Monday, December 19, 2016

The Search for Expansion Space: Part I

About a year and a half ago, two professors from F&M released a report on Lancaster's poverty problems.

The rate is about 29%; you can find data like this at the US Census bureau or through cool tools like PolicyMap, which also gives very refined views of neighborhood statistics.

Before we started The Lancaster Food Company in 2013, I spent some time on PolicyMap to try to figure out where we should locate the company. It's a lofty goal--try to reduce poverty by hiring people living under the line who live within walking distance, and there isn't a lot of real estate available in the city for food manufacturing.

Some of the highest poverty rates were right around South Water Street and Hazel. So we looked very closely at a few buildings when we started. We passed on the building that became Spring House's third location. It's a very cool building, but it needed a lot of work and we're not developers. The property itself is two acres, and has a remarkable view of the city from its north side.

We ended up leasing a space completely inappropriate for food manufacturing, but we were eager to see whether we could prove our concept could become a viable company in the increasingly competitive certified organic food sector.
Liberty St space before the buildout

So we took a space at 341 East Liberty, complete with flaws and obstructions, and made it work. We invested in a conversion of the space with a loan from Community First Fund (the landlord would not finance a buildout for a startup), passed our USDA Certified Organic and FDA & PDA inspections, and literally took our products to market. Things really took off--we grew 30% every quarter until March of this year, when we hit production capacity.


We knew early on we'd need to expand, so we continued to look for space while growing the company at Liberty.

Just to the east of the Spring House building is the Brookshire Printing Company building. Across the street is a city-owned lot, warmly called Lot 13. We felt we could work with the Brookshire building, and went into contract with it. It needed work, but we're flexible and figured out something that could get us to our own sustainability, plus the location couldn't be beat for impact. The area's poverty rate was something like 60% at the time. 

The bank required an environmental report. A "Phase I Environmental Report" is basically a survey of the immediate area. Phase II requires samples from the site itself. Old cities tend to build on top of themselves. As standards evolve, cities adapt, sometimes by burying the past and looking the other way. Lancaster is no different. 

Well. The Phase I report was alarming. There are high concentrations of PCBs next door, uphill on the UGI site; PCBs can cause leukemia and a host of problems you don't want. PCBs were banned a long time ago (Monsanto was a primary manufacturer), but the site was never cleaned up. There was also benzene and lead. A visual inspection found a tank somewhere below ground level in a sort of basement with an unknown liquid in it. 

We balked. We couldn't imagine building a food company in a space that could be potentially poisoning us and our employees, or tolerate even the perception that we were making food in possibly dangerous conditions. If that sounds like an overstatement, please read about the Housotonic river after GE dumped tons of PCBs into it.

We also looked at Lot 13 across the street, and asked for the most recent environmental report. Again, very high levels of lead, benzene, and some other harmful chemicals. We would have had to remediate the site, which isn't currently part of our mission, so we passed.

Later this week I'll post Part II about the space that almost was, and what we eventually landed on. It's been a long, challenging process that almost killed the company. 

No comments:

Post a Comment