Friday, December 21, 2007
Me and the man here are going to go spike the eggnog, pull out the Jack London, and dream about the Great White North. Then maybe go hop around in the Chicago slush. While we're doing that, HPP will be offline, and no comments will be moderated between December 21, 2007 and January 2, 2008. So keep the fire going, give a howl at the moon, and see you next year.
Thursday, December 20, 2007
Just when you thought that the Herald's "coverage" of the closing of the Co-Op couldn't possibly get worse or more biased, the Herald surprises with "Co-Op Board Rejects Members Pleas" (lead story in the December 19th edition).
The idea here is that the Co-Op board, in honoring the clear majority of votes for option A , was rejecting the pleas and exhortations of barely 75 people attending the board meeting (see Richard Gill's recent post for an accurate account). Option A, you may recall, replaces the moribund Co-Op with a new grocer thanks to a multi-million dollar gift from the University of Chicago. The votes of some 3200 members don't count. We learn that they were duped by a slick PR campaign.
This is classic NIMBY logic -- only a few enlightened and privileged souls should lead our community. The rest are too gullible or too easily swayed by logical reasoning. The reality of the mountain of Co-Op debt, farcical mismanagement, and customer alienation be damned!
Who perpetrated this latest Herald outrage? There is no by-line. Perhaps, some poor Herald reporter, who was ordered to write this drivel, is trying to preserve hope for a career at a real newspaper. More likely, this story was written by heavy-handed Herald publisher, Bruce Sagan. It is ironic that Mr. Sagan asks others to stand up against the evil University but is unwilling stand up and be counted himself.
The self-congratulating reporting of "Hyde Park Businessman" Bruce Sagan's last minute, hollow offer of $500,000 is particularly amusing. Where was Mr. Sagan during the pledge drive? Will Mr. Sagan forgive the Co-Op's unpaid advertising bills? Two can play this game. I've decided to pledge $10,000,000 to the McGovern campaign of 1972 myself.
Of course, the Herald fails to note the courageous efforts of Co-Op board members (including some who were against option A) and Alderman Preckwinkle to patiently explain that the Co-Op is bust with its own members voting it out of existence. The Herald doesn't report the outrageous and unsubstantiated allegations of bribery and extortion that filled the air of the meeting.
The story is chocked full of quotes from a Mr. Mulberry making such outrageous statements as that Mr. Sagan could find "100,000" friends to contribute to the Co-Op. The Herald, through Mr. Mulberry, paints a picture of a populist grassroots campaign against the PR machine greased by the University. Herald forgets to note that the house organ, The Evergreen, was full of NIMBY nonsense on why you should vote for B and was sent to all members. Those in favor of Option A did not have access to this mailing list.
The splurge of yellow journalism ends with a thinly disguised threat of a "class action lawsuit." As usual, the Herald simply speculates, wistfully, about this and can't name any source. If this pipedream comes about, it will be interesting to learn how the "class" will be defined in the lawsuit -- all those who have suffered food poisoning from Co-Op purchases?
The Herald is one of the longest-lived neighborhood papers, providing endless examples of editorializing in the news pages. I offer a smattering of headlines from the past and wish everyone a very Happy Holiday:
(while none of these are actual headlines from the Herald, many are based very closely on actual headlines -- try to guess which ones these are)
"Herald Investigates: M.S.I. Coal Mine Revealed to be a Fake"
"University Eyes Englewood Ghetto"
"Nieman-Marcus Signs 47th Street Lease"
"City to Pave Over Point"
"Despres admits - 'I'm a Communist'"
"Herald Investigates: Alderman Receives Campaign Contribution"
"Point Revetment Predates European Settlement"
"Doctor's Hospital Missing Work of Louis Sullivan"
"Woodlawn Renamed Saul Bellow Drive"
"Borders Dooms Local Bookstores"
"Herald Investigates: SECC arm of University"
"Sacred Shrine Found in International House"
"Herald Investigates: Parking Spaces Disappear at Night"
"Flu Outbreak Linked to Mid-Rise Development"
"Antheus Capital Buys Rockefellar Chapel"
"Moresbach Donates Parking Space to City"
"57th Street Mailbox on 'Orange' Preservation Alert"
"HP Historical Society Endows NIMBY Center at U of C"
(answer: all of them, ho, ho, ho!)
Wednesday, December 19, 2007
Tuesday, December 18, 2007
posted by Richard Gill
My wife and I attended the Dec, 17 Co-Op Board meeting. About 75 people attended, and I estimate at least 25 percent of those were employees.
By my watch, the meeting ran three (3) hours and 18 minutes, broken down as follows: 2 hours, 48 minutes of discussion from the audience; 25 minutes in executive session; 5 minutes of open session, during which the Board voted.
Media were there - Tribune, Channel 7, Herald, maybe others. They stayed for the whole meeting.
Based on audience misbehavior at the meeting, I want to commend: the entire Board for valor in the line of fire; James Withrow for unhesitating adherence to the election results and doing, with a heavy heart, what he thought was right; Jay Mulberry (not a Board member) for openly stating his favorable assessment of the vote-counting process, though the voting results clearly disappointed him; and Board president Jim Poueymirou for extreme courage under fire, patience and restraint in the face of insults and abuse, and clarity in his explanations. Similar praise for Alderman Preckwinkle, who was there and spoke about the realities and was peppered with audience abuse for her efforts.
The final Board vote was 7-to-1 in favor of Option 'A', with Director Mueller casting the lone dissenting vote. Director Stanek was absent.
I won't try to chronicle the whole meeting (you had to be there). Here are just some of the highlights.
Several shouted charges of collusion, corruption, being on-the-take, leveled at the University, the Board, Certified, Alderman Preckwinkle. Most - but not all - of this came from employees and a few "activists". This then was followed by cheering and feel-good yelling. Interruptions by employees got so bad that Bruce Brandfon, the store's general manager, had to try to get them to exercise some civility.
There was much audience speech-making among themselves, much rehashing of history and many words about matters beyond the Board's control.
There were audience attempts to belittle and discredit the election.
Sue Walker, of the Herald, announced that Bruce Sagan would pledge a half-million dollars - which the Board explained more than once was too little, too late.
After a number of audience charges that the Board had not involved enough people, James Withrow asked them where they had been all the years that nobody was volunteering for committee work.
Many in the audience demonstrated either a total misunderstanding of economics, bankruptcy and the law, or willful denial of all of the above. Many made wishful remarks about what if they had more time, what if they could ask for this or that; a lot of what-ifs, which more than one Board member explained, more than once, doesn't pay the bills.
Several in the audience made statements about how the Co-Op had been a community center, a democratic institution, etc. As has been previously observed, the sentimentality went far beyond anything that would be felt for a store. It was more like the Co-Op had been Hyde Park's Mother Ship, and it was now imploding.
There was also much negative talk about Treasure Island and Certified.
Jo Reizner and Susan Campbell, of the U of C, attended the meeting and stayed throughout. They were asked to speak. Ms. Campbell briefly and clearly (amid interruptions) stated the University's position.
Near the end of the audience session, someone suggested that the Board had to vote against Option A because of the general anti-Option A sentiment in the audience. Someone shouted something like, "How come nobody here is speaking for Option A; they didn't even come to the meeting." At that point, I felt I had to say something. I raised my hand and was called upon to speak. First, I stated my name, said I voted for Option A and hoped the Board would do the same. Next I said that people who charged bribe-taking and corruption should be ashamed of themselves for making such unsubstantiated accusations. An employee tried to interrupt me, but I yelled back and wasn't interrupted again. I then said that over 5000 votes had been validated. I said further that there were just a few dozen people in the room who could not claim to be representative of the Co-Op's membership.
When the Board came out of executive session, Mr. Poueymirou said that they had called the University and asked if a time extension might be possible. He said the answer had been 'no.' He said this meant the Board still had only Options A and B from which to choose. The Board then voted for Option A, and the meeting was adjourned.
Saturday, December 15, 2007
The vote (3200 to 2049) by the members of the Co-Op and the decision of the Co-Op Board (7-1) to shutter the store is one of the more remarkable events seen in Hyde Park in many years.
There is much to be learned from the vote and the community foment that preceded it.
What We Learned About the Co-Op and Retail in Hyde Park
I learned that there are many Hyde Parkers who hate the Co-Op with a passion. Witness the dozens of "good riddance" comments posted to the Chicago Tribune web site in response to their saccharine story about the good old times.
This deep resentment was not born overnight. Many recount stories of poor treatment and spoiled food that date from the 1980s. I can still remember a Co-Op bag person screaming at a patron in the early 1980s because this person hadn't said "please." Customers were treated with indifference at best, quality has been poor, and selection has been very limited. My mother, a member of the Co-Op from 1955 to 1967, noticed the bad smell of rotting fish and produce while visiting in the 1980s. The experience of shopping at the tawdry Co-Op is remembered by many a U of C alum of the time (including the current President). These are not pleasant memories.
This increasing discontent started a slow erosion in the Co-Op customer base. That and increased competition from Peapod and Roosevelt Road would have eventually spelt the death of the Co-Op. The demise of the Co-Op was only hastened by its own silly expansion plans.
How can an affluent and highly educated customer base in Hyde Park find itself with a malfunctioning supermarket? It was a combination of a not very savvy landlord and the decline of our neighborhood.
In the late 1990s, the Co-Op's landlord renovated the Hyde Park Shopping Center and signed the Co-Op to a new long-term lease. The plans for this renovation were singularly unimaginative and timid. U of C Vice President Hank Webber was approached by Whole Foods, which thought it could find a good home in Hyde Park. The size of the Co-Op is perfect for WF (32,000 sq ft), and Hyde Park is better suited for a niche market than a competitor for the 100,000 sq ft plus stores found elsewhere in Chicago.
Mr. Webber dismissed Whole Foods as "too expensive" for U of C students. What poppycock! There are Whole Foods in Madison, Ann Arbor, Amherst, and Cambridge. Even "poverty stricken" grad students like to hang out at expensive coffee shops and trendy food outlets (there is a whole city called Berkeley devoted to this). Many U of C undergrads have well heeled parents who would be glad to see their kids getting good quality food. We should not sell short the many professionals, not associated with the U of C, who make HP their home.
But it was not just Hank Webber's bad judgment that got us in this pickle. It was also the lack of competition. If the Co-Op were located at 18th and Michigan Avenue, it would last about five minutes. The new residents of the South Loop have many grocery shopping alternatives. In Hyde Park, we are an economic backwater where the lack of competition keeps obsolete institutions afloat. We need large scale retail development with name brand retailers and much more housing. This is possible but requires vision.
What We Have Learned About the Decision-Making Process
Most issues of importance in our community are decided at "community meetings" called by local officials (often the alderman). These meetings are attended by a tiny fraction of 1 per cent of our community residents, usually the same tired group of NIMBYs. Examples include the disgraceful meetings on Doctor's Hospital and the Point (at a Point meeting, local "activist" Jack Spicer bused in residents of Montgomery Place to pad the crowd estimates).
The game is to see if you can turn out 50+ shouting and angry people, most of whom don't have the slightest idea of what they are protesting or why.
In the case of the Co-Op, we had such a meeting at the Hyde Park Neighborhood Club. Little of substance was discussed and a great deal of mis-representation was practiced by various local NIMBYs.
Imagine that there had been no vote. The sense of the Board would certainly have been --- save the Co-Op at all costs.
Instead, there was a membership vote. It turned out that the people who showed up at the HPNC were NOT representative of Co-Op members. The vote was overwhelmingly in favor of a shutdown. Imagine if we had polled the community where there are thousands of pissed-off former members!
So we were lucky this time. A decision was made on the basis of valid information and a more or less democratic process. The opportunities for demagoguery were limited by the vote.
This model should be applied to other, even more important, issues in our community such as the Doctor's Hospital, Sale and Development of Harper Court, the proposed new development at the Village Center, and (last but not least) the Point.
The 53rd Street Vision workshop is a start in the right direction, but we should remember that many interested and reasonable people won't attend these sorts of events. Many believe that we elect government officials to fend for our interests. Over the past few years, our local officials have not exercised leadership on behalf of their constituents. If our alderman are uncertain of neighborhood opinion, some sort of survey or poll should be attempted. This is the only way to make informed decisions. Community meetings and the letters to the editor section of the Herald are a good source for amusement but not for community sentiment.
A majority of voters chose Option A, to close the Co-Op and allow a buyout from the University of Chicago, over Option B, to pursue bankruptcy or a commercial loan.
The Co-Op will therefore cease to exist as a business entity sometime in the very near future.
Here's the tally:
Option B: 2049
To put this in perspective: in 1964, Lyndon Baines Johnson won the presidential election by the greatest margin in US history: 61 - 38 % of the popular vote.
In politics, this election is the definition of a landslide.
And those number are almost exactly the margin of victory for Option A over Option B:
60- 39 %.
Thursday, December 13, 2007
The Solstice on the Park development at 56th and Cornell has received approval of the Chicago Plan Commission. The next step will be a vote of the zoning subcommittee of the City Council. Given the support of 5th ward Alderman, Leslie Hairston, it is very likely this vote will be affirmative.
It looks like we are going to have the first significant multi-unit development in Hyde Park in over 15 years.
Alderman Preckwinkle: the ball is in your court to get the stalled development in the 4th ward off the mark. McMobil, Harper Court, Village Center and 53rd and Cornell are all in limbo. The 4th ward can rise again but we need action on a large scale. Make no little plans!
Wednesday, December 12, 2007
If you've been reading this blog for awhile, it will come as no surprise to you what we think should happen at the McMobil site on 53rd and Kenwood. We want to see a mixed-use, mid-rise building put right there. Like the buildings of similar height just yards away. Not surprisingly, a group of folks want a building here which allows for more cars, fewer and therefore more expensive units, with none of these preferences based on substantiated arguments as to why a bigger building would be worse.
In previous posts, we've gone over the reasons why we think a mixed-use mid-rise is a good idea, and in fact fits with the character of the neighborhood. The alpha and omega of this issue -- something which goes against the very core of the NIMBY soul -- is that Hyde Park needs more people. We've gone over the demographics here, and made it clear that the decline in neighborhood retail is linked to the decline in neighborhood population, and not just here but throughout the South Side.
We've also pointed out the research demonstrating that, as household density goes up, auto ownership goes down. That means fewer people actually chose to own cars. That's good for congestion. And the environment. And when retailers decide to locate nearby concentrations of shoppers, that means fewer trips by car are necessary. If NIMBYs don't want a building here, congestion is not going to be a convincing bogeyman.
Hyde Park is in fact full of such buildings, sprinkled liberally among low-rise structures. This is the case on 53rd as well, and a building here would in no way depart from the historic texture or precedent of the street or the neighborhood.
Here are a few examples of other mid-rise buildings amid low-rise housing. Does anyone have any complaints about these towers near the intersection of 56th and Kenwood? Can anyone argue that they contribute to congestion on 56th Street?
After the 53rd Street community visioning meeting this past Saturday, I sense that people are starting to realize this, that the Old-Timer resistance to change may be ebbing. Hyde Park needs more people. It needs new people. And it needs new, modern housing to hold them in sufficient numbers to make streets busier and safer.
When you get a chance to build new housing on a major artery of the neighborhood, if you don't try to match what the neighborhood historically supported, you're perpetuating the suburbanization of the inner city that was the vision of Urban Renewal. It's something a lot of NIMBYs still cling to.
A lot of holes have been ripped into the neighborhood in the last 50 years, and the NIMBY crowd has grown accustomed to them. They like their vacant lots, dead space in public parks, empty streets with anemic urban densities, and marginal retail amenities. And they especially like their free street parking.
But none of those things are fundamentally good for the neighborhood. And there is as yet no good reason that has been offered as to why an 8-10 story building shouldn't go on this spot.
When we get a chance to fill one of those holes, and turn some of these things around, we should make the most of it, and in a big way.
Monday, December 10, 2007
Say what you will about chain grocery stores, about "capital" and all the 1960s phobias that make Co-Op die-hards and Hyde Park isolationists shiver. What we're getting from the community of amateurs lately is no more reassuring.
It consists of a deep paranoia projected onto the University of Chicago when all the evidence makes clear that it is the Co-Op itself that is to blame for its current pickle; a laughable arrogance in the conviction that there are higher moral questions involved in this tale of banal mismanagement and play acting; and a revealing sense of entitlement to a continued existence at the expense of the University and other folks willing to keep the Co-Op on the dole.
The New Option B -- since the first one, the one members probably thought they were voting on, is moot, since that the National Cooperative Bank has rejected Chapter 11 financing -- is all about getting a regular commercial loan, with interest and terms, to help keep gas in the Co-Op's tank while the Co-Op gets its act together. This loan, which will only come on condition of an agreement with the University and Certified, has been seized upon by Co-Op savers as the "Third Way" out of the current crisis.
While we're not sure if there is such a thing as a third way out of a hole you've dug yourself into, we're quite sure that there are three questions that hover over the present strategy of Option B supporters now that a third attempt is being made to secure a commercial loan.
Can the Co-Op even secure a commercial loan? On what terms can it be secured? And can it be serviced in such a way as to do more than defer a resolution of the present crisis to a future point in time?
Rather than making an examination of any of these questions, the "Save the Co-Op" website highlights the very distant possibility of restoring some value to member shares, while glossing over the potential risks involved. The "lure" of Option A that is written off as part of a surreptitious, University-sponsored PR campaign is not that different from the "lure" of redeemed member shares here being proffered with next to no assessment of its real probability.
The risks not mentioned on the website include 1) the likelihood of meeting the conditions of a loan, meaning a payment plan agreed to with the University of Chicago on the Co-Op's back rent, and with Certified Grocers on its lease on 47th Street; and 2) the chances that the Co-Op will default on this loan, leading once again to supplier and liquidity troubles, and the threat of liquidation.
The Save the Co-Op website minimizes any downside to Option B because it counts on the University to provide a bailout in the event of the Co-Op's failure in servicing the new loan. In the bizarro-world of Co-Op Director Mueller, this expression of entitlement to financial rescue is "the more moral option."
Here's the key text outlining the preferred scenario from the Save the Co-Op website:
Option B passes but there is no way possible for the Co-Op to get a loan or go into reorganization. At this point the University will either go back to Option A or disgrace itself by allowing the Co-Op to go into liquidation. The idea that the University would allow the dismemberment of the store, the non-payment of merchants, the community with no place to shop, its mall without a keystone, residents heading north for all their shopping, etc. etc. is completely at variance with dozens of statements made by President Zimmer, Henry Webber and other University representatives for months and months. They would be doing what they claim the Co-Op has done -- but doing it with 100 times greater destructiveness.
Essentially, the Co-Op savers are playing a game of chicken with the University. The claim here is that the University is bluffing, that if the Co-Op membership and Board decided to go for Option B, now that debtor-in-possession financing is off the table, the University would in fact come to the Co-Op's rescue because they don't want a shuttered store in the neighborhood. This plan counts on the hegemonic University saving the Co-Op's insolvent but entitled arse.
Somehow or another, at the end of this queer passage, you get the sense that if the Co-Op goes down, it will somehow be the University's fault, rather than that series of friendly, neighborhood Co-Op Boards staffed by your friendly neighbors, the ones who ran this ship into the ground. In the absence of evidence to the contrary, this is what I see as the true fruit of the "democratic center of community involvement" advertised on the Save the Co-Op website.
Rather than stepping up and shutting down a failed business like responsible adults, the Co-Op Savers are acting like spoiled children -- eager to speed around in the family car knowing that if they crash it, Daddy will just buy them a new one.
It's one thing when amateurs botch up their own accounts. We don't have to live with that.
It's another thing entirely when amateurs botch up an enterprise that is supposed to serve the entire community, hold no accountability for the wildest schemes, and then make claims of moral superiority that would make Hugo Chavez cry.
Saturday, December 8, 2007
posted by Peter Rossi
Look! Up in the sky! It's a can of soup. It's a pigeon. No. It's the Hyde Park Herald (December 5th edition) to the rescue. The Herald pulled a fast one with an unverified (of course) lead story that there is the possibility of a 2.5 million commercial loan to "bailout" the Co-Op. Those news hounds at the Herald beat a confession out of the Co-Op Board President that there had always been a commercial loan on the table.
I am sorry to let reality intrude on this pipe dream, but there are at least three catches:
By now, even the Herald editors must realize that no one really believes anything that the paper tosses out to stir up the pot. So the story goes on to spin the favorite conspiracy web. Here the villain is that sinister organization, the University of Chicago. An "aggressive and well-coordinated effort to convince Hyde Parkers to shut the Co-Op down" is afoot.
How do we know that the University is behind these fliers circulating around the neighborhood? The source, Hyde Park Co-Op manager Bruce Brandfon, says it is "likely that the University bankrolled this effort." The Herald fails to cite any actual evidence that the University is behind any of the recent efforts to persuade Co-Op members to vote for option A. It's bad enough to splash rumors on the front page but when the source of the rumor has a direct interest keep the Co-Op around so he can get paid for a few more months, you do want to scream.
The first to start pointing fingers at our fair University was James Withrow (who is employed by the University). Mr. Withrow accused the University of stuffing the "fact sheet" that was sent with the ballots down the throats of the Co-Op board. Mr. Withrow has since apologized for his error in his own private blog. So like many NIMBY conspiracy theories it has acquired a life of its own divorced from reality. In a recent email, prominent NIMBY Jay Mulberry aped the University theory stating without a shred of proof, "Option A is represented by a PR machine, financed by the University and supported by workers from Alderman Preckwinkle's office."
But what of it? If it is true that the University is lobbying Hyde Parkers to shutter the Co-Op, why aren't we all shouting-- Go Maroons!
It is hard to understand why the University comes out such a villain on the Co-Op. They have been most patient (some say financially irresponsible) in allowing the Co-Op to have a free line of credit for 1.2 million. They have offered to pay more than 5 million to bring a real grocery store into our neighborhood. The university competes on an national level for students and faculty. On this issue, the neighborhood and University interests are perfectly aligned. If the University wants to pay a subsidy to obtain a better quality grocery store than we would get otherwise, let them spend their money.
Our friends in the Herald editorial suite are mystified by the University. In their editorial, they wonder out loud why the University is so determined to bring a quality store to our neighborhood. Are the Herald editors too tightly wrapped in the NIMBY flag to see the obvious or are they too beholden to the Co-Op ad revenue and worried that Dominicks will not advertise in a tiny paper with an aging and shrinking readership?
Friday, December 7, 2007
posted by chicago pop
Who is Leon Shernoff? If you don't happen to have your pack of Co-Op baseball cards laid out in front of you, he's the dude who puts together the Evergreen, the "Newspaper of the Hyde Park Cooperative Society." That's right, another astute journalistic organ based right here in Hyde Park.
Up until Vol. 60, #10, December 2007 of the Evergreen, it was a folksy and disarmingly honest little window into the dysfunctionality of a community-run commercial enterprise. (LIES!)
It's how we learned all the Onion-like details of daily management at the Co-Op over the years, like how decades-old POS equipment was aced by a devious squirrel, how various unionized cashiers absconded with untold thousands right under the noses of their altruistic managers, or how various vendors stopped returning phone calls from the Co-Op to service their products. (MORE LIES!)
But all that happy gemütlichkeit seems to have evaporated with this last issue. Because in Volume 60, Number 10 of the Evergreen, Leon Shernoff has gone on a paranoid bender of epic proportions. (A NEW LIE EVERY DAY!)
We can only assume that the paranoia that got into this issue is only a fraction of the paranoia that has seized the rogue faction of the Co-Op Board, a minority that has somehow managed, despite their declared affability and simple interest in rutabagas, to shrewdly seize all outlets of communication from the majority and broadcast their strange and none-too-clear tale of intrigue, "illegitimate fact sheets" (FRAUDULENT RESEARCH!) and, best of all "University-sponsored identity harvesting." (BEWARE!)
What is identity harvesting, you ask? Let's ask Leon.
Identity Harvesting by the University
In their frenzy to smear the Co-Op, the university has even resorted to unethical means of information gathering. At the November 26th Board meeting, university administrator Jo Reizner attended and tried to guilt-trip the Co-Op with stories of how many shoppers were leaving the area to avoid shopping at the Co-Op. She said that an unnamed supermarket at Roosevelt Road keeps track of its customers via an identity card, and has shared that information with the university, leading to the revelation that shoppers from the 60615 and 60637 area codes spend about $100,000 a week at this grocer. She proudly revealed this research at the meeting, apparently unconcerned with the massive privacy and confidentiality violations involved.
Now let's step back a bit. You know that little magnetized fob on people's key chains, the one that says "Dominick's" or "Jewel"? The thing that gets you a discount every time you check out? Guess what? It has your ZIP code on it, information that you freely provided when you applied for the fob at Dominick's and Jewel so you could get the discount. Lots of people have one. Ever notice how the computer at the gas station asks for your ZIP code when you pay? (SPIES!) It's the same thing. Is it linked to your name, your Social, or any other privileged information? No. Is it aggregated and sold to market research firms? Yes. (STILL MORE LIES!) Is it part of how we know that millions of dollars a year are being spent outside of Hyde Park? Yes.
Is this unethical? Not at all. Are individuals' privacy compromised? Not in the least; this information is given with consent.
Is it a conspiracy? You decide. (THE UNIVERSITY IS CLONING OPTION A SUPPORTERS!)
As for the $100,000/week spent at an unnamed Roosevelt Road supermarket, there's no news there, we've been talking about leakage at this blog for some time. And most of what we learned came from the Tribune, and they throw much bigger numbers around ("Delivery is oasis in food 'desert'." April 1, 2007).
Shernoff isn't too concerned about that $100,000 number. Why not? "[T]hat $100,000 is about the amount of business the Co-Op does on a Saturday."
Nice job, Leon, losing one day of revenue a week for 52 weeks of the year. Maybe this kind of indifference to losing money is why the Co-Op is insolvent, with twice pledged collateral, and can't get a loan.
By my calculation, that lost revenue amounts to $5.2 million annually.
And that's just money lost to one store. (DISTORTION!)
And it doesn't include all the money going into all those Peapod vans.
Wouldn't that $5.2 million in lost revenue alone be enough to solve most of the Co-Op's problems?
(WE DON'T HAVE PROBLEMS!)
Tuesday, December 4, 2007
At that time, there were two Germanies. China was closed to the outside world. Personal computers did not exist.
Is this pledge, and the anxieties to which it responds, out of date?
I have a feeling it might be. But there's no question that the issue is complicated.
After all, there is expansion through the urban renewal methods of razing and displacing, which did happen in Hyde Park, and didn't happen in Woodlawn; and there are other methods of expansion, through erecting buildings on vacant lots that would otherwise remain magnets for crime, and bringing jobs to a community that will help pay for rents and mortgages.
The University can without a doubt play a role in the latter strategy. It certainly requires sensitivity and open communication with neighbors on the part of the University, but it also requires and openness to change south of 61st Street, with change understood to mean that not all of the people in Woodlawn will always be poor, and that the neighborhood might one day approach the balance of household incomes it has known historically.
Take another look at the above picture of a longtime Woodlawn resident taken near her home. The University, in the end, never did expand south of 61st Street. In fact, it didn't do a thing in Woodlawn during the heyday of urban renewal, when it kept itself busy instead bulldozing solid chunks of Hyde Park.
Hyde Park, comparatively speaking, is now flourishing. Woodlawn has vacant lots the size of city blocks like the one above, not far from where Amadou Cisse was murdered.
The picture is taken from Monday's column by Chicago Tribune writer Dawn Turner Trice, who did the service of pointing out that Amadou Cisse was not the only one murdered recently nearby the University; in fact, two women have been found strangled and burned beyond recognition in garbage cans in or near Washington Park.
Trice spoke with two longtime Woodlawn natives who think the Washington Park homicides would have gotten a lot more media time if they had involved University students. They are probably right. The fact that the Cisse murder got such immediate and sustained attention from the media and from police, Trice argues, is part of why there are powerful racial and class tensions between the University and neighboring Woodlawn to the south.
That's certainly true. But things get a little less clear when the column takes a further turn, and as with so many issues in this part of town, brings it back to real estate. In particular, to the Big Bang of urban renewal, to which so many things around here can be traced back.
Like the idea that, instead of helping to get rid of those vacant lots, provide jobs, and partner with local organizations and developers to build market-rate and affordable housing, the University should be kept out. It all sounds very familiar to anyone who pays attention to Hyde Park politics, because in so many ways the terms of the debate were cast at this historical moment for both neighborhoods.
Trice quotes longtime resident Helen Latimore:
"People still see the University as harboring dreams of taking over our property." Latimore said. "Of waiting until Woodlawn is in such disrepair that all they have to do is swoop down and take it over."
It didn't help that a few years ago, the University hired a planning consultant that recommended the University expand south of 61st Street, which it has long said it wouldn't do. University officials quickly nixed the idea. But not before it reignited the suspicions and the mistrust among some Woodlawn residents.
Woodlawn residents, organized into the vibrant community and civil rights activist organization TWO, helped block University-led urban renewal plans in Woodlawn, and eventually elicited a sort of "61st Street Pledge" from the University in 1964.
But then, in the 1970s, long after most whites had left, most of the black middle class left, too. A neighborhood numbering 81,279 people in 1960, Woodlawn declined to 27,086 in 2000, a loss of 54,193. That kind of loss is not unlike that resulting from the incendiary carpet bombing of a large urban area. It constitutes the death of a neighborhood, if not a large part of a city. The number of vacant lots in Woodlawn and other similar neighborhoods attests to this massive depletion of human capital out of the neighborhood.
But without bringing human capital back in, and allowing investment from outside, things are never going to change.
So does this ban on University development south of 61st Street make any sense today, in the 21st century? Woodlawn may be able to fend for itself, with some of the indirect kind of help and support from the U of C described in a 2006 Chicago Magazine article. And, over the last decade or so, the market has finally started to notice Woodlawn; as the Chicago Reporter notes, "Between 2000 and 2004, the number of single- family attached units sold in Woodlawn tripled."
But this movement represents only a slow nudge towards what Woodlawn used to be. It's been hearly 50 years since things began to slide downhill for Woodlawn, and it may be another 50 before it returns to anything like what it was before it became pocked with vacant lots.
Considering that the University never did tear anything down south of 61st Street, maybe it's time to revisit this old treaty that keeps it behind an asphalt curtain.
Monday, December 3, 2007
Just a little public service announcement reminding folks about this Saturday's visioning workshop for 53rd Street. ( please email rsvp to: email@example.com ) For once, we have a community meeting with somewhat of a scientific methodology behind it (those electronic keypads), and put together by organizers who have made a real effort to turn out a real cross-section of Hyde Park-Kenwood residents.
It's a big time commitment, but one way to think about it is that with this meeting, you will have dispensed the equivalent labor of attending 4 or 5 less important ones. If you're going to put your time into any community meeting in the next little while, this is probably the one to invest in.
So come let your voice be heard, and tell the Man that you want more currency exchanges, dollar stores, curio shops, cell phone retailers, and third rate restaurants.
Saturday, December 1, 2007
There is a light at the end of the tunnel for the debt-saddled Hyde Park Co-Op. The Co-Op web site proudly proclaims a total of $26,245 (as of December 1st) has been pledged by members to defray the debt. "We have been surprised at the support the neigborhood has shown us," reported maverick board member Jim Too-Tall Tail. "The pledges we have received so far top our total store revenue for November."
When asked by this Herald reporter why neighbors should support the dying Establishment institution, Mr. Tail responded "People give back in proportion to the contributions that the Co-Op has made to our community."
"The Co-Op's contributions to our community are intangibles that can't be measured by action but must be considered an ethos," added Mr. Tail.
The prospects for the success of the pledge drive are bright, according to Mr. Tail. "At this rate, we may reach $50,000 by the bankruptcy deadline of December 14th. Only the failed 'Save the Point' campaign has raised more money in our community than our drive."
"We hope this signals a return to the hey-day of community activism. Members of our community are putting narrow concerns for their own welfare behind them and reaching out in the cooperative spirit to ensure that we are all worse off."
Tale of the Tape
1.2 million back rent to U of C
2.3 million owed to suppliers
0.685 million 47th store debt
1.01 million owed to Certified
Total: 5.195 million
Pledged: .026 million
"We expect that the fund raising drive will finish successfully around the year 2100," Mr. Tail asserted. "We feel very strongly that there are many lenders who will jump at the opportunity to extend us credit on the strength of this pledge cashflow."
In the past, my Herald's Chicken posts have been commentaries on or parodies of Herald coverage. However, the penchant for NIMBY points of view by Herald reporters and editors allows me to predict future Herald coverage. It is particularly easy to presage Herald articles as most articles do not involve any news content.
Friday, November 30, 2007
Even HPP bloggers need a break from being snarky. So we're off to the woods of Wisconsin to dig up some mushrooms, which means we won't be able to post any vitriol, wit, insight, digression, segues, interpolation, double-entendres, learned references, invidiousness, asides, praise or damnation.
Not until Monday, at least, when it will all resume in full.
Thursday, November 29, 2007
[Newsflash: As reported on the Co-Op's website (which, sadly but not surprisingly, gets the date wrong!) the National Cooperative Bank has refused to loan money to the Co-Op. "Other financing is being sought," the website states.]
Somewhere in the last week or so the Co-Op crisis has passed over from neighborhood politics into divine comedy, though we're not sure yet which circle of hell we're in: with ever more lunatic rescue plans from the Herald editors, in which the cost of saving the store seems to drop by the week, and the first of what I can only hope will be an ongoing series of political infomercials from Co-Op Board Secretary, James Withrow.
What do you do with this stuff? Even I am virtually at a loss this week. Call Hollywood? Pitch the Co-Op crisis as a reality show? Or maybe a cable teledrama? It's got nearly everything a scriptwriter would ask for -- except sex and humor, but those tend to be scarce around here anyway -- but it certainly has intrigue, betrayal, greed, lust (for produce), passion (for produce) and suspense (about produce).
The greatest challenge in pulling together Herald's Chicken this week, beyond making sense out of the ever-spiraling insanity, was forcing myself to read Mr. Withrow's dissertation prospectus -- without recourse to alcohol -- on crisis management in retail food cooperatives. I'm sure I can now number myself among a small elite for having done so.
After putting down Mr. Withrow's "quick" article reviewing "the main points made during my Town Hall speech," the glory of which I was happily able to relive, one thing is certain: there's not enough (free) space for James Withrow. Or at least his verbiage. It seems to keep expanding to fill whatever nooks aren't already occupied. At some point, this may cause a local media bottleneck -- say, if Hans Morsbach starts feeling talkative again.
What's interesting about the latest installment of Withrow verbiage, or, as fellow blogger Elizabeth Fama dubbed it, The 95 Theses, is that Mr. Withrow paid for it, and then got some key facts wrong, which he later corrected on his website.
Now, as any professorial type, or aspiring professorial type will tell you, before anyone goes into print, especially in such a high-profile and prestigious forum as the Hyde Park Herald, one would assume an author would take great pains to get the facts right. Especially if one is paying out of one's own pocket for the privilege of being read; and even more especially if the central fact in question (which I will pass over here, out of simple boredom) is rather central to one's argument.
Well, it turns out those assumptions would here be confounded, and Mr. Withrow got his plot wrong. Which doesn't really bother us, since he was paying for it anyway, and it probably attracted as many readers as the Journal of Late Etruscan Numismatics.
But when we think about how this kind of gaffe applies to community management of a retail food establishment, and not just one's own bank account, it does give us some pause. As does the entire recent theatrical turn of events, replete with fiery oratory, a rallying of old-timers, and the truly vintage, McCarthy-esque call among die-hards to "name names."
All very entertaining, but can we translate this into financially stable and reliable groceries? Look at what a time the Board is having just deciding what to do; figuring out who can vote; determining who should speak for them; and who takes the liberty to speak for them; and how to control whoever takes out a full-page ad in the Herald. It seems to me that when anyone suggests "we start acting more like a cooperative," that this is in fact exactly what's already going on, and it's not encouraging.
It all seems a bit chaotic on top. Would this kind of drama fade out if these folks were left alone to manage a grocery store? Or would the theater continue? Is this the French Revolution, with pamphlets from Robespierre and Danton, and the tumult of factions in the National Assembly, the call for purges, and cries of conspiracy?
Should running a grocery store really entail so much drama?
I, for one, am ready for a little competent banality.
Tuesday, November 27, 2007
A faction of the Hyde Park Co-Operative Board wants to pursue a scorched-earth policy. “To struggle and go down in flames is a more moral decision,” the Maroon quotes one such Board member declaring at Monday night's Board meeting.
The only problem with this Napoleonic delusion is that in taking the Co-Op down, such a policy would take down a good chunk of Hyde Park with it.
Hyde Park doesn't need a Napoleon, a scorched-earth policy, or a rallying of support for "more moral decisions."
Hyde Park needs a supermarket.
Hyde Park needs a financially stable, fully equipped, and modern supermarket. Not six years of Mr. Hooper meets the Battle of Stalingrad, which is what a filing for bankruptcy would bring.
Co-Op members, as we all know by now, face a decision between voting for an Option A, and an Option B. (For a comprehensive list of the specifics in each Option, click on the image below).
Option A provides for a very generous buy-out by the University of Chicago and an enormous write-off by Certified Grocers, as well as the structured payment of debts to smaller vendors, all against the background of a speedy handover of the store from the Co-Op to a new operation. Above and beyond this, the University and the new operator would immediately begin investing $5 million in much-needed capital improvements in the 55th Street location.
Option B involves filing for Chapter 11 bankruptcy. This requires first obtaining a significant loan which has so far not materialized. At best, this route would preserve the status quo of a deteriorated building and inadequate facilities for at least 6 years, while the Co-Op squeezes its margins to pay off $6 million in accumulated debt based on just under $1 million annual earnings.
During this time, the slightest failure to meet payment obligations to already leery vendors and creditors could lead to liquidation and the indefinite shuttering of the store.
At worst, and we will know by December 17th, if the Co-Op fails to secure a loan (debtor-in-possession financing or DIP), it will be unable to file for Chapter 11 bankruptcy and will instead go into liquidation. The practical implication of this is that a third-party appointee of the court will be responsible for paying off the Co-Op's most senior creditors by selling off its remaining assets.
This will take time, and could result in a considerable period during which there is no major, central grocer in Hyde Park.
To sum up the challenges the Co-Op faces, we'll quote from the Hungry For Change website, set up by Hyde Parkers who support Option A for a reliable, new grocery store in the neighborhood:
The future of the community's grocery options are at stake, and in your hands. The Co-Op has a negative net worth of $1.8 million. To pay its current bills the Co-Op must borrow over $2.3 million and obtain a $400,000 letter of credit. The Co-Op has continued to operate the past eleven months by deferring payment to its vendors and not paying rent to its landlord, the University of Chicago. The Co-Op owes the University of Chicago over $1.2 million in back rent and it owes its suppliers over $2.3 million. It also owes $685,000 related to the 47th Street store, as well as a $1.01 million loan to Certified Grocers.So where would the "more moral decision" leave the rest of us?
The version of morality represented by Option B, should it fail at any point or at all, or should Option A be rejected by the Co-Op Board, is likely to lead to greater hardship for the Co-Op's smaller and unsecured creditors, some of which are local and minority-owned businesses that stand a greater chance of payment under Option A.
It will likely lead to greater hardship for employees who stand a greater chance of losing their jobs permanently, together with their pensions.
It will likely lead to greater hardship for nearby retail establishments in a mall that would lose foot traffic from a shuttered anchor.
It will likely lead to greater hardship to even more members of the community who would have to absorb the time and costs of shopping out of the neighborhood while the store was shuttered.
It will likely aggravate the chronic problems of a neighborhood that cannot attract more shoppers because it cannot support retail business.
We don't need heroics at the deli counter, or last stands in the produce aisle. We don't need a scorched-earth policy at 55th and Lake Park.
We need a supermarket that we can rely on.
Vote Option A.
Friday, November 23, 2007
Hyde Parkers moved closer to adding the Co-Op store on 55th to the long list of shuttered and abandoned buildings in Hyde Park. Ignoring recommendations that the Co-Op accept a generous bail-out proposal in exchange for a replacement with an actual grocery store, Co-Op members shouted "Save the Co-Op" at a meeting last Sunday.
Boldly defying market forces and dry balance sheet statistics, many attending held out the panacea of bankruptcy as a way to save one of the oldest neighborhood Establishment institutions. These members were exhorted by two maverick Board members who were seen to be holding well-thumbed copies of The Rochdale Principles.
"Bankruptcy is a way to turn the rules of the Capitalists against them," commented member Ned I.M. B. Young, 99. "If the Co-Op files for bankruptcy, they can simply walk away from the 47 Street store lease." A Herald reporter reminded Mr. Young that Certified Grocers is both the Co-Op's landlord on 47th street and supplier for 55th. "Details, details, the people have spoken -- these suppliers will just have to give us free groceries until we get back on our feet."
Others at the meeting excoriated the Co-Op's landlord, the University of Chicago. "As rich as these people are, they can certainly afford to extend us another few millions to let the Co-Op continue to provide us with poor service, high prices and low quality produce," said local writer Curtis B. Misguided. "You need to suffer in order to be truly creative. The long Chicago winters, coupled with the Co-Op, have helped many of us do our best work."
Still others emphasized the preservation motive in taking the bankruptcy route. Freeze! Illinois chair, Daniel Buttress, explained that "we want to preserve buildings in the amber of the Hyde Park backwater. We have been very encouraged that Alderman Hairston has turned down proposals to replace Doctor's Hospital with a hotel. We have St. Stephen's, Doctor's Hospital, and the crumbling Point revetment on our list of historically significant, abandoned structures. If the Co-Op takes the bankruptcy route, it will be shuttered within a few months and we can add it to our list."
When asked why the Co-Op structure deserves the attention of preservationists, Mr. Buttress replied, "well, it is true that Co-Op was very badly rehabbed in 1999. But if we don't abandon poor architecture today, we will have nothing to preserve tomorrow!"
Some at the meeting noted that the "Save the Co-Op" campaign could be a boon to local environmentalists and recyclers. "We can recycle the rhetoric of the unsuccessful 'Save the Point' campaign for use here," according to Save the Point task force spokesman, Don Sheepish. "Even the 'Save the Point' bumperstickers can be reused by covering 'Point' with 'Co-Op.'We are going to use minimum wage dishwashers from the Cosimo's to help out with this task."
Whatever the outcome, many in the community welcome a rebirth of the unrealistic expectations, empty rhetoric, and financial irresponsibility that our community was once famous for. A group of members is preparing to chain themselves to Co-Op shopping carts, if the Co-Op turns over operations to another retailer.
Happy Thanksgiving from HPP!!
Thursday, November 22, 2007
Hyde Park Progress will be taking a break over the Thanksgiving Holiday. There may be a few new posts, but no reader comments will be moderated until we're all back and a little bit heavier on Monday morning, 11/26/07. Have a thankful and pleasant holiday!
Tuesday, November 20, 2007
Solstice on the Park would replace the largely empty Windemere parking lot with a 26 story condominium building and a 500 car parking garage. The tower would be located on the south end of the lot with a circular drive facing 56th street. Behind the tower would be a garage covered with a garden and swimming pool. To provide affordable housing, the developer, Antheus Capital, has acquired the rental apt building at 5528 S. Cornell (directly north of the garage) and has agreed to keep these 53 units as rental in perpetuity.
The architect, Jeanne Gang, made a presentation on the details of the building and how she sees it fitting into the architecture of Hyde Park. One of the strengths of Hyde Park is the diversity of high quality architecture. Mies van der Rohe's Promontory Apartments made of glass and concrete with a "glass box" lobby sit right next to the red brick Baroque Flamingo Apartments. Raphael Vinoly's Graduate School of Business complements its classic neighbor, the Robie House by Frank Lloyd Wright (both feature cantilevered building sections). Modern architecture should relate to its surroundings but does not have to be a bad copy of them either in design or materials. Solstice features a deep setback with circular drive just as its neighbor, Windemere House, does.
Ms. Gang emphasized that Solstice is also compatible with the height of other buildings in East Hyde Park. A panoramic view of 56th showing Solstice and other buildings shows how correct Ms. Gang's assertion is. Solstice is by no means very tall. 1700 E. 56th is about 20 per cent taller. The Windermere House is about 30 per cent shorter at just under 200 ft (it has much higher ceilings so that you can't simply compute a multiple of stores - 14 vs 26). Shadow studies show that the Solstice tower will not shade another building except 5528 S. Cornell and then only in the early morning and late afternoon on Winter days.
Solstice has an unusual design in several respects. The building can be thought of four story modules stacked on top of each other. This gives the South elevation of the building its dramatic "sawtooth" look. The purpose of this is to use the building to shade itself in the summer, while letting natural light in in the winter. The East and West elevations are not sheer walls like so many buildings of this type in Chicago. A seemingly random pattern of cut-outs are filed with windows. These and many other features make Solstice an unusual design with also an unusual level of energy efficiency. The building will be featured in a television program on energy efficient architecture as the Midwest representative.
The Solstice developers have also tackled the traffic flow problems at this site in a thoughtful way. The existing condition has two bad features: 1. there is two-way traffic for about 150' of Cornell Ave; 2. there is a dangerous situation as buses and parents attempt to pickup or drop off their children in front of Bret Harte school. With a land swap and some good design, the new development will correct both problems. Parents will be able to drop off their children in a new dedicated alley just to the east of the school. Parkers will enter the garage on 56th street allowing Cornell to be restored to one way northbound. In addition, teachers will have a larger and relocated parking lot that does not pose a safety threat to children playing around the school.
The bulletin makes two basic arguments against the development: 1. the architecture is "incompatible" in the sense that it does not contain "shapes or patterns" or materials found in neighboring buildings and 2. the tower is too tall. The very same argument of "incompatibility" could have been raised to block the construction of the Robie House or any of Mies's buildings. In my opinion, this shows remarkably little appreciation for the evolution of architecture that has made Chicago so great.
The argument against the size is specious as there are other buildings in East Hyde Park that are larger and the building fits well in the street scape of 56th street. "Cornell Neighbors" don't specify what the maximum size that would be acceptable to them is. In addition, Cornell neighbors feel that the garage to the north of the main tower is too tall at 50' high. Here we have two alternatives: reduce the amount of parking (a Hyde Park No No) or go underground. Underground parking is expensive and the developer apparently does not feel they can recoup the expense of underground parking in higher condominium prices.
The document contains other curious arguments such as the development violated the Lakefront Protection Ordinance or that the development is priced badly by the developer or that the developer has designed something that makes service access to his own Windemere House impossible. The idea appears to be that the Lakefront Protection Ordinance applies to a property located 5 blocks from the Lake but fronting a park which connects with the lake By this same reasoning, much of the Jackson Park Highlands violates the Lakefront Protection Ordinance.
The memo goes on to praise Antheus Capital for being so responsive to the community. Here the argument is: they have been so accommodating in the past, let's press them for even more (but unspecified) concessions.
The most curious sentence in the letter is on page 3 as part of set of bullet points providing the reader with a list of possible actions. The memo urges you to write letters to the Hyde Park Herald and "avoid calling for no development at all." Given that the memo starts out with the statement "it can be stopped," this sentence is puzzling to say the least. Perhaps, the authors mean that we don't like this building but we might like some other building. Since the authors do not specify what they would find acceptable, the developer is faced with an impossible task of guessing what would be acceptable. This has the net effect of discouraging any development, no matter how thoughtful. There will always be someone who doesn't like it.
Mr. Greenspoon has filed a lawsuit against the Chicago Board of Education and the developer regarding the purchase of Board of Education land to allow for the new alleyway. The essence of the complaint is that there was a no-bid sale and that this contravenes normal operating procedures. Mr. Greenspoon shared correspondence from the Board of Education which indicated that the Board as rescinded it's earlier decision, but "the board remains interested in improvements to Bret Harte School. Therefore, the board directs the Chief Administrative Officer and the general counsel ... to further consider this project and present recommendations to the board regarding its implementation." While it is always hard to intrepret these sort of messages, it appears that the Solstice proposal for improvements at Bret Harte is considered desirable. It may be just a matter of time. A land swap for the purpose of improving both parties is not some sort of under-handed deal.
It is clear that Mr. Greenspoon does not want to look out from his house on Solstice as currently conceived. The community meeting was one referendum on this building. It is clear from this meeting that Mr. Greenspoon's views are not shared by others. It will be incumbent on him to show that there are more than just a handful of people who agree with him. Mr. Greenspoon reported to me that he has a petition against the development signed by about 60 of his neighbors.
Mr. Greenspoon also contends that Solstice will not be able to get a zoning amendment approved. He believes that the building will not comply with the RM6.5 designation as he contends it is too tall in relationship to the site. Why a developer would make such an substantial investment of time and funds without an expectation of success is not clear. In the interest of promoting development, Antheus should be given a chance to convince municipal authorities to give the go ahead for this development.
Sunday, November 18, 2007
No matter which option is ultimately selected, the Co-Op and its democratic community principles will no longer exist, whether the 55th Street store stays in operation or not.
Further, any funds raised in a "capital drive" not only will probably never be refunded, but may very well end up helping to keep alive a store that winds up owned by someone other than the remaining cooperative members.
And, if the die-hard faction's proposal to go into bankruptcy and reject the University's bail-out is chosen, the high risk of eventual liquidation of the Co-Op's assets means that the chances are higher that the neighborhood will go longer without any grocery store at all. No one brought up this potential consequence of the bankruptcy route.
But first, let's review the afternoon's events.
It was cause for some concern that the audience was clearly composed mostly of die-hard Co-Op supporters who did not understand the magnitude of the institution's financial distress, the concrete implications of bankruptcy proceedings, or the complicity of the retail cooperative Certified in the Co-Op's troubles.
The first option presented, also known as "Sorry Charlie" in our earlier post, involves the generous debt workout plan that the University has proposed. This approach would allow the University to buy out the remainder of the 55th Street store lease (through 2013) and forgive the 14 months of back rent that the Co-Op still owes. The 55th Street store would close, and a new grocery store would open within 14 days of the Co-Op's exit. The Co-Op would take the proceeds from the buyout and pay off the 47th Street lease with Certified, and pay off its vendors.
While the University has purportedly had discussions with several grocers, it has clearly stated that whichever grocer ends up moving into 55th Street must make significant improvements to the store space. With this option, the Co-Op's last remaining store would likely be shut by the end of January, and a new grocer would open up in that freshened space within two weeks.
The second option, also known as "Rehab," means the Co-Op would file for Chapter 11 bankruptcy, keep the 55th Street store in operation, and attempt to clean its financial house. However, this option is fraught with 6 very big "ifs."
The 6 Very Big IFs:
Rehab will only work out 1) if the Co-Op is able to get an approximately $2 million loan; 2) if Certified will agree to a $1 million buyout of the 47th Street lease; 3) if the Co-Op can raise "substantial" pledges from the membership for the capital campaign; 4) if General Manager Brandfon stays on and continues to improve operations; 5) if shoppers start spending more food dollars at the store; and 6) if it can pay off all its creditors 100%.
Even if all of the above conditions are met, make no mistake about it: this alternative would only save the existing grocery store at 55th Street -- but not the current cooperative management or ownership structure -- and the store would wind up in the possession of whichever lender is foolhardy enough to loan the Co-Op more money. It does not allow the membership to retain control of the Co-Op during bankruptcy proceedings.
In this Chapter 11 debtor-in-possession arrangement, the new (post-bankruptcy petition) creditor will take precedence over pre-petition creditors and shareholders (the membership), and will be in the position to oversee operations of the 55th Street store.
As one Hyde Park resident, Mark Johnson, pointed out in the meeting, the creditors will have a lot of influence on the bankruptcy judge, not the Co-Op members. In this bankruptcy situation, the Co-Op will be answering to its newest creditor, not to its membership. So much for the democratic control that the Co-Op likes to stand for.
If the Co-Op pursues rehab and is not able to secure the considerable financing necessary, then the default would be bankruptcy and liquidation. In this case, the 55th Street store would be shut down, the court would appoint an independent party to liquidate all remaining assets and pay creditors in order of seniority.
This default situation would also likely make it very difficult for the 55th Street landlord, the University, to line up a new grocer on short notice, leaving the neighborhood potentially without any grocery store for longer than 14 days.
Note: the Co-Op has thus far not been able to secure financing for rehab. It must be in place by 12/17/2007, which is when the University is likely to file for foreclosure notice on the 55th Street store.
So, the clock is ticking. The National Cooperative Bank is willing to entertain the possibility of loaning the Co-Op $2 million, which would allow the Co-Op to enter Chapter 11, and will be voting on it Monday 11/19. But before anyone gets too excited, the NCB's loan is itself contingent upon Certified Grocers agreeing to a $1 million buyout of the 47th Street lease. As President Poueymirou pointed out, Certified has not in the past and is not currently willing to negotiate on this point.
In the earlier Keystone Co-Op posts, we had originally thought the board would endorse the rehab option. After the University entered the scene with its extremely generous debt workout offer, we then believed the board was likely to move in that direction. As it turns out, the board is split on these two approaches.
With the University's debt workout plan, the biggest uncertainty is which grocer would move into the 55th Street store space. However, I'm fairly confident that any new grocer would be an improvement on how the 55th Street store has been run over the last five years.
With the rehab option, on the other hand, there is more uncertainty and risk concerning the ultimate outcome. Going down that path could result in 1) a quick liquidation, 2) a long, slow death if the capital campaign fails or if GM Brandfon leaves, or 3) ownership by creditors even after emerging from bankruptcy if the Co-Op fails to pay off its creditors 100%. In this last scenario, the members would be left out in the cold, and their shares would still be worthless.
Interestingly enough, many members who commented in the meeting seemed willing to view the University as the great villain in this drama, but no one was nearly as critical about Certified, which in my view has been the biggest obstacle keeping the Co-Op from regaining any financial footing.
The University has cut the Co-Op plenty of slack, to the tune of 14 months of missing rent payments, while Certified has been quick to cut off food shipments as soon as the 47th Street rent payment is late. As President Poueymirou related, the Co-Op tried to stop its rent payment to Certified only last month, but Certified immediately cut off a food shipment.
As a result, the only reason the Co-Op has been able to continue to stock its shelves and stay in business is because it's stiffing the University on rent in order to keep up with its lease with Certified. In this case, the membership should be thanking the University.
Big kudos go to President Poueymirou, Treasurer Lowenthal, and Alderman Toni Preckwinkle for championing the debt workout plan -- the most realistic option that will bring a new grocer to the neighborhood in an orderly and efficient manner. While they are in a difficult position of having to advocate for the end of a Hyde Park institution, this is the most financially responsible choice for members.
On the other hand, Secretary Withrow and Director Stanek fueled hope and promoted the rehab option, without explicitly outlining the risks associated with that approach. In the vast majority of bankruptcy cases, the pre-petition shareholders -- such as shareholders -- are left with a big fat zero by the end of the reorg. Chances are very slim that members will get any value for their stock, or enjoy the right to participate in the management of the business.
That's because control over the Co-Op during the reorg will reside with the creditors, not the members. For all practical purposes, it will cease to be a cooperative. Rehab promoters ask members to invest more money in the capital campaign, while chances of ever realizing a return are extremely low. If you are inclined to make a pledge, I'd suggest you think of it as a donation.
Needless to say, this vote is very important and all Co-Op members should make sure their voice is heard on the options. Ballots will be mailed starting Wednesday 11/21. Having said that, the membership vote will only be taken into advisory by the board. In the end, the board is authorized to make the decision, and it may have to do so very quickly in those few days before 12/17.
Friday, November 16, 2007
If we're lucky, we may even see some blood on the floor as a few lone Board members attempt to seize control of the insolvent colossus and are beaten down by enraged grocery shoppers who are tired of the ceaseless propagandizing.
We'll begin this installment of Keystone Co-Op by giving credit where credit is due, and quoting directly from the recent to-the-point Maroon editorial collectively authored by that paper's editorial board (the only one in Chicago, we'll point out, that we usually agree with):
It has become increasingly clear that the Co-Op has no sustainable operating plan, and this time it has dug itself a hole too deep to climb out of. The University and the community must learn from the Co-Op debacle and invite outside competition into Hyde Park. Be it Trader Joe’s, Dominick’s, or some other chain store, this neighborhood deserves an affordable, financially stable supermarket. (November 13, 2007)It should also be noted that today's sepia-tinted story on the front page of the Tribune's "Metro" section captured two of its most supportive quotes from individuals over 90 years old. If there ever was a neighborhood minority, this age cohort is one of them.
"I love this store, it's a neighborhood institution," said Campbell, 92. "I admire its goals."With all the isolationist talk about how much will be lost if profit-oriented chain grocers are "allowed" into the Special Economic Protection Zone known as Hyde Park (special mention here should be given to one Diane Schirf, who loves the Co-Op, hates chains except when they are in Ann Arbor, and doesn't like being called "stupid"), a few things should be pointed out.
Leon Despres, former 5th Ward alderman, was there at the start. One cold day in December 1932, a young man was on his doorstep selling memberships in a food cooperative.
A towering irony in this drama is the fact that one of the principle protagonists in the Co-Op's decline into insolvency is a cooperative that is acting like a rent-seeking monopolist. Certified Grocers, the Co-Op's landlord at 47th Street, is itself a cooperative which acts as a distributor to smaller and independent grocery stores. Certified's mission statement declares the wholesaler to be "a conscientious corporate citizen and ethical partner with our suppliers, customers, and employees."
As everyone concedes, Certified's position vis-a-vis the probable debt workout, or "Sorry Charlie" Option B outlined in Keystone Co-Op #5, remains a mystery. What is known and verifiable is that, unlike the Co-Op's landlord the University of Chicago, Certified has displayed very little of the "cooperative spirit" in its unwillingness to cut the Co-Op slack in its rent obligations over the last several years, and in its caginess regarding its participation in any debt buyout.
Certified has made money off an empty store for years now, and hasn't budged on the stranglehold lease at the 47th Street location, despite being approached several times since 2004. The U of C, during the same period, has lost money.
From Certified's perspective -- derived purely from the Rochdale Principles of 1844, no doubt -- it's not such a bad deal letting the rent checks come in from a drowning operation on the South Side, without lifting a finger to help solve the problem. Why should they? They have a sweetheart deal on the lease at 47th Street, and have every incentive to get the University -- the other non-profit in the equation -- to shoulder the problem so Certified can keep the rent checks coming until 2023.
If that's the spirit of cooperatives, then I'll take profit-seeking. At least the customer gets something out of it.
As the Herald sees it, and reminds us fairly often (Editorial of November 14, 2007), "We cannot assume a for-profit business will provide the sort of community support we have enjoyed with the Co-Op."
What kind of support might that be? Certified certainly doesn't seem to care about the Hyde Park community. So why would a Dominick's, or any other grocer, be worse?
Competent management and reliable operations are the most basic services that a business can provide a community. You can be altruistic with what's left over after you've paid your bills and don't owe anybody else -- including your shareholders -- money. But if you don't take care of those essentials, you can't do anything for anybody.
The propagandists at the Herald see it a different way -- that "support for the community" means support for managerial ineptitude and bad strategic decisions, and a tolerance for chronic and worsening indebtedness, declining quality, and poor service. That, and the delivery of some other magical combination of altruistic services besides what customers want, which is a competitively priced, well-stocked, and reliably run grocery store.
I can take or leave the full-time home economist or the sad variety of potato salads at the current deli counter. What I'd much rather have is a supermarket that doesn't lose the deli cook it hired from Whole Foods after a few months due to inadequate kitchen facilities.
Real community support should theoretically include allowing the membership to access the financials in a timely manner. Instead, complete and audited financials for fiscal 2007 were still not available as of November 10. Nor has any public explanation been given of how a legitimate vote can and will be taken based on out-of-date and corrupted membership data.
Support for the community should also include making Hyde Park a desirable place to live for newcomers to the community, including working people with families, not just the folks who were around when the Co-Op was founded during the Great Depression or have the time to run a major commercial institution.
The economy itself has changed in the intervening 8 decades, as well as the organizational structure of businesses and non-profit institutions alike. In the retail foods sector, the changes have been especially dramatic, weighing heavily against smaller-scale operations. This strikes directly at the core of the cooperative's initial competitive advantage, which was to buy and sell in bulk at a discount. While it may be possible for that model to function adequately in other sectors, in retail foods where volume is the name of the game, it's an uphill battle where even a small mistake can lead to disaster.
The surest way for Hyde Park to get over the malaise it has endured for nearly half a century is to become the hub of a rejuvenated South Side, a place where new people want to live and new business wants to locate. Not because it is sticking to institutions invented to solve the problems of the Great Depression or Urban Renewal over half a century ago, but because it is making the neighborhood the place where the best there is to offer from everywhere else wants to be.