May 21, 2024
Annapolis, US 61 F

A Market House Delay

We had good intentions to live tweet the special City Council meeting last night, but that did not happen. As it turns out, not much happened at City Hall either.

Annapolis Mayor Joshua Cohen was supposed to introduce legislation on the zoning changes requested by Lehr Jackson for the newest iteration of the Market House. Additionally, the lease for the premises was to be revealed as well and presented to the City Council for action.

Yesterday, we were contacted by City Public Information Officer Phill McGowan who advised that contrary to the opinion in this weekend’s column by The Observer, that there was no lack of transparency in the process and quite simply, the information was not finalized and not available. He indicated it was the Mayor’s hope that the negotiations wodl be complete in time for the meeting.

After the meeting, McGowan caught up with us by phone and explained why the Market House issues were not presented including the current stumbling blocks and the tentative time schedule.

The main stumbling block is a termination clause. The parties have reached an agreement “in principle”, and have agreed to a termination clause, but not to the specifics of that clause. In light of the Site Realty debacle, the City wants to make sure that there is an “out” if the deal with Lehr Jackson goes south. The parties are negotiating the terms of that clause, particularly the amount of compensation paid to Lehr Jackson if the City decides to terminate the agreement earlier than contracted. McGowan could not tell us the intended term of the lease so it is unknown if the City is negotiating a 5, 10, or 20 year agreement–or longer.

An additional point which needs to be worked out is profit sharing. While it is expected that the Market House will not earn a profit during the first two years of operation, the City is requiring Lehr Jackson to assume 100% of the risk and will subsequently be responsible for any profit or loss during the first two years. However in year three and beyond, it is expected to be profitable and the City is trying to negotiate a profit share for any profit, while opting out of any liability for any losses. The Mayor has said that the City will not subsidize any operating costs for the Market House for the duration of the lease, excepting the initial costs for the renovations.

McGowan briefly addressed the consulting payments to Lehr Jackson to develop the project and advised that the City does have ownership rights of any products or plans produced should Lehr Jackson or the City terminate the agreement.

Going forward, it is planned that the legislation and lease will be introduced to the Council on December 13, 2010 as a first reader. The second reader and public testimony will take place on December 20, 2010 with a final vote on January 3, 2011. However, with time sensitive legislation, the City has been known to accelerate their votes and move to adopt during a second reader. With Lehr Jackson’s stated start date in January, 2011, the City may indeed fast track this vote if it appears that a delay will result in a delayed opening.

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