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Minutes of the
Marquette Food Co-op Board of Directors
February 17, 2015 Meeting
Start time:
Meeting was called to order by president Tom McKenzie at 6:02 p.m.
Roll call:
Tom McKenzie, Phil Britton, Barbara Krause, Janna Lies, Brad Jackson, Emily
Wright, Cori Noordyk.
Emily Weddle (Board Recorder).
Brian Brady (excused), Mike Potts (excused).
GM Matt Gougeon, Natasha Lantz, Evan Zimmerman, Kat Eaton, Kelly Cantway.
Patrick Thompson, Leanne Hatfield.
Absent:
Staff:
Public:
II. Preliminaries:
Approval of Agenda & Additions: The agenda was reviewed and no changes were made.
Motion: To approve agenda without changes (motion by P. Britton, second C. Noordyk).
Action: Motion passed unanimously.
Review of January Minutes: The minutes were reviewed and no changes were made.
Motion: To approve minutes without changes (motion by C. Noordyk, second E. Wright).
Action: Motion passed unanimously.
Electronic Communications: None.
III. First Public Comment: Leanne Hatfield, who owns Seeds and Spores Family Farm with
her husband Jeff Hatfield spoke about their concerns with the GAP program. They have been
suppliers of the MFC for 18 years and do not want to be required to participate in the GAP
program because they feel it will be costly and will require a lot of time, and they do not feel it
will improve their product. She is concerned that it may alienate some farms and increase the
cost of local food at the MFC. The board thanked Leanne for coming in to raise her concerns and
share her perspective about this issue. The board also explained that it does not have direct
influence over MFC operations. The GM commented that as it currently stands, the GAP
requirement is still in place, but he is willing to talk more with the Hatfields about their concerns
and work toward some resolution.
IV. GM Monitoring
(a) Store Report/Expansion Report (M. Gougeon): GM provided a written report and explained
that sales in the first six weeks have been very strong. The average basket price has increased.
Seventy new members have been added in 2015. UNFI is opening another warehouse, so the
MFC is again experiencing more out-of-stocks. The GM explained that the holes on the shelves
are not due to poor ordering. Human Resources is currently evaluating compensation and other
HR policies. The wage schedule that has been in place for the past two years may not fit current
staffing since there are a lot of new supervisory positions and new skill sets among staff.
Compensation is being evaluated and compared to similar co-ops. The employee manual is being
updated. The Prepared Foods Assistant Manager has stepped down. Meat and Seafood and
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Prepared Foods will now be combined under one manager. The GM and several other Michigan
GMs will be visiting the Phoenix Earth Food Co-op in Toledo that has asked regional co-ops for
help. The GM will also visit a startup co-op in Iron River. The Acoustic Brunch series continues
to be well attended, and front-end staff have noticed an increase in memberships during the
brunch. Bulk Foods is not doing as well, but there are plans underway to revamp that area of the
store.
(b) L5 – Financial Condition (M. Gougeon): A written report was provided along with compiled
financial statements, a sales and net income report, debt to equity ratios, asset to liability ratios,
ratio analysis report, and ratios/benchmarks. The GM explained that the MFC had a loss in 2014,
however it was expected and the loss was actually a little less than anticipated. The GM
introduced Patrick Thompson, CPA, who explained that 2014 was not a typical year for the
MFC. He encouraged the board to look at the cash flow. He explained that there was a loss in
cash, but it was expected and can be attributed to interest being paid by the MFC and the
increase in employees. There was $3.6 million in assets on the books. The MFC received a
$600,000 MEDC grant. Patrick Thompson explained that he does not think the grant is taxable
because it was a non-shareholder contribution of capital. He explained that it was not income,
nor a liability, but was an infusion of capital by a government entity for the community at large,
and therefore the $600,000 MEDC grant was left off, and the building was reduced so the MFC
won’t take a tax benefit. Kat Eaton was recognized for doing a great job. The GM gave an
overview of ratios and explained that debt to equity improved because grant money was used to
pay down debt. The GM explained that the current ratio is good.
Interpretation Reasonable: Yes.
Adequate Data: Yes.
The report was accepted as in compliance.
(c) Annual Patronage Discussion: The GM is not recommending a patronage dividend since
there was a loss in 2014.
(d) G8 – Vice President’s Role (M. Potts): The Vice President’s role as parliamentarian under
G8.4. was discussed. G8.2.2 and G8.2.3 need to be updated since elections are now electronic.
Because revisions and further discussion are needed, G8 will remain on the March agenda.
(e) Certify Membership (P. Britton): P. Britton reported that he has been emailing with Chris
Peacock and will forward the membership list to the President.
V. Second Public Comment Period: Leanne Hatfield added that the reason they do not want to
be part of GAP does not have to do with not wanting to follow food safety. She said they sell
most of their food within 11 miles and are very transparent. She voiced that she has not heard
concerns in the community about food safety.
VI. Outreach Reports
(a) Outreach Report (N. Lantz): The Outreach Department is working on long-term projects. The
Annual Report is underway. The Owner Manual is being redone and will be redesigned and
printed in-house. The Community Classroom is getting a lot of use. Sarah is working on making
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standardized offerings for private groups that want to use the classroom. The website revamp is
still underway. Before the new site is launched, a lot of consideration is being given to how
information will be communicated, especially for frequently changing items like prepared foods
daily menu items. Chad is working on updating the MFC style guide so all promotional materials
will have a consistent look. Abbey Palmer is working on the NMU Hoophouse Report. The
Lexicon of Sustainability is traveling all over the UP.
(b) U.P. Food Exchange Report (N. Lantz): The MFC is looking into possible collaboration with
food banks that have trucks that are only used a few times a week. The UPFE website has been
launched. The UP Food and Farm Directory is down for maintenance and is expected to be down
for a month to a month and a half. Directory information for farmers will be updated and Evan
Zimmerman is working on improving the system.
VII. Break
VIII. Board Monitoring & Discussion
(a) Committee Reports:
(i) GM Evaluation (J. Lies, B. Brady, and T. McKenzie.): No report.
(ii) Finance Committee (B. Krause, J. Lies, and B. Brady): Met on February 5 to discuss
the cash situation. The committee will keep an eye on it through the summer. The
committee also discussed the use of the MEDC money and the capital
raise/crowdfunding.
(iii) Communications Committee (P. Britton, E. Wright, and B. Jackson): No report.
(iv) Bylaws Committee (T. McKenzie, B. Krause, and P. Britton): No report.
(v) Orientation Committee (E. Wright, M. Potts, and C. Noordyk): No report.
(vi) Elections/Nominations (B. Jackson, C. Noordyk, and M. Potts): Did not meet. The
committee received Rick Kochis’ completed application.
(b) Board Education:
(i) Annual Meeting: The Annual Meeting will be March 13 from 5:30–8:30pm. The
meeting will start at 7pm. The board is encouraged to arrive by 5pm. The event will be
very similar to last year’s meeting. Natasha will email the board with information and
times. The board discussed sharing a table with Customer Service so they can share a
suggestion box. The board needs to send any materials they want to have displayed to
Natasha before the event so everything can be given a consistent look.
Voting will take place from February 23–March 6. The newsletter goes out this week
and a reminder email will be sent to members. The board discussed having board
members present at the store during the Acoustic Brunch to encourage people to vote.
The board was asked to notify Amber and Mary Moe.
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IX. Third Public Comment: None.
X. Closings
(a) March Assignments:
i. Annual Membership Meeting
ii. Board Elections
iii. Store/ Expansion Reports, (M. Gougeon)
iv. G11 – Treasurers Roll (B. Krause)
v. L4– Membership (M. Gougeon)
vi. L10 – Board Logistical Support (M. Gougeon)
vii. CCMA Planning
viii. Outreach Report (N. Lantz)
ix. UP Food exchange Report (N. Lantz)
x. G8 – Vice President’s Role (M. Potts)
XI. Motion to adjourn at 7:48 p.m. (motion by B. Krause, second E. Wright).
Action: Motion passed unanimously.
Next Board Meeting: March 17, 2015 at 6:00 p.m.
Emily Weddle
Board Recorder
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POLICY TYPE:!
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EXECUTIVE LIMITATIONS
POLICY TITLE:
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L5 – FINANCIAL CONDITIONS AND ACTIVITIES
Reporting Period: October 1, 2014- December 31, 2014
I report compliance with all parts of this policy. Policy interpretations are unchanged since last
quarter review. Supporting data and statements have changed in the Global policy and policies
L5.2, L5.3, L5.5, L5.6, L5.7, and L5.8. Changes are highlighted in yellow.
I certify that the information contained in this report is true to the best of my knowledge given the
information available to me.
Signed: Matthew L. Gougeon_________________________, General Manager
Date: February 17, 2014
Unless otherwise indicated, all data is taken from the 4th quarter of 2014.
With respect to the actual, ongoing financial condition and activities, the General Manager will not
cause or allow the development of fiscal jeopardy or material deviation of actual expenditures from
board priorities established in the ends policies.
Interpretation/Operational Definition: The General Manager will ensure appropriate cash flow to pay
daily bills, refrain from incurring debt other than trade payables or other reasonable and customary liabilities
related to daily operations, and actively work toward the development of a financial contingency plan should
one become necessary. All related financial decisions must be guided by the concepts of the Global Ends
Policies surrounding open access to local, organic, wholesome, and fairly traded products; support for local
suppliers; and education for everyone about food and related issues.
Data: The Statement of Cash Flows as of December 31, 2014 shows a decrease of cash of ($650,124.00).
This decrease in cash is representative of proceeds from our operations, construction loans, sales of equity
shares, and sales of preferred shares and the ensuing expenditure of those funds during the expansion
project. No new debt was incurred in the 4th quarter of 2014. A""!#$%&'!()*"+!,)+)-"&.!)/(!"*)-*"*$*&.!
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The GM Will Not:
L5.1 Incur debt other than trade payables or other reasonable and customary liabilities incurred
in the ordinary course of doing business.
Interpretation/Operational Definition: The General Manager will not place the Co-op in fiscal jeopardy
through abuse of his power as the cooperative’s agent regarding large capital expenditures, unreasonable
loans, etc.
Data: Our current customary liabilities fall within normal operating procedures as shown in our quarterly
financial statement. The liabilities are not changed from the previous quarter but exhibit updated figures to
the Notes Payable to Range Bank, NCDF, and NI. On December 20, 2013, with Board knowledge and
consent, we entered into construction and equipment loans with Range Bank, Northern Initiatives, and
Northcountry Cooperative Development Fund in the amount totaling of $3,456,800.00. All of these funds
are dispersed to the project by Range Bank, Marquette County Title Company, or the NCDF. Our
Commercial Mortgage with Range Bank on our buildings was retired and subsumed by the commercial
construction loan closed on December 20th of 2013.
L5.2
Use restricted funds for any purpose other than that required by the restriction.
Interpretation/Operational Definition: There are currently no longer any identified restricted funds until
such time as MFC management and Board determine specific restricted funds.
Data: N/A
L5.3 Fail to settle contracts, payroll, loans or other financial obligations in other than a timely
manner.
Interpretation/Operational Definition: The General Manager will fulfill all financial obligations in addition
to COGS and daily expenses and will not incur late charges.
Data: Financial obligations outside of COGS and operating expenses are the Notes Payable with Range
Bank, NCDF, and NI and payroll. Interest only payments to Range Bank and NI have been made on time.
Only Range Bank and NI loans have been active during this reporting period.( See statement from Range
Bank and NI as of December 31, 2013) Principle and interest payments to NCDF have been made on time
in this reporting period. (See statement from NCDF dated 12/31/2014) The 4th quarter payroll has been
met in a timely manner. (See attached Electronic Federal Tax Payments Systems (EFTPS) reports. The
“Settlement Date” on this report corresponds to our pay date.)
L5.4 Allow tax payments and other government-ordered payments or filings to be overdue or
inaccurately filed.
Interpretation/Operational Definition: The General Manager will ensure that all tax and government
ordered payments are made on time, filed accurately and have resulted in no late notifications or
assessment of penalties.
Data: All federal tax payments, federal withholding, social security/medicare (FICA), and federal
unemployment (FUTA), are paid electronically through the Electronic Federal Tax Payments System
(EFTPS) and followed up with paper quarterly returns prepared by our accountant, signed by the General
Manager and filed by their due date. Monthly Michigan Sales, Use, & Withholding returns and State
Unemployment Agency quarterly tax reports are completed by our accountant and signed by the GM, paid,
and filed by us. Our 2013 Federal Corporate Tax return was completed and filed before its due date of
September 15, 2014. Our Michigan Business Tax return is completed and filed. Our 2014 Federal
Coroporate tax return and Michigan Business tax return are due September 15 2015. ( see EFTPS deposit
report) (See attached filing schedule from Thompson & Thompson, P.C. and copies of all returns and check
stubs for the 4th quarter of 2014)
L5.5
Enter into real property lease agreements without board approval.
Interpretation/Operational Definition: The General Manager will seek board approval before entering into
any real property lease agreements. Additionally the GM will apprise of, make recommendation to, and
seek counsel of the board prior to the MFC entering any real property leases.
Data: We no longer have any real property leases.
L5.6 Fail to meet the following objectives unless otherwise established by a board-approved
document:
A. Maintain sufficient liquidity to pay bills in a timely manner. Current Ratio should not fall
below 2:1.
B. Maintain sales and net income at levels sufficient to support store operations and
annual objectives.
Interpretation/Operational Definition: The General Manager shall meet these objectives, unless by
otherwise written board directive, to maintain a healthy ratio between ability to pay debt and payables and
prevent creditors from exerting undue influence over the membership and this business while maintaining
modest profitability.
Data: A: Current ratio as of December 31, 2014: $1,052,965.00/$321,493.00 or 3.27:1 B: As of December
31, 2014 sales have increased at a rate of 22.0% over the same period last year and there is a -7% net
profit.
L5.7 Fail to make recommendations and rationale to the board regarding patronage dividend at
the February meeting of the board.
Interpretation/Operational Definition: The General Manager will provide the board of directors with his
recommendation and rationale regarding a patronage rebate for owners of our cooperative at the February
board meeting each year.
Data: See attached recommendations. See also a quick glossary of terms at bottom of this page.
L5.8 Allow financial record keeping systems to be unchecked by a certified public accountant,
outside audit or other qualified third party.
Interpretation/Operational Definition: The General Manager will ensure that record keeping is adequate
to provide the accountant the information that he needs to prepare our monthly and quarterly financial
statements.
Data: Pat Thompson, our accountant, reviews financial documentation provided by bookkeeper, Kat Eaton,
before preparing all financial reports. Further, Paul Nardi, of Makela, Toutant, Hill, and Nardi, PC has
completed a Review of our financial statements, in 2013, as per the requirements set forth by the State of
Michigan relative to our securities offering.
Quick Glossary for Patronage Dividend recommendations:
Patronage means sales attributed to our members.
Qualified Notices, means net profit dollars attributed to our members and set aside in “their name” to be
returned to them- now or later- in cash or improvements to operations.
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