The Greenbank Farm Management Group (GFMG), a non-profit corporation organized in 1997 to manage the Farm on behalf of the public, operates the Farm under two agreements with the Port of Coupeville, a Lease Agreement and a Management Agreement. Under these agreements the GFMG is required to provide financial statements and reports of activities during the year, as well as final-year end financial statements.

The purpose of this report is to fulfill those reporting responsibilities.

Summary of Activities

The Greenbank Farm continued as a favorite venue for Island events and as a gathering place for residents and visitors. In 2008, the Farm was the site of the annual Highland Games and the Antique Car Show, as well as the venue for many other smaller events and for weddings and other private parties. The Whidbey Pies Café continued to draw patrons at an increasing rate and the Wine Shop and Tasting Room and the Greenbank Cheese shop were also favorite stops.

The Farm continues to develop its place as an arts center with three galleries, Artworks Gallery, The Rob Schouten Gallery and Raven Rocks Gallery.

This year marked the start of the Farm as the site for a Community Supported Agriculture (CSA) Learning Center, developed by the Northwest Business Center (based in Mount Vernon) with the WSU Extension program. Since May, the CSA has been producing vegetables weekly for subscribers. This solid year served as a base for further development of this important program. All agricultural fields on the Farm are certified organic.

The GFMG organizes and presents two major festivals during the year, the Loganberry Festival in July and Oktoberfest in, well, October. In addition, the GFMG presents four seasonal wine markets.

In August 2009, the Port of Coupeville adopted a Master Site Plan for the Farm, a project that had been going on for 18 months with more than 40 volunteer citizens. The GFMG was please to contribute to this important long range-planning project for the Farm.

Summary of Financial Results

The year 2009 represented a financial and operating recovery from 2008, in which Farm operations recorded a net ordinary loss of $69,000. The net ordinary loss for 2009 was approximately $13,000, an improvement of $56,000.

This was made possible by addressing operating issues, including allocating additional management effort to wine shop operations, including inventory control and gross margin management, adjusting staff and payroll, stabilizing long-term lease relationships and analyzing facility rentals and market activities. Many of these efforts were carried out under the management of Virginia Bloom, the Farm’s executive director since January 2009.

Total fundraising in 2009 was $34,400, which consisted of $28,000 from the 2009 Annual Fund drive, $3,700 from 2008 Annual Fund carry-over and other donations, and $2,700 from grants.

GENERAL

As a nonprofit organization, the Greenbank Farm Management Group (GRMG) generally incurs an annual operating loss, which is offset through fundraising efforts directed to individual and business donations and grants. The operating loss decreased $56,000 from 2008 to 2009, from $69,000 to $13,000. In late 2007, the Board adopted a 2008 strategic plan that increased staff and compensation with the goal of increasing revenue generated by the Farm. The plan did not work and in 2009 that plan was corrected. Revenue increased by $15,000 in 2009, largely due to higher wine shop gross margin. Total expenses dropped by $41,000, from $344,000 to $303,000. This was from a $26,000 reduction in payroll costs, from lower staffing and greater use of hourly personnel in place of salaried personnel, and a $15,000 reduction in operating costs, from tighter cost controls.

The GFMG also undertakes annual fundraising to cover its operating shortfall. In 2009, fundraising efforts generated approximately $34,400 compared to $49,200 2008, a decrease of $15,000, generally reflecting the economic recession.

REVENUE

Program Services

Program services revenue includes three categories: (i) rental of the Farm facilities to outside parties for weddings, events (such as the Highland Games), shows and markets, such as antiques and art shows, and meetings in the Jim Davis House, (ii) leasing of office space, such as the Whidbey Camano Land Trust, and space to retail businesses, such as the Whidbey Pies Café, the Greenbank Farm Cheese Shop and retail art galleries, and (iii) markets operated by the GFMG, such as the wine and chocolate market in February, the Sunday farmers markets during the summer and the holiday markets in December.

Facility rentals were substantially the same as 2008.

Long-term leases were the same from 2008 to 2009. Tenant facilities at the Farm are fully occupied.

Revenue from markets declined $1,200, largely due to Sunday farmers markets, which continued to struggle. The GFMG is experimenting with different approaches to the markets in an effort to improve attendance by vendors and the public.

Events

During the year, the GFMG sponsors and organizes two primary events, the longstanding Loganberry Festival in the summer and a recently originated Oktoberfest in the fall. Revenue from the Loganberry Festival was up about $2,000 reflecting better attendance; although there has been less revenue from sponsors and more from parking fees.

Port Fee

Under a management agreement, the Port of Coupeville pays the GFMG a fee to manage the non-commercial areas of the Farm (generally the agricultural fields and recreational areas). Through March 2008, the monthly fee was $3,750 ($45,000 annually). Beginning in April, the monthly fee was adjusted to $4,162.50 ($49,950 annually) and will continue through 2009 and 2010.

The increase in Port fee revenue of $1,650 from 2008 to 2009 reflects the adjustment of the fee during 2008

Wine Shop

The GFMG owns and operates the “Greenbank Farm Wine Shop and Tasting Room,” which sells a selection of table wines produced by small western Washington wineries, including the Farm’s own private label loganberry wine and loganberry dessert wine, as well as wine accessories and a small selection of deli items.

Wine shop sales in 2009 were $268,000 compared to $254,000 in 2008, an increase of $14,000 or 5%. Some of this increase was due to December weather in 2008 where snowstorms cut into seasonal customer traffic and sales. Although the sales increase was small, gross margin grew $16,500 in 2009, from $88,000 to $104,300. The gross margin percentage in 2008 was 34.2% and 38.9% in 2009, an increase of 4.7 percentage points.

Wine shop gross margin had declined from almost $109,000 in 2007 to $88,000 in 2008, primarily due of gross margin changes. Due to changes in record keeping and accounting programs, it is difficult to identify the reasons for the reasons for this. Starting in the fall of 2008, however, the GFMG instituted more thorough inventory controls and reporting and additional analysis of operating results on an ongoing basis.

As a result of these efforts, 2009 wine shop operations improved over 2008, showing results comparable to 2007.

EXPENSES

Payroll Expenses

In planning for 2008, the GFMG increased the salaries of its principal management personnel and added a senior staff position with the objective of increasing the revenue base of Farm operations. Accordingly, payroll expenses increased from $163,000 to $188,500, although the revenue plan was not successful.

At the beginning of 2009, the GFMG hired a new Farm manager adjusted compensation and staffing levels to what was a more reasonable level, as well as reducing salaried positions and relying on hourly personnel to perform the same functions.

As a result payroll and related expense declined about $16,000, from $188,500 in 2008 to $162,150 in 2009. Base salary expense declined from $111,500 in 2008 to $75,500 in 2010, a reduction of $36,000. At the same time, hourly personnel expense rose from $45,000 to $65,000, an increase of $20,000. Payroll taxes were comparable in the two periods, but health insurance costs declined $9,000.

Operating Expenses

Administration

Basic costs of administration, such as copier rental, office supplies, software and postage, were substantially the same for 2008 and 2009, as database software and postage declined and office supplies rose.

Bookkeeping, Accounting

The GFMG uses an independent contractor on an hourly basis to maintain it financial records and perform accounting and financial tasks. The expense declined $3,500 in 2009, reflecting less need for bookkeeping.

Advertising and Promotion

Advertising and promotion includes institutional advertising to make the public aware of the Farm in general and specific advertising and promotion of Farm sponsored events, such as the Loganberry Festival. These expenses declined $4,550 in 2009, in part, due to tighter controls. There could be some additional advertising through a grant allocation from the 2% hotel motel tax. This expense could also rise if it appears the level of advertising and promotion is affecting the volume of visitors to the Farm.

Credit Card Fees

Most sales in the wine shop are through credit cards, the issuers of which charge the wine shop customary fees.

Insurance

The Farm carries public liability insurance, casualty insurance and directors and officers liability insurance. Expenditures are fairly stable.

Maintenance and Repairs

Maintenance and repairs expenses includes the commercial buildings, such as the barns, the Jim Davis House, and the caretaker’s house, the grounds around the commercial buildings (but not the fields), the equipment, such as the tractors and related farm equipment, and janitorial services and related facilities supplies. The GFMG uses independent contractors to maintain the grounds and provide janitorial services.

Maintenance and repair expenses rose $2,350 in 2009, from $40,100 to $42,450. Building maintenance rose $3,800, equipment maintenance declined $3,100 and grounds maintenance rose $1,450. Building maintenance reflects, in part, several expenditures that could be classified as capital expenses (preliminary work on French doors in Barn A and inspections of Barn B for anticipated use of second floor), as well as several unexpected plumbing and electrical repairs. Equipment maintenance in 2008 was abnormally high due to several vehicles. Grounds maintenance may reflect a new base level of expense.

Utilities

Utilities expenses include alarm and security, electricity, garbage collection, propane and telephone and Internet services. Utility expenses as a whole declined $4,100 in 2009, from $25,100 in 2008 to $21,000 in 2009. Propane expense dropped $2,700 or about 60%, which could be partially from lower use but also from timing of deliveries. Although electricity expense declined only slightly, 2010 could bring greater reductions as the result of a new, more efficient heat pump serving the café, wine shop and adjacent areas. Telephone costs dropped $1,000, reflecting a more cost efficient combinations of lines and services.

Entertainment

Entertainment expenses relate to the Loganberry Festival and Oktoberfest. These costs are declined by $3,200 in 2009, resulting from market forces and management decisions.

Taxes, Licenses, Permits

The GFMG pays leasehold excise taxes, business and occupation taxes and various annual fees and permits. Expenses are fairly consistent from year to years.