Minutes of Special Called Board Meeting

People's Intergalactic Food Conspiracy No. 1, DBA Durham Food Co-op

5:00 PM, Sunday, November 2, 2008

1101 W. Chapel Hill St, Durham, NC

Board Members Present:  Jeane Bross, Thomas Harris, Daniel Read, Christine Westfall

Co-op Members Present:  Lorraine Clark, James Pickering

Guest:  Nicholas Hawthorne-Johnson of Bull City Restoration

Nicholas Hawthorne-Johnson requested this meeting with the Board on very short notice in order to discuss his interest in and proposed plans for the Co-op’s property. He has finished acupuncture school and is now sitting for exams. He will be leaving Durham in February for about six months of travel, and when he returns his plan is to open a community wellness center/clinic at this site. He considers this a great building, could walk to work here from his home on Arnette Street, and has fond memories of the Co-op from his childhood. There is one other building he’s visited that could work for his wellness center/clinic, but 1101 W. Chapel Hill Street is his first choice. The wellness center/clinic would include acupuncturists (Hawthorne-Johnson plus two others who went to the same acupuncture school) plus an herbal pharmacy to start with.

The community clinic concept means treating several patients at once for less than the going rate (i.e., $10 to $25 versus $70 to $80), using large spaces with treatment chairs or tables, where some privacy is sacrificed for affordable treatment. Acupuncture practitioners must treat a lot of patients in order to make a living at it. Hawthorne-Johnson said there is a community wellness center/clinic in Chapel Hill that is still in operation using this model. He anticipates adapting some floor space for community use. Some practitioners would donate their services for specific days/times each month.

The cost to outfit the space as a wellness center/clinic determined how much he can offer for the property. He had $150,000 in mind prior to his recent inspection tour; now he believes he can offer $160,000. He has a family business, Bull City Restoration, which restores historic properties while preserving authenticity of the structures and the character of the neighborhood. BCR has 12-13 properties in the neighborhood, including the house he lives in on Arnette. Half of these renovated properties are affordable housing rented to low-income tenants, the other half are rented at market rate to higher-income tenants.

Hawthorne-Johnson stated he would gladly rent space for the new buying club; he was generally in agreement with the deed restrictions (preserve both murals, and neither rent nor sell to a pawn shop or purveyors of packaged alcohol, tobacco, weapons) that the Co-op membership and Board requested, but wanted some time limits.

The requirement of offering a right of first refusal to a non-profit was raised. Hawthorne-Johnson expressed some hesitation at this requirement, saying it made him a little nervous because he cannot purchase the property without family money and he did not know what his family would say. He was not personally staunchly opposed to offering a right of first refusal and agreed to discuss this subject with his parents. Westfall provided background on the basis for this requirement. In order to purchase and renovate this property in 1990/91, the Co-op got low-interest loans from various nuns’ orders and also a 3% loan from the Institute for Community Economics (ICE), which has a loan fund that provides financing to qualifying non-profit groups. The extensive renovations were done with volunteer labor, so the community’s investment has been huge. Accordingly, the Co-op is placing a high priority on finding a good steward for the property and in assuring a permanent affordable space for start-up businesses.

Read asked: If you offer $160,000 and if the Board accepts that, when would the formal offer arrive? Hawthorne-Johnson indicated the offer would be submitted after the November 4 election, and the closing could be in about 45 days.

Westfall asked whether Hawthorne-Johnson would provide long-term, rent-free space to the buying club. Although not agreeing to provide rent-free space, Hawthorne-Johnson mentioned the possibility of a “deep discount” for Co-op members and of his tenants ordering from the buying club. In response to a question from Lorraine Clark, Hawthorne-Johnson indicated that in addition to acupuncturists, other modalities such as massage therapists, aromatherapists, chiropractors, tai chi and yoga classes are among the other components that ultimately may be added.

At 5:45pm Hawthorne-Johnson left the meeting.

Board members then discussed that (a) in September 2008 we had called a special membership meeting, with mailed notice to current members, to discuss and authorize sale of the building and (b) the sense of that special meeting was to go ahead and sell the property for $160,000 even though an official quorum of the membership was not present (see minutes of September 21, 2008, special called meeting for detailed discussion). In light of (a) the lack of interest by any other parties, (b) the lack of any objection from any members during the September 21, 2008, special called meeting to the proposal to sell at $160,000 if deed restrictions to protect the surrounding community in the future are included, and (c) the fact that in October 2008 the entity that had been interested in purchasing the property at $160,000 to establish a restaurant withdrew from consideration due the current financial crisis nationally, the Board decided that as good stewards of the Co-op's business assets we should go ahead and vote to sell (accept Hawthorne-Johnson's offer) given that this new offer was equivalent to the restaurant partnership's $160,000 tentative/unsigned offer which had been fully discussed and authorized during the September 21, 2008, special called meeting.

Motion: Harris moved that the Board accept Hawthorne-Johnson’s general offer of $160,000 with details yet to be worked out.

Seconded: Read

Vote: unanimous (Bross, Harris, Read, Westfall: 4-0)

Following the vote, and in response to a question by Westfall, Board members discussed deed restrictions versus a contract. Bross mentioned, and Read concurred, that one or more of the member-requested deed restrictions could have a specified effective period/termination date/sunset clause.

Discussion continued about appropriate deed restriction periods for the following specific matters:

(1) There appeared to be consensus on a period of 10 to 15 years of deed restriction for protection and preservation of the two murals.

(2) No definite deed restriction period was determined for prevention of a sale or lease of the property to an entity who would be a purveyor of tobacco or packaged alcohol (except as part of a meal consumed on premises) or who would establish a pawn shop, firearms/weapon store, or other business similarly detrimental to the neighborhood/community. Nevertheless, it was acknowledged that at some future point the building may need to be demolished.

There seemed to be consensus that a contract between PIFC/DFC and Hawthorne-Johnson (in lieu of a deed restriction) could be sufficient for the following:

(1) Buying Club space in the building, rent-free (as referenced above during discussion with Hawthorne-Johnson) or at nominal rent, e.g., $100 per month including utilities (as had been negotiated with Rocketship/Two Rockets) for the walk-in cooler and contiguous back room space, including existing built-in shelving.

(2) Upon future resale of the property by Hawthorne-Johnson/Bull City Restoration, right of first refusal would be offered to Durham Community Land Trustees (or some other yet-to-be-identified non-profit) at a yet-to-be-determined discount %.

(3) The following may or may not need to be included in a separate contract, since it may be included in the offer to purchase: As referenced during discussions with Hawthorne-Johnson, Bull City Restoration would deal with disposition of all remaining shelving (built in or otherwise), fixtures and equipment (working or not), except for (a) the Sallam Cultural Center sign belonging to Billy Stevens, (b) “metro” rolling metal shelving units, (c) bulk bins/jars/bottles, and (d) the customized wooden shelving (at the back left corner) that houses herb/spice/tea containers and (e) whatever else Board members are aware of that should not be transferred with the property.

Discussion turned to the matter of money owed to the Co-op by a former Board member and, in particular, what action to take given that a payment due no later than October 15, 2008, was not received.

Motion: Read moved that a letter be written indicating that the Board has tried to be patient, but the repayment schedule has not been adhered to and our willingness to forbear further legal action is at an end. If payment in full of the outstanding balance has not been received by 12:01 a.m. December 1, 2008, the Board will take further action, to include consulting with the District Attorney about possible criminal prosecution.

Seconded: Westfall

Vote: unanimous (Bross, Harris, Read, Westfall: 4-0)

The topic of requests from former employees was discussed.

Motion: Read moved that one former employee (who placed $60.00 of personal funds into the Co-op’s change bag) be reimbursed, and that a second former employee (whose unemployment benefits were credited by the State to a previously existing obligation) be offered a final settlement of up to $100 with provision that payments would be made in exchange for a general release.

Seconded: Westfall

Vote: unanimous (Bross, Harris, Read, Westfall: 4-0)

Meeting was adjourned.