Timeline for Hampden Park Co-op Expansion and Purchase of IOOF Building

—prepared by board member Karen Gill-Gerbig

HPC Board Strategic Planning concluded the following:

• Stay in geographic neighborhood where we built our business.
• Location must meet needs of store, while cost effective and affordable.
• Present location meets needs of store and is exceptionally cost effective and affordable.
• HPC must negotiate new lease with the IOOF, prior to the end of our existing lease of December 31, 2005.
• HPC would like to expand in present location. Restaurant has ongoing lease; no sign of the space opening up.

2005 Outcome:

• Stayed in present space; will look for comparable/larger space in same geographic area; will consider restaurant space should it become available.
• Negotiated and signed new lease with IOOF, including language that gives HPC first right to rent restaurant space, should it become available.
• HPC would consider purchase of a building, to be more fully in control of our destiny—no fear of losing lease, significantly increased rents, etc.

2005 Extended outcome: HPC renewed lease with IOOF

• Continued favorable terms and additional language in lease that gives HPC first right to rent restaurant space, should it become available.
• The lease term began on January 1, 2006, and terminates on December 31, 2015.
• During these negotiations we indicated our interest in possibly buying the building, should it be placed up for sale.

2006 and 2007 Issue: fiscal planning for HPC future

• Begin investigating whether to work with Bill Gessner of Cooperative Development Services to further refine our finances and develop an accurate pro forma to further plan our future.
• Contract with Bill Gessner to hold workshop with board to strategically plan for HPC future. Initial foundation formed on which to continue to build the HPC pro forma.

2008 Issues: additional building space available & Possible property purchase

• We are notified by IOOF that the restaurant will not be renewing its lease, and the space is offered to us. IOOF asks HPC to offer a lease agreement for the restaurant space. We have less than one month to write and secure a lease for the open space.
• At the same time, the IOOF indicates if HPC is sincere in wanting to secure the restaurant space that sincerity would be further and more fully illustrated by also offering a bid on the entire property itself, AT THE SAME TIME WE OFFER THE LEASE. Again, we have a tight timeline to create and offer a purchase agreement for the property.
• We hired a legal firm whose specialty is real estate law and who also happens to be in the neighborhood.
• Our bank indicated they are open to working with us and will help HPC, as they can, to pursue our goal of financing the purchase of the property.
• Continued to develop pro forma with Bill Gessner, under our original contract, to present to bank in our financing request.

2008 Outcomes: lease of additional space and purchase agreement on property

• HPC and IOOF negotiated a lease for the restaurant space with similar provisions as our present lease for the original store, and identical expiration dates.
• “The lease term will begin on May 1, 2008 and will terminate on December 31, 2015.”
• Purchase agreement of property was written and presented to IOOF. Discussions occurred among and between both Boards of Directors. Minimal changes were made to the agreement, to which both parties agreed; and the document was signed by both parties.

2008 Extended outcomes part 1: HPC works to determine how to best own building

• As stated in the purchase agreement, HPC must secure funding to purchase the property and have the closing—a meeting in which both interested parties all sign the transfer of property papers—by 30 SEPTEMBER 2009.
• Obviously, we must have our funding secured PRIOR to closing so that we can transfer the money to the IOOF in exchange for ownership of the property.
• HPC continues to work with Bill Gessner, our attorneys, our cpa/tax attorney, SCORE, to determine the best methods/processes to:
• own the building—(type of ownership of building determines whether any gifts would be tax deductible on the part of the gifter)
• LLC (Limited Liability Company) (“LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC.Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation.” “Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single member” LLCs, those having only one owner.” From the IRS Web site: <www.irs.gov/businesses/small/article/0,,id=98277,00.html>)
• Newly established, separate non-profit, to parallel HPC.
• Contract with established non-profit to have it act as our agent in any and all non-profit-related processes and transactions.
• Members’ monetary gifts to an HPC-contracted non-profit, would be tax deductable for the gifter.

2008 Extended outcomes part 2: HPC works to procure financing to purchase building

• HPC continues to work with Bill Gessner, our attorneys, our cpa/tax attorney, SCORE, to determine the best methods/ processes to:
• put together financing to purchase the building
• HPC Member loans and/or gifts
• financing from our bank
• HPC creates Capital Campaign to allow HPC membership to gift or loan monies to purchase building.