The emergence of Local Economy Centers

I didn’t have an opportunity to meet her at the recent BALLE conference in Grand Rapids, but, as luck would have it, I was able to dial in to a conference call during my lunch hour a couple of days ago, and ask a few questions of Kelley Rajala, the woman who runs the Sonoma Country Share Exchange in Santa Rosa, California. Rajala, along with Dave Feldman, a co-founder of Bethesda Green in Bethesda, Maryland, were talking about the emerging trend growing out of the Transition Town movement, of people creating Local Economy Centers in their communities. [note: Together, Rajala and Feldman run a consultancy called the Livability Project.] Ragala said that she started her center in 2010, when it became obvious to her that a physical location was needed if Santa Rosa was going to accelerate the pace of transition toward a more sustainable future. What they needed, she thought, was a community facility where all of the various initiatives that were taking place, in the areas of food, entrepreneurship, energy and health, could come together, under one roof. The hour-long conference call was set up by Transition US, and I’m told that a recording will be available available online in the near future. In the meantime, though, here are my rough notes, which focus primarily on the Santa Rosa case study, as I think that, of the two, it’s the one that’s most relevant to our situation in Ypsilanti. [note: My quotes may not be exact. I believe, however, they’re pretty close.]

Ragula explains her decision to open a brick-and-mortar location as follows: “There comes a point (in a movement like this) where there needs to be a more outward-facing presence, that seeks to engage the wider community. We’re at that point. We need small epicenters of transition activity, where (the principles of) BALLE and the Transition movement, can come together (and be put into action).” She envisions a future in which such centers exist across the country, leveraging downtown storefronts left vacant in the wake of shopping malls and big box retailers. Each center, she says, would be independently run, and take on the flavor of the community in which it’s housed. The subject matter addressed within these centers, she says, could span from healthy food access to business incubation, with the common thread being the shared values of localism, social justice, permaculture, education, biomimicry, economic empowerment, etc.

Rajala’s Local Economy Center, the Share Exchange, is one block off the main drag in Santa Rosa, the second largest city in California’s Wine Country. (Their population is 167,815.) They chose not to pursue corporate sponsorships, as other centers have, but, instead, to focus on the grass roots. They are organized as a cooperative under California law. (They’ve yet to define their bylaws, but that is in process.) Their intention is to become both a consumer coop, and a worker coop. The space is 1,800 square feet, and they pay $1 per quare foot. (The space was relatively move-in ready when they took possession.)

Their rent, for the most part, is covered by the sales of the Made Local Marketplace, which takes up the first 400 square feet of their space. At present, according to Rajala, the goods available in the store, all of which are made in their county, are relatively “gifty.” She’s hoping, however, to transition, over the coming year, into more practical items. The vision, says Rajala, is to have it be like a general store. (I believe she said that, since opening, they’ve sold the work of close to 250 artists, makers, etc.) The entire space is open to the public from 9:00 AM to 6:00 PM… I asked about the revenue generated by the Marketplace, and she said that it covered half of their budget. (Their budget was $100,000 the first year, and $130,000 the second.) She also said that half of the Marketplace sales were recorded in the first three weeks of December. Last year, they hosted a street fair, hoping to generate non-December sales. (I didn’t ask how much they raised.)

Behind the store, there is a co-working space, which presently has 60 members. This area has a kitchen, video conferencing room, etc. And, over time, they will be adding entrepreneurial services, helping people to launch businesses that make the community more sustainable.

They also generate revenue by renting their space, after hours, to organizations that are “mission aligned.” (They rent the space approximately 200 evenings a year.) Craft groups, community organizations, and local businesses, among others, make use of their meeting rooms, which are outfitted with white boards, and other tools to facilitate the creative exchange of ideas.

Furthermore, they’ve started something called the Local Economy Institute, which they hope will evolve into something like the Evergreen Cooperative, in Cleveland, helping to create jobs by looking for opportunities to fill in the local supply chain. For example, she mentions that Amy’s Kitchen, a huge, vegetarian food processor in her area, imports most of their ingredients. So, she wants to start a worker-owned farm to supply them. The Local Economy Institute would not only identify such opportunities, and help launch companies to take advantage of them, but also hold courses for people on how to be responsible, successful worker/owners.

The secret to staying afloat, she says, is to diversify revenue streams, and thereby bring in enough money to support those activities that don’t make money. (They also do some contract work for nearby cities that are interested in sustainability, marketing work for local businesses, etc. Furthermore, a local bank has recently stepped up to be a sponsor.) The key, she says, is to stay flexible.

The organization has two staff members. And, there are five makers/artists who volunteer to run the store. In exchange for running the store, these five people pay a much lower commission rate on their pieces that sell in the store. (Occasionally the two employees of the organization need to run the store, as the volunteers can’t always make their shifts.)

When asked what she would have done differently, Rajala says that she would have done more outreach concerning co-working. As it was something new in the community, she said, people weren’t ready for it. And, as a result, those spaces aren’t fully utilized, and, as a result, the people who are using the co-working facility, are essentially being subsidized. She says that she doesn’t know if co-working is going to work in the long run. They may have to transition some of their co-working space into dedicated offices for startup companies, she says, which they can rent by the year.

They’re constantly trying new things. They looked into the possibility of a time bank, but decided to put it off for the time being. They’re working with the national Slow Money Network to roll out their Credibles program, which is a platform though which people can pre-pay for goods at their favorite food-related businesses, and, in so doing, help budding food entrepreneurs by advancing them working capital. They will also soon be rolling out a matchmaking service through which people with unused yard space in urban areas can be matched up with would-be farmers who are looking for plots to cultivate. And, they’re hoping to replicate the Port Townsend Local Investing Opportunities Network (LION) that I told you about not too long ago, in hopes of getting high-net-worth individuals investing in local startup enterprises that create jobs, improve the community’s resiliency, and contribute positively toward the local ecosystem. And, they want to explore all kinds of swapping and sharing, whether it be in the form of hosting local fabric swaps, or facilitating equipment lending networks. She also says that they’d like to do more to get the people who create things for their store into stores of their own. The main thing, she says, it to keep going… to keep finding new sources of revenue, so that you can continue to push the envelope. In order to do that, according to Rajala, you have to be creative, and you have to foster partnerships.

I had thought, since the first Shadow Art Fair, that Ypsilanti might be able to support a year-round store, managed by volunteers, that would sell the products of our food entrepreneurs, craftspeople, and makers. The idea that such a business could serve as a gateway to something bigger, though, is something that I hadn’t considered. And I like it. Unfortunately, what works in a city of 167,000, where you only pay $1 a square foot in rent, may not work in a considerably less affluent community that’s a fraction of that size. Still, though, it’s interesting to consider what a Local Economy Center would look like in Ypsilanti.

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  1. Elf
    Posted June 6, 2012 at 6:44 pm | Permalink

    The Growing Hope Center, as it’s imagined, should be doing all of the food/agriculture stuff. There’s still a need, however, for something on the business development side of things that isn’t SPARK. And, since that energy place left Depot Down, there’s no one handling that end of things. It would be good to roll up everything together, around a store. I don’t know, however, if our population of 20,000 would support such an initiative. You’d probably need grants to pull it off.

  2. anonymous
    Posted June 6, 2012 at 9:02 pm | Permalink

    We could reopen the Velvet Touch, on Michigan Avenue, and fund the whole operation on porn sales.

  3. Posted June 6, 2012 at 11:24 pm | Permalink

    I like this. In Austin we have the Austin Co-op Think Tank which is working on helping to create more co-op economy in Austin and the group Cooperation TX which helps worker co-ops get their start. Wheatsville is also having a role to play as a financially successful food co-op we’ve been able to help fund the world’s first co-op brew pub, Black Star Co-op, as well as guide and buy from Austin’s first co-op bakery, Red Rabbit Co-op.

    I’d like to see our local alliance, Austin Independent Business Alliance find a way to nurture more local businesses, too.

  4. james
    Posted June 7, 2012 at 2:01 am | Permalink

    A while back I noticed that the old “Hope Dental Clinic” was up for sale on Swisher commercial. I think they wanted $75k for the building.

    I don’t think it ever sold. If you could get a non-profit together, you could buy the building. There would be no property taxes, and you would only have to pay a mortgage. You might even be able to work out a land contract with the Hope Clinic people and thus not have to go through a bank.

  5. JC
    Posted June 7, 2012 at 6:19 am | Permalink

    Dan from Austin, thanks for this. It’s refreshing, especially amid so much talk of entrepreneurialism, wealth-growth, and corporate “innovation.” I’d like to add to your collective of Austin coops the idea of Mondrag√≥n:

    Here in Ypsilanti we also have a Food Coop, which thrives and steadily continues to grow.

  6. Edward
    Posted June 7, 2012 at 6:52 am | Permalink

    This is all good stuff, and I’m happy to know that people around the country are exploring new ideas to empower their citizenry and build more sustainable communities, but it’s hard to be enthusiastic when, at the same time, the macro trend seems to be favoring the likes of Scott Walker in Wisconsin, who are doing everything in their power to push the corporate agenda.

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