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The Eastern Market’s South Hall opened with a Mayoral ribbon cutting on June 26th. With the merchants moved from two year temporary home to the renovated South Hall, the Market is ready again to resume its place as the hub of Capitol Hill economic and social life. A number of questions remain relative to the Market’s success as it moves through this period of transition.
North Hall: A Gold Mine?
The potential gold mine in the newly restored Eastern Market may well be the enormously untapped capacity of its North Hall as a revenue producer. Not only is the North Hall required to be used to promote the arts and to be made available as a community meeting space, but it has unlimited promise as a revenue stream now that the Market has heat, AC and restrooms which it previously lacked.
The Reserve Officers Association, located near the Capitol, books over 400 events per year and charges a $2,500 rental fee for receptions; $1800 for breakfasts and luncheons for space half the North Hall’s 4000 sq. ft. The historic and elegant Sewell Belmont House, also nearby, is available for $5000 for political receptions, luncheons and dinners and hosts 8- 10 large tented weddings each spring on its outside grounds asking $4,000 for space that is again half the size of the North Hall. Hill restaurants a fraction of the North Hall’s square footage report large parties and holiday events with revenues in excess of $15,000 for a three hour event. The less expensive American Legion space with a capacity of 200 holds 40-50 events each year for $850 plus beverage revenues. The North Hall has the capacity of producing projected rental revenues in the range of $500,000 to $600,000 with a well managed and fleshed out schedule of booked events.
The refurbished North Hall holds a premium position in attracting bookings from the national political community, the Hill neighborhood and surrounding region and as a performance space, having size, historical charm and convenience.
Financial Future Of The New Market
The Eastern Market has struggled financially. The most recent publicly available projections based on the 2007-08 interim budget show a projected operating deficit of $77,000 with revenues of $365,000. Expenses do not include an unpaid $207,000 utility bill discovered when Pepco threatened to cut off electricity. Utility bills have regularly averaged $20,000 per month in the East Hall, which was purchased for $1.5 million by the District and whose porous membrane was unable to adequately preserve heat and AC. Utility costs are expected to fall dramatically with the Market’s state of the art heating and cooling system.
Expenses have been greater than revenues for two other principal reasons: the burden of a much criticized management contract fee ($225,000 annually ) that absorbed 50% of the Market’s budgeted expenses ; and, since OPM’s unified management team came on January 1, arts and craft vendor stall fees are projected at $250-275,000 annually and are now deposited into the Market’s operating account.
There is now a six month history of rentals under the unified management showing a 65 % increase in Market revenue projected to be $625,000 annually, positioning the Market to operate with a surplus. A semi-annual financial report by OPM has yet to be released to the public which may include additional operating expenses with the replacement of the previous management team’s facilities and security personnel.
A Market with a possible $1.2 million in revenue with future contributions from the untapped North Hall is considerably stronger financially than one with its 07-08 underperforming revenue stream of $365,000. It is a Market that could flourish financially and even build reserves.
Future Governance
Among positive developments is that the Market, owned and temporarily being managed by OPM, has hired a new and more responsive management team. The Eastern Market Community Advisory Committee (EMCAC), made up of community stakeholders and in existence for a decade, continues to function strictly as an advisory group.
According to Ellen Opper-Weiner, former chair of EMCAC and one of the principal authors of the Market legislation, the previous management “did as they pleased” and one of its representatives, Bruce Cook , told her in a meeting “We don’t care what you think or what OPM thinks or what EMCAC thinks. “ and managed accordingly. Opper-Weiner, who thinks it is time for EMCAC to “evolve,” supports a future board of directors even as she feels the current membership “needs to be re-pollinated with new membership,” EMCAC gives its advice to OPM and not management.
Accountability has historically not been a significant part of Eastern Market’s governance. Among the provisions of the Market legislation is an annual audit which was rarely conducted and often delivered years late. In September 2008, the DC Auditor issued a long overdue report (www. dcaudit. org, see Reports ), the last being 2004, that criticized not just the previous market management among its list of 31 critical findings, but included more than a few broadsides leveled at OPM for having “ineffectively managed” its own contracted management group. The Market, in a decade of supervision, also suffered from having four directors at OPM as well as constant turnover in the key liaison position that dealt with the Market.
With OPM holding a massive portfolio of 18.5 million square feet of owned properties as well as 3.5 million square feet of leased space (see report www.opm.dc.gov, See OPM News), its focus was too often not on the Market, contributing to a number of unaddressed maintenance and management problems, until the devastating April 2007 fire and the sense of urgency that came with rebuilding the Market. The 14,000 square foot Eastern Market is according to a source at OPM, “among the smallest properties in OPM’s portfolio even as it takes up the most time and energy.”
EMCAC, though not empowered with the authority of a board of directors, which is one governing model adopted by many successful public markets nationally, is positioned to exercise the scrutiny that an investment of this magnitude ($20 million) warrants. Other models have municipalities hiring and managing their markets through a city agency. The Eastern Market is a hybrid of these models lacking the authority of a board.
Public markets, currently finding a second life in American communities, can be operated for profit and as non profits. Two exceptionally successful public, non-profit, markets are Seattle’s sprawling Pike’s Place and Philadelphia’s Reading Market, which are guided by boards of directors and which produce revenues of $100 million and $3.5 million respectively. Each are required to be self sustaining as is the Eastern Market. Reading’s vendors produce taxable revenue of $35 to $40 million and hold a $1 million reserve. Management reports to these boards which meet monthly.
According to Paul Steinke, General Manager of Reading Market, its board: “hires and fires, makes final decisions on leasing and marketing, reviews fiscal management and operations such as the market’s cleanliness among its duties.”
Ward Six Council member Wells is satisfied with the new market management arrangements and governance, and describing a number of models, commented : “I think that what we had was not good. One way is to have the government hire a market manager as an employee. EMCAC has great influence with the government, but no direct legal relationship with the management. I am not of the mind that we get a new Market Manager today. That is not the way to go. I support the government in this role for the next year to see how it works. ”
Donna Scheeder, Chair of EMCAC, responding to how the Market should be governed offered this comment: “Market management needs the stable vision and strategic planning of a board of directors that is committed to preserving the historic character of the Market while embracing new customers and ways of doing business.
Community Meeting On 7th St Closure
Ward Six Council member Tommy Wells has called for a community meeting on July 7 at Tyler ES at 10th and G streets SE from 6:30 to 8:30 to discuss the weekend closure of 7th Street, a matter on which there is no broad agreement among community residents and businesses.
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