Big Step Forward on Market House: City of Annapolis, Gone to Market Strike Lease Deal
The target date for reopening the Market House is July 1, according to the lease agreement.
As the adage goes, all good things come in time.
After months of deliberations between the City and Gone to Market LLC over the Market House, Mayor Cohen announced that a deal has been reached with the Baltimore developer on a proposed 30-year lease for the historic market at the foot of City Dock.
The mayor is excited about the prospects of opening a fully renovated and occupied Market House – and what that will mean for downtown businesses that have been struggling to shake off the economic downturn.
“Through this lease with Gone to Market, the Market House stands the best chance of succeeding and renewing its promise as the heart and soul of downtown,” the mayor said in a statement yesterday. “It is important to demonstrate to the business community how committed we are to its success. A strong, vibrant Market House will give the city the strong economic shot in the arm that it needs.”
The target opening date for the new Market House, according to the revised lease, is July 1. To keep the deal on track, the Mayor has established the following legislative timeline:
- Monday, Jan. 24: The City Council will hold the public hearing on the lease and all legislation on the Market House
- Wednesday, Jan. 26: The Economic Matters Committee will review business and marketing plans from Gone to Market.
- Monday, Jan. 31: The City Council will hold a special meeting to consider a final vote on the lease and related legislation
In the meantime today, the Finance Committee will consider the Cohen administration’s budget transfer request of $600,000 of 2009 general government bonds to the City’s Market House renovations. That funding will be used to relocate the utilities to the center of the 5,000-square-foot market, install a new heating and air conditioning system and make other exterior improvements.
The mayor stressed the importance of getting this lease approved by the end of the month so as to preserve the timetable for opening the historic market this summer. The City Council received the current lease yesterday, which fills in sections of the prior draft and revises some of the provisions that were previously agreed to.
Key provisions include:
- Gone to Market will pay all operating costs of the Market House
- Gone to Market’s annual rent to the City will be 50 percent the net profits per year during the original term and any extension term.
- Target opening date of July 1
- Ensures that the vendors will emphasize local and regional fare and will prohibit national chains or franchises
- Allows the City to terminate the lease, if in the public interest, after five years
- The City will renovate the exterior of the building and provide adequate utilities; Gone to Market will renovate the interior.
- No more than 5 percent of goods for sale shall include any “tourist merchandise,” such as T-shirts, caps, sweatshirts and other merchandise bearing names and symbols such as Annapolis or Chesapeake Bay
“This lease allows the City to achieve the three priorities we had from Day One: the right vision, the right operator and the right protections,” Mayor Cohen said. “In terms of the vision, this lease ensures that the Market House will fulfill its promise as an authentic Annapolis experience, filled with regional vendors offering a variety of quality, locally sourced foods priced to appeal to a variety of customers. In terms of the operator, this lease provides for the Market House to be run by a solid, local team with proven and relevant experience managing similar unique public markets. And in terms of the protections, this lease not only establishes strong performance standards to ensure that it is operated in accordance with our vision; it also enables the City to terminate the lease if it’s in the public’s interest.”
It’s been almost close to a year when talks about the funding that was supposed to cover the renovation of the market and the air-conditioning. Had they used ducted air conditioning for the market, they could have saved thousands of dollars.
There should be a Marketing Plan and a 5 year projected P&L. Otherwise, the City is just shooting in the dark, with no estimation of expected revenues or an idea of how those revenues will be generated. There’s no benchmark by which to evaluate progress.
The absence of some sort of base rent is an especially bad idea. Even if the place is successful, it will be easy to show no profit.
The lease seems unbalanced, in that there is little risk and practically no initial investment for GTM. In that we’re giving Jackson, the best retail location in the City, a liquor license, a renovated space and years of free rent, it seems to me that he should have more skin in the game.
The City has put themselves in a weak negotiating position by not having other options. They put all their eggs in one basket with GTM, just as they did with D&D and Site. You can’t cut a good deal, if you counterpart knows you have nowhere else to go.
But, at least we’ve got something on the table. Hopefully, it will all work out.