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SAN RAFAEL -- Buckelew Programs is scaling back its plans for People's Harvest, which was intended to be an 18,000-square-foot, fresh-cut produce processing center in Petaluma, but which will now be temporarily housed in a small commercial facility in Marin County, the nonprofit said.

Buckelew ran into unexpected expenses related to improvements at the planned building at 1297 Dynamic Way in Petaluma, which turned out to be too large and required significant upgrades that substantially added to the $1.1 million price tag of the building.

"Due to the unexpectedly high buildout costs, People’s Harvest could not financially justify the space and will instead begin production in a small commercial facility in Marin County for its August launch," said Michael Paik, manager of People's Harvest, in a press release. "Longer term, People’s Harvest has developed two facility strategy options, which are both significantly more cost effective than the Petaluma space. They expect to finalize their facility strategy by the end of September 2012. Long term space is expected to be located in Marin or Sonoma counties."

Bob Brown, interim executive director of Buckelew, said that while the project will be smaller than initially expected, it will still meet many of its original goals, including employing between 75 to 100 people by 2016. Initially, employment in 2013 is expected to reach 25 part-time positions -- estimates that are consistent with past expectations.

"The project is going to be smaller," Mr. Brown said. "The build-out is jut too expensive and the building is too big."

People's Harvest also announced that it will begin shipping fresh-cut and boxed produce to San Rafael and Mount Tamalpais school districts this August, ahead of schedule. Several other school districts in the North Bay Area have expressed strong interest in adding People’s Harvest to their supplier list for this fall or in 2013, according to the nonprofit.

People's Harvest, a "social enterprise" run by Buckelew, hopes to help local farmers while providing jobs for individuals who face barriers to employment, according to the non-profit behavioral health organization.

The Petaluma site was poised to be Buckelew's fourth social enterprise. The program seeks to provide jobs while serving as a hub for local farmers who wish to sell their produce to local schools and hospitals. Buckelew runs similar enterprises in Marin and Napa counties.

In October 2011, the nonprofit said it had raised $900,000 of the $1.1 million needed to open and run the new venture for the next 18 months, with significant support coming from the Marin Community Foundation and the Roberts Enterprise Development Fund, or REDF, a San Francisco-based venture philanthropy organization.

News of the scaled-back plans comes at a time of transition for the San Rafael-based nonprofit. Executive Director Steve Ramsland stepped down shortly after another nonprofit, the Family Service Agency of Marin, merged with Buckelew Programs.

There are two interim executive directors -- Buckelew's Mr. Brown and Family Service Agency of Marin's Executive Director Margaret Hallett -- while new leadership is sought.

With an annual budget of $12 million, Buckelew is the 15th largest nonprofit in the North Bay, serving Marin, Sonoma and Napa counties, according to the 2011 North Bay Business Journal list of nonprofits. The addition of Family Service Agency’s annual budget of $2.3 million made the combined organization the North Bay’s 11th largest.

Buckelew had revenues of $10.7 million in the fiscal year ending June 30, 2011. The merged organization employs more than 200 people across Marin, Sonoma and Napa counties.