Did Village Err By Lending Money to Failed Community Bookstore?
Two years after its closing, questions linger about Shorewood's decision to lend $35,000 to the Open Book co-op, a debt that village officials have written off as "uncollectable."
April marks two years since organizers slammed the book closed on Open Book, leaving an empty shell on the busy North Oakland Avenue block.
The bookstore co-op opened in November 2010 and occupied the space that previously housed the Harry W. Schwartz Bookstore.
With high community energy and backing, including a $35,000 loan from Shorewood, Keith Schmitz and hundreds of other Shorewood residents, through a grassroots effort, hurried to open the store before the holiday season.
Schmitz said the store was something that created a buzz in Shorewood and the community rallied behind.
“This was something that the community needed and wanted,” he said. “We had 40 volunteers that got involved to make this thing happen.”
Those involved in the effort envisioned a place that not only sold books, but was a spot that strengthened Shorewood's sense of community.
"We want it to be a community gathering place where friends and neighbors meet for coffee, and small groups hold meetings," bookstore manager Lisa Zupke told OnMilwaukee.com in June 2009. "That's something the community sorely needs."
They saw huge support in its opening months, but Christmas came and went — and so did their customer base.
After only five months, they were forced to close up shop.
“It just became clear it wasn’t going to pan out,” Schmitz said. “But if you ask most of the people who were a part of this, they say, 'Yeah, it failed, but at least we tried.'
“It was something we felt we needed to do for the community.”
The failed bookstore has recently resurfaced as the focal point of a discussion among Patch readers and at a recent candidates forum, mainly because $25,000 of the $35,000 loan from the village remains unpaid. Residents question the village's process for vetting loans to businesses.
”Sometime these things work, sometimes they don’t. That shouldn’t discourage you from taking risks."
Schmitz, who generated the idea for the shop and helped attract residents to join the cooperative, said they paid back $10,000 — the store's profits over its five months — and put it toward their loan balance. Schmitz handed over everything from the store over to the village, but those assets couldn't be resold.
The village wrote off the loan in late 2010 and is no longer attempting to recoup the money, said Village Manager Chris Swartz.
“It was uncollectable,” he said. “We sent them a letter. You can’t leave it on your books if you know you can’t collect it.”
Schmitz said the co-op had financial and marketing professionals on board with the bookstore and felt members could find success in the new upstart. But as the village debated whether to give the $35,000 loan to Open Book, many officials felt differently.
Trustee Jeff Hanewall said that the village’s Community Development Authority knew the loan to Open Book was a little more risky than ones they had granted in the past.
"We decided to go forward with it because there was a huge amount of the public coming to us and saying, 'Do this,'" Hanewall said at the candidates forum.
The $35,000 was funded through the village's special taxing district, and Hanewall said the CDA knew that if it wasn't able to recoup the loan, the taxing district could cover it.
"It was a risk we were willing to take," he said.
Swartz echoed Hanewall’s comments, saying village officials were bombarded with community support and felt compelled to grant the loan.
“It was more of a community loan than a business loan,” Swartz said. “There was a lot of energy in the community; a lot of support in the community for it."
Schmitz said the co-op was sorry it failed and couldn’t pay back the loan.
“It was something that was different, and bold, and it didn’t work, but sometimes you have to try something out of the ordinary,” Schmitz said. "Sometime these things works, sometimes they don’t. That shouldn’t discourage you from taking risks."
Roundy's currently owns the Open Book store, in addition to Walgreens' current location, and village officials have said the company plans to expand at some point and bring a Metro Market to the village.