North Coast Co-op in financial trouble

About $500,000 needed to quell ailing cash reserves

North Coast Co-op General Manager Melanie Bettenhausen explains the Co-op’s financial situation during a special board of directors meeting Thursday night. (Philip Santos — contributed)
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The North Coast Co-op is running low on cash reserves and its profits have declined for several quarters, an issue the board of directors addressed Thursday night.

On Nov. 8, a special board of directors meeting was packed with dozens of concerned Co-op members and employees who spoke on the situation, and what the course of action moving forward ought to be.

“The board understands it’s a crisis,” James Kloor, treasurer of the board said.

Kloor said the Co-op has lost about a half a million dollars in the first two fiscal quarters this year.

General Manager Melanie Bettenhausen began the meeting with a brief overview of the events leading up to the current financial crisis. She cited several causes of the current predicament, including an unpredictable market plagued by wildfires, new competitors, the waning cannabis industry, a high rate of staff turnover, and health care claims in the hundreds of thousands of dollars. Over the past six months, sales have continued to fall.

“The most critical thing right now is to manage cash,” she said.

How to do that was one of the contentious points of the meeting. Many ideas were discussed and written down, among them were finding ways to “trim the fat,” as one member of the Co-op put it.

Changes in the Co-op that have already been made include the layoff of several employees, reduced hours, and inventory reduction, which Bettenhausen said are projected to put the Co-op on track to make a small profit at the end of this month.

The primary plan to move forward, however, is to establish a line of credit. Bettenhausen said the amount needed was in the neighborhood of $500,000.

One person asked how a business with a recently rocky financial track record would be given such a line of credit. The answer was that the board was considering the possibility of putting the Arcata Co-op building up as collateral.

Colin Fiske, president of the board, said the building was assessed to be valued at “4.2 million.”

Gil Friedman, who has invested $50,000 in the Co-op through “C shares,” said he was concerned about that possibility. Friedman worried that if the Co-op followed through with the plan to use the building as collateral and then tanked, those who have invested in “C” shares wouldn’t see their investments returned.

So other ideas, including a grassroots-like form of crowd sourcing to raise awareness and money were thrown around. Friedman, among others suggested posting signs informing Co-op customers of the financial troubles, and asking for donations at the register or through fundraising events. Many at the meeting expressed sentiments that the Co-op was more than just a store. The consensus among the group was clear: the Co-op could use help from the community.

“It’s the heart of town,” Friedman said. “They have the best selection of vegetables, I’d hate to see that store close.”

Philip Santos can be reached at 707-441-0506.

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