A Feasibility Study for Urban Edge Agricultural Parks - SAGE

Beyond the capital costs for the initial infrastructure there would be need for capitalexpenditures for any buildings or structures that would be leased to tenants, someoffice space and equipment for management, grounds and maintenance equipmentand storage structures.Management and OperationsThe level of management required of this AgPark will depend on the number oftenants and is expected to increase over time. In general, the managementresponsibilities would consist of the following:• AgPark Operational Management.• Tenant and lease management, including tenant recruitment, any coordinationof tenant crop mix, management of farm stand and kitchen space, and monthlybilling of tenants for water and supplies.• Organic certification/practices monitoring.• In-kind service and trade management.• Equipment management.• Dispute & adjacencies management.• Oversight of grounds and maintenance crews associated with the leasedproperty.• AgPark Housing Management.• Security & Equipment Management (fencing, crop security, etc.)• Public relations and marketing.Operating CostsInitial operation costs in the first two phases would be comprised of salary formanagement/maintenance, electricity for irrigation wells, office expenses, soiltesting, and agricultural and business consultants. It is estimated that operationalexpenses in the first phase would total $500,000.RevenueInitial revenue would be expected to be minimal. There should be revenue to offsetthe cost of electricity for irrigation water; however initial lease income may be zero.Lease revenues would be expected to increase annually as the capabilities of theland are determined and enhanced. Ultimate lease revenues would be dependanton the capability of the soil, irrigation costs to the lessees, any restrictions orconstraints on normal agricultural operations, and any value that might beconferred by location or on site improvements that enhance the profitability of thefields leased. Based on agricultural leases in neighboring counties, one mightexpect revenues of $200-$600 per acre per year on good soils for vegetable cropswith no onsite facilities that might add value to the crops.DRAFT 1.6.05 39