Have you heard the news? Open Harvest is moving from our South Street storefront that has provided a base for our growing cooperative these past 32 years. This relocation is precipitated by the inability to extend our lease, which expires in March 2024. In April, our GM & Board signed a letter of intent to lease 10,000 square feet of space at 330 S. 21st St., in the Telegraph District. The same building is home to Allo Communications, The Mill Coffee & Tea, and Subway, and close to one of Lincoln’s main recycling sites at Lewis Ball Field.
The Telegraph District a place of immense growth and community for Lincoln. Located on the eastern edge of downtown Lincoln, this mixed-use district revitalizes the industrial elements of the former Lincoln Telephone & Telegraph campus. This area features incredible walking & biking access, and is located near the UNL campus. The relocation of the co-op brings a more efficient and appealing shopping and dining experience, with greater product selection and much improved parking.
This is not the first time we’ve moved, but this relocation poses a unique set of opportunities and challenges. All of us at the co-op have been hard at work, playing our roles to bring awareness to this project, to connect with owners, and ultimately, to rally our owners! We need YOU to invest and become a part of this historic project for our 47 year old cooperative.
Since Open Harvest Co-op Grocery is collectively owned by community members, and no one person has the authority to sign a bank guarantee, financing expansions at cooperatives can often be misunderstood, even by financial institutions. Here’s an overview of the capital mix required to fund our relocation.
To finance the construction of a building, businesses need capital, and securing that capital can be complex. Co-ops usually follow a similar strategy to fund major projects —selling preferred shares to owners and drawing on bank loans, grants, savings, and other income for the rest. Ours, for example, will be financed in the following ways:
Preferred Shares (~50%): An exciting perk of ownership is having the first opportunity to invest in projects. In August 2021, our owners approved a change to our Articles of Incorporation which allowed the Board of Directors to issue preferred shares. Simply put, these preferred shares are non-voting, dividend-bearing investments offered to owners. These are mutually beneficial because owners are able to receive a return on their investment and the co-op is able to lower its financing costs. For our project, we are offering 2,000 preferred shares at a par value of $1,000 each to owners who are in good standing and residents of Nebraska. A-Shares require a minimum investment of $10,000 (10 shares), and yield a potential 3% dividend rate. B-Shares require a minimum investment of $1,000 (1 share), and yield a potential 2% dividend rate. If we sell them all, we will raise $2,000,000 in ownership investments. More information about investing can be found by visiting our website at GROWTHECOOP.COM
Grant Income (5-25%): On June 9th, we were awarded a $200,000 grant by the Reinvestment Fund as part of America’s Healthy Food Financing Initiative (HFFI) small grants program. This year, $22.6 million in financial support was awarded to 134 food-centered missions and establishments across the United States – Open Harvest was one of three recipients in our state! Funding for the HFFI grants program is provided by the United States Department of Agriculture (USDA), authorized by the 2014 Farm Bill. The 2021 HHFI grant application pool was the largest since the program launched in 2018, and awardees were selected through a competitive process.
We continue to look for other grants that we may be eligible for. Feel free to share with us any grant programs that you think we may qualify for, and we’ll review the requirements, and if applicable, submit an application!
Bank Loans (35-50%): We will be applying for a loan from a financial institution that we will pay back over an agreed upon term. The loan amount will depend on how much equity we can bring to the table – either invested by owners, cash, and received through grants.
Other sources of financing this relocation project include donations, landlord contributions, extended vendor credits, free-fill products from vendors,, and gap financing. We will make use of any of these that fit our needs.
Taking on a project of this size can be daunting for co-ops, but we have strong leadership that not only puts us in position to secure financing for this project, but also a team that is keeping our regular operations running smoothly in an on-going pandemic. This new location will set the co-op on a successful path for years to come and will increase food access in an underserved area of our community. Let’s all play our part to make this a reality. More information about investing can be found by visiting our website at GROWTHECOOP.COM