Comments regarding the proposed store relocation will be posted as they are received.

I received the voter/member materials for the Emergency Election to approve the loan for helping support the move to the new site for the Co-op.  I had a question before I voted:  Why is the interest rate so high (6%, seven-year amortization with 15 months interest-only payments)?  In today's credit market, even home mortgages are going for an all-time low of around 3%.  I realize that mortgages and commercial property loans are apples and oranges, but I'm still concerned that 6% seems pretty steep.

One more question: Are the banks offering better rates than the credit unions and wouldn't it be more consistent with Coop philosophy and goals to use a member-owned financial institution rather than a private bank? 

Robyn Boyer

Membership # 41001332401

Robyn,

Thanks for taking the time to write with your question.  The 6% rate that the pro forma was based on is a worst case scenario.  Because the proposed store is not scheduled to open until the summer of 2014, the banks do not want to commit to an interest rate that reflects the current market.  Based on the conversations that I have had with the banks I chose to use the highest rate that we might expect to pay as opposed to the lower rates that are now being offered (for instance, the current loan that we have with the National Cooperative Bank carries a 4.25% rate).   This was done to test the project under the most adverse conditions that it might face.  Using those figures, the projections indicate that the Co-op will be able to afford the 6% rate and that with a lower rate the project will be even more affordable.

Re credit unions, they are usually not able to make commercial loans of this size.  In the past we arranged to borrow $500,000 from the Church Credit Union (which is now Golden One).  That was only possible because a number of other co-ops deposited a total of $500,000 in the credit union to act as security for the loan.  If Co-op owners approve the financing, we will approach local credit unions to see what they might be able to do.

Paul Cultrera, General Manager