New Pioneer Has Better Options than College/Gilbert

Proposed New Pioneer Co-op Relocation is Financially Risky

A rosy outlook in life and an optimistic attitude about the future are nice, but not useful when grounded in unreality, something Republicans learned in the recent election.



       
        I believe a majority of the New Pioneer board is wearing rose-colored glasses when it comes to its proposed relocation of New Pi to the corner of College and Gilbert Streets. 

     For tax year 2011 the downtown New Pi paid $24,948 in property tax; a new store with a $5 million assessed valuation would pay at least seven times that. (Tax levy on 100% of commercial valuation is $40.74369/$1,000.)

       In the first quarter of FY'13 labor costs for both stores for 135 full and 59 part time employees was $1,438,150*, which projects to an estimated $5,872,600 in yearly labor costs. The potential 40 new employees, to which the General Manager referred in his presentation to the City on December 4, would add more than a million dollars to the operating costs.

    

       New Pi currently carries no mortgage on the downtown store. A $4 million mortgage on any new store, carrying an interest rate of 3% (likely higher) for 15 years would add $163,115 per annum to operating costs. 

       If New Pi becomes a member of a condominium association there likely would be a substantial annual fee paid to the association.

     In FY 2011 less than nine percent of the Co-op’s approximately 26,000 members were responsible for 57% of total sales at both stores. This means that approximately 2,340 members conducted a majority of all transactions. Less than a third of the membership qualified for the patronage dividend paid to those spending more than $500 during that year. 

       It is indisputable that the planned relocation would cause a large increase in New Pi's operating costs. It is reasonable to conclude that it would be difficult to generate the amount of sales needed to cover this large increase, especially considering that New Pi is an expensive place to grocery shop (and food costs are projected to rise considerably in  coming years) and that a very small percentage of total members do a majority of the transactions.

       The GM stated that the proposed location would attract 250,000 additional people downtown, a per day average of 685. Where will they park and where would they come from? Would those who currently shop at the Coralville store come to the new store on a regular basis and why? If they did, would that not negatively impact the sales in Coralville?

       The impact on The Bread Garden cannot be as lightly dismissed as the GM stated at the December 4 Council meeting.  If the Bread Garden -- which is believed to be sensitive to any pressure that would detract from its customer base -- went under, the assessed valuation of Plaza Towers would decrease and so would the amount of taxes the City collects on this property. (Plaza Towers was a TIF recipient.) 

        Many members recall the near collapse of New Pi due to the rose colored glasses of a previous board. If New Pi also fails, the downtown would be without a grocery store, a significant loss to the many who now live and will live downtown; and there would be two very large spaces of ground floor commercial property standing empty. (The size of the proposed new store is roughed out at about 20,000 square feet.)

   
       The current New Pi board majority -- six of seven -- who want to relocate the store include a retired adjunct professor from the School of Business Administration and a Carlson-KPMG Research of Accounting Professor from the same school. The 1999 New Pi board, which voted to proceed with the Coralville store, included an Entrepreneur of the Year and a full professor in the College of Business. This move, based on a majority faith that we could afford a second store that would be wildly successful, nearly brought the Co-op to bankruptcy. It was a long haul for the Cooperative to return to the sound financial position it is in today; along the road to recovery there were staff reductions, no bonuses, no raises, no patronage dividends, no senior discounts, and no community donations. 

         

       I hope any member of the Council who may be giving consideration to any one of the four proposals that has New Pi on the ground floor will seriously consider the potential of Iowa City New Pi failing should it be relocated to the Gilbert/College site. No one would want to see the bottom floor of whatever is built there empty in five or six years, with only office space and apartments/condominiums above it.

        

       I believe the City and New Pi have a shared interest, one that would be served by the City negotiating a land exchange with the Co-op, trading City land east of the Unitarian Church for the Van Buren Street NPC property. New Pi would have space to build a LEED certified larger store that could continue to serve the vital 'quick in, quick out' shoppers who come by car as well as those that come by foot or bicycle. In exchange the City would get land to build a permeable paver parking lot for employees and visitors to the Civic Center. 

City        

       For something visionary, how about this idea recently sent to a friend of mind: Iowa City builds a year-round food market like the recently opened NewBo City Market in Cedar Rapids, with New Pi as the anchor. There could be food trucks/carts with outdoor seating, and a covered, but open-air pavilion for an expanded, pleasanter Farmers Market. Something like this would create a true local foods destination. An appropriate location might be in the yet developed Riverfront Crossings area. The City would be foolish not to be a willing and supportive partner in such an endeavor, as such a project would help to drive the future residential and retail growth the City hopes to see in that part of town. 

       While the citizenry is generally fed up with TIFs, a TIF to enable an option of public good is a lot different than one that simply allows a business to get a 20 year tax break.  It's a very good thing that the Robert A. Lee Recreation Center is downtown. It's on prime development land and it doesn't generate a penny of property tax. Citizens today would very likely support public funding to build it if it weren't there already.

       TIF bonds to support bowling alleys, theaters, and an art gallery would be public money spent to enable a public good: expanded recreational and educational opportunities downtown.  For this reason, the Moen proposal's TIF request is far more acceptable than the requests by the other developers to help them build for-profit commercial space from which the ordinary citizen will not see any benefit for at least 20 years when the TIFs expire. If the Council has concern about the height of The Chauncey that point should be negotiated with the developers.

*Information provided by Matt Hartz, New Pi General Manager.

 Carol deProsse

New Pioneer Member

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'The belief that one's own view of reality is the only reality is the most dangerous of all delusions."

                                                                                                                            -- Paul Watzlawick