EAST LANSING FOOD CO-OP Page 1 of 4

MINUTES OF MONTHLY BOARD OF DIRECTORS MEETING

March 29, 2007

EAST LANSING FOOD CO-OP BOARD OF DIRECTORS MEETING

Thursday, March 29, 2007

Urban Options, East Lansing, Michigan

Minutes

There was a quorum for the meeting. The meeting was called to order at 7:06 pm.

  1. Check-ins and introductions

Board: Kriss O., Getachew, Mitra, Adrien, Darren (sick at home but on call to join us by phone if needed)

Staff: Dave F., Marilyn S., Susan K.

Member/Owner: Ruth B., Lee B., Tony W., Wayne

  1. Approve agenda

Getachew motioned to approve the minutes; Mitra seconded. The agenda was approved.

  1. Approve minutes from January 25, 2007 Board meeting

Adrien motioned to approve the January minutes; Mitra seconded. The minutes were approved.

  1. Approve minutes from February 22, 2007 Board meeting

Kriss moved to approve the minutes; Adrien seconded. The minutes were approved.

  1. Board nominations and elections.

Information will be posted in the store and to the e-mail list. The announcement will also be on the first page of the newsletter that should be going out within the next two weeks.

  1. General Manager performance review
  • The Executive Board, Mitra, Getachew, and Margabeth, and Darren on the phone, met and approved the General Manager (GM) contract. The contract states that there needs to be a performance review of the GM by June 15 and the Executive Board needs to establish a process for this. A number of the Board members have been involved in performance reviews for other organizations or in their employment, or could contact others who are familiar with performance reviews that would be helpful in establish the process: Adrien, Denise (Wayne).
  • Kriss had a brief discussion with Darren about the performance review. Darren thought it would be useful for Dave to do a self-evaluation as part of the performance review.
  • There was a discussion about whether to have a subcommittee for this. Getachew wanted to see templates so that the board could decide on the approach for the performance review and also use them in developing one for ELFCO. Marilyn was asked to look at CGIN for templates on performance reviews, or perhaps some sister co-ops would have some. Information will be shared through e-mail.
  • The issue about previous performance reviews was also raised. Apparently the previous board kept the performance reviews and information on the board. There is no current access to historical records.
  1. Potential purchase of property

Dave F. said that there is a decision to be made this coming October whether ELFCO continues to rent or purchases the property or moves. In the Fall of 2006, the Board put it to a vote whether or not the Board could vote to purchase the property. There was a group decision to hold off until it could be seen where the co-op is financially. It is not only the purchase of the building but other factors such as the condition of the building.

One big question last fall was how does ELFCO pay for the building. Last year, the building owner wanted $50,000 put down. Val said that she believes the landlord, Fred, would sell it on land contract. Kriss asked whether the price would stay the same. That was Dave’s understanding but he would ask Val the next time he speaks with her.

Dave had talked to a relocation specialist suggested by the Ann Arbor co-op General Manager. For $3500, the relocation specialist would do a 10-year pro forma on what ELFCO might expect to happen if it purchases the building. Or the specialist could do a shorter version for $115/hour. Wayne asked if we knew what the terms might be; no idea. Adrien said that the last time the Board talked about the building purchase, it also talked about moving and asked whether anything happened to the possibility to relocate. Dave’s realization in Phoenix at the National Meeting is that ELFCO won’t have the money to move. The bottom line is that ELFCO would save $3000 in rent were it to buy the building. Wayne said that it’s a fallacy to think that it’s one or the other; it’s an investment in an income-producing property. Adrien said that if you buy the building you are committing to being somewhere for a while. Dave thought that you were committing to a 3-year window.

Kriss asked about the HVAC, which was one of the concerns last year. The problem is the air ducts from the oldest furnace, the one that feeds the storeroom. Apparently during the remodeling some of the ceiling was taken out and the return air is coming from the furnace room instead of from the front of the store like it used to do. This is indeed a violation that has not been corrected. Can correct this by redoing a little bit of duct work. Dave will be getting some quotes on this from AC Mechanical.

  1. Surplus sharing for ELFCO staff

Dave said that one of the most important things that has helped ELFCO to survive is that staff work pretty much for minimum wage or a little above. Everyone is working for less than staff at other co-ops that are comparable to the size of ELFCO. The Board asked Dave to come up with ways to retain and reward staff. The proposal is that some of the profits be split among staff on a percentage basis on the hours worked. It allows ELFCO to continue to make the argument that it pays minimum wage to maintain financial health. It was initially talked about giving incentive pay once a year, but it would be better to reward people sooner, i.e., quarterly, because an annual schedule is so far out and people come and go so quickly. The way it works, if the store makes a profit, then 25% of the profit is used to reward staff.

There was a lengthy discussion about this with everyone offering comments.

  • Mitra what happens if the Board approves this plan and suggested that this should be reviewed annually. Dave thought this should just be put in as a benefit, just like sick leave or annual leave.
  • Getachew thought there should be some kind of benefit based on performance, i.e., bonus. Another thing to consider is whether this is for one year, two years? Are there some other possibilities for the board to consider? Getachew feels that providing incentives is one thing but the other thing is how to use any surplus. He said that staff should be rewarded for the turnaround.
  • Wayne asked what other co-ops do as incentives for the employees. He thinks an incentive is an excellent idea but is concerned that the co-op is in poor financial shape.
  • Tony thought this was a good co-op. Putting every dime back into the co-op also means investing in your employees. He thought the incentive is also putting money back into the co-op and supports quarterly payments. Psychologically it makes sense; i.e., the well-being of the employees.
  • Adrien thought it depends how you structure it: do you give the incentive to someone who isn’t there any more? Getachew said that you have to look at whether you want to pay annually or quarterly or every six months.
  • Mitra asked whether the incentive is a separate check or just included in the paycheck and thought that with the incentive, staff should get a card thanking them for their service.
  • Susan said that staff is working for a very mean wage and agrees with Tony.
  • Dave, who excluded himself from the bonus, said that his reasons go back away. And he negotiates himself a contract every year so he has an opportunity to raise his money.
  • Wayne wanted to know what happens if someone leaves in the middle of the year. Essentially this is a profits sharing bonus. Wayne wanted to hear from Marilyn. Marilyn said that they work at the co-op for reasons other than getting rich. Marilyn can’t help but look at the financials; she thinks ELFCO needs to overcome the negative numbers before staff start giving themselves bonuses. Marilyn would still rather have ELFCO survive and be there than get some additional money.
  • Dave said that in a lot of ways staff wages are impacted by the extravagances of the previous GM and staff.
  • Wayne proposed that the policy be made subject to annual review by the board.
  • Kriss asked about the patronage refund and how does that relate to this proposal. Dave said that 25% doesn’t get returned.
  • Adrien asked for a straw vote in terms of implementing this, since there had been discussion for quite a while. The straw vote is non-binding. Most were generally in favor of the concept; there were a few abstentions
  • There is also a possibility for the board to include performance-based incentive in Dave’s contract.
  • Approaches: Could bring this up at the General Membership Meting. And could add that people are not eligible until through the probationary period, put a cap on the incentive, review annually, etc.
  • Adrien would not be opposed to passing the resolution as it stands. Mitra is comfortable on voting.
  • Kriss said that the actual program is really very simple. Although the Board really needs to vote on it and that 25% is not excessive.
  • Wayne would add an amendment to the motion that this be reviewed annually by the Board of Directors.

Adrien proposed that the Board adopt the proposal with the following amendment: The program shall be reviewed annually by the board of directors. No incentive shall be earned until after completion of probationary period and will be lost if fired. The proposal was approved.

  1. Plans for the van

The van originally was to be used for a mobile van but at the moment, it is used for storage. The Board discussed the possibility of having a fundraiser for the van. ELFCO received an invitation from Susan Smalley of the Mott Foundation to submit a letter of interest to go to a co-op in Iowa that is using a mobile market delivery.

There was concern among the Board that a mobile market van would not be profitable.

  • Mitra asked whether making a decision about the purchase of the property is impacted by the use of the van.
  • Susan liked the idea of utilizing this for the elderly population also, i.e., Burcham Hills. Mitra said the dorms, too.
  • Mitra talked about the mobile market for the Seattle Co-op. It not only was a mobile market but also provided information on nutrition and healthy eating.
  • Tony said that having it painted well will be the best thing you could do for the co-op. It would be good advertising. Even if you park it in the front, it will be a bigger sign.
  • Adrien thinks the only way this would work is a delivery, and most restaurants have their own delivery system. Dave said that the way it was envisioned is adding dry and packaged goods to the mix at Allen Street neighborhood. ELFCO doesn’t want to compete with the farmers.
  • Wayne suggested that the Board brainstorm for potential uses of the van and that it budgets for maintenance of the van as it sits there. It is a potential investment for the co-op that might down the road become a potential asset.
  1. General Managers Report
  • Dave went to Phoenix to meet with Central and Eastern corridor folks. There was good insight and good feedback on our performance.
  • There is in development a “buy local first group” on whose steering committee I sit. Terry Link from MSU started it. Right now the group includes Lansing Chamber of Commerce, Allen Street, Berl Schwartz, LeRoy Harvey, someone in investment, and a couple of others. The model on which they are basing this effort is the Business Alliance for Local Living Economies (BALLE).
  • It has been necessary to do some computer upgrades. The Internet computer used to place orders with UNFI has been upgraded. And a computer technician that was called in also pointed out that the accounting software needed to be upgraded and we would need to upgrade two computers. Staff also got new monitors (under $1500). Labor was between $1000-$1500.
  • We hired two new staff: Tim Durkin, who was the working member director, and DeShawn. Heather has just accepted a job at a camp so she will be leaving. And Rachel will be coming back from the bus trip soon so might be coming back.
  1. Finance Committee Report
  • For February, sales were $16,000 better than last month. We were a little over on cost of goods as a proportion or percentage of sales so have to still work on that. Personnel was 17% of costs and we budgeted 20%.
  • For operating expenses everything is in good shape. Administrative expenses, this is where ¾ of annual dues for NCGA goes. It’s an expense now and we’ll pay as payables throughout the year. Total marketing was $1,938 and part of that was the CAP book.
  • With the UNFI program, each co-op has to pay into a fund that will insure in case one of the co-ops goes under. Payments start the second quarter.
  • Employee insurance is down to about half of what it was last year because the GM does not get the same benefits as the previous GM.
  • In March, there will be significant computer expenses and a $400 furnace bill. Have received a preliminary estimate for replacing the meat freezer and that will be another expense coming up.
  1. Planning for the annual General Membership Meeting Lee has offered to be involved in this. Mitra is very interested, depending on when this is.
  1. Committee Reports

Outreach committee – Mitra has been super busy but asked if there was something they should be doing. She has had impromptu meetings with others, working/members, Wayne interested in helping. Kriss said that it was almost time for a dog wash; Dave said that he had contacted someone about that.

Marketing Committee – Adrien is looking into t-shirts that were supposed to be organic and fair trade; looked at one and found they were made in China. Got price from Maggie’s for organic cotton t-shirts that would be acceptable. Presented some rough ideas for the design image for t-shirt. The Board commented on the rough sketch and discussed potential contacts with an artist to do the art work.

  1. Member comment – Marilynreminded current board members that if they are interested in being on the Board, they must nominate themselves. Wayne encouraged everyone on the current board to self-nominate. Wayne was up north last month and ran into Jan who used to be a member.
  1. April 2007 Board/General Membership Meeting agenda topics: Update and financial report, general manager’s report, Board elections, Dinner, Member structure
  1. Announcements and Questions
  • Reminder to check board mail boxes.
  • Kriss got a letter from Oryana Food Co-op (Traverse City) proposing that co-op boards get together in Fall 2007 to form a Great Lakes Neighborhood of Food Co-ops. Mitra was at a CSA conference last fall in Madison and there is an alliance and everyone in there gets a big discount because supposedly they are eating healthy.
  1. Adjournment - Kriss moved to adjourn; Adrien seconded. Meeting adjourned at 9:48 pm.