By Brandon Kane, General Manager
One last critical vote is needed to determine the fate our of West End expansion to 770 Cascadilla Street in 2019. This spring, GreenStar owners voted 93 percent in favor of relocating our West End campus to the 770 Cascadilla site and entering into a lease. At that time, we stated that our plan is to purchase this property after leasing for 10 years. This is still the plan — the vote coming before you now is needed to solidify it. Nothing has changed except one of the contract terms — our development partners wish to have the purchase plan in the contract along with the lease plan. This is an important distinction and, thus, a necessary owner vote. It does not change what we, as owners, have already discussed: we want a property that will be our property. Now we need to say that in writing, which is what will happen if we vote yes in September.
GreenStar’s bylaws require our owners to approve the acquisition of real property. This vote asks our Co-op owners to approve (or not) the purchase of our new store and premises after our first rental term of 10 years (2020 through 2029).
The purchase price is determined by a simple formula (see chart).
During the first ten years of renting our new location, GreenStar would set money aside to put toward the purchase in 2029. The total cost of the purchase would be based on the actual costs in the chart below — estimated to be about $9.4 million. As part of that price, we would be assigned the mortgage balance from the landlord, which would be approximately $5.4 million as of the end of 2029. Of the remaining $4 million, GreenStar would pay $2 million in cash in 2029 and the balance of $2 million would be rolled into our mortgage loan.
The down payment of $2 million is built into our business plan and accumulates in an escrow account during the 10-year rental term. The remaining $7.4 million would be financed over a standard amortization period of 20-25 years.
GreenStar owns our current warehouse/The Space property, which generates only about 1 percent of our cooperative’s total revenue. With this purchase, GreenStar would own over 80 percent of our revenue generating property, and our monthly mortgage expense would be lower than the rental payments during the first 10-year term. Finally, this purchase would enable GreenStar to build equity in the most up-and-coming development area in our City.
Renting our new location for 10 years will allow us to fine-tune our business and set money aside each year in preparation for the transfer of ownership in 2029. The purchase of the property in year 10 has a significant and long-term positive impact on GreenStar’s overall financial health.
This critical vote is key to the Co-op’s future. Please be sure to cast your vote online or in our stores between Wednesday, Aug. 29 – Friday, Sept. 14.