feasibility study hawthorne redfish restaurant & inn port ... - John Irwin

FEASIBILITY STUDYFOR THEHAWTHORNE REDFISH RESTAURANT & INNPORT ORFORD, OREGONSelected ExtractsView of Humbug Mountain and Battle Rock from the Redfish RestaurantPrepared For:Economic Development Department of Curry CountyUnited States Department of Agriculture, Rural Business Enterprise GrantsChristopher and Gregory Hawthorne, InvestorsPrepared By:John IrwinJ. Irwin Community InformaticsSeptember 23, 2008

IntroductionThe Hawthorne Redfish Restaurant & Inn at Port Orford, Oregon encompasses a fine foodrestaurant, a quaint short stay resort, and sculpture garden. This initial investment and operationconstitutes Phase One of a two-phase longer-term project. Phase Two will see the building andopening of a Hawthorne Art Gallery in Port Orford.This feasibility study analyzes multiple dimensions of the proposed Port Orford, Oregon,Hawthorne Redfish Restaurant, Lodging, and sculpture garden, i.e., Phase One. It also containsmany references to the overall vision as they are linked together over time.…The feasibility study addresses a variety of components, including:Economic feasibilityLocal workforce availabilityAccess to the site and utilitiesThe management teamMarket areaMarket plansCompetitionCustomer baseAccess to materials and suppliesOverall impact to the area.Other relevant informationPreparation of the feasibility study included:Review of the business plan and financials (Appendix 1 and 2).Multiple interviews with the Christopher and Gregory Hawthorne (Investors)Interviews with the Curry County Economic Development DirectorInterviews with city of Port Orford administrationRegional and local studies addressing transportationReports addressing the local economyAnalysis of factors related to the targeted marketOn site visit to the Investors’ facilities in Big Sur and Monterey area in California andSixes River and Port Orford in Oregon.Interactions with the Investor’s Certified Public AccountantBuilding site visitsAssorted other analysis, compilations, and reviews of related background information.A review of multiple factors impacting decisions relative to this proposal will be informed byfully understanding all of the contextual elements required to successfully launch and sustain this

investment. As such the contents of this document are wide-ranging in its presentation of data,information, and opinions relative to the investment proposal.…LocationEconomic FeasibilityPhysical LocationHG/RR will be built adjacent to Battle Rock Park, the second most visited park on the OregonCoast, with stunning vistas of the Pacific Ocean; the spectacular views invite visitors to stop andexplore. On many occasions one can easily watch whales breeching in the bay.Figure 1 – View of Humbug Mountain and Battle Rock from HG/RR SiteTwo non-historical structures exist on the site and will be removed and replaced. The resultingeffect will be to enhance the beauty of this superb entry location into Port Orford.

Figure 2 – Existing Buildings at the SiteThe Port Orford location at Battle Rock is located approximately at Latitude / Longitude N42°23' 45.93" / W123° 0' 16.78".Figure 3 – Map Location of HG/RR in Port OrfordAir travel miles to selected cities in Oregon, Washington and California follow (note thathighway miles may differ and vary with the route taken):City Distance to HG/RRBandon 26Brookings 49Coos Bay 45Crescent City 70Eugene 115Eureka 135Gold Beach 24Lincoln City 155Los Angeles 689Medford 88Newport 133Portland 212Sacramento 328San Francisco 361Seattle 352Figure 4 – Miles to Port Orford

Impacts and Implications of Location to this Business ProposalHG/RR will be the first and most prominent structure seen when entering Port Orford from thesouth. It will also be the last image in the rearview mirror when leaving town and heading southtowards Gold Beach.Figure 5 – Entrance to Port Orford from the SouthAverage annual daily traffic flow through Port Orford is reported at 4,000 – 4,500 cars. 1Approximately 200,000 visitors stop in Battle Rock Wayside off of Highway 101 each year.HG/RR will be adjacent to a 75 car parking lot and the drop-in rate is estimated at 200 visitorsper day. The market will also include golfers from Bandon Dunes and other nearby golf resorts.This is an established building site with existing non-historical structures. These structures willbe removed. The adjacent structure, Coast Candle, will lose its common wall when the buildingis removed. The Coast Candle Shop building currently does not house an active business.Adequate notice to the building owners has been given and will be repeated.1 2006 Oregon Department of Transportation,http://www.oregon.gov/ODOT/TD/TDATA/tsm/docs/Flow_Map_GIS_2006.pdf

Figure 6 – Common Wall with the Coast Candle ShopA geologic engineering review may be required once the site is cleared. But if so the likelihoodis very high that no issues would be found as this has been a well-established building site formany years with no apparent issues relating to stability of the earth at this location.Given that this site has been worked in the past the likelihood of Native American artifacts islow.…WorkforceAvailabilityAccording to the results of the latest Business Retention and Expansion survey the current PortOrford business environment is dominated by retail and services. 2Sector % Sector %Service 21 Finance/Insurance 3Agriculture 0 Real Estate 10Wholesale 7 Restaurant 3Construction 3 Lodging 14Retail 28 Education 0Technology 7 Manufacturing 3Medical 0 Recreation/entertainment 02 Business Retention & Expansion (BR&E) Survey, Port Orford Area, 2007, Curry County Economic & CommunityDevelopment, Susan Brown, Director

Note: Responses to the BR&E survey did not include indications of known north countyagriculture (cranberries, ranching, etc.) or teachers (education). This likely is the result of thesurvey method of distribution by mail to a non-random group of existing businesses.Discussions with several parties 3 indicate that at any time there may be only a little over 2 dozenunemployed employable persons in the Port Orford area. As such HG/RR employees likely alsowill be recruited from the Gold Beach and Bandon/Coos Bay areas.Port Orford area businesses (includes Langlois and Sixes) were asked how many people theyemployed on an average throughout the year. 29 Port Orford area businesses responded to thesurvey and reported they collectively employ 102 people.Full-Time Part-Time Seasonal Union Total62 26 14 0 10260.8% 25.5% 13.7% 0%Businesses were asked if they planned to modernize or expand their business. 55.2% of localbusinesses do not have plans to modernize or expand. 44.8% would like to expand or modernizetheir businesses.In short the skill sets necessary to support light manufacturing, including assembly work, orcustomer service work (e.g., call centers, restaurant wait staff) are not present in sufficientquantities to support attracting a new business entity to the immediate area. The implication isthat HG/RR will need to draw staff from within the immediate area as well as to recruit fromoutside the area.QualityThe Port Orford area respondents to the BR&E survey indicated overall dissatisfaction with thelocal workforce.Excellent Good Average Poor Very PoorQuality 4.2 25 33.3 25 12.5Quantity 4.2 16.7 12.5 37.5 29.2Availability 4.2 12.5 20.8 37.5 25Stability 0 12.5 16.7 50 20.8Note: Numbers are percentagesQuality has 37.5% rated Poor/Very Poor. Quantity has 66.7% rated Poor/Very Poor. Availabilityshows 62.5% Poor/Very Poor. Stability has 70.8% Poor/Very Poor. These are not numbers thatwould encourage external investment.3 Discussions on the topic of the Port Orford workforce included Commissioner Lucie LaBonte, Leesa Cobb,Executive Director of Port Orford Resources Team, Michael Murphy, City Administrator, George Welch, NCElectronics, and Susan Brown, Curry county Economic Development Director.

For the most part existing businesses are content with their employees but several areas ofneeded improvement were identified. The BR&E report cited above reported issues with poorquality of available help, work maturity, teamwork, technical and basic skills, customer serviceskills, personal skills and thinking skills.TrainingWhen asked to rate areas in which current employees need training, the following responseswere provided:Skills %Customer Service 56.2Computer 50.0Specialized 25.0Professional 18.8General 12.5Managerial 6.2Other 6.2No Training Needed 18.8Businesses were asked about future technologies and the effect on their business. 64.3% reportedthey did not foresee technologies that would affect their business, while 34.7% indicatedtechnologies that would affect their future. Of the businesses that would be affected by newtechnology, 40% responded that new innovations in computer software/hardware updates,internet speeds, communications, etc., will be the future trend of their business.UtilitiesWaterPort Orford City Administrator Michael Murphy indicates that water will not be an issue. Thesite is already serviced and the proposed usage at the site is well within the capacity of the watersystem.Water meters are read and billed every month and customers are billed for both water and seweron the same bill. Effective April 1, 2007 Rates will be as follows:Base rate for water will be: $23.47 which includes first 2000 gallonsConsumption rate will be billed at:2,001 - 5,000 gallons billed at $6.00 per thousand gallons5,001 - 10,000 gallons billed at $8.00 per thousand gallons10,001 - 20,000 gallons billed at $9.00 per thousand gallonsAnything over 20,000 gallons billed at $10.00 per thousand gallons

PowerCoos-Curry Electric already provides power to the site. Proposed usage of electric power at thissite does not appear to bring any concerns.Propane will be necessary for the cooking operations at the site (no natural gas supplied in thearea). Propane is readily available in the area. Julie and Christopher Hawthorne already purchasepropane in large quantities to support their glass and pottery operations. Opportunities for bulkdiscounts may apply.Waste DisposalSewage disposal is not an issue for this proposed operation per Port Orford City AdministratorMichael Murphy.Base rate for sewer is: $33.93 + $5.05 per thousand gallons consumption (based on waterconsumption). Pursuant to chapter 13.08.010 of the Port Orford City Code, sewer rates shall beas follows:Residences/Unit $33.95Commodity/1,000gal $ 5.05Solid waste (i.e., garbage) pickup is readily available from Curry Transfer and Recycling.TransportationOregon’s natural assets, including its gateway location and aesthetic beauty, are part of thereason for its success. Use of ground transportation – including trucks, buses and cars – is anatural element of the expected economic activity. More than one in five jobs in Oregon (over400,000 jobs) is either directly transportation-related or else strongly transportation-reliant (e.g.,traded industries or tourism).Area Transportation PlansCurrently, Greyhound operates the only commercial bus service in this corridor and the onlyinter-city service to California. There are four scheduled buses per day, two northbound and twosouthbound along US 101. Service to Portland, Oregon and San Francisco are available.Intermediate destinations enroute to major cities are also available. Curry County Transit providesinter-city service between Brookings, Gold Beach, Port Orford, and Bandon, Coos Bay andNorth Bend in Coos County.Para-transit services are available in Curry County. Curry County provides this service through adispatch center at the Gold Beach Senior Center and Port Orford Senior Center. Service isprovided both on a scheduled and demand response, dial-a-ride basis. These services areprovided at a minimal cost to senior citizens and disabled people. The general public can alsoaccess these services for a slightly higher fee. The primary focus of this program is to meet theneeds for local, routine trips within three miles of the dispatch centers. Transportation to the rural

areas and adjacent cities are a secondary focus of this program. These trips are Limited to a 14mile radius of the dispatch centers according to a published weekly trip schedule.Local transportation is also provided by the Retired Senior Volunteer Program (RSVP) throughthe Brookings, Gold Beach and Port Orford senior centers. This program consists of volunteerdrivers who are reimbursed for their travel expenses. The program is funded from public sourcesand user donations.In the rural areas, US 101 is a two-lane facility with occasional passing lanes or climbing laneson steep grades; speeds are generally 55 MPH. Within each of Curry County’s cities US 101 is afour-lane facility, with some left turn pockets provided. Speeds in the cities vary between 25 and45 MPH. The pavement widths vary from 32 feet to 84 feet, with lane widths of 12 feet. Insidethe city limits, US 101 is primarily bordered by commercially zoned areas. Some sections haveadjacent residential or public open space zones. In the Urban Growth Boundary adjacent zoningis a mixture of light and general commercial, rural residential, agricultural, forestry grazing, andexclusive farm use designations.Curry County is primarily centered on the US 101 corridor. The county collectors and localstreets form a disjointed system rather than a grid. The general characteristic of the collectors andlocal streets is that they connect to US 101 to provide property access to the primary regionalroadway facility.Impact to Local TransportationWhile the local transportation impact from this particular business proposal is expected to beminimal, as both truck traffic and passenger vehicle traffic increase on roads throughout thestate, there are some locations where the interface between large trucks and passenger vehiclesresults in both higher costs to businesses and potentially dangerous conditions. New, longertrucks used to ship goods from businesses along the coast must travel on Highway 101. Duringthe summer season, trucks often get stuck behind slow-moving RVs and other tourist traffic,increasing the time needed to complete deliveries. These delays have a negative impact onshipping costs. As traffic volumes increase, the interface between trucks and passenger vehiclesis increasing, creating dangerous conditions on the coastal highway.The HG/RR business proposal once implemented could be a source of employment for a taxioperator or similar surface transportation service.Chartered or privately owned airplane flights could be a good source of access to the area.Facilitating this would be consistent with servicing the HG/RR target market. Picking up andreturning passengers to their aircraft would be a good value added service, whether the airport islocated from Brookings to Bandon.Impact of Distance to I-5 CorridorUse of ground transportation to cover the distance to the I-5 corridor is a significant limitingfactor for some coastal businesses. Many businesses, particularly along the coast and in southernOregon, have somewhat limited options for shipping goods east and west. Some businesses musttruck their products up to 200 miles before connecting to I-5, adding considerable costs to the

companies and their customers, and thus making them less competitive. Limited transportationaccess is considered in business expansion decisions, and has factored into the decisions of somefirms to expand at plants outside of the coastal region with better transportation access. UPS andFedEx shipping is available on small trucks.Additional costs are incurred due to travel delays, which occurs during peak summer seasonswhen traffic levels rise along two-lane roads in rural areas that serve major coastal recreationdestinations. In some of these areas, winding mountain routes, steep grades and lack of passinglanes all act to constrain traffic capacity.Yet some of these same impacts from the surface travel to the I-5 corridor contribute tosatisfying the “sense of escape” and “romance of travel” to vacation destinations. This sense ofremoteness and isolation when taken into consideration along with the other factors of the area’sextreme natural beauty works to enhance the experience of the tourist. This is especially true forthe target market seeking “experiences vs. vacations.”RailThere is no rail service in Curry County. The nearest rail stop is in Coos Bay and this is forfreight only.AirSeveral airports are in the region. There are three airports that serve Curry County: Curry CoastAirpark (Brookings), Gold Beach Municipal and Cape Blanco State. Seven additional privatelanding strips are known in the county. These include grass or dirt strips at Agness, Big Bend,Half Moon and Paradise Bar. None of these airstrips include support facilities or developedimprovements.No commercial service is provided at the Brookings, Gold Beach or Cape Blanco State airports.The closest available commercial air transportation services are available from Crescent City,California to the south and North Bend, Oregon to the north.Privately owned small aircraft and chartered air services frequent the surrounding airports.For a more complete discussion of area airports with aerial photographs of the airports pleaserefer to “Cape Blanco Airport Area Economic Development Feasibility Study,”http://www.jirwinconsulting.com/documents.htm, January 2, 2008, funded by Curry CountyOregon and a USDA Rural Business Enterprise Grant,TruckingSee discussion under Transportation.