WCOM and WSM: Save Our Station

There is now a hole at the heart of the finances of Weaver Street Market Co-operative. This much will become clear when its Audited Annual Report is published at the beginning of October.

It has been caused by the Food House and Expansion. The long-term debt of WSM has risen dramatically over the past year to just under $10 million (on an annual turnover of $21 million). The scheduled annual repayments balloon from some $170,000 this year to $700,000 in 2011 and $1.5 million in 2012.

The Accounts will show a loss of some $400,000 this year. As a consequence, the Worker-Owner Dividend was not paid.

At the September Board Meeting, WSM's Auditor 'suggested' to the Board that they formulate a comprehensive plan to deal with the debt. It would be much easier to put together such a plan if the Board had an Audit Committee.

My concern is that, in the absence of a plan and an Audit Committee, the Board may overreact to the situation, and end up doing more more harm than good, as it thrashes around trying to find anything and everything it can to lessen the debt burden, rather than adopting a measured approach.

I mean no disrespect with that last comment. Suddenly to be faced with a report of $10 million in debt can make even the strongest of people quake just a little - if it's something for which they are not used to taking responsibility.

Before I left the corporate world to pursue my creative interests, I was what in England used to be called a 'company doctor.' I made my living as a lawyer helping companies to get out of tight spots. That's one of the primary reasons I'm standing for the Board this year as a Worker-Owner candidate. I want to help. Anyways, my first advice to my clients was always: don't panic.

Weaver Street is inherently strong. We have $14 million in real assets. We have a product with which people love to associate - even if there have been a few glitches with some of the food this past year. We have 12,000 Consumer-Owners and 200 Workers who are committed to The Weave, not just as a grocery store, but as a living social statement which they love.

We will pull through. If I didn't believe that, I wouldn't be standing for the Board. But it will require an honest appraisal of where we are. A comprehensive plan about where we want to go. The full support of our Ownership. And a freedom from knee-jerk, fear-driven, short-sighted stop-gaps - which simply amount to trying to fix a broken leg with band-aids.

To be honest, one of the latter has been WSM's immediate reaction to shut off support to WCOM 103.5 LPFM, Carrboro and Chapel Hill's Community Radio Station.

WCOM was formed by WSM in 2004. Since then, WSM has been the lifeline for WCOM (either directly, or through its associated 501 (c) (3) non-profit, Public Gallery of Carrboro (PGC)), providing it with free station space in the Community Realty building on Greensboro Street, and underpinning its finances.

In a recent letter from the General Manager of WSM to WCOM (a copy of which is set out at the end of this post), notice was given that the support was to be discontinued.

My concern is not that WSM is attempting to regularize its finances. It is the abruptness and insensitivity involved. We in WSM face tough decisions in the next year. The measure of our standing as a leading community support organization will be the manner in which we affect our community with those tough decisions.

Before I turn to anything else, and putting on my hat as a member of WCOM's Development Committee, let me say that WCOM needs an immediate injection of cash and general fund-raising assistance to finance the move to a new location, and to fill the new hole in its own finances.

You don't need to be rich or to be an expert in fund-raising (but if any of you are, so much the better). All you need is a bit of spare cash or (if you want to help the fund-raising effort) two hands, a brain, a voice and a desire to see genuine locally-based public radio continue in our community.

Go to http://www.communityradio.coop/ and follow the links to Donations and/or Volunteering, and let the folks know you're ready to jump in and help. Or you can contact me directly at: geoffgilson@hotmail.com.

In the meantime, I've started to do what I can by writing a letter to the Board of WSM, which letter I set out below (Jacob [Myers] is a Worker-Owner Director, who has been WSM's Board Chair these past three years):

"Dear Jacob,

I attach a letter that apparently was sent by Ruffin in his dual capacity as General Manager of WSM and President of Public Gallery of Carrboro.

You will know that, quite separately, I have asked for WSM's Auditors (among other matters I believe to be crucial to understanding and then acting upon the critical state of the co-op's financial security) to provide all owners of WSM with an organizational chart showing all owners what is the relationship between WSM and what appear to be all of its attendant companies.

In the meantime, what I am led to believe is that the majority, if not all, of the funding for PGC has come from WSM. Indeed, the web-site of WSM openly proclaims that it was WSM (not PGC) that was responsible for the creation and early upkeep of WCOM 103.5 - our local Community Radio Station.

You and the Board will know of my concern at the level of debt in WSM. I am not surprised if the response, whether it is to me, the Auditors, or whoever, is to take steps to start reducing that debt. Including, if necessary, the sale of the property on Greensboro St., and the desire to see WCOM eventually become self-funding.

However, I think it important that WSM reduce its debt and its costs in a way that is commensurate with its Mission Statement, Board Policies, and its standing as a community co-operative. In other words, in a way that is creative, and not destructive.

The letter to WCOM has caused some consternation among supporters of our Community Radio Station. It is akin to foreclosure and cutting off a banking credit line - all at the same time.

In the circumstances, as and when the Board reviews the decisions being made by Operations to reduce the debt and cut costs within WSM - which ought to be when it considers the Annual Accounts for 2008 - I would be grateful if the Board could have before them this letter, and if it would then address its contents.

First, I am not sure that Ruffin should be making decisions unilaterally about reducing WSM's debt. And certainly not decisions which have such impact on WSM's standing in the community.

I would have thought that any decisions to reduce the debt should be taken by the Board. As were the original decisions to incur that debt.

If the Board has changed its Policy, such that the General Manager is allowed to incur debt and reduce it unilaterally, then I would, with the greatest of respect to all parties, strongly suggest that the events of the past year (not least the non-payment of our Dividend) would persuade the Board to re-visit that Policy.

The Board is responsible to all owners for the financial health of the co-operative. It is the Board which must answer to the owners for the risk to their investment. Not the General Manager. The Board should have primary decision-making responsibility for the major risk to investment, being debt.

Secondly, I would appreciate the Board considering ways to process the sale of the property in Greensboro St., and the attempts to encourage WCOM to be self-funding, that are more sensitive.

What about some sort of Lend-Lease arrangement with a potential buyer of the property? For a limited time? Say, a year?

What about WSM using its many contacts actively to help WSM find a new home? I was at the Steering Committee of WCOM when Ruffin's letter was discussed. No-one from WSM or PGC was present, to offer assistance to WCOM in facing the new reality which had just been imposed upon them.

What about WSM offering WCOM an immediate interest-free loan, to be repaid in no less than five years? WCOM is struggling to raise funds. not least because it has not had its own formal Board these past four years. PGC was their active Board - until this past week.

WCOM will need immediate funds to secure at least a temporary new home, and finance the move of equipment.

The measure of progress in a progressive institution is not necessarily the end destination. It is almost always the nature of the journey itself. And the friends we manage to retain when we have to make otherwise difficult decisions.

Let's not lose our co-operative sensibilities, as we pay the price for our own Expansion. Let's not let down our community, as we struggle to make the necessary tough decisions this next year. Please."

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[The letter from Ruffin to WCOM:]

"Hi Audrey [Chair of WCOM's Steering Committee of Volunteers],

Thanks for being in touch. Here is what I know about the status of the studio at its current location and my ideas for the future.

Regarding Weaver Street Market providing studio space for WCOM:

Weaver Street Market purchased the corner building five years ago to prevent it from being developed into a CVS Pharmacy and to meet its need for office and meeting space. The part of the building that WSM wasn’t using was rented to Community Realty and provided free to WCOM. (WSM has also provided free electrical to WCOM.) The arrangement with Community Realty and WCOM was made with the understanding that 1) their use of the building was temporary and at some point WSM would do something else with the property; and 2) WSM was not interested in putting a lot of money into a building that didn’t have a future by doing things like replacing the roof.

WSM no longer needs the space in the building because it now has office space elsewhere. As WSM considers next steps for the property, the future of WCOM remains an important consideration. Regardless of whether WSM rents or sells the building, WSM is committed to arranging for WCOM to stay for a period of time in order to facilitate a move to a new location. In summary, while there are no specific plans for the corner property, WSM is starting to consider next steps now that it no longer needs space in the building, and I will let you know once WSM’s plans become more concrete.

Regarding the Public Gallery of Carrboro’s support for WCOM:

The Public Gallery of Carrboro’s Board raised the money to launch WCOM and most of the money to finance its first two years of operation (about $70,000). That was a one-time effort to get the station going, and the Board has said that it doesn’t have the time or the energy to continue to play an ongoing fundraising role, although board members continue to pay the costs associated with taking website contributions (about $600/year). The Board had hoped that the idea of locating the studio in the Arts Center might come to fruition, but the Arts Center’s expansion into a larger space still seems to be several years off. In summary, at this point the Board has turned the running of WCOM over to the Steering Committee. While the Board will help however it can to find a new studio location, at this point it does not know of any obvious candidates for a more permanent home for the WCOM studio.

Achieving financial self-sufficiency will ensure a secure home for WCOM’s studio:

While WCOM appears to be nearer to a point where it is financially self-sufficient it did not meet its budgeted fundraising goal last year and may not raise enough money again this year to meet all of the expenses in the budget. To ensure that it has a secure future, WCOM needs to be able to pay studio rent and studio electrical along with the rest of its expenses. I think everyone realizes that raising money and making the station financially self-sufficient is important. Chris Frank uses the leaking roof to draw attention to the uncertain financial future and to build a sense of urgency for achieving financial self-sufficiency. Chris is right that the only sure way to have a more permanent home for the studio is to be in a position to be able to pay for it.

Thanks for all of your efforts on behalf of WCOM,

Ruffin"