Eastern Market Report – October 2017

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The October 25 Eastern Market Community Advisory Committee (EMCAC) meeting found the various and often warring constituencies of the Eastern Market rowing in the same direction. All are against the suggested rent increases proposed by the Market landlord, the Department of General Services.

DGS ordered appraisals recommended substantial rent increases to both the South Hall merchants as well as the weekend privately owned flea markets who have been operating temporarily on lower 7th St. In response, EMCAC, the legislatively enacted advisory body to the Eastern Market, is calling for a legal opinion by the Inspector General of DGS on the 1999 legislation which placed strict caps on merchant’s rent.

South Hall Rent Increases and Meeting with Councilmember Allen
An Executive Committee meeting report from Chair Donna Scheeder and Vice Chair Burger summarized a meeting held on October 25 with Councilmember Charles Allen and DGS Director Greer Gillis.

Calling the meeting “very productive,” Scheeder said that all participants want the Market to succeed. Once again calling for a business plan for the Market, Scheeder said that “We all agreed this is the opportunity.” The Market is in “a new stage with the big development across the street, and the decision to keep the 200 and 300 Seventh St. SE blocks open.”

Scheeder stated that Councilmember Allen affirmed that the Eastern Market is a ‘public good’ and he is willing to find money in the DC budget for what the Market needs. Scheeder continued: “It was heartening to hear that statement.”

Burger reaffirmed Allen’s support saying that he “likened the Market to a park. That the Market might not generate income, but it improves our lives.”

The Market currently is self-sustaining and had a profit in FY16 of $25,000.

The issue under discussion at the EMCAC meeting concerned whether to accept the doubling and at times near tripling of the merchants rents as recommended by the Marcus Asset Group (MAG) appraisal, or to follow the legislatively mandated Eastern Market law (DC code 37.107) which allows for no more than a 102% of CPI limit on annual rent increase.

Many EMCAC members believe that the appraisal process is flawed.

Complicating the discussion was an added requirement of DGS that the “same statement of work” be applied in the hiring of a second appraiser to be paid for by the South Hall merchants if they disputed the first appraisal. The “same statement of work” requires using the same data and process as the initial MAG appraisal and would call into question any independence in its conclusions.

After a lengthy discussion EMCAC voted unanimously to reject any “timelines and requirements for the South Hall merchants to provide a second appraisal until we have a legal opinion clarifying how the city can establish a new baseline when there is a cap on rent increases in the legislation; and to ask for additional interpretations of additional legislation regarding the city’s responsibilities and to have this opinion for our meeting on November 29.”

A letter will be sent to Mayor Bowser, Councilmember Allen and DGS.

In addition the EMCAC continues to call for timely financial information as a condition of supporting any rent increase. Scheeder added that income information is provided but “when there is a surplus we have no idea where the money goes.”

Under the law all Market revenue must be deposited in an Enterprise Fund and not be commingled in any way with city revenue.

EMCAC moved to the next agenda item and unanimously rejected the appraisal report for the 300 block of Seventh St SE which increased rents for the flea market operators on the grounds that the whole Special Use Area must be appraised; that their advisory responsibilities were ignored; and that the report was not received in a timely way in order to provide any advice.

“We reject everything about this and its process” said Scheeder.

Market Manager’s Report
Validated Parking is coming to the Eastern Market. Although the details remain murky it is a beginning in solving what is the Market’s biggest impediment to growth and viability. The Market is the only large food operation on the Hill that has little to no parking with its 15 spaces.

Market Manager Barry Margeson stated that the nearly completed Hine development with its 320 parking spaces will be charging $8 per hour and $16 for two hours for Market customers. A South Hall merchant plan to offset that charge is currently under discussion. Stanton East Banc, the developer, promised parking for Eastern Market customers as part of securing the community support for its project. No mention of paid parking was part of those discussions.

Also available and steps from the Market is a Colonial Parking site which charges $10 per day on weekends and regularly has more than one hundred spaces available on weekends at all hours of the day.

Nationally, other public food markets surveyed have validated parking on site or nearby that is either free with a purchase or a nominal fee of $4 per car.

Margeson presented EMCAC with the Market’s FY18 budget. Estimated revenues are $990,000 with $453, 651.77 (45.8%) scheduled for Personal Services and $536,348.23 (54.2 %) scheduled for Non Personal Services. There is no projected profit. In FY16 the Market had a profit of $25,000. Last year’s personnel costs were $320,244 or .35% of revenue.