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South Hall Rent Increases Unanimously Rejected

It is the rare occasion when Capitol Hill residents, the Eastern Market Community Advisory Committee (EMCAC), Eastern Market’s South Hall merchants and its arts and craft vendors agree. The Oct.4 EMCAC Special Call Meeting was one such occasion. The gathering was called to discuss the appraisal of South Hall stalls authored by the Marcus Asset Group (MAG) at the behest of Department of General Services (DGS). The study offered an assessment of the fair market rental value of these concessions to provide a rubric for setting rents to be incorporated into long term leases offered by DGS to the merchants.

MAG recommended South Hall rents be increased between 44 and 88 percent depending on the type of business. The merchants objected. Bill Glasgow, owner of Union Meats, took the lead arguing that business at the Market is “terrible,” which he attributed to its lack of accessibility to dedicated customer parking. Citing 1995 studies, he offered a point by point rebuttal of the comparable markets used in the MAG appraisal.

EMCAC members pointed out that the draft report and the final report were virtually identical despite EMCAC’s recommendations to the appraiser. MAG failed to address limitations of parking and accessibility, stated EMCAC Mayoral Representative Jonathan Page, in its final report. Adding a note of levity, he stated that “I had to kick my wife out and move her out of the bedroom when I read this (report).”

The MAG appraisal stated that the average rent paid in the Capitol Hill submarket was $40.62, stated EMCAC Chair Donna Scheeder. Therefore, she found it perplexing that the study recommended rents that were in some cases double that amount. Currently, South Hall merchants pay between $25 to $31 per square foot.

The MAG report also ignored the that all rental increases are limited by the 1999 Eastern Market legislation. Mike Bowers of Bowers Fancy Dairy Products referred the community to portion of the DC code that states that “Annual rent increases for any (Eastern Market) operators shall be limited to 102 percent of the Consumer Price Index (CPI) or to an additional amount to reflect the of additional services provided, except that in no instance shall the annual increases exceed the 110 % of the CPI.”

Bowers presented a “variance analysis,” which he contended demonstrated that the South Hall merchants had overpaid their rent obligations by $53, 980.07 over the previous 20 years.

Late in the meeting, Glasgow offered a motion on behalf of the merchants to pay a 5 percent increase contingent on timely and monthly reporting on Eastern Market income and expenses. EMCAC, in the experience of this reporter, does not regularly receive timely financial information on the Market’s operations.

Glasgow agreed to table his motion. A broader more sweeping alternative that included more expansive language was offered. This incorporated a provision allowing South Hall merchants more time to decide on whether to commission a second appraisal, which is allowed under the DGS process.

“We reject the appraisal and its conclusions,” the motion stated. “We reject the appraisal process and call for a hold on any further lease actions and proceedings. We want a process that is consistent with the Market Act. We call for a halt to the current timetable. We urge the city to take a holistic approach that reflects the public good, the Special Use District and that includes all actions and deadlines.”

EMCAC unanimously endorsed the motion.

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