By Matt Stanley/General Manager
Published in the Co-op’s Spring 2016 Newsletter

You’ve heard us talk a lot over the last year and a half about our Co-op’s growth plans. Please be assured that despite a lack of big announcements about the where and when of our new store, lots of work is happening to prepare us for our expansion. Our focus on preparedness will ensure that when we do open the doors to an expanded location we will be successful. In the meantime, our store is growing rapidly in the current location and space is becoming a real challenge, both for shoppers and employees!

A critical step was checked off our to-do list when the owners attending our March Special Meeting at 14 Street Cafe unanimously voted to adopt preferred shares into our Articles of incorporation. We now have a powerful financial tool and new owner benefit at our disposal to raise the necessary equity to build our new store!

So now begins the hard work of preparing an effective capital campaign. By effective, I mean lots of member participation. For the purposes of this article, I want to plant the seed of an idea. What does it mean to invest in a local food co-op? Is it something we might consider as an alternative to traditional investments? What are the compelling reasons to purchase preferred shares?

In a capital campaign, the Co-op will reach out to the owners who use and benefit from the goods and services of the business to invest together to help it grow and thrive. A clear distinction to be made here is that the Co-op is not asking for handouts. Rather than making a donation, we’ll be asking you to invest in dividend-earning preferred shares.

I think the most compelling reason to invest in your Co-op is that it offers an opportunity to make a modest rate of return (3-4%) on something you’ll watch grow right here in your own community. You’ll see new jobs get created, more local products filling up the grocery shelves, and more fellow community members seeking out the Co-op as a way to live healthier lives. Even the strictest socially responsible index funds won’t let us watch our money turn into positive projects in our own community. Furthermore, parts of these portfolios won’t align with our values nearly as much as our food Co-op.

For the Co-op, the money we raise from preferred shares will create the necessary equity to leverage any third-party loans necessary to complete the project. The more capital we raise through preferred shares the less we need to borrow from a bank. The minimum investment in our preferred shares offering as per our recently approved designation rights is $2,500. For most of us, this is not an insignificant amount. We’ll be seeking an average investment of considerably more than that in order to reach our goal.

There are other ways to help us reach our goal of opening a new store if this minimum investment is beyond your household’s means. You can pay off your common share and even invest an extra $100 (for a total of $300), or you can encourage a friend to join the Co-op. Shopping at the Co-op as much as possible is a powerful way to demonstrate your support, too!

Finally, our capital campaign will require a dedicated team of board members, staff, and other volunteers. If you have experience with fundraising and want to lend a hand, please let me know (matt@astoria.coop).

For a detailed look at the approved designation rights, please check our web page. In the meantime, please trust that we are working hard to open an expanded location that will better serve our growing body of owners and staff.

March 2 at 6 p.m. at Street 14 Cafe (1410 Commercial St. Astoria)

The Co-op’s expansion plans require significant capital and fortunately we can raise money via our owners.  It’s a great opportunity for local people to invest in our locally-owned grocery store. Food co-ops are successfully using preferred shares as a means to generate funds for expansion.

Our board of directors approved the amendment at its October meeting and we need a certain amount of Co-op owners to vote as well.  Read the fine print by clicking here.

We’ll explain in greater detail and hold an election at a special meeting of owners on March 2 at 6 p.m. at Street 14 Cafe in Astoria.  It should be a fun evening full of tasty treats and a video showing another co-op’s success in raising funds for expansion.

If you have any questions you can chat with our general manager matt@astoria.coop or call the store (503) 325-0027.  You can also check out Matt’s article in our newsletter. We hope to see you at the meeting!

By Matt Stanley/General Manager
Published in the Co-op’s Winter 2016 Newsletter

Our Owner Equity Drive in October 2015 was a resounding success. Hundreds of owners paid off their shares, made an equity payment ahead of schedule, and some even forked over an additional $100 in equity to help us raise nearly $30,000 to kick off our expansion. But our expansion plans require significantly more capital. Fortunately, we have capital raising tools at our disposal that we intend to use. To that end, we intend to offer preferred shares to our owners.

What are preferred shares?

Under the Oregon Cooperative Corporation Act co-ops can issue dividend earning preferred shares that have a specified par value. Members can purchase these non-voting shares that will provide Co-op owners an additional means of investing in and supporting a local business. Those who purchase preferred shares will watch as we build a new store with their equity! At the same time, preferred shares will allow the Co-op to leverage additional funds from banks or other lenders. Finally, preferred shares align perfectly with one of the seven cooperative principles: Member Economic Participation.

Preferred shares work like this: Co-op owner Tom wants to invest in the Co-op beyond his normal membership share. Each preferred share has a specified par value of $100. The minimum purchase requirement is 25 shares. So Tom invests $2,500 in the Co-op and will receive a 3% annual dividend on his shares, which amounts to $75 per year. If Tom has more money to invest, he can earn an annual dividend premium in addition to the 3% annual dividend. Owners who purchase 100 ($10,000) or more preferred shares will earn an additional 1% annual dividend premium. Our goal is to raise $1.3 million through the offering of these preferred shares. We hope to have an average investment of over $5,500 so we will need many Co-op owners to invest, some at the $2,500 minimum level and others at $5,000, $10,000, $20,000 and even more.

First Steps
But we are getting a little ahead of ourselves. In order to offer the preferred shares we have some preliminary work to do. Specifically, we need to amend our Articles of Incorporation to establish this new class of preferred shares. The board of directors approved this amendment at its October 2015 meeting.
According to state law, our owners must approve this amendment to the Articles of Incorporation, too. We’ll need you to attend our special meeting of owners on March 2 at 6 p.m. to approve the amendment to the Articles of Incorporation. We’ll make it a fun evening full of tasty treats from Chef Andy at Street 14 Café. The board of directors will also give owners an update on the progress of our proposed expansion. We look forward to having you there!

Capital Campaign
With the approval of the amendment to the Articles of Incorporation, we’ll tentatively plan on a capital campaign this year during which we’ll work hard to reach our goal of $1.3 million through the offering of these preferred shares. In the meantime, we’ll be working with our securities attorney and fellow food co-ops who have engaged in successful capital campaigns through the offering of preferred shares in order for us to create an effective and successful campaign.

If you have any questions you can contact me for more information. We are compiling a preliminary list of owner investors that I can add your name to, as well. I can be reached at the store or at matt@astoria.coop. We are excited to take this next step toward our expanded store!