People's Food Co-op Grows a Green Store

From #108, September-October 2003

People's Food Co-op Grows a Green Store

B Y   M I L E S   U C H I D A

The produce department.

At People's Food Co-op in Portland, our vision of expanding began over five years ago. A 1,000 sq. ft., 1900-era house had served as our co-op home since 1970. But the store was too small and old, while sales were approaching $800 per sq. ft. and competition was increasing. Our first step was to analyze our financial position. Although sales had been steadily increasing, net income had been minimal, and our balance sheet was seriously weak. Not surprisingly, a financial pro forma compiled by Cooperative Development Services (CDS) showed mediocre results. For the next couple of years, progress slowed to a crawl, with minimal fundraising and preliminary design work by an expansion committee, but no clear direction. We did clear one giant hurdle during this time, securing a zoning variance to expand our commercial space (we are zoned residential, but grandparented in). In the spring of 2000 I proposed to the board that I be "hired" as expansion project manager to get things moving again. Little did I realize I would hold the position for the next 21/2 years! The first step was to hire Bill Gessner from CDS for a three-day site visit to assess our project and do an assessment of our organizational strengths and weaknesses. Bill's work with us then and throughout the project was vital, providing both reality checks and reassuring support.

The review was daunting yet encouraging. Organizationally, we had several critical issues, including board development, organizational structure, and unifying our vision and commitment. We had just converted to a cooperative structure with a member equity system, and we parlayed this change into an expansion campaign with excellent results (almost $50,000 in the first year). Improved store operations allowed us to stash away net earnings.

Our financial position had improved, and we were gaining skills that would improve it further. Our PeopleLoans (member loan) drive, launched in the fall 2000, took more than a year to top our goal of $160,000. ShoreBank Pacific approved a $388,000 loan contingent upon us reaching our PeopleLoans and other financial goals. After a final push and some supplemental fundraising, we made it! Meanwhile, achieving unified board support for the project proved to be difficult. The board was split between moving forward as planned and scaling the project back and avoid significant outside debt. After several months of reconsidering various possibilities, including a member input forum, agreement was reached to forge ahead.

We could have moved to a newer building on a higher traffic street. But we would have lost the sense of place that is so vital to this co-op. A commitment was made early on to sustainable design, and we stayed true to that. And there was strong desire from the membership to expand the existing building rather than demolish it or move.

Our design team, headed by designer Dave Wadley, incorporated such basics as using sustainable and recycled wood, recycled and plant-based paint, and non-toxic finishes. But we also thought outside the box-in terms of store design (an "L" shape, preserving the courtyard and our weekly farmers market), energy efficiency (ground source heat pump, radiant floor heating and cooling, lighting, insulation), building materials (cob, bottle wall, "eco roofs"), and rainwater harvesting (for landscaping and toilets). [See www.peoples.coop for more info.] We were also in the right place at the right time, scoring two grants from the City of Portland's new Office of Sustainable Development (OSD) and another grant for our eco roofs.

the store entrance.

We hired local architect Thia Bankey to assist with hiring a general contractor, coordinating construction meetings, change orders, and other project details, as well as to contribute her insights and organizational skills. We contracted directly on several projects-including HVAC, windows, office floors, siding, trim, walkways, painting, and landscaping-sometimes hiring members, sometimes utilizing working members and staff.

The construction phase provided its own set of challenges. Starting in January assured us of months of relentless Portland rain. First came the portable toilet (for over five months!), followed by three noisy and muddy weeks of drilling of three 300-foot deep bores for our ground source HVAC system. Literally hundreds of community and co-op members had a hand in the creation of our cob walls and benches during several weekend work parties. On July 4, 2002 we moved to the new wing and phase 2-renovation-began. Many delays and cost increases accompanied our renovation, mostly from foundation and framing issues in the old building. Finally, in December we took down the temporary plywood walls and opened the whole store. In March, we held a week long Grand Opening Celebration to inaugurate our dream.

Shoppers at the new store's checkout counters; the new sunroom.

Handling many of the jobs in-house proved to be both frustrating and gratifying. On the one hand, coordinating our schedules with the contractor's resulted in several delays and made the responsibility for quality, cost increases, and delays difficult to distinguish at times. These challenges were compounded by the many green building requirements we had.

However, involving members and the community, as laborious as it was, helped us stay true to our goals and has helped give our members a strong sense of pride and ownership in their co-op. The overall project cost savings were questionable, but the process is paying off now in exposure and support. The overall project budget grew from an initial $600,000 to $840,000, and actual expenditures ended up at $930,000. Much of the difference was made up from additional grants, member equity, and store income. Again, the returns appear to be justifying the investment. Although construction took three months longer than planned, we still squeaked out a 6% sales increase during that period, and sales were up more than 50% for the first half of this year. We have received lots of publicity-including several local papers, Natural Foods Merchandiser, Natural Home magazine, a city award for energy efficiency-and generated a lot of interest in sustainability, with tours coming through the building every month. The community room is getting a lot of use, drawing in new people and opening up opportunities for educational and well-being programs. And we have a beautiful, unique, energy-efficient building.

Of course, new challenges arise to fill the void. We are still adjusting to the higher volume, have revised the floor schedule three times this year, and are experiencing a late wave of post-expansion staff burnout. Thankfully, sales and cash flow have remained good.

A local natural foods chain is opening a store six blocks away next spring, and with Wild Oats only 15 blocks away and Trader Joe's and Whole Foods expanding their presences, there is no shortage of competition! Despite these challenges, our foundation is solid, and we are ready to continue thriving and serving our community.

Miles Uchida is financial manager at People's Food Co-op in Portland (miles@peoples.coop).

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