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Members OK "Building
Blocks" to help finance new store
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by Deborah Trupin
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Co-op'ers have authorized
an innovative "Building Blocks" program to expand member options for
financing our new store. HWFC shareholders will be able to buy $25, $50
or $100 Building Blocks, redeemable for goods after seven years.
On June 7, nearly 100 Honest Weight Food Co-op members gathered in
Albany to vote on a change to the HWFC Bylaws and learn about the
budget for the new store. Board President John Godfrey began the
meeting by introducing the facilitator, Coop member EJay Carter, who
reviewed the voting rules and discussion guidelines. John noted that a
quorum of 98 members had been reached.
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Innovative
Fundraising
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The
first order of business was to discuss and vote on a proposed change to
the HWFC Bylaws. The change was needed to allow HWFC to begin a program
called Building Blocks as an additional way to raise funds for the new
store. Board member Lenore Gens burg had the idea for the program based
on a project she had been part of in Great Barrington (Mass.).
Lenore de - scribed how a deli in that town raised all the money it
needed for a remodeling project by selling "Deli Dollars"-- in essence,
IOUs that customers bought, to be redeemed for food and drink after the
remodeling project. Lenore brought this idea to the HWFC Board, who
also liked it.
Building Blocks would make it possible for many more HWFC shareholders
to invest in the new store. The shareholder loan program, which has
raised nearly $600,000, has a minimum investment of $1,000 due to
expenses and paperwork associated with loans. The Board recognized that
not all HWFC shareholders have $1,000 to lend.
The Board took this Building Blocks idea to the appropriate lawyers,
who advised that for the program to be legal, the Bylaws should be
amended to permit HWFC shareholders "to make a cash contribution to the
capital account of the HWFC, to be redeemed in accordance with the
provisions of the prospectus for the HWFC's Building Blocks program"
(from the ballot for the proposed change).
Once the Bylaws amendment passed, HWFC would put out a prospectus for
the Building Blocks program. HWFC shareholders would review the
prospectus and, if they chose to participate, buy Building Blocks for
$25, $50 or $100. After seven years these Building Blocks would be
redeemable for HWFC goods at 20% more than the original contribution.
During the meeting there was quite a bit of discussion about how the
Bylaws change had been proposed and about ways it could be used to
authorize similar projects in the future. Members then voted on the
proposed change, which passed overwhelmingly. (Look for more
information about how to participate in the Building Blocks program at
the Co-op and on the website).
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New
Store Budget Explained
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The
second part of the meeting was devoted to a presentation by Kyle
Lawrence, HWFC Treasurer, on the budget for the new store. To help
members understand the terms and meanings of the numbers in the budget,
and to know what HWFC is doing to make the project a success, Kyle
provided a snapshot of the work that had gone into the budget for the
new building so far. His presentation walked through the process in
great detail.
Kyle said that the Co-op is using a budget called a "Sources and Uses"
budget. "Sources" refers to where money will come from; "Uses" to what
the money is needed for. The Finance Committee is also doing Scenario
planning--making projections to be sure the HWFC can meet its
obligations and fulfill its mission.
The total for Uses is $13,490,000. This figure includes the $1,050,000
already spent to purchase the new property and $1,140,000 in overrun
allowance that we hope will not need to be spent. The rest of the Uses
are: Construction/Site Development: $6,800,000; Equipment: $2,300,000;
and Miscellaneous: $2,200,000. "Miscellaneous" includes inventory,
fees, working capital and start-up costs. Kyle pointed out that these
are the best estimates available now and noted that the construction
costs will change, as that is the nature of construction.
Kyle outlined the Sources as they stand now. HWFC is negotiating with a
local lender for loans of $8,300,000 for the building and equipment.
Other funds will come from existing HWFC savings ($1,100,000), member
loans, as noted above, and other financing (community loan funds, free
inventory expected from vendors, etc.: $500,000). HWFC is exploring
other programs to fund the rest of the project, to make up the gap of
about $4,000,000. These include federal Stimulus money from the Blue
Print program, NYSERDA, and the City of Albany.
Among the other programs, the most interesting and exciting is the New
Markets Tax Credit. This is a U.S. Treasury tax credit program for
investment in underserved areas. The HWFC project qualifies for this
program and seems to have good chances. The program looks for projects
that have positive effects on the environment and on the community.
HWFC is now working with lenders to pursue a subordinate,
below-market-rate loan through this program. This loan could make up
the gap between Uses and Sources, and could save $1,500,000 over 10
years. HWFC expects to hear about the success of this in September or
October.
Kyle also discussed the scenarios that the HWFC Finance Committee is
using as they work on the budget. Kyle encouraged members to contact
him with questions or suggestions about the budget and financing for
the new building. He said, "Our membership is our greatest resource."
Kyle and the Board expect that members will vote on the budget for the
new building in September or October, once the gap between Uses and
Sources is closed.
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If
you are an HWFC member or shareholder, you can help reduce the new
store's budget gap by making a loan to Honest Weight and/or purchasing
Building Blocks. If you are not yet a shareholder, but want to support
the Co-op, please join--and then make a loan or buy some Building
Blocks!
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