Friday, November 30, 2007

Gone Fishin'


Nephew of Chillmaster


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

Herald's Chicken: Insanity Spirals; Editors Pitch Another Daft Rescue Plan

posted by chicago pop

Co-Op Board Member Gloriously Rallies Die-Hards


[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

VOTE OPTION A!

posted by chicago pop


Mr. Hooper says:

VOTE OPTION A


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).



What You Get With Each Option (Click to Enlarge)

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

Herald's Chicken: Add Co-Op to List of Abandoned Buildings

posted by Peter Rossi

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

Gone to Grandma's


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 Update: Community Meeting

On Wednesday, November 15th, a community meeting was held on the proposed Solstice on the Park development at 56th and Cornell. More than 70 people turned up to hear presentations from the developer, architect, and traffic consultant. After these presentations, the developer took questions and comments for more than one hour.

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.

Architectural Rendering of South and East Elevations

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.

Site Plan

As a result, the development has received wide support from it neighbors and neighborhood groups. Gary Ossewarde of the Hyde Park Community Conference spoke up in favor of the development, praising the willingness of the developer to listen and respond positively to community input. John Murphy of the Coalition for Equitable Community Development also endorsed the development and praised the developer for their efforts to promote affordable housing. Robert Mason of the Southeast Chicago Commission also supported the development, warning of the dramatic decline in population of Hyde Park in the last 50 years. A neighbor who lives in a single family house directly across from the development welcomed it after "looking at a parking lot all my life." The Bret Harte School Council is an enthusiastic supporter.

Numerous residents praised the development and were met with thunderous applause. A few residents asked informational questions. Rebecca Moore, a neighbor on Cornell, asked about potential for problems for pedestrians crossing the entrance to the garage. The traffic consultant responded that there are good sightlines to avoid conflict. Jerry Pryor from the U of C medical facility at Windemere House asked about parking during construction. The developer replied that parking arrangements and shuttles would be provided but stated that any major construction project would involve inconvenience for the residents. All current users of the lot would have access to parking in the new structure (note: the developer also owns Windemere House so there is no reason to design a development which reduces the value of their adjacent property). A resident of 5528 S. Cornell asked numerous questions about how the development would affect those apartments.

Four local residents, calling themselves "Cornell Neighbors," circulated a document in the neighborhood prior the meeting. This bulletin opposes the development and urged those of like mind to attend the meeting. The memo was signed by Diana Jiang, Robert Greenspoon (who lives on Cornell directly across the street from the proposed parking garage), Rebecca Moore, and Kathy Newhouse. Mr. Greenspoon graciously provided more details regarding the positions discussed in the document.

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

Keystone Co-Op #7: Board Split on Bankruptcy or Buy-Out


posted by deep throat

Bankruptcy Option No Easy Fix for Co-Op

At Sunday's standing-room-only community meeting on the Co-Op's future, two different factions on the board laid out opposing options for the membership to vote on.

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

Keystone Co-Op #6: The Co-Operative Spirit in Action


posted by chicago pop


Rogue Faction Disrupts Co-Op Community Meeting


This Sunday's community meeting of the Co-Op membership to decide the fate of the institution promises to be great spectator sport, and we hope they'll be selling popcorn. We're expecting a model display of cooperative sentiment, as die-hards and dead-enders make their last stand against a Board and a frustrated majority of the membership dedicated to guiding the Co-Op gently to the junkyard.

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."

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.
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.

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.

Thursday, November 15, 2007

Abandoning the Harper Court Ship

posted by Elizabeth Fama

In case you hadn't noticed: the bike shop Wheels & Things has moved out of Harper Court and onto 55th Street -- complete with its self-proclaimed grumpy owner, Richard Padnos, his two very large dogs (who, thank heaven, can no longer wander Harper Court depositing their feces at will and terrorizing canine clients at the Hyde Park Animal Clinic), and a bird cage the size of a bathroom.

The interesting point here isn't the dogs or the cockatoos, though I'm admittedly distracted by them. The interesting point is that another business has left Harper Court and found a better space. You'll recall that Toys, etc. moved from Harper Court in February, and experienced a 60% increase in sales in the first several months. I would be interested to see if Mr. Padnos experiences a similar boost after his move. If any of you readers are brave enough to talk to him, let me know what he says.



Wednesday, November 14, 2007

Herald's Chicken: Blow-up the Co-Op

posted by Peter Rossi


Another Hyde Park institution has succumbed to foul play on the part of profit-seeking capitalists. The Herald has learned that the Board of Directors will recommend that the Hyde Park Co-Op cave in to pressure from its landlord (boo, hiss) and pursue a "debt-workout" option that will mean the closing of the Co-Op. This option will mean that the Co-Op will be replaced by, horror of horrors, a store managed by those who seek to maximize profits.

Where is our community cooperative spirit? In past years, we have stood firm by our principles that we must endure low-quality produce, bad service, and high prices. Occasionally, the Co-Op sponsored worker solidarity events such as the shutting down of all cash registers for several months. We made our Soviet brothers, who suffered through the siege of Leningrad, proud.

We at the Herald are loath to point fingers, but there is a malaise in community cooperative spirit. We need to stand fast and cling to unrealistic goals. We hope to see a revival of our Quixotic spirit at the community meeting to be held this Sunday. Go forth and demand that we vote FOR keeping the Co-Op, whatever the financial reality is.

These capitalist stooges insist that the Co-Op doesn't have enough funds to continue in operation. This is silly; only last week we started a fundraising drive that has collected several old CTA bus tokens and campus bus tickets. Where is the Co-Op hiding all of the money they have extracted from the working class, the poor, and the elderly with their high prices?

The Board of the Co-Op insists that this is a meeting only for "members" of the Co-Op. Nonsense, the Co-Op is a community institution that we all have a stake in. Just make up a membership number, they have lost their membership records anyway.

We should be deeply suspicious of the machinations of the University of Chicago. This institution is not well-managed with any sense of fiscal responsibility. Who else would front our Co-Op 1.2 million? This is all a part of a secret plan to rob our community of the existential support that the Co-Op has given so generously over the years.

We should be prepared for the worst. The Forces of the Market are very powerful and we must prepare for the closing of our beloved Co-Op. No longer will small groups of community residents be allowed to control our grocery store. The new profit-hungry store will have to cater to ALL of its customers.

We must hold the community hostage and force the capitalists to beg for our precious store location. Let's wire up the old Co-Op and threaten to blow it up if we don't get a hand in selecting the new store owner. We can easily pile old, dry produce in aisle 8 and soak it with wine that has gone bad. A simple detonator based on friction generated by local activists would work nicely. Once the Co-Op is damaged by fire, we will have another trophy of community activism to add to the abandoned St. Stephen's church, shuttered Doctors Hospital, and crumbling Point revetment.

Comrades, spread the word. Only a few gifted thinkers and activists deserve to run our community.


This post is based on an editorial that appeared in the November 14, 2007 edition of the Herald. We at HPP are sorry to report that there are only minor differences between our spoof above and the actual editorial.

Tuesday, November 13, 2007

Chant: Raising the Bar in Hyde Park

posted by chicago pop


Chant, the new pan-Asian restaurant on East 53rd, doesn't seem to need anybody's help.

Based on our experience dining there on a recent Saturday evening, the establishment has been well received in Hyde Park. All tables were full, and new customers were arriving regularly.

It's no wonder. The place sparkles on 53rd and enlivens the entire block, making it possible, if you squint your eyes, to pretend you're on a date somewhere on the edges of Park Slope, or perhaps the East Village: it's late, sort of chilly, and you're out on the street; you see the clutch of people near the entrance, the flicker of orange and amber lights from the bar inside through the broad windows; once you're in, you smell not the faintest trace of Pinesol as you might in any of the slop-gallies on 55th Street; and, most noticeably, you are greeted by courteous and very charming staff.

Chant, we'd have to say, is off to a raging start as a great neighborhood restaurant. In terms of vibe, decor, and food, they've raised the bar in Hyde Park.

But we also think they could raise it a bit more, and we hope they do.

Pan-Asian is tricky to pull off, and the standard risk is that by trying to be everything, you wind up being less than anything. There's also the tendency to cater to certain preconceptions about what a middle-American market will tolerate as "Asian" food.

Which is why we were prepared to walk if there was any sign of Crab Rangoon on the menu -- an appetizer which typically has very little to do with crab, and even less to do with Rangoon (though quite a bit with cream cheese).

A nervous scan of the appetizers let us get past our own deal-breaker, but only on a technicality: the all-American Crab had been thoughtfully upgraded to Lobster Rangoon. Thankfully, we could continue.

Chant advertizes itself as a tapas place, so it's perhaps appropriate that the kitchen shines brightest with the small dishes. We tried the crispy mussel bites and Szechwan short ribs. The latter are a take on a classic dish found in several regions of China, notable versions of which are served up at a few other locales on the South Side. While good, the didn't come across as particularly Asian apart from the sauce, especially in a town full of ribs. But for that reason alone, they are bound to appeal.

The mussels were a clever assemblage of fried egg, scallions, a crispy mussel topped with sriracha sauce, enough sweetness and crunch to make the mussel-averse forget about sand, seashores, and red tide.

I had the Lemongrass Roasted Chicken, and my companion the Clay Pot Tofu. I definitely placed the better order and was generally happy with it. The chicken was beautifully roasted to a golden crisp while retaining its tenderness. Accompanied by several slices of eggplant in a delicious sauce that carried the aroma of tea-smoked fowl, on the whole I thought it should have been accompanied by a broader range of flavors and textures to avoid the impression of "meat-on-a-plate."

My companion was disappointed with the vegan option of Clay Pot Tofu. Especially in an Asian restaurant, this kind of dish should be bursting in flavor to counteract the potential wateriness of the glass noodles and tofu combo. This dish needed a lot more garlic, ginger, basil, and thoughtfulness before it should be sold for $9.

The shiraz was a happy and workable accompaniment to the relative spiciness of the appetizers, and held up well through the more savory flavors in the entrees. My companion was very happy with the mohito.

Dining at Chant was, overall, a very pleasant experience. The service was fast, attentive, and fantastic (let's hope it lasts!) the ambiance a very welcome departure from the utilitarian neighborhood standard. The tapas-like appetizers especially, the range of which we only sampled, were peppy and enjoyable.

The entrees, in our opinion, need some refinement, especially for the price. The Chinese bun added little to the Lemongrass Roasted Chicken, which was somewhat overwhelmed in a tasty but monochromatic bath, with little to give it contrast. The Clay Pot Tofu was bland, and fell far short of tofu-based vegetarian dishes that can be ordered on Cermak and Wentworth.

Chant has definitely raised the bar. We just encourage them to keep doing so.




Menu for 2


Hors d'oeuvres
Crispy Mussel Bites
Szechwan Braised Short Ribs with Spicy Sesame Mango Dipping Sauce

Entrées
Lemongrass Roasted Chicken with Enoki Mushroom Gravy and Chinese Eggplant served with Rice and Chinese Bun
Clay Pot Tofu (Vegan)

Drinks
2006 Bong Bong Shiraz
Chant Mojito

Tab (Tip not included)
$
50


Chant, 1509 E. 53rd Street, Chicago, Illinois. Hours may vary.
773-324-1999

773-684-2817 (Fax)
M-S 11-10
Sun 11:30-10:30



Sunday, November 11, 2007

Development Hyde Park Style: The St. Stephen's Fiasco

posted by Peter Rossi

One of the prettiest blocks in Hyde Park is the 5600 block of South Blackstone Ave. A mix of apartments, large frame houses, quaint rowhouses, and even the some of the nicer I. M. Pei urban renewal specials, this block represents the best of Hyde Park. There is one problem, though. On the west side of the street near 57th is an abandoned and vandalized church. This church is referred to in the neighborhood by the name of its last congregation -- the St. Stephen's Church. It was built at the turn of the 20th century as a Christian Science Church.

Vandalized Entrance to St. Stephen's


In the late 1990s, the St. Stephen's congregation had difficulty paying its bills and sold the church to Konstantinos D. Antoniou who was interested in developing the property. Shrieks of concern were heard from local activists who worried that the church would be torn down. Not to worry, said Mr. Antoniou, I will keep the facade and build condos behind it.

No one asked if the church was in character with the rest of the block that grew up around it (it predates the condos to the south and the row houses directly to the North). Today, this church sits like a fat toad, overwhelming the buildings to the North and South

Quadrangle Condos and St. Stephen's


The hulking facade, the Dome, and row houses

The developer's proposal to keep the facade mollified some but, then, the immediate neighbors got concerned. How high was this building going to be? How can we be assured that it will be built properly so that our buildings will not be damaged during construction? How about parking and street access (there is no alley access)? Some of the neighbors got to work and met with the developer to come to terms.

Why should the developer talk turkey with some of the building's neighbors? It turns out that, according to current zoning law, the developer would have to get a zoning variance to build anything more than 4 stories high. He decided that he wanted to build a luxury condo building that would rise to the height of the current structure (the dome is about 76 ft high). This is more like an 8 story building not a 4 story building. The need for a zoning variance gave the neighbors some bargaining power. They thought - we don't really mind a tall building, we just want it done right and with tons of parking.

After consulting various real estate attorneys, these legal eagle neighbors drew up an agreement and persuaded the developer to sign. This is a fascinating document that purports to be a perpetual "convenant" that would be "binding on the Owners and Antoniou and their respective successors, assigns, heirs... " (this document is available from the Cook County Recorder of Deeds ). This agreement forces the developer to build only exactly what he had proposed (complete with drawings) or get approval from two parties to change the plans. The two parties are the Quadrangle Condo Association (the condos immediately to the South) and Jonathan and Elaine Smith (owners of the row house immediately to the North).

Well, the developer, as developers will, changed his plans and asked for approval to proceed. One of these two parties balked and has withheld approval for at least two years. In the meantime, the developer has shown some signs of losing interest in this sordid affair. In 2005, it appears that the developer transferred the control of the property from his land trust to the land trust of an associate, one Julie Georgiadis of Niles. A 300K+ mortgage was taken out from Western Springs National Bank and Trust. The bank filed to foreclose on this mortgage in June of 2007.

Today we have a situation in which one intransigent party is allowed to block progress. The agreement blew up in the faces of those who crafted it so carefully.

But, we should ask why any small group of residents, neighbors or not, should have complete control over the St. Stephen's affair? What about the dozens of other residents of this block? What about other residents of Hyde Park who might benefit by improvements in our housing stock? The church is regularly broken into by local teenagers. When one of them falls to his/her death, we may regret that the church is left standing.

Even if the bottleneck were removed, there is considerable doubt that Mr. Antoniou will develop this property. A search of public documents reveals that he and his many businesses (Mickshea builders, Pantheon Builders, G&D Excavating ...) have had dozens of suits filed against them. Tax authorities, suppliers, the trustees of the Cement Masons Pension fund, and many others would like to get their hands on Mr. Antoniou and his assets. They may fail but this certainly clouds the future.

If you remove the church, a very nice development of three row houses or a four story condo of some 6-8 large units is possible on the 100' by 150' lot. Some contend that expense of demolition of the church makes developments of this sort un-economic. I am not an expert in demolition, so I can't say.

We are left with a property that has been vacant since 1999 (at least) and with no prospects for construction at any time in the forseeable future. At this point, we need some leadership to break the deadlock and recognize the interests of those other than the immediate neighbors. One logical source of this leadership would be the alderman, Leslie Hairston. We note that Alderman Hairston was elected after the agreement was signed and was left with a mess to clean up.

As I snapped pictures for this blog entry, I was stopped by a lady walking her dog. "Are you documenting graffiti?," she asked. "There is a whole mural on the back of the dome." I told her it was a shame that the buildng wasn't torn down. "Oh, you know a developer wants to put up something much worse -- a high rise." I told her she was mis-informed -- the developer proposes a building the same height as the current structure. "Oh, I didn't know that. Have a nice day." I wonder if she will remember or, perhaps, she thinks 8 stories is a high rise.

In Memoriam


Apollo Gullstrom
1994-2007


Neo Gullstrom (HPP's favorite Peapod driver) recently lost his beloved dog, Apollo. Our thoughts are with Neo, his wife, and his daughter. Anyone who has met Neo knows that Apollo was one lucky dog.

Friday, November 9, 2007

Zeno's Paradox: Do Classically Trained Public Muralists Exist?

posted by Elizabeth Fama

A recent headline in the Hyde Park Herald caught my eye. It's a second appeal for information leading to the whereabouts of Albert Zeno, the muralist who created "Alewives and Mercury Fish," an amateurish piece of public art that graces the southern wall of the 55th Street Metra underpass.


I don't want to sound mean about this -- I genuinely hope that Albert Zeno is alive and well. And if the Chicago Public Art Group does find him, I hope Mr. Zeno has spent the intervening years studying at the Chicago School of Representational Art,* for the sake of us all.

* SORA's motto: "Life without art is unimaginable. Art without study is unattainable."

"Solstice" Meeting Date and Time

posted by Elizabeth Fama

The community meeting (with Antheus Capital and Leslie Hairston) regarding the proposed "Solstice on the Park" development at 56th and Cornell is set for Thursday, November 15th, at 7:00 PM at the Bret Harte School, 1556 East 56th Street.

It would be nice if people who were in favor of this project (and others like it) would show up, both to learn more and to voice support.


Come on down!



Coming Soon to a Blog Near You...

Watch this space for a review of Chant, the new asian tapas restaurant on 53rd Street.

Wednesday, November 7, 2007

Herald's Chicken: The Herald As Maoist Pamphlet

posted by chicago pop


Herald Editor Rallies Remaining Co-Op Members to Give $100 Each

As anyone who has visited China recently can attest, there are probably more Maoists on the editorial board of Hyde Park Herald than are in the Red East. I credit at least one of them with the following statement, written in the Herald's editorial on saving the Co-Op (November 7, 2007):

"Cooperatives are designed to follow a set of principles [undoubtedly published in some little book somewhere] that include a commitment to community. Don't expect a national chain to be guided by anything but profit."

It may indeed be possible to put aside the expectation of profit; no one has received a Co-Op dividend in a while. The problem, however, is that the Co-Op's kind of commitment to the community has left us with a grocery store that cannot pay its bills.

Mao thought that if every Chinese peasant melted their iron utensils, China could exceed the UK's steel production in 15 years without having to import foreign machinery. Likewise, the Herald would like for the remaining members (including the dead, those who have moved, or who are inactive -- they may all still be on the Co-Op's corrupt membership rolls) to chip in "less than $100 per member" to generate the $3 million it will take to "wipe out debt" without having to take out a loan.

The similarities don't end there. This week's editorial fails to grasp the financial realities of the Co-Op's situation. In fact, it indulges in the kind of homespun economics, unburdened by the constraints of having to make other people's money pay for itself, that got Mao in trouble. Like a dangerously misinformed ministry of planning, the Herald manages to inflate some numbers while fantasizing about others.

Take the inflated membership rolls of the Co-Op, for example, with "membership somewhere around 35,000." If all these folks simply dug in their pockets, shouldn't we be able to save the Co-Op? Unfortunately, given all the known problems with the Co-Op's record keeping, putting this number out there without substantiation is like boosting the figures on grain output from the local agricultural commune to please the Party chief.

For one thing, the Co-Op's membership database is so corrupt that the Board literally has no idea who is or is not a member, who is active or inactive, or who is dead.

Further, as was hazily revealed in July of 2007, the Co-Op somehow "lost" the computer in which the membership database was stored -- whether this "loss" means the computer failed, was trashed by monkeys, or got put in the washing machine, is unclear. But given the extent of the problems afflicting the Co-Op's membership rolls, the figure of 35,000 is a not a reliable benchmark for fundraising efforts.

Co-Op Worker Holds Corrupt Membership Rolls

Now let's move on to the Herald's One Month Plan to raise $3,000,000 to "wipe out debt." Not only will this money supposedly erase the Co-Op's enormous debt burden, but there will be enough left over to go towards "capital improvements on 55th Street." All problems solved.

We suspect that, regardless of their ideological leanings, the monkeys that trashed the Co-Op's computer might have a greater appreciation for the fact that, even if the masses were to achieve this goal, it would do nothing to address the fundamental problem of the $90,000/month rent due on the 47th Street property, which is not going to go away no matter how much "debt" is "wiped out" through charitable donations.

So how did the Herald come away from its courtly reception of Poueymirou thinking that "the loan was intended not only to wipe out debt -- including the debilitating lease on the shuttered 47th Street store," when that lease runs until the 2023 and is not a debt but a lease commitment totaling $16,000,000? Is this kind of incomprehension one of the cooperative principles vaunted in its editorial?

The Herald has never bothered too much about informing us as to the inner workings of the Co-Op, which should come as no surprise, given its disinterest in anything "guided ... by profit." In this case, that editorial disinterest translates into editorial disability. Whatever principles you follow, no one wants to lose money; but that's exactly what these kinds of plans will lead to.

That the Herald's editors should, in such circumstances, beat the fundraising drum when there are a number of people who will likely never recover the value of their Co-Op shares, demonstrates what happens when a neighborhood paper becomes more of a hobby for the ideologically obsolescent, than an exercise of critical journalism.

Youthful Co-Op Members Enjoy Bounties of Produce Department

Webber's Co-Op Proposal: Buy-Out or Bankruptcy


posted by chicago pop


Ahead of the membership vote on the Co-Op's future, Hank Webber has circulated a memo to University staff and faculty making the University's position clear.

From the University's perspective, it comes down to two options: either the Co-Op Board agrees to let the University buy it out, and pay off the Co-Op's creditors in the process, allowing the University to then try to bring in a new grocery store; or, as Webber says, "the chances of bankruptcy are very high."

Translation: the University may not stand by if the Co-Op membership decides to follow the Herald's advice (outlined in a delusional editorial today, November 7, 2007 ) and initiate a capital campaign, or any other, Terri Shiavo-esque life-support efforts. It would take a lot of folks throwing good money after bad to make up what the Co-Op owes, but that's beside the point.

Webber's letter (appended below) makes it clear that the University wants a functioning (and modern, clean, well-stocked) grocery store in the neighborhood, partly so that it won't lose faculty and students to competing Top 10 institutions that can offer these things. Bankruptcy is the long road to this goal. Debt consolidation is the short road, but it means the Co-Op membership has to sign on.

If they don't, chances are they'll help even more people lose even more money.

****

To: The University Community
From: Hank Webber, Vice President for Community and Government Affairs
Re: Hyde Park Co-op

You may be interested to note a story in today’s Hyde Park Herald ( http://www.hpherald.com/) about the future of the Hyde Park Cooperative Society. The story outlines a set of extremely challenging financial circumstances that threaten the Co-op’s ability to continue to operate its grocery store at 55th Street.

The Co-op’s Board of Directors has been in discussions with the University about a possible solution to these serious financial troubles. The board has spent many months considering various options. One of the options under discussion is an agreement among the Co-op, its creditors and landlords that would result in the Co-op closing, payments to its creditors, and a new grocer opening a store in the same location. The board also is looking at the possibility of obtaining a loan and the potential for bankruptcy if neither of the first two options proves feasible.

The University is supportive of the board’s efforts because we believe our community deserves to have a high-quality grocery store. If the Co-op cannot fulfill this role, then we are committed to facilitating a new grocery store coming to the 55th Street location.

Access to high-quality grocery shopping has a direct impact on the quality of life for our faculty, staff and students, and thus our ability to attract people to our community and retain them once they are here. In fact, when we surveyed our students earlier this year on their retail needs, the most frequently cited desire was for “improved grocery store service.” Having a successful store in this location would keep shoppers and businesses in the neighborhood and bring new business to surrounding retailers.

The University is the landlord for the Hyde Park Shopping Center which includes the 55th Street store. The Co-op currently owes the University approximately $1.2 million in unpaid rent. As part of the proposed agreement, the University has indicated its willingness to forgive most of the unpaid rent and to supply additional funds in order to substantially repay local vendors to whom the Co-op is in debt. These actions would permit the Co-op to close without the costly process of bankruptcy proceedings and allow a new grocer to begin operations within two weeks of closure. All current Co-op employees would have an opportunity to interview for jobs in the new store as part of the arrangement with a new grocer.

These actions will not happen unless all interested parties, including the Co-op board and its other major creditors, can come to an agreement on the terms. If an agreement is reached, the board has indicated its intention to put the proposal to a vote of the shareholders. If an agreement is not reached, the likelihood of bankruptcy is very high. In either event the University will remain committed to having a new, high-quality grocer at this site.

The Co-op board will discuss its final recommendation at a town hall meeting at 2 p.m. on Sunday, November 18, at the Hyde Park Neighborhood Club, 5480 S. Kenwood Avenue, Chicago. We expect there to be robust community dialogue about the board’s proposed course of action. More information will be available at www.coopmarkets.com.

Tuesday, November 6, 2007

Keystone Co-Op #5 : The Moment of Truth

posted by deep throat


Is Time Almost Up for the Co-Op?

It looks like the Co-Op board has finally run out of time -- denial of the crushing financial problems and strategic mistakes has ceased to be an acceptable public relations strategy. Now, the current board (and the membership) face some very tough decisions.

Unfortunately, none of the alternatives is particularly attractive for the Co-Op. On November 18, a community meeting will be held and the board will present its recommendation on a course of action, and the membership will vote Yay or Nay on the board's suggestion.

From our perspective, it's about time. The status quo and on-going cash burn situation have turned the Co-Op into a sinking ship.

While some folks might have hoped for the luxury of time to let the 55th Street store continue to generate profits that would be siphoned off to pay for the on-going lease obligations at the 47th Street location and various vendors, the Co-Op has been digging itself into a deeper financial hole as each month passes because what it owes still far outstrips the cash it is able to generate.

Now the board is finally entertaining the drastic solutions that this type of situation calls for.

The board must choose from four options, two of which will allow the Co-Op's 55th Street store to remain in operation, and two that will shut that store down.

Before we assess the four approaches, we have one large caveat that must be voiced. If the board endorses an alternative that allows the 55th Street store to continue operations, the members are being asked to take a leap of faith that this board will govern responsibly, and avoid making the types of bone-headed decisions made by multiple previous boards.

That long history of bad decisions by previous Co-Op boards is what landed the Co-Op in its current situation in the first place. In our view, it is incumbent on this board to demonstrate that it can do differently, before asking for a vote.

Option A - "The Good Samaritan" - Debt Consolidation
This is similar to the low production-value, late-night television ads that offer to help those who are drowning in late payments to the utility companies, credit card companies, and other consumer lenders. It involves consolidating all the Co-Op's various debts to landlords and vendors, and then working out a plan to chip away at that mountain of debt over a long period of time.

This approach would require an entity, like a bank, to step up and take over all the Co-Op's debts and then receive payment little by little. It would also allow the Co-Op to avoid going to bankruptcy court and to continue operating the 55th Street store.

We're skeptical that any bank would actually be stupid enough to take on the consolidated debt of the Co-Op, unless management and the current board truly show that they, unlike previous boards, are ready to make difficult decisions and smart choices going forward.

Option B - "Sorry Charlie" - Creditors Left Holding the Bag
The Co-Op would negotiate with creditors to buy out the Co-Op's current leases, and shut down operations at the 55th Street store. This would not involve the bankruptcy courts.

Option C - "The Lindsay Lohan" - Going into Rehab
Like LiLo going to rehab, the Co-Op would file for Chapter 11, gain the bankruptcy court's protection, get time to reorganize its financial affairs, get its hydra-heads as straight as possible, and eventually emerge from bankruptcy in a (hopefully) healthier state.

This alternative isn't wholly unlike the 12-step program and having to apologize to those you have hurt in the past. It involves working out a new plan for paying off creditors, negotiating with every vested party (e.g., vendors, landlords, creditors, unions), and getting their agreement to the new plan.

As a result, this approach tends to involve a lot of lawyers and take a fair amount of time. But, it would allow the 55th Street store to continue operations. When the Co-Op leaves bankruptcy, the pre-petition shareholders (i.e., current members) will likely have no claim on the Co-Op, and it will instead be owned by the post-petition creditors.

In other words, whatever current members paid to buy their shares will almost certainly never come back to them.

Option D - Just Plain Vulture Food
The Co-Op would file for bankruptcy, shut down the 55th Street store, and liquidate all remaining assets. This is usually the best choice when a business is worth more dead than alive.

The Upshot
We believe Options B and D are unlikely to really happen. As with mortgage lenders when they are faced with foreclosing on a home, creditors are generally very reluctant to take ownership of the actual assets, and then put the time and resources into selling them at fire-sale prices, or worse, actually operating them. Banks want to be in the lending business, not the residential real estate business.

Banks only foreclose when it becomes clear that they'll never get their money back. We suspect that Certified and the University don't want to be on the hook for a bunch of leases with empty store space. It would be in their best interest to work out a new payment plan, which may involve smaller payments stretched over a longer period of time.

One rule of thumb: when shareholders equity is negative (as it is in the Co-Op's case), bankruptcy and reorganization is often favored. Another consideration is whether the Co-Op's assets would be put to better use elsewhere.

If so, then liquidation is the best bet for paying off creditors. In this case, it's not clear that many other parties would have use for the Co-Op's assets, which include refrigerator cases, inventory, shelving, and equity in other co-ops.

After weighing these factors, we're laying odds on the board recommending rehab. Britney, Lindsay, move over: here comes the Co-Op.





Sunday, November 4, 2007

Solace on the Park

posted by Peter Rossi

A new development is slated for the corner of 56th and Cornell Avenue. Dubbed “Solstice in the Park” by developer Antheus Captial (NIMBY warning), the building will be 26 stories tall with 145 units. The architectural renderings below show this to be a striking building – one that will certainly draw attention from the passerby. More importantly, it will breathe life into a desolate stretch of 56th Street. Residents of this building will patronize local businesses and increase foot traffic and neighborhood safety. Who knows – if this starts a trend, we might see some new businesses in Hyde Park (it will take a lot more than this one building to do that). If all goes well, ground will be broken in the summer of 08 with completion at the end of 09 or early 10.

Architectural Rendering of Solstice in the Park


What will this building replace? After all, there is not much vacant land in East Hyde Park. It will replace the Windemere parking lot. This ugly lot is underutilitized. The new building will feature underground parking for ALL of the Windemere users (about 200) and ADD 250-300 MORE parking spaces for resident of the building. This information and the drawings were provided by Mr. Eli Ungar of Antheus Capital.

What does this mean for “congestion” in our neighborhood? This is a ratio of parking spaces to units of more the 1.5. My guess is that this will mean that parking spaces in this building will be rented to others in the East Hyde Park community who are now parking on the street. So it is entirely possible that this building will reduce parking congestion while increasing foot traffic.

Streetview of Solstice in the Park


Current Streetview

When rumors regarding this development were first heard, NIMBYs wrote into the Establishment organ, the Hyde Park Herald, complaining. What were their complaints? – unspecified “congestion” and that their views might be blocked. Actually, it is very hard to figure out how this new building will block any desirable views. The view from Windemere west toward the ugly parking lot and Metra tracks?

There will be a community meeting on this development on November 14th (place to be announced – we will feature it in this blog). Let’s not let a few self-interested people block a great addition to our neighborhood. I should also note that there are some NIMBYs who don’t like the developer Antheus Capital because it is headquartered in New Jersey and it is “big.” Let me point out that only those with deep pockets can afford to develop something like this. I really don’t care where the developers are headquartered; Taipei would be fine by me if they are willing to invest in our neighborhood!

The NIMBYs who oppose all positive change in our neighborhood have a new tact: We are under fire for opposing all change; let's say that we are "ok with" or "like" some developments and focus our opposition on others. In this way, we can give the illusion of being reasonable without having to support any actual change. So it looks like this development will go through smoothly but don't count on any help from these folks!

Provision of parking spaces is held up by some as evidence of good faith on the part of the developer. This development goes overboard on parking. For a development right next to the Express Bus Stop and Metra, we don’t need anything more than 1:1. My guess is that Antheus would like to make a bit of money by renting or selling parking. Sounds like the free market at work to me!

Empty Windemere Parking Lot (Sat 11/3/07)

Saturday, November 3, 2007

Herald's Chicken: Herald Reporters are Nowhere In Sight

posted by Peter Rossi

"Condo task force nowhere in sight" blares the lead headline in this weeks Hyde Park Herald (October 31, 2007). We have a classic example of the "no new is news" philosophy of the Herald. It turns out that this story is about the lack of progress of the "Condo Task Force" covened by Mayor Daley. By lack of progress, the Herald means that the task force hasn't yet met. Hmm, I've seen that before.

Why is this newsworthy? The story refers to only one resident of Hyde Park. There is no evidence that anyone else in Hyde Park gives a hoot.

But there is an issue here that escapes the sages at the Herald. There has been little progress in augmenting the housing stock in Hyde Park over the last 10 years. We need more development. Task Forces will not bring this about, though. At best, a task force will be an impediment to development -- another hurdle for developers to jump over .

It is curious that the Herald only draws attention to the lack of progress by task forces created by the evil Mayor Daley (hiss, hiss).

To save Herald reporters legwork for future "No News Is News" stories, we at Hyde Park Progress came up with our own list of community groups who have made no discernible progress. Just to be fair, we also include a couple of our elected officials

  1. There has been no progress on getting the Point revetment repaired since the "community task force" rejected the Compromise Plan in 2004-2005. The Save the Point web site has not been updated since August 21, 2006
  2. Senator Barack Obama promised a resolution of the Point issue in "six months" at a meeting in early 2006. Congressman Jessie Jackson Jr has promised funding for alternative plans for the Point -- still no funding more than two years after this was first reported in the Herald. The Point is in Alderman Leslie Hairston's ward; she appears to be disgusted with this issue as well. Still there is $24, 000,000 to be spent on improving a priceless neighborhood treasure and protecting it from the lake. Our elected officials are leaving this on the table (never leave anything on the table in Chicago!)
  3. The "working party" drawing up unsolicited alternative plans for the Doctor's Hospital
  4. The "community group" that is "meeting" about the McMobil development.

  5. Where is the Doctor's Hospital protest website promised in Letters to the Editor?
  6. Those in the community who are protesting the 53rd and Cornell and 56th and Cornell developments. Where are those people who are worried about their views and "congestion?"
  7. The Hyde Park Co-op hasn't made a stitch of progress extricating itself from life-threatening financial problems. Product quality and service have not improved either.