A Pathway to Responsible Community Ownership of the Renaissance Center

Updated August 7, 2013

F4DC first published A Pathway to Responsible Community Ownership of the Renaissance Center in May 2013. Since that time, many of our elected leaders have indicated by vote and public comment that they are anxious to “get out of the shopping center business” as quickly as possible. Urgency to sell the Renaissance Center has led Council to consider a competing proposal that asks the City for $2 million in a 0% fully forgiveable loan.

In respect of the City’s urgency to sell the shopping center, we have updated this version of the Pathway to include a fourth scenario in which the Community Land Trust could purchase the Shopping Center as early as 2015, with the City playing a stronger financing role. We note, however, that the City’s financing role in this new scenario does not ask the City to make any forgivable loans. Every dollar will be paid back in this and all scenarios we discuss in this document. Why? Because we want the City to be able to replicate this approach to economic development in other parts of the community!

In addition, we have heard some Council members discuss the supportive rent arrangement that the Renaissance Community Cooperative (RCC) has sought from the City as a financially unsupportable burden that undercuts the viability of the shopping center. That may be true for a private developer seeking maximum return on investment, but the City’s interests, we believe, are more nuanced and community focused.

In this version of the Pathway, we are highlighting the fact that the supportive rent figure sought by the RCC enables the community to save up the money to purchase the shopping center from the City at Fair Market Value. In this context, the supportive rent figure isn’t a problem—it’s part of the solution, helping the community achieve its big picture dreams of community ownership, health, and wealth while providing the City with a responsible way to sell the shopping center to an entity that has the betterment of the community as its fundamental mission.

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Executive Summary
The best option for ongoing community wealth building in Northeast Greensboro is for the City to allow the community to purchase the Renaissance Center. This document maps out several pathways to that end. Community ownership is made possible by the development of a Community Land Trust. This community-owned and controlled entity would buy the shopping center from the City using a combination of financing including accumulated profit from the operation of the Renaissance Community Coop, financing from Self-Help Credit Union and, in some scenarios, loan assistance from the City of Greensboro. Debt service would be repaid using the net operating income of the Center, leaving a balance of funds available to finance other community projects. This analysis includes provision for vacancy rates and fulfilling the existing lease agreement to Family Dollar Store.

Four scenarios of purchase and ownership are included, each having different dates for purchase of the property and retirement of all debt. Also analyzed is the rate and amount of accumulation of community wealth under each scenario. Spreadsheets are attached that summarize these scenarios. This document also looks at the process of preparation of the community to exercise the responsibilities of ownership through a Community Land Trust.

Our hope is that this document will illustrate possible pathways to community ownership of the Renaissance Center and help the City Council to be able to evaluate community ownership of the Renaissance Center as a serious option as they decide the fate of the Renaissance Center.

Background
For more than a decade, residents of Northeast Greensboro have been faced with the run-down, nearly empty Renaissance Center (formerly the Bessemer Center). In its current decaying shape, the Renaissance Center is an eyesore and a symbol of economic desolation. The City of Greensboro, recognizing the need to turn this situation around, committed to improving the area. In 2008, the City purchased the Center, and then built the beautiful McGirt-Horton branch library on the front quarter of the property.

Extensive community discussions and negotiations with the City established several ways the community wished to see the balance of the buildings and property be put to use. Concerned Citizens of Northeast Greensboro, Citizens for Economic and Environmental Justice (CEEJ) and others who participated in the many forums, charrettes and endless meetings believed that they were on the road to a vibrant, healthy facility that would meet a range of community needs, including a full-service grocery store, a health facility, job training, and other retail and commercial opportunities.

Sadly, these efforts to turn the shopping center around sputtered and stalled. Taking matters into their own hands, residents of Northeast Greensboro began working together to meet the long-standing community need for a full-service grocery store. They formed themselves into the Renaissance Cooperative Committee and are making great strides towards turning their dream into a reality. The Committee is on track to open the Renaissance Community Cooperative (RCC) Grocery Store by June of 2014. They completed a market study and pro forma business projections that establish the viability of the project. The market study and pro forma have been examined by experienced grocery professionals (Uplift Solutions) and lenders (Self Help) who believe that the RCC grocery store has real financial viability.[1]

The City is now contemplating whether to maintain ownership of the Renaissance Center or sell it to a private development group (with the RCC grocery in the mix either way). City Council is weighing which of these two paths will cost-effectively lead to a turn-around of the Center and the community’s economic fortunes. There are many factors to be weighed, including the question of whether it is feasible and appropriate for the City to own and operate a retail shopping center.

There are also questions about whether private ownership of the Center will lead to the kind of development the community wants—stores that meet real community needs and jobs that pay a decent wage—or whether private ownership will result in extractive “slum” type stores that do little in the way of providing jobs and building community wealth and health. The logic of profit as the sole business motivation creates these types of stores. This logic requires that businesses strive to make the maximum profit, taking advantage of every fad, prejudice, weakness and dependency existing in the neighborhood in order to sell at the highest allowable price while making the lowest possible expenditures on wages and benefits and providing as little upkeep and maintenance as possible to their facilities. In low-income neighborhoods, where there is little competition and a captive audience with limited transportation, slum-type businesses operating with profit as their sole motive need not worry about providing high quality goods and services.

There is a Third Option: Community Ownership

There is a third path, however: the community could buy the Renaissance Center and democratically own and control it, using it as a major asset to leverage on behalf of ongoing community wealth-building. Some people have raised concerns that this is not a realistic option, saying that the community is not now and will not soon become capable of purchasing or governing a shopping center. We at F4DC dispute this bleak view of the current and potential capability of the community. After working closely with the RCC Steering Committee and other Northeast Greensboro organizations for more than a year, we have a gained a good sense of the community’s current and emergent capabilities. We see a clear pathway to responsible community ownership of the Renaissance Center within the next two to ten years within a range of financial scenarios.

The Importance of Community Ownership
There are some who question why the City or the community should own the real estate in which community-owned businesses, like the RCC Grocery Store, operate. While the RCC Community and F4DC strongly prefer that the Renaissance Center be owned by the City until the community can buy the Center, the RCC Grocery Store could conceivably exist inside a shopping area and building owned by another developer, as is the case with Deep Roots. The reason that we think we should move down the path toward community ownership is because it is clearly better for the community. While community ownership comes with greater responsibility, it will create opportunities to stabilize the community, along with opportunities to create, accumulate and retain wealth that will improve the quality of life in the community for years to come. The ownership of the center is both a business opportunity and an opportunity to enhance the community in the following ways:

  • Community ownership will bring in revenues from the rental of business space to other businesses
  • Community ownership will allow the community to select which businesses are brought into the community and to decide which businesses are not welcomed there
  • By regulating rent structures (within the business limits of what is needed to handle the debt service), the community can offer incentives to particularly desirable tenants who will have a significant impact on the community, e.g., health facilities, job training facilities, community arts, recreation, culture, history, etc.

As important as it is to select good tenants, it is also important to exclude tenants that do not contribute to the community and instead extract the community’s limited wealth. Unhealthy fast food, predatory lending establishments, high priced rent-to-own centers, and speculative businesses such as sweep-stakes parlors that prey on community members’ economic uncertainty do not help the community reach its full potential. Even the provision of “creating jobs” doesn’t help very much if the jobs are at or near minimum wage and without benefits. A study done by economics professor Christopher Gunn of Hobart and William Smith Colleges, using standard industry data, shows that in a typical McDonald’s franchise the total surplus exceeds the payroll and of that surplus, more than 75% is taken out of the community (Reclaiming Capital, Cornell University Press, 1991, 28-29). In contrast, community ownership of the shopping center will ensure that the majority of the surplus generated by the co-op grocery and the shopping center will stay in the community. It will be controlled and managed by the people who live there, put back to work developing economic strength, quality of life, and general well-being that community desires. We think that creating good jobs and community wealth must be the objective of community economic development.

The City has a commitment to help alleviate some of the long-standing inequities that are evident in the disparities shown in numerous studies, including the recent parity study, and which are reflected in the lives of Greensboro residents. The city’s use of economic incentives for job creation along with its involvement with community redevelopment efforts are expressions of that commitment. Helping to create the democratic structure and the opportunity for ownership of the Renaissance Center as a hub of the economic life of this Northeast Greensboro community will be important steps on the road to parity.

Cities across the country are in similar positions. The current economic crisis increases the urgency of these efforts at equitable community development, but it did not create it. Greensboro will have the opportunity to be a model for other cities in answering a question on the minds of many: How can we best develop the economic and physical infrastructure that will allow all of our neighborhoods the chance and the means to help themselves?

The balance of this document attempts to responsibly tackle this big question in the specific context of Northeast Greensboro, by addressing three questions that collectively assess whether community ownership of the Renaissance Center is a viable option:

  1. Can the community raise the money to purchase the Renaissance Center?
  2. Are there viable forms of legal ownership and governance that would allow a community to responsibly and democratically own and operate a shopping center?
  3. How will the community gain the requisite capabilities to pull this off?

By answering these questions, we will map out multiple pathways to community ownership of the Renaissance Center so it can be evaluated as a serious option while the City Council makes up its mind about the fate of the shopping center.[2]

Question 1: Can the community raise the money to purchase the Renaissance Center?

Purchase Price of the Shopping Center

The first step in answering the question of whether the community can raise the money to purchase the shopping center is to establish an estimate of its purchase price. The City’s own studies show current fair market value (FMV) for the Renaissance Center at $490,000, though this may be merely an estimate of the residual value of the land following the sectioning off of the portion used by McGirt Horton Library. An April 2013 report prepared for the City by Michael Watts estimates a projected FMV of $1.9 million, should the City invest the roughly $2 million it is considering investing in improvements.

We assume the community’s purchase of the shopping center would take place after the City has made its improvements, so we will use Watt’s estimate of $1.9 million as the purchase price. Of course, if the Center takes off over the next few years and becomes a bustling, vibrant shopping destination filled with tenants paying high rents, the FMV will go up. That’s not the scenario we have data or experience with, so in this paper, we’ll not consider this as part of our analysis. Even if the FMV of the center goes higher, the rents that could be charged would go up accordingly, which would cover the debt service on extra financing needed to cover the increased purchase price.

We note that the City will consider its own public policy, fiscal, and statutory concerns in setting a purchase price for the Renaissance Center. Some of the relevant statutes require sale at FMV as determined by three independent appraisals, whereas others allow sale at a lower price, if certain public notice and public hearing requirements are met. For purposes of this analysis, we’ll work with the $1.9 million figure, which seems a fair estimate of FMV.

Financing the Purchase of the Shopping Center: Net Operating Income from Rental of the Shopping Center Goes to Debt Service

In all scenarios in which the community purchases the shopping center, the presumption is that the net operating income from the leasing of stores would be used to cover any debt service related to financing. In the attached spreadsheet, we do a quick-and-dirty, non-discounted, non-depreciated, non-inflated cash flow analysis where we calculate an annual net operating income, before debt service, of $91,414 per year. We based our revenue and expense figures on explicitly named assumptions drawn from the Michael Watts’ report and the May 20 proposal of New Bessemer Associates. With a healthy reserve of .35 per square foot included, we think our assumptions are conservative and responsible.

Financing the Purchase of the Shopping Center: Equity

To obtain the $1.9 million purchase price, the community would bring some amount of equity to the table, with the balance financed by Self Help Credit Union and, perhaps, the City.  In scenarios 1-3, the community would bring a minimum of $400,000 in equity, with the largest part of the equity stake coming from surpluses generated by the RCC grocery store. RCC’s cash flow analysis suggests that the RCC can contribute a minimum of $250,000 of surplus accumulated during the first five years after launch, and as much as $800,000 over ten years. In scenario 4, the “fast-purchase” scenario, there is less time for the RCC surplus to accumulate, so the community would bring $100,000 in equity, 20% of which comes from the RCC, and the balance from grassroots fundraising and grants.

The Role of the RCC Grocery Store in Capital Formation

It is important to highlight the important role of the RCC Grocery Store in the purchase and success of the overall plan for community ownership. In addition to being an anchor store that will attract other tenants to the Center, the RCC plays a critical role on the financing of the shopping center, specifically in providing equity for the down payment.

Within the RCC community, there is already a great deal of support for the longer-term goal of purchasing the Renaissance Center. Members of the RCC see ownership of the shopping center as good for the co-op as well as connected to the co-op’s larger mission of contributing to the community’s ongoing economic development, health, and well-being. There is explicit understanding that the supportive rent figure that the RCC is seeking ($2,000 per month, or $24,000 annually—$2.40 per square foot) is to be tied to community benefit, including using a portion of surplus to buy community-owned assets such as the Renaissance Center.

Some people have criticized the supportive rent figure for the RCC as a financially unsupportable burden that undercuts the viability of the shopping center as a business enterprise. That may be true if the shopping center is to be owned by a private developer seeking maximum return on investment, but neither the community nor the City as owners of the Renaissance Center have such a narrow interest. In fact, it is in both the City’s and the community’s interest to set the rent figure for the RCC at a level that ensures that the Center’s basic expenses are covered (“lost” property tax, maintenance, insurance) while allowing for the community to accumulate surplus at a faster rate.

In this context, the supportive rent figure isn’t a problem—it’s part of the solution, helping the community achieve its big picture dreams of community ownership, health, and wealth while providing the City with a responsible way out of the shopping center business.

Support from Foundations and Grassroots Fundraising

Rounding out the RCC’s contribution to equity, we are confident that we can raise additional funds in donations and grants from individuals as well as local, regional, and national foundations. In Scenarios 1-3, we estimate a minimum of $150,000 from foundations, individual donations, and government sources, such as the federal government’s Healthy Food Financing Initiative. In Scenario 4, the fast-purchase scenario, we do not have as much time to do the grant-seeking and fundraising, so this figure is smaller, at $80,000.

It may well be possible to raise considerably more financial support from foundations and government sources, which would be applied toward increasing the equity stake: there is a great deal of interest nationally and regionally in the use of community land trusts as a tool for turning around blighted areas and rebuilding local economies. However, in the interest of presenting responsible scenarios, we’re holding to the conservative range of $80,000 to $150,000 for donor, foundation, and government support.

Financing the Purchase of the Shopping Center – Lending

F4DC has had a preliminary conversation with Self-Help; they have indicated that they could bring financing of up to $1,500,000 into a deal in which the community purchases the shopping center from the City, holding the land and buildings as collateral.

While Self-Help has the capacity and interest to meet all the need for outside lending, the debt service on $1.5 million is too big to be covered by the annual net operating income from the center. That shortfall can be addressed in two ways: (1) the City of Greensboro could participate as a 0% interest lender in a subordinate position to Self Help, thus lowering the cost of borrowing, or (2) the community can wait longer to purchase the shopping center, which would allow more time for a larger equity stake to be raised (from RCC surpluses).

Lots of Ways to Accomplish The Purchase: Four Possible Financing Scenarios

Please see the attached spreadsheet in which we compare four different financing scenarios, with different timelines and implications for cash flow.

Scenario 1: The community is able to purchase the shopping center in 5 years and pay off the debt within 40 years of purchase (45 years from now).

Down-Payment: $400,000 (21% equity)

  • $250,000 from accumulated surplus from grocery store
  • $150,000 in donations and grants from local, regional, and national foundations

Lending: $1,500,000 (79% financing)

  • $800,000 @ 4% over 20 years from Self-Help (annual debt service in years 1-20 is $58,174)
  • $700,000 @ 0% over 40 years from the City of Greensboro (annual debt service in years 21-40 following payoff of Self Help note is $35,000)

In Scenario 1, the debt to Self-Help is retired before the City’s debt begins to be paid off.

Scenario 2: The community is able to purchase the shopping center in 10 years and pay off the debt within 15 years of purchase (25 years from now).

Down-Payment: $950,000 (50% equity)

  • $800,000 from accumulated surplus from grocery store
  • $150,000 in donations and grants from local, regional, and national foundations

Lending: $950,000 (50% financing)

  • $500,000 @ 4% over 15 years from Self-Help (annual debt service in years 1-15 is $44,381)
  • $450,000 @ 0% over 15 years from the City of Greensboro (annual debt service in years 1-15 is $30,000)

In Scenario 2, both the City and Self Help are paid back within 15 years of purchase.

Scenario 3: The community is able to purchase the shopping center in 10 years and pay off the debt within 20 years of purchase (30 years from now)

Down-Payment: $950,000 (50% equity)

  • $800,000 from accumulated surplus from grocery store
  • $150,000 in donations and grants from local, regional, and national foundations

Lending: $950,000 (50% financing)

  • $950,000 @ 4% over 20 years from Self-Help (annual debt service in years 1-20 is $69,082)

The City does not participate as a lender in Scenario 3. Self Help is paid back within 20 years of purchase.

Scenario 4: (Fast Purchase Scenario): The community is able to purchase the shopping center in 2 years and pay off the debt within 30 years of purchase (32 years from now)

Down-Payment: $100,000 (6% equity)

  • $20,000 from accumulated surplus from grocery store
  • $80,000 in donations and grants from local, regional, and national foundations

Lending: $1,800,000 (94% financing)

  • $300,000 @ 4% over 5 years from Self-Help (annual debt service in years 1-15 is $66,299.52)
  • $1,500,000 @ 0% over 15 years from the City of Greensboro (annual debt service in years 6-30 is $60,000)

In Scenario 4, the debt to Self Help is retired first, in years 1 – 5. The debt to the City is retired over the next 25 years (Years 6-30).

Community Wealth Building

The four scenarios have different implications for the goal of building community wealth, as can be seen in some detail in the Comparison spreadsheet. From the perspective of community wealth-building alone, Scenario 2 is both the fastest and most effective, achieving debt retirement by 2038 (20 years earlier than Scenario 1, five years earlier than Scenario 3, and seven years earlier than Scenario 4), and generating almost $2.5 million in cash by 2058.

Question 2: Are there viable forms of legal ownership and governance that would allow a community to responsibly and democratically own and operate a shopping center?

Community Land Trusts

Across the U.S., communities are turning to community ownership of real property to accomplish a number of goals: building community wealth, renewing decaying residential and commercial properties, providing economically sustainable opportunities for affordable housing and commercial development, combatting the destabilizing effects of gentrification, and gaining community control over the environment.

Many communities are using the 501(c)3 non-profit Community Land Trust (CLT) as the legal formation to manage community ownership of shared real estate assets. The closest CLTs we know of are in Orange County (Community Home Trust) and Durham (Durham Community Land Trustees). For information about CLTs, check out these websites:

While most CLTs have focused on housing stock, some are purchasing and managing commercial property as well.

Governance

In this preliminary discussion, we don’t want to go too far in specifying the details of how the land trust should be set up or governed—these are matters that have to be worked out in the community among the people who take the responsibility of forming the land trust, working with knowledgeable legal and financial experts. However, we think it’s appropriate to talk about the need for authentic democratic governance structures and practices to be in place, embedded within a strong Policy Governance framework.

We are sometimes asked how it is possible for a whole community to operate a grocery store, a shopping center, or any kind of business. Some people believe that if there are not one or two people “at the top,” then all decisions will be labored and fraught, requiring far too much patience and taking far too much time. Policy Governance is a system of governance that clarifies the roles and relationships of membership, board, and management. Policy Governance is widespread in the cooperative movement, because it allows for coherent, flexible, and effective day-to-day management of business operations, while long-term policy, strategy, and direction are determined by the membership, either directly in the annual meeting, or through their elected representatives, the Board.

Roughly, Policy Governance applied to community ownership of the shopping center would work like this: the CLT would be established as a non-profit membership-based organization, consistent with North Carolina and federal non-profit law. The membership would elect the Board and decide major strategic direction in an annual meeting. The Board would follow that strategy in establishing policy. The Board would contract with a professional property management firm to handle day-to day operations of the shopping center, following policies outlined by the Board. Management is accountable to the Board. The Board is accountable to the Membership. This model affords tremendous flexibility to management. As long as the management successfully enacts the strategic direction and follows the policies established by the Board and the membership, it is free to carry out operations in any way that works. This enables the daily operations to be carried out efficiently and effectively. (For more on Policy Governance see www.governancecoach.com.) If you remain skeptical of the effectiveness of Policy Governance in a business setting, consider the success of Weaver Street Market (annual revenue $14 million) and Company Shops Market (annual revenue $5 million), both of which utilize Policy Governance structures and practices.

Authentic Democracy and Community Control

Broad membership, anchored in the immediate neighborhood and joined by allies from across the city, is the starting point for democratic functioning of the CLT. The membership in the CLT can begin rather small (say 50 to 100 people) and easily grow to 500 to 1,000 or more people. It will be important for members to have financial or time commitment requirements as an expression of their seriousness about the organization. There are various ways other CLT’s have decided membership, but ultimately these requirements will be decided by the community. Any resident of North Carolina could become a member, but membership recruitment would be focused on the area immediately surrounding the shopping center, with secondary attention to the wider community of Greensboro.

We propose that the CLT’s board be elected entirely from its members. The majority of board seats would be reserved for members who live within a 1-2 mile radius of the shopping center. This would ensure that the shopping center would be operated with the concerns of the immediate community most in mind. Two to three seats could be reserved for members who live outside the immediate community, to bring in outside perspectives, expertise, and connections to complement those of the immediate community.

Taking its cues from the membership meeting, the Board will need to set policy on a number of issues, starting with the question of what needs of the community are to be met by the shopping center, by whom, and at what cost. The Board will also have to set policy around uses of the community space that is in the shopping center, and guidelines for the recruitment of tenants and the setting of lease terms that sustain the CLT while encouraging appropriate community economic development.

The Annual Membership Meeting would need to be conducted in a substantive, democratic way, so that members have real say about the strategic direction and questions facing the CLT. The cooperative movement can provide many examples of annual meetings with large memberships where serious matters are decided by the membership. One key question that should be addressed in each annual meeting will be whether and how to spend any annual surplus. The CLT’s bylaws will almost certainly restrict certain kinds of expenditures, to prohibit self-dealing and ensure maintenance of a charitable and community focus for the CLT.

Throughout the year, there need to be ways for members of the CLT to affect policy and day-to-day practices, while building community among members. For example, members can serve on committees, attend sponsored social and educational events, and volunteer for community improvement efforts sponsored by the nonprofit land trust.

Non-members who live in the immediate community should be invited to at least one event each quarter, designed to strengthen the CLT’s connection to the immediate community and to hear about any issues or opportunities facing the community. The CLT should also conscientiously interact with other community organizations and institutions in the area, including CEEJ, Concerned Citizens, Woodmere Park Neighborhood Association, Peeler Recreation Center, and McGirt-Horton Library.

As stated earlier, it isn’t appropriate in this paper to specify all aspects of the governance of the CLT: it’s critical that members of the community be engaged in deciding how they want the land trust to be structured. What’s key, though, is an initial and sustained commitment to authentic democracy. That means governance structures and practices that are inclusive, transparent, and accountable, backed up by well-understood and agreed-upon decision making processes. It’s not enough to get articles of incorporation and bylaws in place—it’s about building a living, dynamic capacity for practicing authentic democracy.

Question 3: How will the community gain the requisite capabilities to pull this off?

What capabilities are needed?

We see three broad capabilities that the community will need to succeed:

  1. Collective and individual skills and aptitudes related to democratic Policy Governance of a CLT that owns a substantial asset
  2. A moderate level of community cohesiveness and trust, enhanced by soft skills in community engagement and community building
  3. Specific knowledge and skills related to owning and operating a shopping center

Where will the community get these capabilities?

Keep in mind that there are different spheres and contexts in which the needed capabilities can reside:

  • In the community as a whole (e.g., a shared sense of community trust has to be held in the community at large or it isn’t authentic)
  • In individual community leaders (e.g., skill at engaging people in the community, knowledge of policy governance and how it applies to this situation, etc.)
  • Within hired experts (e.g., real estate attorneys, CPAs, board development consultants, etc.)

Our experience organizing in Northeast Greensboro on the grocery store project has taught us that there’s more capability already present in the community than it is generally credited with. The RCC experience is not a fluke: after all, the same community came together in a highly effective way to stop the re-opening of the White Street Landfill. CEEJ and Concerned Citizens have proven themselves to be well-organized, purposeful, hard-working, and in it for the long-haul. So there is clearly a solid set of capabilities to work from.

We are also confident that the experience of launching and operating a cooperatively owned grocery store will prove to be a valuable training ground for both individual leaders and the larger community in the areas of democratic functioning, community engagement, finance, retail operations, etc. In fact, we see the next few years of RCC start-up and operations as essential to getting the community ready for the larger project of owning a community asset like the shopping center.

Frankly, we’re suspicious of other proposals that have suggested “giving” part or all of the shopping center to the community, without any serious consideration of the community’s preparation to take on that responsibility, or who, exactly, represents “the community.” Without an extended, concrete opportunity for learning and practice at democratic governance of a business and in the absence of an organization with a mechanism in place to carry this out, we don’t see how the community will be able to identify its most important goals in owning the Center, elect an accountable Board, and secure and supervise appropriate qualified management.

We have sketched out four scenarios for community ownership, three of which provide five to ten years for the development of capacity, leadership, and democratic organizational structures to assume responsible ownership of the Renaissance center. These longer-term scenarios are needed to raise larger equity stakes, but they also have the benefit of providing ample time for community development. The fourth scenario, in which the community land trust is able to purchase the shopping center in two years, is achievable, but requires an acceleration of community development activities and a more serious commitment on the part of the City to creating a supportive environment for that work.

In both the RCC grocery store project and the shopping center project, F4DC is willing to commit significant staff time and some financial resource to supporting ongoing individual and community capacity building. Through our relationships with national and regional non-profits and cooperative development agencies, we can provide workshops, consultants, and trainers who can help prepare the community and its chosen leaders in the various tasks and roles required. We believe that other foundations in the region would also like to participate in these kinds of capacity-building efforts ensuring that the community and its leaders will have ample support to grow the capacities they need to succeed.

Footnotes

[1] The RCC has a plan to obtain $2.1 million in equity and debt financing, has already secured almost $800,000 in promised lending, and is on track to raise the balance by Spring of 2014 through member equity and loans, grassroots fundraising, foundation and government grants, and City sources. The RCC has established relationships with several national groups that are working on the food desert issue, including the Food Coop Initiative (where the RCC is under consideration for a $10,000 development grant and extensive technical assistance), the Food Trust (which partners with The Reinvestment Fund to bring CDFI, federal, and state investment to food desert projects), and Uplift Solutions (which pairs extensive urban grocery experience with a holistic vision of grocery stores as community anchors of health and economic well-being).

[2] Readers should note that this document is speculative in nature, even as we attempt to anchor our speculations in realistic assumptions. It is not a prospectus, pro-forma, statement of commitment, or formal feasibility assessment. Nor is it a business plan. Its purpose is to provide rough-cut, good faith estimates and information that help to answer the question of whether there is a realistic pathway for the community to assume ownership of the Renaissance Center.

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Financial Projections

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The Early History of F4DC’s Role in Community-Based Efforts to Build a Cooperative Grocery Store at Bessemer Center

Bessemer Center, Northeast Greensboro (Photo by Eric Ginsburg, Yes Weekly)

Earlier this week, I drafted this history to clear up some confusions about how and when work on the Renaissance Community Coop started, and the role that F4DC has played. We decided to post this history on our website so that more people have access to it during this period when City Council is deciding whether and how it will support the coop. We also thought that in the long term (5-10 years from now), people might be interested to see in some detail the ways that F4DC has chosen to work in its local community. You can see that community organizing of the kind we’re supporting on the grocery store project is connected to long time frames, networks of relationships, and developing ideas.

It’s important to say that this particular written history mainly covers the early work on the coop, which was spearheaded by F4DC. At this point, in 2013, the coop development work is led by the Renaissance Cooperative Committee, to which F4DC provides technical support. But in 2011 and most of 2012, F4DC was playing the leading role, which is why this history is titled the way it is: its emphasis is on the early days, before the RCC had assumed the lead. I eagerly await the history as written by the RCC, which will have its own perspective and community-based flavor!


Since 1998, when the Winn-Dixie closed, Ed Whitfield (co-director of F4DC) and I have independently followed and occasionally connected to Northeast Greensboro residents’ efforts to bring a grocery store to the site of the old Winn-Dixie. Both of us attended early meetings of Concerned Citizens of Northeast Greensboro, just to see what was going on, and to lend our occasional support as private citizens.

In 2010 and 2011, Ed and I established a tighter focus for F4DC’s work, with a strong emphasis on cooperative economics. In the course of entering this arena, we discussed among ourselves the possibility of a community-owned grocery store on Phillips Avenue.

In fall of 2011, Ed and I had a discussion with Goldie Wells (President of Citizens for Economic and Environmental Justice (CEEJ) and founder of Concerned Citizens) about the possibility of a coop grocery store in the site of the old Winn-Dixie. At that time, Goldie wasn’t particularly interested, because she thought Sav-a-Lot was coming in. By the end of that year, it was apparent that the Sav-aLot deal was dead.

In winter-spring of 2011-2012, Ed and Sohnie Black (an F4DC staff member with a personal interest in the grocery store) began mentioning the idea of a coop grocery store in CEEJ and Concerned Citizens meetings. People showed interest, and a few took home copies of a “how to” manual for starting food coops put out by the National Cooperative Grocers Association that we circulated.

In March of 2012, I reached out to Dyan Arkin, the City Planning Department staff member with responsibility for the Bessemer Center, to discuss the possibility of a coop grocery store. It took a while to set up the meeting, but we finally met in early June. Dyan went to some length to help us understand the history of the by-that-time “past due” contract with East Market Street Development Corporation and New Bessemer Associates (the 75% occupancy deal). She encouraged us to give the coop grocery a try, since there seemed to be no other action on the Center at that time.

On July 10th, Ed, Sohnie, and I convened an exploratory meeting with Ralph Johnson, Bob Davis (co-chairs of Concerned Citizens), Wes McGuire, Mac Sims (East Market Street Development Corporation), Jim Kee, and Dyan Arkin, in which we explained how coops work, and asked for their ideas about whether/how to proceed. Goldie Wells was invited to the meeting but was unable to attend.

The very next morning, with no consultation with F4DC, Concerned Citizens or CEEJ, Jim scheduled a press conference at the Bessemer Center, and at least one TV station filmed Jim’s press conference. The news story, which can be viewed in its entirety here, included these statements and quotes:

The Concerned Citizens group who live in East Greensboro is talking about starting a co-op grocery store. In this case it would be owned by investors and people in the community who would also invest.

“The great thing about a co-op is that the community gets to decide what they want in the store, how they want the store to look, how they want the store to operate,” said Kee.

Jim also mentioned F4DC’s role in helping to find financing for a coop grocery store and compared the potential of the Northeast Greensboro effort to the recent successful coop grocery startup in Burlington, Company Shops Market. (F4DC had provided information about Company Shops the night before, as an example of how a community came together to build itself a grocery store.)

In late July and early August, Ed, Sohnie, and I made presentations about the coop approach at CEEJ, Concerned Citizens, and Woodmere Park neighborhood association meetings, to drum up interest for a field trip to Company Shops Market.

On August 8, 2012, F4DC sponsored the field trip to Company Shops Market, and took 2 van-loads of folks from the neighborhood to tour, eat lunch, and talk to a founding board member and the general manager of Company Shops. Jim Kee, Ralph Johnson, Bob Davis, Goldie Wells, and Mac Sims were on the trip, as were many of the people who went on to form the core of the RCC Steering Committee. About 25 people from the neighborhood decided over lunch at Company Shops to continue to explore how they might, as ordinary people working together, form a coop grocery store.

Throughout the fall, these folks met regularly, studied, and got more people involved. Jim Kee attended a few of these meetings. In November, the group decided to formalize its organizational efforts, and voted to name itself the Renaissance Coop Committee, because they knew the name of the shopping center was slated to change and because they liked the association with the concept of “rebirth.” The Renaissance Coop Committee publicized the fact that they would be electing officers at their next meeting in December. A front page Peacemaker article featured the RCC and its efforts.

In its December 3rd meeting, which, like all its meetings, was open to the public, the RCC elected officers and decided to commission a market study, to assess the viability of operating a full-service grocery store. Jim Kee was in attendance at that meeting, and Ed asked him if it was time for the community to formally ask the City to stop seeking a grocery store for the site, because the coop was going to take care of that need. Jim responded that there was no need to slow the process down since it had been many years since the grocery store had closed and there was no progress. “You couldn’t go any slower,” he said. He then went on to say that he wanted to remain open to any and all proposals, but that there was nothing in the works at that time.

Two weeks later, at a specially called CEEJ meeting to discuss the proposed sale of Redevelopment Commission property on Phillips Avenue to Dollar General, Skip Alston made an announcement that he was working with a group of investors who wanted to bring a full service grocery store and a renovated shopping center to the Bessemer Center. He stated that he had been working with Jim Kee on this for a few weeks. When coop people in the crowd asked Skip if he knew that there was a community group interested in opening a community owned cooperative grocery store, he responded that he did not know anything about that. Skip was then asked if his group of developers would be interested in working with the coop in a scenario where the coop group would operate the grocery store and his developers would operate businesses in the remainder of the Center. He responded that his group was not interested in that. “No,” he said. “We want the whole thing.”

The next night, at the December 18th City Council meeting, Jim Kee formally asked City Council to work with the new development group that Skip represented on the proposal that would include giving the ownership of Renaissance Center to Skip’s group of investors. In that discussion he made no mention of the community’s interest in opening a coop grocery store. In his presentation, Jim stated that he had been working with Skip on the project for the past two months.

Epilogue: In mid-February, 2013, Skip contacted the RCC to offer the coop a corner of the grocery store that his group of investors would own and operate and to say that the coop might even have its own cash register there. He was told that the coop was interested in opening a full service grocery store, not just a fresh vegetable section of a larger store. He said that he did not know this. It was later erroneously reported to City Council that Skip’s investors had offered to support the coop and that the coop had rejected the offer.

Since that time, there has been continued work in the community by the RCC leadership group and growing understanding and support for the coop grocery store. Skip and his investors met with the RCC and amended their original offer to say that they are now willing to lease the grocery store space to the coop at the same rates the coop requested from the City. RCC also met with New Bessemer Associates, the developers who are seeking the contract for doing the construction and upfit work on the Center, but are not seeking ownership. They too expressed a willingness to work with the coop and offered the fact that they had built the successful Deep Roots expansion as proof of their competence and willingness to work with coops.

Private investment is private investment, whether it comes from individuals or a community

Bessemer Center, Northeast Greensboro (Photo by Eric Ginsburg, Yes Weekly)

The Renaissance Community Coop will bring $1.3 million in private investment to Phillips Avenue, and has already raised more than half of that amount.

Bessemer Center, Northeast Greensboro (Photo by Eric Ginsburg, Yes Weekly)
Bessemer Center, Northeast Greensboro (Photo by Eric Ginsburg, Yes Weekly)

The Renaissance Community Coop (RCC) is really on a roll! Self-Help Credit Union has stepped up with a term sheet offering $700,000 toward the start up costs for launching a community-owned grocery store in the Renaissance Center on Phillips Avenue. Now, Self-Help didn’t do this out of some charitable impulse. Sure, they’re a credit union with a mission of community development, but they’re also successful bankers who have to properly evaluate and underwrite all the risks associated with any loan they make. Like any bank, they want their money back—with interest.

Self-Help looked at the RCC’s market study, pro forma, and proposal, and decided the coop was a solid investment. A solid investment, that is, given certain conditions, including ongoing City ownership of the shopping center in which the coop will operate. Self-Help added this condition because they think that’s the best situation to nurture the coop and lay the groundwork for an even larger investment in community ownership: the community buying the whole shopping center.

No doubt, the news about Self-Help’s willingness to lend to the coop had a strong impact on Greensboro City Council members. That news, plus the over 100 people who turned out in support of the coop, turned last week’s City Council meeting into a bit of a love-fest for the coop. Virtually every member of Council plus both developer groups declared their support for the RCC effort.

The Council meeting was long and ultimately no conclusion was reached. After more than four hours of listening to the various proposals and public commentary, followed by discussion among themselves, Council members decided to postpone the decision about the long-term ownership of the Renaissance Shopping Center until their June 4th meeting. Whichever way the Council decides (continued City ownership of the Center versus passing ownership to a private developer), it looks like the coop has a home. So I left the City Council meeting pretty happy, even though I was confused about one aspect of the conversation.

Here’s the thing that puzzles me: Again and again, I heard several Council members say in support of the idea of selling the Renaissance Center to a private development group: “In this economy, we can’t afford to turn our back on private investment!” I wanted to jump up out of my seat and yell, “Wait a minute! That’s exactly what you’ll be doing, if you sell the Center to a private developer. Because that’s endangering the $700,000 loan from Self Help, which is explicitly tied to the City retaining ownership of the shopping center or selling it to the community!”

Council members, for the most part, seemed oblivious to the idea that the coop was itself bringing a significant amount of money to the table. Instead, many seemed to be treating the coop as a very worthy, popular, “charitable” enterprise. This was puzzling to me: In the RCC’s presentations to Council and in all the information we had circulated to Council members in face-to-face meetings, we had carefully spelled out our plans for raising the $2 million we needed to open the grocery store. Yes, we are asking for a $100,000 grant and a $600,000 loan from the City. Lots of businesses have asked for and received economic development support of this kind from the City. More importantly, the RCC is also bringing $1.3 million of our own money to the table. That $1.3 million is what any banker would call “private investment.”

Maybe there’s some confusion about this word “private.” When City Council members were throwing the word around in regard to the proposal from the private development group that wants to gain ownership of the shopping center, I think they meant “dollars not coming from taxpayers.” That is the same meaning I am putting on the term when I say that the coop will bring $1.3 million in private investment to the project.

With the Self-Help offer included, the RCC already has $745,000 of our private investment in hand or pledged. That’s a whole lot more than any of the other proposing groups have demonstrated.

And we are well on our way in raising the $600,000 more that we need, from member equity, owner loans, local and regional foundations, and community development financial institutions who specialize in lending to coops. If you want to see the details on our financing plan, check out the “Capital Requirements” worksheet that’s included in the RCC’s pro forma, which is available on the RCC website.

It’ll be a whole lot easier to raise this money when decisions are finalized, assuring the coop has a certain home in the Renaissance Center with the financial backing of the City. Here’s hoping everyone on City Council comes to understand the sizable investment the coop is making in our community, and makes the best decision for the community and the coop!

Eliminating food deserts and building community ownership are keys to sustainable development

Steve Dubb and David Zuckerman recently published a great article explaining how eliminating food deserts is critical to developing sustainable communities. This is precisely what the folks in Northeast Greensboro are working on through the Renaissance Community Coop. We are thrilled to join them in this effort and excited about the transformative potential it has for their community, and the city of Greensboro more broadly.

The authors point out that grassroots focused economic development is important – critically important – but that community ownership is equally vital and often times overlooked. They go on to briefly outline other communities using community-owned cooperatives to eliminate food deserts and build community wealth:

One strategy for ensuring community ownership can be seen in Pittsburgh’s Hill District. In 2008, community organizations successfully negotiated the city’s first ever Community Benefits Agreement (CBA). As part of this agreement, the Hill House Economic Development Corporation received $2 million in commitments from the Pittsburgh Penguins and the Pittsburgh Urban Redevelopment Authority to help develop the neighborhood’s first grocery store in over 30 years.

Importantly, Hill House EDC continues to own the land on which the store is built, ensuring that lease payments provide earned income revenue for years to come to financially support the nonprofit. Additionally, as part of the CBA, Hill District residents referred by a newly established First Source Center receive first consideration for all hires.

They close by noting that,

A framework for revitalization that includes local purchasing and hiring, employee and community ownership, and anchor institution and community stakeholder support is necessary to guarantee that, over the long term, the community retains control of its important assets.

Ridding communities of food deserts so that the people have access to healthy and affordable food is a cornerstone piece of redeveloping our neighborhoods to be sustainable. Community-owned businesses can play a critical role in this work. Reinvesting money directly back into those communities through democratic processes is equally important. The Renaissance Community Coop is building just such a business and, in the process, re-imagining their community as one that is democratic, just and sustainable.

Read the full article here.

A New Era in Chicago as workers open their own window factory

New Era Windows

Writing in The Nation, Laura Flanders covers the opening of New Era Windows in Chicago. After their former employer, Republic Windows and Doors, closed the plant and fired the staff, the workers occupied the plant. Eventually they were able to take ownership of it and, with the help of the broader cooperative movement around the country, re-opened it as a worker-owned cooperative!

Flanders writes:

The workers in this story are members of the same workforce who, when they received word that their plant was about to be closed with no notice at what was then the Republic Windows and Doors factory in 2008, occupied their plant and became a cause célèbre in a grim winter of mass layoffs. When they were laid off again in early 2012, by a second owner, they decided, as Apple would say, to “think different.” With encouragement from their union, the United Electrical, Radio & Machine Workers of America (UE), and The Working World, a progressive investment group that helps co-operative start-ups internationally, they formed a company, “New Era LLC.” New Era is 100 percent owned by workers and now, at last, open for business.

Below is a great video piece on the opening. Click here to read the full article.

Local food coops and initiatives celebrated at Food For Thought film night

Attendees mingled and learned about food initiatives across our city.

On April 24, a great crowd came out for F4DC’s third movie night, “Food for Thought” at the Carousel Theater. We were so pleased to co-sponsor the event with Deep Roots Market in celebration of the grand opening of their new location and the Renaissance Community Co-op that’s in the midst of an impressive drive to launch a food co-op in Northeast Greensboro.

Attendees mingled and learned about food initiatives across our city.
Attendees mingled and learned about food initiatives across our city.

What’s a co-op’s number one purpose? To meet the needs of its members! This reality rang clear throughout the evening.

In the late 1960’s and early 1970’s it was really tough to get natural and organic foods in Greensboro. So, a small group of people starting a buying club for these types of items. This was the origin of Greensboro’s first consumer food co-op. Community members recognized a common need and worked together to meet that need by forming a cooperative business. With the expansion this year, Deep Roots is expecting an annual revenue of over $4 million dollars and will employ more than four dozen people. They’ve come a long way from those first days in a Guilford College dorm room!

Renaissance Community Coop Steering Committee members signed up new members!
Renaissance Community Coop Steering Committee members signed up new members!

Likewise, neighbors in Northeast Greensboro decided they were tired of waiting year after year for a grocery store chain to set up shop after Winn-Dixie closed in the 1990’s and left them living in a food desert. Folks started meeting together last year to start their own grocery store with healthy foods in a conventional store that’s owned and democratically controlled by the community. In addition to healthy and affordable food, this store will create community wealth and good jobs. By working together to meet their own needs, they are paving the way for communities across the country. With the help of the City of Greensboro, Renaissance Community Co-op is soon to be a national success story.

Four film shorts were shown at movie night, In between, there was rich discussion with panelists, Joel Landau (of Deep Roots Market), Sadie Blue and Casey Thomas (of Renaissance Community Co-op). If you missed “Food for Thought” movie night, check out some of the videos that we showed:

What’s to love about Food Co-ops is a 2 minute short about why natural and organic food co-ops are so great!

Watch some of the rough-cut scenes of Food For Change, a feature-length documentary in production about how food co-ops are a force for dynamic social and economic change in American culture. The movie tells the story of the cooperative movement in the U.S. through interviews, rare archival footage, and commentary by the filmmaker and social historians. A third of the money collected at the movie night went to this group to support the completion of their film.

The Little Mercmaid and Co-op Style are sure to leave you humming. Each of these short films were created by their co-op members in Lawrence, KS and East Lansing, MI respectively as part of the 2012 Year of the Co-op “My Co-op Rocks!” film contest.

We wrapped up the evening with very cool open space time. Everyone left their comfy theater seats and joined A&T Urban and Community Horticulture Program, the Edible School Yard, Greensboro Farmers Curb Market or Food Not Bombs and talked about ways to connect and get more involved in more food related efforts going on in Greensboro.

We hope to see you next time at F4DC’s next movie night. Check our website or sign up for the listserve for more information.