Caves Valley Partners (CVP) has pulled out of an agreement with Baltimore Public Markets Corporation (BPMC) to redevelop the 31,800 sq. ft. Cross Street Market in Federal Hill. BPMC began its effort to find a developer of the market in January 2015 when it issued a request for proposals. It selected the team of CVP and Scott Plank’s War Horse in June 2015, the only group to submit an offer with all the requirements according to BPMC, and reached a deal with only CVP in November 2016. Today’s news takes the redevelopment of the Cross Street Market seemingly back to square one.
Rendering courtesy of Caves Valley Partners and Brown Craig Turner
The $6.5 million renovation was to include outdoor seating on Cross St., likely eliminating six parking spaces; more natural light including new windows and glass garage doors facing Cross St.; updated utilities; a common seating area with approximately 100 seats; and facade improvements. CVP was aiming for 25 to 30 tenants within the market, with a mix of all the types of vendors that would make up a replacement for a grocery store, plus dine-in and carryout food tenants.
CVP was pursuing a market-wide liquor license for the project, which CVP said at public meetings was a deal breaker if it didn’t come to fruition. Arsh Mirmiran of CVP said last month he hoped to have approximately eight vendors selling alcohol, but did not want a “bar-like” atmosphere at the market. Two alcohol-based vendors he had in mind were a “Beers of the Chesapeake” tasting room and a wine tasting room.
There is a moratorium on new liquor licenses in the Federal Hill Business District where there are currently 40 licenses. Given this, a state bill was needed to obtain a new license.
A bill drafted by the Maryland General Assembly District 46 Representatives of Senator Bill Ferguson and Delegates Luke Clippinger, Robbyn Lewis and Brooke Lierman, titled Baltimore City – 46th District Alcoholic Beverages Act 2017, is what led to CVP walking away from the deal. The bill required a $50,000 per year fee for the liquor license unless CVP could obtain and extinguish an existing liquor license in Federal Hill. This fee was reduced to $20,000 per year if CVP obtained and extinguished one Federal Hill liquor license, and $10,000 if CVP obtained and extinguished two Federal Hill liquor licenses. Last call would be at 10pm on Sunday through Thursday and 1130pm on Fridays and Saturdays. Delegate Clippinger was present at the Cross Street Market Advisory Committee meetings and gathered input from area neighborhood groups and attendees.
CVP first saw this bill on Friday and was not asked for input before it was drafted, according to Mirmiran. He told SouthBMore.com that the “fees speak for themselves” and that this is “the deal the representatives felt the community wanted.” Mount Vernon Marketplace’s license in comparison has an annual fee of less than $3,000 per year. Horseshoe Casino Baltimore has an annual fee of $15,000 that allows 24-hour service of alcoholic drinks in its 335,000 sq. ft. facility.
CVP countered this bill with an absolute offer of $5,000 per year if it extinguished no other licenses, and no annual fee if it obtained and extinguished one license. After a counter offer from the 46 Delegation, Mirmiran decided to walk away. Mirmiran told SouthBMore.com its offer was above the market value for a license. He first told his partners about his decision to walk away and then informed BPMC. He said the decision is final.
Currently 43% of the market is covered by businesses that allow the consumption of alcohol. The new bill required that number to be at 35%. CVP was willing to agree to 30% of the market not including its 5,000-7,500 sq. ft. “sit-down restaurant.” The bill also proposed no liquor sales for the first two years, which CVP wasn’t willing to agree to.
CVP was hoping to purchase the two existing beer/wine licenses in the Cross Street Market used by Nick’s Inner Harbor Seafood and Big Jim’s Deli and sell them to other businesses in the neighborhood in hopes of seeing an upscale restaurant open. Mirmiran said these licenses have a value of approximately $60,000 each.
Mirmiran told SouthBMore.com CVP had existing tenant Pretzel Twist signed to a new deal at the Cross Street Market as well as a new BBQ vendor, chicken vendor, two Asian-concept vendors, a pie vendor, an ice cream vendor, a doughnut vendor, two breakfast vendors, a New York-style pizza vendor, and a local coffee vendor signed to letters of intent.
Mirmiran told SouthBMore.com that CVP might build another market elsewhere in the city and that its $275-million development Stadium Square, two blocks from Cross Street Market, is an “absolute possibility.”
“We were the only bidder on the market,” said Mirmiran. “We made an unsolicited offer to the City to redevelop the Cross Street Market and tried to get War Horse to join in with us. I’m not sure who would have a greater interest in completing this project in the heart of Federal Hill. Maybe someone else will try. We’d still love to see a redeveloped Cross Street Market.”
The plan had support as well as opposition, mainly regarding the future of the current tenants, from area residents. CVP was involved in a legal matter with Nick’s Inner Harbor Seafood, the only business with a long-term lease which has six and a half years remaining, after terminating its lease. Nick’s had received an outpouring of community support and this situation was expected to play out in the District Court of Maryland.
Many of the current merchants at the market were pursuing financial support from the City for a relocation or 8 to 10 month pause in business while the renovation took place. They are represented by attorney John C. Murphy.
A rally was held last Thursday with more than 200 people expressing their support of the 17 existing merchants at Cross Street Market. A petition titled “Help secure the future of the existing tenants at the Cross Street Market” had 730 supporters online, as of today, and there is a large list of signatures at the Cross Street Market.
Mirmiran said it was a culmination of everything that hindered the deal. “We genuinely hope that all of the support for the merchants does not wane and that the momentum leads to positive results for all involved,” said Mirmiran.
According to CVP’s plan, the building needs $2.5 million in utility work to get it up to code. Baltimore City was going to contribute $2 million for the these updates.
Councilman Eric Costello, who made the redevelopment of the Cross Street Market a priority in his first weeks in office in late 2014, released the following statement expressing his disappointment about today’s news:
I am very disappointed with the conclusion that Cross St Market will not be revitalized. For a variety of reasons, Caves Valley Partners (CVP) has made the difficult decision to not move forward with the project. Dating back to my time as a community president, this was one of the top issues our neighborhood fought for. After being sworn in to office, it became a top priority of mine and I have worked tirelessly ever since to help get this project across the finish line.
Public-private partnerships on municipal markets are extremely complex and challenging. Funding must be cobbled together from multiple public and private sources and margins are extremely thin. The fact that CVP was the only team to respond to the RFP demonstrates truly how challenging this effort was.
I would like to thank the members of the Cross St Market Advisory Committee for selflessly volunteering your time and effort along the way, all with the best interest of our collective neighborhoods at heart. The Baltimore Public Markets Corporation should be commended for shifting their paradigm and embracing the public-private partnership model. Lastly, thank you to CVP and Arsh Mirmiran for giving your best effort. Despite how risky and financially unattractive this deal was, your willingness to try this far exceeded what should have been expected.