Members lament Elm City Market demise

Sept. 30--NEW HAVEN -- Everyone agreed it was a sad day.

Some 30 members of the Elm City Cooperative Market Monday came together for a post-mortem of sorts as the grocery hopefully heads for new ownership, but not as a cooperative.

The Board of Directors answered questions for more than an hour from the members and some workers, all of whom felt they were unnecessarily kept in the dark around the challenged finances at the less than three-year-old grocery.

The board ultimately voted to give the chairperson, Lise Dondy, the authority to execute a lease termination for the market, which would be held in escrow until there is a successful bidder.

There is an Article 9 asset sale Wednesday at noon at the market, where Webster Bank has invited bidders.

L. Linfield Simon of the RISC Foundation has indicated his interest in taking it over and running it with the four market managers as preferred investors. The board's lease termination will depend on whether Webster gets a bid it is happy with.

Dondy said she has also heard there is another seriously interested bidder.

The board also voted to give a general release to Webster on liability and in turn the bank will pay for a three-year extension for board members on their liability insurance.

The directors plan to have a telephone meeting on Wednesday to determine a message to the members as to the outcome of the bidding. Dondy traced some of the history of the market and the board's desire to bring in the National Cooperative Grocers Association to get Elm City on its feet with a $1 million loan and its management expertise.

But the landlord, Webster, and the United States Department of Agriculture opted for the Article 9 asset sale instead to get rid of the market's debt.

Webster put $3.6 million into the much-heralded market when it opened in November 2011 as an amenity to serve the growing number of apartments downtown and in the contiguous Wooster Square neighborhood.

"The precipitating event was the default to the landlord," Dondy said, which came about in the spring after the terms of the lease had been changed in December requiring more money monthly than it had been obligated to pay previously.

Dondy, asked if she realized the significance of that lease change, said: "Yes and no."

She said the board received monthly financial reports and she knew that not all the obligations to the landlord were being met, but the owner had been lenient before.

Dondy said the NCGA was able to make its case to the bank, which had the unanimous support of the board.

Board member Bob Marra said the landlord kept imposing "increasingly punitive terms to the point where the NCGA said we have no confidence in a workable plan given the landlord's intransigence."

The landlord is the union investment fund, the Multi-Employer Property Trust, which owns 360 State Street, a 500-unit apartment building on State and Chapel streets. The market leases a ground-floor space,

"We tried to convince the landlord that this co-op had great growth potential with a team of experts that would have come in here to help," Dondy said, referring to the NCGA

She said ultimately, the owner, the bank and the USDA were concerned the amount of debt on the co-op was too much.

Board member Bruce Becker said other co-ops have struggled in the beginning, but ultimately succeeded.

He said the River Valley Market in Northampton, Massachusetts, now has $19 million in sales despite having had a lot of debt. "They are prospering," Becker said.

"I think if there had been more time and there had been more back and forth in discussion," the results might have been different, Becker said.

Becker said the market was a $10 million business, not that much off from what it needed to succeed. Under the NCGA proposal it would have $500,000 in the bank annually for the next 10 years and enough to pay its debts.

Natalie Elicker, a board member, said going forward, if the public continues to want a grocery store, it has to patronize it. Despite having 2,200 members, few of them shopped at the market, she said.

The comments from the public concerned the lack of information about the market or outreach to members. Dondy said when the situation entered a crisis, they couldn't talk about it for fear vendors would pull out and futher hurt it until it could be stabilized.

Several of the members who paid $200 to join expressed interest in talking to the new owners about continuing a co-operative if possible and rallying like-minded members.

Peter Webster was concerned whether the replacement market would be more along the lines of the Dollar Store, rather than a Trader Joe's.

Dondy said the landlord wants an upscale market in the space, as does the city of New Haven.

The board could have opted to refuse to vacate the premises and force Webster to go to court, but the directors said that would only be "a bump in the road," that would have delayed the inevitable.

The website of the market was dark Monday night and labeled: Under construction.

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