CreekSide Co-op New Loan FAQ

We have received many positive comments since Jeffrey Rotter, Board President, wrote a letter to the member community regarding his role in Co-op's refinancing. We have also received a number of questions that we would like to address in a "Frequently Asked Questions" format. Thank you for your feedback and your continued support of CreekSide Co-op.   How does the interest rate compare to market rates for a loan like this?  The Board approached both traditional and "non-traditional" financing sources to refinance our building. All traditional lenders declined to offer a new mortgage given the past financial performance of the Co-op and our status in default on the current loan. The less traditional sources - private and other non-bank lenders - quoted rates from 10.5%-12% with fees of 2-4% of the loan amount, but they were unwilling to proceed at this point and in the required timeline. Based on this input as a reflection of the risk, the fact that any group was willing to make a loan at 7.5% interest, with interest-only payments throughout the life of the loan, no upfront fees, no exit fees, and no legal costs, was considered to be a very good opportunity.   What about the original member loans? What is their status?  Those loans are still in place. The member loans are unsecured, subordinate to all other Co-op financing, and may be deferred indefinitely by the board if the Co-op does not have the funds to pay them back. Given the current financial position of the Co-op and continued burden of its $3 million debt, the member loans presently have very little, if any, value and little likelihood of being repaid. The Board is optimistic that the proposed refinancing will make the repayment (with interest) of those original member loans more feasible in the future.   Why are we finding out about this so late in the process?  Over the last 24 months, the Board has conducted monthly public Board meetings and no fewer than 6 community meetings during which our financial picture and loan situation have been openly discussed. In addition, the Board has issued multiple email, web site and in-store communications about our debt situation, the need to increase sales, equity campaigns and other fund raising initiatives. After prolonged negotiations, an agreement between the bank and the Co-op was reached that presented us with the opportunity to close out the existing $3 million mortgage for $550,000, but with just a 6 week window to act. If we are not able to meet this hard September 30 deadline, the bank's offer automatically increases to $1.1 million. Therefore, we have been going full force since that time to find a way to take advantage of this opportunity that we have worked so hard for.   Why wasn't this new loan opportunity offered to the full membership group with some baseline investment amount? Would the Board consider opening up the opportunity?  Thought was given to opening up this opportunity to the members, but was ultimately rejected as unworkable given the restraints of time and the amount of money that needed to be raised. The legal process for raising such funds from the membership is complicated, expensive and time consuming. It involves possible filings with the Securities and Exchange Commission or the launching of another member loan campaign. There are also tax implications, financial reporting requirements and other procedures that would have made a member fund raising campaign on the required scale unworkable at this time - and with no guarantee of success. However, once the new financing is in place, if there is an interest among the members to do so, we could possibly undertake a "retire the debt" fund raising campaign among the members to pay off this new loan and become truly debt free. It is certainly worth discussing further.   What happens in 5 years?  The Board is working very hard to stabilize operations in the next 6-12 months. Our goal is to be in a position in 12-24 months to "refinance" this community loan of $550,000 with a more traditional lender or with the Reinvestment Fund (currently financing our equipment). However, at present, none of these lenders are willing to provide the funds needed to repay our current mortgage. If in 5 years the Coop hasn't replaced this loan, the Board at that time will sit with this lender group and discuss next steps. As mentioned above, a "retire the loan" campaign could be one possibility.   What if the Co-op fails to make debt service payments going forward?  The current loan is in default and the current lender could have foreclosed on the property at any time over the last year or so. If that had happened, the current bank (with no connection to our community or interest in the Co-op as an enterprise), would have taken possession of the building and the Co-op would certainly be out of business. Fortunately, the Board was able to hold off this outcome while we explored other options. The Board considers the option being presented here to be by far the best one available at this time (and in the time available). Of course, the new lender group will have all of the rights, remedies and protection of a secured first mortgage lender. However, this is a "Co-op friendly" group that is providing every opportunity for the Co-op to succeed. If at any time the Co-op is not in a position to make payments on the new loan - then the Board will sit with the new lender group to review the situation. However, in the interest of full disclosure, the members need to understand that this is a loan and a mortgage like any other. If the Co-op fails to make its debt payments, this new lender, like all lenders, will have the right to foreclose the loan, take title to the building and sell it.   Why is the loan amount sometimes referred to as $600,000?  The lenders have provided us with the flexibility to borrow an additional $50,000 above the $550,000 to secure a beer license (intended for the sale of craft beer), which has been much discussed and anticipated over the last couple of years. However, this would involve additional investment above the license itself, so for now we are focusing on securing the mortgage as the top priority. Hopefully we will soon be in a position to take advantage of the additional funding for the beer license as well.   Why does the Board believe the Co-op will be in a position to repay the new mortgage?  The Board regards this refinancing package as only one half of the recovery plan. The other essential piece is the operational upgrade of the store being facilitated by the not-for-profit group Uplift Solutions, together with the hiring of a new General Manager. Uplift is working with us every day to professionalize our activities in the areas that matter to our members, including training, customer service, product selection, pricing, inventory, personnel management and more. Neither of these initiatives can secure the future of the Co-op without the other. We strongly believe that operational excellence coupled with a manageable debt burden will finally provide the sound basis that we need for a robust and sustainable community store that we can all be proud of.   Thank you for your support and see you at the Co-op! The CreekSide Board

Great Things Are Happening At CreekSide!

As all of you have heard we are very busy in the store. In the next two weeks we will:

• Finish the first phase of our equity campaign -- $40,000 by September 30th. We are at $21,000.
• Pay-off our old loan of $3 million and replace it with a $600,000 new loan.
• Bring Park Plates to CreekSide. Chefs Locke and Owen, the owners of Park Plates will be working with our prepared foods department to reinvent our menus, fine tune our recipes and continue to develop our prepared foods staff. As interim consultants, they will be will be in the CreekSide kitchen working with our staff making delicious local and seasonal dishes for our prepared foods case and our hot bar and streamlining our kitchen operations.
• Reset the store. Beginning Monday, September 28th through Friday, October 2nd, we will reorganize the grocery department to better serve our customers. We hope to have plenty of staff and volunteers in-store throughout the transition to help you navigate the changes.

Stop in soon to sample the delicious new dishes and see all the wonderful changes!

CreekSide Announces Incredible Debt Refinance

The CreekSide Board of Directors has negotiated an 80% reduction in our primary mortgage!  What had originally been a $3 million loan for which we had been paying roughly $20,000 per month will be refinanced, with the community’s support, for $550,000 by the end of September.  The new loan will be interest-only for five years, reducing our monthly payments to less than $3,500, a monthly savings of more than $16,500!

And perhaps just as amazing - the Board has secured a group of local investors to provide capital for this new loan!

But we need our community to make this work.  We need to raise another $40,000 from our membership by the end of September in order to pay for closing and other related costs.

This is clearly a huge monthly savings, part of our comprehensive plan for a successful CreekSide, including:

• Resetting the store to better meet the community’s needs
• Operating more professionally, efficiently and effectively
• Reducing expenses (through the refinance and operational improvements)
• Growing sales

There will be a CreekSide Member Meeting on Thursday, September 10 at 7:30pm at the Jewish Learning Venture at 7607 Old York Road. Come meet UpLift Solutions, learn about the refinance opportunity and our comprehensive plan for a successful CreekSide.

Exciting Plans and Sept 10 Member Meeting

The Fall of 2015 will be momentous for CreekSide Co-op! 

Don’t miss the member meeting on September 10th as we officially kick off our plan to secure our Co-op’s successful future.

The Board of Directors, UpLift Solutions, and the CreekSide staff have been hard at work developing a multi-faceted initiative that will take the store over the top to profitability and sustainability once and for all, including:

• Refinancing the building by the end of September with a huge monthly and overall savings
• Reducing operating costs through more efficient operations
• Improving the shopping experience in multiple ways

We have secured more than half of the necessary financing and we are working on securing the rest - which is going to take the community’s support.  

We’ll be sharing more details in the coming weeks and will discuss them in-person at a general membership meeting on Thursday, September 10th.

CreekSide Co-op Member Meeting

7:30PM Thursday, September 10, 2015 

Jewish Learning Venture

7607 Old York Road

At the center of the Mandell Campus in Melrose Park

Next to Gratz College

Call for 2016-2017 Directors!

CreekSide Co-op is searching for a few good Board members!  Nominations for new and returning directors will open September 1 and must be submitted by November 2.  There are 7 Board positions open for the 2016-17 term.  What better way to contribute to the success and sustainability of your co-op?  Learn more by emailing elections@creekside.coop or contacting any current Board member.