Red Tape

Two Hearings

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Brewery Faisan required two public hearings with the City of Detroit in order to get permitted to begin construction. After successfully completing this daunting hearing process, we can now happily share the experience!

These hearings are triggered as a result of city ordinances and zoning requirements. Initially, the Building, Safety, Engineering, and Environmental Department (BSEED) reviews each site plan to ensure that a project is complying with the ordinances before the project can be permitted for construction. It is here where they identify any compliance issues and hearings that are needed.

When we purchased our property, we made sure that a microbrewery was acceptable under the property’s M-4 industrial zoning. However, there are two acceptable use categories: by-right and conditional. A microbrewery without a kitchen is considered conditional and, as a result, we were required to face a Special Land Use Hearing with BSEED. It was interesting to see the other business types that fall into the conditional category, such as cabarets and strip clubs. Essentially, businesses that the public could view as potentially harmful to a neighborhood. Paradoxically, a microbrewery with a kitchen is considered by-right and we would have had no hearing required. Simply add a kitchen. We chose to stay true to our vision. We are a brewery, not a restaurant.

Our other remaining shortfall was not having enough land to provide the number of parking spaces as determined by our square footage and proposed use. This necessitated a hearing with the Board of Zoning Appeals (BZA). Though we were willing and able to work through these issues, the hardest part was the insane amount of time it took to do so. We began the process by applying for the site plan review on November 15th, 2017 and everything was finally fully permitted on October 17th, 2018, just under one year. ONE YEAR. Let that sink in for a minute.

SPECIAL LAND USE

The Special Land Use hearing was a small group from BSEED and Planning and Development as well as our team around a conference table. The hearings are also open to the public and we had a friend and neighbor attend in support. Also, one curious neighbor who just wanted more information about our planned project showed up. Neighbors are notified by a mailer sent out to any property owner and tenants, residential or commercial, within 300 ft of a project. Plus a large notice gets plastered on the front of our property for any passerby to see.

It began with a presentation a field inspector gave on our location. He presented photos and a brief report documenting the surrounding area. Next a member of the Planning Department gave an overview of the Master Plan for the neighborhood. Lucky for us, the future zoning designation was given as simply light industrial. She went further and said our proposed use would be a good fit for the neighborhood and not “injurious” or “deleterious” and other esoteric terms one hears from planning department folks. This was excellent to hear someone from the city advocating for our project. We were then allowed to speak, which we described how we sought a industrial area specifically because we felt it was fit for a brewery. The purpose of this hearing is to decide whether to allow the use at all; so we needed to present to them that we are responsible business owners, will be good neighbors, and acknowledge some of the negative impacts we might have on the area and how we will mitigate them.

Once completed, BSEED takes a full month to render their decision. A month later to the day…approved! With the condition we then apply for our BZA hearing to address our parking deficiency. Even though the BZA is an entirely separate department deciding on a separate issue at hand, the city would not let us go after these in parallel and we had to complete them in order.

BZA

A BZA hearing is a whole different animal. The Special Land Use hearing is basically just checking that your proposed use is in-line with the intent of how the area was zoned. A BZA hearing is held for projects seeking variances (i.e. deviations, exclusions, waivers) from city ordinances. In our case, we needed to provide 20 parking spaces per the ordinance and we could only fit 4 (up to city size standards) on our property. So we had to go in front of the board to have the parking requirement waived for our project.

Once again mailers were sent out to every property within 300 feet and a large notice was posted on the front of our property. We knew variances are treated with much consideration to the opinions of the surrounding neighbors, so we reached out to everyone we knew and had them give their support of our project to the board. This was a mixture of letters, emails, and a few extremely helpful individuals who were willing to come and testify under-oath that they support the variance.

The hearing is held in an auditorium in front of a panel of appointed board members. It is very similar to a court proceeding and it is in fact a specialized branch of the circuit court. We were fortunately provided the questions we should be expected to be asked ahead of time. These questions centered on things like: why would granting the variance not be harmful to surrounding businesses, how it might give us an unfair advantage, and the impact this variance might have on future development. We prepared answers to each and Rachel diligently practiced speaking her responses with help from her attorney sister who is familiar with litigation.

We got there in time with one case in front of ours. We watched as they were grilled with questions, angry board members went off on tangents, and dozens of impassioned public comments were made in opposition. The applicants floundered under the pressure. They got defensive, tried to butt in when concerns were being raised, and repeated themselves far too much. Things got pretty tense. The board deliberated and promptly voted with a unanimous nay–variance denied. Now it’s our turn!

We took the stand and listened to an inspector give a site report detailing our project and why we seek a variance. Basically, all the information we had to fill out to get on the docket. When the questions started we had a detailed, thought-out response to each inquiry. The board was nodding along in agreement. One key we followed is to be patient. Let any board member finish speaking completely, even let a small pause elapse. Additionally, it is wise to speak slowly and always remain polite and formal. A few supporters also took to the stand and spoke in favor. No one appeared in opposition, phew. To our surprise, many of our responses were repeated during the board’s deliberation. We had successfully steered the dialog in our favor. A quick vote, this time a unanimous yay–variance approved!

With a brief sigh of relief, we now head straight into the stresses of construction. The approval stamp still wet on the construction permit, we came back to our building with crews having immediately started cutting out new openings in our walls and tearing off the crumbling mess that was our building’s roof. It has begun.

First Steps

Round 11 Motor City Match Awardees

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We are happy to share that we are recipients of a Motor City Match Cash Award grant! The road to winning this grant has been a long one. After 11 Rounds and 11 applications our persistence on going after the big money paid off. It was a truly great experience to meet the mayor and to share in the press release event with the other businesses that won!

A review of our 11 applications spanning back to summer 2015 would surly be an anthropological study of our business plan as it has evolved into a solid backbone on which we are now able to close on our funding! Underwriters, we found, ask pretty much the same questions as a grant committee.

This grant is designed to fill a gap in funding. As luck would have it, we were awarded the exact amount of an appraisal shortfall of the used brewing equipment we are planning to acquire. The bank typically requires an independent appraisal on used equipment and the result for us was a ‘fair market’ value coming in at what most people would consider scrap value. Disappointing but unsurprising. Needless to say, we are thanking our lucky stars that this grant will allow us to move forward with the purchase.

Motor City Match also helps businesses that are still in planning stages. This includes early steps like writing a business plan or finding a suitable space. We came into the program when we had just acquired our building and Motor City Match helped us with the professional design of the renovations and some due diligence items during the purchase. The program also encourages networking and has provided many resources to aid building and business owners alike.

Overall, the experience as been awesome and it is a huge piece in the puzzle of opening Brewery Faisan. We are grateful that this program became available when it did. It is one of the reasons we are able to keep our small business our own. Thank you, Motor City Match!

First Steps

The Plan: Drawings & Contractors

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In the previous post we talked about the upfront costs of due diligence and property ownership. Now that we owned a building, the next step was to have drawings made to illustrate our plans for the space. What will our dream look like? How will we build it? Will the city allow it?

Procuring architectural & MEP (mechanical, electrical, plumbing) plans was another hefty upfront cost we had to be willing to spend on. This is also a soft cost–if you later go on to secure bank financing, the bank just wants you to have drawings completed. They don’t factor how much it cost you and won’t leverage it towards the loan. We got 4 quotes for architectural drawings ranging from $7,500 to $26,000. On top of this, some firms included a cost for an MEP plan set, to be completed by a sub-contracted engineer, which was fairly consistent around $7,500. Each firm also offered varying levels of service which made it somewhat difficult to truly compare. Do we just need the bare minimum to satisfy the city’s permit requirements and get accurate construction quotes? Or do we need someone to decide on the exact type and color of each item in the taproom? We have experience in design and we want to make the small detail choices, so we chose a firm we felt shared out overall vision and was willing to deliver the minimum required for permitting and thus remain affordable.

Our timing coincided with the City of Detroit announcing Motor City Match, a grant program. One of the program grants is for professional design services. We won that grant and were able to engage the architect we had chosen using those funds. Working through the grant program did prolong our process, however, it saved us from having to spend thousands out of pocket. We are so grateful that this was available to us and that the timing was perfect.

Faisan Permit Drawings

A year later we had a complete set of stamped drawings. This might be a good time to talk about that old adage: Good, fast, cheap… pick two. The idea being that by picking two, you ultimately sacrifice the third. We saved a lot of money here but it took a long time. We needed the drawings to engage contractors and also to begin the process with the City of Detroit for permitting.

Construction budget estimates:

We learned by talking to banks that we needed to work with a general contractor who could manage the project and ensure it gets built on time and at cost. When we starting planning, we honestly thought we could manage the project ourselves and bring in contractors for the big stuff. When we realized this wasn’t an option, we had to get comfortable with the idea of adding in contractor fees and salaries into our budget. The fee is usually about 10% of your construction costs (plus construction management staffing). With that dreadful news in mind, we solicited 10 contractors and got budget estimates from 5 of them. Interestingly, most contractor’s total budget estimates were very close and differentiated only on the details. One would estimate plumbing really high and electrical low. The next would show the opposite numbers. Likely, this is just the result of them estimating the total based on square footage and then filling in the smaller buckets with numbers to get there.

Choosing a contractor was something we had prepared to freak out about because in our minds it’s the biggest unknown and dictates the project’s success or failure. We chose to work with Honor Construction because they were the most impressive and honestly, they were the only ones who spoke our language. They’ve done breweries and they understand where we’re going and how to get there. We engaged them in a pre-construction contract designed to utilize our plans to get us as organized as possible prior to construction so that any unknowns could be eliminated early and our budget would be much more accurate. It is such a relief to have them on our team and we’re sleeping so much better at night.

First Steps

Brick & Mortar

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We spent two years searching Detroit for a location for the brewery. Two years. We spent that time touring suitable buildings (although that criteria changed a lot over time) and talking to building owners about long-term leases. We contacted listing agents and also rode our bikes up and down streets marking down addresses and cold-calling owners (by paying to view tax records online). Detroit posed a particular challenge in that many property owners are comfortable continuing to wait for their property to magically increase in value as they’ve done for decades. Frustrations aside, we enjoyed touring spaces and exploring our city. The brick & mortar that we eventually purchased came about with the help of a friend who had become a real estate agent in the time we were looking and with a bit of persistence and luck. Cheers to reasonable people and wonderful neighbors!

The realization that leasing wasn’t ever an option:

When you’re looking for at least 5,000 SF (likely in need of new utilities and major upgrades like a new roof) we found many landlords in Detroit were not willing to make those upgrades or discount rent enough to make it worthwhile for us to undertake. Opening a brewery is not cheap and having rent due on top of a large loan payment was never an option for us. We ended up taking a risk by spending our seed money on the purchase and aimed to use the building and our home as collateral to secure the financing for the build-out. Nothing in the process of securing a location was obvious or straightforward and because we were willing to take our time and learn what we could, we were able to avoid some bad deals. Nothing is certain until the location is secured. The plan shapes the location search and the location crystallizes the plan.

Due diligence:

We finally found a perfect building and they’re willing to sell it to us! Let’s sign the paperwork and pop the champagne-beer! … If only it’s ever so simple… We spent around $10,000 on due diligence before the sale closed. This included an inspection, a survey and phase I & phase II environmental studies. Having these actions performed made it possible for us to complete a parcel split (the property was originally part of a larger tax parcel), file the necessary paperwork, and confidently close knowing that there were no hidden environmental nightmares lurking below.

It was easy to see that the roof needed replacing (it rains inside) and the inspection did not identify anything else significant to us. Next we tackled the environmental side of things using some grant money from the city. Often a phase I study (historical research on the property) is all that’s needed. When the property is located in an industrial area that has housed many underground tanks and heavy industry businesses, usually a phase II is triggered by the historical research. Our phase II included a company coming out to bore into the soil at several points on the property to collect samples to be tested. The study revealed some heavy metals in the top soil of our vacant lot adjacent to the building. Everything below a few feet was clay and therefore uncontaminated. We now have to allocate about $10,000 of our construction costs to pay to haul away the contaminated soil to a proper site when the land is graded.

An acquaintance who did not know about environmental studies inadvertently purchased a similar property and later found a buried oil tank. The resulting remediation was likely at lease $50,000 and could go a lot higher. That is a red flag/hefty bargaining chip or a budget breaking hidden cost depending on when it’s discovered. So, whatever you do, do your due diligence!

When using the building as collateral for the business loan, the bank will also require at least a phase I to be performed. We made sure to choose a company that is on the bank’s list of approved vendors.

The pride of ownership:

Pheasants roam the neighborhood that houses our 9,000 SF building and adjacent lot in Islandview. Our confidence in the awesomeness of our location is a driving force that has moved us through the next two+ years of getting organized and getting funded. While we wait for construction to begin we’ve taken pride in the simple things like weeding, mowing, and shoveling our little slice of Detroit. We love our space and can’t wait to share it with the world.

First Steps

Step One

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This blog on making Brewery Faisan exists because it’s important to us to share our experiences as first time business owners. It has been and continues to be invaluable to us to learn from others who have shared their brewery journeys with us both privately through correspondences and by publicly posting online. We intend to contribute to the positive & open craft beer community by doing the same.

It all started with a business plan.  

We spent hours upon hours writing and rewriting as we read, researched and became more prepared for the realities of business ownership. It was/is a labor of love. Our plan progressed from a simplified idea expressed in a few pages to over 70 pages detailing every tiny aspect of the business. By creating spreadsheets based on industry data and research we were able to create a living document that could be used as a tool to illustrate in numbers our path to success. When questions arose from lenders, we were able to address them efficiently and confidently because the answers already existed in the plan. A thorough plan heightened by sincere confidence and belief in the project and ourselves was/is instrumental to our success thus far.

Introduction to Brewery Faisan

Introduction to Brewery Faisan

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Now that our website and social media are launched, we are happy to begin blogging our progress as we work toward opening our brewery in Islandview, Detroit.

Rachel and Paul in the warehouse.
Rachel and Paul in the warehouse.

Here you will find details on our progress and experiences throughout this exciting and arduous undertaking of opening a (not so) small business in the city we love. The project includes renovating a 9,000 SF warehouse and adjacent lot into a microbrewery and tasting room. We have been working toward this goal for many years and look forward to sharing our journey with you.

Cheers! -Paul & Rachel