U.S. Rep. Paul Tonko at Co-op's Pioneer Market!

On Tuesday, Feb. 16, U.S. Rep. Paul Tonko visited the Pioneer Market, future home of the Troy Community Food Co-operative, to meet and greet member-owners and talk about downtown re-development. The Co-op is a big part of Troy's revitalization! Tonko learned about the Co-op's fundraising efforts from board members and the general manager and saw plans for the renovated Market. He praised the Co-op for creating new jobs and being a showcase for local farmers' fresh produce. Some 50 people attended. This stop was one of many on his walking tour of downtown businesses in Troy. Mr. Tonko represents the 21st Congressional District.

Link to news story and more photos.

TCFC Launches Second Owner Loan Campaign

TCFC recently announced that:
1. It had received a commitment from the Empire State Development Corporation (“ESDC”) for a $270,000 “convertible loan”;
2. It was moving ahead with the renovation work on the Congress Street facility that will house the market; and
3. If construction progresses as planned, the market will open for business in Summer 2010.

This is certainly great news and weʼre all very excited about it. Downtown Troy desperately needs a full service grocery market, something thatʼs been missing since 2005. What makes this all the more exciting is that the market will be owned by residents of the community - over 700 members at this point.

As we explained at the membersʼ meeting back in November, a business like this requires a significant level of capitalization - both debt and equity - to be financially viable. $2.5 million in fact. The ESDC commitment puts us in a position where that target has substantially been achieved. This involved support by numerous financial institutions, foundations, businesses, community development organizations, the State of New York, the City of Troy and the 700+ members of the Co-op.

So, if the capitalization is substantially in place, why has the Co-op launched another owner loan campaign?
Thatʼs a good question. And itʼs important for members, prospective members, and other supporters to understand why. So let me explain, without going into too much detail. First, we need to keep in mind the following -
Fact - Even with the most compelling “canʼt miss” business plans, many start up businesses either fail or experience difficulty early in their lives as a result of running out of cash. Weʼve seen that very thing happen before here in Troy.
Fact - Although weʼve substantially achieved our overall capitalization target, senior debt represents a significant proportion of our total capitalization. (And senior debt is more expensive to the Co-op than owner loans.)
Fact - Good planning doesnʼt mean you can predict the future with absolute certainty. These conditions are pretty typical for a start-up business. Nothing profound here!

So what are we doing about it and how does the Owner Loan program fit into things?
Action - Cash is king! Do everything possible to ensure that our cash reserves are solid when we open for business. You can never have too much of a good thing. Well, maybe you can, but not when it comes to cash for a start-up. The Owner Loan program helps us boost our cash reserves.
Action - Expect the unexpected! Any number of things could increase our cash requirements as we move to and beyond opening. So weʼve built a “contingency reserve” into our capitalization target for those things that go bump in the night.
Action - Do everything we can to enhance our cash flows.

For many of us, our biggest monthly outflow is to cover our debt (mortgages, car loans, credit cards, etc.). As Iʼve said before, the Co-opʼs capitalization includes a lot of debt. Owner loans will help relieve the resulting cash flow pressure in a couple of ways. First, interest and principal are not paid until the loans mature. Second, the interest rates on owner loans are, in the aggregate, well below the rates on our senior debt. In the ideal scenario, a very successful Owner Loan program reduces our need for senior debt.

I could go on and on. But instead, Iʼll sum it up with a sports metaphor. Your football team has a two touchdown lead midway through the second quarter. Do you pat yourself on the back and begin the celebration? Or do you keep the positive momentum going and do everything possible to make sure the final score is in your favor? I think the answer is clear. For the Co-op that means (among many other things) continuing to grow its membership - equity is great! - and having a successful Owner Loan campaign.

If you think you might consider an owner loan, we would be more than happy to provide you with detailed information about the loan program, the Co-opʼs business, and our financial expectations. And weʼd welcome the opportunity to meet with you face-to-face to discuss the program and answer any questions you might have.

We thank you for your support and look forward to our community-owned market becoming a reality this summer.
Dennis Sullivan (Treasurer)
Co-op Contact info - Phone 518-424-1131 E-mail - info@troyfoodcoop.com
Website - www.troyfoodcoop.com