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Rent dispute sparked Market House departures

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Published May 08, 2008
A county judge in March ordered the city to stop collecting rent from the Market House management company.
That order, however, didn't stop Market House Ventures, LLC from going after at least seven tenants who owe more than $87,000 in back rent.

And now that one owner of four Market House businesses has pulled his equipment from the historic market, ongoing legal wrangling surrounding the property could keep it half empty this summer.

"It's amazing," said Chip Miller, the owner of Waterside Pizza, American Grill, Gourmet Commissary and Sophisticated Sweets - all of which closed shop this week. "They want that building to go under."

Rich Cohen, vice president of Silver Spring-based Site Realty Group, the parent company of Market House Ventures, said they tried to work with the tenants but that they couldn't let them slide on their rent.

"It wouldn't be fair to those tenants who were still paying rent," said Mr. Cohen, explaining why MHV filed the complaints April 7 in the county's District Court in Annapolis. He noted some tenants were behind several months in their rent. "Some of these merchants were behind significantly ... (and) there was no end in sight."

He added that even without paying rent to the city, the market "still costs money to operate."

The rent dispute and tenant pullout is just the latest in a string of problems for the historic market.

In December, Market House Ventures, which signed a 10-year, $100,000-a-year lease with the city in 2005, filed a $6 million lawsuit against the city. The lawsuit accuses the city of not having the money to fix the building's flawed cooling system and of attempting to buy them out of their lease.

And in March, Circuit Court Judge Pamela North ruled the city had to stop collecting rent on the property while the lawsuit is pending. The city is appealing that order to the Court of Special Appeals, but has agreed not to collect rent until that appeal is settled.

Ray Weaver, a city spokesman, and Johnathan P. Kagen, a private attorney representing the city in the lawsuit, said they thought the city's agreement to not collect rent would maintain the status quo at the market while the appellate court reviewed the case. They realized, however, they were wrong when Mr. Miller closed up shop.

Unbeknownst to the city, Market House Ventures last month went after back rent from Mr. Miller's businesses and three other tenants, including Auntie Anne's Pretzels, Lee's Ice Cream and Vaccaro's Italian Pastry Shop. Some of Mr. Miller's businesses hadn't paid rent since November, while other stalls stopped paying in February.

District Court Judges Robert C. Wilcox and John P. McKenna sided with the managers April 14, ordering all of the businesses to pay.

"The city had no knowledge that MHV was seeking eviction against certain tenants. To the contrary, the city hoped and expected that its agreement not to collect rent pending the lawsuit would have been passed on by MHV to the benefit of the tenants," Mr. Weaver said in a prepared statement.

"That was really the arguments upon which they argued. That their tenants weren't paying them (so they shouldn't have to pay the city)," Mr. Kagen said. He acknowledged the order does not specify that the tenants don't have to pay.

Mr. Miller, who owes Market House Ventures at least $55,000 in back rent, said he is now trying to intervene in the $6 million lawsuit against the city to ask Judge North to convey to the tenants the same rent protection she gave Market House Ventures.

"We're filing a motion right now," he said, expecting it to take a year or two before Judge North would rule on such a motion. "If I get salvation, I will be back."

Mr. Miller said he moved out of the Market House to avoid being evicted.

He said he tried to negotiate an over-arching, 30-month payment plan to pay off his back rent and open a farmers market in the building, but Market House Ventures turned him down. Fearing Market House Ventures would try to seize his equipment, Mr. Miller decided to pack it all up and put it in storage instead.

"I decided to pull out before that happened," he said, explaining he doesn't plan to pay the back rent because he doesn't believe Market House Ventures upheld their end of the lease.

Mr. Miller's pullout leaves six of 12 stalls filled at the Market House. BankAnnapolis, The Fresh Stop, Auntie Anne's Pretzels, Vaccaro's Italian Pastry Shop, Galway Bay and Chesapeake Bay Crab Cakes and More remain open.

In October, What the Fudge and Fractured Prune pulled out of the market. Mr. Miller opened Sophisticated Sweets in the What the Fudge stall and planned to open a deli in the Fractured Prune stall.

Lee's Ice Cream, which also is in the process of leaving the Market House, remains closed.

Mr. Kagen said the city will not approve any more tenants until the appellate court weighs in on the approval process. He said that when Judge North restricted the city from collecting rent in March, she also ordered the city to give immediate permission to Mr. Miller to open three businesses in the Market House without producing "heat load analyses."

Mr. Kagen said she didn't have that authority. He said the city has a right to require such analyses - particularly in light of the recent questions surrounding the market's air conditioning system.

"The city wants to make sure it is done right," he said, explaining why the market will probably remain half empty this summer.

Mr. Weaver said the city has upgraded the temporary air conditioning units that sit outside the market. He said independent engineers say the units are strong enough to keep the market cool this summer and that the claims of inadequate air conditioning "lack merit."

Mr. Cohen said the city's refusal to replace the market's permanent air conditioning and commitment to bureaucracy is hurting their business.

He said local businessmen regularly call him asking to lease space at the market, but he's having to turn them away. He said he could fill the market with new tenants if the city would give permission.

"We believe we have the ability," he said.

Regardless of how many businesses are there, however, Mr. Cohen said they aren't going anywhere.

"The Market House will remain open," he said.

 

Reader comments: ( Post )
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1 month 27 days 8 hours ago
Moyer - You Need to Go
The city of Annapolis can't even run a small 12 unit building and they want to buy a golf course? Stop spending my money. Put all our tax money in a CD and leave office. Make sure you turn the lights out, electricity is expensive and yet again going up.
Matt Brown - Annapolis, MD

 

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