Elgin Grocery Co-op Advocates to Seek City Funding

Another Startup in Illinois

Rauschenberger said Shared Harvest supporters also have made the project known to Kane County officials and will be writing a grant proposal seeking funds from a USDA program that is encouraging the development of markets for locally grown foods.

Proponents of the Shared Harvest food co-op project intend to ask the Elgin City Council for some form of financial support to advance their plans to bring a grocery store to the downtown.

Councilwoman Carol Rauschenberger said she has been told that there is about $400,000 available in the city's Central District tax increment financing district, though some of it is earmarked for other projects. As for what form or how much assistance would be sought, Rauschenberger said that was still to be determined.

"We'll be asking the city for some funding, possibly about using TIF money," Rauschenberger said.

Co-op advocates, who have been working for several years to locate a cooperative grocery store in downtown Elgin, have taken some big steps to bring the project to fruition.

Rauschenberger said Shared Harvest supporters also have made the project known to Kane County officials and will be writing a grant proposal seeking funds from a USDA program that is encouraging the development of markets for locally grown foods.

At this point though, at least two other members of the City Council have reservations about any financial support coming from Elgin.

Mayor Dave Kaptain noted the city's policies changed in the last few years to a focus on incentives being tied to tax revenue generated and waivers and expedition of permits and related fees. And most of the downtown TIF money is tied up with the Tower Building project, Kaptain noted.

Success of organic farming is 'the future of Kane County'

"We do have grant programs for signs and other capital projects but don't give out direct incentive money," he said.

Councilman Terry Gavin said he agreed with Kaptain's observations and added that the Shared Harvest group might consider approaching a bank for a loan for its project.

While grocery co-ops can take many forms, those behind the Elgin effort have been selling shares at $100 each to investors who would have a voice in how the incorporated establishment will be run. Shared Harvest supporters will be having an open house fundraiser from 6 to 9 p.m. Monday at Solo Restaurant & Wine Bar, 13 Douglas Ave. in downtown Elgin.

The co-op intends to focus on selling locally grown produce and meat and would stock an array of locally sourced non-food items found in a traditional grocery store, too. Shared Harvest treasurer Kari Christensen said the co-op would find out-of-state providers during the months when goods aren't locally available.

Christensen said the group has found about 500 backers who have bought a combined 616 shares. Shared Harvest's start-up costs will be about $995,000, according to Christensen.

Rauschenberger said she had been part of co-ops when she lived in warm weather Phoenix and in the college town of Ann Arbor, Mich. She said that co-ops in Champaign and in Madison, Wis. each have more than doubled in size in recent years.

"People want choice," Rauschenberger said. "There's a lot of demand for locally produced and organic foods. Look at the ads for Jewel. And look the success of Trader Joe's and Whole Foods. But since Elgin is not their typical market, we thought, why not start our own store."

That store would be at 215 S. Spring St. in the empty, 4,250 square-foot space that was an Ace Hardware. It is adjacent to the currently operating Ziegler's Ace.

At a presentation on the project at the May 6 City Council Meeting, Ace owner David Ziegler said he is willing to offer Shared Harvest the space rent free, provided members fix up the building.

Among the points Ziegler said attracted him to the effort were the momentum the local food movement has, the synergy to be had between a grocery store and a hardware store, and that Shared Harvest will be customer-centric.

A market study conducted by Debbie Suassuna of the California-based G2G Group for the Elgin project claimed the store could draw from "Elgin, South Elgin, southern Dundee, and northern Saint Charles" — an area of about 178,000 residents.

"However, the trade area exhibits a demographic composition that is weaker-than-average with regard to most of the demographic variables that correlate positively with natural foods co-op sales performance levels (i.e., college-education levels, the proportion of non family households, and the proportion of persons employed in a health- or education-related occupation)," the study stated.

The study also noted that while there are no direct natural/organic food store competitors in the area in question, there are some conventional stores that carry some similar products, with a Butera a few blocks away not drawing from the same base clientele.

There are also some stores just outside the area, including Trader Joe's in Algonquin and Geneva and a Mariano's in Hoffman Estates, that draw from the same demographic typically interested in offerings found at a co-op.

While the study recommended going with a space of 6,250 or more, Ziegler's no-rent offer made the smaller space attractive. Based on the study's findings, Shared Harvest backers feel the Spring Street store could gross $2.7 million in sales its first year — or about $7,400 a day.

The study also assumes "a level of store management that is knowledgeable and experienced (with at least five years of co-op store management experience), with a significant amount of market and marketing savvy."

Rauschenberger noted that the store also would be community-oriented and have a mission of educating its patrons about understanding good food and healthy eating. While Shared Harvest items may be higher priced than those at grocery chains, savings could come from buying bulk items and from learning how to shop more cost effectively, she added.

Both Christensen and Rauschenberger noted that there are few co-ops currently operating in the Chicago market, chief among them being the Dill Pickle in Chicago's Logan Square neighborhood.

One called the Sugar Beet is set to open in Oak Park, they said, and it will be getting some funding from that suburb. Rauschenberg also mentioned that Shared Harvest is part of a coalition of efforts underway across the region made up of groups hoping to open co-ops.

Chris Prchal, who with his wife Marcy, operate Troggs Hollow Farm locations in Elgin and Poplar Grove is a Shared Harvest shareholder and intends to sell at the Elgin market if and when it opens.

"I still don't know if Elgin has the right type of customer base for this to work, but that doesn't mean I don't want to see it happen," Prchal said.

Prchal noted that in Illinois the chief crops remain corn and soybeans with most of those fields not grown for human consumption. The state currently has a program trying to encourage 20 percent of the produce consumed in Illinois to come from Illinois farms by 2020, he said.

However, currently there may not be enough farmers growing the variety of fruits and vegetables found at a big box grocery. It's also hard to find things from other states that co-ops would want that they couldn't get locally, Prchal noted.

"Right now there probably aren't enough farmers operating on a small scale that would serve co-ops," Prchal said. "There also might not be enough people willing to pay the actual cost of food. My wife and I discuss this a lot, that with all we do it may not be enough to make a living. People forget that a good deal of what they buy at big grocery stores has low prices because of farm subsidies and because of the economy of scale big farms have in growing a limited number of items."

While there have been co-op success stories, Prchal and Northern Illinois University College of Health and Human Sciences professor Beverly Henry pointed to the Duck Soup Co-op in DeKalb, which closed for good in March after 40 years. According to reports, members voted to close due to being $45,000 in debt and needing about $100,000 in capital to stay afloat.

Henry, who has been involved in Kane County and Elgin area public health initiatives, said, "Grocery stores have moved into the marketplace that co-ops used to center on these days," Henry noted she thinks a co-op in Elgin might be able to fill a niche.

"I do think that offering hard-to-find specialty products or offering semi-prepared foods or cooking classes might be interesting, though those mean another host of considerations," Henry said.

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Copyright © 2016, Elgin Courier-News

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