DAVIS FOOD COOPERATIVE, INC.

BOARD OF DIRECTORS

MEETING MINUTES


March 5, 2007


Call to Order


The regular monthly meeting was called to order at 6:30 p.m. at the Davis Food Co-op Conference Room, 620 G Street, Davis, California, by Darius Pazirandeh, President..


Roll Call:

Directors Present: Winston Berger, Daniel Berliner, Julie Cross, Debbie Eernisse, Danyal Kasapligil, Darius Pazirandeh, Ben Pearl, Doreen Pichotti, Joy Rowe


Directors Absent: Jared Davis, Lucas Frerichs,


Staff Present: Beth Tausczik, Kenna Krueger, Doug Walter, Eric Stromberg, Amy Radbill, Seth Larsen


Guests Present: Bobbie Hales, BE Murray, Joan Randall.


Roles:

Facilitator: Darius

Time Keeper: Ben

Notetaker: Amy


The Secretary determined that notice of the meeting was duly provided as required by Bylaw Art. VIII §6(C), and that a quorum of Directors was present under Art. VIII §6(B).


Member Comments: BE Murray follow-up on e-mail re: lateness of audit and audit not being in line with bylaws. Presented book by Van Baldwin; referred to issue of whether BOD can vote to not issue patronage refund; passed out information to Directors.


Announcements: Julie: The Superbowl was a smashing success; thought we’d sold out, but not quite; got rave reviews—not a single complaint during event; even t will probably be repeated.

Darius: Lucas is sick, so Darius will facilitate


Consent Calendar


Presented: Consent Calendar Items

Retained by unanimous consent:

Removed by objection:

Approval of February Minutes – postponed to April meeting

Julie: Someone moved to adopt agenda, and we didn’t get who it was—anyone know? Thinks it was Lucas; would like to postpone approval

Motion: re-calendar E1 monitoring (Eric) – moved to new business


Motion: Darius moved to adopt the consent calendar as amended

Julie Seconded

Vote: Motion is adopted unanimously.


Agenda Review


Darius began discussion of BE’s policy questions. Is there a violation in allowing the audit to be late? Because there’s a full calendar, Darius would like to schedule that discussion for next meeting


Amend Agenda by

moving any discussion of the report on B6(H) to a closed session

adding “re-calendar E1 monitoring” as 8.3 under New Business

removing 8.1, discussion of how the Co-op serves as a resource for Co-ops as a separate topic & folding it into the E-3 discussion


Motion: Darius moved to adopt the agenda as amended

Julie seconded

Motion carried unanimously


Reports

Presented: Bobbie Hales of Gilbert Associates presented the 2006 audit information. Handed out draft financial statements. Fairly close to being able to issue the audit—they’re waiting for replies from attorneys, but don’t expect those to change the information from the report looked at during meeting.


Discussed communications to the BOD first: went over handout.


Moved on to financial statements. General comment on financial standing: Solid financial position; good news report.


Kenna: asked about income taxes in financial statement. “Since this deduction is not applicable under generally accepted…” Concerned that for someone reading the statement, it seems as if we’re not doing things under Generally accepted accounting principles.


B; We can go back and restate it as it’s been stated in earlier years.


Kenna: Also, accounts receivable note doesn’t match with balance sheet—longterm notes… Question of how to look at (assets?)—Kenna didn’t think they should be placed with current assets


B: We’ll clear that up—we’ll do that before issuance.


Joy: Question about cost of sales


B: That’s a rolling amount of inventory


BE: Does the Co-op use FIFO


B: No—you do average cost, right?


Kenna: Yes


BE: And the advantage of that would be that it’s more accurate?


B: I think it’s materially representative. One of the suggestions we have for this group is inventory tracking…


BE: In terms of the patronage refund—does the retained amount have to be paid out at least 20% every year in cash?


Kenna: First year of the refund at least 20% has to be paid in cash…


Bobbie then went over Observations and Recommendations (handout): Some of these recommendations come about because you have limited staff—there are duties that you want to separate. You as a group need to work with management to decide where the costs of separating duties outweigh the risks of not doing so.


Process she recommends is for management to discuss the recommendations to determine whether they’re valid/cost effective/etc.


None of these recommendations rise to the level of material weaknesses—the Co-op can decide how to handle each of them.


Darius: General question—none of these are recommendations because there’s a big exposure to risk?


B: Correct.


Joy: Inventory tracking: Benefits?


B: At this point, I don’t believe you have any kind of ready, monthly accurate count of your inventory balance. It also allows you to track shrinkage—what’s been sold as opposed to what’s been taken (doesn’t think that’s a big problem, or she would have put it in her report).


Darius: Why doesn’t a quarterly inventory show shrinkage?


Kenna: The perpetual would allow you on a daily basis to track—any manager would probably be thrilled to be able to track their departments or sub-departments. The thing is it would be very difficult to implement that here—


Darius: But it’s not that we can’t track shrinkage, it’s just that we would be able to do it more finely on a daily basis, right?


B: Correct.


BE: I actually wanted to ask Beth, would one of the benefits be better ordering…


Beth: Well, better control…


BE: Was the internal accounting manual and procedures book ever adopted?


Kenna: It’s being fine tuned by Gilbert Associates.



Ben suggested formally agreeing that the general manager expects to provide a full report on his response to the auditors Observations and Recommendations at the June meeting.

Recess at7:41; reconvene at 7:50.


Presented: General Manager's Report

6.2 Report and questions: highlights of policy monitoring

• E3--We make community

Seth expressed excitement about working with Jeff and Annie Main/Good Humus


Julie: Thrilled when we do something that leads to something else. SouperBowl—head chef at Sudwerk expressed an interest in being involved in cooking classes


Ben echoed Seth’s excitement about working with Good Humus.


• Voter Pamphlet

Doug discussed sending out candidate packet to BOD members; after the board’s April meeting, there’s an intense period of putting together anything going into the Voter Packet—to be sent out April 25 (?), starting date for elections is 27 (?)

Doreen: Finalized that Doreen, Julie and Doug are on election committee; Julie will review Voter Pamphlet—do we need someone else?

Doug: One director has been sufficient in the past

Julie: It’s only one director, but three people total

Doreen: Only because I reviewed it last year; I think I could do it quickly this year

Julie: Okay, so it’s both of us.

• B4 first quarter

Darius: One of the things that BE Brought up was in regard to B4A2—financial info should be available 120 days after the close of the fiscal year. Do you feel comfortable speaking to that right now?


Eric: Well, I think I should write a report, but Gilbert Associates is a contract employee—we can ask them to do things by a certain time, but…


Darius: Do you think you can report on that next month?


Eric: Yes.


Julie: Even if Gilbert had been in compliance, our bylaws say February 1, and that’s never going to happen in an audit year. We should change it to say at the first


Kenna: I think you should set a meeting in January—it’s definitely not going to be ready in December, and if it’s ready in February, it’s out of compliance with the bylaws. This is a weird year and things didn’t happen, but [normally] tax returns should be filed by December 15 and then Gilbert reports


Eric: the other option is to have the report available in draft form…


Julie: I think we should wait to hear from Eric, and then figure out how we can be in compliance (?)


BE: Just wanted to point out that it’s not only the bylaws, it’s CA corporate law—the bylaws are written in compliance with that.


Doreen: Could we possibly do it at the January retreat.


Doug: It has to be an open meeting.


Joy: About E3, part time person and marketing, someone in marketing to label country of origin—why is this marketing and not produce?


Seth: It’s still produce’s responsibility to label, but it’s her responsibility to go through and make sure it’s done consistently through the week.


Darius: Wanted to talk about what Eric brought up in e-mail. I think we’ve gotten three requests in the last year from people who want to start co-ops. What is our role in supporting co-ops other than just—it seems like what we’ve done that’s substantial is to make loans, or join the NCGA. But what’s our role when some kids in the city say, “We want to have a bike co-op?”


Ben: Was there actually a request from the Roma group?


Joy: It was just a discussion.


Dan: I can speak to that…


Darius: I don’t know that there was an official request


Doreen: are we talking about how to support co-ops in general, or will we have a chance to talk about supporting the coffee co-op specifically?


Darius: I just wanted to discuss it in general.


Eric: With PachaMama it was really easy—they had a business plan and sources of support, so the support they needed was easy to give. What we can do is to give them Van Baldwin’s book on incorporating a co-op and instructions on how to write a business plan.


Doug: One of the things we did was send them a link to Cooperative Fund of New England, and something in Minn./St. Paul. Essentially, they offer financing—they’re a lender and a way of facilitating getting people together with sources of money. So when someone approaches us with a diffuse idea—we can educate them (what sort of co-op are you looking for, etc.). Also, there’s a Davis Cooperative Development Fund through Twin Pines, and that could play a role in people getting funding, but that’s when they’re at that stage.


Eric: …We could pay someone to actually help a group write a business plan (if we felt they were actually serious).


Dan: I came on behalf of the group of people at café Roma. Julie and Doug and Eric all gave me a ton of information, and that book (Van Baldwin). As far as if anything else is going to happen, we don’t think so. We haven’t heard back from College Realty… I felt like as far as the Ends, I was happy.


Joy: It sounds like we have a lot of resources we can share with people—can we put things on the Web site in a formal way.


Doug: The book is no longer available. I did take some of the information in one of our “What is a Co-op” brochure and added it to the Web site.


Darius: Because we moved fifteen minutes to the end, and we’re about five minutes ahead…how many other people have questions about the reports? How about until 8:30


Ben: RE: margins of various departments. Whether or not specific departments made their projected margins—if it’s in one of these documents, just point me to it.


Eric: The only department we have some concern about is Beer and Wine—we’re considering going to a monthly inventory, because we don’t know why. Is it just a bad count? We know grocery hasn’t quite made margin, but we know why—they working under Unified… Otherwise, no departments were of concern.


Ben: So you’re saying that they all made margin?


Eric: And if you’ve paid attention, deli’s had an upward trend in margin too. Margin is: If you look on your income statement…


Kenna: It’s the green, towards the back. 6.2G, the third page.


Eric: You’re going to look for a page like this… (explanation of how to read the margin report…) Bear in mind, we do see ups and downs from quarter to quarter, but in the case of beer and wine, we’ve had it consistently down from quarter to quarter.


Joy: What department is sushi part of?


Eric: They’re an independent contractor—we track sushi sales, but not they’re margin, because that’s they’re own business. They share a percentage of their sale with the Co-op.


Joy: So what percentage of the increase in deli is attributable to sushi?


Eric: They’re doing better because they’ve brought in new packaged products, new salads.


Darius moved to accept E3 report

Dan seconded

Julie abstained from the vote because she contributed to it

Unanimously accepted


Darius moved to accept B4 report (except for B4A2, to be reported next month)

Julie seconded

Unanimously approved


6.3 Report: Renovation

Much discussion of the miracle oven that self-cleans, deep fries, and speaks Farsi!


Julie: Board needs to approve resolution placing loan on the ballot at the next meeting, right?


Eric: That’s correct.


Julie: Who will write it”


Eric: I’ll write it.


Doug: Usually when the board places a motion on the ballot, they recommend to members passing it


Joan: Do we own [the strip of land next to] the building?


Eric: No, but the lawyers are talking


Joan: So that amount for purchase goes into the phase one loan?


Eric: We’re going to pay cash.


Joan: IS phase one contingent on that purchase?


Eric: No. (Discussion of what will happen if they won’t sell…they’re worried that we won’t do remodel.)


Joan: Is shopping center design.. happening (?)


Eric: Couple other things we’re still working on—good set of final drawings for checkout area. We didn’t like original drawing with stacked checkouts. We have to come up with plan and preserve space for credit union. We’ll likely do stacked checkout for express, but not for regular lanes.


Dan: Is that saying that you’d have two express lanes stacked?


Eric: That’s what we’re thinking, although we haven’t worked that out as a drawing..


Debbie: How will that change staff at checkout?


Eric: Well if sales increase, we will need more employees at checkout. If our experience is similar to what his clients typically see after renovation, we expect a 20% increase. We’re not budgeting that we’re going to experience that.


Joy: Where was the membership counter? Which phase was that in again?


Eric: That would be in the green phase. Originally that was going to be the third phase, but we haven’t said for sure it’ll be the third phase, but I think it will likely be.


Joan: So we’re getting rid of the bad dairy/wine/bakery point in the first phase?


Eric: Yes, and the other thing that happens in this phase will be that badly placed deli grab and go items will go back to the renovated deli area. And we anticipate that the meat cooler/freezers in the back won’t be needed.


Doug: Two weeks ago we had a meeting which several directors were at, and one of the things that was discussed there was that renovation would obviously be a focus of the Annual Meeting on May 23, and there would probably be a meeting in advance of that in West Davis.


Darius: Dave passed out a communication timeline plan. There are board responsibilities and staff responsibilities


Seth: I can e-mail you the current plan tomorrow or Wednesday. But not much has changed as far as responsibilities—we decided to have the focus of the Annual Meeting be getting out info on renovation… We were going to see who from the board could do what weekends for tabling (Tasting Fair weekend and another weekend…)


Doug: The other weekend was the weekend before the end of balloting, the weekend after the Annual Meeting (May 25, 26, 27)


Seth: Talking points… A lot of that is basically what’s on the Web page. It outlines continued information in the newsletter, … a PowerPoint presentation that I’ll put together.


Ben: I don’t have much more to add, but the plan extends out from the beginning of April and includes, as Seth said, a mailer, two spurts of tabling (you’ll be receiving an e-mail sign-up by the end of the month from me). Talking points will give us a clear vision of how to go out into the community and get people involved. There was some discussion about places in the community where we could go and do a little outreach—neighborhood groups. Discussion of doing a meeting in West Davis.


Eric: We requested space on Old North Davis’ agenda for April.


Ben: Old East meets as things come up, but they’ll let us know when they’re meeting..


Doreen; We’re still doing ads in the newsletter, right?


Seth: Yeah, we’re increasing the size in April


Doug: Tabling dates: April 28, 29, May 24-27.


Danyal: Would a booth at the Farmers Market be a good opportunity to answer questions about the renovation?


Julie: I don’t know why not—I’ll be there every Wednesday from April on and I don’t think it would be a problem if directors came and stood with me.


Darius: I’m going to talk about the board process leading up to the renovation. What we decided was that the people from West Davis who actually came are the people we responded to.


Doreen: Are we going to get a copy of that letter?


Darius: I can send that out. Also, Dave Webb has a communication plan, and I think part of that is speaking with one voice—I think it would be a good idea to familiarize yourself with that. He’s got three messages, I think…


Doreen: He e-mailed it to us today, the talking points.


Darius: I think we should just use those as a guide


Seth: He’s done a good job of taking complicated information and [making it] into relatively easy to understand information.


Doug: If you go to speak at the Farmers Market, you need to be ready to have someone who’s opposed to the renovation speak as well…


Julie: Anyone can set up a booth at the Farmers Market and speak, they don’t need to speak form the Co-op booth.


Ben: We’re walking a line between advocating…


Julie: It’s a good place to answer questions about the renovation, but I don’t think we should advocate for the renovation from our booth.


Darius: I want to refer everyone again to the bylaws. We need to make sure we offer equal access…


Ben: Because of agreement on renovation plans among board and staff members, we need to constantly check to make sure we’re not crossing line into advocacy…


Debbie: Do we have a button maker?


Presented: Debbie reported on GP9 Trusteeship & Relation to Members (from Feb.)


Discussion of compliance RE: member linkage


Discussion of member comment review


Julie: In the distant past, five years ago maybe, the secretary did a report every month on e-mails/letters/comments—that gave us a mechanism to say, “Oh, Jay came to the meeting and asked about coca-cola…” And then we could go back and write a letter…


Doreen: I was looking at all the comments, Julie was going to put them in my box…


Julie: I’ve fallen down on that…they’re actually sitting in a folder, I just literally haven’t copied them.


Debbie: But if one director is reviewing them, and we’re still not discussing them as a group, I don’t think we’re in compliance


Darius: This is our policy—if anything is alarming when Doreen looks at the comments, that would be the point of this, that there’s some oversight… I also think it was Joan and me and … we didn’t really know how to write it—I think it was more than just member comments. Obviously there are hundreds of comments that come in every month.


Debbie: I was thinking more about the major…


Darius: In that sense, I think we have been. You know when Jay came, those thirty people who came—a letter was written in response to them.


Debbie: And maybe in our agenda, we can have three minutes where someone can say, “Okay, I did follow up, I did call Jay…” And we can know that it’s delegated.


Joy: So could we have every month follow-up from previous member comments?


Darius: This next month, I’ll do that, and we can see how that goes.


Discussion of how to handle the board column in the newsletter…

(How to make it timely, etc.)

Darius suggested rewriting the policy so that it only specifies communicating in writing with the membership in some way, rather than holding the BOD to specific monthly or quarterly reports in the newsletter…


Discussion of whether to change policy on number of member linkage activities…


Darius: I don’t think anyone should be afraid to report on compliance…


Winston Departed at 9:00 pm


Motion: Julie moved to accept Debbie’s report

Darius seconded

Passed unanimously (Ben Pearl absent during vote)


New Business

Presented: Julie - Discussion: CCMA (June 7-9 – La Crosse, WI)


Ben and Julie talked about this in terms of last year’s CCMA when the BOD sent a number of members who were no longer on the board. Something to avoid this year.


Discussion of who to send—we don’t know that those who are alternates won’t be on the board in the future.


Julie: Not suggesting a policy, but we probably want to avoid sending people we know aren’t ever going to run again.


Darius: Maybe an easy way to put it would be that trips to CCMA are for directors who will be serving in the next year…


Debbie: Question for Eric: You mentioned that there was an opportunity in April for some training


Eric: It’s in April in Seattle, but no one has expressed any interest…


(Joy and Debbie both expressed interest)


Julie came back and confirmed the dates of CCMA


Darius: How much money do we have budgeted?


Julie: $12,000, enough to send 6 people. The airline reservations are difficult to transfer


Julie pointed out that La Crosse is Podunk—“You’re going to get off in Minneapolis and get on the airplane with the rubber band…”


Discussion of transport options...


Darius: So what exactly do we need to decide and when?


Julie: Ideally we need to decide who’s going tonight…


Darius: I actually am going to run for the board next year, and I would like to go


Lucas, Doreen, Julie, Debbie, Ben, Joy, Darius


Discussion of whether more money could be found in the budget to send everyone who wants to go.


Julie: I would like to say that we will send these seven people, with the understanding that if anyone on the list is not a director at the time of CCMA, they’ll give up their seat.


Presented: Eric presented a discussion of changing the dates for E-1 monitoring


Beth: I realize that E1 is more important than almost anything we do—reason to monitor it once rather than twice in a year is that to change anything we do in the merchandising realm takes at least six months. I tried once with a lot of detail, and it took 40 hours, and once with less detail, and it wasn’t really helpful to you. Trying to find a time to do the report in the year is really difficult. There’s almost no way that we can change what we’re doing so quickly. Once a year probably would work. If the directors feel it’s imperative to do it twice a year, let’s work out a way to do what you want that will not impact the operational needs of the store—I just want to do a good job, and I feel like the way it’s set up now


Darius: What might be a compromise would be to do one 40 hour report and one less detailed report. It seems like having it come up regularly is important


Joy: And in that case it wouldn’t necessarily need to be 6 months apart—it could just be a follow-up


Doreen: When I first saw this suggestion, it seemed reasonable… Hearing that Joy feels really strongly about this, I wonder if there’s a way that we could split it into two reports—maybe there’s some way that we can spread out the workload.


Beth: You could just report on some departments and not others. The thing that takes the long time is that our point of sale software is not very user friendly so all the data needs to be extracted as text files and then worked from there—so doing all the reports is just as easy as doing half the reports. I’m assuming that we’re reporting in June, and I was hoping that by next month I would know what information you want to have. Anything that’s data is hard, and then there’s been a lot of interest in what’s local—we don’t really have consolidated electronic vendor files. A lot of this depends on what exactly you want, and not being a policy governance person, you crafted what was probably a very good end, but it’s open to a lot of different interpretations.


Ben: It sounds like maybe there’s a bigger picture that we can look at so that we’re not asking you to put together this data on a…


Beth: I’d be happy to participate with you in terms of letting you know what we have the capability of getting easily…


Julie: We don’t need a report from Beth to discuss this as a board—we can get a report in June and have a discussion in September or October, and start formulating what we want to know the following June. It doesn’t have to be reported data for us to…


Debbie: My thought was we need to be more specific about what we want. If you do it again in six months, what do you anticipate would be different?


Beth: If I repeated the same report each six months, I don’t think you’d see a huge difference. You saw certain conventional products that were very popular—they’re losing popularity in our store. You might see more natural products becoming more popular—it’s stuff that you could also learn by reading Natural Foods Merchandiser… we’re very much like the rest of the stores in our industry in the larger trends. We can verify the fact that we’re not straying too far from the larger trends, and we can see which larger trends we find despicable and decide whether the membership wants to …


Darius: we’ve got this scheduled for June already—anyone who has specific requests, have them by the beginning of next month. We can keep discussing this,


Ben asked who wanted to get together before April meeting to discuss this (Joy, Doreen, Deb, Julie?, Ben…)


Next Meeting –

Facilitator: Ben

Time Keeper: Debbie


There being no further business to come before the meeting, it was adjourned at 10 p.m. by a motion made by Darius, seconded by Julie, and passed unanimously.


Non-approved – August 7, 2006