“Cooperatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility."
—United Nations Secretary-General Ban Ki-moon
It wasn’t only the United Nations General Assembly that declared 2012 to be the International Year of Cooperatives. Brattleboro did, too.
The Brattleboro Food Co-op has just taken its own breathtaking leap into the future by moving into a new, state-of-the-art green-built downtown food market.
As icing on the cake and in cooperation with the Windham and Windsor Housing Trust, the co-op added 24 affordable apartments on the upper floors of the new building.
To continue the dessert analogy, the cherries will be two outdoor cafes/green spaces. These will be heavily planted to mitigate the fact that both face onto what is generally regarded as the worst traffic corner in town.
It is rare that downtown Brattleboro gets a new building and, in a time of recession, the co-op’s move is particularly bold and daring.
“It’s significant and will have an impact on the economy and on the liveliness of downtown,” said Connie Snow, the executive director of the housing trust.
With the new $9.2 million building, the co-op has increased its store space from 14,600 square feet to 23,000 square feet.
The cutting-edge, environmentally conscious construction will certainly lower the utility bills, but the green building has also dramatically increased the co-op’s mortgage payments.
According to General Manager Alex Gyori, the co-op, which has revenues of about $17 million a year, will have to increase sales by 25 percent the first year.
“It’s a lot of debt, but if we hit the sales level, we’ll be in fine shape,” Gyori said. “We need 25 percent growth in the first year, but we have 38 percent more retail space, and we’re better organized.”
The Brattleboro Food Co-op started in 1975 as a buying club and over its lifetime has had almost 10,000 shareholders. Currently, it has 5,900 members.
By almost any measure, these past 12 months have been difficult for the co-op and its shareholders.
First, a fire in an important Main Street building wiped out many of the apartments that provided the co-op with walk-in customers; the loss of 13 stores downtown also cut down on general foot traffic.
Construction on the lot, which started in late 2010 and eliminated much of the free parking, has also dramatically slowed growth.
In August 2011, the co-op had to weather the tragic killing of one of its key employees by another key employee.
The motivations behind the shooting are still not clear, and still unanswered is the question of how a co-op dedicated to values like community and democracy could be the backdrop for such workplace violence.
In September, the nearby Whetstone Brook flooded during Tropical Storm Irene.
There have also been many construction delays.
But now is a time of renewal. The old store will close for the last time this week. The cash registers in the new store will start to ring — a “soft opening” — on June 16.
The old store will then be demolished and the space paved for parking. The grand finale — the opening ceremonies, the speeches by politicians, and the ribbon-cutting — will come later, probably in October, when all the moving parts of this tremendously complex operation are working smoothly.
The co-op world understands that Brattleboro is taking a big risk and is watching it closely.
“It’s a really exciting project,” said Erbin Crowell, the executive director of Neighboring Food Co-op Association, itself a federation of 175 Western New England co-ops, including the Brattleboro Food Co-op, in Vermont, New Hampshire, Massachusetts, and Connecticut.
“It’s an audacious project,” Crowell said. “But in business terms, that’s what it takes.”
“Some folks are hesitant to take that risk in showing what a co-op can do. But it’s exciting that Brattleboro has stretched their business so much and taken on that challenge,” he said.
Crowell said that the move makes sense.
“We’re still in a recession, and a lot of people are still disillusioned with how our economy works,” he said. “They’re looking for community ownership, economic democracy and a successful and resilient business model.”
“Co-ops have demonstrated their ability in very exciting and powerful ways,” Crowell asserted.
A global phenomenon
Co-ops — food co-ops, worker co-ops, farmer co-ops, credit unions, housing co-ops — are a global phenomenon, and while they may contribute to only a small part of the world’s economy, their numbers are growing.
Co-ops offer a different business paradigm from the one developed by slash-and-burn, for-profit capitalism.
Cooperatives are owned by and democratically run by members, not by outside investors. Members elect their boards of directions from within the membership. Surpluses are returned to the business and/or to the members. And while co-ops are not in business to fail, profit is not their only motive — there is also a key element of social responsibility.
Co-ops contribute to “socioeconomic development, particularly their impact on poverty reduction, employment generation, and social integration,” according to the United Nations.
“The U.N. looked at about a billion people globally who are members,” Crowell said. “More people in the world are members of co-ops than people who directly own stock [in traditional corporations]. Co-ops employ about 100 million people worldwide, more than are employed by multinational corporations.”
The U.N.’s focus is especially timely and welcome, according to Crowell.
“The U.N. had set aside these millennial goals to eliminate poverty over time,” Crowell said. “The 2008 recession threw those plans in the air. So they wanted to look at what was working.”
“On a global level, co-op businesses were doing quite well,” Crowell added.
It wasn’t just food, he said.
“In the recession, credit unions were not involved in all that toxic mortgage debt,” Crowell said. “So credit unions have been growing at a huge rate. People have been pulling their money out of banks because they trust their credit unions.”
The U.S. itself has about 30,000 cooperatives that operate 73,000 places of businesses, according to the National Cooperative Business Association. These co-ops own more than $3 trillion in assets, generate over $500 billion in revenue, and pay $25 billion in wages. At least 300 new food co-ops are starting up now across the country.
“One in three Americans are members of a co-op,” Crowell said.
New England is especially rich in cooperatives, according to Crowell. The co-op members of his organization include Cabot Creamery; the Putney Food Co-op (founded in 1941 and one of the oldest food co-ops in the country); the Brattleboro Holistic Health Center; Deep Root Organic; and the Valley Alliance of Worker Co-ops.
Together, these cooperatives employ more than 1,400 people. Their average wage is 18 percent higher than the average food-and-beverage industry wage in the same state.
In 2010, western New England co-ops posted annual revenues of over $250 million. Over the past three years, they had a median growth rate of 14 percent.
“Taken together, Vermont food co-ops would be among the top 25 employers in the state,” Crowell said. “According to our 2007 study, as a whole group they purchased about $33 million in local products, and since then that number has gone up.”
“These are big numbers. They’re exciting. That’s the point we’re trying to get across,” he said.
Crowell also noted that “people think of community-based stores as very local, but you have to consider the dramatic impact they have in a group.”
Co-ops are stable businesses, Crowell pointed out. They won’t get up and walk away from a neighborhood because they can make better profits somewhere else.
“They’re dedicated to the local community, dedicated to local food producers, dedicated to providing good jobs,” Crowell said. “So the International Year of the Co-ops is a big opportunity to share that message.”
The big decision
Safety and energy efficiency were a worry at the old Brattleboro Food Co-op, but its long journey to a brave new building might have started with traffic problems in the kitchen.
Back in 1997, the co-op kitchen was so small that “our cooks had to do amazing choreography to keep from bumping into each other,” Gyori said. “We did $600 a week in sales.”
But as soon as the co-op moved the kitchen to the front, “we were doing $11,000 a week. Two years later we were doing $17,000. And now we’re doing $42,000 a week.”
Something had to be done.
The first thing co-op management and its board looked at, back in 2002, was moving into a bigger space somewhere other than downtown.
“When the opportunity to move arrived, we looked at the Grand Union site on Putney Road and explored other options with our community,” Gyori said.
“Our shareholders didn’t like the idea of running away from downtown,” he said. “Then our landlord, Larry Cassidy, asked, ‘Would you stay downtown if we sold you the building?’”
In January of 2004, the co-op closed on the property, buying it for $1.7 million from Larry Cassidy’s BAST Investments.
“As we were walking down from the bank closing, I was saying, ‘We own it! We really own it!’” Gyori said. “And someone said, ‘Great! What’s the new building going to look like?’”
But a new building wasn’t on the immediate agenda. Slowly, as the other businesses in the plaza found other locations, the co-op took over some of the vacant spaces.
Yet by 2008, more needed to be done. The co-op found itself looking at four options: do nothing; systems improvement and minor renovation for about $4 million; major renovations for about $7.5 million; or putting up a new building for about $9 million.
Somehow, at this level, the difference between $7.5 million and $9 million didn’t seem like that large a step.
In August of 2008, the board of directors approved the concept of going forward with a new building; at a referendum, shareholders voted 77 percent in favor.
The push was on.
From the beginning, the co-op’s intention was to build a state-of-the-art green building, or at least as much of one as it could afford. The designs for the new co-op have been deeply thought out and the building will truly be cutting-edge.
For example, the floors are polished concrete and will not require solvent-based cleaners or sealers. All the windows are triple-glazed with fiberglass frames to minimize heat loss.
A large part of the heat will be captured from — of all things — the store’s refrigeration units.
When refrigerators cool beer and freeze turkeys, a lot of heat is produced.
In conventional buildings, the heat just gets blown out the top of the store. At the co-op, that heat will be captured and recycled to partially heat the building and provide hot water. This technology is widely used in Europe, but not here.
The energy cooperative Co-op Power, from Greenfield, Mass., is providing photovoltaic panels for added energy; the co-op will buy the display over the next five years.
This measure wasn’t so much an attempt to save money as it was an idealistic attempt to do what is right for the environment, Gyori said. The break-even point, when the co-op will no longer have to pay for electricity, is about 25 years out at the current rates.
Even the problem of rainwater runoff has been worked out.
The rooftop plaza, sheltered from the cold Northwest winds, is designed to be relatively comfortable in all four seasons. Called an “intensive green-roof system,” it will hold soil deep enough to allow for major landscaping.
This soil will also hold rainwater; therefore, it will minimize stormwater runoff into the Whetstone Brook, which won’t “spike” and flood as easily. The plantings will filter the air and traffic noise.
The rooftop plaza also has a heat-absorbing element.
“I am really proud of the work of all of our colleagues, our board members, and our staff on this project,” said Sabine Rhyne, the co-op’s shareholder and community relations manager. “I think the investment in this downtown community, in the multi-use aspect of this building, and the careful balance of cost and environmentally sound practices is good cause for pride.”
From the beginning, it was apparent that a housing element in this project would be a good addition.
“It was a downtown site and you want maximize density in downtowns,” said Snow, of the Windham and Windsor Housing Trust. “You do that through mixed-use buildings with stores below and housing above.”
“And I think the co-op realized that the site had always had a multi-storied building on it,” she said. “A four-story building really fit with the streetscape. They started to like the idea of restoring a historic streetscape.”
After “costing out” that part of the project, the co-op decided it was not affordable.
“Our core competency was running a store,” Gyori said.
The natural partner was the Windham and Windsor Housing Trust, dedicated to providing quality affordable housing in two counties.
A fast-growing organization, it has an ownership interest in 796 units of housing — rental apartments, the land under single-family homes and mobile-home lots, and an operating budget of $1.6 million. The organization spends an average of $4 million a year in construction.
“We said we were interested,” Snow said. “Then we had to play catch-up. We paid for our own feasibility study to turn [the co-op’s] sketch into a four-story building.
“And lo and behold, we looked at the design and cost and it looked like it would work,” she said.
The housing trust subsequently involved Housing Vermont, whose “expertise in using tax credits to raise money for housing was important to us.”
So the top two floors are owned by a partnership between Housing Vermont and the Windham and Windsor Housing Trust.”
Essentially, the co-op sold the building’s “air rights.”
“They owned the land, so we didn’t have to buy it,” Snow said. “So there was a value to what they were providing. We bought the right to build on top of their store. We had an appraiser value that, and we paid $160,000.”
The housing trust has created 24 new apartments — 18 one-bedroom, two two-bedroom and some studios — on top of the store at a cost of $3.6 million.
Only five of the apartments will be rented at market rates. Another five will be deeply subsidized for Section 8 tenants, and the rest will be rented at “affordable” rates. The housing trust is now processing 80 applications for the 24 apartments.
“We’re really thrilled that the co-op invited us into this project and saw the value in creating some housing opportunities,” Snow said. “We’re tremendously grateful to them for that. It’s a great building.”
Gyori echoed her words in a message to his shareholders:
“It has been a great pleasure to work with our housing colleagues on this project,” he said. “It has afforded us an opportunity to combine the spirit of the Sixth Cooperative Principle, Cooperation among Cooperatives, with the Seventh Principle, Concern for Community, in a real and meaningful way.
“The result is a new, long-term relationship with our housing partners, stronger ties with another local organization, and a shared vision of a livable, healthy, and sustainable downtown,” Gyori wrote.
A brave new world
The Brattleboro Food Co-op now faces a new and exciting future with the full support of its shareholders, who alone put $1.5 million of their own money into the construction. The co-op plans to hire about 12 more people.
And Gyori anticipates more future growth.
“We’re growing a lot for such a small community,” he said. “In the last couple of years, without parking while we were under construction, we haven’t grown at all. But typically, we do 4 percent to 5 percent percent a year. And we expect to grow a lot more. It’s because our community is highly supportive.”
Nationally, co-ops are also growing.
“People are banding together to be able to survive in hard economic times,” Gyori said. “Also, our co-op is a natural foods co-op, and more and more people are becoming aware of the value and health benefits of whole foods. The industry is growing even during economic downturns. Values are becoming a priority.”
Some people complain that organic foods are expensive — they’re for “elites.”
Gyori said that wasn’t entirely fair.
“Not all organic food is more expensive,” he said. “But overall, the co-op is more expensive. When people value healthy food higher, they’re willing to spend a little more to buy it. And people should buy when they can afford it. As volume grows, prices go down.”
The Brattleboro Food Co-op enjoys a strong national reputation. Gyori credits his shareholders for that.
“We’re one of the co-ops that many co-ops around the country look up to,” Gyori said. “We’ve done a lot of really wonderful things. We’re trying to respond to what our shareholders want us to do, and it’s been recognized.”