We held our WFC Annual Meeting in late January. Although N&J aren’t yet equity shareholders, we still benefit from their input on any decisions that will be made at this meeting of the owners. We are also interested in talking about their long-term plans and learning how they feel after nearly a year in residence at the farm.
First we review the financial reports from 2015 and discussed any questions that they generated. We looked at the task list of items we had discussed at our first WFC Annual Meeting the year before, to cross off those items that had been successfully completed, and to prioritize the items that had not been addressed. Then we all listed the items that we wanted to address in 2016.
In addition to WFC work that we wanted to get done (and budget payment for) in 2016, N&J also listed the capital investment they were interested in making in their own farm business, Dickey Hill Farm. The group discussed whether any of the projects on their list would improve WFC but not be able to be removed if N&J ever wanted to leave the LLC. Often this is called “sunk cost” when it involves a leased property. For example when a business leases a retail space for a store, they may move walls, strip and refinish the floor, and improve the electrical system to accommodate their equipment. When the lease runs out, none of that can be removed by the business, so the lessor and lessee should have already agreed on a way to deal with any “sunk cost” in the property before the lease is signed.
Other discussion items included:
- the future plans of the cow herd, ownership of which was slowing being transferred over to Dickey Hill Farm outside of the WFC arrangement;
- the future use of the Airstream trailer that was a part of the WFC;
- the best way to monitor and split the costs of energy use between the cheese studio, and the walk-in refrigerator that N&J had built in 2015.
The group also reviewed the timetable set up in the Purchase and Sale Agreement: when the initial lease ran out in early 2017 N&J could could be voted into WFC as members and become equity shareholders. The P&SA also specifies that if either party wished to back out of the P&S they would have to notify the other party of their intentions at least six months before the end of the lease. The P&SA was reviewed, and the specific deadline date in late summer was acknowledged.
Without any more agenda items, the meeting was adjourned until 2017.