Past and present Citybikes owners in legal tussle over assets, shop’s future

A dispute between current and past co-owners of Citybikes Workers Cooperative has turned into a messy legal battle that will decide the future of the storied institution.

Founded in 1986, Citybikes has been a cornerstone of Portland’s cycling scene with its “mothership” location on Southeast Ankeny near 20th and its former Annex location (now closed) 12 blocks west. The shop grew right along with Portland’s reputation as the best cycling city in America. By 2008, Citybikes expanded to a second location, doubled its retail space, and had 25 workers and owners at its peak.

Citybikes pioneered a DIY, self-reliance, bike education ethos that remain strong currents in Portland to this day. In 1992, when a veteran bike mechanic named Brian Lacy showed up to work at Citybikes, he spent most of his days out on the street helping kids fix their bikes. It was such meaningful work it inspired him to create the Community Cycling Center two years later — a nonprofit that thrives three decades after Lacy opened it on Northeast Alberta Street.

Now Lacy and a group of other former Citybikes worker-owners say a mutiny is afoot.

“Citybikes Workers Co-op is being looted!” screams the headline of a statement signed by Lacy, along with two of the five original founders Roger Noehren and Mike Kennedy, and longtime past co-owners Sara Stout and Peter Young. They say three of the shop’s four current owners are “trying to sabotage Citybikes for personal gain” and “seek to rewrite or absurdly interpret Citybikes’ bylaws to put in motion their theft of assets plan.” Flyers have been printed, there’s an online petition, a GoFundMe, and a “Save Citybikes” Facebook group.

Lacy sees the effort as nothing short of a life or death struggle for the beloved shop — and he blames the trio of current owners for trying to kill it and profit off the carcass.

According to Lacy, the problems started back in March when he and others got wind of a plan by three of the four current worker-owners — Bob Kamzelski (who also owns Bantam Bicycle Works), Bryce Hutchinson, and Claire Nelson — to dissolve the shop and “swindle” all remaining assets among the four current owners.

You might think an bike shop that specializes in cheap parts doesn’t have much in the way of assets; but Citybikes owns those two buildings on SE Ankeny outright. Lacy estimates they’re worth about $2.5 million.

Noel Thompson, the one current worker-owner who has split from the other three, says Kamzelski just wants the money. Thompson has been with Citybikes for 25 years and says when Kamzelski called a special meeting back in March he suspected something sinister was afoot. Thompson had received a letter prior to the meeting request from Kamzelski’s lawyer Brian Jolly that stated an intention to dissolve Citybikes and split the assets among the four current worker-owners.

“According to Oregon law, it only takes a two-thirds majority to make a decision on dissolution, but our internal policy is full consensus,” Thompson shared in an interview. “I think [the other current owners] saw that and set up a special meeting to force that vote. They were going to have the meeting without me even knowing … to do it quick and dirty and not let anyone in the community know what was going on.”

Kamzelski, who’s been a worker-owner for seven years and is listed as president of Citybikes in the shop’s most recent filing with the State of Oregon, denies much of what is being said about him. He says he simply wants to talk have an honest discussion about the future of the co-op. Kamzelski feels Citybikes is on life-support and he’s worried if he doesn’t act fast, there will be no remaining assets to distribute.

In an interview with Kamzelski Thursday, he said he has no intention of rewriting bylaws or closing the shop. At least not right now.

“If the business shutters, and we don’t actually have a plan at the moment to do that,” Kamzelski said. “As officers of the business we are legally required to distribute whatever assets are left over, as our articles of incorporation say. And that’s exactly what we intend to do.”

Asked if he thinks Citybikes’ assets should be distributed to the four existing worker-owners or among the 50 others that have been worker-owners since the co-op started like Lacy, Noehren and others want, Kamzelski said it’s up to lawyers to decide.

“If that’s their interpretation, I mean, they should probably get a lawyer and have a lawyer figure it out for them because I’m not a lawyer and none of these other people are lawyers. I don’t think we’re qualified to actually make that decision.”

Citybikes’ 1990 articles of incorporation (right) state that only shareholders should receive assets upon dissolution. Since shares are held only by the current owners (“Class A shareholders”), it appears as though Kamzelski has a case that, as the articles state, he and the other three current owners should, “share equally in all cooperative assets.” There is a clause that “excess assets” to go all present and former shareholders, but that appears to be triggered only after shareholders receive their distribution. And if “all assets” were paid out to shareholders, there would be no “excess”.

Interpretations of old documents are at the crux of this disagreement. On one hand there are the intentions and spirit that have sustained the organization without need to worry about bylaws and articles of incorporation. On the other are actual words on paper. Even Lacy admits their bylaws and other legal documents are outdated and aren’t up to dealing with this type of dissention among the ranks. “They were created in a more innocent time,” Lacy shared. “Tim [Calvert, a founder] and Roger didn’t wonder back then, ‘How would we deal with sabotage?'”

Shawn Furst, a business consultant who specializes in co-ops, told me that, when it comes to asset distribution, typically they’d be spread beyond current owners. “When they dissolve, they pay off all their debts, then they split rest of assets based on how many hours each worker has worked for the co-op over the life of the organization,” she explained.

Furst said when disagreements like this pop up, it can be very challenging. “In democratic organizations, since newer voting members wield equal power to more established workers, the group can move towards ill-considered decisions. This is something I’ve observed before. At the same time, like any business, co-ops sometimes need that new fresh perspective. In democratic organizations, it’s important for the whole group to work collaboratively to serve the needs of the workers, customers and community as a whole to make hard decisions.”

Based on the tenor of comments from people I’ve talked to in the past few days, collaboration seems unlikely.

Beyond the disagreement over how assets should be split, there’s also a difference of opinion about whether or not Citybikes is even worth saving.

Sara Stout spent 15 years as a worker and owner at Citybikes. “I think it’s a shame the current owners are trying to close the shop,” she said. “It’s valuable for people who use it and it’s a community resource. Why close it?” Stout wishes Kamzelski would just move onto other things if he doesn’t want to keep the shop open. “I’d rather the owners just take their leave. To close it seems like a waste.”

The way Stout sees is, “It was just sort of understood” that Citybikes would last forever and it was never thought of as “somebody’s business.” The idea that just four current owners would benefit from any potential payout feels very wrong to her.

While Kamzelski told me he has no plans to force a closure of the shop, he was being coy. Later in our conversation, when I asked him about the special meeting he called with Thompson in March, Kamzelski acknowledged he and the other two owners who support him wanted to discuss shutting the business down. It was only when Thompson “delayed and deferred” that conversation for two months and then began sending harassing letters, Kamzelski says, that he hired a lawyer.

While he said it’s not a “happy situation,” Kamzelski feels the best way forward is to close Citybikes for good.

“It’s not a viable business anymore,” he said. “We’re looking at a loss of tens of thousands of dollars every year and we’ve been in decline for the last 10 years.” Kamzelski paints a dark picture, saying there’s not enough money in the business to hire more people, to make much-needed building repairs, or to pay anyone much above a poverty range. He says the shop is going to go bust regardless of what happens.

In addition to the four worker-owners, there are only two non-owning workers on staff at the moment — barely enough people to keep working hours.

“I realize Citybikes has served this community for 32 years, but my main concern is that this thing is failing,” Kamzelski said. “If we don’t shut the business down soon we will go into default. We have mortgages and bills to pay. Summer is usually the busiest time for a bike shop but even now our account is empty. It’s been a very successful run and I’ve been here for a third of it. I just think it’s time to move on. Other shops are closing. It’s a very hard time to run a bike shop.”

Thompson, Lacy, and others strongly disagree. Stout said if the business needs cash they should sell the old Annex building on SE 8th and Ankeny.

Thompson knows times are tough right now, but he thinks Citybikes can make a comeback. “I feel positive about it. While a lot of shops have been closing down, we’re on a busy commuter route, we own our shop. I can’t imagine that if we had the right people in there we wouldn’t sustain ourselves.”

For Thompson, Lacy, and founder Roger Noehren, the “right people” no longer includes Kamzelski. They want him to leave.

“I have no doubt that Bob (whom I have a favorable opinion about otherwise) was/is unhappy working at Citybikes, so rather than just leaving and focusing on his frame building business, hatched his plan to dissolve the co-op and abscond with a quarter of the assets,” Noehren shared with me via email this morning.

And Lacy said they’re demanding the “termination” of Kamzelski and Bryce Hutchinson (they believe Claire Nelson is on the fence).

“I know it’s rather bad-bloodish the way we’re coming at this,” Lacy said. “But if you [speaking to Kamzelski] would have followed procedures properly and been respectful of what you signed up to do when you became an owner, none of this would be happening. At this stage, given that our cordial attempts to communicate have fallen on deaf ears, you need to go away. There’s been too much damage done for too long. So off you go.

And we’re going to rebuild Citybikes. We don’t want it to die.”