Outcome of Special Member Meeting May 22

At the Special Membership Meeting of New Leaf Market Cooperative on May 22, 2018 at 6pm in the Allouez Community Center the only agenda item was to discuss the future of the co-op and vote on a motion from the Board of Directors.

The motion was: “New Leaf Market Cooperative shall be dissolved. The Co-op Board of Directors is tasked with closing down the business and distributing remaining assets as prescribed by New Leaf Market Cooperative articles and by-laws, and by Wisconsin Statute.” The motion passed unanimously.

The Treasurer reported that all member loans would be paid back at the interest level specify in the loan documents, but that no membership funds could be returned.

Special Member Meeting May 22

There will be a Special Membership Meeting of New Leaf Market Co-op on Tuesday, May 22 at 6:00 pm at the Allouez Community Center, 2143 S. Webster Ave. in Allouez.

The only agenda item is to discuss the future of the co-op and vote on a motion from the Board of Directors.

On April 4, 2018, the Board of Directors passed the following motion:
"New Leaf Market Co-op has not secured sufficient financing to move forward with the project, despite every effort to do so. Therefore, the Board of Directors recommends that New Leaf Market Cooperative be dissolved and that the Board of Directors be tasked with closing down the business and distributing remaining assets as prescribed by the New Leaf Market Co-op articles and by-laws, and by Wisconsin statute."

If sufficient financing is secured before May 22, the Board of Directors will present this option to members at the May 22 Special Membership Meeting.

Background:
The Board of Directors of New Leaf Market Co-op voted to recommend dissolution of the cooperative at its April 4, 2018 meeting. This action was taken reluctantly and with great disappointment. Despite every effort to secure sufficient financing, it has not been possible to do so.

Thanks so much to the 1000 visionary member-owners who invested their time, talent, and money in New Leaf Market Co-op and especially to those members who contributed to member scholarships and member loans.

Member loans will be refunded with interest. Over the past 10 years, memberships have been invested in co-op development, legal and consulting fees, market studies, insurance, web hosting, appraisals, store design, printing, etc. Members have been kept apprised of development expenses at the Annual Membership Meetings. Although final numbers are not yet determined, there is little or no membership equity remaining.

Your investment has helped establish a permanent Winter Farmers Market in our community. Also, many families, schools, and community organizations are growing their own food in garden boxes from our sister non-profit, New Leaf Foods. Its non-profit mission of healthy food access and education will keep growing.

Thanks also to key community supporters, especially Khrome and Immel Construction, who provided invaluable expertise in marketing and construction and to the City of De Pere, Brown County and the Wisconsin Economic Development Corporation for their offer of loans and a grant, respectively.

Even with community support, additional financing from a private bank is a critical piece of funding for consumer food co-ops like New Leaf. New Leaf Market sought loans from several banks but was unable to secure sufficient financing. The following is a brief summary of New Leaf's efforts to secure funding and the feedback received during this process:

1. Banks most often cited the following reasons for not extending financing to New Leaf Market Co-op:
a. The grocery business is a highly competitive one, with low profit margins. Grocery in our metro area is especially competitive and is becoming even more so.
b. New Leaf Market Co-op is a startup business, which means brand-new employees, systems, vendors, etc., with no proven track record of managerial success.
c. New Leaf Market Co-op's debt-to-equity ratio negatively affected projected profitability.

2. A national bank specifically created to finance co-ops withdrew its support for New Leaf Market in August of 2017, citing the reasons stated above. That bank also required an extra $200,000 in escrow added to the total project cost. Further, New Leaf Market was informed of a $200,000 unbudgeted expense to relocate utility cables under the parcel of land to be acquired from the City of De Pere.

3. In August of 2017, a regional bank expressed interest in financing the co-op. Their interest in lending to New Leaf was based on recent changes in federal law that made co-op businesses eligible for Small Business Administration (SBA) loans. New Leaf Market worked with this bank and a regional Certified Development Company (CDC). Both the bank and the CDC approved the loan, pending SBA approval. At the end of March 2018, the SBA informed the CDC that SBA approval would require a personal guarantor. As a community-owned business where profits go to all the members, the co-op could not expect any individual member to assume such a level of risk.

4. The other key source of financing is from member-owners. New Leaf Market Co-op did not attract enough member equity to make banks comfortable with the level of risk that they would incur.

New Leaf Market Co-op was able to overcome many obstacles, but not able to meet the additional equity requirements of $400,000, nor of a personal guarantor. We are grateful for your support throughout this process. Your dedication to healthy local food access for all will create the right conditions for a future co-op for our community. Please address questions to:  This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Sincerely,
New Leaf Market Cooperative Board of Directors,

Lynn Walter
Pete Angilello
Carrie Cameron-McDonald
Josephine Dobson Mann
Jim Lemsky
Tracy Flucke
Megan Olson Hunt