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Future of School House Market uncertain

10/04/2007

By Lisa Loomis

After eight years of operation, the School House Market at the East Warren School House will be closing its doors at the end of this month. Each party involved in the fate of the School House Market at the East Warren School House presents a slightly different version of what has happened to get to this point.

The store has been operated by Bruce Fowler and Larry and Linda Faillace and has been leased from Rootswork. Fowler started the store eight years ago and the Faillaces joined him in 1999, he said.

The store was operating with a five year lease which expired in December. Rootswork board member Megan Moffroid said that when the store's lease was expiring, Rootswork was also renegotiating its lease of the property with the town and as part of that work, Rootswork began working on improving its own organizational structure and specifically began looking to tighten up its business relationship with its tenant.

TRADITIONAL COMMERCIAL LEASE

Rootswork extended the lease for the School House Market for six months, through June 30, and began working with the Faillaces and Fowler on negotiating a more traditional commercial lease.

What they came up with, according to Moffroid, was a more businesslike lease, but still one more favorable than what they'd offer a new tenant with whom they had no history. In July, Rootswork extended the lease through October 31 and asked that the business vacate after that date. Rootswork declined to offer a five year lease, which the business owners had requested.

"We thought they were working to meet the terms we laid out for a tighter business relationship, but in the end, we weren't able to agree on terms," Moffroid said, "and we sent them an eviction notice last Friday."

"This was a hugely difficult decision for this board. We tried to keep this positive and there were several parties involved," Moffroid added.

NEEDED TO RENEW

According to Linda Faillace, the efforts to craft a lease were proceeding amiably, or so she thought. She said that in order for the store to receive a loan from a state loan program, she needed to provide a five year lease, which she had (the one that expired in December 2006), and needed to renew.

"We have the right of first refusal for renewing the lease and assumed we'd be offered another five year lease. Instead, with the shake up of the Rootswork board, we were offered a lease for one year and the rent was increased from $300 to $500. I didn't have an issue with that and then we were asked to put down a $1000 security deposit, even though we'd been there for eight years and had put an incredible amount of money into the building. I said that a one year lease was unacceptable and that was the start of a long drawn out battle," Faillace said.

"That was January when they offered the one year lease and there have been all different hoops they wanted me to jump through. I thought I was meeting all the requirements and Rootswork extended the lease and gave me a three page letter of stuff they wanted done. I gave them everything they wanted, or that I thought they asked for. In July I was told I was not getting the lease and that I had to be out by October 31," she said.

NULL AND VOID

Faillace said that when she questioned Rootswork about the issue she was told that the board has a fiduciary responsibility to its membership and board members felt they could not lease the space to someone who did not pay rent. Faillace said she countered by offering to put six month's rent into an account, and pay rent regularly.

"If we were late paying they could take the rent from the account and we'd have two months to replace it and if we didn't, the lease would be null and void," Faillace explained.

She was surprised to get the letter of termination (eviction) last week, having thought the matters were settled.

"I think what this has come down to is a personality conflict. We feel the store is a community asset," she said and added that she is hopeful something might be worked before the end of the month.

OWNERSHIP STRUCTURE

Bruce Fowler is in a business partnership with Linda Faillace. Although he started the store and personally funded thousands of dollars of renovations to the facility (furnace, kitchen, front porch, wiring, walk in cooler) he said he has never been compensated for his financial contributions and the hours he has spent working at the store. Fowler said that he was deployed by the National Guard and changed his ownership structure from 50-50 to 51-49 so that Faillace could run things while he was deployed.

When the lease expired, he too thought renewal would be worked out. He said he was surprised when, in June, he was voted off the corporate board of the School House Market. He and Linda Faillace had been the officers, and while he was out of town, a board meeting was held and he was voted off the board.

"I was baffled that she'd voted me off the board and put Larry and their daughter Heather on the store's board. After that, I was not inclined to sign any lease, particularly if I'm never going to be paid back for any of the money I put into the store, and I'm off the board and I'm not allowed to sign checks for the business and I'm still a 49 percent owner," Fowler said.

LEGAL ISSUES

As for what might be next at the store, depending on how the legal issues are worked out, Moffroid said Rootswork is interested in pursuing a different type of project, a coop that resembles a large scale buyers group.

"We've been approached by community members with an idea to create an co-op they way co-ops used to be run, where you purchase large amounts of things cooperatively and people join and have to work a minimum number of hours a month to belong. This would be a Rootwork project so we wouldn't need to be a landlord," she said.

"All of have loved the fact that there's been a store there and we're all sorry to see it go. It's coincidental that there happens to be a community group interested in creating this co-op type venture," she concluded.

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