Dear Member Owners and Supporters,
We are about to embark on the most exiting year since we announced our efforts to bring a co-operative market to the community. This year, we plan to announce our site and raise all the capital necessary to build a grocery store where you are going to love to shop. How is that for New Year’s ambition? I know you’ve been waiting for some major news from us and we have been working diligently behind the scenes to lay the ground work for the coming months. Let me get right to the details.
In December, we received our updated market study that analyzed a site we have been negotiating for several months. The study results were very good, but most importantly we needed to see how that information impacted our financial pro forma. As we have told you many times before, full service grocery stores are not inexpensive to start. At over $2 million, we need to be sure we can afford the site and sustain the store before we sign a final lease. This is the job of our finance committee, who worked diligently right through the holiday, testing and tweaking our pro forma to come to a decision regarding our fate. Last Thursday at our board meeting, our finance committee chair made a formal recommendation on behalf of the committee. His recommendation was to pursue the site because our financial pro forma can support the business.
Wait, it gets more interesting. In past posts, I have been alluding to a member loan campaign. Member loans are one way the project will be capitalized. This is in addition to loans that we receive from banks and organizations that specifically lend to co-ops, along with any available grants. Member loan campaigns are common practice among co-ops and have historically been highly successful. Lexington Co-op ran this type of campaign years ago when they were building their store on Elmwood Avenue.
While member loans are extremely successful in capitalizing co-ops, they show up as debt on a balance sheet. With the amount of money we are going to raise through our members, our pro forma was not looking as healthy as we had hoped. Our consultant, who works with co-ops across the country, has seen a growing trend among both start-ups and mature, expanding co-ops, where preferred shares are offered in conjunction with member loans. The benefit of running a campaign with the adjunct of preferred shares is that the preferred shares are considered equity on the balance sheet. Having tested this on our pro forma, the finance committee has strongly recommended that we use both for our capital campaign.
Because this is a deviation from our bylaws, we will hold a vote to amend both our bylaws and articles of incorporation in order to offer preferred shares. In the coming weeks, you will be receiving a letter in the mail, inviting you to a meeting where you will cast your vote for or against the change. So stay tuned for that and plan on being an active participant, helping us accomplish this important step.
While we prepare for those changes, a myriad of other events will be happening on the project. We hope to sign a letter of intent with our prospective landlord in the coming weeks. Once our legal work is ready, allowing us to launch the campaign, we will be announcing the site. Yes, believe me, we live for that day. What a celebration that will be! Then we will launch the capital campaign and begin work on the site, including environmental testing and design feasibility work.
It is important to note that in doing the preliminary work (environmental studies, pre demolition work) we are testing the environment for things that, if present, could prove insurmountable for us. All of these events are “toll gates” that we have to get through successfully to get to the next step. Getting through all of these “toll gates” will make it possible to begin construction in the summer and work toward an early to mid-2015 opening. We are cautiously optimistic, but there is still a great deal of work to be done.
How can you help? Thanks for asking. We are always in need of volunteers. Now is the most exciting time to get involved, so don’t miss out. Come shop at the Mini Market. That helps us offset some of our expenses as we make progress toward our goal. Encourage others to join the Co-op now. Remember that we need a strong base of membership to both start and sustain the store. Come to our events and bring a friend. We are very inclusive. We have some exciting opportunities to meet the board and consider joining their team. It is fun, educational, and often entertaining. Read your email and remain informed so you can stay pumped along with us, right up to opening day and beyond.