Community News, Business Climate, Development and Policy (navigator page). Tracking Community Trends.

Hyde Park Co-op Markets' story, impact on the neighborhood, struggle to survive, and demise

A neighborhood news and analysis service of Hyde Park-Kenwood Community Conference and its website www.hydepark.org. Help support our work: Join the Conference! This page does not come from or represent the views of the Hyde Park Cooperative Society.

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From the Co-Op's final letter to the public and vendor/creditors.

The Hyde Park Cooperative Society, Inc., by a majority vote of its Members and affirmation by the Board of Directors, will return its store to the Landlord and vacate the premises on or before January 31, 2008. the action was taken due to the mounting debt from the closed 47th Street store and the lack of outside financing to allow us to continue operations.

The last day of shopping will be January 20, 2008 and after t hat date no retail sales ill occur. As part of the transaction, The University of Chicago will contribute funds together with the existing assets of the Coop which will provide the basis to retire most of its obligations to the secured and unsecured creditors. The amount of final payments to creditors is anticipated to be finalized with a target date of payment scheduled for March 2008....

After 75 years, we are sad to close this chapter in the life of the Coop, but want to thank everyone during these years that supported our endeavors.

Latest

The University has signed Treasure Island. Here is the University January 15 2008 release on this and interim options for shoppers. In mid February Treasure Island was fixing up corrections required by the Board of Health and awaiting permits.


From: Hank Webber [mailto:communityaffairs@uchicago.edu]
Sent: Tuesday, January 15, 2008 4:05 PM
To: grocery-store-announcement@bulkmail.uchicago.edu
Subject: Hyde Park Grocery Shopping Announcement

Dear University Community,

I am pleased to tell you that the University has signed a lease with
Treasure Island to open a grocery store in the Hyde Park Shopping Center
at 55th Street and Lake Park. Treasure Island is working intensively to
obtain a number of city business licenses that are required. Although
the timing of this process is somewhat uncertain, Treasure Island has
set a goal of opening the new store before the end of February.

Treasure Island, a locally owned grocer (see www.tifoods.com
<http://www.tifoods.com/> ), plans to make major renovations to both the
interior and exterior of the store, while maintaining operations
throughout the remodeling. It will be some months before the
renovations are completed, but we believe they will be worth the wait.

Treasure Island will occupy the space formerly leased by the Hyde Park
Co-op. Given the Co-op's serious financial difficulties, the University
worked closely with the Co-op Board to ensure the smoothest possible
transition to a new store. The Co-op's licensing agreement for the 55th
Street store will expire at the end of January, and the Co-op
anticipates closing its operations by January 20 as its current food
supplies are sold.

All of the current Hyde Park Co-op employees who are interested in
working at the new store will be invited to interview for employment,
beginning as early as this week. Additionally, the University has
worked with Alderman Toni Preckwinkle to ensure that city and state
resources, support, information and training are made available to the
Co-op employees.

Beginning immediately, Treasure Island is offering on-line shopping and
delivery service to the Hyde Park community. For information, visit
www.tifoods.com <http://www.tifoods.com/> and click on the "personal
shopper" link. Treasure Island has also agreed to immediately take over
the Co-op's shopping and delivery program to the area shut-ins, ensuring
continuous service to those who cannot do their own shopping.

In addition to the news about Treasure Island, we are looking forward to
the opening by the end of January of the new Hyde Park Produce in
Kimbark Plaza at 1226 E. 53rd Street. The new store will be more than
three times larger than the current store at 1312 E. 53rd Street,
providing a significantly larger selection of produce, meats, cheeses,
and other foods.

Since we are in a period of transition, we want to remind you of other
Hyde Park grocery shopping locations near the University, including:

* Harper Foods, 1455 E. 57th Street, 773-363-6251
* University Market, 1323 E. 57th Street, 773-363-0070
* Village Foods, 1521 E. Hyde Park Blvd. (Village Center),
773-288-8180
* Market in the Park (Regents Park), 5050 S. Lake Shore Drive,
773-734-3687

A detailed map with shopping alternatives can be found on the web at
http://oca.uchicago.edu/ More information about shopping options is
available through the Hyde Park Chamber of Commerce at
contact@hydeparkchamberchicago.org or 773-288-0124.

Sincerely,

Henry S. Webber

Vice President, Community and Government Affairs

December 14, 9 pm. The Co-Op vote is over, and so is the Co-op. The vote was Option A 3,200, Option B 2049, together about a quarter of the membership. Judge Jay Mulberry says the vote under Project LEAP was a model of integrity and good judgment, although many voted incorrectly and were disqualified. Complaints were voiced by the Herald, others about the wording of the ballot, with allegations denied by others that a UC affiliated pr firm wrote the letter.

Then , the board convened to give about 70 shareholders, residents and employees a chance have input on the board's decision (perhaps in reality to vent, as the result was foregone). Afterwards, the board voted in public 7-1 for Option A and ultimate dissolution, with the store to close January 20 (not 28). Hope Mueller was the sole dissenter; Member Bob Stanek was absent.

Most in the crowd at that December board meeting consisted of supporters of Option B or some alterative that might save the 75 year old institution. They were highly critical of what they considered a bullying, inconsiderate and shortsighted role and campaign by the University of Chicago as well as irked at past decisions of Co-Op boards and were highly skeptical that a Treasure Island or Dominick's' would be better. Board members James Poueymirou, James Withrow and Mike Lowenthal pointed out the fiscal constraints of an insolvent institution that cannot get debtor-in-possession or a commercial loan, even with offers of help as large as Bruce Sagan's $500,000. Many participants appeared to be be trying last minute scenarios when there was simply no more time--especially after the University, which had bailed out the Co-Op twice before, flatly refused to agree to any payment plan or delay beyond that evening. ) Some, seeing the inevitable, pressed the University to commit to bringing in a store superior to the chains' run-of-the-mill and keep it that way. Sadness or bitterness was voiced for the plight of the 170 employees who have sacrificed for the store over the years and were only offered a chance to interview with, at request of the University and Alderman. The Herald reports that a class action suit is being prepared.

Visit the Co-Op's and Evergreen's website and our Co-Op page. Our page includes report on the November 18 meeting and full background and official statements of the 2 options and later reports, opinion, possibilities.The Conference hopes the community will come together now to work for the common good and neighborliness.

Several who have been putting out background and questions on the Co-op crisis (our thanks to all) are Jay Mulberry, M.L. Rantala and James Withrow. To inquire about getting on their blog or list serve, email respectively jaymulberry@gmail.com (Save the Co-op-- in Google Groups) (Good Neighbors@googlegroups.com) , mlrantala@mac.com or jamesdwithrow@mac.com (Hyde Park Urbanist-http://www.alwaysintransit.notepad.com/Hyde_Park_Urbanist/). Also Curtis Black's news blog. There is also a site of a retail improvement advocacy group that on this issue urges a vote for Option A: www.hungry4change.org (or call 773 324-8614, may now be same as hydeparkmajority.blogspot.com/) . See also the blog Hyde Park Progress- hydeparkprogress.blogspot.com. Caveat emptor, of course--and see comments about from, inter alia, Evergreen. More on the internet war in From the President's desk, below.

Herald chronicles final days

January 23, 2008

After 75 years, the Hyde Park Co-Op, the oldest urban grocery cooperative in the country, closed its doors Sunday, sent off with a New Orleans-style funeral complete with jazz musicians and speeches by supporters of the cooperative. Hundreds attended the event.

Meanwhile, the head of Treasure Island Foods, the grocer slated to replace the Co-Op at 1526 E. 55th St. in the Hyde Park Shopping Center, having sighed a 20-year lease fo the space last week, vowed to hire as many former Co-Op employees as possible.

"We want to give them the opportunity to work for Treasure Island," said Maria Kamberos who with her husband Christ runs the 45-year-old grocery store chain. Kamberos also said the employees would be making good salaries. "They will get paid at least what they're getting paid," Kamberos said.

While Kamberos would not predict an opening date, saying "as soon as we get permits and licensing" they would open, University of Chicago (U. of C.) Vice President for Community and Governmental Affairs Hank Webber predicted the store would open by th end of February, shuttling earlier predictions of a two-week turnaround time between the Co-Op's closure and the replacement grocer's opening.

Treasure Island will also continue the Co-Op's popular shut-in shoppers program, Kamberos said. Both Kamberos and Webber flatly rejected rumors that courtyard activities, including the annual garden fair, used book sale and Circle Pines tree sale, were curtailed or eliminated in the agreement. "It turns out those are not tenant issues," said webber, who described Treasure Island as "a very good combination of strong grocer and a specialty store." "It was that combination that was very attractive," Webber said.

Among the well-wishers at Sunday's event was former alderman Leon Despres, a founding member and longtime supporter of the Co-Op who said the cooperative had served as a demonstration that cooperative business model could work effectively.

Citing massive debt and a onerous lease at its shuttered 47th street location, the board of the HydePark Cooperative Society voted last month to fold the cooperative grocer following a tumultuous referendum on the proposal. U. of C. had offered to pay much of the Co-Op's debt in exchange for store closure.

U. of C. is additionally planning a facelift for the spot and Kamberos said Treasure Island will be making interior changes as well. New features of the store will include a sushi bar, a juice bar, organic and non-organic salad bars and a Belgian chocolate case.

Top

There appears to be disagreement over whether many of the Co-Op employees are being hired by Treasure Island.

Nominations called for, as Nominations Chair Jay Mulberry says Society (and website) continues. (President Poueymirou also says such an election is necessary.)

Although the Co-Op market is going out of business on January 20, the Hyde Park Cooperative Society remains in existence.

According to our by-laws, an election for members of the Board and Nominating Committee will be held later this year.

At stake are positions for 3 Board members, two Alternate Board members, and 5 members of the Nominating Committee.

During the next two months, the Nominating Committee will interview members who wish to be considered for any of those positions. It will then nominate those it considers most promising.

Members who wish to run for a position on the Board or Nominating Committee but do not wish to work through the Nominating Committee, or are not recommended by the Nominating Committee, can do so by presenting petitions to the Nominating Committee.

To run any position mentioned above, write to nominate@coopmarkets.com or respond to this email.

For descriptions of the duties involved see http://coopmarkets.com/by-laws.htm

Jay Mulberry
Chair, Nominating Committee
Top

 

Herald report on the board meeting, December 19, 2007.

Bent on closing a deal guaranteed to shut the doors of the Hyde Park Co-Op for good, the Board of Directors of the Hyde Park Cooperative Society pressed through three hours of leas and exhortations at its monthly board meeting Monday, only to buck the heated crowd and vote [seven] to one to end the 75-year-old cooperative institution's life.

Not even the last-minute offer of a half-million-dollar loan by HydePark businessman and Herald owner Bruce Sagan would persuade the board, led by Board president Jim Poueymirou, to explore a $3.4 million loan offer by the National Cooperative Bank (NCB) [actually a term sheet]. The board, Poueymirou said, had stopped looking at alternatives.

Sagan expressed deep disappointment a the news. "54 years ago the manager of the Hyde Park Co-Op knocked on my door to ask me, a young newspaper reporter working downtown, if I would like to try to save the failing neighborhood newspaper, the Hyde Park Herald," Sagan said. "He promised that he would help support that effort to revitalize the community's newspaper. And he did. Monday I tried to return the favor."

For more than three hours, more than 70 members, including employees, urged the board to explore the loan option before making a final decision. Nominating committee head Jay Mulberry said ignoring the offer from Sagan was a criminal act of neglect. "Bruce Sagan is offering $500,000, but he has 100,000 friends who have another $500,000. With an offer like that, something can really be done. You simply can't pass "Option A" when you have an offer like that before you. It would be a crime," said Jay Mulberry.

Asked by an employee whether there were any possible loans to the Co-Op still available, Poueymirou said the board had asked NCB for a $3.4 million loan and received a preliminary description of the terms of the loan, which included agreements with the university and Certified similar to those described in "Option A," as well as $1 million in monies secured elsewhere. Poueymirou said the deal would take weeks to work out. At a late point in th meeting, Poueymirou said the board had requested an extension from the university of their Monday-night deadline, after which the university would rescind their offer to buy out the Co-Op's $1.2 million debt to the university in back rent for the 55th Street location. The university, he said, refused the request.

Poueymirou pointed to the results of a recently held referendum, in which more than 60 percent of the respndents-3,100 votes or roughly one in every 12 members- backed "Option A," described on the ballot as a "debt work out" and negotiated in private by the board with the University of Chicago and Certified Grocers over several months.

Many members at the standing-room-only board meeting complained that members had not had time to respond and were taken by surprise by a well-financed public relations campaign funded by the university and including phone banks, direct mailings and a glossy, full-color brochure urging member-owners who are "Hungry 4 Change" to vote for "Option A." fliers were also distributed by hired individuals on the street of Hyde Park - including on the steps of the Co-Op, 1526 E. 55th St.

Jay Mulberry said that his campaign to gather support for "Option B," described in a letter accompanying the ballot as Chapter 11 Bankruptcy but essentially a vote to explore any feasible option that would preserve the Co-Op, consisted of a website, a mailing list and an e-mail list of close to 200 people. He said it was incomparable to the money and efforts made by the university.

Hardest hit were the employees, who wil now have to seek employment elsewhere this winter. "It seems like one board opens the coffin, and ten the other board puts the nails in," said an unidentified Co-Op employee. "The personal feeling is the board has just slapped all 174 employees in the face."

He said employees took money from their salaries to buy shares, and also gave up vacation time and sick days. The employees were given letters stating their last day of employment would be Jan. 28.

While the board's efforts were in part driven by a desire to close this chapter in the grocery cooperative's history, it is unlikely to be the final one. A source told the Herald Monday that a class action lawsuit is being prepared in response to the planned shuttering of the cooperative.

__________________

The Herald editorial said the options were not stated properly and did not deal with exploring a third option. Marylou Stauffer Hadditt who now lives in California, sid the Co-op has been the conscience of Hyde Park and must remain. Jonathan E. Cowperthwait said there was no viable option, it was mismanaged and would so remain, and why should the University keep foregoing its rent, and the market brings down prices through size and scale.

The Herald of December 5 reported a new option, which may or may not have been viable, or possible in light of the vote. The Herald says Board President Poueymirou told them that although all the loan options for debtor-in-possession (Option B) are out of play, a $3.2 m. commercial loan (preferred by Nat'l Coop Bank overt the pitfalls of Chapter 11) could come through. Conditions are: Certified accepts buyout for $ million as per option A and the university agrees to a payment plan for the owed rent of $1.2 million (unclear--the plan may in fact include paying the University immediately to avoid foreclosure on the 17th) -both iffy but not out of the question--getting enough for Certified to get them to back off and not fall back on having an agreement with the University and Co-Op already, is the key. This variant does not bankruptcy.
Meanwhile the amount received in pledges passed $35,000 December 6 and a wild campaign, full of accusations of dirty tricks, is underway. Stay tuned.

A substantial number of Hyde Parkers met to discuss options December 4 at the Neighborhood Club, convened by Jay Mulberry. Present and addressing included Board President Jim Poueymirou, members James Withrow and Lisa Chin, GM Bruce Brandfon, UC Real VP for Real Estate Jo Reizner, and former manager and board member Richard Orlikoff. Almost all present and speakers (except Jim P and Jo Reizner) were strongly for Option B or an alternative and asked hard questions of the possible commercial loan form Nat'l Coop Bank and were highly critical of the University and its alleged pressure campaign. President JP ticked up what the Co-Op owes and indicated the possible loan is not enough to cover obligations and indicated that the board would only consider a firm program at least equal in value to that of the University (over 4 million). It was indicated later that the board would seriously pursue the new commercial loan option. It was made clear that fiduciary duty when in insolvency, as now, is to pay creditors.

 

Co-op is insolvent, says President Poueymirou; Board calls Nov. 18 meeting, 3-week vote (ending Dec. 12) on bankruptcy and other options. In "A" (supported by board majority) U of C could forgive, pay much and facilitate new store and Co-op gone. "B" (part of the board) involves a tricky refinance and owner-in-possession bankruptcy closure but reopening under the Co-Op.
One loan was rejected as of Nov. 29, but other options remain. Persons supporting Option B have told this page that persons favoring option B may want to wait for more developments--but remember the ballot must be postmarked by December 12. For links to ballot details and comments see next few paragraphs and added links above.
Note that the December Evergreen contains, with or without board sanction, strong criticism of or comments from several parties in the dispute as well s information on the ballot and content of the two Options.

Here: background and links, Pre-Nov. 18 analysis, November 18 meeting reports incl. Herald,
Co-Op Board statements of
how the ballot works. University statement. November 26 board meeting. General Manager's letter and additional to Evergreen. James Withrow's letter tells much not told elsewhere. Other Post-November 18 views. Read the Evergreen or go to its website http://www.coopmarkets/evergreen for its reports on the November 18 Town Hall meeting and the November 26 board meeting.

Ballots went out November 21 and are due by December 12. All members of record get a ballot-- if members have any doubt whether the Co-op has their right addresses, they should go to the membership desk. Follow ballot instructions exactly. See the Co-Op's formal letter to members (never mind who rote it and whether protested and still up with an update section as of December 2) in the coopmarkets.com website or below. To read the Evergreen's statements and interpretations of the 2 options: http://www.coopmarkets.com/evergreen/December2007/JustTheFacts.pdf and http://www.coopmarkets.com/evergreen.htm (Note that the later is a strong critique of actions and positions of the University.) In addition, view the whole latest Evergreen online. at http://www.coopmarkets.com/evergreen/.

View the Co-op Market website (Especially the Evergreen subsite) regularly.
(We are told by a board member who supports option B that the drop dead for loan hopes is December 14 or 15, by which time we will may also know results and whether the "pledge drive" brings forth anything significant $26,000 as of Dec. 2).

Coopmarkets.com as of early December has an addendum to its official letter saying that the National Cooperative Bank has rejected a loan to the Co-Op and there is no other possibility. November 29, board member James Withrow in his blog said there are two other banks in consideration.

At the November 26 board meeting (2.45 hours public, before executive session) a great many questions on both details and major issues were asked by the audience of 20 or so. There were many concerns about the ballots and imperfect addresses.
Joe Reizner of the University disclosed that the contenders for the space are Treasure Island and Dominick's (the former eliciting questions) and saying the University's objective is a good store, not who runs it, and that it's more a community and retail survival problem than one for either the society or the University. (Negotiations were said by all to have been cordial.) Option A disappears, Reizner said, if it is voted down by the members, whether or not the Board supports it (--this was the University position from early November but this was only known to board negotiators with UC until the time of the Nov. 18 meeting); but there is wide feeling that the University and community interest coincide in avoiding a ruinous and prolonged liquidation. If B is voted and fails, Chapter 7 bankruptcy and liquidation follow. Reizner pointed out that the University has listened to concerns for employees and negotiated for them to be able to interview, and wages and benefits will likely be better than at present (where there have been no raises in 6 years) although nonunion (a point raised against the University). The new store would invest about $5 million into the store. Negotiations between the board and the University went on for months, we were told, but only entered present stage when it became evident in September that leasing 47th was impossible, with Certified continually and repeatedly adding conditions and terms.

The board proponents of both Options sought to be as clear as possible, with limited success. It was clear that a loan was not yet secured for Option B to go forward, but the door was still open at National Cooperative Bank - but not for a $400,000 letter of credit needed to secure a new vendor. The pledges would have to be very large to impress a banker. ) The Co-Op was preparing to put up a detailed, ongoing FAQ sheet both in the store and in the Co-Op Markets website.

Read the University statement.

Board president and a 6 of 9 majority, and the University support the debt restructuring (workout) and handover to new entity; Certified is making it hard, seems to prefer Workout with full bankruptcy 2nd choice. Short term shut down likely under any scenario. To our report on November 18 members meeting.

Please note that at least one board member in a public email said that the first paragraph of the following Herald article is untrue in its entirety; board president Poueymirou also said as much at the November 18 meeting.

Hyde Park Herald, November 14, 2007. By Yvette Presberry

Deciding not to pursue a commercial loan to pay its multi-million dollar debts, the Hyde Park Cooperative Society board voted last Saturday to support getting a debt workout with landlords of the 55th Street Co-Op store and the 47th Street Co-op building.

Board president James Poueymirou said the board is endorsing a debt workout that will enable the University of Chicago (U. of C.), owner of the Hyde Park Shopping Center which houses the cooperative's 55th Street location, to forgive up to $1 million of the Co-Op's debts, and also for Certified Midwest Grocers, owner of the 47th Street Co-Op's location at 1300 E. 47th St., to take over the building's lease.

The 55th Street store would operate under the Co-Op's management for about 60 to 90 days, then switch to a new entity. "The Co-Op entity would longer exist," said Poueymirou said.

The Co-Op board president said the U. of C. likes the idea of the debt workout but Certified, which is also the Co-Op's main supplier, disagrees. "They're making terms of a workout very difficult," Poueymirou said of Certified. "We're still hopeful an agreement will be forthcoming."

If both landlords of the properties do not agree, Poueymirou said the next step would be for the Co-op to file for bankruptcy. Attempts to reach Certified were unsuccessful. Hank Webber, vice president of community and government affairs for the university, said he considered the debt workout "a positive move."

The board will present the proposed debt workout, as well as choices for bankruptcy or obtaining a commercial loan, to shareholders at 2 p.m. Sunday, Nov. 18, during a town hall meeting at the Hyde Park Neighborhood Club, 5480 S. Kenwood Ave. The board encourages al of the Co-Op Market's member-owners to attend the meeting. Ballots with the proposals listed wil be mailed to the shareholders on Monday, Nov. 10, so shareholders are encouraged to update their mailing addresses with the Co-Op at the 55th Street Co-Op, 1526 E. 55th St.

"This is ultimately the deciding vote of this venerable institution," Poueymirou said....

Herald editorial of November 14 2007 said the board should not move until it has identified and made public, with transparency, the successor entity--with public discussion to follow including on what the neighborhood expects of such an anchoring institution. The board's responsibility includes providing for the community's future. Above all, we cannot shutter without a smooth transition to a known entity, with proof that a plan is in place. (readers view in letter in this issue range from "good riddance" to sadness to move to 47th.)

 

Co-op considers bankruptcy, U of C to forgive $1.2 million in rent if store closes. Chicago Maroon, November 9, 2007. By Aviva Rosman

Facing financial turmoil, the Hyde Park Cooperative Society, which operates the only supermarket currently open in the U of C's neighborhood, will present a series of options to shareholders later this month that could result in a declaration of bankruptcy and the closure of the 55th Street location.

According to James Poueymirou, president of the Hyde Park Co-op's board of directors, the board is currently weighing three options to present to shareholders. The first option is a commercial loan from an outside lender that would lead to the continued operation of the store.

The second possibility is a debt workout involving the landlords of the 55th and 47th Street locations and all of the co-op's vendors, which would likely result in closure, Poueymirou said.

The third possibility is bankruptcy--either a reorganization of the store would allow it to remain open, or debtor-in-possession financing would result in closure. In this last case, known as bankruptcy liquidation, a third party provides funds for repayment of obligations.

"There are two options that would keep the store open and two that would keep it closed," Poueymirou said. "The truth is that the store is insolvent and has been insolvent for some time."

In order to move the process forward, Co-op Markets will host a town hall meeting on November 18 in the Hyde Park Neighborhood Club to discuss the options. Ballots will be mailed out to all shareholders beginning on November 19, Poueymirou said. The election period will last three weeks, and shortly afterward the results wil be announced. Poueymirou said that the voters' decision will most likely be the final one.

Poueymirou said the grocery stores' financial troubles could be traced back to the expansion beyond the original 55th Street location to branches at 47th and 53rd Streets. "In expanding to both sites, there wasn't sufficient sales activity that justified those activities, so all the income from the 55th Street store was going to offset expenses at the other two locations," Poueymirou said.

In February, the Co-op and the University negotiated a termination of the lease for the 53rd Street Co-op. In May, the board began an analysis of the Co-Op's financial situation. The 47th Street location closed in 2005, but the Co-op has continued to pay rent for the building.

"Access to high-quality grocery shopping has a direct impact on the quality of life for our faculty, staff and students, and thus our ability to attract people to our community and retain them once they are here," Hank Webber, the University's vice president for community and government affairs said in an e-mail to the campus community. "Having a successful store in this location would keep shoppers and businesses in the neighborhood and bring new business to surrounding retailers."

The University serves as the landlord for the Hyde Park Shopping Center, which includes the 55th Street Co-Op. According to Webber, the Co-op currently owes the University approximately $1.2 million in unpaid rent. Under one option, the University would forgive most of the Co-Op's unpaid rent and help them repay their vendors, while facilitating the opening of a new grocery store on 55h Street within two weeks of the closure.

"The University is supportive of the board's efforts because we believe our community deserves to have a high-quality grocery store," Webber said. "If the Co-op cannot fulfill this role, then we are committed to facilitating a new grocery store coming to the 55th Street location."

The Co-op began in 1932 as a buying club during the Great Depression and opened its first HydePark location in 1933. After a series of gradual expansion, the cooperative opened the 55th Street location in 1959, and at the time was the largest supermarket in the city of Chicago.

Herald article and editorial of November 7, 2007. Co-Op nearing the end? By Yvette Presberry

After losing almost $3 million with the closing of the 47th street Co-op in 2005 and standing a hear behind in rent for the 55th Street Co-op, HydePark Cooperative Society Board President James Poueymirou said the cooperative society is facing the decision to either take out a commercial loan, renegotiate terms with debtors or file for bankruptcy.

"We're in the worst financial condition that we've been in 75 years," Poueymirou said. He added that this board wants to "gain ground and move in a positive direction" while it looks at long-term planning. "The status quo is unacceptable," he said.

Bruce Brandfon, the recently hired general manager of the Co-Op, said it has been difficult for the 55th Street location to profit since it is also paying the rent on the 47th Street store. He said the Co-op could not carry the debt of a rent as large as 47th Street's while the location is shuttered and succeed.

Because the shareholders have a stake in the future of the Co-Op, Poueymirou said a vote would be asked of them to decide the direction the board wil take. A town hall meeting ill be held at 2 p.m. Nov. 18 at the Hyde Park Neighborhood Club, 5480 S. Kenwood Ave. The next day, shareholders will be given ballots regarding options for the Co-op with three weeks to decide. The votes would be due by Dec. 7 and published.

"A simple majority will be sufficient for the vote itself," Poueymirou said. Poueymirou said the debt had risen after the 47th Street Co-op was built. Though that store closed in 2005, the Co-op board still has to pay rent for the empty building because it is locked into a lease until 2023. It is difficult to break since the owner, Certified Grocers, is also its supplier, Poueymirou said.

The board president said that he and his fellow board members have met regularly either weekly or bi-weekly since last spring to review its past financial records and discuss options for the failing cooperative. The board has also spoken with consultants over the matter.

Also involved in the discussions is the University of Chicago (U. of C.), owner of the Hyde Park Shopping Center, which houses the 55th Street Co-op. "The problems have been mounting for years," said Hank Webber, vice president of the U. of C.'s Department of Community and Government Affairs. He added that the university had helped the Co-Op twice by either loaning money or decreasing what was owed in rent.

He said that bankruptcy could be an option for Co-Op Markets if a solution was not found soon. "I think this is very serious," he said. Webber said the university has suggested relieving some of the Co-Op's debt to its creditors in exchange for replacing the Co-Op with another grocer. Webber said that several well-established entities have shown interest in the 55th Street store.

Continuing to function as the property owner, the university would upgrade the store and possibly remodel the inside of the store, he said. "Our role is to...potentially be a part of the solution," Webber said. "Hyde Park deserves a modern, high-quality grocery store."

Ald. Toni Preckwinkle (4th) said she was glad the board is open with its shareholders and customers regarding its financial status. "The Co-Op has been in pretty [poor] financial circumstances for a very long time," Preckwinkle said. "They're bleeding so much red ink."

Herald editorial, November 7, 2007. Are we really going to let the Co-Op sink? (suggests an opportunity for shareholders to give/invest, warns that an outside for-profit corp. will not be nearly as good a listener nor community contributor.)

Hyde Park Cooperative Society Board of Directors President Jim Poueymirou came to the Herald offices Monday morning with a sobering message: The Co-Op board will choose among three options, including closing for good, by the end of the year. Either the board wil secure a $3 million loan, file for bankruptcy or enter into "debt workout"--essentially turning assets over to creditors. Poueymirou told the Herald that the board is considering these options as the only ones left. He also said the board will hold a town hall meeting regarding this decision on Nov. 18, 2 p.m. at the HydePark Neighborhood Club, 5480 S. Kenwood Ave.

We believe another option exists for the Co-Op. With membership somewhere around 35,000--and with, in many cases, one membership accounting for a whole family--such a dramatic decision should only follow a highly publicized, long-term capital campaign. It would take less than $100 per member to reach the $2.5 to $3 million in capital the board is trying to gain through a loan Poueymirou told us the loan was intended not only to wipe out debt--including the debilitating lease on the shuttered 47th Street store--but also for capital improvements on 55th Street. It is quite likely that many Co-Op shoppers would be willing to pitch in to improve their shopping experience.

Since we are highly skeptical there is any real chance of securing a loan--with what assets?--this announcement amounts to the beginning of the end of the Hyde Park Co-Op. This means it is essential that members, regardless of their opinion, must come out to this meeting. Whatever decision is to be made, it must be through the direction of membership, and that can only happen if the member-owners get involved.

Before the Co-Op's effort at expansion on 47th Street started diverting resources and attention, its contributions to the community were enormous. From education about nutrition to the Hyde Park Co-Op Book Fair, the Co-Op often made important use of its role as a neighborhood institution to improve Hyde Park. These efforts have been driven in part by the cooperative structure of the organization. Cooperatives are designed to follow a set of principles that include a commitment to the community. Don't expect a national chain to be guided by anything but profit.

Poueymirou also told us the board will begin a ballot drive the following day, most likely asking he membership whether they should pursue the "debt workout" option, a choice that will very likely mean turning the store over to a for-profit owner. We once again urge member participation, regardless of your opinion. Whatever happens, members will later complain in vain about an outcome they did not have a hand in shaping.

A ballot referendum on a particular method of putting the Co-Op out out of business seems a lot less important than a referendum on whether the Co-Op should stay in business at all. We would like to see a more pointed ballot question, accompanied with a pledge form. Give people who vote to keep the Co-Op in business a direct means of securing that goal.

We applaud the board for moving in a proactive direction--this is long overdue--but let's give membership as much participation in this important decision-making process as possible.

 

The University's official position and statement of its involvement, offer. From Hank Webber, University Vice President for Community and Government Affairs, November 7, 2007

To: The University Community

From: Hank Webber, Vice President for Community and Government Affairs

Re: Hyde Park Co-op

You may be interested to note a story in today's Hyde Park Herald
(http://www.hpherald.com/) about the future of the Hyde Park Cooperative
Society. The story outlines a set of extremely challenging financial
circumstances that threaten the Co-op's ability to continue to operate
its grocery store at 55th Street.

The Co-op's Board of Directors has been in discussions with the
University about a possible solution to these serious financial
troubles. The board has spent many months considering various options.
One of the options under discussion is an agreement among the Co-op, its
creditors and landlords that would result in the Co-op closing, payments
to its creditors, and a new grocer opening a store in the same location.
The board also is looking at the possibility of obtaining a loan and the
potential for bankruptcy if neither of the first two options proves
feasible.

The University is supportive of the board's efforts because we believe
our community deserves to have a high-quality grocery store. If the
Co-op cannot fulfill this role, then we are committed to facilitating a
new grocery store coming to the 55th Street location.
Access to high-quality grocery shopping has a direct impact on the
quality of life for our faculty, staff and students, and thus our
ability to attract people to our community and retain them once they are
here. In fact, when we surveyed our students earlier this year on their
retail needs, the most frequently cited desire was for "improved grocery
store service." Having a successful store in this location would keep
shoppers and businesses in the neighborhood and bring new business to
surrounding retailers.

The University is the landlord for the Hyde Park Shopping Center which
includes the 55th Street store. The Co-op currently owes the University
approximately $1.2 million in unpaid rent. As part of the proposed
agreement, the University has indicated its willingness to forgive most
of the unpaid rent and to supply additional funds in order to
substantially repay local vendors to whom the Co-op is in debt. These
actions would permit the Co-op to close without the costly process of
bankruptcy proceedings and allow a new grocer to begin operations within
two weeks of closure. All current Co-op employees would have an
opportunity to interview for jobs in the new store as part of the
arrangement with a new grocer.

These actions will not happen unless all interested parties, including
the Co-op board and its other major creditors, can come to an agreement
on the terms. If an agreement is reached, the board has indicated its
intention to put the proposal to a vote of the shareholders. If an
agreement is not reached, the likelihood of bankruptcy is very high. In
either event the University will remain committed to having a new,
high-quality grocer at this site.

The Co-op board will discuss its final recommendation at a town hall
meeting at 2 p.m. on Sunday, November 18, at the Hyde Park Neighborhood
Club, 5480 S. Kenwood Avenue, Chicago. We expect there to be robust
community dialogue about the board's proposed course of action. More
information will be available at www.coopmarkets.com
<http://www.coopmarkets.com/> .

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Report on the November 18, 2007 Co-Op Town Hall Meeting (Herald take follows)

By Gary Ossewaarde

The gymnasium of the Hyde Park Neighborhood Club was packed with Hyde Park Co-op members and others who came to earn about the fate of the 75-year-old grocery cooperative and what their options were in an upcoming three-week balloting period.

The presentations appear to have genuinely changed the minds of several in the diverse audience. The larger number or majority clearly favored any option that would keep the Co-op alive and a cooperative; others, whether favoring the board majority and University of Chicago "debt workout" option or not, thought it best to stop throwing good after bad, allow the Co-op entity to disappear and a new, private grocer to be installed. All were aware that little or no value remained to their shares under any option. General Manager Bruce Brandfon gave a thorough and upbeat report of major changes including re-pricing instituted in the store, which he reported as making a turnaround in sales.

Board President Jim Poueymirou explained the majority board position, Option "A," debt workout with replacement of the Co-op.

James Withrow and Rob Stanek explained Option "B," a restructuring dependent upon a loan and chapter 11 bankruptcy that would allow a new store to be under Co-op management. (A formerly announced option "C," a commercial loan, is out of the picture as non-securable.) They also clarified much the Co-op and cooperative movement, and presented ways the Co-op could start "acting like a cooperative" again and institute best board and managerial practices while concentrating on its one store and welcoming competition.

Union representatives made appeals, and said they will not go quietly.

Arlene Rubin of Project LEAP described the mechanics of the mail-in vote.

The remainder of the meeting was turned over to questions.

Without going into details of complex proposals, Option A offered a University of Chicago (the landlord)-secured transition to a different grocery store with favorable terms, termination of the 47th Street lease, payment of creditors, and forgiveness of most of the back rent. Concern was expressed that no information is given on whether or what store would come in, under what terms, loss of community control, and the character, quality and dependability of a chain store.

Option B involved securing a refinance loan from the National Cooperative Bank (in negotiation) to pay the creditors, filing chapter 11 owner-in-possession bankruptcy right after the vote (should it favor B), stopping payment on the 47th lease, expected filing for closure by the University and reopening under the court with a new supplier. The Co-op would be strapped for years and need a capital drive.

There was strong emotional support and testimonials for Option B, and a pledge drive started--pledges (not money) could be dropped off in a box at the membership desk. But there were many questions about its feasibility and risks--failure would mean liquidation. Rob Stanek suggested that those who prefer more certainty would prefer Option A, those who want the Co-op Option B. Alderman Preckwinkle was among the few who came out strongly against Option B and pointed out the serious risks and scenarios involved therein. Others expressed resentment at the community being "told what to do" especially by the University.


Herald November 21, 2007: Members speak: Save the Co-op

By Yvette Presberry

Through a series of enthusiastic applauses--including a standing ovation--and comment by member-owners, the Hyde Park Cooperative Society's board of directors encountered more than 400 members, hopeful th at the Co-Op might be saved, [one] of the oldest urban cooperative[s,] Sunday as they laid out the two paths from which they are to choose.

Shareholders of the Hyde Park Cooperative Society were given two choices from the board of directors on Sunday to direct the Co-Op's future. The first is a vote for a debt workout in which the University of Chicago would forgive up to $1 million of the cooperative market's rent, pay ff the Co-Op's existing vendors and trade services, and offer the 55th Street store to a new entity while ending the 47th Street lease. The second choice would be to file for Chapter 11 bankruptcy in which the Co-Op continues to function at 55th Street through financial reorganization, attempts to pay all of its creditor[s] in full, holds a capital pledge drive and takes a loan to cover debt to its vendors. The lease for the 47th Street store would also be eliminated by paying a penalty of $2.2 million or 15 percent of the lease's value. The bankruptcy option is contingent on the loan.

"Do not let apathy stand in the way. You have to be involved. If you don't, you get what you don't vote for," said Co-Op Board President James Poueymirou.

There was little evidence of apathy at the Sunday afternoon meeting hosted by the Hyde Park Neighborhood Club, 5480 S. Kenwood Ave. The audience was particularly enthusiastic as board member James Withrow outlined his plan to save the 75-year-old neighborhood institution.

The first choice, called "Option A" by the Co-Op board, would mean that t he Co-Op Market would no longer exist, and the U. of C., as the owner of the Hyde Park Shopping Center, would look for a company to replace the cooperative grocer.

The second choice, which the board called "Option B," consists of the Co-Op reorganizing itself under Chapter 11 bankruptcy in the hopes of keeping the cooperative in existence.

The 47th Street store was closed in 2005 because of declining sales, but the Co-Op was locked into paying rent on the building until 2023 because of a no escape clause on the lease. The space will require build out before it can be rented again, making it a pricey proposition, according to Poueymirou. "When they gutted the store, the inside is pretty much only usable as a warehouse at this time," Poueymirou said. "As a consequence, it's going to take a substantial investment of money to make that rentable space."

Co-Op members will receive a ballot this week by mail to their home addresses by Project LEAP (Legal Elections in All Precincts), a 36-year-old independent election advisory group that has watched over elections for unions, local school councils and other cooperative boards.

Shareholders will have three weeks to vote for one option and mail in their ballots. The ballot must be filled out with the shareholder's membership number, signature and printed name and mailed with a stamp before Monday, Dec. 17 to the address on the ballot. The address will be a neutral site, said Arlene Rubin, executive director of Project Leap. "We guarantee you the security of ballots from start to finish, and thereafter," Rubin said.

Ronald Barliant, a commercial law firm, served as an advisor to the Co-Op board as the directors considered the Co-Op's financial options. Looking at the bankruptcy choice, Barliant said the Co-Op would have to pay its creditors in full if they wanted to remain the leaser of the 55th Street store.

"There would have to be considerable financing in place [and] available to pay for costs of a bankruptcy, which would be fairly extensive," Barliant said. "[There has to be enough money] to finance the cure of the default on the 55th Street store and to deal with the claims of the creditors whom the Co-Op would need to pay in full if the Co-Op intended to remain in ownership of the store."

In both choices, though, Certified Midwest Grocers (CMG), owner of the 47th Street store, would be affected. The Co-Op Board said Option A has CMG buy out the 47th Street store's lease. The second choice has CMG accept a lease termination that would cost the Co-Op $2.2 million that can be spread out over time. Both options have the Co-Op giving up the 47th Street site.

CMG is also the major supplier to the Co-Op. "If we stop making payments to them for rent, they made it very clear that they would cease shipments to your operations," Poueymirou said. The board can't get a different supplier until they pay off what is owed to Certified.

Members who have not received their ballots after two weeks due to an address change can get a replacement ballot from the Co-Op's membership desk. These ballots will be counted after the mailed-in votes have been counted to make sure member do not vote twice. Ballots will have clear positions for both options. "If you want to keep the Co-Op alive, vote for Option B. If uncertainty is a problem for you, then vote for Option A," said Co-Op board member Robert Stanek., who pledged $5,000 of personal money toward the capital campaign.

One supporter of the Co-Op had her $100 check already written for the capital campaign and other supporters voice their concern that they could not purchase shares of the Co-Op. [Share purchases were stopped August 14 since the board could not guarantee their value.]

While most audience members were vocal in their support of keeping the Co-Op open, some others had a different opinion. "You do not throw good money after bad," said Kenwood resident Vanice Billups, Ph.D. "Yes, it should close. Spare us, please, another 5 years or so of agony and excuses when the next measure does not save the Co-Op and when another option is over."

Board secretary James Withrow suggested holding a member drive, where members contribute funds to help the Co-Op pay its debts to survive. "Some people are saying we should die a dignified death," Withrow said. I'd rather go out fighting."

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Herald Editorial Nov. 21 2007. Save the Co-Op

([Herald] Editors Note: The Herald is a creditor of the Hyde Park Co-Op and stands to lose a significant sum in a bankruptcy proceeding.)

The purpose of the 400-plus Hyde Parkers who filled the large hall provided by the Hyde Pak Neighborhood Club, 5480 S. [Kenwood} ave., on Sunday for the "Future of the Co-Op" meeting is clear. To paraphrase Co-Op board member James Withrow, we will not submit to pressure to "die a dignified death." Hyde Parkers who were committed enough to attend that Sunday meeting and let their voices be heard want to save the Co-Op. We agree.

One should not measure the Co-Op based on its recent past. The losses created by the 47th Street miss-step had made it impossible for the Co-Op to act in our community as it has in its past. The Co-Op has been an integral part of the life of the neighborhood from the book fair to the tables of coffee drinkers. Its support of community institutions was a long and proud record. It is hard in the present circumstances to remember that the Co-Op once was one of Chicago's finest grocers, innovating all kinds of things - like an on-site, active home economist. We know it's hard to remember back. The important question is can it be again what it once was. That can only happen if it rids itself of the 47th Street albatross. Plan B makes that happen.

A chapter 11 bankruptcy, we were told Sunday, is the only answer. our question is, does the current board have the guts to go through a bankruptcy? Hyde Park Cooperative Society Board of Directors President Jim Poueymirou recently visited the Herald offices to deliver a somber message: the Co-Op board was mulling three possible futures for the 75-year-old cooperative grocery, with only one guaranteeing its future. Those choices were a bailout loan, a "debt workout"--essentially turning all assets over to creditors--and bankruptcy. As bankruptcy does not guarantee continued existence, it seemed the Co-Op's survival was a the mercy of some beneficent lender's largess, given the rather modest assets of the cooperative, the daunting collection of debt and the onerous 47th Street lease, a million-dollar sinkhole owed to the Co-Op's princip[al] distributor, Certified Grocers, for the next 16 years despite the fact that the location is shuttered.

Sunday's meeting narrowed those three choices into the two essential outcomes of the meeting we urged the Co-Op board to focus on just two weeks ago: Will the Co-Op remain open or not? If the audience reaction is any indication, the vote will be a thunderous "yes," as it should be.

Co-Op board members James withrow and [R]ob Stankek deserve high praise for their principled and well-thought-out defense of and future vision for the Co-Op. The Co-Op will launch a capital campaign and secure funds for renovation and debt consolidation under their plan. The wild enthusiasm of the crowd in response to their promises to keep this venerable neighborhood institution intact and improve its quality bode well for the future--assuming hat enthusiasm is shared by the majority of voters.

That assumption is not altogether warranted. If, as Withrow suggests, the plan to pull the plug on the Co-Op is largely the result of pressure by the University of Chicago, a large number of member-owners could be leveraged by the university to achieve their ends. If you left the meeting feeling reassured that the Co-Op is in safe hands, you got the wrong message; we have to fight to save the Co-Op.

Even beyond the influence of the university, we sometimes fall victim in this neighborhood to a poisoning cynicism that goes beyond critical analysis. Managing change requires a long view, the ability to look both backwards and forwards beyond a handful of years. The Hyde Park Cooperative Society is one of he founding institutions of this nation's cooperative grocery movement, a thriving proof of the dynamic capacity of citizens in action. Hundreds of these grocery co-ops that have been spawned as a result of the efforts of everyday people dot our country. Over the years, they have survived not by caving in to mediocre, short-term thinking but by bold innovation in the application of the cooperative principles that guide every successful cooperative venture. The Co-Op board should keep this in mind as hey move forward. More than 350 food cooperatives across the country, for example, are part of a network that freely shares information about the strategies they employ to compete in the marketplace; this is a network shunned up to now by our co-op. We urge the Co-Op's board to reverse this and other isolating behavior. Success is possible, but innovation is required to achieve that end.

We must also commend this crop of board members for taking long-overdue action. For years, the Co-Op has been guilty of micro management and a lack of vision. Regardless of your position on this issue, all Hyde Parkers owe Poueymirou, Withrow, Stanek and the rest of the board a debt of gratitude for rejecting "business as usual."

We congratulate Bruce Brandfon as well for apparently, in remarkably short order, becoming the kind of popular general manager we have not seen at the Co-Op in a long time. The praise heaped on him by longtime employee and straight-talker Gerald Howell indicates that the board chose wisely. Bruce deserves time to deliver on the promise his tenure is already showing.

The situation is clear. We must all step up to this challenge and deliver. Endorse plan "B," which will involve employing Chapter 11 bankruptcy to dissolve the 47th Street lease, contribute to a capital campaign to both help remodel the Co-Op and eliminate debt and launch a serious effort to get out the vote over the next three weeks.

In their November 28 editorial, the Herald puts forth a third option--have the city arrange a loan to be backed by bonds for the $700,000 empowerment oed on 47th St. interior work, cutting out the lease, and raise a million in pledges.

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Co-Op statement of the situation and Options. (Note: That this is quite different from the newer links below. The letter here was mailed with your ballots except the new Addendum to Option B, and is on still on their website and most likely is still official as of December 2. Here are the addresses for the new Evergreen material. http://www.coopmarkets.com/evergreen/December2007/JustTheFacts.pdf and http://www.coopmarkets.com/evergreen.htm).
A separated link to the first pdf article, called "Just the Facts" and by-lined by the Evergreen editor.
A separated link to the second pdf article, called "University Misinformation" and by-lined by the Evergreen editor.

(Ballot instructions from the Co-Op markets website follow.)

Please note that board member James Withrow states in a published paid article in the Herald November 18 that that letter was to have been written by a team representing the two options, but the task was instead given to a firm employed by the University of Chicago, an interested party.

(Modified Board letter as of December 14, 2007) Dear Hyde Park Cooperative Society Members,

Dear Hyde Park Cooperative Society Members,

You are being asked to cast your ballot and vote for one of two alternatives dealing with the future of the Hyde Park Co-Op. This letter of explanation provides you with the facts and a more detailed explanation of the alternatives.

As a reminder, ballots must be received by mail to Project LEAP Officials at the address indicated on the ballot no later than December 12, 2007, signed by a member in good standing who can be identified by his/her member number and/or signature. Replacement ballots are available at the Co-Op Membership Desk beginning on November 30.
Following the Town Hall meeting on November 18, 2007, the Board conducted an informal poll and a two-thirds majority of the Board of Directors of the Co-Op voted to recommend Proposal A – the Debt Workout - to the shareholders. The Board intends to place significant value on your vote, but for legal purposes, this election should be considered as Advisory to the Board. You should also note, however, that Proposal A depends on substantial rent relief and cash infusions from the University of Chicago and the successor Tenant that are only available if Proposal A is approved by the shareholders.
The vote itself will be received, validated and counted by Project LEAP Officials, an independent and non-partisan organization retained by the Board of Directors to ensure a fair election.

The Facts:

The Co-Op currently has a negative net worth of $1.8 million and has on its books leasehold improvements of $1.65 million that have no value. Therefore, we must borrow in excess of $2.3 million and obtain a $400,000 letter of credit to pay our bills. Over the past 11 months, the Co-Op has been able to survive by ever-mounting debt owed to our vendors, and by not remitting rent owed to our landlord on the 55th Street store, the University of Chicago. While this has enabled a continued flow of product to our store, it has also put the Co-Op further in debt. The rent due is over $1.2 million, and we have $2.3 million in trade payables and accrued expenses that do not have to be paid immediately. In addition, we owe $685,000 related to the empowerment bond for the 47th Street store and a loan of $1.01 million due to Certified Grocers Midwest, Inc.

The 55th Street store earns about $1 million per year. However, we have a lease for the now vacant 47th Street store which runs through 2023 without any escape clause provisions and we are obligated to pay the $1 million in rent to Certified Grocers Midwest, Inc. on that lease per year.

Proposal A – Debt Work Out

The University of Chicago, landlord of the 55th Street store, would forgive back rent of up to $1 million.

Certified Grocers, the landlord of the 47th Street store would forego all future rents (which run at $1 million per year through 2023) for a one time payment of $1 million which includes the release of all outstanding liability by the Co-Op to Certified Grocers.
This proposal would require the closure of the 55th Street store in a short period of time, but would enable the Co-Op to have sufficient cash flow to meet the remaining financial obligations through the controlled and orderly transition to a new grocer.

The University of Chicago and a new tenant at 55th Street would provide sufficient funds to pay off most, if not all of our debts. Thus allowing an exit whereby the Co-Op, after 75 years, can be proud of its past achievements and meet its financial obligations.

The University of Chicago is in final stages of negotiations with a grocer to operate the 55th Street store, and will announce the store as soon as the lease is signed. The proposed tenant will operate a high-quality grocery store, and make significant physical improvements while continuously operating the store.

The proposed tenant will provide the current 40 full time and 140 part time employees an opportunity to interview for employment positions. Due to the overwhelming debt the Co-Op must repay to outside entities, although we would have hoped differently, we do not envision the financial ability to allow members to redeem any of their shares.

Proposal B – Bankruptcy through Chapter 11

This proposal would require filing Bankruptcy under Chapter 11 which would mean the following:

The 55th Street store continues operating with the current management team led by Bruce Brandfon if the conditions below are met.

Under Chapter 11 reorganization, the Co-Op would terminate its lease obligation at the 47th Street store. The cost of such lease termination would be $2.2 million. This amount could be reduced if a new tenant is found quickly once the Co-Op terminates its lease obligation at that site.

A proposal under Bankruptcy gives us the right to accept or reject any leases to which we are currently obligated. Even in rejecting the lease at 47th Street, its provisions obligate us to pay approximately $2.2 million to Certified Grocers.

We would expect to incur approximately $400,000 of costs related to bankruptcy in addition to all other debts to which we have referred.

Board members who support Proposal B and have analyzed the numbers believe that there would be sufficient cash flow to pay normal trade payables and accrued expenses.
Should the Co-Op enter into Chapter 11 reorganization, the Co-Op would have to borrow $2.3 million plus obtain a $400,000 letter of credit to pay down its current trade payable to Certified Grocers, the past due rent to the University of Chicago and the pay down all debt owed to LaSalle Bank. It is the projection of the Board members who support Proposal B that the Co-Op will generate a $7 million positive cash flow from earnings and depreciation over the next five years. The Co-Op would have to pay out $2 million in loan payments for the $2.3 million loan, up to $2.2 million in lease termination costs, $400,000 in bankruptcy costs and $700,000 in other normal business balance sheet reductions, totaling $5.5 million versus a positive cash flow of $7 million, leaving $1.5 million available for capital expenditures and contingencies. In addition, this scenario can only work if the Co-Op receives debtor in possession financing. At this time, the Board has received a preliminary term sheet from the National Cooperative Bank; however final terms will require further negotiations and approvals. Success is not assured.

We sincerely appreciate your patronage and all the support you have given us over the years. It is with heavy hearts that we come to you now for your assistance in making this very difficult decision.

Sincerely,
The Board of Directors
The Hyde Park Cooperative Society, Inc.

NB: The following has been added since the letter was composed. It brings up-to-date financial information that has developed in the last few days:

At the public meeting on November 18th it was stated that there were discussions with the National Cooperative Bank about debtor in possession financing. Those discussions have now ended and the NCB has declined to provide such financing. There are presently no active discussions with other potential sources of debtor in possession financing. As stated at the meeting, without such financing, the Co-op cannot reorganize under Chapter 11 of the Bankruptcy Code. If the Co-Op fails to secure debtor in possession financing, the store would close in seven months, and it is impossible to project, at this time, what percentage on the dollar creditors might receive as payment. Under bankruptcy, all other debts must be satisfied before any money can be returned to shareholders, which we believe is highly unlikely.

The proponents of Proposal B have secured a Term Sheet from the National Cooperative Bank(NCB) for a Commercial loan that is contingent upon the successful resolution of two items: (a) negotiating a termination of lease from Certified Midwest Grocers for the 47th Street site and (b) negotiating repayment of the outstanding rent due for the 55th Street site which is presently $1.2 million in arrears.

Procedures in the Co-Op’s “Future of the Co-Op” Poll

Sometime not long after Thanksgiving, you should receive a ballot in the mail. It is designed so that your identity is kept secret during the count.

The ballot will contain instructions (reprinted below) and you should follow them exactly as written. Ballots that are not properly filled out will not be counted. In the past, Co-Op members have been lax in following directions and many ballots have been spoiled. We hope that will not happen in this poll.

If there is more than one member in your family, up to two members may vote using one of the ballot forms sent to your home, but they must carefully follow the directions explaining how to do so.

Note that the ballot must be folded so that the address of Project LEAP appears on the outside, and mailed to Project LEAP. It may not be turned in at the Co-Op. All ballots must be received at Project LEAP by Wednesday, December 12, 2007.

Members who do not receive ballots by November 30 should go to the Co-Op membership booth with member number and proof of identity to receive a substitute.

Also note that this poll is advisory. It will be up to the Board whether to accept or reject the suggestion of the majority.

OFFICIAL HYDE PARK COOPERATIVE SOCIETY, INC.

“FUTURE OF THE CO-OP”

BALLOT INSTRUCTIONS

1. COMPLETE YOUR MEMBER INFORMATION: For your ballot to be counted, you must provide your member number, printed name(s), and signature(s) (no stickers, please) . For joint memberships, each person must print and sign his or her name. Fill out the MEMBER INFORMATION panel on the other side of these instructions. Your name(s), signature(s), and number will be detached from the ballot before it is counted. FAILURE TO BOTH PRINT AND SIGN YOUR NAME(S) WILL RENDER YOUR BALLOT INVALID.

2. Determine the number of ballots you are eligible to cast:

• If your membership is held by one person, you have only one vote. Complete only BALLOT ONE.

• If TWO NAMES appear on your envelope address and your member account CONTAINS TWO OR MORE SHARES, each of the two shareholders may vote, completing both BALLOT ONE and BALLOT TWO, respectively.

3. Place an “X” in the box next to the Proposal you choose.

4. Fold your ballot along the perforations so the MEMBER INFORMATION panel is on the outside. Do not tear along the perforations.

5. Return your ballot by placing a stamp on the outside of this sheet and mailing to Project LEAP at the address indicated. Hand delivered ballots will not be counted.

If you have questions about the ballot, call Project LEAP at 773-924-4449.

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Letter to the November 28 2007 Herald from General Manager Bruce Brandfon and additional as to the Evergreen

As the new general manager of the Co-Op Market, I feel compelled to address the 26,000 plus member/owners who are facing a difficult decision these next few weeks. The Co-Op has been a part of Hyde Park longer than most people have been alive. Its roots were founded in the midst of the Great Depression and nurtured with high community ideals. Our country and community have seen many changes over these past 75 years. We have experienced the pain of several wars, the shrinking of the world though transportation and communication growth, advances in medicine which had a profound impact on life expectancy just to name a few. And the Co-Op, likewise, has experienced significant ups and downs. In this changing world the Co-Op's role and vision has had to also change with the times. So now, we are faced with a decision as to the fate and relevancy of this age-old institution-one whose first store opened the year Mount Rushmore was dedicated.

There are clearly two opposing camps concerning this decision. Both sides are equally opinionated and passionate. One side supports the university proposed buy-out thus allowing the Co-Op a "dignified death." I have read numerous letters to the editor and blogs which slam the Co-Op for everything from rotten produce, high prices, and empty shelves, to unfriendly employees. I have met many customers (the Co-Op has over 22,000 per week) over the past several months and some have expressed similar concerns. Clearly the Co-Op has not lived up to expectations at all times. But what are reasonable expectations? You know the o ld axiom "the grass is always greener on the other side." Every other store option has its good and bad points. If one was perfect then they would be doing all the business and obviously no one is. The second camp supports the effort to save the Co-Op. They have been called die-hards. Many of this group has shopped the Co-Op for generations. They have grown up with it and take a proud and proprietary view of it versus succumbing to the chain mentality. I believe they see the shortcomings of the Co-Op but still have hope that things will be better.

"Will things be better?" That is in reality the $100 million question. It is the issue that should rise above all else. All the passion and emotion should be set aside. When I am faced with an employee disciplinary issue which could lead to two possible conclusions--one of termination (a dignified death) or one of giving another chance (die-hard supporter), I first ask one question: What is different today than in the past that would lead me to believe that the employee's situation/behavior is going to create a different result? If I can not get comfortable that the circumstances and tangible/measurable change exists, then I would proceed with the termination. There would be no reason to postpone the inevitable. However, if I became convinced that there was in reality a significant change and tha change provided me with hope that the end results would be different, then I would give this employee another chance. You see I have a lot invested in this employee and even though he/she is not perfect I do know what I have versus someone completely new.

When I first arrived at the Co-Op, I gave a series of interviews in which I stated that my primary goal was to make the Co-Op a place where most people liked to shop and filled their needs. Notice that I said most not all. No one can satisfy every customer's total needs. That is why there are multiple stores in every business. Anyone could find fault at every shopping option. You have a right to expect a clean store with fresh, quality products at a competitive price. I believe if you have shopped at the Co-Op during the past three months that is exactly what you would have found. In addressing the comments and complaints of the past, I was not here. Subsequently I have no direct knowledge, however, I would tend to believe t hat some of them were valid. Many people have heard me address th current state of business and the changers at the Co-Op during he annual meeting and at last week's town hall meeting. For those who have not heard my comments let me bring you up-to-date. Currently our produce is of the highest quality with a very broad array of organic items to supplement conventional produce all at extremely competitive prices. The grocery/dairy/frozen shelves and displays have been very well stocked every day. We have significantly reduced thousands of prices and are very competitive on all the best selling everyday items. We carry the finest meat you can buy--certified angus beef--exclusive at the Co-Op. Our seafood, deli and bakery departments carry the majority of your needs and then some, all fresh and priced competitively. Our revamped weekly advertising is easy to read and is full of your everyday items at prices as good as anywhere. We are committed to improving our customer service and strive to have no more than three people in a line at any time. Additionally, there are some undeniable facts. This store is physically only 32,000 square feet. No matter who operates it, it can not be as large or have departments as big as a full-sized Jewel or Dominick's or for that matter Whole Foods. The Co-Op has been a profitable business over the years and can and will be with the unburdening of he 47th Street store lease. With a return to historic profitability, the Co-Op will be able to reinvest and modernize. The Co-Op is involved locally both in supporting community organizations and events as well as carrying products from local businesses. We offer shut-in service as well as local delivery. Most chain stores do not.

Even though many people have stopped shopping at the Co-Op over the years for one reason or another, we are privileged to have over 22,000 customers a week who still find value and support this unique shopping experience. I invite everyone to please come to the Co-Op during the next couple of weeks and see for yourself the changes and improvements that I have been talking about. I urge you to make an educated decision based on current facts and conditions, not on past experience. The employees of the Co-Op are committed to deliver a store where quality, value, and community service are an everyday experience.

Brandfon in the December Evergreen article on the University and "Misinformation."

(Mr. Brandfon is also outraged by the university's claims that it just wants a "full-service grocery store" for the community.) What in the blazes is that supposed to mean? (he asks). You point to one thing in this store and show me how it's not a full-service grocery! I invite anybody to compare our store with the university's two finalists and se how we measure up.

Would I like a nice walk-around glass case to put our imported cheeses in: Sure! But where am I going to put it, on the roof? This is a 32,000 square foot location. No matter who is in here, they just can't fit in all the goods that you can at a location like a full-sized Jewel or Dominick's, which is twice our size. What you can do is provide an excellent selection of the best quality of the most important merchandise, at a price that makes it unnecessary to shop elsewhere, and that is what we have done at the Co-op. All those people who have been staying away for years need to come in and see what it is they've been hating.

It is shameful that the two biggest historical complaints about the Co-op have been poor quality and high prices. And here the university is trying to bring in Dominick's, whose meat and produce quality is questionable, or Treasure Island whose prices ar on a par with ours. Compare our ad inserts to theirs, and see how we match up. You will only find additional reasons to shop at the Co-op. This 'full-service grocery' nonsense is just one more example of how they [the University] use their 'concern for the community' as a mask to cover their real agenda."

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Letter (paid advertisement) by James Withrow in Nov. 28 Herald tells much we haven't seen elsewhere in print.

Note: Mr. Withrow is a foremost supporter of Option B. Mr. Withrow also said later in his blogsite that he had not been informed as of the writing of his letter that the University said in early November during negotiations with the board representatives, not for the first time circa the November 18 meeting, that Option A would be off the table if Co-Op membership did not endorse it.


In this article, I'd like to quickly go over the main points I made during my Town Hall speech on Sunday, November 18. Then I'll explain how the "Fact Sheet" accompanying the ballots came to be an illegitimate expression of the board. I'll also make the case that we need to give banks until December 14 to offer the Co-op debtor-in-possession financing.

Members want to know how the Co-op's next decade wil be different from the past decade, which was certainly a dismal period in our 75-year history. My prescription for success includes instituting Policy Governance, a process that most successful cooperative groceries use to keep the Board of Directors from micromanaging. Instead, we would focus on our three main responsibilities: hiring a General Manager, monitoring the GM, and devising a long-term vision fo the Co-op. With only the 55th Street store to worry about now, I believe the board can successfully execute its duties.

We also need to start acting more like a cooperative. The board needs to be more transparent. While we pay off our debts with our typical annual profits of over $1 million, we'll still need to raise money for capital improvements. For that, we should do what most cooperatives do and hold capital drives where members can earmark the buying of new shares for a capital fund.

With our debts refinanced, we should, over time, be able to give our employees the resources t hey need to do their work. And we should continue down the path that new GM Bruce Brandfon has charted for the store. (The entire Town Hall speech and more details can be found at my blog "Hyde Park Urbanist".)

Now, let me change topics and explain a little about how the decision we're about to make has been shaped.

First of all, the Board of Directors worked together very well, all the way fro our first session in July to the Town Meeting. All through those months, we've known about the University's proposal to buy out our leases. As a whole, the board decided to be quiet about the proposal as long as possible and, while I regret our choice, I think it says something about our degree of cohesion and mutual respect for one another that when we decided to keep a secret, that secret was kept.

Likewise, our intention has always been to to let the members vote on the by-out proposal. After our legal responsibilities were spelled out for us, we agreed that disposal of assets was a board responsibility, although the member vote should be honored as long as we can execute it in accordance with our obligations.

The board felt comfortable giving our President James Poueymirou full authority to respond to media inquiries during the election period. And I believe he tried to be even-handed. The single slip-up, however, resulted in a front page HydePark Herald headline fo their NOvember 14 edition that screamed: "Co-op Board backs complete shutdown." The headline and the first paragraph, which claimed that the board had voted to endorse the University's proposal, were incorrect. The board had chosen not to endorse any proposal due to our lack of consensus.

That Herald headline caused a great deal of harm. The local lender we'd approached for debtor-in-possession financing wondered if Rob Stanek was a rogue board member, asking them to work on a proposal the rest of the board had no intention of considering. The truth was far different, as the majority of the board, even now, wishes there were an alternative to going out of business. This mistake was inadvertent, I believe, but, had it been intentional, it would have been a tremendously successful strategic ploy to derail reorganization financing.

What's worse is that after the Town Hall meeting, the University and its allies on the board seem to have changed tactics. The final version of the University's Proposal was worked out the evening after the Town Hall meeting, when Certified Grocers agreed to the details. The Co-op's representatives in these negotiations have always been two people who strongly favor the University proposal and, to the best of my knowledge, they have done a fine job of looking after the Co-op's fiduciary interests. However, the agreement reached on that Sunday evening, for the first time, included a clause insisting that the board endorse the University's Proposal even before the member vote was known. To that end, President Poueymirou then called the directors the next day and took his "informal poll" when I was informed that we would either endorse Proposal A or see it withdrawn.

Even worse, the University decided to threaten the Co-op's members. As it stood, the University could have won acceptance for its proposal in two ways. The members could vote for Proposal A, the buy-out. Or the University could win if members voted for Proposal B, but no responsible alternative bankruptcy proposal was put before the board before a certain date, say december 15. Instead, the University is now insisting that the shareholders must approve Proposal A or else they will withdraw their offer.

Now, it's very hard to believe that the University, after promising that they are "committed to having a new, high-quality grocer at this site" will withdraw its offer after the votes are in. If we're to believe everything the University as been saying these last few months, the last thing they want is any possibility of a liquidation scenario where they'd have les control. Instead of getting to choose who the new monopoly grocer in Hyde Park would be, they'd be facing the prospect of our 55th street lease being sold to the highest bidder, a tumultuous process.

So, either the University has been fibbing to us about their priorities or else this threat is an attempt to make Proposal B seem riskier than it really is. In fact, the board is unlikely to turn down the University's Proposal unless both of these events come to pass: Proposal B is approve by the members and Chapter 11 financing is on the table. If Proposal B passes, but we have no way to finance it, I'd expect the board to unanimously approve Proposal A. A close board vote will probably only happen if Proposal B passes, but the best refinancing offer would still place the Co-op in jeopardy of liquidation.

Now, let's turn back to the "Fact Sheet" accompanying the ballot. On November 10, in a motion made by me and seconded by President Poueymirou during executive session, the board unanimously designated fellow Director Lisa Chin and myself to design a ballot package--the ballot and accompanying letter--with the stipulation that Chin and I agree to the package. Lisa & I were leaning different ways on this election, but we both felt a fair election was most important than our side winning. As of November 25, press time for this article, the board has not changed that directive.

I'm proud to say that t6he Chin-Withrow team, in consultation with Arlene Rubin of Project LEAP Official, worked together long hours over the next week to design th ballot. Lisa & I now know more about fair election processes than we'd ever imagined learning. I'd even say that we each tried to make sure that not only our own interests were were promoted but that opposition interests were looked after. The ballot may not lok like much, but we reached agreement after much iteration and by the deadline of Friday, November 16.

The "Fact Sheet" was a different matter. The ballot had to be sent to the printers first due to its 3-color design (which makes it more difficult to fake). We had the weekend of the Town Hall meeting to finalize the "Fact Sheet" language, although Lisa also spent about sixteen hours cleaning up the addresses on the membership list in our computer database. I now realize that she didn't respond to my proposals on language for the sheet partially for that reason. At the time, I wasn't sure what was going on. In any case, I think we could have come to an agreement Sunday night and gotten the "Fact sheet" to the printers first thing Monday morning, which was our deadline.

Instead, this was taken out of our hands on the evening after the Town Hall meeting. I was tod that the"Fact Sheet" would not be written by Lisa & myself, as the board had directed, but would be completed by the public relations consultant the University hired for t his project! And that's what happened. The "Fact Sheet" is certainly a professional-looking document. Indeed, it's exactly what you might expect under these circumstances--slick, but slanted.

I refused to approve the document. While Rob Stanek was allowed to suggest a few tweaks, the "Fact Sheet" was not sent to all the dire cores for approval, despite the claim that it speaks for the board. It's simply illegitimate.

The Town Hall meeting changed so much. Before that Sunday, the University and its allies on the board were working toward consensus and a responsible alternative to liquidation. The widespread expectation was that the Co-op was unpopular, with few friends left. But, the possibility of reorganization and the proven ability of our new General Manager to improve the store convinced the vast majority of those attending that our cooperative has a future. Commitment to fair play and a dignified exit for the Co-op was deemed les important once it seemed possible that the University might lose this vote.

The employees and their union representatives were told about Proposal A one day before Hyde Parkers were informed through the Herald on November 7. The unions' bank needs time to evaluate our situation and decide if they want to provide debtor-in-possession financing. Members who are attached to the Co-op should be given some time to raise money for a capital fund, which could influence how other banks view our viability. December 15 would be a reasonable deadline for the board to make a final determination.

Despite the outside attempt to scare off refinancing offers with an "informal poll," I believe the board can rediscover its prior comity after this election no matter which way the vote goes. In the meantime, Rob Stanek & I will do all we can to secure refinancing.

The refinancing option is exactly as Rob outlined during the Town Hall meeting. We would borrow an additional $2.4 million that would course our back rent owed to the University, back a letter of credit so that we can switch from Certified as our main supplier and provide extra cash for changes in vendor terms and bankruptcy administration costs. The lease at 47th Street could be rejected for $2.3 million, and possibly less, which could then be spread out over several years at the direction of a bankruptcy court. The 55th Street location has contributed profits of over $1 million per year, even during these last dismal years, and we could use future profits to pay off these obligations. We intend to pay off our creditors and members' shares might eventually have value.

Sadly, what started out as a simple decision concerning the Co-0p now has other important ramifications for our neighborhood. Hyde Park is a company town and we'd certainly be a far worse neighborhood without the University of Chicago. However, this election raises concerns about the University's reach.

I hope the new administration of the University will work in partnership with the neighborhood to achieve mutually beneficial goals. We certainly have many and I intend to be a good partner when I can. But I'd hate to see this new administration sink to a strategy of background bullying and slick public relations.

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From the December 2007 Evergreen

[Editor: this site takes no position on the contents of these selections except to note where we believe errors have been made or alternative explanations exist. These selections are here because they are not elsewhere, at least in print. GO.]

From article starting on page 6, The Options on the Ballot: Just the Facts. By Leon Shernoff [Editor]

At the town hall meeting last Sunday, November 18th, the board of the Hyde Park Co-operative Society asked its members to vote for one of two strategies (labeled Option A and Option B) to deal with the Co-op's current financial situation. Put most simply, Option A is a proposal to disband the Co-op, while Option B is an attempt to keep the Co-op going. Ballots were mailed out to members last week with an accompanying letter. The accompanying letter was at best unclear in many important regards--for instance, at no point does it state outright that to vote for Option A is to vote to disband the Co-op....

Please tell everyone you can about the information in these pages - help spread the word! For people who haven't received a ballot, replacement ballots can be picked up at the member services both in the Co-op. If you... want to change your vote, you can likewise pick up a replacement ballot at the vote.
[Note: replacement ballots will be sequestered and counted only after regular ballots. GO]

I wil start with an outline of the situation, and t hen proceed to give more details. Since many members are concerned with how these options fit in with the bylaws that are the legal framework of th Hyde Park Cooperative Society, I will also compare them with the bylaws. Co-op members may recall that the board was planning to revise the bylaws this year, and so printed an official copy..in the June/July issue of this newspaper..... [published in this issue are a record of the town hall meeting, transcript of the November26 board meeting, relevant portions of the bylaws, and solicited statements on the situation from Co-op board members and other personnel. ]

What the Situation Is.

In February 2007, the board of the Co-op decided to stop paying rent to the University of Chicago on its 55th St. store location... The board gave many reason for this in the discussion of this issue at the November board meeting [See page 6]...

By summer the university was expressing its dissatisfaction with this to the board, and suggesting that board might want to disband the Co-op if it couldn't pay its bills, at which point the university would put a different grocery store into the 55th St. space. That is still the essence of Option A.

Naturally, some board members went looking for an alternative...[Note: the board said NOv. 26 that they expected to lease the 47th Store until late September, at which time Certified Grocers upped the anti yet again. GO.] At this point, the only one remaining of the ones they examined is the one presented as Option B. This is to file for protection from creditors under the Chapter 11 bankruptcy law, which allows t he Co-op to shed (the legal term is "reject") the leases on the empty store at 47th St. The idea is that operations at 55th St. are profitable and thus the Co-op as a whole will likewise be profitable if it can get out of the 47thSt. lease. Under this plan, the Co-op would gradually repay its creditors with these profits, and if all goes well would eventually resume its pre-47th St. status as a simply profitable business paying dividends to its share-holders.

In the meantime, the Co-op has continue to pay the lease on the empty 47th St. location, which has virtually exhausted the Co-op's cash. This has significantly restricted its options.

The Details - Option A

Under Option A, the Co-op's store would close, permanently, and the organization would be disbanded. Shareholders would not receive any money for their shares, and all the employees would lose their jobs. The university would permanently lose the $1.2 million dollars that the Co-op currently owes it in rent. At present, the university is saying that they will require whatever new store takes over t he space to interview for a job any Co-op employee who wishes to do so. But of course, they have no say over whether that store choose to hire these people. So why would anyone chose such a plan? Under this pan, the university is promising to pay off all existing debts to the Co-op's other creditors - to the tune of about four million dollars - so that they will not sue for the money that they are owed. If those vendors (or the university) sued and the Co-op was unable to pay, this would lead to an Involuntary Bankruptcy under Chapter 7. I will pause here to point out that as the current situation stands, there is really no danger of the vendors suing--the Co-op actually took the money that it would have paid the university and used it to pay the vendors, so they're actually quite happy with us right now. The only current legal threat is from the university.

The university, quite rightly, is not happy with being stiffed for nine months, and has said that they are ready to take legal action that would result in the involuntary bankruptcy. This would lead to the store being shuttered for a considerable length of time while the Co-op's physical assets were assessed and other legal wrangling took place. The university is reluctant to take an acton that would result in major disruption to local residents' grocery shopping and an associated drop in business throughout the 55tgh St. shopping center that the Co-op is in. Basically, they are taking the position that the Co-op is going down no matter what, and they are willing to put up money to pay off the Co-op's creditors so that a transition to a new grocery store could be accomplished quickly, without a lengthy shuttering of the storefront.

The Details - Option B

Under Option B, the Co-op would have protection from creditor under the Chapter 11 bankruptcy law, which allows the Co-op to shed (the legal term is "reject") the lease on the empty store at 47th St. Free of this lease, the Co-op is only operating the 55th St. store, so it would resume profitability. All the employees would keep their jobs, the members' shares of stock would have value; the university would receive its back rent due and the Co-op would resume paying it on time. Basically everything would be straightened out.

Why then is the board not simply going for this option? Well, first of all, filing for Chapter 11 bankruptcy costs money - $400,000 - and the board has let its cash run down so far that it no longer has the cash on hand to do this. It also requires an equivalent value in credit to acquire a new major supplier for its groceries, because Certified Grocer, its current major supplier, is also our landlord at the 47th St. location, and they have previously indicated that they will cut off their supply of groceries if we take any action against the lease. Failure to secure these sums by borrowing or fund-raising would mean that the Option B actions would fall through. Other financing ([such as]a loan from the Co-op National Bank) would also be necessary to pay off some creditors (including the university) immediately... [outdated information excised-GO].

There is also risk because the Co-op would be extremely cash-poor for a while, so another large one-time disaster like the front-end outage might throw it back in the position of being unable to pay its bills, but this time with the Chapter 11 option already exhausted.

Option B thus is a more optimistic approach, and has a much better outcome if it works, but it may fail, whereas Option A is fairly sure, being as trustworthy as the university is. The university has pledged to withdraw Option A if the Co-op does not select it in this vote. Thus if Option B fails, it would leave the university with the choice of going ahead with legal action against the Co-op, renewing the offer of Option A, or perhaps even funding the Co-op's Chapter 11 filing itself.

Why Was This Not Explained Before?

The letter of explanation accompanying the ballot was put out in a great hurry, and there are grave problems with it. On one possible cause for these problems, please see board member James withrow's statement in this paper, where he states that the letter was actually written by a public relations employee of the university and included with the ballot against the express wishes of himself and other board members favoring Option B. In any case , at no point does it state that a vote for Option A is a vote to voluntarily dissolve the Co-op, which is fundamentally misleading right there. It also makes at least one misstatement of fact: the Co-op has been using the rent money to pay its vendors, so there certainly has not been "ever-mounting debt owed to ur vendors" "over the past 11 months."...

It's hard to address the constant flow (and change) of information that the university has been putting out over the last week. In addition to what it originally propose, the university is now saying that under its plan, all the Co-op employees would receive all their accrued sick days and vacation time, but it's unclear what that would mean - are they proposing financial compensation? Are they saying that such employees who are hired by the new supermarket will enter with these days already accrued?...

At the November 26th board meeting, the board pledged to address the most frequently-asked questions about this decision and have them written up to be posted on the Co-op's web site and the bulletin board outside the office downstairs. A copy of what is posted will also be left with the member services booth for members to pick up, or for the clerk to use in answering questions from members who call in.

The Bylaws

For such a large-scale financial undertaking as this decision, of course legality is essential. It therefore behooves us to compare what has gone on so far with the bylaws governing such situations.

The fundamental part of the bylaws is thus article 3.1, which states that "The supreme power of t he Society is vested in the members, in regular or special meeting or in duly called elections." The...board...did pledge at the November 26 meeting to abide by the results of the poll. [Note, it also has said that this vote is advisory, recognizing that under law the board has the responsibility, and possibly recognizing that as below this vote does not follow the bylaws guidelines and could be challenged if treated as a formal and binding vote-- co-op votes in the past have been overturned by courts. GO]

..the town hall meeting does not constitute a "regular or special meeting.. or ..duly called election" [Article 3.4 notice of meetings]. The board has certainly not tried to claim that the town hall meeting was a 'regular or special meeting' of the Co-op. [And] at the November 27th board meeting, board president James Poueymirou stated stated explicitly that the "vote of 2/3 of the board of directors for Option A" that the university and the Hyde Park Herald have publicized was a completely informal canvassing taken at the town hall meeting, and he explicitly invoked the fact that the town hall meeting was not a meeting at which one could conduct business.

...the poll by mail now being conducted probably doesn't qualify as a legitimate vote, either. Article 3.6 [has come at an annual or other duly called meeting, by request of 1/4 of members present].

The Immediate Future

Besides the information above, it is also crucial for members to know the timeline for what is going to happen. The ballots are supposed to all be mailed to Project LEAP for counting by December 12th. The counting is expected to take at least a couple of days, so let's say that's done on December 15th and the board makes the decision immediately. If the members accept Option A, Bruce Brandfon has said that the Co-op is legally required to give the employees 60 days' notice, which would put the closure of the store no earlier than mid-February.

If the members choose Option B and the financing is already in place, then the store would just keep operating as normal, and no disruption would take place. If the members choose Option B and the financing for Chapter 11 falls through, then the university could lake legal action against the store at any time (actually, they could do so at any time regardless, unless we paid off the back rent with the Option B financing). How long would it take from the time they stated this action to the time that the store is shuttered? [unknown]...

 

More views

Abstracted and addressed by Gary Ossewaarde in the interest of public information and interest.

Leon Shernoff in the Evergreen.(Shernoff is the editor.) In a page one editorial, Shernoff accuses the University of misinformation, much, he alleges, disseminated by a blog and organization called Hungry 4 Change, funded and organized, he alleges by South East Chicago commission, managed and partly funded by the University of Chicago, and also disseminated to the Chicago Maroon and elsewhere on campus. Shernoff cites "identity harvesting" in university gaining the information from a grocer on Roosevelt Rd. that $100,000 of its business a week is from 60615 and 60637. (Such information sharing is common and without any personal identification, whatever one thinks of its ethics; however,use of this by Vice President Jo Reizner at the Nov. 26 board meeting to show vast leakage because of the Co-op is misleading in that it equals what the Co-op takes in just on one Saturday. Shernoff notes that the Co-op is "sophisticated" enough to also have this information but does not share it with outsiders).
Shernoff also critiques a financial survey of the Co-op commissioned by the university and shows ways it is biased.
Shernoff accuses the university of intimidation, citing the threat to pull Option A from consideration unless members vote for it. He asserts that this is because the university's "parachute for suicide" involves some disruption while a funded Option B could result in no disruption--so the university, he says, stresses the risks if there is not funding. He says that if the university really takes the option away, it will be punishing the community and showing that it community concern and respect for community wishes are a sham.
He says the university is making false promises to and about prospects of employees under Option A.
He says, the university got its own letter inserted into the official Co-op ballots.
Shernoff claims insincerity on the part of e university in the form of its empty properties. (The present editor finds much of this section in error-- search our pages, such as Harper Theater RFP.)
Shernoff quotes at length from GM Brandfon's letter in the same issue touting the full-service character of the Co-op (and that space precludes another grocer from doing better), in refutation of the university's assertion it only wants a full service grocer, in the interest of the community.

M.L. Rantala in a series of listserve emails, has set forth much of the background and given analysis, for example, on the role of Certified in the would situation and why it may be the worst villain--and continue to supply and control whatever store replaces the Co-OP--or the Co-Op it it can't get a large letter of credit for a new supplier; action and non action and degrees of honesty and openness of the board over the past 7 years; role of the University, and likely scenarios under the two options.

Ted and Barbara Asner say they hate to see the Co-Op go--a new store won't have the variety of specialties or listen to complaints and ideas; but trying to save the Co-Op is far-fetched.

Paula Corrigan-Halpern just wants a Jewel or Dominick's.

Carol Horton says a well-run, competitive store will boost the community. Both shoppers and stores base decisions on practical considerations - stores will do what brings shoppers in and will give to the community for publicity and to build loyalty. A good, successful local store will build business for other local retailers. Gregor Sosnowski basically says the same.

Noah Berlatsky says we have no options and the Co-Op no money. There are many to blame, but we'll just have to put up with what we get.

Lois Dobry in a phone tree is urging a vote for Option A to guarantee a store.

Jay Mulberry (for Option B) in his Good Neighbors blog says-We're being rushed by the University. Boards let matters go too long and held too many closed sessions. Vote should have been after final audit of 2007 which is still not available and after know if the loan application was accepted--and what those loan terms are. The board should have put out a FAQ page (turned down by the board). He quotes another to the effect that the University offers nothing and complete loss; we should say no to them and "security" and have a rebirth of community spirit and Co-Op management.

James Withrow still has hope for a loan, but we may not know until December 14. Viability for option B also depends on the pledge drive's success. He publishes a page-long, densely typed letter (paid advertisement) in November 28 Herald page 11.

A group called Hungry For Change, which has set up a website, www.hungry4change.org, signed by 36 who say they are members who still shop at the Co-Op, published a letter urging members to vote for Option A, "the responsible choice" to strengthen the community and help our nearby neighborhoods. They praised what the Co-Op had done in the past.

Careful letters supported each of the Options, and also pointed out that t here have been recent improvement so that decision should be based on best future possibilities, not past experiences.

Jane Pugh warns not to expect much better from Treasure Island or Dominick's, which have weaker selection and jack up prices to what they think the neighborhood will pay--and all the 55th's customers are by no means from Hyde Park.

From the HPKCC President's Desk- December 2007 Conference Reporter. George W. Rumsey

Community debates, such as the current discussion about the future of the Hyde Park Co-op, tend to bring out the spark in Hyde Parkers. No where is this more apparent than on the internet.

Of course, the HPKCC website, hydepark.org, is a treasure trove of information, thanks to the diligent work of Gary Ossewaarde. And the Co-op's website (www.coopmarkets.com), maintained by Jay Mulberry, provides useful guidance regarding the membership vote.

But some of the most amusing exchanges occur between the "dueling bloggers." Next time you're on Google, search for "hyde Park progress" (hydeparkprogress.blogspot.com) to see why you should vote for Option A (or "blow up the Co-op," as one recent headline exclaimed). Then search for "hyde park urbanist" (alwaysintransit.typepad.com/hyde_park_urbanist) for the counter arguments of why you should vote for Option B and help save the Co-op.

This open exchange of ideas (and opinions) is healthy for Hyde Park.

Top__________________

Late coverage, letters reveal much.

Herald December 12. Co-Op's future decided this week. By Yvette Presberry

Whether in front of 400 people last month or 40 people last week, it is evident the board of directors of the Hyde Park cooperative Society are split on the future of the 75-year-old cooperative grocer. What is not clear is what the board will do with a new commercial loan offer from National Cooperative Bank. The offer came as part of a note rejecting the debtor-in-[possession] financing loan the Co-Op was seeking as part of its Chapter 11 bankruptcy strategy.

Part of the nine-member board wants to go through a debt workout with the Co-Op's landlord, the University of Chicago, and replace the 55th street grocery store with a national grocer. The remaining members prefer filing for Chapter 11 bankruptcy protection to reorganize its finances and settle its debts while the 55th Street store remains open.

Both options allow the Co-Op to eliminate its multi-year lease on he defunct 47th store with Certified Midwest Grocer. But only one choice gives the Co-Op's at least 22,000 and perhaps as many as 35,000 shareholders control of the type of grocery store that will function on 55th Street and Lake Park Avenue. ......

Option C?
The $2.5 [sic 3.2] million term sheet, a commercial loan, was kept from shareholders before the ballots were dispersed. The Herald learned the loan was offered by National Cooperative Bank on Nov. 30 and verified this with Co-Op board president James Poueymirou.

"Well thank God for leaks," said Jay Mulberry, head of the Co-Op's nominating committee during a Tues., [Dec.] 4 meeting he called to discuss ways to save the Co-Op. "[The board] voted to keep it a secret from us."

Members peppered Poueymirou and fellow board member James Withrow with questions regarding Option C, the commercial loan, at the meeting. Withrow said Option B could be modified to pursue the loan, while Poueymirou pointed to the requirement of a deal between Certified and the university, as well as the narrow window of time before the loan would have to be secured, as stumbling blocks.

Former Co-Op board member Richard Orlikoff said that if the University drops its offer should shareholders vote for bankruptcy, the board can decide between bankruptcy and the ..commercial loan, and not what the university is offering. Orlikoff said Certified would likely agree to terms with the Co-Op similar to those agreed to between them and the university. "You're not going to them hat-in-hand," Orlikoff said. "You're going to them with ...million in your pocket." Orlikoff said that he and his wife , also a former Co-Op board member and the president of the board at one time, voted for Option B before the news of the commercial loan offer.

At stake. The Co-Op owes more than $5 million to several [creditors], including $1.2 million in back rent for the 55th Street store; $1.01 million that was borrowed from Certified; $685,000 to LaSalle Bank for a loan used to help build the 47th Street store; and $2.3 million in accrued expenses.

Poueymirou said that a bulk of the debt rose from the expansion of the Co-Op to 47th Street and 53rd Street. The 47th Street Co-Op storefront was built in 1999 at 1300 E. 57th St. to accommodate what was believed to be a housing boom in Kenwood. When sales did not reach expectations, the Kenwood branch was closed in [2005] and the inside of the store was completely gutted. The co-Op still had to pay $1 million in rent on the building since it was signed to a lease there until 2023 with a no exit clause.

The 53rd Street store closed this past January. The property is currently undergoing a makeover to serve new tenant Hyde Park Produce.

Poueymirou said the board looked at their financial state this past spring to see what bills could be paid to keep shelves full at the 55th Street Co-Op. Since Certified is also the Co-Op's supplier, the board decided to continue paying rent to Certified for the 47th Street store but halt paying rent to the university for the 55ht Street store.

In September, Poueymirou acknowledged during a co-Op meeting that $840,000, or a year of rent [sic], was owed to the university, but its real estate representatives said there was no rush to pay the debt.

Jo Reizner, assistant vice president of the university's real estate operations, said at the there was no pressure to pay all of the rent due right away. [Ed. the two parties were in negotiations on what to do about the situation since the past spring and in a demand status and negotiations over terms of what became known as Option A since July.] Two months later, Poueymirou and the university said over $1 million was due and the Co-Op either had to close or look for financing to remain afloat.

The university said that it is talking to Dominick's Finer Foods or Treasure Island to replace the Co-Op. In order to smooth the transition from the Co-Op to the new grocer, the university said it will forgive up to $1 million in back rent, pay off most or all for the Co-Op's debts and bring in a new grocer for the 55th Street store. The university will make several new upgrades to the site. If shareholders and the board choose bankruptcy for the Co-Op, the university said it would take its offer off the table. "The University is not bluffing," Reizner said.

Under Chapter 11, the Co-Op will borrow ..and get a $400,000 letter of credit to [together get a new vendor,] pay the back rent to the University, debt to LaSalle and trade payable to Certified. The board will also have to pay up to $2.2 million to end the lease for the 47th Street store, $400,000 in bankruptcy costs and $700,000 in business balance sheet reductions.

Poueymirou told the Herald that the National Cooperative Bank offered a term sheet of $2.5 million, but the sheet was not a guarantee of a loan. It depends on credit review and documentation as well as termination of the 47th Street lease and a repay said.

Support everywhere
Supporting fliers for Option A, a debt workout and a new grocer, as well as Option B, bankruptcy, have been dispersed in various ways to shoppers and shareholders of the Co-Op. Glossy fliers from Hungry 4 Change, a group of Hyde Parkers backed by the university who want a new grocery store, were distributed last week to shoppers in the Hyde Park Shopping Center. One of the distributors was identified as an occasional employee of Ald. Toni Preckwinkle (4th). Preckwinkle said the distributor was a former Fourth Ward staffer and was not sent by her or her office to pass out fliers supporting Option A. She did however, say she is in favor of a new grocer over the Co-Op.

about 40 of the Co-Op's supporters also met last week at Mulberry's meting to discuss Option B and methods to get more support to sway the board to vote for Option B. Some participants suggested leaflets with information could get sent around the neighborhood. More than $64,000 was also pledged by shareholders to help the Co-Op by Outlook presstime. Mulberry offered to create a Web site at http://savethecoop.com, where ideas and comments could be shared.

Bruce Brandfon, general manager of the Co-Op Markets, said that the store's services and produce had improved in the last few months and sales had also been steadily high. "I think the store (is) easier to shop," Brandfon said. "We try to be responsive to the community."

Members of the Hyde Park Chamber of Commerce also gave their opinion on what to do with the Co-Op. "It's a shame that the Co-Op is at the point that it's at," said general contractor Richard Nayer. He suggested that either the Co-Op undergo an internal change or that Hyde Park receive a whole new grocer. "The Co-Op, as it is now, is not making the grade."

William Harris, president of the Hyde Park Mortgage Company, suggested that the Hyde Park Village Foods, 1521 E. Hyde Park Blvd., be offered the space of the 55th Street store. "I can only imagine what the Village Foods could do with the additional space in terms of product choices," Harris said. "Their store hours of opening as early as 6 a.m. and closing at 11 p.m. have always been greet for early morning or late night folks."

Co-Op for whom?
What is not clear to shareholder is to whom the Hyde Park Cooperative Society's Board of Directors consider themselves beholden. During Mulberry's meting, Poueymirou said that when the Co-Op became insolvent, the board's main obligation were to the Co-Op's creditors and not the shareholders. He and others also noted hat the shareholders' votes for Options A or B are advisory and not actual choices the board had to follow.

"We have to ensure the vendors get paid," Poueymirou said. Withrow agreed that the Co-op's priority had changed over time. "Our first obligation [turned] to creditors," Withrow said.

Orlikoff, the head of a an unsuccessful bid in the '90s to prevent the 47th street store from being built, said the board's fiduciary duty was to the shareholders. "We own the store," Orlikoff said of the shareholders. He added that Option A does not give any proceeds back to shareholders, but Option B with the loan form National Cooperative Bank could help the Co-Op recover within five years if the co-Op and its landlords all agree to the terms.

Mulberry demanded that Poueymirou support the Co-Op instead of Option A, which the board president has publicly suggested shareholders also choose. "Start standing up fo the Co-Op," Mulberry said, "or else resign and let someone else do it."

The Co-Op board will meet on Dec. 17 to discuss the ballot totals and what t he next step will be for the Co-Op. The date is also the deadline for when the university has threatened to foreclose on the Co-Op's 55th Street store.

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Charles and Joan Staples said the Co-op's challenges can be met

Hyde Park already has a full-service grocery store--and owns it, with the power to improve their own business using sound financial principles and productive management. Many find cooperative vehicles work for them. A true Rochdale (Eng from 1844) co-op sells at market prices yielding dividends to consumers and capital for improvements. It's for profit but capital is from member-owners, each with just one vote, who reap the profits but capped at 6 percent per year.

Certified has too many conflicts of interest in the mess, and the university is too anxious to reshape the community institutions in just its interests. In fact we have to use a number of countervailing institutions and organizations to counter monopoly in the reshaping of the community.

Chapter 11 reorganization is a common business tool, especially in volatile business like supermarket.

Ann Swanton, Aaron Collard say they are not supporting Option A because of the alderman, and HP needs both more and better retail and more people to support it.

Dianna Barrie sent Hank Webber of the University and the Herald dismayed at the university plan to close the co-op--it's stepping in very late- as if just waiting to pounce then look like a hero, in interest of recouping its rent, offering employees really nothing. She thinks the store is as good as others and won't shop at a replacement. The University should concentrate on filling its own vacancies and 47th--we have too many banks and cell phone stores. Target or should be at 47th.

Board Treasurer Michael Lowenthal seeks to set record straight to Herald Dec. 26

One would expect a letter to the editor to be one sided but for your Dec. 19 editorial to be so one sided and in some cases wrong is bothersome. The Co-Op sent out 19,600 ballots but received only 5,500 votes of which many were tow votes from the same household if there were two members in the family. This means 2,042 people wanted to keep the Co-Op open, but 3,200 voted for closure and in excess of 14,000 did not care. The few people who came to meetings and pleaded for the Co-Op to remain open are not a reflection of HydePark sentiment as borne out by the above numbers. I suggest you reread the many past letters to the editor criticizing the Co-Op and your report on the October 2006 Hyde Park-Kenwood Conference meeting where the Co-Op was severely criticized to the extent our GM resigned shortly thereafter.

The letter accompanying the ballot was written by Board members, not the University of Chicago (u. of U.) public relations people, and in fact one of the Board members who favored proposition B had last edit and did not remove the reference to a bank commitment that he knew was not valid. While you can question the heading, alternative A clearly stated it would result in the closure of the store.

As [to] the U. of C. lobbying ford its position, I believe this is a constitutional right. Proponents of alternative B could have mounted a phone campaign or other measures. Receiving 2,o42 votes out of 19,600 ballots or about 10 percent does not suggest support for keeping the Co-Op open.

As to the National Coop Bank, it is true they were considering making a loan but only if significant additional equity could be raised. It was nice of Bruce Sagan to offer $500,000 on the day the U. of c. offer was to expire, but since the Co-Op president had been in touch with him for at least three weeks and explained the timing and deadlines the Board was facing, the offer can only be classified as a nice gesture, but too late.

The U. of C. could have given the Co-Op board an extension of time but since negotiations had been in progress for several months it was within their rights to set a deadline. Also note, due to the Co-Op not paying rent on time gave them the right to cancel the lease at anytime.

The Board wanted to save the Co-Op and spent many months dealing with banks and other lenders without success. Reality had to be faced. We could accept the $4.2 million being offered to help pay our employees and creditors, or without financing in place, close the store anyway and not pay anyone.

 

Michael Blake says letter writer claiming sparcity for ethnic and unusual/organic products and poor quality at high prices hasn't been in Co-Op recently.

Sharonjoy Jackson says she didn't vote for this board to shutter the Co-Op; money and university rule and want a mundane community.

Noah Berlatsky says Herald coverage extremely biased- mean spirited assertion, innuendo and deliberate obfuscation with no evidence or chance to others to comment. He says the boards were to blame for the tragic slide- and the Herald was late on that.

Susan Gzesh notes that the board followed the vote. those on the other side are free to start a new cooperative project--unencumbered by the legacy of bad board decisions. Let competition come.

In January the Chicago Maroon continued to give a militant take on the Co-Op's closure, saying in articles and editorials that the Co-op was a bad store that was a bulwark of community "anti-corporate" and anti development stances, and it's demise not only is a harbinger of better retail so students wont have to travel but first step in remaking the whole neighborhood.

Here is Alec Brandon's op-ed January 15. Silent majority finds its voice in Co-Op debate

I owe the residents of Hyde Park an apology. Over the past year this column has had more than its fair share of philippics against Hyde Park residents. I've denounced their selfishness, myopia, and ignorance. This hasn't been very hard. We're talking about people who have consistently blocked development on 53rd street, fought to save the Co-Op from its inevitable demise, and will soon be turning their attention to blocking the U of C's planned demolition of the Doctors Hospital for the construction of two badly-needed hotels (and the creation of hundreds of jobs).

The amazing thing is that while some Hyde Parkers offered to donate tens of thousands of dollars to save the Co-Op and tried to convince people that t he whole vote was a U of C-engineered conspiracy, most Co-Op members didn't buy any of it. Co-Op members didn't just vote to shut down the store; they overwhelmingly demanded to close shop. Out of over 5,000 votes, 61 percent supported Proposal A.

If you look at the situation on its face, this shouldn't really come as a surprise. The Co-Op was a terrible store. It had been poorly run for nearly a decade; of course it should close. But, leading up to the vote, the discussion in Hyde Park was largely dominated by the small group of residents who thought differently. For years t his group has managed to hijack the political process in Hyde Park by showing up in droves to community meetings and screaming their heads off.

One of the most notorious outlets for opinions of this group is the Hyde Park Herald. Right before the vote and in its immediate aftermath, the Herald made little attempt to distinguish reality from ideology. I'm mot referring to its staff editorials, which every week proposed more desperate and inane plans to save the failed grocer. Opinion is fine by me, but it needs to stay in the opinion section.

The Herald staff became so radicalized that it lost any notion of what a news story is supposed to do- convey correct and objective information to readers. When voting was underway, the Herald published a front-page story on the Co-Op receiving a $2.5 million "commercial loan." They briefly noted that this loan was conditional on two things happening: having the Co-Op's multi-million-dollar 47th Street lease forgiven and the U o C easing up on the $1.2 million it is owed. Both of these things were about as likely as Chris Dodd winning the Iowa caucuses, but that didn't stop the Herald from portraying the loan as the savior of the Co-Op.

The worst of the Herald's coverage came in the aftermath of the vote to close the Co-Op. You'd think after being rebuked by 61 percent of the Co-Op's membership, it would tone down its rhetoric, but objectivity be damned. The Herald's front page headline read "Co-Op board Rejects Member Pleas." While this statement is technically true--they did reject some of the members' pleas--it is like saying t hat the electoral college rejected t he pleas of American citizens when it didn't elect Ross Perot to the presidency.

But, it gets even worse. The article went on to document the community meeting that preceded the Co-Op board's final vote and how the brave and valiant Bruce Sagan (who happens to be the Herald's owner and probably penned the article, which was mysteriously missing a byline), had promised a half a million to the Co-Op to save it.

Sadly, Sagan and his staff weren't the only ones who couldn't understand why anyone would want to put the Co-Op out of its miser. Based on description in the Herald and elsewhere (particularly the "Hyde Park Progress" blog), the meting that preceded the vote to close the Co-Op was completely out of hand. A standing-room-only audience decried the closing of the store and demanded the board vote against the wishes of its members. Supporters of the University's plan who spoke up were booed and drowned out by the crowd.

Unfortunately, this sort of meeting is the model of how policy is made in Hyde Park. When a developer wants to build a high-rise for condos, a public meeting is called. Of course, all the radicalized Hyde Park residents who don't want anything to change show up and go nuts about "protecting" the neighborhood, and in process convince our aldermen that the ideas put forth at these sorts of meetings are representative of what Hyde Park residents want.

Hyde Park's aldermen are culpable here. For years they have taken these sorts of meeting far too seriously. If they really want to represent their constituents, they'd be smarts enough to go beyond just calling meetings and work toward gauging the real attitudes of their wards. For too long the community meeting approach has allowed a handful of radical residents to block the community from getting the sort of change and development it desperately needs. Top


Earlier

There was reported to be discord and concern at the 2007 Annual meeting in October. There was also reliable street word that the University (current landlord via the Shopping center) would take some action re the arrears and unsustainable position of the Co-op. And recently elected member Richard Buchner resigned.

The Co-op board is appealing for volunteers to run for its board and its nominating committee in 2008. The first 3 vote receiving board candidates become 3 year members, the next 2 1-year alternates. Contact to volunteer or suggest at nominate@coopmarkets.com or call Jay Mulberry at 773 288-1242.

At the August 27 2007 Co-op board meeting the new General Manager was introduced. Bruce Brandfon has over 20 years experience in all aspects and markets of the grocery business, coming most recently from Wisconsin Piggly Wiggly. He is reported as doing a good job.

At this meeting, very favorable results were reported for July (sales, per-employee, and profit margin) and indeed for the year. (Final financial reports will be available next month and the audit in time for the Co-op Annual Meeting (October 14, details tba). The Co-op has new security firm and has taken strong measures, internal and external, to prevent robbery or other loss. Vendor issues are expected to be resolved shortly. Promise is still offered on leasing 47th. Caveat- it was disclosed that the Co-op was then 12 months in arrears ($840.000) to its landlord the University of Chicago, with negotiations in progress. Evergreen publication will now average 6 a year. There are leftover issue and items being cleared up from the 53rd St. store.

Hyde Park Herald, August 29, 2007. By Yvette Presberry

The Hyde Park Cooperative Society, Inc. chose Bruce Brandfon Monday as general manager of the 55th street Co-op, 1526 W. [sic] Street, and his job was set to begin on Tuesday as of Herald press time.

Brandfon recently served as chief operating officer of the Piggly Wiggly supermarket chain based in Sheboygan, Wis., a company that also runs Fresh Brands, Inc. "That's what we have her. We have a community store that's here to service the community," Brandfon said.

Brandfon said he worked in groceries and supermarkets since he was a teenager growing up near Philadelphia. He climbed the supermarket ladder in handling almost every job in the grocery industry, from deli employee to senor management positions for the last 20 years. "I think there's a lot we can get done here, and I'm excited to get started," Brandfon said.

Co-op board president James Poueymirou said the board of directors used a search firm to find a suitable general manager. The board considered one other person, but decided to choose Brandfon.

Bob Schaffner served as interim general manager since January, after Carl waggoner resigned last December. Schaffner said he was retired but was asked by the board to lend a hand with the store managers and to work as an interim general manager.

Other business discussed by the board of directors at the regular monthly meeting was the status of the 47th Street Co-op. Poueymirou said negotiations have been discussed with several tenants, but nothing final has been determined. Whoever decides to take over the site, though, must agree to a 25-year lease that has a "no escape" clause attached to it. "We have no ability to walk away from these obligations," Poueymirou said. ...

Herald's take on Co-op back rent. Sept. 5 2007 Herald.

The University of Chicago (U. of C.) is allowing the Hyde Park Co-op Markets to pay $840,000--a year's worth of back-rent--"as they can," according to university officials.

Joe Reizner, U. of C.'s vice president of real estate operations, said there is no pressure to force the Co-op Markets to repay the deficit immediately. "As they can, they are making payments," Reizner said.

Hyde Park Co-Op Cooperative Society Board President Jim Poueymirou caused mouths to drop two weeks ago when he announced about $840,000 is owed to the U. of C. for a year's worth of back-rent. Poueymirou placed the bulk of the blame on former general manager Carl Waggoner, who resigned unexpectedly last December. According to Poueymirou, Waggoner developed a relationship with vendors of the Co-Op Markets in which the vendors would be lax in receiving bill payments late. After Waggoner left, the Co-Op was forced to re-establish a more formal relationship with its vendors by paying them on time, Poueymirou said.

The Co-Op's efforts to rise out of debt are limited to actively looking for a suitable vendor to take over the 47th Street Co-Op and generating increased profits from sales at the 55th Street Co-Op, Poueymirou said.

Reizner said that it was impossible to predict whether the addition of a new general manager as well as discussions with prospective owners for the 47th Street Co-Op will help Co-Op Markets rise out of debt in a timely manner. "I believe the Co-op is assessing internally how they will operate in the future," Reizner said. "They have a long road ahead of them."

 

Top

Mid April 2007 it was said that at the April 23 Co-op board meeting the new General Manager would be introduced. This did not happen; hopes are for fall. Meantime work is divided 3 ways and the board has taken on additional duties since the General Manager and the Controller resigned. A search firm has been engaged.

Lease of the 47th street store is also called very near, but hasn't happened and that prospect would carry cost of about a million (funded) to remodel and take up only half the space and not be compensated at full dollar for sq. ft. pro rating. Also, the Lake Pointe shopping center owners were rumored to be displeased with the terms.

At its late May meeting, Co-op officers said they may have a lease signed by the end of summer. No details were given. In May, the Co-op, apparently with the Shopping Center, decided to no longer host the fundraising and charity Co-op Used Book Sale in October, citing among other reasons need to free up space and resources. A search ensued for another sponsor and venue. In early August, the Co-op and Hyde Park-Kenwood Community Conference reached agreement for HPKCC to run the Sale and rent space from the Co-op for receiving and preparing the books.

HPKCC release:

 

HPKCC Adopts Co-op Used Book Sale


After lengthy discussion and careful analysis of budgets and volunteer hours, HPKCC has reached tentative agreement with the management of the Hyde Park Cooperative Society to “adopt” the Columbus Day weekend used book sale. Proceeds from this year’s sale will go to support programs of the Conference, including WhistleStop, the new Environmental Sustainability Task Force, Preservation and Development, and publicity and advertising.

This year’s sale will be held on Saturday, Sunday, and Monday, October 6, 7, and 8 at the Hyde Park Shopping Center courtyard. Negotiations are still underway with the Co-op management to determine how book-dropoff's will be managed, but the organizers hope to begin accepting books in the Co-op no later than August 15.

Conference organizers are Rani Fedson and M.L. Rantala (both of whom have organized the sales during the past five years), and Jane Comiskey, who will work to coordinate volunteers (contact _jjtippy@aol.com_ (mailto:jjtippy@aol.com) [Ed. note phone 773 324-0750).

The idea of the Conference hosting the sale was suggested by James Withrow, representing the Co-op Board of Directors. The HPKCC executive committee gave approval to proceed with discussions and negotiations, and the entire HPKCC board of directors approved the committee on a vote of 17 affirmatives, 2 negatives, 2 abstains.

The Conference will rent space from the Coop (the downstairs video room) to sort and store the books, and will pay for help with moving, loading, and shelving. Watch for future notices—and please bring a huge load of books!

HPKCC steps in to save Co-op [Used Book Fair]. Herald, August 1, 2007. By Nykeya Woods.

Cash-strapped Hyde Park Co-op Market handed over reigns to the neighborhood's annual fall book sale to the Hyde Park-Kenwood Community Conference (HPKC) this week. The Hyde Park Shopping Center courtyard at 55th Street and Lake Pak Avenue will still be the site of the book sale. Books can be dropped off at the store beginning Aug. 15.

"I'm excited and hopeful it will be successful," said HPKCC board member Jane Comiskey. "This is the first big-time fund-raiser we as an organization have ever done." as in previous years, the event il take place Columbus Day weekend.

The weekend event was in limbo all summer, as the Co-op decided in May to stop organizing the event and, over following months, the Hyde Park Neighborhood Club finally declined to pick up the project.

Co-op board member James Withrow said the struggling cooperative, currently without a general manager, just couldn't handle the job any more. "The board felt that we didn't want our managers running it this year or it distracting from their time because they have a grocery store to run and we are still looking for a general manager," Withrow said....

Withrow is happy that there will be a book sale this year, he said. "The book sale is specifically important to me because I'm a big book reader. several friends and I go to as many book sales as we can like this. So it was really important to me that this goes on," Withrow said.

A longstanding event, the book sale draws midwestern buyers from used and rare book stores as well as bibliophiles from all over the country. Owners of an English-only bookstore in P0land have participated in the past.

Comiskey said the event wil retain its familiar features. "Nothing wil be different," Comiskey said. "It wil be the same and it will be run by the same woman who ran it last year for the Co-op, Rani Fedson."

Those looking to volunteer should call Comiskey at 324-0750.

 

New board members elected spring 2007 (according to the Herald): Jason Bruce, Richard Buchner, Donna Trainor. Alternates: William Davis, Serethea Matthews. James Poueymirou (appointed to replace Steve Trent) was elected President by the board to succeed Ms. Fegan, who remains as a consultant.


Customers and members continue to ponders ways for a new manager to run and improve the store, including getting a continuous update for the on-line buying service.

To November 19 2006 Annual Meeting report

Early 2007: The Co-op closed the 53rd Express store in Kimbark Plaza January 6.
all but two employees were absorbed into the 55th store. February 19 Hyde Park Produce signed a 5-year lease with the university for the 53rd store, closing that issue and association with the Hyde Park Co-op.

End of 2006:

1) Waggoner resigns. General Manager Carl Waggoner on December 24 tendered his resignation, citing according to the Herald a better offer he could not refuse, discord between management and a board that he said failed to arrive at a consensus on vision, lack of community support, and the frustrating burden of Co-op's financial and other difficulties. Waggoner was reported by the Herald and confirmed by others as citing the HPKCC Co-op Future forum October 25, where criticism and about 20% survey response indication of lack of confidence in Co-op management he "took personally" saying that the complexities and hardships Co-op management and staff work under are not understood by members and neighbors. Waggoner has been GM since 2002. His resignation is effective January 12. See below: the Board's letter. The board hoped to have a gm in place within three months and appeared to be on target, with 4 major persons of interest and a preferred candidate being introduced to board and staff. But it fell through.

Waggoner's letter

As you may have heard, on Jan. 12 I left the Co-op in order to pursue another employment opportunity. I would like to express my heartfelt thanks to the Co-op's membership, customer and the entire community for their support throughout the entire eight years I was with the Co-op. I joined the Co-op in 1999 as assistant general manager and assumed the position of general manager in 2003. I had the opportunity to meet and get to know many of you during the course of those years.

I would also like to thank the entire staff of the Co-op. The Co-op has been able to survive a turbulent period largely due to their outstanding efforts. I was privileged to work with them and will miss them.

I urge you to continue to support the Co-op. It is a wonderful institution that has served the community for more than 75 years. It has given far more back to the community than any grocery store chain operation. I sincerely believe that the Co-op can best service the needs of the diverse Hyde Park/Kenwood Community

I wish you all the best of luck.

While board members interview prospective general managers (dozens have applied, a hybrid oversight is in place. Willie Ragland and Ernie Griffin are doing part of the work. The board hired a part time, at least, financial operations manager, Robert Schafner, especially for vendor relations. The Controller resigned.

Meanwhile, Asst. Mgr. Bill Radcliffe removed partitions and opened up flow in the produce area, including some stock reorganization.

2) Where is the evidence (as of early in 2007) that leasing the properties draining the Co-op are any closer to conclusion than a year ago? Sale of the leasehold for 53rd St. store is still in process (but said by board leaders at the forum to be virtually certain) Negotiations appear to be dragging on--the December Kimbark Plaza board meeting also passed without a lease. See below on the sale. 47th lease seems more remote.

3) Cash is getting short, although the Co-op has cut losses from $3.3 million to $250,000 for fiscal year 2005-06. (The cutbacks resulted in customer anger at poor and inadequate stock.)The hemorrhaging at 55th St, the profitable store, continued since at least a while after the computer/cash register fiasco of August 2006. Customers were not coming back, according to Waggoner at the December board meeting- three losing months, maybe four by the end of 2006. And the on-line shopping program was not doing well do to lack of inventory and price updating.

2006-07 Budget based on assumption of successful sale of 53rd, leasing of 47th

As reported in the Herald, budget projections for 2006-07 are based on having one tenant into 47th by the end of January, another by April and a third in the 2nd floor by the end of the fiscal year in July, treasurer Mike Lowenthal told the Herald at the August meeting.The real estate committee is negotiating with several prospective tenants. Still, loss will continue to be in the $950,000 range including getting space ready for tenants.

Meanwhile, funds are now in escrow from Hyde Park Produce for the 53rd store pending signing of the lease. General Manager Carl Wagonner said that once money from both is in hand, the Co-op can start to increase sales. 55th St. sales were down last year but profits higher due to reduced costs. Being eyed: more competitive pricing, pluses and minuses from new computer installation, an active education director (funds to hire appropriated), and effects of gas prices.

Components were starting to arrive for a new, state of the art leased front end computing, scales and scanners system. They were installed and went live the first week of October. Inventory files as well as scales and scanners were lost on the 20 year old equipment due to an extended neighborhood power outage August 20 combined with un replaced backup batteries. This situation was an absolute mess for customers, staff and management. (See below.)

2007 appeal for candidates for elections

January 17, 2007. William P. Davis, of the Nominating Committee, called for candidates for open seats on th board in this 75th year of the Co-op. "The concept of cooperative societies is based on the notion that members unite and pool resources toward a common goal." Any member can run for the three open positions and two alternate seats in the early April election. You can contact the Nominating committee to be interviewed for slating or can file petitions. Stop by business office downstairs and place name and contact in the box or pick up a petition in the office. A 275-word statement of interest and bio and a current photo are requested.


Letter of the Board of the Hyde Park Cooperative Society re: resignation of Carl Waggoner as GM and search for an interim leader, pursuant to emergency meeting December 28.

The Board of the Hyde Park Coop announces the resignation of General Manager Carl Waggoner.

A committee of board members has been formed and has already begun a search for a successor.

The board is committed to finding a successor who will accelerate the current and on-going improvements at the store and who will re-establish the Co-op as a premier, quality, exciting, and localy-owned food store serving all of the residents of HydePark-Kenwood community.

the board would like to extend to Carl its heartfelt thanks for his years of service in, to say the very least=, extremely turbulent times.

The Co-op and the community will miss his infectiously big smile and boundless enthusiasm.

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October 2006: the new computers/registers are finally up, the Co-op joins the push for better access for persons with disabilities; residents and members continue to critique, offer alternative trajectories for the Co-op, and call for special meeting . (HPKCC has scheduled a forum October 25- see at top of page.)

Carl Waggoner, GM, says "Thanks for Hanging in there." (But the store took a big financial, and maybe loyalty, hit.) Herald, Oct. 11, By Erin Meyer

After more than a month of doing everything by hand, Hyde Park Co-op cashiers and customers enjoyed the long-awaited front-end computer system, which was up and running for the first time Oct. 6, said General Manager Carl Waggoner. Since the Aug. 20 power outage that left its antiquated computer system permanently out of commission, the 55th Street store had been struggling without the use of scales, scanners or electronic inventory lists.

"Any chain store would have closed immediately," Waggoner said. "But we know we are going to have to work hard to get the customers to come back in." To better protect the customers' private information the new system will not print credit card numbers on receipts. And members will be able to track savings on the receipts. The Co-op has also increased the number of checkout lanes from eight to 12. "Now that this is behind us we will be focusing on stocking the store," Waggoner said.

The board and Waggoner--conscious that most members agree that the Co-op should have taken action sooner--said during the September meeting that they have been planning for years to replace the 18-year-old system. "The stalemate occurred due to one issue," said board member Hope Mueller. "We were not credit worthy enough to enter into a lease."

In addition to extra long checkout lines and more than one angry shopper, the technological breakdown impacted the Co-op's bottom line. The 55th Street store suffered an estimated loss of $65,000 in August, according to financial reports. And some board members fear the Co-op could be hit even harder when the September report is released. "If we lost $65,000 [in August[, we could easily lose $100,000 next month," said Robert Stanek.

October is member appreciation month. Normally the Co-op offers members a 5 percent discount at checkout on Thursdays throughout the mont. "As a token of our appreciation to our members for their help and patience, we are offering them additional discount days," Waggoner said. Members will receive the discount Tuesdays, Wednesdays and Thursdays through October.

 

Co-op drafts disability resolution. Herald, October 11, 2006. By Kathy Chaney

The Hyde Park Co-op is showing that it is on board with the mission of the Disabilities Task Force, a community-wide initiative, by showcasing their own disability resolution in their monthly newspaper.

James Withrow, a Co-op board member, said his initial plan was to put a sign in the window letting everyone know that service dogs were welcome at both Co-op locations. After discussing it with other board members, Withrow said, "The entire board felt that it would be better to put something in the Evergreen," the Co-op newspaper.

"The Co-op has consistently allowed service dogs to enter and the Customer Service desk provides additional assistance. The Co-op further promises to work with the task force on disabilities to educate business owners and shoppers about this important issue," said a statement Withrow submitted to the Evergreen.

Withrow will also represent the Co-op at task force meetings. The Task Force was formed in response to the Hyde Park Community Disabilities Forum on Sept. 6. It will be made up of representatives from the 4th and 5th Ward aldermanic offices, Hyde Park-Kenwood Community Conference, Hyde Park Chamber of Commerce and local volunteers.

"I think it's a good idea," said Ald. Toni Preckwinkle (4th) of the Co-op's efforts.

An editorial observation from this site: The next step for the Co-op and other businesses, once the Disabilities Task Force is set up, is to invite a delegation including people with various abilities and disabilities to survey and make suggestions to improve access to and within the business facility.


Steve Carl says in Herald letter that the Co-op should focus on products, cost

I often wonder where the board members of the Hyde Park Co-op do their shopping, especially for fresh produce. They certainly can't be buying from the Co-op. If they did, they would have made some drastic changes in the store's buying agents and growers who provide the produce.

However, because leadership cannot see the forest for the trees, the focus continues to be on niceties such as a gourmet creations department, cafe, the annual book sale and the Evergreen paper, instead of concentrating on the quality and price of its produce, meats, fish and other groceries.

We don't need a Membership Development Manager and an Advertising Sales Representative, and we certainly don't need an "Education Director," a new position contemplated by the board. We need quality merchandise at the right prices; then people will buy memberships and they will shop. Bottom line, the Co-op was started to serve the grocery needs of Hyde Park and it needs to refocus on that initial goal.

It is imperative that the board call a special emergency member-owner meeting wherein everyone is encouraged to participate freely in making constructive criticism and suggestions without board members becoming defensive and taking it personally. This would be more effective than waiting for people to show up at a regular board meeting where the greatest part of time is spent discussing trivialities. This should be an urgent call for help, not be a business as usual meeting where formal protocol is followed. The possibility of replacing board members and management should be up for discussion. It's not that the board members are incompetent, but many have full time jobs; they may be overextended and not have the time or dedication necessary to resuscitate the dying Co-op. We need people who can see the truth and who have vision, commitment, and time available to seek advice and solutions.

Secondly, if the Co-op is unable to lease the 47th Street store, it should reopen it as a high quality produce market. Instead of selling fancy olives, cheeses and exotic deli foods that target an as-yet-to-arrive gentry, the 47th Street store should focus on selling large quantities of high quality produce and basic items at low prices to the existing neighborhood.

The Hyde Park Co-op is unique in its potential to serve our community, but the current board must realize that it needs help before all is lost.

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From the November 19 2006 Co-op Annual Meeting

Herald report November 22 2006. Co-op lowers debt, though still struggling to stay out of the red. By Erin Meyer

While the Hyde Park Cooperative Society remains in the red, it successfully cut overall losses by more than $3 million, according to 2005-06 financial statements made public at the annual meeting held Nov. 19 at the Hyde Park Neighborhood Club.

Losses fell from more than $3.3 million reported for the 2004-05 fiscal year down to approximately $250,000 for the fiscal year ending July 2006. According to General Manager Carl Waggoner, the reduction is the result of belt-tightening across the board that included cutting back on stock, strategic staffing and concessions from the grocery workers union. Last year's losses were also particularly high because the Co-op wrote off remaining assets at 47th Street.

Outside of reducing both debt and losses, the remainder of the 2006 annual meeting played out much the same as last year's annual meting, during which Waggoner assured the membership that final negotiation with a new tenant for the 47th Street store were underway. "I can tell you we have a draft lease with a tenant for the majority share of the first floor," he said again on Sunday. Waggoner and the board refused to share with the membership what type of business the Co-op had been negotiating with but added, "this new tenant is going to be very good for the community."

The 42,000-square-foot retail space at 1300 E. 47th St. has been vacant since it closed in January 2005. The Co-op is bound to the property, with rental payments exceeding $100,000 per month, until the lease expires in 2023. While the 47th Street store continues to be the biggest financial drain, th 53rd Street Co-op Express, 1226 E. 53rd St., is becoming more of a liability as lease negotiations between Hyde Park Produce, the University of Chicago and Kimbark Plaza Board drag on.

"From my point of view, [lease negotiations for 53rd Street] are taking far too long. It is what I would call legal wrangling," said Board President Claudia Fegan, who is currently serving her sixth and final year in the position.

Kimbark Plaza was scheduled to meet to review the new Hyde Park Produce lease in closed session Monday, as the Herald went to press. The board's approval would allow the Co-op to abandon operations at 53rd Street, which has lost money every month since the Co-op bought the store in the 1990s.

The 5th Street and 53rd Street stores netted more than $28 million in sales. And 55th Street reported a profit of $2,289,000.

Because the Co-op's fiscal year started July 30, 2005 and ended July 30, 2006, current financials do not include August and September--two of the most difficult months the 55th street store has seen in recent history.

The east side of Hyde Park experienced blackout after a squirrel chewed through some wiring in a power box on Aug. 20. The power outage crashed the store's 18-year-old front-end computer system, leaving the Co-op without the use of scales, scanners and electronic inventory lists for more than a month. The Co-op experienced losses of as much as $200,000 between the end of August and the beginning of October, which are not reflected in the financials.

Sales at the Co-op's flagship will not keep the cooperative society out of bankruptcy if new tenants are not put in place at 53rd Street and 47th Street.

According to Fegan, the Co-op must also reinvent itself and win back the loyalty of its members if it is to survive. Fegan cited an article from "Cooperative Grocer" magazine entitled "Why Co-ops Die." "The continued success of co-ops rely on the quality of the relationship between the co-op and its members," said Fegan. She conceded that many Hyde Parkers no longer feel good about the Co-op and some are openly hostile to it.

"If we are unable to recover that loyalty then maybe we won't be her next year," Fegan said. "But I am not that pessimistic."

The Co-op was again unable to provide stockholders a dividend, though Waggoner reported that members had saved almost $85,000 through discounts.

The general manager received much praise during the meeting in spite of the Co-op's cash-strapped condition. Former 5th Ward Ald. Leon Despres's opening speech credited Waggoner as one of the three most import "quarterbacks" in the history of the 75-year-old institution. Despres--possibly the Co-op's oldest member at age 98--included Waggoner on a short list along with former U.S. Sen. Paul Douglas, who played the key role in moving the Co-op from a buying club to a grocery store in 1934.

"The members are our eyes and ears," Waggoner said before the meeting closed for dinner. "We need you to help us change."

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Delays in 53rd turnover as of December 2006

Co-op lease negotiations delayed until mid-Dec.

Hyde Park Herald, December 6, 2006 by Erin Meyer

A new Hyde Park Produce lease, which was expected to come before the Kimbark Plaza Board for review at the Nov. 20 meeting, has not yet been finalized, according to University of Chicago officials. All parties involved now hope lawyers on both sides will finish negotiations in time for the board’s December meeting. “The board had planned to review the lease but the university came to the meeting and reported that it was not ready,” said Kimbark Plaza Board President Charles Newsome.

“[The lease] is in the attorney negotiation stage and we are all hoping for a quick resolution,” said Joe Reizner, assistant vice-president for real estate operations. Both Hyde Park Produce owner Larry D’Amico and Newsome are now looking to the Dec. 18 meeting for approval. “The lawyers are still ironing out minor details,” D’Amico said. “But I am hopeful that the lease will be ready for the next Kimbark Plaza Board meeting.”

D’Amico struck a dial with the Hyde Park Co-op‘s ad hoc Real Estate Committee in late June to buy out the lease at 53rd St. Co-op Express, 1226 E. 53rd St. Since, he and University of Chicago lawyers have been negotiating the rent and circumstances under which D’Amico will take over the space.

Changes to the retail makeup at the plaza are complex because so many parties need to sign off on new leases. All parties—including the 10 retailers who currently occupy Kimbark Plaza storefront, U. of C. and the Hyde Park Co-op—have divergent interests to protect.

The university owns shares in the Kimbark Plaza Corporation, which corresponded to the 10,000 square feet in the Co-op Express. As stated by the Kimbark Plaza bylaws, the board of the shopping center must approve all new tenants.

To date, the Co-op is the only party that has signed off on the lease. An attempt by the Hyde Park Co-op to expedite negotiations in November failed. “We were hopeful that Dec. 1 would bring with it a signed proprietary lease and to date that has not occurred,” said Co-op Real Estate Committee member Jim Poueymirou.

The cash-strapped Co-op will not be able to get its hand on the money from the sale, which is tied up in escrow, until the lease is approved. Without the needed funds, management is struggling to properly keep up operations at the 55th Street flagship store.

“It has been very hard to manage the 55th Street [store] in terms of the levels of stock and the scheduling of employees due to the delays of the decision involving the 53rd Street store,” said General Manager Carl Waggoner. Co-op Express employees are also anxiously awaiting the outcome as it will determine, for some, whether or not they need to find a new job. “It has been a tremendous drain on the staff as they await the decision,” Waggoner added.

The Co-op will need several weeks to vacate 53rd Street once the lease is finalized, according to Waggoner. The unions need to be notified and all merchandise will have to be transported to 55th Street. “In the meantime we are making every effort to keep the store fully operational,” he added.
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And who are the most recently elected members of the Co-op board and their qualifications and interests?

May 2 2006 election: 6 vie for 3 seats. Current board members Hope Mueller ran for a second 3-year term; Scott Marriott, elevated to full membership in February to replace a member, ran for a full term. Sandy Wilson (Treasurer) must step down having served two terms. Running also were Wendy Allen Ayres, Liana Chin, Diane Glenn, Bob Stanek, and Evan Trent. Directors serve staggered 3-year terms. Chin and Glenn are in banking (Glenn vp of commercial lending at JP Morgan Chase. Stanek is a former manufacturer who has been a Co-op administrator and whose wife owns Toys Et Cetera. Mueller is a decorator active in many community activities. Marriott has professional and managerial background. Some were selected by the Nominating Committee (which is itself elected, though the vote will have to taken again.) .They got the largest turnout in modern times. Note, Jim Poueymirou was appointed to fill a vacancy.

And the winners in the close election were:

Evan Trent 611, Lisa Chin 602, Robert Stanek 502.

Alternates: Diane Glenn, Hope Mueller.

Said Nominating chair Bob Poueymirou: "The election yielded an emphasis on people with professional expertise that would benefit the Co-op as an organization. We are heartened by the participation of our members."

The Herald also praised the election and hopes for a new begriming (see after bios). A writer to the Herald said the board should make a field trip to successful stores and see what the Co-op can do better.

The new board elected new officers. Claudia Fegan continues as President, James Poueymirou will be vice president, Like Lowenthal a treasurer, Evan Trent as secretary.

Statements of the winning candidates

Lisa Chin

My name is Lisa Chin, and I have lived in Hyde Park for about 20 years since my arrival a a freshman at the University of Chicago. Like so many other alumni, I fell in love with the neighborhood and never left. I have been a member of the Hyde Park Co-op for almost as long as I have been a resident of Hyde Park.

I have worked for JP Morgan Chase Bank, N.A. (and its predecessor organizations going back to the American National Bank and Trust Company of Chicago) for 15 years. Currently, I am an assistant vice president and senior risk analyst in the Global Trade Services Department.

I am running for a seat on the Co-op Board because I remember what it was like in my student days and early working years when I did not have the option to shop anywhere else. For many people, this is still true today. For those people and also for those who still make the choice to shop at the Co-op even though they have other options, they deserve to have a viable grocery store that needs their needs.

There is no easy solution to t he Co-op's problems. If there were, someone would have thought of it by now. However, if I am elected, I will work with those who believe in the Co-op to find smaller solutions that will hopefully help its long-term future.

Robert Stanek

I believe strong, successful, locally owned businesses are a vital and indispensable ingredient for strong and successful communities. The Co-op played that role in the past in Hyde Park and I believe the Co-op can play that role again.

As the former owner and operator of a successful manufacturing company, the husband of the owner of a long-time Hyde Park business, Toys Et Cetera, an over-40 year resident o Hyde Park and a graduate of the University of Chicago and its Business School, I believe I bring ample business and Hyde Park Experience to make a strong contribution as a Co-op board member. I would work to improve the financial stability of the Co-op and improve the product offerings available at the Co-op to better reflect the wide diversities that exist in Hyde Park.

Evan Trent

I have called Hyde Park home for eight years now. After graduating from College I started my own business right here in Hyde Park. As an entrepreneur, I am an ardent supporter of neighborhood businesses. I also grew up in one of the only other communities in the country with a vibrant grocery cooperative (Hanover Co-op in Hanover, N.H.). My parents also started and ran, for 15 years, a food business. I thus have some familiarity with the grocery and food industry, but more importantly I believe in the concept of Co-op.

Last year, a student group that I help lead at the University of Chicago's Graduate School of Business was asked to provide management with recommendations for improving the organization's financial performance. Along with four other MBA students, I worked with the Co-op's general manager on a number of issues of critical importance to the Co-op's future.

I see myself as part of a demographic in Hyde Park that is growing steadily. Increasingly, young professionals and families are moving into Hyde Park just as fewer students are leaving for other neighborhoods upon graduation. I love this neighborhood, take great joy in watching it prosper with each passing year and would be grateful for the opportunity to serve on the Co-op's Board of Directors.

______________

The Nominating Committee election had ballot errors and is being re-run in June. The 5 (not the required 6) are William Davis, Charles Bernstein (sp.?), Carol Schneider, Betty Smith, Winston Kennedy.

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Herald calls results a new beginning, June 14 2006

The announcement this week that the Hyde Park Co-op membership elected three new faces to its board in the greatest turnout in recent memory comes as refreshing news to a neighborhood grocer that's had its share of upsets.

If the board of directors that has served the Co-op over the last 12 months ushered in a transition period with the creation of committees, especially a real estate committee to oversee leasing the giant 47th Street vacancy, then this board must mark a new beginning in co-op Markets' history.

Membership must revel in this good news. There hasn't been much to celebrate in th last seven years, since Co-op Markets took a financial risk and opened 47th Street in burgeoning North Kenwood. The neighborhood didn't grow fast enough and the customer base that the Co-op was banking on just wasn't there yet. The 47th Street Co-op finally closed in January 2005 after it was reiterated again and again that the grocer's third and most ambitious store was sinking the entire chain into debt. The Co-op is still in debt and despite interest by Marshall's to move into 47th Street the company has not filled that vacant storefront.

The Herald is hopeful that the new members elected to the Co-op's board this year and t hose remaining on the board for another term can rescue one of Hyde Park's remaining icons of cooperative enterprise. the formation of the three-member real estate committee earlier this year is a good thing. One of its members told the Herald that t he Co-op needed to have as few cooks in the kitchen as possible tackling the company's biggest problem. Too many cooks offering too many suggestions and pieces of advice will not bake the richest cake.

Priority number one is leasing 47th Street. So find the three brightest people with any knowledge of retail development and put them in a room to hash out a plan. Keep them there without distraction until the problem is solved.

Then the Co-op can move on to other challenges, such as improving customer service, refurbishing the front-end computers at 55th Street and offering more products.

There are those who wish to see Co-op markets close its doors forever and criticize without offering any solutions. That's not productive. Saving the Co-op requires community support, and the best thing the community can do is shop there.

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53rd store to be vacated c. September 2006, Hyde Park Produce to take over

In early August 2006 final leases were expected to be signed and the Hyde Park Co-op to vacate the store in Kimbark Plaza on 53rd. The Co-op was preparing to clear out in September But it will be many months before Hyde Park Produce (Larry D'Amico and family) can open at the new space, three times the size of the old on 53rd. In fact, leases are still being negotiated. The new produce store will include general grocery items. Few if any jobs are expected to be lost among the 30 who staffed the 53rd Co-op. But the Co-op has to find a replacement kitchen with blast coolers for their prepared foods line.

Negotiations reached a snag or barrier in early fall when Hyde Park Produce found that its assumptions it could have a better bottom line by selling wine were dashed by Kimbark Liquor's adamant opposition. KL is a property owner in Kimbark Plaza, which means, in the unusual cooperative makeup of Kimbark Plaza, it and the other owner has an absolute veto over new tenants, unlike HPP, which would be a leaseholder (ultimate owner the University of Chicago). Kimbark Liquors owner Gail Swain insists on maintaining its liquor monopoly in the plaza. HPP is redoing the numbers to see if they still want to buy. Top

 

Co-op restudying basics and roots: how can the cash-strapped entity become the "good store" its customers demand, yet be socially responsible?

Co-op managers and board members are looking at the founding years and cooperative principles to find ways to become the good and competitive store its members and customers demand. Founded as a bulk buying club when stores were empty in the Depression year of 1932, the Co-op has changed a lot but, says General Manager Carl Waggoner, it still exists "for the good of our membership." And the measures of that are "offering a wide variety of quality goods and services in a customer friendly environment, consumer education and a financial return on member shares." Some would add, how about low prices? The education part fell out in cost-saving measures.

Besides the need to unload the 47th albatross, keeping shelves stocked is the main obstacle on the road back. Vendors won't take credit orders from the Co-op. Sale of the 53rd store is expected to provide a lifeline and breathing space so the Co-op can get back to stocking shelves on a cash basis with its 100 plus vendors. There are also repairs needed that can't wait much longer.

Speaking of roots and basics, Waggoner and board member James Withrow attended the Consumer Cooperative Management Association convention in Atlanta in June 2006. Withrow spoke there on the importance of purchasing with social responsibility and using this to recruit customers, who increasingly take such matters into account in deciding where to shop. Such purchases would include fair trade brands and support for local specialty vendors, and eventually being able to tell customers where their foods come from and how the makers are treated. The Co-op has already increased organic and health-conscious purchases as well as three brands of fair trade coffee. The Co-op wants to do a better job of telling folks what they have to offer.

First priority, though, is "running a good grocery store... that our neighborhood can have confidence in..[which requires] that the Co-op improve transparency. This entails using the concept of Policy Governance, which utilizes consultants who help streamline such things as the working relationship between the board and general manager.

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Co-op continues to suffer setbacks

The latest, in August 2006, is destruction of the cash registers' ability to scan, resulting from a neighborhood power outage compounded by reboot problems. The store was down all of August 21, and as of the 24th customers were being asked to only bring items that have price stickers on them to the cash registers. Since parts are not available, the Co-op will have to scramble to quickly buy planned new computers and cash registers. (James Johnson in the Herald said, at least Harper Court has functioning cash registers.) New computers have arrived at 55th and are expected to be installed soon as of Labor Day.

At its August meeting, the Board agreed to publish minutes in the immediately-following Evergreen.

Co-op webmaster Jay Mulberry reports August 29 2006 that the board has mandated a new web section on Co-op stories and histories. Here's the scoop and how to submit.

I am the webmaster of the Hyde Park Coop. Last night at the Coop Board meeting I was asked to add a new element of history to our web site (http://coopmarkets.com)

We are going to have a section of memories. Ordinary people will write their memories of the coop in from 100 to 2,000 words and we will put them on the web.

There may be memories of the founding and growth of the Coop, of personalities and policies over the years, or of little bits of life that took place in the market. In other words, they can be either "hard" or "soft" history.

Submissions must be made in the format of major word processing programs or in plain text. They will be lightly edited for spelling and typos, but seriously deficient pieces will be returned for revision. Matters of great controversy can be covered, but they will be given special scrutiny and if the facts seem questionable they will be returned for clarification, or rejected. Vigor will be welcomed, vitriol will be discouraged.

We especially welcome the work of members and friends of the Hyde Park Historical Society to our new pages. Eventually the web site will contain submission page, but that does not exist now.

To submit work or to ask questions write to JayMulberry@gmail.com.

Thanks,
Jay

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Disagreements over Co-op transparency

From James Withrow letter, August 23 2006 Herald, on Co-op transparency

I’d like to thank the board of the Harper Arts Council for making my duties much easier. I was elected to the board of directors of the Coop Grocery Store two years ago. Of course, my first priority has been to work to make the Coop a much better place to shop, but I’ve also tried to improve our processes so that our members and the community would someday view the Coop as a model of openness in the business world. Thanks to the Harper Arts Council, the inner workings of the Coop look positively transparent.

I was quoted in a Herald article a couple weeks ago as saying that improving transparency at the Coop was essential and that’s an accurate quote. Still, a longer and more accurate comment would describe the Coop’s openness problems as falling into three categories.

First, much of the board’s work of late has revolved around real estate dealings which,by their nature, tend to include a certain level of secrecy. Once we get the subleasing of our former 47th Street location finished—and please, God, hopefully soon—more of our work can happen out in the open.

Second, people forget how transparent we are. Any member, for instance, can attend the Finance Committee meeting each month and look over our financial statements, even ask questions of our General Manager. The Operations Committee meetings give members a chance to talk to a Department Manager as well as our GM. Monthly board meetings begin with an open session and allow members to comment. The names of our board of directors is published in our newsletter, the Evergreen, every month. I urge members to attend these meetings and bring us your toughest questions.

Third, we’re definitely deficient in some areas. We could publish a summary of our board meetings that’s both timely and accurate. Sometimes, it’s easier to discuss controversial items in executive session, but we should make a greater effort to talk in open session. I’d like to see us publish a summary of our executive sessions, even if that summary is vague. Thing is, the committee structure we’ve adopted in the last year allows members to influence the board to be more transparent, to remedy those deficiencies, but few members have taken part. That’s a shame because I think the board has gradually grown more and more comfortable with greater transparency and would act on thoughtful plans that come before it, even though some thorny issues make great demands on our time.

Noah Berlatsky says board meetings don't address questions, and board officers lie on issues such as sale of the 53rd store. Another says at least the cash registers aren't broken in Harper Court businesses.

L.C. Brown disagrees with Withrow's favorable discussion of the Co-op, calls it a terrible store. Herald September 13 2006

The animosity in the neighborhood against the Co-op will not be fixed by a grocery list (no pun intended) of pointless ways in which the Co-op is superior to Harper Court. In a recent letter to your newspaper, Mr. James Withrow debates which of these unpopular neighborhood institutions is worse.

The answer for my family is clear. It is the Co-op that made my children cry more than once in recent months when food I've promised is not available. It is the Co-op's inefficiency that has mad us drive out of the neighborhood to buy basic requirements. It is the Co-op hat has exposed my children to rudeness in cashiers. It is the Co-op that has dirty shopping conditions.

I think the Co-op board members should spend their time fixing these problems instead of publicly instructing other boards how to conduct their business. The Co-op must first put its own house in order before having the nerve to scold others.

Withrow's rejoinder in Sept. 20 Herald

I sent a letter to the Herald's editor four weeks ago and, since them, a couple of letters have been written in reply. I'm sure these replies reflect the feelings of quite a few Hyde Parkers so I'm glad the letters were written and that I now have a chance to respond. This also gives me a chance to make clear that my first letter reflected my own views and was not vetted by either board that I sit on. Ditto this letter.

In the Aug. 31 Herald, Noah B[erl]atsky said that the Co-op board and, in particular our board president Claudia F[e]gan had lied "to his face" about plans to sell the 53rd Street Co-op to the owner of Hyde Park Produce. Well, its' one thing to call someone a liar and quite another to show that someone lied.

If I'd caught Dr. F[e]gan lying to members, I think I'd remember it. The gist of her remarks was that the Co-op had not participated in anything resembling serious negotiations for the 53rd Street store lease, but, if we did receive an offer that was good for our members, then we would sell the store.

I know Dr. F[e]gan was upset that articles in the Herald implied we had been deep in negotiations for the last year, but I think a careful reading of the Herald articles would lead one to conclude that no serious offer was made until this summer. If Mr. [Berlatsky] or anyone else can prove otherwise, it would mean that Dr. F[e]gan, the board's real estate committee and our general manager all lied to my face. Such a conspiracy seems unlikely, but I'm always willing to look at the evidence.

The Sept. 13 Herald carried a letter from L.C. Brown. I want to take issue with his accusation that I said he co-op is superior to Harper Court in "pointless ways." First of all, I was comparing the co-op board to the Harper Court Arts Council, the property's landlords, not Harper Court or the businesses there that are an irreplaceable part of our community.

Secondly, my entire argument compared the transparency of the HCAC and the Co-op. I agree that transparency is less important than executing the basics of running a good grocery store--things like working scanners, excellent produce, cleanliness, friendliness and well-stocked shelves. But transparency is not "pointless" and I don't regret the time I've spent to make it easier for members to have a say in their Co-op. Those hours came not at the expense of trying to improve the basics but, rather, in addition to.

And that effort paid off last month when a member-sponsored policy change made is ay from and Evergreen task force, through the Operations Committee and ten was passed by the board. Our board meetings will now be summarize in the next Evergreen,rather than six weeks later.

Also, Mr. Brown states, "I think Co-op board members should spend time fixing (Co-op) problems instead of publicly instructing other boards how to conduct their business." Now, I'm sure that's a common opinion, so I don't want to single out Mr. Brown for articulating it.

However, Co-op directors volunteer their time. The Co-op's member pay their directors nothing and they almost always get their money's worth. Plus, it's not like serving on this board is a lot of laughs or a smart way to pad a resume. Like the other dedicated directors, the only reason I volunteer my time is that I want Hyde Park to have a Co-op we can be proud of. We spend almost all of our board time trying to find the resources to cure the problems Mr. Brown identified.

Co-op directors are expected to attend two meetings per month and my average is well above that. Until Mr. Brown or someone else proves that I'm shirking the duties I agreed to, I'm going to spend my free time as I see fit--whether it's reading books or drinking at Jimmy's or a hundred other things I don't need anyone's approval to do. And if I feel my free time is best spent telling another board that they should talk to the HPKCC face to face, that's what's going to happen.

However, I'll promise something that the Harper Court Arts Council has so far refused to do. Any Co-op member is welcome to attend Operations Committee meetings at 6 p.m. on the third Monday of every month and tel me, face-to-face, what I should do differently as a Co-op director. It would be nice if attendees came with the expectation o listening and learning as much as they plan to talk, but that's not a requirement.

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Other views (mostly letters in Herald)

Sarah Ward says it time the Co-op thinks about closing. She cites the ongoing scanner problem, not being met by persons giving cards to write prices down on, so many goods still without prices, high prices, mediocrity, an intolerable lines. It's Soviet-like.

Steve Carl says profit not Co-op's purpose and suggests way the Co-op can fill its purpose of serving the grocery needs of Hyde Park- high quality food (basic goods in volume) at low prices.

The latest breakdown of the computerized checkout system reflects the general disintegration of the Hyde Park Co-op and its possible demise. My friends and I are long time member-shareholders who feel that various Co-op boards' management has forsaken the primary goal of providing quality food at low prices to the Hyde Park community.

In the past we have privately criticized the management and various boards for incompetence or lack of commitment. But our criticisms should bed made publicly in the hope that someone will take note and try to take actions necessary to improve the situation before the Co-op goes completely belly-up.

We believe it is wrong to blame a community for the inability of a store to prosper, as failure is primarily due to internal weaknesses and errors within the failing entity. The 55th Street store and the 47th Street store tried to do too many things at once which resulted in doing nothing well. The overall product quality, especially of fruits and vegetables, is poor, and prices are generally outrageous. As a result, we shop elsewhere, unless we need incidentals; and even then, we are increasingly going to Village Foods, Hyde Park Produce and One Stop. Surely, the Co-op leadership is aware of this. Coupons and 5 percent discounts are not the answer.

The Co-op could be something special because it is a member-owned entity and can undersell every store in Chicago. Unlike chain stores such as Jewel, Dominick's or Whole Foods, the profit motive does not have to be primary.

What the Co-op needs to do is sell the freshest produce, meats, and groceries at the lowest prices possible. Shoppers from across the city would flock to it and it could pay its employees the best wages of any store. It needs to forget about dividends and frills and dedicate itself to selling basic goods, in volume, at low prices.

I would be happy to take Co-op board members to see how produce markets like Marks in Whiting, Ind., or Jerry's in Niles accomplish this. They get most of their produce fresh from growers, either directly or through accomplished brokers.

Bottom line, the Co-op was started to serve the grocery needs of Hyde Park and it needs to refocus on that initial goal.

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See Steve Carl's letter near the top of the page.

January 8, Dawoud Bey says it's time to put Co-op out of its misery, bring in new kind of market- we need good places to shop.

January 17 Richard Gill said the same: "There is no place for the Co-op in a thriving neighborhood like Hyde Park. It is a disgrace that this vibrant community has to have meetings and angst about not having a decent, serviceable supermarket. ... the Co-op per se is a drag on the community..."

Carl Waggoner said the Co-op serves the community's needs far better than any chain operation could.

John and Brenda Murphy praised the new brightness, cleanliness, employee happiness of the Co-op.

August 1 2007. From letter of Joseph Samuelson:

And of course we need a new supermarket. Why on earth do we need a Cooperative? We do not live in the '50s anymore and we are all worse off clinging to this old mismanaged institution that hasn't paid dividends or lowered its prices in years. Of course the big guys can do it better than a small operation like the Coop. It is time to bring in a Dominick's or Jewel that can bring a pleasant shopping experience and decent prices. Notice I did not write Wal-Mart, although that would be amazing.)

September 12. Kevin McVey says university meddling with market, with dire results, by going easy on Co-op rent. Carl Copper says Co-op is not a real coop like most others and could only compete by becoming one- otherwise move out of the way. Certainly, stop scapegoating Waggoner.