conference and meeting rooms, back office support, and restroom facilities and given no revenue potential. Any revenue that might be generated from these spaces was included in the revenue models for the individual units. The dining space is included in this multi-purpose space and would be available to tenants for networking and other events held at the facility. The commercial kitchen was assumed to house two commercial kitchen suites occupied by a single tenant user operating their business with the added ability to attract by-the-hour users to supplement on-going revenues. Another portion of the facility was set aside for the Mt. Zion Daycare. The inclusion of the daycare at no cost was done as a provision of the initial parameters set by MZBC and must receive
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2 | THE CONCEPT
further consideration if this project moves forward. The existing daycare expansion occupies thirteen (13) of the fifty-two (52) units or twenty-five (25%) percent of the total building. The Mt. Zion Credit Union was allocated three (3) additional units at a discounted rate.
five (85%) percent occupancy rate at which time you begin to cover the anticipated costs. Separately, the commercial kitchen must be leased at one-hundred (100%) percent occupancy, because the feasibility of this model relies heavily on this revenue stream. The ability to offer flexible office space at low cost is critical to the success of the concept and it is recommended that the facility offer five (5) types of office space that make optimal use of the existing layout of the facility. This requires a majority of the space to be dedicated to the Enterprise Center concept. The remaining units would be allocated to the Mt. Zion Credit Union at a discounted rate of two hundred ($200) dollars per month. With this concept in place, the Enterprise Center would support nearly one hundred (100) entrepreneurs and small business owners if fully leased. Descriptions of each office type can be found in Appendix D. Rental rates range from seventy-five ($75) dollars for dedicated space in a co-working office to five hundred ($500) dollars for a double office for multiple employees, see Figure 2E for a breakdown of the optimal leasing structure. All lease rates were set in relation to the traditional, single office space
Alternative Concepts
Based on feedback, three concepts were analyzed. The following concepts were eliminated from the discussion. For detailed information on each alternative please see Appendix C.
[ LEASING STRUCTURE ]
The remaining thirty-nine (39) spaces were evaluated for their revenue generating potential to identify the optimal tenant mix needed to create a self-sustaining business model for the facility. Several concepts for the building were considered, the following mix was determined to provide optimal results. Details of the other concepts considered can be found in Appendix C. The projected figures represent a stabilized operating year, with five (5) years expected to achieve leaseup. With projected expenses to exceed $200,000 annually (see Appendix B for a detailed breakdown of expenses) the facility would need to generate that amount to cover all their cost and breakeven. The following lease rates were determined to be competitive based on a reasonably assumed eighty-
COMMERCIAL OFFICE + ENTERPRISE CENTER

REVENUE EXPENSES PROFIT / LOSS
$163,000
$207,000
($44,000)
COMMERCIAL OFFICE
REVENUE EXPENSES PROFIT / LOSS
$107,000
$121,000
($14,000)
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THE CONCEPT | 2
FIGURE 2C: EMERGING CONCEPT

Figure 2C shows the conceptual breakdown of space as envisioned for the Enterprise Center. The daycare would retain their space and the credit union would have three (3) units. The entrepreneurial office space makes up the majority of the building. All meeting, conference, and back office functions would be clustered together near the core of the building. The kitchen would remain in place and the cafeteria / dining area would be repurposed as the new cafe / coworking space.
NORTH BOULEVARD PLACE

DAYCARE KITCHEN & DINING AREA GENERAL OFFICE / CREDIT UNION ENTREPRENEURIAL OFFICE SPACE MEETING & BACK OFFICE
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2 | THE CONCEPT
which was priced at a competitive rate based on current market trends. The ability to utilize the space and services would be included in all rents, monthly membership would provide access to non-tenants but they would have no dedicated space.
2F for detailed analysis. The ability to fully lease this facility is unlikely and at eighty-five (85%) percent occupancy there is still a gap between the projected operating expenses and the projected revenue generated from the enterprise units, over $10,000 annually.
[ OPERATING BUDGET ]
The annual operating budget for the proposed concept would be just over two hundred thousand ($200,000) dollars. The operating expenses include a lease, which covers MZBCs mortgage on the property. These payments would go away once the mortgage was paid in full and would create an operating surplus. See Figure 2D for a breakdown of the projected operating expenses.
[OPERATING SHORTFALL ]
Even at stabilized operations, the Renaissance Center will continue to suffer an annual loss of over ten thousand ($10,000) dollars. During the five (5) year lease-up period an even greater loss is expected, totaling in excess of $230,000 for the first five (5) years. The first few years of operation will need substantial operational subsidies to fill the gap. During this time growth in occupancy will be slow and marketing will be key to attract tenants and reduce the nearly $75,000 operating gap. up period. One of the key factors to the operational short-fall is the amount of space dedicated to the daycare at no cost. If the daycare could pay a greatly reduced rate Figure 2G shows the projected profit / loss during the five (5) year lease-
[ FEASIBILITY ]
The inability to attract a kitchen tenant makes feasibility unrealistic and eliminates any concept from working at this location because the ability to repurpose the kitchen space is difficult and not cost effective. Even at the optimistic occupancy levels, breaking even is not possible without subsidies. See Figure
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THE CONCEPT | 2
FIGURE 2D: ANNUAL OPERATING BUDGET

Figure 2D breaks down the annual operating budget for the enterprise concept at the Renaissance Center. The lease payments reflect MZBCs 5-year mortgage payments, after it is repaid, the lease rate for the facility would need to be renegotiated, reducing the overall operating costs.
ENTERPRISE CONCEPT
Mortgage / Lease Utilities & Maintenance General Administration Marketing Property Management Enterprise Support & Services ANNUAL TOTAL $30,000 $51,800 $26,800 $2,400 $0 $96,000 $207,000
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2 | THE CONCEPT
FIGURE 2E: LEASING STRUCTURE

Figure 2E identifies the leasing structure of the Enterprise Center concept. To achieve the potential revenues shown in the accompanying table, an 85% occupancy must be attained with the exception of the kitchen and memberships which must be at 100% occupancy.
TYPE
Entrepreneurial Office Space Single Office Double Office Cubicle Office Co-working General Office / Credit Union Daycare Commercial Kitchen Memberships
MONTHLY RENT
$300 $500 $150 $75 $200 $0 $3,500 $50
* Potential revenue based on 85% occupancy
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THE CONCEPT | 2
FIGURE 2F: REVENUE & OPERATING GAIN / LOSS

Figure 2F breaks down the potential revenue by unit type at stabilized operations, shown with a fixed occupancy of eight-five (85%) percent. While this model approaches the breakeven point for the facility, a loss of over ten thousand ($10,000) dollars is still expected.
MONTHLY STABILIZED USERS RENT OCCUPANCY

Daycare Credit Union Double Office Single Office Cubicle Office Co-working Kitchen Memberships 1 1 2 14 45 18 1 20 $0 $600* $500 $300 $150 $75 $3,500 $50 100% 100% 85% 85% 85% 85% 100% 100% Annual Revenue Annual Expenses Gain / Loss
PROJECTED REVENUE
$0 $7,200 $10,200 $42,840 $68,850 $13,770 $42,000 $12,000 $196,860 $207,096 ($10,236)
*Credit Union monthly rent reflects the use of 3 general office spaces at $200 per month.
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2 | THE CONCEPT
FIGURE 2G: 5 YEAR OPERATING BUDGET

Figure 2G shows potential revenue over a five (5) year lease-up period. Occupancy during the initial years will be low as marketing and tenant recruitment ramps ups. The total loss during lease-up is expected to be over $200,000 and will continue to suffer operating losses even at stabilized operations.
YEAR 1
Daycare* General Office Space* Double Office Single Office Cubicle Office Co-working Kitchen* Memberships 50% $0 $7,200 $6,000 $25,200 $40,500 $8,100 $42,000 $6,000
YEAR 2
55% $0 $7,200 $6,600 $27,720 $44,550 $8,910 $42,000 $6,600 $143,580 $207,096 ($63,516)
YEAR 3
60% $0 $7,200 $7,200 $30,240 $48,600 $9,720 $42,000 $7,200 $152,160 $207,096 ($54,936)
YEAR 4 YEAR 5
70% $0 $7,200 $8,400 $35,280 $56,700 $11,340 $42,000 $8,400 $169,320 $207,096 ($37,776) 85% $0 $7,200 $10,200 $42,840 $68,850 $13,770 $42,000 $13,770* $196,860 $207,096 ($10,236)
Annual Revenue $135,000 Annual Expenses $207,096 Profit / Loss ($72,092)
Total 5-Year Profit / Loss
($238,560)
* Potential revenue reflects 100% occupancy
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THE CONCEPT | 2
of around three ($3) dollars per square foot, or twelve thousand ($12,000) dollars annually, operations will generate a positive net gain in year five (5); however, the challenge still exists of subsidizing the operating gap created during the lease-up period. Another option to address operating loss is to allocate the entire facility to entrepreneurial office space, maximizing the revenue generating potential. While an operational loss would still be expected during lease-up, it would be reduced to a total of $80,000 and would come close to breaking even in year four (4). Where the model drastically changes is in year five (5) at eight-five (85%) percent occupancy, a net gain of over $30,000 is projected. Dedicating space at free or very low costs reduces the feasibility of the enterprise concept because the ability to financially sustain operations is directly linked to the amount of space allocated to revenue generating tenants. Providing that the daycare could pay rent, there is a possibility to reach a near breakeven point, but there would be substantial losses suffered during the first five (5) years of operations. If the daycare vacated the property, it would still incur operating losses during
the first three (3) years but would be able to reach a positive net income during the stabilized operating year. Consideration should be given to investigating additional locations that could support the necessary amount of entrepreneurial office space.
4 | ORGANIZATIONAL PLAN
[ GOVERNANCE/BOARD ]
A separate, single-purpose nonprofit should be established to support the Renaissance Center, manage the project, and operate the facility. This entity must be independent from the church and without religious affiliation, making it better suited to attract funding and tenants. It would be governed by a Board of Directors made up of representatives of the Mid-North community. As a prominent community organization, MZBC may be represented on the board, however, as the property owner, conflict of interest may arise.
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2 | THE CONCEPT
[ OWNERSHIP ]
Ownership or the potential for it is key to attracting capital dollars, therefore it is recommended that the newly established, single-purpose nonprofit purchase the property or have the option to purchase to increase the likelihood of attracting capital improvement funding and allow for the project to carry future debt. The best scenario is to structure a lease with MZBC so that the nonprofit has the option to purchase the property once the mortgage is paid in full. Discussions with MZBC have indicated they are not interested in pursuing this option, since ownership of the property is a critical component to implementation, additional buildings and locations where ownership is possible need to be identified.
Project Developer supports the functions of real estate development, project management, as well as fundraising and grant management. Facility Operator manages the day to day functions of the facility including business and entrepreneurial development, leasing, events, IT and technology, security, janitorial services, and overall building maintenance. Kitchen Operator handles the daily operations of the commercial kitchen space and manages kitchen subleases.
Contracted Services
Once established, the nonprofit should not be the development and operational entity for the facility. These services should be contracted out to professional organizations who can leverage experience and economy of scale to more efficiently
5 | FINANCIAL RESOURCES
[ CHARITABLE FOUNDATIONS ]
Exploring the opportunities to receiving funding from a local philanthropic entity should be considered. These entities have the ability to assist with capital improvements and on-going operating support. Examples of local foundations that support
carry out these tasks. Contracted services should include a Project Developer, a Facility Operator, and a Kitchen Operator.
[ INTERMEDIARIES ]
The nonprofit board would need to contract services from various intermediaries to support functions related to development, on-going operations, facility management, and the commercial kitchen.
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THE CONCEPT | 2
comparable projects are Central Indiana Community Foundation (CICF), Lilly Endowment, and United Way of Central Indiana.
[ FEDERAL, STATE, AND LOCAL GRANTS ]

A variety of local, state, and federal grants are available for use in both capital improvements and operating assistance. Below is a selective list of potential sources to be explored. C ommunity Development Block Grant Program (CDBG) is a federal resource administered by the Department of Housing and Urban Development that provides flexible funding to address a wide range of community needs in low- and moderateincome areas. E conomic Development Assistance Programs (EDAP) is a grant overseen by the Economic Development Administration, a federal entity that seeks to provide economic stability and job growth through innovation and regional collaboration. C ommunity Economic Development Program (CED) is administered by the Office of Community Services (OCS) that aims to
address the economic needs of low-income communities through the creation of employment and business development opportunities. N eighborhood Assistance Program (NAP) is a state-wide program that utilizes tax credits as leverage for individual and business contributions to support community-based projects and programs. R ebuild Indy MBE/WBE Program is a Public Works program of the City of Indianapolis to transform the City through infrastructure investments that create construction jobs with an emphasis on M/W/VBE business opportunities.
[ PRIVATE LENDING ]
Without ownership of the building, the nonprofit entity would be unable to support debt and traditional private lending would not be considered a potential source of financing. If the ownership of the property changed, the potential to utilize private lending should be considered, but an existing entity with both experience and financial ability will need to guarantee financing on behalf of the newly formed entity.
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2 | THE CONCEPT
6 | CRITICAL ISSUES
There are three main issues that will greatly affect the feasibility of this project. Moving forward without addressing them will undermine the purpose of this feasibility study and result in the provision of greatly diminished space, services, and support.
[ NON-REVENUE GENERATING TENANTS ]

Mitigating the effects of non-revenue generating tenants by decreasing their space allocation becomes another critical issue. A certain revenue threshold must be met to cover the fixed costs of the enterprise concept and is not possible with space set aside for the daycare as a non-rent paying tenant. If the daycare were able to contribute, at a minimum $12,000 a year, this would eliminate the operating shortfall and allow for the facility to break even. The ability to generate revenue to support enhancements, expansion of services or programs, or to reserve for future projects would not be supported. Alternative locations that increase the number of revenue generating tenants would increase the concepts financial feasibility and allow for additional flexibility in the leasing structure.
[ SECURE KITCHEN TENANT ]

The kitchen is a critical component of the business model for this facility and it is imperative to secure this tenant. Even with a kitchen tenant the project faces many other challenges, but without it, the project isnt feasible. The kitchen becomes less important to the overall concept when looked at in a different location. It plays such a large role at the Renaissance Center because re-purposing the space would add to the costs and yield lower revenues as entrepreneurial office space. However, research did not indicate that a commercial kitchen would increase the viability of the entrepreneurial component itself and a scaled-back version of a cafe or coffee shop could be substituted in the overall model.
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THE CONCEPT | 2
[ CAPITAL IMPROVEMENTS ]
Another critical issue that cant be overlooked is the amount of up-front money needed to rehabilitate the Renaissance Center. With an expected budget of over one million dollars, consideration must be given to determine if this is the most effective and efficient use of limited resources. Realizing that the entire capitol improvement budget can not come solely from grants, an extensive fundraising effort must occur, with the nonprofit board leading this campaign. Not being
IMAGE 5: The former wellness center is a prime example of tenants that could occupy free or low-cost space at the facility. The inclusion of these community-based services decreases the feasibility of the enterprise concept and should only occupy a small fraction of the space.
in a commercial location would increase the marketability and remove some of the downward pressures on rent.
the buildings owner will create additional hurdles and may limit their ability to effectively raise the needed funds. This issue would arise as well with grant funders and charitable foundations who express hesitation to fund tenant improvements. Implementing this concept in an alternative location would allow better utilization of resources and mitigate some of the other issues surrounding ownership, need for a kitchen tenant, and meeting the revenue threshold. Additionally, locating a business and entrepreneurial venture
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3 | NEXT STEPS
1 | ALTERNATIVE DIRECTIONS
Without addressing all the critical issues, the concept is not feasible as conceived for this location. However, with the completion of the feasibility study, three avenues for further action emerged. The advisable direction is to seek an alternative location and focus on implementing the entrepreneurial component which was supported by the most demand and market potential. Additional directions include implementing the concept at the Renaissance Center understanding that critical issues need to be addressed or take a significantly scaled-back approach and stabilize the existing operations for MZBC.
To move forward, the church must agree to two primary commitments. Sell the Property to a new, single-purpose nonprofit who would manage and operate the facility OR provide the option to purchase the property. Relocate the Daycare to an alternative location and utilize the entire building for entrepreneurial office space OR provide a $12,000 or greater annual subsidy to close the operating gap. Even if the church agrees to both of these commitments, implementing this concept will still be a challenge. Securing a kitchen tenant to anchor the development very early on is crucial; even with the churchs commitments, not having this key tenant will ultimately determine if the project moves forward. The nonprofit will also need to embark on an extensive fundraising campaign to raise the dollars needed to renovate the facility. Occupancy will continue to be a challenge at this location and better located offices will place pressures on rent and occupancy.
Critical Considerations
Many critical issues and limitations with the conceptual model arise from the on-going ownership and use by Mt. Zion Baptist Church. The first line of action for this project is to have conversations with the church to understand their willingness to alter their plans for continued ownership and the space occupied by the Daycare. Understanding if these parameters are negotiable must happen immediately since they play such a crucial role in the feasibility of the concept.
[ IMPLEMENT CONCEPT AT RENAISSANCE CENTER ]

One scenario would be to implement the concept as envisioned in this study. This approach will continue to have operating shortfalls and if critical issues are not addressed up-front, the ability to successfully implement this project is highly unlikely.
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NEXT STEPS | 3
[ IMPLEMENT ENTREPRENEURIAL COMPONENT ]

An alternative approach is to separate the entrepreneurial component, the most unique and found to have the most potential, and find another location with less constraints. Things to consider when investigating alternative locations include: location in commercial area, easily accessible with adequate parking, flexible layout,
IMAGE 6: A variety of tenants occupy the Renaissance Center and the church continually seeks to rent space as well as house church entities such as the Daycare and food pantry. Moving forward, they should focus on attracting revenue generating tenants that add to the mix of businesses already occupying the space.
[ STABILIZATION FOR RENAISSANCE CENTER ]

Another option for MZBC to consider is to take some of the learning from this analysis and apply it to their current operations in an attempt to reduce their on-going financial losses. Working under the assumption that a religiously affiliated organization will have a harder time raising capital funds, only the required building systems upgrades should be completed as well as limited tenant space improvements. An aggressive and continuously on-going marketing effort is necessary to attract tenants and generate enough revenue to support operations. The church has had limited success at attracting tenants to the building in its current state, but with improvements to the building and operations they might increase their ability. Without the business and entrepreneurial support and services, the operating costs decrease, in turn reducing the need to reach maximum occupancy levels that were necessary to support the additional costs of these services. A basic stabilization plan for MZBC is included in Appendix E.
at least 15,000 ft2 (or enough space to reach the revenue threshold), and minimal capital improvements needed. While the kitchen was critical to the implementation of this concept at the Renaissance Center, it is not an integral part of the entrepreneurial component and is not a priority when evaluating potential locations. The next step for this approach is to determine a location and update the operating and expense plan to reflect the new costs.
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APPENDIX
APPENDIX A: REITANO DESIGN GROUP REVIEW

The kitchen space at the Renaissance Center (RC) is currently inoperable and contains little to no equipment of value for future food service endeavors. However, it does have adequate space, appropriate utilities, and a workable configuration to allow for repurposing into a community asset. To follow are some thoughts on what it may take to make this space useful again and some ideas on what that vehicle(s) may look like. [ Opportunities ] There are two organizations that would immediately benefit from an on-site kitchen [ What We Have ] The layout of the space and the location of the utilities will lend themselves to re-use as a kitchen operation. Although the current walk-in refrigeration units would need to be operation. It is my understanding that there is a daycare center nearby to this location. Certainly, food production and a transportation option can be implemented from this kitchen. Also, if the proposed replaced, they are in the right spot for flow of food supplies into the kitchen. The dishroom is not currently operable, but its location and the availability of utilities in the room will bode well for future endeavors. Last, but not least, the center wall may be a natural divider for two different operational functions occurring simultaneously. business incubator comes to fruition, or the rest of the building is filled in another manner, this kitchen could also support a caf operation. I would envision light food offerings and a coffee / beverage component in this endeavor. Beyond that, the kitchen space is large enough to house two production-cooking suites. These suites would be outfitted with the necessary equipment to allow outside operators to produce food for catering offsite or food trucks. Church groups would use a kitchen suite or even a chef wanting to give private cooking lessons. Perhaps the kitchens could be leased to recent Ivy Tech culinary graduates. Or, another agency could use the kitchen to produce food for their
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APPENDIX
CONTINUED FROM PAGE 37
clients and transport it back to there location. The uses for the space are relatively endless. With the explosion of the food channel and the rise of culinary schools, there does not seem to be a shortage of fledgling culinarians in our area.
[ What will it take ] Buy-in from various stakeholders will be key to a successful launch of a commercial kitchen at Renaissance Center. A clear plan for opening and operating the facility. It is one thing to finance the renovation of the kitchen and to complete that task. The real test will be having a champion on board to sell the concept to outside operators (revenue generation) and/or to operate the kitchen for the in-house functions mentioned earlier.
A financial commitment of $150,000 to $200,000 for food service equipment. To include all the elements of a complete renovation, it may take up to $200,000. That figure does not include related construction work around the food service equipment element of the project. It does include all food service items such as the walk-in cooler/ freezer, the dishmachine, all cooking equipment, and the exhaust hood. Certainly, the operational plan for the kitchen will dictate what equipment is needed and what the overall cost of the project will be. As a rule of thumb, whatever the food service equipment cost is estimated to be on a kitchen project, the construction costs equal that. So, a $200,000 kitchen project is a $400,000 overall renovation project, etc. Another viable option is to produce a master
plan for the complete renovation and then put the pieces in place as funds allow. By having a master plan in place, the proper utilities can be brought to the area and the overall space can be configured to accommodate the future expansion in a seamless manner. Taking a piecemeal approach to a project of this scope leads to a waste of money and resources. A phased approach is good. A piecemeal approach is not.
>> Respectfully submitted by Scott T. Reitano

December 14, 2012.
38
APPENDIX
APPENDIX B: DETAILED EXPENSES

ENTERPRISE
Property Management Property Lease Payroll (Center Manager) Payroll Taxes Accounting / Legal Marketing Insurance IT Support IT - Telecom Office Supplies & Copier Utilities Janitorial Services Maintenance & Repairs Landscaping & Trash Security Parking Lease Enterprise Programming TOTAL $0 $30,000 $45,000 $1,980 $13,500 $2,400 $5,400 $3,000 $16,800 $13,200 $20,604 $12,000 $6,000 $7,200 $6,000 $12 $24,000 $207,096
NON-ENTERPRISE
$12,000 $30,000 $0 $0 $13,500 $2,400 $5,400 $0 $0 $6,000 $20,604 $12,000 $6,000 $7,200 $6,000 $12 $0 $121,116
|
The Detailed Expenses compares the breakdown of the projected annual expenses related to the Enterprise Center concept and the Non-Enterprise alternative, which represents no business or entrepreneurial development services.
39
APPENDIX
APPENDIX C: ALTERNATIVE CONCEPT A

Alternative Concept A includes equal office and enterprise space and retains the daycare and credit union. The limited number of entrepreneurial office spaces increases the operating loss because the lower lease rate of the generating general office space does not cover the fixed costs associated with the additional business and entrepreneurial development support and services.

DAYCARE KITCHEN & DINING AREA GENERAL OFFICE ENTREPRENEURIAL OFFICE SPACE MEETING & BACK OFFICE
40
APPENDIX
APPENDIX C: ALTERNATIVE CONCEPT A

The potential gain / loss for Alternative Concept A is shown and projected to generate an annual loss of over forty-four thousand ($44,000) dollars at stabilized operations. The necessary revenue threshold can not be met when additional space is allocated to the lower rent, general office space. While the low cost general office space reflects at capacity, reduced occupancy of the entrepreneurial office space is expected with this alternative.

Daycare General Office Double Office Single Office Cubicle Office Co-working Kitchen Memberships 1 19 0 12 18 12 1 20 $0 $200 $500 $300 $150 $75 $3,500 $50 100% 100% 85% 85% 65% 50% 100% 100% Annual Revenue Annual Expenses Gain / Loss
PROJECTED REVENUE
$0 $45,600 $0 $36,720 $21,060 $5,400 $42,000 $12,000 $162,780 $207,096 ($44,316)
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APPENDIX
APPENDIX C: ALTERNATIVE CONCEPT B

Alternative Concept B retains the daycare and credit union and allocates the remainder of the space to general office. Without the unique, attractive features of the entrepreneurial component, the facility becomes strictly office space and must compete in the over-supplied Class C space market. Locational deficiencies and inadequate improvements and upgrades will continue to put downward pressures on the rent and lease structure.

DAYCARE KITCHEN & DINING AREA GENERAL OFFICE ENTREPRENEURIAL OFFICE SPACE MEETING & BACK OFFICE
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APPENDIX
APPENDIX C: ALTERNATIVE CONCEPT B

The potential gain / loss for Alternative Concept B is shown and projected to generate an annual loss of just under fourteen thousand ($14,000) dollars at stabilized operations. By removing the added costs of the business and entrepreneurial development services, the gap between expenses and revenue decreases. The occupancy shown is overly optimistic and expected to remain low due to competing, better suited options for general office space. Additionally, without the attraction of the entrepreneurial component, the prospect of attracting a kitchen operator decreases.

Daycare General Office Double Office Single Office Cubicle Office Co-working Kitchen Memberships 1 39 0 0 0 0 1 0 $0 $200 $500 $300 $150 $75 $3,500 $50 100% 70% 100% Annual Revenue Annual Expenses Gain / Loss
PROJECTED REVENUE
$0 $65,520 $0 $0 $0 $0 $42,000 $0 $107,520 $121,116 ($13,596)
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APPENDIX
APPENDIX D: OFFICE TYPE DESCRIPTIONS

Appendix D describes the various types and levels of office space offered in the Enterprise Center. All Entrepreneurial Office tenants receive all services, support, and access to the cafe, meeting, and conference rooms included in their rent. The double, single, and cubicle office types provide permanent private and semi-private space, whereas the co-working space is flexible and tenants can select from a variety of work spaces or choose to work from the cafe.
DESCRIPTIONS GENERAL OFFICE SPACE

General Office private office for 1-2 employees, can be combined to make larger office space for multiple tenants. membership services not included. multi-room, private office space for 3-5 employees. small, private office space for 1-2 employees. very small, semi-private office space for 1 employee. flexible open space, dedicated workspace for 1 employee. no dedicated space. use of cafe, meeting, and conference rooms. membership features included with all entrepreneurial office tenants.
ENTREPRENEURIAL OFFICE SPACE

Double Office Single Office Cubicle Office Co-working Memberships
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APPENDIX
APPENDIX E: STABILIZATION PLAN

While the entire Enterprise Concept was found to not be feasible, this proposed stabilization plan takes some of the key learning from the study and provides a scaled-back approach MZBC may implement to reduce the operating loss at the Renaissance Center. The following pages provide a modified capital improvement budget, operating expenses, revenues, and operating gain / loss. To be competitive in an over-supplied Class C office market, the facility will need to offer below-market rate rents to attract even minimal occupancy. Pricing space at approximately six ($6) dollars a square foot, the church may reach sixty (60%) percent occupancy. With low operating costs and minimal occupancy the ability to create a positive net gain isnt possible, however, the ability to reduce the churchs loss is. The As the property owner and operator, MZBC will face challenges raising the necessary dollars needed to fund the extensive capital improvements. The church should focus on making priority building systems upgrades and limited interior space improvements. projected gain / loss at stabilized operations is seventeen thousand ($17,000) dollars annually and can be reduced further if higher occupancy levels are reached. The church can continue to house the daycare, credit union, and additional ministryrelated entities within the Renaissance Center to increase occupancy, but should not expect to increase their net operating gain with these users.
45
APPENDIX
APPENDIX E: ADJUSTED CAPITAL IMPROVEMENT BUDGET

The Adjusted Capital Improvement Budget indicates which improvements are necessary to implement the proposed stabilization plan for the Renaissance Center. The upgrades to the building systems would be mandatory and the interior space improvements would vary depending on the level of finishes and alterations to individual units.
ESTIMATED COST
Required Building System Upgrades Interior Space Improvements* TOTAL $250,000 $75,000 $325,000
MAJOR COMPONENTS
roof repairs, replace damaged A/C unit, HVAC upgrades, removal of individual units from each room, and bathroom facilities repairs to ceiling, walls, and floors as needed, and build-out of tenant space
* Tenant Improvements were estimated using $5 per square foot.
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APPENDIX
APPENDIX E: OPERATING EXPENSES

Operating Expenses for the stabilization
EXPECTED EXPENSES
Property Management Marketing Insurance Utilities Janitorial Services Maintenance & Repairs Landscaping & Trash Security TOTAL $4,500 $2,400 $5,400 $20,604 $12,000 $6,000 $7,200 $1,020 $59,124
plan do not include the mortgage for the Renaissance Center. Without the entrepreneurial support and services offered and by contracting out property management services, MZBC can significantly reduce the operating expenses at the Renaissance Center.
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APPENDIX
APPENDIX E: REVENUES & OPERATING GAIN / LOSS

The Revenues and Operating Gain / Loss are shown at stabilized operations. At sixty (60%) percent occupancy the facility will suffer annual loses, but will have adequate space available to offer health and social service provides at low or no cost. Additionally, the low occupancy allows for MZBC to continue to house many of their entities such as the daycare, credit union, and food pantry in the facility without increasing the annual operating loss.
USERS
Daycare General Office Double Office Single Office Cubicle Office Co-working Kitchen Memberships 1 39 0 0 0 0 0 0
MONTHLY STABILIZED RENT OCCUPANCY

$0 $150 $500 $300 $150 $75 $3,500 $50 100% 60% Annual Revenue Annual Expenses Gain / Loss
PROJECTED REVENUE
$0 $42,120 $0 $0 $0 $0 $0 $0 $42,120 $59,124 ($17,004)
48

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THE RENAISSANCE CENTER FEASIBILITY STUDY

SPECIAL THANKS TO: M T. Z I O N B A P T I S T C H U R C H L O C A L I N I T I AT I V E S S U P P O R T C O R P O R AT I O N B U S I N E S S O W N E R S H I P I N I T I AT I V E

THE RENAISSANCE CENTER FEASIBILITY STUDY

[ INDUSTRY EXPERTS ] [ RESEARCH & LEARNING ]

RENAISSANCE CENTER FEASIBILITY STUDY

THE RENAISSANCE CENTER FEASIBILITY STUDY

[ APPENDIX C ] [ APPENDIX D ] [ APPENDIX E ]

RENAISSANCE CENTER FEASIBILITY STUDY

THE RENAISSANCE CENTER FEASIBILITY STUDY

RENAISSANCE CENTER FEASIBILITY STUDY

RENAISSANCE CENTER FEASIBILITY STUDY

Mt. Zion Baptist Church

[ NNDC & BOI ]

To learn more about their work in the community visit www.mzbchurch.org.

RENAISSANCE CENTER FEASIBILITY STUDY

e-newsletter was distributed, briefly summarizing the progress of the study.

[ SERVICE PROVIDERS & TENANTS ]

[ RESEARCH & LEARNING ]

RENAISSANCE CENTER FEASIBILITY STUDY

TABLE 1A: KEY DATES

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FIGURE 2A: ENTERPRISE CONCEPT

CO-WORKING + SHARED SPACE

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What is an Enterprise Center?

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FIGURE 2B: CAPITAL IMPROVEMENTS

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COMMERCIAL OFFICE + ENTERPRISE CENTER

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FIGURE 2C: EMERGING CONCEPT

NORTH BOULEVARD PLACE

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FIGURE 2D: ANNUAL OPERATING BUDGET

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FIGURE 2E: LEASING STRUCTURE

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FIGURE 2F: REVENUE & OPERATING GAIN / LOSS

MONTHLY STABILIZED USERS RENT OCCUPANCY

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FIGURE 2G: 5 YEAR OPERATING BUDGET

Annual Revenue $135,000 Annual Expenses $207,096 Profit / Loss ($72,092)

Total 5-Year Profit / Loss

* Potential revenue reflects 100% occupancy

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[ FEDERAL, STATE, AND LOCAL GRANTS ]

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[ NON-REVENUE GENERATING TENANTS ]

[ SECURE KITCHEN TENANT ]

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[ IMPLEMENT CONCEPT AT RENAISSANCE CENTER ]

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[ IMPLEMENT ENTREPRENEURIAL COMPONENT ]