Some questions about Sweet Water Organics

Sweet Water Organics – job creators?

In 2011, Sweet Water Organics, an aquaponic fish and vegetable farm located in Bay View, received a $250,000 forgivable loan from the City of Milwaukee. Under the terms of the loan, if Sweet Water Organics (SWO) employs 10 people by 2012, 21 by 2013, 35 by 2014, and 45 by 2015, the loan will be forgiven. If Sweet Water fails to meet those job creation goals, the loan must be repaid with 5-percent interest.

At the time the loan was being considered, Sweet Water’s president and cofounder Josh Fraundorf said, “Our goal is to continue to expand because we can’t produce enough,” Fraundorf said. “We get a premium for our produce. Our demand is such we need to expand our capacity.” At the time Milwaukee Alderman Tony Zielinski (pictured, left) had high praise for Sweet Water’s loan, calling is support for the public loan a “slam dunk” case.

In a recent candidate Q & A with the Bay View Compass, Ald. Zielinski cited Sweet Water Organics as an example of his efforts to create jobs, saying, “Additionally, hundreds more jobs are being created with funding we secured for urban agriculture companies like Sweet Water Organics.”

However, as far as I can tell, Sweet Water Organics hasn’t created “hundreds” of jobs; in fact, Sweet Water Organics reports having “created or maintained” 12 jobs since receiving the loan from the City of Milwaukee, with 4 of those jobs being held by Sweet Water Organics staff members who were employed there prior to the grant and who were receiving much better pay. Two more of those twelve positions are occupied by Josh Fraundorf and Jim Godsil, the co-founders of Sweet Water Organics. For a time Fraundorf and Godsil had not been drawing pay from SWO, but it appears that for the purposes of “job creation,” both are now drawing paychecks from Sweet Water Organics.

Having reviewed Sweet Water Organics’ most recent quarterly wage report, there also appears to be a number of individuals listed as having received wages who are actually former employees of Sweet Water Organics who were owed back pay by SWO, as opposed to being “new” employees of SWO.

So here’s two questions I have: How many jobs has Sweet Water Organics actually created, and how many of those jobs are the type of jobs that are family-sustaining? It certainly seems to me that if Sweet Water Organics has created jobs, they’re minimum wage jobs that certainly aren’t the kinds of jobs that would be comparable to high-tech “Silicone Valley” jobs Ald. Zielinski mentioned in a recent mailer sent to voters.

Sweet Water Organics – when will it turn a profit?

One final question I’ve found myself wondering is when Sweet Water Organics – which is organized as a for-profit business – will actually start turning a profit. In may, 2010 SWO co-founder Josh Fraundorf told the Wall Street Journal he hoped to begin to show a profit by that fall (while employing “around 20 workers,” no less). However, in a December 30, 2011 article in the Bay View Compass, Fraundorf said he hoped to have data on April 1, 2012 that would show a profitable farm. Interestingly enough, while Fraundorf said he hoped to have data showing a profitable farm by April 1, 2012, in the same article from the Compass Todd Leech, Sweet Water vice-president and sales manager, is quoted as saying the company should be “running at a profit by late winter.”

It appears Sweet Water Organics has never turned a profit since coming into existence, leaving me to wonder when exactly Sweet Water Organics will start turning a profit – in the process showing some sort of return on the investment the City of Milwaukee has made in SWO?

What’s Next?

When I sat down to put this entry together, I felt conflicted, because I support the idea of urban farming (I’ve got four vegetable beds in my backyard) and didn’t want this entry to discredit the urban farming/aquaponics movement as a whole. However, while I applaud what the folks at Sweet Water Organics are trying to do, I can’t help but wonder if what they’re attempting to do can’t be done better/more profitably/more transparently. Hundreds of thousands of dollars have already been spent by various governmental and non-governmental bodies in order to give Sweet Water Organics a “boost” to help it become profitable, but despite years of high hopes and talk about profitability, Sweet Water Organics seems to me to be no closer to profitability than it was when it was first organized.

68 comments to Some questions about Sweet Water Organics

  • PaulS

    Urban agriculture is a fabulous idea. SWO is too. But grand ideas can be poorly managed and unwisely funded; that is the case here.

    It’s time for SWO employees–not the top dogs but the grunts–to go public with their experiences (told privately to me) of payroll not being met (even after the loan), of investor-workers pulling out, and of illegal toxic dumping at the site. Folks, it’s time for you to go public. Right now.

    We cannot afford to let this excellent project collapse because of mismanagement and an Alderman who will not exercise reasonable–and public–oversight of $250,000. He owes it to the neighborhood and he owes it the concept.

    Ald. Zielinski needs to get out of the business of being a business loan officer for the City. There are plenty of kinds of assistance the City can provide, but paying a private company $5000 per job–with no stipulation that they are new jobs–is precisely the Scott Walker economic development plan. We all know how that’s working.

    Finally, the Ald. needs to separate his campaigning from his fiduciary responsibilities and take a hard look at the way this company is managed. We’re sold on the *idea* already, but selling this management team as a good investment of City tax dollars–that rings up a “No Sale” for me.

    I hope we take an honest look at SWO management and require an independent audit of its books–before ‘No Sale’ turns into ‘For Sale.’

       11 likes

    • Jesse

      Lots of people know what happened and what is happening at SWO, but it remains to be seen if others will come forward (other than anonymously). The VP of Sweet Water sent out some nasty angry texts and emails to former employees a couple days ago. They’re obviously really desperate to keep all this covered up and people who call Milwaukee/Bay View their home are afraid of the backlash. Everything I’ve put down is verifiable, but there is still the social backlash that can come from those who feel threatened by the truth.
      “Stop negative campaigning” too easily translates into “stop telling the truth”. There’s mudslinging and then there’s legitimate questions around what happened with city money.
      I have heard reports of conversations regarding the city giving even more money, as well as city land to SWO. If the people of Milwaukee want that, fine. But any decision along those lines needs to be based on the truth rather than smoke and mirrors.

      There are lots of examples of urban farms taking smart steps to prove themselves as legitimate businesses. I do believe that a necessary industry is forming. Urban agriculture and aquaponics is a real answer to a lot of problems facing us today -locally, nationally, & internationally. But it has to be accomplished through transparency and honesty. Otherwise, people will just turn sour on the whole thing before it has a chance to do the good that so many of us know it can.

         10 likes

  • PJ

    The lies told by Tony Zielinski are becoming more and more ridiculous.

    Hundreds of jobs?? The fact that he is taking the credit for this organization is laughable, especially in light of the fact that he arranged for a wad of money to be dropped into the laps of people who simply cannot make it work.

    What a shame. This is a great idea whose time, apparently, hasn’t come. Seems everything Tony touches turns to crap.

    We have five days, people. PLEASE, for the sake of the Common Council, the city, and “his” district – please vote this shyster out of office.

       11 likes

  • SherryS

    Thank you for bringing attention to this issue before the April 3rd election. Ald. Zielinski needs to be answering these questions.

       10 likes

  • Wait… I thought we liberals were all supposed to favor market-distorting incentive programs like this? Do we need to send you back to the FEMA re-education camps for a round of electroconvulsive therapy to “get your mind right?” Don’t make me get my squid-launcher…

    :-)

    Seriously, this is exactly the kind of crony capitalism that all liberals and Progressives should question.

    Excellent reporting, Zach! Well done!

       10 likes

    • Thanks Phil.

      To be honest, my intent in writing this was not to discredit the urban farming/aquaponics movement as a whole, because I think there’s definitely a place for urban farming and aquaponics, if done right.

         8 likes

  • RDinMKE

    Some of the jobs were created by giving former VOLUNTEERS paying gigs. I don’t think they would be considered former employees.

       2 likes

  • Same as it ever was. It’s rare for these job-creating claims to be scrutinized sensibly both before and after these loans and grants. As soon as the pork gets local enough to influence a politician’s friends and neighbors, then the “we’ve got to do something” wins out over the free-market position that cut benefits for some far-away non-constituent or Them they don’t like.

       3 likes

  • PJ

    @John Foust – you may be right. And aldermanic privilege further disposes of that scrutiny, e.g. if an alderman thinks something should (or should not) be done in his district, the Common Council will generally go along with it so they don’t have to spend so much time researching and fact-finding on their own. That works, if the alderman is honest…

       6 likes

  • AK

    The City money is not going towards the back pay owed to former employees, is it?

       2 likes

    • Jesse

      No not technically. But it did help SWO pay that back pay since the city money was being used to cover material expenses. A page in the SWO report to the DCD listed all of the wages that had been made that quarter. As it included employees owed back pay, it certainly ‘padded’ the report though, making it appear as though SWO had employed independent contractors or the like. There was no mention in the report that this was back pay. So there was no way for the DCD or the people of Milwaukee to know that those back wages and the $8100 in back pay that was also owed at that time totaled $12,520.

         6 likes

  • Oh Please

    I’m less concerned about SWO making a profit. As a Private Business, they can keep getting investments from other private venture capitalist or investors all they want, and burn up as much cash as they want. But when you take public money, you have a new level of accountability, and frankly, their story isn’t adding up. They are using this loan as as a way to fund payroll, and it isn’t sustainable. If they go bankrupt, that money will be long gone.

    And to top it off, Tony Z is using as one of his top campaign topics, and he doesn’t even understand the basics around economic development. Throwing money at a sinking company does not equate to job creation. If SWO goes down, then TZ, by using public money as his investment tool, goes down with it. If he is so eager to take all the credit for SWO, then he needs to take responsibility for it’s shortcomings.

       10 likes

  • AK

    RDinMKE–former volunteers now being paid is separate from the former employees who are owed back wages. Prior to receiving City funds, SWO was unable to pay a number of the employees it had at the time, leading many to leave the company to wage claims being filed with the Department of Workforce Development. Subsequently, the $250,000 in City funds were granted to “create” “new” jobs. How many of the promised new jobs number simply replace the employees who left due to unpaid wages?

       6 likes

  • TF

    SWO not only has some questions regarding its use of public funds it should answer, it should also address the issue of its use of PVC pipe in its infrastructure. Godsil and Fraundorf were fully aware of the potential of this PVC to leach out harmful organotin compounds that have been shown to bio-accumulate in fish and are clearly harmful to people that consume such fish.

    Alternative pipes were suggested prior to ground being broken and they decided to use PVC because it was considered easier to assemble. They may or may not have a demand for their product now, eventually this demand is very likely to dry up once enough people become aware of the use of PVC to grow their product.

       3 likes

  • Jesse

    Let me start by introducing myself. I was one of the first employees that SWO owner Josh Fraundorf hired (as the Director of Horticulture). I held 50 shares in the company, and would have owned 100 shares by November, 2011 if I had stayed on. Instead I left along with 4 other employees in April 2011.

    I really have struggled with this whole situation. I have little to gain personally and, due to my history with SWO and involvement in the national aquaponics/urban farm movement, risk losing much professionally by speaking out about what I know. Many people in Milwaukee will potentially have egg on their face as info continues to come to light, and I think many of us can relate to how many friends you don’t make by telling the truth.
    I do feel however, that vital pieces of information are missing from the public debate, especially in regards to Tony Zielinski’s involvement in getting SWO a $250,000 forgivable job creation loan from the city.

    The first thing to make clear is that in the midst of all the “do-gooder” PR that Sweet Water Organics (SWO) continuously puts forth, many people forget that SWO is a FOR-PROFIT BUSINESS.
    Despite having never made a profit or even possessing a business plan, Sweet Water was awarded a quarter of a million dollar forgivable loan to create jobs. This was due in large part to Alderman Tony Zielinski, who convinced the city of Milwaukee to put $250,000 into a failing business. At some point prior to the city council hearing on 4.26.11, the grant application was re-written to make it possible for SWO to qualify. Zielinski either did not perform his due diligence to find out the status of SWO, or knew that they were failing and pushed forward anyway, more than likely to gain some ‘green’ and ‘urban ag’ street credit.
    Zielinski has recently been touting that “hundreds of jobs” have been created because of the money he got for SWO and Growing Power (the latter of which is not even in his district). What really resulted at SWO was a handful of at or near minimum wage jobs that replaced the better paid workers who had actual experience in their fields of expertise and who spent large portions of their own time and money helping to put SWO on the map.
    BTW, to the best of my knowledge, hundreds of jobs were not created via Zielinski’s efforts at Growing Power either.

    When the “new and improved” loan application was submitted to the City Council, SWO was several weeks behind on payroll, and several months behind on utility payments.
    It would have been easy to check for those things prior to awarding money to SWO. What the rewrite did was allow SWO to simply “strive to achieve and maintain employment levels…” which according to the report issued to the DCD in December 2011 translated to low wage, part-time -whatever.
    SWO was also several hundreds of thousands of dollars in debt, a recorded debt which didn’t include everything that was owed. It was discovered in March 2011, for instance (a year after starting construction), that all of the greenhouses that were put up in 2010 and the construction materials for making them operational had yet to be paid for. Many of the employees at SWO had seen instances of money coming and going far too quickly prior to this. It was extremely difficult to get a project finished there, as the budget that was set aside for it would often be gone before any of the valuable and business enhancing attempts could be completed. The news on the greenhouses, etc was especially startling however, as there were private investment installments during the spring/summer 2010 totaling $480,000 that were supposed to cover the cost of the expansion plan. We were told that the $480,000 ran out in fall 2010, and employees spent the next 2 months without pay just to find out later that the money had not even covered what we were told it was supposed to.

    During the Common Council meeting on April 26, 2011 reviewing SWO’s application, Josh Fraundorf stated that he had only four employees. Although the statement may have been true, it was also extremely misleading. The reality is that SWO had 9 employees just weeks prior to the grant. Five of the most crucial staff members, those in charge of water chemistry, horticulture, public relations/marketing, and soil/compost left weeks before the $250,000 loan was approved. Each employee was owed a considerable amount of back pay. It should be noted that out of belief in, and loyalty to the supposed mission of SWO, all of the former employees had endured several instances in the past of late or non-payment during their time of employment, sometimes for months at a time. Toward the end, several more weeks of missing payroll, plus the unhealthy, environmentally unfriendly, and inhumane situations being maintained in the facility were too much to endure and by April 2011, all five had left.

    This issue isn’t about whether urban agriculture is good or bad, or whether people believe that because of all the good things the folks at SWO say they will accomplish and all the times they have claimed to be close to profitable, that the end will eventually justify the means. It’s about the lack of due diligence that caused the city of Milwaukee to award money to a business where the financial situation was and is so poor that it can’t even pay living wages to its current employees, much less create the NEW jobs the loan was originally intended to produce.

       21 likes

  • PJ

    WOW. I never realized the scope of this situation. Jesse, thanks for your courage in coming forward and telling your story. Why is Tony Zielinski using our tax dollars to support a business that he KNOWS is circling the drain?

       11 likes

  • PaulS

    In case anyone was wondering if they’d run across bravery today–thank you Jesse.

       15 likes

  • MKE Fan

    I hope the situation isn’t as dire as this lineup makes it sound. This doesn’t seem like the way to build credability for urban ag and urban aquaponics, and Jesse’s story sounds frighteningly credible.

       3 likes

    • Former Employee

      Urban agriculture is not what is in question. There is no question at all that there are a plenty of vacant urban lots that can be put to good use by growing local food available to local consumers. There is no question that this a viable solution to loss of local jobs and lack of quality food available to all persons in an urban environment. And there is no question that urban agriculture can address environmental regeneration, neighborhood revitalization, and stimulate the local economy all at once. But Sweet Water Organics is not the model to follow, nor is it the only model out there. What is in question is the public funding of businesses that have a history of illegitimate financial claims and documentation, irresponsible business practices, and a pattern for misrepresentation of facts. What is in question is HOW they were approved funding and the ways in which their documentation was verified, and WHERE the money they were given was spent.

         13 likes

      • Ed Heinzelman

        “…loss of local jobs and lack of quality food available to all persons in an urban environment.”

        Actually now you bring up the bigger picture of insufficient regional planning for the past 70 years…without the urban/suburban sprawl that is Waukesha and Ozaukee county…there would be plentiful agricultural opportunities within 15 minutes of downtown Milwaukee…so yes urban agriculture is in fact in question.

           1 likes

        • Former Employee

          Ed, in that context, I agree that indeed *planning* is in question. With urban/suburban sprawl, available arable land for farming and adequate food production is in question. Which is why urban agriculture is but one solution to a myriad of ways to address this challenge. Not THE solution.

             4 likes

  • Ed Heinzelman

    Regardless of the issues surrounding SWO, I have my overall doubts about the sustainability of urban aquaponics period.

       1 likes

    • Jessica

      You know what’s unsustainable? Modern mega-agriculture.

         11 likes

    • TF

      The early work done by Nancy and Jack Todd that was instrumental in developing aquaponics was set in rural environments. Energy inputs were primarily solar and wind. The question of the viability of urban aquaponics is still to be answered.

      I highly recommend finding and reading “The Book of the New Alchemists” edited by Nancy Jack Todd, c. 1977.

         1 likes

  • Former Employee

    As a tax-paying former employee with my name on the aforementioned report, it certainly bothers me greatly that after working for months without pay (and leaving SWO due to poor working conditions, environmentally unfriendly practices, and the misleading information told to employees and investors about all financial matters, including wages) that a portion of my own taxes goes to paying SWO to continue their improper business practices.

    Sweet Water Organics HAD a staff of skilled individuals with expertise in horticulture, hydro- and aquaponics, water chemistry, soils and compost, brownfield remediation, and both nonprofit and business management. Each of the 5 employees who left by April 2011 had brought multiple interdepartmental solutions to attain financial and environmental sustainability (as per mission statement) to the table, but were either ignored or lied to about funding these solutions. While employees went unpaid, monies within SWO were either misspent or misappropriated or both. Regardless, no clear direct answer was given to either employee or investor as to the actual amount of money available at any given time to budget properly, nor as to what the money invested was actually being spent on.
    If Tony Zielinski truly cared about his constituents, he would look deeper into this issue that fell within his district.

    Everything Jesse has asserted is indeed true and representative of a larger systemic problem, not just within SWO but within the City of Milwaukee. The DCD’s commitment to accountability and due diligence has come into serious question. This story is not just about the call for transparency and accountability within a business claiming to be leaders in an eco-social frontier, this story is also about a serious need for due diligence and careful monitoring of city funding for businesses and organizations. It is about the need for basic fact-checking on business who make claims in order to receive city grants. After waiting a year for back-pay and struggling with the financial backlash of working unpaid for months, only to find they have used my name at a meeting with the City Council to gain $250,000 of tax money that I am contributing to with my taxes is just the tip of a melting ice-berg. Besides re-paying back wages owed, “re-hiring” old employees, and hiring several new employees at minimum wage, what else did this money get used for??? I have some ideas, but rather than speculate I would prefer to see the City of Milwaukee and honest taxpayers ask the questions themselves, and be prepared to dig deeper than a hastily prepared business plan to find the truth around the words they will inevitably be told.

    The truth is that urban agriculture (a much needed solution to the serious challenges of daunting environmental toxification and degradation, food insecurity, postindustrial urban flight, and U.S. labor loss) is being used as an untouchable shield for a business who has demonstrated on multiple levels for years that they are unable to support even a meager staff for a project that far outweighs their own business management skill sets. Rather than support a failing business, that $250,000 could be used to support any number of non-profit organizations or businesses in Milwaukee that have demonstrated time-tested economic transparency, social and environmental integrity, and serious commitment to their mission statements, to build local jobs that truly support local economies. Something must be done. And if all questions to Tony Zielinski and Sweet Water Organics go unanswered, your vote will certainly count April 3rd.

       13 likes

  • Jeff

    Sweet water is open everyday of the week. Please come down for yourself and judge for yourself.

       1 likes

  • Jeff

    Jesse’s comments are that of a disgruntled employee/ owner. Just because this person has grievances does not mean sweet water is bad. Sweet water foundation was recently awarded a macArthur digital media grant for transforming the face of education. One salty person’s account of swo does not mean it’s accurate. Jesse has been bad mouthing sweet water for a while. Money isnt Everything. Sweet water is a revolutionary startup business. That is not an easy road. Sweet water is an amazing business which supports it community and will continue to… What is Jesse doing for the community? Sweet water currently employs 14 people and is growing ( they have 4 years to grow to 40). Everyone who was owed money has been paid, and swo will be hiring more great folks who support families, including all of the employees with children and families at sweet water currently (all pf those who left were thirty somethings with no kids)Thanks for reading. Check out Jesse Hull on ccap.

       0 likes

    • Jeff, since you seem to be “in the know,” how long did it take SWO to pay everyone who was owed back pay the money they were owed? What’s more, what was the total amount (in dollars) of back pay SWO owed to former employees?

      Further, how many of the jobs SWO has created are family-sustaining, meaning they’re above minimum wage?

      What about rumors the folks at SWO buried their outdoor fish “tanks,” filling them with construction debris and garbage before they did so?

      Oh, and since you invited folks to check Jesse out on CCAP, mind posting your full name so we can check you out as well?

         10 likes

    • And since I’m in the mood to ask questions, what’s your connection to SWO, Jeff? Done any work with/for them?

         8 likes

    • Jesse

      Wow. That was really low, Jeff. I checked out ccap just to make sure I wasn’t someone I should be worried about. There’s no record of me, so what gives? There are OTHER Jesse Hull’s there, but…
      And for the record, there is a HUGE difference b/t the non-profit SW Foundation and the for-profit Organics side. Although I’m less than familiar and don’t know if there are any issues there, I actually applaud the work that the Foundation has done and is doing.

         10 likes

    • MkeRes

      How many other disgruntled employees also left? I have seen two different numbers but either way it does not seem as though this is an individual case. Also, resulting to Ad hominem attacks does not help your argument

         8 likes

    • Former Employee

      5 accounts and counting…

         5 likes

    • Molly

      Although Jesse’s account has already been backed up by another former employee, I am commenting as a third former employee to verify that everything Jesse said is true as well. In the interest of full disclosure I am also Jesse Hull’s girlfriend AND I have a seat belt violation on record with the CCAP.

      I believe it’s important for readers of this to know that Jesse and I have debated endlessly how to best move forward with our lives after we both were forced to leave Sweet Water a year ago due to the issues Jesse explained above. We both are passionate believers in the promise of urban agriculture, especially aquaponics, and kept quiet because we didn’t want to damage the reputation of this emerging industry. We speak up not out of spite but out of concern and out of a desire for an open and honest discussion.

      I fail to see how a person’s choice to have or not have children factors into this discussion at all. However, money and the skills of the business owners handling it are vital elements of this story. The financial and other issues that we witnessed at Sweet Water are far too large and consequential to be dismissed as part of the normal financial challenges that start-up businesses often face, even a revolutionary one.

         12 likes

      • Molly, thanks for sharing the information about your seat belt violation. No doubt that will weigh heavily on your credibility. :-P

        Ultimately, the fact that some who’ve commented here have felt the need to start with ad hominem attacks means they can’t really attack the arguments, so they’ll instead attack the messenger.

           9 likes

  • PaulS

    Jeff, ad hominem attacks do nothing to address the facts, now consistently articulated by two different people.

    Maybe you’d like to open up the books and not just the doors 7 days a week? Or you could always give the $250K back–if there’s any left…

       9 likes

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