Problems Without Solutions: Jackson Market House Presentation Highlights, Doesn’t Address Major Issues

By Kyle Stewart

Annapolis, CITY HALL – Radical – and expensive – change was in the air at City Hall last night as Lehr Jackson’s Gone to Market, LLC presented the first of two updates on the Market House project slated for this month.

The presentation by Mr. Jackson to the City’s Economic Matters Committee (sans chairman Ald. Fred Paone who was tending to a family emergency) included an updated preliminary site drawing of the ‘new’ Market House and first official details as to how much the project is going to cost Annapolis. Mr. Jackson told the Committee that he is convinced that the Market House’s history of consistent failure has been primarily due to three particular factors:

• Traffic patterns around the Market House
• Vendor make-up was that of a food court, not a market
• Lack of proper air conditioning

Harkening back to Fred Kent’s (Project for Public Spaces) presentation in September, Mr. Jackson said that the constant flow of traffic around City Dock is intimidating to pedestrians. He stated that pedestrians, not motor vehicle traffic, should be the top priority Downtown.

Jackson noted that the food court-style collection of Market House vendors has historically been a problem, and his aim is to return it to a true market space. He revealed that he and his colleagues at Gone to Market, LLC have already begun talking with vendors from his previous projects including Easton Market about leasing space at the Market House. In an attempt to return to the “heritage” of the Market House, Jackson said that the new Market House will host businesses that cater to local needs and, according to Jackson, attract “all walks of life.” This includes vendors that offer quality, low-cost food in addition to traditional market goods. According to Jackson, a family of five should be able to eat a full meal at the renovated Market House for about $25.

Recalling the Site Realty debacle which ended up costing the City over $2.5 million, Jackson said that the current environmental control systems at the Market House are inadequate and must be improved. He along with City representatives and engineers believe the building needs a major HVAC overhaul which will increase its air conditioning capacity to around 40 tons and will accommodate industrial cooking machinery including friars and ovens. Their current plan calls for the placement of four geothermal units that will cost the City approximately $300,000.

While the bulk of Jackson’s “update” consisted of him re-showing slides of his prior projects ripped directly from the previous PowerPoint presentations he’s made in the Council Chambers, several interesting pieces of information surfaced during the question and answer session that followed:

• After Alderwoman Sheila Finlayson (Ward 4) expressed concern that the Market House will compete with and adversely affect existing Downtown businesses, Jackson replied that he believes the new Market House will actually “enhance” the restaurants around it.

• When asked if the City will need to subsidize the ongoing operations of the Market House, Jackson insisted that the site will be a self-sustaining, profit-making business and not require municipal help.

• Jackson does not intend to have vendors who offer their own produce at the market, rather grocery ‘middle-men,’ an issue that was raised by Freshfarm Market’s Ann Yonkers.

• Jackson was asked if creating a pedestrian-friendly environment was as important as a liquor license for the future success of the Market House, and if he intended to demand that the City change traffic patterns to accommodate the site as he did with a liquor license. Unfortunately, Mr. Jackson either did not understand the question – even after clarification – or refused to answer it. Instead, he essentially said in many words that beer and wine are good (no kidding) and that a liquor license is completely different than foot traffic.

• Ald. Finlayson asked Mr. Jackson if his team had made progress on the marketing plan to help vendors during difficult winter months, to which Mr. Jackson did not give a direct answer.

• The City’s total budget for Market House renovations is $600,000, as clarified by Ald. Finlayson after resident Harvey Singer asked if the Council or City representatives had firm estimates of what the project would cost Annapolis.

Though not presented at yesterday’s meeting, the City also released their “Pre-Development Agreement” with Mr. Jackson’s Gone to Market, LLC, which revealed that Mayor Cohen has agreed to pay the firm $9,500 per month for three months (October 1^st through January 1^st) for consulting services, up to $3,000 for related expenses, and up to $30,000 for engineering costs. Stipulated in the contract is that one of Gone to Market’s responsibilities during that period will be “Merchandising, Marketing, Business Plan Projections.”

The question is, what do we make of all of this? Here’s my take:

Mr. Jackson is using a boiler-plate model that he’s used on previous projects – one that doesn’t directly address the issues he himself stated have plagued the troubled Market House historically. Traffic Downtown isn’t conducive to residents using the public space, but his plan doesn’t specifically address that central, crucial problem. The Market House has in essence been a food court for many years – which again Jackson pointed out as a problem – yet food service dominated by regional and not specifically Annapolitan businesses is what he is expecting to be the site’s main draw. Vendor survival during the winter months is a problem everywhere – and yet Mr. Jackson didn’t have an answer for how he intends to address it even though the City is currently paying him for that (see the “Pre-Development Contract”). We have YET to see anything truly exciting, truly innovative, or authentically Annapolitan be presented by Mr. Jackson and his team. In fact, he is literally using the same presentation (slightly amended) over and over again in public meetings.

On top of failing to show our city any signs of originality or that he understands the unique character of Annapolis (though he continues to assert he does), this whole process is costing us a lot of money, and looks to cost us even more. As it stands, by January 1^st the City will have spent at least $30,000 to get the process started, and if you figure in possible expenses, engineering fees and the cost of retaining Baltimore law firm DLA Piper, we will have spent over $100,000 before the actual lease/development agreement is signed. Add that to $600,000 for renovations, and we’ve spent nearly three-quarters of a million dollars on this public space in a time when the City is hurting financially.

So, Annapolis, where’s the silver-lining in all of this? Am I missing something here, and if so, help me make sense of this expensive, ineffective circus?

PRE-DEVELOPMENT SERVICES AGREEMENT

FOR THE ANNAPOLIS MARKET HOUSE

This Pre-Development Agreement for the Annapolis Market House Project (the “Agreement”), when duly executed, shall constitute an agreement between the City of Annapolis (the “City”) and Gone To Market LLC (“GTM”) (jointly, the “Parties”), entered into the _4th_ day of November, 2010 and effective as of October 1, 2010.  The Parties agree that GTM shall provide Pre-Development Services from October 1, 2010 to January 1, 2011 (the “Pre-Development Term”), subject to the appropriation and availability of funds. Payments to GTM will be authorized through the issuance by the City of a purchase order to GTM (the “Purchase Order”).  The Purchase Order may be amended and increased by the City as necessary during the term of this Agreement.

1. PRE-DEVELOPMENT SERVICES. GTM shall provide the following Pre-Development services during the Pre-Development Term:
2. Design, Engineering, Permitting

(a) GTM shall lead bi-weekly team meetings and administer the design of the retail plan as it relates to design, circulation, amenities and graphics for the Annapolis Market House. GTM shall manage and coordinate the architectural design and engineering work (“A+E Work”) to develop schematic plans for the retail areas of the Market House based upon merchandising considerations specifically addressing the layout of tenant areas and public areas, traffic patterns, general design treatments, servicing, storage, mechanical layout and interface with other project components, subject input from and approval by the City.  All A+E Work, including but not limited to schematic plans, the tenant layout, traffic patterns, mechanical layout, product specifications etc., shall be the property of the City.  GTM will provide copies of the A+E Work Product at least monthly throughout the Pre-Development Term.

(b)  GTM will provide a cost estimate for architectural and engineering work that must be approved in advance by the City.  The parties expect that architectural and engineering expense shall not exceed $30,000, unless approved in writing in advance by the City.

(c) GTM will perform the A+E Work with GTM personnel and/or identify and select qualified third party contractors, subject to final approval by the City. In selecting A+E contractors, GTM shall bid the scope of work, negotiate and award the contracts and supervise said work. Third party contractors will be under contract to GTM, and will be paid by GTM for their services.

(d) The City shall reimburse GTM for A+E Work according to the compensation conditions defined below, subject to the maximum allowable payment specified in the Purchase Order.  The City will reimburse GTM thirty (30) days after receipt of an A+E invoice from GTM, provided that the invoice is accompanied by  documentation from third party contractors itemizing work performed and documenting the reasonableness of and the basis for the fees charged (such as hourly rates, fixed-fee charges, services rendered, itemized expenses, etc.).

(e) The City shall provide, within five (5) business days following any submission of the above referenced A+ E Work, its approval to proceed, and/ or required changes and/or additional review that will be required prior to Final Approval defined in subparagraph (f) below.

(f) Upon written final approval by the City of the A+E Work (“Final Approval”), GTM shall obtain the necessary permits for use of the Market House and the required building renovation.

(g) Upon Final Approval of the A+E Work, the City shall seek bids from general contracting firms for the construction and remodeling work of the Market House.

(h) GTM shall provide to the City the capacity and desired performance specifications for the HVAC equipment with sufficient capacity to condition the interior space of the Market House, consistent with the tenant occupancy GTM proposes and anticipates.

(i) The City shall manage the bid process for the HVAC equipment.

1. Merchandizing, Marketing, Business Plan projections

(a)    GTM shall develop and provide to the City a merchandising plan indicating the specific proposed location, size, configuration and merchandise category for each tenant space and proposed kiosks, carts, advertising and other retail and commercial activities.

(b)    GTM shall provide within 20 days following execution of this Agreement, a preliminary Market House operating budget showing, at a minimum, a five (5) year profit and loss projection.

(c)    GTM shall develop a listing of prospective tenants, indicating projected rent and other economics of occupancy.

(d)    GTM shall produce a marketing book to promote and attract prospective tenants to the Market House.

(e)    GTM shall oversee development of the architectural design guidelines for tenant improvements.

(f)     GTM shall actively market the availability of Market House retail space and make presentations to prospective tenants.

(g)    GTM shall submit to City for review all offers to lease space made and/or received by GTM and recommend to City whether to accept offers submitted by or on behalf of prospective Tenants.

(h)    If and when the City provides GTM with written authorization to proceed with pre-leasing and/or leasing activities, GTM shall:

(1)        Submit to the City Attorney for review and approval, all proposed lease documents and/or license documents, one or more of which documents  may provide  for  short term use of Market House space to allow  vendors to prove business viability prior to entering into agreements of longer duration; and

(2)       Submit to the City monthly leasing status reports which shall include:  space leased to date, leases awaiting execution, proposals awaiting evaluation, and a list of prospective vendors.

1. COMPENSATION
2. As compensation for Pre-Development Services, the City agrees to pay GTM a professional fee of $9,500.00 per month and prorated for any partial month.
3. In addition to the above professional fee, GTM shall be reimbursed for all reasonable, documented out-of-pocket project expenses, incurred after the starting date of October 1, 2010, such as delivery service, postage, communication, marketing materials, and preparation and reproduction of project materials. Total out-of-pocket expenses shall not exceed $3,000 unless approved in advance by the City. Also the City agrees to pay for relevant documented architectural and engineering work product, incurred after the starting date of October 1, 2010, consistent with proposals, estimates and/or contracts approved by the City during the Pre-Development Term.
4. TERMINATION
5. Advance Notice. Either party may terminate this Agreement for any reason with 15 days advance written notice.
6. Termination by GTM. If GTM terminates this Agreement, the City shall have no duty to pay GTM for services rendered on or after the fifteenth (15th) day on which GTM gave notice of termination.
7. Termination by the City. If the City terminates the Agreement due to a default by GTM in the performance of its obligations hereunder, the City shall owe no further compensation to GTM hereunder as of the date of notice of termination.  If the City terminates this Agreement for any reason other than a default by GTM in the performance of its obligations hereunder, then GTM will receive payment for the balance of the Pre-Development Term.

1. MISCELLANEOUS
2. Entire Agreement.  The Parties do hereby agree that this Agreement is the complete agreement between the Parties and no warranties, inducements, or representations exist except as stated in this Agreement.
3. Modification and Waiver.              A modification or waiver of any provision of this Agreement must be made in writing, and executed with the same formality as this Agreement.  Failure to insist on strict performance of any provision of this Agreement shall not be construed as a waiver of any rights based on subsequent default of the same or similar nature.
4. Governing Law.   This Agreement shall be construed in accordance with the laws of the State of Maryland.
5. Severability. In case any one or more of the provisions contained in this Agreement or any document, instrument, or agreement required hereunder should be declared invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not in any way be affected or impaired thereby.
6. Notices.  Any notice required or permitted by or in connection with this Agreement shall be in writing and shall be made by hand delivery or by Federal Express or other similar overnight delivery service, postage prepaid, addressed to the City or to GTM at the appropriate address set forth below or to such other address as may be hereafter specified by written notice by the City or by GTM.  Notice shall be considered given as of the date of delivery by hand delivery  or one (1) business day after delivery to Federal Express or similar overnight delivery service.

If to the City:

City Manager

City of Annapolis

160 Duke of Gloucester Street

Annapolis, Maryland 21401

Telephone No.: (410) 263-7825

cc:        City Attorney

City of Annapolis

160 Duke of Gloucester Street

Annapolis, Maryland 21401

Telephone No.: (410) 263-7954

If to GTM:

NOW THEREFORE, the parties do hereby acknowledge their Agreement to the terms and conditions set forth herein having the signatures and seals of the duly authorized agents affixed hereto on the dates shown below.

AGREED AND ACCEPTED,  this __ day of November, 2010 CITY OF ANNAPOLIS By:______________________________ The  Honorable Joshua J. Cohen, Mayor ATTEST: By:___________________________ Regina C. Watkins-Eldridge, City Clerk Business Terms & Conditions Recommended For Approval: By: ________________________ Douglas E. Smith, Advisor to the Mayor for Development Approved for Financial Sufficiency: By:______________________________ Michael Mallinoff, City Manager Approved for Legal Sufficiency: By: __________________________ Karen M. Hardwick, City Attorney

AGREED AND ACCEPTED this _ day of November, 2010 GONE TO MARKET, LLC By:            ______________________________ Lehr Jackson, Managing Partner