Economic Matters Committee - Regular Meeting

The meeting of economic matters. Currently present are myself and Alderman Savage. Alderman Allsop Johnson will be joining us shortly. First, can I get a motion to before we begin, I am going to add one additional item to the agenda, ID 926, a conversation on the market space leases? Can I get a motion to accept the agenda as amended?

So moved.

I will second. All in favor? Aye. Aye. Alright. So up next, can I get a motion to approve the amendments from our April 1 meeting?

So moved.

Second. All in favor? Aye. Aye. Alright. So first, ID forty twenty six, the special exceptions process finding and recommending discussions with director Kubiak. Director Kubiak, thank you for joining us today. We appreciate you being here on your day off.

Thank you. Good to be here.

So I had sent you some questions in advance. Essentially, one of my concerns has been coming up over for a while. Oh, I apologize. I've just now noticed Alderman Thorpe is joining us as our guest. Thank you for shooting me a text to remind me. Too many boxes to track. Alright. So Great. Thank you. The special exception process for a lot of our small businesses and findings.

A concern that I've had seems, for lack of a better word, vibes based. And welcome all to all and also Johnson. We are currently on ID 4026. So it currently seems very vibes based and a lot at the discretion of individual staff members. As we all know in business, uncertainty leads to high costs and lack of investment.

And I am essentially just trying to get a better understanding of how this is done. And sometimes even vibe space decisions help out a business, sometimes they hurt out a business. What is goes into the process? What are the checks and balances? What goes into this? If you wouldn't mind kinda getting into a little bit of the background.

Sure. Yeah. So, a special exception is one type of permitted use within a zoning district. It's, not a permitted by right use. In other words, it's not allowed, by right.

It's allowed only after a public hearing and after some criteria are established. And they it's a city council that makes the determination about what is a special exception and what is a permitted by right use. So in many of the zones, there are some special exceptions. In, some zones, special exceptions are things like restaurants or restaurants over a certain size. In there, the thinking is the logic behind the zoning ordinance is that certain uses have unique characteristics or potential impacts, that require further review and evaluation and a systematic study by a disinterested body, in this case, the board of appeals.

So a board of appeals conducts a public hearing, applies the standards that are set forth in the zoning ordinance, and decides whether the special exception is approved or not. Again, if it were permitted by right, there would be no special exception. It would simply go through the normal site plan process and obtain a use and occupancy permit. So, the there is a role for the staff in getting the board of appeals prepared for special exception hearing in the same way the staff provides information to the planning commission. And this is unique.

I mean, this is not unique at all. This is what planning and zoning staffs do throughout Maryland, in fact, throughout the country, is prepare some staff report. Every board takes things differently. Our board of appeals appreciates a detailed staff report that gives them the information that they can consider when making a determination. So what the staff reports do on special exceptions is that they address each of the standards or criteria that's that are set forth in the zoning ordinance.

And, to your point, Alderman, the the standards themselves are not quantitative, easily measurable, precise. They are in fact meant to be adjudicated, discussed, debated. Their findings that are established after a public hearing and after the review consideration of testimony. So they were by by virtue of that, they're they do endow the level of discretion in the decision maker. And the decision maker with respect to special exceptions is the board of zoning appeals.

So to answer your question there and for those folks who are kinda interested in going a little deeper, there are a series of standards that are set forth in twenty one twenty six zero five o of the zoning ordinance. And they're listed a through g. And then if it's a restaurant, there are quite a few additional very precise, standards. I say precise and yet they're still very much subject to judgment and to valuation. Now you might ask why do cities employ this approach?

Why not just make it permitted or not permitted? That would make it much cleaner, and everyone going in would know what uses they could expect to see in their neighborhood, and property owners would know what, in fact, they could do without with their property. Well, the special exception process was set up to deal with uses that don't necessarily fit perfectly, that needed a little review and consideration. And over time, many jurisdictions, and elected officials have said, we kinda like special exceptions, but we want the public a chance to weigh in on the process. We would like to hold a public hearing and allow people to show up at a public hearing and offer testimony.

And, that is essentially what the city of Annapolis has done for quite a few special exception uses. So the, the process is set up to add length and further deliberation to the process rather than it being a process that leads to a speedy decision. It's a process that's quite drawn out, frankly. So I won't go through each of the standards unless you want me to. There's step step forth in code, and I I think that probably addresses your first question, Alderman, about, you know, about the special exception of why we have them.

So are there any checks on what the staff makes as their discretion? So something that I may find let's say there is something that needs a special exception that's going to be coming up in neighborhood that hypothetically ate myself and Alderman Savage share. And I think that this I make a comment that this would be harmful, and Alderman Savage makes a comment that this would be beneficial. What goes into that staff member's weight of that choice of is this a good or a bad fit for the neighborhood?

Right. Okay. Well, first, there's two parts to your question, I think. First, you said check on the

Yeah. And then there's also is there a check on that individual staff member's judgment?

I So let's talk about the the the check first, of course, is the fact that it's not the staff that's the decision maker. The board of appeals may choose to accept the staff report as evidence. It could reject the staff report as evidence. If it does accept the staff report as evidence, the parties to the case may dispute the staff report and are entitled the opportunity to cross examine the staff at the public hearing, which is a very typical approach in Maryland zoning jurisprudence. You question the staff reviewer, and you understand the logic and the decision making that went into formulating opinions, for the board of appeals.

And the board can decide whether to accept the the evidence or not. I mean, that's the the foundational check. As to what goes into formulating recommendations or staff analysis. There are a lot of things. I mean, it it really depends on the criteria that has to be established, and then a staff member will evaluate the physical location, the zoning district, the purpose of the district, the adjoining uses, the public testimony that was provided, up to the case, or on the case, and bundle those various factors as well as what the code says in terms of specifics into an analysis of of how to approach each of the conditions.

In many respects, the the staff report is can be read as, something like the board may wish to consider the following factors because they raise questions as to whether this condition can be met, or it looks like this commit condition cannot be be met because there's not adequate utility servicing servicing the facility. Well, why isn't there no adequate facilities? Well, then you have to make a a determination about whether the pipes leading into and from the the property can hold the additional demand flowing from it from it, for instance, or whether there's enough parking within the neighborhood. So, you know, the staff is actually challenged quite a bit in getting to the details of the standards. And in some level, we have to rely on the public hearing process, which is a, you know, competing parties advancing their their their, their causes.

You you rely on that to to generate the information necessary for the board. Of course, the board could say we need more information. We the staff has raised some questions about the drainage serving this property or the impacted drainage. We would like more information about that. So we'll require further study or we'll condition the approval on this item being dealt with.

So it's really the staff considers what available information is there and what we can reasonably do, what resources we have, you know, in light of the resources we have. And then the it's ultimately the board's decision about, whether anything we provide in the staff report raises questions for them to seek additional information or to, or for the various parties in the case to, question staff and to to develop a greater understanding of the the potential impact. Again, the whole issue for special exceptions is a it's an impact test. The whole purpose of the hearing is to understand the impacts of the proposed use within that specific location, and that's something that's unique to all of the zoning. It's a unique impact test.

Every other use, when you adopt the zoning code and you adopt you say residential is permitted in a residential zone, you're making a presumption that the residential uses that are allowed in that zone are presumptively valid and and had no adverse impacts. They are what they are. But when you introduce things like restaurants or outdoor dining within areas where the city council said this warrants a special exception, the council has identified the proposed use as one of substantial concern, a concern enough to justify a fur a thorough review. And the staff's job is to get that review to the board of appeals.

Is there an average timeline that it takes to conduct these studies and complete the process and make that report to the board of appeals?

I don't know that we've ever done any real analysis on that, but we're fairly quick about it because when once the board gets the application, they set the the hearing date fairly soon, and then we we prepare the staff report. There is often deliberations between the staff and a developer before a public hearing is set, but that's not required, and that's typically at the request of the developer. Many think that getting the staff on board is a necessary precondition for the board's approval, but I reject that idea. I we're there to serve the board of appeals, and we wanna give an an unbiased kind of analysis and to allow the board to go deeper into areas where concerns seem to justify it.

And then my colleagues on the committee have, questions about the process. Alderman Savage?

Thank you, mister chair. Yeah. So first, I just wanna dig into kind of the rationale. You mentioned you described the special exception process as kind of an impact test for a specific location. But my question on that would be, like, if a use is already permitted in a zone in that area or the district, or if the the district's explicitly mixed use, hasn't the city already made up the legislative judgment as far as the use is appropriate there?

Like like, what's what impact is the special exception trying to catch that underlying zoning decision hasn't already?

Well, I don't know. You know, once a a use has made a special exception, the the impact test follows forward, and the public hearing is set. So there's just from the very beginning, there's a differentiation between uses permitted by right and special exception. If the, city council wanted to avoid the necessity of going through the the more detailed fact finding and impact evaluation, that it would make use as permitted by right. So there, I mean, there are times when there there are, uses that clearly have adverse potential, and the the board of appeals, would benefit the community by doing a more detailed analysis.

There are times I suspect, and I haven't gone through the code, but I've seen it in other jurisdictions that a special exception is assigned to a use more because the elected officials would like there to be a public relief valve. The public hearing process provides a really great valve for the public to offer comments and to help shape the outcome of decision making. And so there are times when things go into special exception process that they almost routinely get approved, but the community has a opportunity to help shape that or at least persuade the board of appeals to, bring about a set of conditions or raise questions that they should consider.

Yeah. I think that's that's an interesting point you brought because, yeah, I think you're right. It's in the sense that it's, it seems like the special exception process really is a it's basically an extra it's an expression of additional priorities that are put in place by a council when they pass that policy because I mean because it's kinda related to my my another question, which has to do with duplication in existing code because I could see some value for a special exception if there are, you know, impacts that aren't already dealt within the code. But, you know, we already have noise ordinances, parking requirements, you know, all kinds of nuisance stuff to prevent nuisances, you know, alcohol licensing, fire health code, all that stuff already applies.

Yeah.

Yeah. And so it just seems like this is special exception. Unless they're really crafted specifically, they could potentially be some kind of parallel regulatory framework, and not necessarily value add. Because I think we often hear from businesses that, oh, this is this seems to be burden and just wanna make sure our processes have sufficient value. But I I suppose the answer might be we just look at it in a a specific case by case, you know, standpoint. And and does it depend on the underlying land use? Like, if it's mixed use, it's kind of implied that it's gonna have more than just residential and hence other impacts. Right?

Yeah. But even within the business districts, some business uses are special exceptions. You know? And the when the the principal allowed use is business, a whole suite of business uses. Some of those uses are special.

Gasoline in convenience stores are classic one. Special exceptions in places where you would expect this gasoline and convenience store to operate fine, except that it's a special exception, so it takes you through that process. And and most recently, restaurants and outdoor dining. Again, restaurants and outdoor dining. Outdoor dining seems to be a, in my view, a customary use of the outdoor of a restaurant, right, as sort of accessory general generally.

But in the Minneapolis, we have a far bigger code related to outdoor dining, and it's goes the special exception route, because the council's prince presumably have has determined that the outdoor dining is of such potential adverse impact that a further review and approval process separate approval process is necessary. Now in some uses can that you can resolve that by within the code specifying some standards that would address the impacts. Outdoor dining at outside of a restaurant should not exceed so many tables. That would be very clear, and everyone would know up front what the the rules were. Or, you know, within certain parameters of distance between adjoining properties, outdoor dining shall be this or that.

That's not the way our code is. Our code is far more extensive, and and and it's also far more generalized. So it leads that leads to a decision making board, the board of appeals, having to grapple with these standards. And that leads us as staff to have have to give an honest review of these conditions so that the board can make a a decision. And so it's it really you know, it's like I hear what you're saying. It it does add a complicated step to the process, especially within our zone districts where commercial uses are already permitted.

Yeah. And I know there's certainly a push with, you know, I think in the housing world to have more buy right, but it seems like we don't it seems like we have a lot more restrictions for the businesses in many cases. Although, I mean, I do see your point as far as, like, with gas stations. Right? They they they clearly could potentially have other significant impacts, you know, as far as traffic, air pollution, all kinds of things, than another business.

But I just feel like some like, in particular, you know, which obviously one of the things that brought this to our attention is outdoor dining. I mean, that's is this something that really is it such a abnormal use that it would require a separate process? And it could by the nature, by its name, the special exception. Right? And I and I suppose that it comes down to just a policy decision.

Right? And that's but I guess that's one one of my questions for you would be, like, if you if we do have an interest in revisiting some of the uses that require special exceptions, would you, you you know, presumably the department will able to help us assist us with determining if there is any kind of overlap with underlying zoning or not and if there are sufficient code requirements that that cover the potential noise or traffic or parking impacts and just really get focused on the the true, impacts that would not be able to be mitigated, too successfully. Because I think a lot of the times, these impacts can be mitigated. But as a part of the special exception process, that also gets placed entirely on the shoulder of the businesses. Anyway, I'm I'm just kinda just thinking aloud here.

But but I guess bottom line, we it it sounds like this is something the department can really help us work through as we consider revisiting this.

For for exam for example, in in the the council has done this over the years, and there's an extensive chapter in our code that talks about land uses permitted by standards or land standards that land uses forgotten the term. Excuse me. But it's essentially special there are various land uses that are permitted by right, but they're subject to standards. So there, you've sort of cut it right between the middle. It's not simply allowed regardless of the size or its impact.

It's allowed provided that you meet certain standards. So with respect to outdoor dining, you could say it's permitted by right subject to specific standards or for convenience store. I'm just picking these two because we're talking about, you know, obvious special exceptions or for, certain housing types permitted by right subject to the following standards. And and then you've achieved the same thing, and you've constrained the staff to permit and approve those things that meet the standards. And we're out of the loop in advising a board that comes to this free of any presumably free of any bias and is looking to us to offer a a balanced view of things.

So not a supportive view, not a negative view, but just one that's balanced and lays it all out there. And if if the council gets specific, it could address these types of uses within that section of the code that says subject to to certain standards.

Okay. So that would go to that wouldn't go to the board of appeals. That would go to staff basically, a staff termination based on those condition those standards. I'm sorry.

Well, if it was a new development, it it would could go to the planning commission if it's a major site design. If it's a minor site design, like, just a small change in addition to a building, that's handled administratively by staff. And we would check that it we make sure we check the boxes, and it would move towards approval.

Okay. Yep. Alright. Alright. Well, that's all I have for now, mister chair. Thank you.

Just kinda give you a good example of what the standards are when we did the more day cares act and removed, changed day cares as a special exception to a permitted use in the majority of our commercial districts that was bystanders. So as long as they could check all those other boxes by what the state said, they were good. Yeah. Also, your thoughts out loud, generally describe my feelings on special exceptions. I don't like them. I find them notoriously unpredictable. Alderman Alsop Johnson, do you have any questions?

Not at this time.

Alright. Alderman Thorpe, do you have questions for director Kubiak, sir?

No. Thank you.

Alright. Alright. Well, director Kubiak, thank you so much for joining us and diving in deep for this today. Does help me know that there's little bit more of a process than just vibes on vibes. And thank you again for joining us on your time off.

Okay. Thank you for the questions. Very good. No.

Thank you. Thank you.

Have a good night.

You too.

Alright. Up next, we have ID 826, general economic development update. Miss Stewart, if you could please present a quick version of this so we can dive into the outdoor dining or not the outdoor dining. The market space dining.

Yeah. I will keep it quick. So, hopefully, you all receive the final report for the Inclusive Ventures program. As you know, in 2025, the city council gave a grant of $75,000 to Anne Arundel County to help fund Annapolis businesses with their Inclusive Ventures Program, which helps small minority owned women owned and veteran owned businesses. So they were able to distribute $5,000 working capital grants to 15 Annapolis based businesses.

The grant has not been funded for this year, but perhaps we might be able to look into doing it again in the future. Also, the Inclusive Ventures program is celebrating its five year anniversary in June. Another update is we talked at the last, Economic Matters Committee meeting about events for the Citadoc businesses, and they will be getting together to host a Citadoc Appreciation Day event on June 13, July 11, August 15, and September 12. They are actually working with, former Alderman, Payone, to get these approved. And we're waiting for Whiting Turner to give final approval on these dates, but we don't think that this will be a problem at all.

And then just a quick recap of economic development data. Our vacancy rate throughout the city is still low at 4.4% with Eastport remaining the lowest in the city at 1.5%, and we celebrated nine new businesses in April.

Alderman Alsop Johnson, since the Inclusive Ventures program was implemented before your time, this was something spearheaded by Alderman Gay and myself. We tried to do it as a direct grant for businesses in the city, but it would have required a study that basically would have spent the entire grant just to conduct by state law. So this was a clever workaround that miss Stewart came up with, and I am glad to see that it is doing its intended goal. So thank you for that update. We really appreciate it. Alderman Savage or Alderman Alsop Johnson, do either of you have questions? Excellent. Thank you so much. Alright. ID nine twenty six, Market Space.

Miss Leonard, thank you for joining us at our not normal committee. I got an unpleasant surprise brought forward to me on Saturday when some of these businesses presented that they were not we were not extending these leases. To be honest, I feel very out of the loop, caught very flat footed. I appreciate the new talking points and clarifications that the administration has brought forward, but a lot of questions still remain. And I'm going to be very blunt.

And I don't know if this is something that you have control over or not, and this is part of me just pontificating. I do not wanna see another car enter market space. It has created such a fantastic community area. I want it to be prettied up, bricked over, and turned into something of a plaza that Europeans would be jealous of. And if it gets reverted back into a parking lot even just for the winter, that would just prevent that from happening in any chance. So, I will stop my grandstanding and hand it over to you for any updates that you are allowed to provide us, and then I will give some, time over to the businesses that have been impacted.

I don't I don't have much in the way of, updates. I know the administration is working, to possibly consider something else, like a different arrangement that we would hopefully get up and running by July 1. Beyond that, I I know that's still a work in progress, so I don't have any details per se on that. I know that based on the talking points, the intention is more that it is these leases have been in place for a while and that it's kind of time to revisit them to a certain extent, not necessarily, end the concept per se, but more that these were enacted post COVID. There wasn't a lot of studies done in advance.

There wasn't a lot of consideration about, for instance, putting down bricks or, doing something else more permanent to the play to the area. So I think, I helped draft the original leases, and the intent always was that these, to a certain extent, were temporary until a more, till the city had more time to consider a permanent more permanent type of solution. So when the original leases were drafted, it was meant to assist post COVID, and they were supposed to sort of wind down when city dot construction ramped up with the understanding, that the idea would be relooked at and reviewed and sort of reconsidered at that time.

I appreciate that background. I do know that we are getting more money from these businesses renting the space than we are as that being a parking lot and less the temporary nature of the ordeal than it is. A lot of us, I feel, just more caught so off guard by this. And, again, I might be rambling to the wrong person here. But does anyone else have a question for, miss Leonard, Alderman Savage?

Thank you, mister chair. Yeah. And, and thank you, miss Leonard, for the briefing. Do you know what's driving the desire for a different arrangement?

I mean, I think that's always been considered. Under the original city dock, construction plans, there was actually a phase of construction that was looking at this particular area. That phase has sort of been put on hold based on base you know, all the things that have happened with city doc, including funding availability. But it was always was always being considered. There was always sort of a potential, desire or vision to repurpose the area, and that has existed in some form or other for probably since the beginning of these leases.

So, again, I I I I think the the this particular round of leases was not meant to be permanent long term. It was meant to be sort of like, let's see if the concept works. And then, you know, when city dot construction comes in, revisit the idea to consider ways it could be improved upon or changed.

Yeah. And and I know I know you're the lucky recipient, but I know it's not, your decision here. But just, you know, at least from my standpoint, I I I had no idea that there was such a desire all along to have a different arrangement. I think, alluding to what the chair had mentioned, you know, I think we all had our idea this was moving the the direction we wanted. And, know, and I think I think the question well, one of the questions would be, well well, first of all, I guess, one of the the frustrations is that I think the idea was at least to have these leases last for the outdoor dining season.

And so the the timing of the notification and even including this potential, you know, envisioning this new desire, like, has do you know if there's been how much outreach has there been to the businesses involved to bring them to the table before they're giving these notice about the leases and the city wanted to go in that new direction?

I don't know. I haven't been involved in that aspect of it.

Okay. I mean, I guess yeah. I think I think the chair and I will have to relay this to the administration, but I think it'd be good to have some kind of work session on this topic, and we can invite some of the business owners and have a discussion as a group. I know that's not your call, miss Leonard, but just speaking out loud here. But do you know so it sounds like it sounds like what it would look like has not been defined yet.

No. Well, the original vision was under a prior administration and a an an older, you know, city doc work plan. I know that there has been a discussion of perhaps pulling out that that old design that I think got fairly fairly far along, but don't hold me to that, and to look at that and see again. But, beyond that, I don't have many details.

Okay. Yeah. It just seems like the announcement was a bit premature from the admin because it it's certainly gotten, I think, a number of our constituents and businesses concerned. And, again, I know this is not your office, but I think, the the the phrasing in the press release I don't know if miss Stewart might have any insight into any of this, but the the phrasing in the press release was that the city hopes to continue outdoor dining through July, August, September. My concern with these businesses is that, you know, they have to make staffing purchasing decisions now.

They need commitments, not some aspiration. And and I think also that's just feel pretty confident that the saying that the council, at least collectively, has had the understanding that this would continue for the rest of the season. So I guess if we can get any kind of clarity from the administration on what the timeline is gonna look like, what kind of outreach they're gonna do to businesses as well as with the council would be helpful if you could

Yeah. Yeah.

Pass that along and

I will. Will certainly be the same.

I'm not saying there there has or hasn't. I just haven't been involved in that aspect.

I'm seeing Ms. Stewart with her hand up.

Yeah. I just wanted to say that on Monday, I do know that this coming Monday, there will be a meeting with the market space businesses, the administration, and Adam Straat and I will be joining. And I think they will be discussing their plans at this meeting on Monday.

Good. And so do either of you have, like, a general timeline on the negotiations that have been set yet, or is this kind of still getting developed?

I do not have a, a definitive timeline. I I do have I presume if we need to draft a new lease, I I will probably be starting on that sooner than later if that's the direction they go, but I haven't received that direction as of yet.

And will that lease come to the council?

Yes. It would need to come to council. Yes.

I thought the last ones did. Right? I

The yes. The last ones, the original ones, came to council for original approval. They had, they didn't have per se a set term. They had the option, for the tenants to renew if there were no defaults or other issues. But there was also built in ability for the city to not renew or to terminate if, and this is how I know there were plans originally for this space to terminate for when city dock construction entered that specific area. So that was the original set of leases that was approved

Okay.

By city council.

Okay. So just two, I think. One, I'm not gonna dwell on this, but just I I'd as you could probably guess, I entirely support, the chair's comments on vehicle access. And I know you you're the wrong person to talk to about this, but I just speaking out loud, I do worry about opening it back up and the impacts to pedestrians. One question I think that miss Stewart might be able to help, if not at this meeting, perhaps down the road, is just taking a look at the fee amount.

And because I know that's related to the Medco agreement, if I'm not mistaken. And to the chair's point, regardless of the fee, you know, this is well, I guess, except if it if the fee wasn't there and it'd be just parking space, we are making more money for the city with the fee. But my my point and question now is that I wanna make sure the fee is set at a reasonable level. I'd rather I don't wanna have it be a burden to the businesses and a burden and a barrier to us making this more of a traditional pedestrian plaza. And so, you know, personally, I'd rather on the lower fee.

And if Medco is not happy with it, then negotiate or or if we need to cover it with, some other funds. But, I just wanna I guess if if so I don't know if miss Stewart's heard anything from the businesses as far as the the previous year, how the fee has been impacting them or not?

No. But we actually don't as I said, my office doesn't work with the market space businesses Okay. On this program, so I don't know if Ms. Leonard might have more information because I know that she negotiates directly with Medco too.

Under the concession agreement, the rate is set at 10 times the hourly meter rate per day per space. So I think I think believe currently, again, that the hourly meter rate in market space is $3.25, I believe. So that would put under the Medco rate, it would be at $32.50 per day per space. Currently, the market space tenants are paying $24.50 per day per space, I believe. Okay.

Alright. Yeah. So if if there if the potential

With the understanding of that, we've had to then because they're paying under the Medco rate, we have had to make other, negotiations with Medco about that.

Okay. Well, I mean, if if their seating ends up getting reduced, we may need to revisit some of that female. But in any case, that's all I have, mister chair. Thank you.

Thank you, Norman. And I'm just gonna say, I think another one of my sources of frustration on this is I feel like we had just negotiated with Medco to get these newer, better rates for the businesses in the city. Then just Mhmm. Feel like the whole rug got right yanked out from underneath us. Well, mean, also, Johnson

I was just gonna say we did negotiate down. Originally, it was 17 and a half times that meter rate, and we did negotiate it down to 10.

That was a hard fought negotiation, which we appreciate you doing, and then, I feel like we just jeopardized the whole darn thing. Alderman Nelson Johnson, do you have any questions for the regarding the leases in the market space?

This is gonna be challenging. Wow. The leasing, is that where the people are sitting outside the tables and the chairs where they're eating outside, or is another lease to go with the buildings? Is this two different leases? Or

This is in regards to that outdoor space. It is Outdoor space. I it is currently shared by five restaurants in a group.

Okay. Okay. That's what I thought. Okay. Yeah. That's gonna be interesting. So we want to, make it smaller or put allow people to drive through that area again? What's going on?

I don't know.

I do not want people have decision or are they able to

know the lease is not being renewed. I do not want people driving

through it. I no. I don't. Oh, that's not good to drive through while you're sitting out there eating and kids. And I oh, okay. This gonna be interesting. That's all I can say. Alright.

Almendorpe, do have anything?

No. Thank you.

Alright. Well, miss Leonard, thank you for joining us today. I know you have to hop off to another meeting, so I'll let you go fifteen minutes early so you can grab a bite or do anything else before you have to hop on to the next thing. And I do have a couple businesses from the market space lease that are here to testify. I know we at least have Chris Hannon from the Garvey's. Is there anyone else from the market space lease that's joining us? If you are here from MarketSpace, you can now unmute yourself and put yourself on camera.

I'm here. My business partner, Kevin Havens, is also on, but he would probably defer to me on the majority of information that you may want to know. And then as a general of thumb, in accordance with what we did last year, as a general of thumb, I've taken the lead presenting stuff so that it can be a little clearer. Although, I believe, Carl from Ayrusher was on television today. Mark has spoken out. Jeremy from Federal House has. But in terms of these things, I think I can provide the most concise information to the the committee that they may wanna hear.

Excellent. Thank you. For, the record, if you could please introduce yourself, give your full name and address, and then, would love to hear any testimony information that you can, provide for us.

Sure. My name is Christopher Hannon. My address is 154 Drexel Drive, Smyrna Park, Maryland, and I am one of the three owners of McGarvey's.

So when were you first informed that the lease would not be renewed?

Sure. I can give you those exact information. On in accordance with the the lease, we had to indicate a intent to renew within sixty days. So my partner on April 21, Kevin, sent an email to miss Leonard and mister Fender Flinnard saying that we intended to renew our lease in accordance with the terms of the existing lease as it was. On April 28, he had not heard back, so he followed up again and said, well, what is the status?

At that point, no one from the administration or anyone had reached out to us to indicate that there was anything that would be of concern. On March or excuse me, April 29, Mr. Fliner responded, that he apologized for the delay, that they were in the middle of budget system. This confirmation will receive renewal notice, and Ashley or I will be in touch to discuss the next steps, which was followed by the next day at 04:45, a notice of cancellation of our lease.

The last week?

On Friday at 04:45 on the way out the door, followed, to be fair, by a message from, from miss I think Ms. Short was copied on it, but it is Adam oh my goodness gracious. Who is

Adam Adam

Stratt followed up shortly thereafter saying, I'm sure this is a shock to you, and we would like to engage in a meeting with you to, I guess, discuss. So as much as I can, before the committee keep a motion out of it and just be factual, those are the exact facts. The city businesses got together and suggested that we also Ms. Richards is returning from vacation, I believe, the following week. And the suggestion is that we would all meet together on Monday, being, what, five days from now as a group.

And what happens at that meeting is yet unknown. But as it stands right now, we do have an official notice that our leases are canceled with no direction on what will happen.

Now if these new leases were to increase the amount of money you would have to pay per space, would you be able to continue to use the outdoor dining?

We would. I think that's a question where it gets into a little bit, and perhaps what the administration is saying is that some of the businesses can afford it. But if I give you the exact, data, I would say that we under when we first started this lease, going into last year, we were anticipating that we were going to pay a rate of per space was about $24.6 per spot when we so that is ironically about where it came out, but we were scheduled to go higher based on an increasing threshold. So I have there's an innumerable amount of data that I could give you. The basic line is just as that under the previous lease, we were to increase by CPI each year.

This past year, when we met before this committee, before yourself, and it was an issue with Medco, a rate came back to us at $24.5 which is fine. If it were slightly more than that, it would be fine. But I think it should be clear that at $24.5 that is substantially beyond the expectations that Medco or the Hillman parking garage even put into their, plannings to the tune of about a $05,000,000 over the next fifteen years. The city is making if this parking goes away, the city will lose, at least a half million dollars over the next fifteen years.

We're losing money if we take this away from you?

You are unequivocally the city is unequivocally losing money by reopening these two parking spots.

That seems like a very bad deal for everybody.

We would agree. I think a couple other interesting points that we point out, Ms. Leonard was commenting, is that it was clear in the original concept because under the previous mayor, there was consideration that pumps a la New Orleans style might go under the Market Space Street, that the whole idea was to pull that street up at some point, make it look like West Street where it's bricked and continues along those lines, which we had anticipated at some point could possibly happen. When we first entered into this lease, we went out on a limb and we, in the middle of the pandemic, agreed to a rate of $25.98 per parking spot, which means that three sixty five days of the year, whether it's raining, snowing, sleeting, there's not a human being in Annapolis, we paid $26 per parking spot for 19 parking spots. So we went out on a limb and took the risk to make this happen, and we believe we've turned it into an economic engine for the city where people attend and come downtown, not necessarily just to eat at one of those restaurants, but because it is an open spot, because people walk through it, it's a city center, which again, a similar testimony that we've provided in the past is that it's not just a matter of parking spots, but it's also the additional economic impact that we provide.

And once we consider the idea that the new Dock Street will go in, where will those people, as we've said before, where are we expecting those people to go eat? Where is the social spot? Where is that overflow? There's a million calculations. And, I don't wanna take overdo my time.

I'd I'd be one to answer specific questions probably may be more useful, but I would say that the city is unequivocally making more money by us renting out those spots for three hundred sixty five days out of the year. It exceeds anything that Medco expected to make from those spots. We went out on a limb to make those spots work, and we're completely willing and open to figure out what may need to happen next. We have been from the very beginning. Every time we've tried to reach out, it generally has gone unanswered or unheated by anyone within, the city hall where to say, perhaps this meeting could have happened three, four, five months ago and said, what do we need to do?

What do you need to adjust? What what how can we be good partners with the city to continue this?

I'm gonna say that these, outdoor dining spaces that you guys have created are so attractive. We actually got an email support coming all the way from Falmouth, Maine Mhmm. Today. Not my exact hometown, but close enough in Maine standards. So one of the things that was one of the things that was discussed in the past is that you have a a group lease together and that if it was separated too much, that would end up being too expensive for each of one business to absorb. Is that correct? Am I remembering that correctly?

I think the gist of it, Mr. Jones, is similar to that idea is that there is the five of us have basically come together to make it work by each person taking a little bit more or less than what they may want in their particular area. Market space or market houses in particular are interested, like for their spots a lot that are towards their area that's towards the roundabout, I can't particularly answer for that, but I will say that everyone wants this to continue, so I will be I will make the presumption that every single one of the businesses does want this to continue as it is. And even last year, we were in the same situation. I will say before the committee, it's interesting that the rate was the effective rate was slightly reduced from our previous year.

I'm assuming, and I've tried to do a calculation because it's based on this concept of a parklet model. A Pearl, which is outside in the market space area, had contacted me and that's a seasonal rate, where it supposedly goes from April 15 through November 1. So I think there was an attempt perhaps to tie that in and make it similar. But regardless whether it's 24.5 or $25.5 or whatever the number is, is that we all came out and said that $35 which is the bag commuter rate within the code which Metco has set, which is where that number came from, and is that $35 was negotiated because that is what was set in the original omen agreement as a bag mark rate. Your plumber comes, needs a spot in front of your house, you pay $35 for that spot.

The consideration was it should be less because no one from the city has to come out market. They don't have to assume that it's going to be, captured properly. They don't have to go after the plumber or the homeowner to get it, that there's incentive to make it less than $35 So where that number falls, I'm not exactly sure. But to answer your question, I have no doubt that the businesses want this to continue and that they are would be just as happy that where this had just been renewed as we expected.

Right. Alderman Savage, do you have any, questions regarding the market space?

Yes, Mr. Chair. Thank you. So what and thank you for coming to testify, Mr. Hannan. So first question, what was the regular end date or renewal date for the canceled lease?

The lease runs along the city's fiscal year. So the lease ends on June 30 of each year, and it's subject to yearly renewals with a sixty day notice by the tenants with intent to renewal or the city, sixty days notice with intent to cancel. Hence the reason, I believe, that the official lease cancellation was sent on May 1.

Okay. Well, I guess I don't don't know if miss Leonard's still here, but I guess I'm kind of curious why if the lease has to be fiscal year. Because considering that it has to do with outdoor dining, would think it would make more sense to have it end sometime during the, you know, off season in the winter as opposed to, the middle of the outdoor dining season, June 30. But I'll need to follow-up with her separately.

So the

what was the date of effective date of cancellation then that they gave you?

If I look up the email. The effective date is oh, it says 05/01/2026, the date of the notice. With the effective date, remove all your personal property from the leased premises within thirty days of calendar day, June 30. Within June 30? Within thirty days within thirty days of 06/30/2026. Within ten days of vacating, I'm happy that this I'll just go ahead and forward the letter to the committee or

Okay.

Or to the chair, and he can pass along the official, termination notice. So what how does

that uncertainty impact your business to have this kind of be

up and down? It's a minor disaster in that we our staff that's just and we've said this before. Our staff are the first people that come and say, what am I supposed to do for a summer job? We estimate that we know specifically at McGarvey's that outdoor dining employs 20 additional staff members. So we'll average it and say it's a 100. If it were a perfect world, let's round down. Let's be fair and say 75 people's jobs are dependent upon it. You need additional cooks. You need additional food runner. You need additional hosthostesses.

You need an additional manager. You need additional bartenders. It's not just you need additional prep people. You need additional person to clean the place in the morning, set up tables, break down tables and chairs. So it's not hard to get to that 20 person number and say that that's about 20 people's jobs that are in jeopardy for our particular thing.

And there are questions immediately, they look and say, what's going on? What are we supposed to do? Sure, we talk about our economic input to the particular business owners. I think that's stuff evident. What we really want to do is point out to the committee is that it's our staff, it's an additional economic impact of, again, drawing people downtown to that area where they might not know where they're starting or finishing, but it's a city center, we firmly believe that it's to the benefit of all the surrounding businesses, that they get an incredible amount of foot traffic by people walking by and looking through the windows or stopping in.

19 parking spots do absolutely nothing in the whole scheme of things, absolutely nothing. To the fact that we even overpay for those 19 parking spots, we've eliminated that as even consideration that somehow 19 parking spots will materially benefit anyone. It will be the complete opposite from revenue to the city to impact on people's jobs, the impact on just overall finances of business owners.

Yeah. Yeah. Well, it sounds like since you didn't really hear anything, your expectations were to, you know, that the lease would continue. And I think I certainly can't blame you for that because I think that everything you've heard from the city prior to this point, including from this committee was that we we we love having you do the outdoor dining down there, and everything you hear from the residents is that they love it. Businesses testified to this committee last year at some point that, they love it.

So, yeah, I it it's called all of us off guard. So definitely, you know, wanna extend our, you know, regrets in that regard if we but it's it's we do what we can to help you out. But, again, I thank you for coming today. That's all I have, mister chair, for this at the moment.

Thank you. Alderman, Alstom Johnson, do you have any questions for the businesses?

This is something that's gonna be really hard to handle right now. That's all. I'm not at this time. I'm just just listening and observing right now. So whew. Yeah. There's gonna be something. That's what I can say.

No. Thank you, mister chairman.

Alright. Well, gentlemen, thank you so much for joining us today. I am going to work to get more information that we can. Yes. And we're gonna try to get as good of a term that we can do. The negotiations are handled by the executive part of the administration, but Mhmm. I am very interested in seeing that this continues. And as I said earlier, I do not want to see another car end up in market space. I understand part of this has to do with the boat show coming in, and you all understood that when you were first negotiating and were more than willing to accommodate. Absolutely.

If this turns back into a parking lot even in the winter, I am going to be livid. So thank you for joining us today.

Mister Chair Yes, sir. I I did see mister Havens. He was visible for a little while. Did you wanna see if he had anything you wanted to add?

Oh, yeah. Mr. Havens, I'm sorry. Do you have any,

looks like he went dark again.

Alright. I'll assume he went, visible to just say me too. Alright. Well, gentlemen, thank you for joining us today.

Move forward. Very much.

So that is all that we have on the agenda. I am here.

I am here.

I am here. We are. It

was okay.

Takes me

a while to push these buttons out.

Well, do you have anything else to add before we, move on?

Yeah. Move on. I didn't have anything to say. I deferred everything to Chris. Thought he did a great job as a representation of what

we're trying to say. Yes. He did. Yes. He did.

Excellent. So, moving on. Do we have anything else for the good of the order? Seeing none. I am going to say I would like to hear from a representative from the administration regarding the regarding this decision and any updates that we'll have in a month. Hopefully, we have a little bit more information, a little bit more progress, and everybody is going to be on the same page that we're going to continue this wonderful program in market space and offering a fantastic deal on the lease that we all know and love and can continue this. But if not, that's why we have these committee hearings too.

That's right.

That's right. People swear. So, miss Jackson, if you could please ensure that someone from the administration is here to give us any updates on this at our next meeting?

Yes. I have it in my notes.

Thank you. Alright. So if there is nothing else for the good of the order, can I get a motion to adjourn?

So moved.

Can I get a second?

Second.

All in favor of adjournment?

Aye. Aye.

Alright, everyone. Thank you for joining us today. Alright.

Good night.