Thrift Shop & Recycling Center RemodelCITY COUNCIL | AB 5711| June 16, 2020

Presentation Overview

Review the preliminary project scope of work, cost estimates, and project timelines.

Review potential capital funding resources.

Consider next steps.

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Background

Thrift Shop History

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The Thrift Shop has been operating since 1975.

Proceeds from the Thrift Shop help fund the services provided by the City of Mercer Island Youth and Family Services (YFS) Department.

In 2019, the Thrift Shop generated $1.98 million in annual revenues, which represents about 65% of the resources needed to support the YFS Department.

In 2020, the Thrift Shop was projected to generate $2 million in revenues.

COVID-19 Pandemic Impacts

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The Thrift Shop closed in mid-March due to the COVID-19 Pandemic.

Several scenarios have been considered to resume operations under the Governor’s Safe Start Plan. A few things to consider:

Thrift sales is a volume industry and we will not be able to meet prior volume sales under current operating restrictions.

Staffing and volunteer considerations.

Bulk sales to Goodwill/others may be limited or unavailable in the short-term.

Short-term profit and loss considerations.

The future impacts of the Pandemic remain uncertain.

Capital Project History

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In 2013, the City Council considered a Thrift Shop expansion project. The project did not move forward.

The City revisited the Thrift Shop expansion project in 2018 –updating cost estimates and the scope. The project did not move forward.

Capital Project Exploration

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Given the uncertainty of Thrift Shore operations over the next 12 months an effort began to explore a potential capital improvement project.

A team of community volunteers, City Councilmembers, and staff completed an initial project scoping exercise.

Preliminary Project Scope

Thrift Shop – Preliminary Project Scope

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Project goal: Expansion of retail floor space.

Decommission most of the existing production spaces (donation processing areas) and open the walls.

On the first floor:

New office area (113 sf) New breakroom (242 sf) New bathrooms (192 sf) New back of house area (379 sf)

Projection is 6,500 sf of retail space, which is about 50% more than what is available currently.

Thrift Shop – Preliminary Cost & Timeline

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Preliminary cost estimate is $250,000

Preliminary project timeline is 4 months

Thrift Shop – 1st Floor Concept

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CURRENT

Thrift Shop – 1st Floor Concept

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CURRENT PROPOSED

Thrift Shop – 2nd Floor Concept

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CURRENT

Thrift Shop – 2nd Floor Concept

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CURRENT ProposedPROPOSED

Thrift Shop – Images

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Front of Thrift Shop (looking east)

Recycling Center– Preliminary Project Scope

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Project goal: Relocate production spaces to the former Recycling Center. Also facilitate wholesale processing and sales.

Enclosing a 1,600 sf space.

Additional design work and assessment is needed:

Operations analysis – production drives sales.

Evaluate the production space.

Ingress/egress, signage, equipment, and other code and permitting requirements.

Recycling Center – Preliminary Cost & Timeline

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Preliminary cost estimate is $250,000

Preliminary project timeline is estimated at 4 months

Recycling Center – Concept

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CURRENT

Recycling Center – Concept

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CURRENT PROPOSED

Recycling Center – Images

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From corner of 77th Ave SE & SE 32nd St (looking southwest)

Recycling Center – Images

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Recycling Center (looking west)

Recycling Center – Images

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Recycling Center (looking northwest)

Recycling Center – Images

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Recycling Center (looking south)

Operating Margin Illustration

Thrift Shop – Operating Margin Illustration

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Increased volume scenarios prepared to illustrate what could be achieved with an increase in retail floor space.

We don’t know how fast volumes would ramp up, but some combination of increases is a reasonable outcome.

Further analysis is needed on production/Recycling Center operations.

Project Funding

Capital Projects - Facilities

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Recommend suspending/modifying the following facilities capital projects:

WG104R – Thrift Shop Repairs: $50,000 Available/$152,000 Budget

WG101R – City Hall Building Repairs: $405,274 Available/$541,000 Budget

WG101T – City Hall Building Improvements: $222,000 Available/$222,000 Budget

WG105R – Community Center Repairs: $80,000 Available/$419,000 Budget

WG107R – Luther Burbank Bldg. Repairs: $50,000 Available/$204,000 Budget

Total available funding due to the suspension/modification of the above projects is $807,274.

Projects will be reconsidered as part of 2021-2026 CIP discussion this fall.

Next Steps

Next Steps – Project Proceeds

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Select an architect and begin design work immediately. Focus on Recycling Center first to address code, permitting, and operations questions.

Refine the operations analysis (staffing and volunteers) for both facilities.

Develop/update plans and the business model to scale production to match Thrift Shop retail space.

Begin planning for re-opening.

Consider a short-term operations plan.

Next Steps – Project Does Not Proceed

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Resume work on the re-opening plan, aiming for Phase 2.

Align operating requirements with COVID-19 guidelines, per the Governor’s Safe Start Plan.

Allow three to four weeks for start-up to re-hire staff, complete training, etc.

Allocate one-time start-up costs for Thrift Shop.

Next Steps – YFS Funding through 2020

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Under both scenarios, the City Council will need to revisit funding for the YFS Department through the end of 2020.

At the June 2, 2020 City Council meeting, $250,000 was allocated from the Contingency Fund to sustain YFS operations through August 31, 2020.

Recommended Motion

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Suspend the capital facility projects as previously described and allocate up to $800,000 for the Thrift Shop and Recycling Center Remodel Project.

Authorize $50,000 for architectural services to begin design of the Thrift Shop and Recycling Center Remodel Project.

Direct the City Manager to provide a 30% design update to the City Council including updated cost estimates, construction timelines, project scope of work, and an operations analysisbefore completing further design work.

Questions