Hub City Cooperative
Annual Meeting
2014
Agenda
Welcome
Tim Meade, Board President
Business
Introduction of Board Members: Tim Meade
Vote on Board Terms: Laura Barbas-Rhoden, Board Vice President
Milestones: Fran Fried, Board Member
State of the co-op: Sheila Cash, Board Treasurer
Celebration
Volunteers – Laura Barbas-Rhoden
Site Development – Tim Meade
Next Steps
Funding: Fran Fried
Invest & Grow: Tim Meade
Sources and Uses: Fran Fried
Q&A
Adjourn
Tim Meade
Board Terms
Board Terms
Name
Term End
Beth Cecil
2017
Andy Gustafson
2017
Tim Meade
2017
Jeff Tillerson (filling term of EO)
2016
Laura Barbas Rhoden
2016
Cyn Massey (filling term of SM)
2016
Sheila Cash
2015
Fran Fried
2015
Sallie Ann Burnett
2015
Milestones 2013-2014
Owner Investments: At last year’s Annual Meeting, we were preparing to kick
off the Invest and Grow Campaign. During the spring campaign and a smaller
fall follow-up, we successfully secured commitments for $625,500 in preferred
shares and owner loans. That is a fantastic result for a first-time investment
campaign like this one, and a true milestone to celebrate!
Primary Debt Financing: About a quarter of the development budget is to be
financed by an outside lender. Last spring, the Co-op applied to Lowcountry
Housing Trust (now known as the SC Community Loan Fund) for this financing,
and after an exhaustive vetting process, received a commitment of just under
$600,000 in financing. BUT, the offer required us to purchase the co-op
building, in order to have sufficient collateral under their underwriting rules to
support the loan.
The Board decided to pursue this possibility throughout the Invest and Grow
campaign, but ultimately decided that the close to $1 million in additional cost
that this option added to the project was simply too much for a start-up
venture. We parted ways on good terms with Lowcountry Housing Trust, and
they have committed financing for the Northside Food Hub project, so we are
thrilled that they are still investing in healthy foods in the Upstate!
Milestones 2013-2014
Launch of the Innovative Rural Development Corporation: The IRDC, which is a
nonprofit community development corporation, was granted federal taxexempt status in June 2013. The IRDC’s mission is to build sustainable
economic systems that strengthen the health of our communities by creating
market outlets for locally- and sustainably-produced goods and foods, and by
educating on how healthy food and environment impact healthy life styles.
Getting the doors open at the Hub City Cooperative is the IRDC’s pilot project,
and the advent of the IRDC necessitated some transition of Board members
from the Hub City Cooperative Board of Directors to the IRDC Board of
Directors, for continuity and stability. But this has been a fruitful partnership
thus far: thanks to donations and a grant from the JM Smith Corporation, the
IRDC has been able to invest $21,500 to date, in preferred shares in the Hub
City Cooperative. Another big milestone!
Milestones of Transition: After the spring campaign and the decision to turn
down the Lowcountry Housing Trust financing, the Board and advisors took a
step back to re-examine whether purchasing the building was in our
ownership’s best interest at this phase. The Board ultimately decided that a
cheaper lease-based development plan to get the doors open was preferable to
the longer fundraising effort necessary to gain ownership of the building.
Milestones 2013-2014
After the intensity of the spring Invest and Grow campaign, there was a need
to take time to look at the data the campaign generated, to talk to co-op
experts to make evidence-based decisions -- based on the values and ideals
that brought us all together in the first place -- about the Coop’s next steps.
The Coop Board used the summer and early fall to strategize carefully about
ways to realize the commitment that this growing ownership has always made:
to plan for the long-haul, and to create a sustainable, thriving store. The Board
is committed to the slow, steady, careful build, on solid ground, that brought all
of us into the cooperative as owners, and that has taken co-ops next door in
NC, and across the nation, to success.
The Board also welcomed three new members during the fall, appointed to fill
seats opened mainly by transitions to the IRDC Board. This process reflected
and encompassed Cooperative values and principles around education and
training, leadership development, owner empowerment, and diversity within
the ownership, and, I can say personally, it has been wonderful to move
forward with this strong group of Board members.
Milestones 2013-2014
Primary Debt Financing, Round 2: During the winter, the Co-op secured a letter
of pre-commitment for primary debt financing, shared by the Local Enterprise
Assistance Fund (LEAF) and Northcounty Cooperative Development Fund
(NCDF), under a lease scenario. Both are national organizations, devoted to
supporting the development of cooperative businesses, with deep experience
in the financing of retail food coops. Our lease scenario was familiar and
acceptable to them, due their specialization in the world of co-op finance. We
will finalize this application during the summer of 2014. This commitment is
contingent on finishing the owner investment portion of our financing plan,
and on securing support from the City of Spartanburg.
City of Spartanburg: The City has been supportive of the co-op concept from
the early days of its organization. Co-op owners began discussions with City
staff and council members in the fall and winter. Initial information sent to
council in February, and the Council invited the Cooperative to present before
them in mid-March. This past Monday, as you might have seen in the paper
this week, at its work group session, the Council and City staff discussed a
potential structure for City support. This is a critical and FINAL piece of the
financing, to be voted on soon… please contact your City Councilperson NOW
to let them know you support full City funding for the Coop!
Milestones 2013-2014
Navigated Scarce Financial Resources: Most developers have considerably
more cash on hand throughout the pre-construction phases of a project of this
size than the Coop has had this year. The ownership has borne considerable
expense to test market viability and store location, to secure a site, and to
create biddable designs and floor plans, to get to these final planning stages.
We the owners have accomplished a huge amount of pre-development, on a
shoestring budget, thanks to grants from VCOM and the Food Coop Initiative,
IRDC investments that have been “released” early, and, finally, to new owner
equity coming in – we have added over 200 new owners since the beginning of
April last year. And that is quite a milestone!
Milestone for next Annual Meeting: first retail cooperative in SC, open!
Featuring locally-grown and locally-produced products, available year-round.
The first grocery store in downtown Spartanburg in a generation… that’s the
milestone for next year!
Hub City Cooperative
Income Statement
December 31, 2013
Ordinary Income/Expense
Income
Interest Income
Seed Grant
Total Income
Expense
Administrative
Advertising
Annual Meeting Expenses
Architect Fees
Consulting
Contract Labor
Credit Card Fees
Dues and Subscriptions
Insurance
Office Expense
Postage - Invest & Grow
Printing
Professional Fees
Rent
Special Events
Total Expense
Net Ordinary Income
$
128.43
15,278.43
15,406.86
542.68
4,656.36
559.74
19,884.88
21,973.43
27,500.00
1,337.37
68.00
1,158.74
884.14
1,907.19
2,548.18
21,212.22
8,000.00
1,135.98
113,368.91
(97,962.05)
$ (97,962.05)
State of the Co-op
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
36,651.99
Total Accounts Payable
36,651.99
Total Current Liabilities
36,651.99
Long Term Liabilities
Owner Loans - 7 Year Maturity
5,000.00
Owner Loans - 9 Year Maturity
2,500.00
Owner Loans - 10 Year Maturity
30,000.00
Owner Loans - 5 Year Maturity
31,501.00
Owner Loans - 6 Year Maturity
20,000.00
Owner Loans - 8 Year Maturity
2,500.00
Total Long Term Liabilities
91,501.00
Total Liabilities
128,152.99
Equity
Owners Equity
57,856.94
Preferred Shares
94,500.00
Retained Earnings
(3,027.49)
Net Income
(97,962.05)
Total Equity
TOTAL LIABILITIES & EQUITY
51,367.40
$
179,520.39
Volunteer Recognition
• Celia Cooksey
• Pam Stoll
• Ester Kelley
• Theresa Mann
Hub City Cooperative
Sources and Uses
Current
# owners
SOURCES
Benefits and Donations
Grants
Owner Equity (Target: 1200 owners)
Preferred Shares
Owner Loans
Owners Contribution
1100
BUDGET SECURED* BALANCE
USES
13,000
10,000
180,000
800,000
150,000
1,153,000
13,000
10,000
165,000
527,500
98,000
813,500
0
0
15,000
272,500
52,000
339,500
Upfit
Equipment
Inventory
Fees
Start-up promotion
Start-up staffing
Operating/Admin prior to opening
Econ. Dev. Investment - City of
Spartanburg*
Vendor Credit
Free Fill
Building Owner Contribution*
Line of Credit (LEAF/NCDF or CAB)
350,000
30,000
30,000
500,000
0
0
30,000
30,000
500,000
0
350,000
0
0
0
0
Holding/Site Costs
Interest during project
NCGA Deposit
Post-Opening professional support
Working Capital allowance
External, subordinated
910,000
560,000
350,000
Subtotal Uses
LEAF/NCDF
734,500
734,500
0
734,500
2,797,500
734,500
2,108,000
0
689,500
NEEDED
1st Position Debt
Total Sources
Overrun Allocation
Total Uses
BUDGET
1,068,00
0
468,000
200,000
250,000
35,000
109,000
25,000
25,000
12,500
50,000
30,000
160,000
2,432,50
0
365,000
2,797,50
0
*Funds are in-hand or committed, contingent on remainder of project budget being raised.
**Proposed City of Spartanburg funding, currently under consideration. Includes $150,000 operating assistance over first four years of operations to repay
Landlord for additional upfront cost, and $200,000 subordinate loan, to be repaid starting in Year 3 of operations.
Note: These are best estimates, given current conditions and information. As plans and financing are finalized, some categories will change.
Announcements
& Questions
• Q&A
• Quick Orientation on Tables Available for
Small Group Discussion
2014 Annual Meeting Motions
(P2) Call to Order – Tim: Annual meeting of the owners of the Hub City
Cooperative
(P2) Recognition of Key Attendees - Tim (Board, IRDC, City, Charles)
(P2) Reference to 2013 Meeting Minutes - Tim
(P2) Board Terms – Laura
Motion for Beth Cecil / Andy Gustafson / Tim Meade to begin new 3
year terms expiring 2017
Motion to approve the Jeff Tillerson and Cyn Massey assuming
unexpired terms of Erin Ouzts and Simone Mack
(P2, P4) Business Milestones - Fran
Motion to enter the accomplishments as reported into the official
record of the Hub City Cooperative
(P2, P3) State of the Co-op - Sheila
Motion to enter the end of-year 2013 financial status into the official
record of the Hub City Cooperative
2014 Annual Meeting Motions
(P1) Celebration of Volunteers – Laura (with Sharyn assisting)
Motion to note the extraordinary commitment and volunteer efforts of Pam
Stoll, Ester Kelly, Theresa Mann and Celia Cooksey into the official record of
the Hub City Cooperative
(P7) Site Development – Tim
No Motions / Update / Reference Posters in the Room
(P3, P5) Funding – Fran
Motion to enter the current sources and uses statement into the official
record of the Hub City Cooperative
(P3) Invest and Grow - Tim
No Motions / Update / Summer Fundraising Campaign
(P5, P6) Education and Cooperation – Tim
No motions / reference information tables set up around the room
(P5) Q&A - Tim
Adjourn – Tim
Motion to adjourn the Annual Meeting of the Owners of the Hub City
Cooperatives