Sugar Beet food cooperative, which plans to open shop at 820 Madison St. in February, is asking the village of Oak Park to pitch in $250,000 from the Madison Street tax increment finance district to build the store.
The coop also is asking the village to cosign on a $250,000 line of credit as a contingency in case the venture is unsuccessful.
On Monday, Sugar Beet and the Oak Park Economic Development Corporation will jointly present the Oak Park village board with the OPEDC’s funding recommendation.
Sugar Beet co-founder Cheryl Munoz said in a telephone interview that the request for $250,000 for the build out is contingent on the group raising $800,000 in a $1.8 million capital fundraising campaign launched earlier this year. The coop would have until the end of 2015 to raise the money in order to receive the $250,000 in TIF dollars.
Munoz said Sugar Beet organizers already have raised $400,000 in loans from their members and another $100,000 in membership dues. The store has not opened and the coop already has some 530 members, Munoz said.
“Our goal is to raise another $400,000 (in loans) from our members … and have 1,000 members by the time we open the store in February,” she said.
Memberships are $250 for families and $50 for seniors, students and low-income customers.
In addition to the membership dues and member loans, the coop seeks financing through sources such as banks and cooperative development funds, Munoz said, referring to the mishmash of financing sources as “lasagna financing.”
In an interview last week with Wednesday Journal, Village President Anan Abu-Taleb expressed general support for the coop but raised some caution as to the amount of the money being recommended by OPEDC. As a businessperson, he said, he always wants to see greater “skin in the game” from entrepreneurs.
John Hedges, OPEDC executive director, said the $250,000 line of credit from a bank would be backed by the village but would not be needed if the business is successful.
“It’s likely never going to be used,” he said.
Hedges said he believes the group is well on its way to raising the $800,000 needed for the matching TIF money.
“I think they are pretty close to raising $500,000; it looks like they’re off to a good start,” he said. “I expect they’ll meet that ($800,000) goal sometime this year. We’re (suggesting the village give) them until the end of 2015, which would be more than enough time.”
Munoz said she believes that the business will be an anchor for business development on Madison. She said if the coop does fail, the money used for the build out of the store could be applied to the next business that comes along.
“That ($250,000) investment stays with the property,” she said. “It won’t go to stock our shelves or buy grocery carts.”
Hedges noted that the store is projected to generate $4 million to $5 million in sales per year and that the village would recoup its investment in sales and property taxes in a couple of years.
The OPEDC recommendation estimates that the village will annually realize approximately $62,000 in sales tax and $42,000 in property tax from the venture.
The store is expected to create 15 full-time jobs and five part-time jobs, according to the proposal.