I call to order this meeting in the finance standing committee at 10 33 a.m.

Um before we jump right into the agenda.

I just want to thank so many of the people here, uh City Manager Buckland, a bunch of other folks for making sure we had a very smooth election yesterday.

And whoever reset the room, big thanks to you two.

I was in here yesterday and it was it was all set up for voting.

So thanks for the quick turnaround.

Mr.

Beavers, he was here.

Mr.

Beavers did it.

Wonderful.

Well, thank you, Mr.

Beavers.

Uh uh with that, uh roll call vote.

Uh Alder Woman Finlayson.

Present.

Alder Roman O'Neill is not present, and Alderman Huntley is present.

Uh is there a motion to approve the agenda?

Move approval of the agenda from the September third meeting.

Uh no, I mean the agenda, not oh, I'm sorry, I was approving the minutes.

Uh approval of the agenda is written.

And I'll second that.

All those in favor say aye.

Aye.

And then is there a motion to approve the minutes from the September third meeting?

I'll approve the minutes of the September third.

Second.

Or motion.

All those in favor say aye.

Aye.

Excellent.

All right.

On to our supplement first supplemental appropriation here.

Uh this is SA 726.

This is funding to rename our garage from Hillman to Mills Hillman.

Uh the does anyone come anybody want to come forward and speak on this?

I mean, it's pretty self-explanatory.

The council passes resolution.

We need money to actually do it.

Uh I I didn't support passing the resolution because I didn't want to spend the money, so I'm not going to support the supplemental appropriation.

But uh question to Mrs.

Bucklin or Ms.

Moran.

Uh is this amount sufficient to do the job?

Yeah, we have a we have a hard estimate.

Um this will cover it.

Okay.

Then I will make a motion uh to give this a favorable recommendation.

All right.

All those in favor say aye.

Aye.

All those opposed saying nay, nay.

Motion does not carry essay 726 has not received a favorable recommendation.

Um, Mr.

Chair, I would like it noted that there was um one vote of support.

Uh and as we have one member missing, I guess that's a tie vote and no one prevailed.

But I would like to note it for the record.

Thank you.

Um, moving on down the line.

Uh I am I'm excited about this.

This is hopefully something that produces money.

Uh R 3325 speed monitoring system finds is uh legislation I brought forward that puts our uh speed monitoring system finds in line with what the state allows.

Mainly it's making them more progressive.

So if you uh at the moment somebody who's driving 80 miles an hour in a 30 mile an hour zone is paying the same ticket as somebody who's driving 43 miles an hour.

So this would uh this would change that.

This would set those fines to be more progressive based on how much you go over the speed limit.

So uh anybody want to speak on it?

Anyone got questions?

May I ask McGuzz if she can speak to this?

Yes, Captain Amy Migeth with Annapolis Police Department and Administrative Services Commander.

Uh it's exactly as all Alderman said, it would bring us in line with the state maximums allowed for those different speeds.

We make no recommendation on the fine increase itself.

Technically, okay.

So the um we're going from 40 for first offense and 40 dollars for every additional offense.

And then we're increasing those amount based on the mileage that is their traveling above.

Faster than the speed limit.

So the first increment is still 40 miles and 40 dollars for the fine um for about three a range of three miles per hour of violation.

At the first violation, they're still going at least 12 miles over the speed limit just to receive the citation itself at all.

So between that 12 and 15 is that still that same 40, and then it goes up from there.

And uh the chairman said in your uh these are the numbers that the state uses in their speed camera.

So well, they're the maximum maximum allowed fines by the state.

So jurisdictions could set lower fines, but they can't set higher fines than these maximum amounts.

So these are the maximum amounts will allow.

Um Mr.

Chair, may I ask why we just automatically went to the maximum with there being uh a range prior to getting to that because I think it's important to keep folks safe, and I I think this is a good way to do it, but that uh I won't say that it's not that it is impossible for us to have some more thought on.

I would, and and safety is always the top priority, so please don't misunderstand.

Um but I'm thinking about our residents also.

And um I don't like anything that appears to be unduy harsh for our residents, all residents.

So when we look back at the past year, about 17 to 20 percent of citations would fall more than the 40 range.

So it's not a significant um amount, but it's still you know, about a fifth.

I'm sorry, I'm not clear.

Uh the 40 dollar amount.

Right.

So 17 to 20 percent of the citations that people receive last year would have been for a speed that would be above that 40 amount.

So 80 percent would be still 40 dollars, basically.

Okay.

Um if we looked at last year's numbers.

So do we know how many uh fall into those other ranges?

Well, it's 17 to 20.

We didn't break it out by each speed level, but it would be 17 to 20 that are outside of the 40 dollar, be above that.

Okay, so the 16 to 19, we bump up to 70.

But 20 to 29 bumps up to 12.

And then 30 to 39, 230, 230 dollars, and 40 or more, 425.

Um, I would like to see how many people actually fall into those ranges.

I understand moving the 16 to 19, if that's where the the bulk of our um infractions fall.

I want to be clear that moving the others will have some benefit other than us just making more money.

Can we get that information?

Not today.

Pardon me, not today.

No, I yeah, I I know you don't have a magician's hat next to you, so uh sometimes it seems like you might uh but I I would like to see this.

I cannot give this a favorable recommendation without that addition.

Uh I think that somebody tells me it's online.

Is it uh is it in the staff report, maybe I don't know if finance got a better breakdown than I got.

Uh yes.

Yeah, yeah, it's in the fiscal impact note here.

Okay, I have it.

Okay.

I have it.

Thank you.

Yeah, we had requested a specific number from the from the company, and they are very responsive when we ask for data.

I think finance may have also asked them.

Okay, what I'm looking for at this chart is helpful because it tells us how much money we're gonna raise, but it still doesn't tell me how many infractions there are that would require such a significant increase.

I think it's that total the total what the total incidence column here is saying how many were in each one of those ranges.

So we had 10,000 that were people speeding by 20 to 20,370.

Okay, I want us to look at that because I I think the the data that we got and the data that Captain Miguez got sounds a little bit different.

I want to I want to go back and scrub that and make sure we're looking at the same thing.

And have the same understanding about what in the information was that we were given.

Right.

I don't think I that I got the information that finance got, and I can't remember if I shared exactly what they sent me.

Well, yeah, I'd like to go back to postponing this if you want.

I would be very comfortable with that.

And the uh city manager um is gonna look at.

Um, but this chart does bring bears some additional questions, so but I'll wait until we get the rest of the the data for yeah.

My my other question with this chart, and it could be nothing, but it's seems very odd to me that we have so many more incidents in the 20 to 29 mile per hour range than in all of the other ones combined.

But it's not impossible or anything, it's just surprising.

Um yeah, okay, let's let's postpone it.

I'm sorry, did you have to do that?

I just wanted to add that the data that we received was right from our operator, our red speed operator.

So we can that's where I got my data.

Okay.

We can we can look we have sure from 22 to 24 and this is the 24 data.

But we can look at it together.

Sure.

Could also be maybe one of you's talking about maybe you're talking about fiscal year and you're talking about calendar year, maybe.

I don't know.

It doesn't matter.

I'll have to look at it.

We're gonna postpone it.

We're gonna post the code.

That's fine.

We should be clear about what time frame these data the data refers to.

Is it this year 2025?

Is it 2024 collectively exactly what did these numbers represent?

Yeah, and I should also add that these are all current locations.

Right for all places that we have actual cameras at at the moment.

Yeah, well, I'll ask the other question so we can be prepared the next time.

Do we have a breakdown by location?

I think that would be helpful also.

Um Captain, are there efforts made to slow speed down in these particular areas that are high incident area?

I mean, we can just find people to know when, or we can do some proactive things that might reduce speed.

Well, that is really public works as purview, traffic calming, public works.

But if I can answer so they do a number of projects, I know they have a project along the forest drive corridor to improve safety for the whole corridor, which would involve bringing speed down.

We do have two cameras out of our five on Forest Drive.

And you can see over the years the speed does go down, whether that's due to the camera or the addition of lights.

You know, we know we there's some new communities where lights have been added on forest, but they're pretty far away from the middle school, which is where those cameras are centered.

But I I think because I want to jump in on this, I think it's actually really important to note the money the uh according to the enabling legislation we passed earlier this year, the funds from speed cameras have to go to reducing speed.

They have to go to pedestrian safety, traffic safety that is it is earmarked for that.

So um then that raises another question.

Yeah, and that is what efforts have been made to use those funds, the existing funds to uh make those corridors safe.

As of right now, the amount that we collect on an annual basis goes towards the um salary piece of monitoring and and ticketing the I'm not sure what exactly what that involves, but it goes towards the um salaries off.

So it's a requirement of the state law that the funds raised go first to offset the cost of the program, which includes the staff that until October 1st have to be police officers who check those tickets.

The money was never received into um the police accounts, but was used by finance to pay those costs in our public safety accounts, which is um after those costs are uh recouped, then any extra money per state law is to go towards public safety and highway safety specifically.

So I do have concerns with the current city code needing to be changed because ours also says that can be used for public transit.

I don't know that that would fall into highway safety.

Um it goes into the sustainable mobility fund, anything extra per city code.

So if we earn more money, that's where it will go.

And highway safety refers to state highway.

So highway can be any road that is traveled on by the public in general.

So there are different definitions of highway controlled access highway is the most recognizable that most people use it as, but it can also be just any roadway that the public in general travels on.

Looks like there's a lot of moving pieces here.

Yes.

And we don't know who's getting what and where it's going really.

Well, certainly it hasn't been like a huge amount of revenue.

I mean, it's still helpful to offset costs of us running the program, but it hasn't been a huge amount of revenue.

If with the proposed camera increases to different locations, plus the proposed increase to the fines, then that maybe become a concern, making sure that the money is going to where it is meant to go per state law.

And and just I pulled up the city code while we're at it.

Our words are solely for the cost of implementing and administering pedestrian safety, road redesign, and public training.

So that feels to me like we're using them to make our road safer.

Well, and I'm hearing, however, what state is requiring that.

And I'm not sure they are one in the same.

So earlier in that code piece, it does speak to the state requirement.

Um, where that it says that the um costs have to be recouped for the program first.

I think there needs to be some coordination between state law and our city code and things that we've had.

So and I would hope that going forward that would be on the agenda of things to um codify as we're passing legislation.

Yeah, it was in my plan when I know this is we're ending the we're getting to the end of uh this legislative piece with this council.

My plan was then to work on making sure that it aligned with the state law.

Let's hope you'll still do that.

I think uh yeah, I I um uh I think all of our goal here is to say we want safer streets, and we want these funds to be directed towards safer streets so we can make sure that city code, state code, everybody's running in the same direction towards that goal.

But for now, in the interest of getting all that data in a digestible format, let's postpone this until our next meeting.

And Captain Miguel, thanks for being here.

I I always say to drag you out for something that we don't end up uh or that we end up having to bring you back for.

But no, it's all good.

Um is our motion to postpone.

I will make a motion to postpone our 3325.

And thank you, uh, Captain McKez.

It's important that we have all of the information in order to make sound decision.

Yes, ma'am.

Uh so I see Ms.

Moran would like I just wanted to add for the record, we act we do know where these funds go, and we do know how they're used, and nothing has been used outside of the cost of the program, just for clarification.

So does that mean the police department knows?

I mean, it's funds that's supposed to come back to them, right?

No, it it's general fund revenue, but the offset is the police cost for that program.

Who's responsible for the program?

The safety program that's supposed to accommodate these um these fines, the the system.

Who's responsible who's to do that?

I think it's APD.

Correct me if I'm wrong.

Yes, you our officers had to approve the citations and deal with um any disputes about the tickets and things like that.

And then if there's revenue, they APD is responsible for creating the safety program.

That's how I was reading.

It doesn't have to per state law, it just says public safety and highway safety.

It used to say pedestrian safety, now it says highway safety.

So who does it?

So who does it that typically varies by jurisdiction?

Um talking about in innapolis.

So yeah, yeah, yeah.

Um here, given and sort of the here the amount that has been collected, um primarily goes to the cost of the program itself, and particularly um with the expansion.

But with both this fine increase and an increase in the number of cameras, that amount will be more.

We do keep track of how much that is so that we know.

Um, but there hasn't been a lot of decision points necessarily to make about it, given what's there currently.

I think part of the point, and this is part of what Captain Miguez was was saying was that in the future there probably will be more decisions and more discussion to be had.

So we have the sergeant position that was added, which will be funded from the revenue from the citations, and that sergeant is in charge of traffic safety, and they will be responsible for administering and managing the overall speed camera, red light camera, whatever else kind of enforcement cameras that become legal in the future.

Um, and so their salary and benefits can be paid to recoup uh that cost of having that extra position.

And then October 1st, probably our camera monitors who are not sworn, but have uh, I believe all three that we currently have were former police officers, they will be the ones taught to review the citations in the future as part of their duties.

They will be the ones taught to review the citations in the future as part of their duties.

They have experience testifying.

This is what happens sometimes with the citations.

They have to go to court uh occasionally.

Um, but they'd be qualified to do that that job.

And so part of their salary might also be offset based on the amount of citations they're processing.

And then the extra would go to the sustainable mobility fund for those traffic safety projects.

Okay.

As long as there's communicate between finance and the department.

I I'm good with it.

I trust you to make the right decisions.

You know, with the code says you know what state law says.

Um that's my point exactly.

So, Mr.

Chair, I will make the motion that we postpone action on uh R 3325.

Until the next finance committee meeting.

Until the next finance committee.

Well, let me ask and you guys gathered the data that we need by the next finance.

Oh, definitely.

Okay.

Then perfect.

Thank you.

All right.

Second, uh all those in favor of postponing R 3325 to the next finance committee meeting.

Say I thank you for being here, Captain.

No problem.

Director Vogel, my friend, how are you doing?

We're here for R 3625.

Making sidewalks safer.

Always happy to talk about sidewalks.

And snow.

And snow.

Yeah.

Well, I don't know that I'd say I'm always happy to talk about snow.

I'm always happy to talk about sidewalks.

Uh so uh this these fees come out of the legislation that we passed earlier this year that said um it gave the option for public works to clear sidewalks.

Uh and I like to say this is sort of the option of last resort.

We we ideally want what code says you got to clean your own sidewalks, and hopefully, if you're not able to, a neighbor will take care of it for you.

If that's not a possibility, there's an option hiring somebody, but in the case in which our sidewalks are still not safe, we want the option of public works being able to go and clear them.

And of course, if the city's going to have to pay people to clear them, we need to recoup those funds somehow.

So that's what these fees are for.

Um, could either of you speak to how you determined what these fees should be.

Sure.

We'll we'll start with introductions.

I'm Burr Vogel, uh, director of public works.

Betsy McKeown, Bureau Chief of Engineering and Construction and Public Works.

Thank you.

So the question is uh hopefully we can agree that putting some kind of fee on this is necessary.

The question is why these fees?

How did you guys come up with how much these uh it will cost the city for each one of these tiers?

I'll I'll just start with kind of a general comment.

Um no, there's really no perfect solution here.

Um so we we tried to find something that um balances a few factors, fairness, um, you know, kind of being cost neutral to the city that we'd be able to recoup uh most, if not all of our costs, uh, disincentivize uh particularly businesses or large, you know, residential property owners from just relying on the city uh rather than taking care of the things themselves.

And then last but not least, it's got to be administratively feasible.

You know, maybe the most fair thing, the perfect solution would be to charge people per feet.

Um, but if I said that your side, you know, I you just got fined for 47 feet of sidewalk, you might argue with me that you know you only have 45 feet, um, plus just even coming up with that 47 foot number would would be a challenge.

So what we've uh proposed here as a structure is is something that that kind of puts um property owners in into buckets, and we can then uh once we find somebody that we need to recover these uh costs from, we we can we can do things that way.

Um Betsy came up with all of the details, so I'll I'll turn the mic over to her.

Yes, thank you, Burr.

Um, so what I did was I got the I received the sidewalk length data from our GIS folks.

Um so I was able to get per property the sidewalk length from them.

And um, and all honesty, I used uh AI to help me with this.

AI I love to hear that.

Thank you.

Um so AI took the data and then lumped it into four distinct groups with equal numbers of properties and equal distribution of properties in those four groups.

Um I then took I fed it information.

I I gave it, I assume six inches of snow.

I gave it labor rates that I had access to.

Now these are contract labor rates, so that is an overestimation, but I think that's the worst case scenario for this.

I yeah, I think it's good that we actually consider contract rates because we likely our staff will be busy.

They're always busy during snowstorms.

So that's good.

I'd rather have that.

Correct.

I agree.

Um, now where I came up against a dilemma was with those really long sidewalks.

So that's why I wanted to add that fifth tier, because I do I don't want to make this advantageous for those really large properties to just set because that could be extremely financially burdensome on the city.

So that's essentially how I did the analysis.

Um, I did round.

Um, I also wanted to make sure I included travel time and administrative piece associated.

So that's how I came up with these numbers.

Do you have any specific questions?

No, I'm just I I'm gonna to my horn, but mostly give a big shout out to you guys.

I I'm so proud of how this came together.

I think it is the way that legislating should work to see that we we didn't just pass something and assume it'll work.

We like we have this dialogue between the department doing some really awesome research, crunching the numbers, thinking about what's actually feasible.

It's it's just like I I heard this analogy not too long ago about legislating as gardening, and your job is not to plant seeds but to cultivate uh as a legislator, and this feels like that.

So huge congratulations to you, Betsy.

To you, you director Vogo on making this work in a way that's truly feasible, not just like a mandate on on from on high.

And uh uh I so like I said, it's a little bit of tune of my own horn, but really I'm I'm very grateful for the work you guys did on this.

Thank you.

Thank you.

Likewise, thank you.

Go ahead.

Uh Ms.

McEwen, did you how many cases and just a ballpark have we had where we had to hire a contractor to go out and clear sidewalk?

That's really interesting.

You asked that question because I was thinking about that this morning.

Um, my understanding now I have worked for the city for eight and a half years.

We never had to do anything until last year in my tenure year.

Um, so it last year was the first year in my time here.

So I don't know what happened before then.

Well, but last year it was once we hired a contractor to clear uh a number of properties along Forest Drive, about five days after the the big January snowfall.

The other properties where the city uh had uh sidewalks where the city had to do clearing, we did that with our own crews.

You did that with what?

Our own crews, a mix of wreck and parks uh and public works staff.

So my and and part of the forest drive is my ward.

And so, and I know I called because it's a path to school.

Right.

And um that's why I'm asking.

And I thought uh Miss Johnson sent Wrex and Park staff out to do part of Newtown.

I don't know how far down Forest Drive uh they went.

But do we know?

And I know we use the GIS system.

Can we actually track the owners of some of these properties?

Absolutely.

Um, I know there's a corner on by not by water, new town and forest that the owner has been rather I'll say elusive um, but if we're able through the you know GIS system, um that's awesome.

Yeah, yes, for the most part, we are able to identify owners that that piece that you just uh mentioned, that one was a difficult one.

And I think Byrne and I would agree that if we can't figure it out, we'll just clear it.

Correct.

Um in those situations.

And I think that's what we did there.

Forest drive is another uh problem.

Well, how much does the county weigh in?

I mean, forest drive is a county road.

Do they have any oversight for sidewalks at all?

Yes, it's the county's responsibility.

But but but to they they don't they they do not have uh they just have not made this kind of a thing a priority.

So it's not just Forest Drive, it's throughout the county.

That's I just wanted to clarify what you said.

They have responsibility, but they don't tend to exercise it.

That's correct.

Correct, yeah.

They they have a um a small amount, it's it's for a nominal fee, maybe 20 or 25 dollars uh that they're allowed to cite people, and they just simply don't really implement that as a program throughout the county, not just Forest Drive.

So do we include them in this uh fines?

Uh or these actually.

They don't really own much of the the adjacent property, right?

So we're talking about enforcing either county code or city code.

It's the enforcement piece that the county doesn't really do.

County public works does not do.

And so the schools, for instance, they do own a lot uh along Forest Drive and a couple of other roads.

Uh the school does does do their sidewalk or did this past time up after a little after a little while.

I I recall several years ago, there was an effort to eliminate the bus service from the new town corridor down to Annapples Middle.

And so I called superintendent of schools, uh the public works director for the county, the county executive, the mayor, our public works director at the time, and several engineers.

Ms.

McEwen, you might have been a part of that group, and all of us came together, and we walked from New Town Drive down to Annapolis Middle, so that everyone could see the danger in taking away the bus service for the kids and having everyone experience the path that our students would have to walk.

And of course, and the superintendent of schools, how do I forget him?

Because he's the one that was going to eliminate the bus service.

Um, so they decided to not eliminate the bus service.

But part of their concern was property owners who weren't maintaining their properties, and so there's overgrowth on the sidewalk.

And the other big concern was, and I share it is the speed on Forest Drive.

You know, that cars just whip by these kids walking down.

So anyway, all that to say, the county and the board of ed kind of have a role.

You know, the board of ed doesn't own any of these properties other than the middle school.

But do we find the county when they don't maintain their portion of this?

Or is there a discussion about it?

I do think that's a good idea.

So there's I'm gonna repeat something.

Go ahead.

I want to I want to broaden it the your question to if other government entities, the county or the state, uh not in the county, but to the extent that they own property in the city.

Are we able to issue these fines on them?

Uh so let's let's take a county office building on West Street.

Right.

Uh we've never encountered a situation where they don't.

They all have good contractors or their own staff, they just take care of it.

Yeah.

But and so the county, other than the board of ed doesn't own any property on Forest Drive.

It is the adjacent property owner who is responsible in uh in all cases, it is either uh private property or the school district who owns the adjacent property on Forest Drive.

And and I will um note that you know the council had reached out to the county council about some of these concerns.

County has actually gone ahead and uh we got notice yesterday.

Um the the list was uh email distribution list was was hidden.

But I I if you have it, you did get it.

We did get it.

Um yeah, that they have introduced some legislation to strengthen their own rules around snow and ice removal.

The other thing that I'll note is that the county has um recently um started that safe roots to school program, Eric Glashinski from the city is participating in that.

And part of my request to him um was to have some coordination with DPW so that there's some coordination between that safe roots to school program and what do we check first if we have a snow event um so that we um we sort of start there in some sense.

So it sounds like there is some communication and it's a beginning.

Um my understanding is if an adjacent property is within the city, we would have the ability to cite them, even if they're adjacent to a county road.

Now, I the dilemma along Forest Drive is the county clears snow along five lanes of roadway, and so that snow gets dumped onto the sidewalk, and it's really challenging for those adjacent homeowners to clear that snow.

So I think we're gonna probably have to have a conversation about what we're gonna do in those scenarios.

Well, and I would hope that a conversation with the county, because they need to know the impact of you know their snow removal program.

We want them to clear Forest Drive, absolutely, but can we afford to have them dump all the snow on our sidewalks?

Um, because that's a danger for our residents.

So just to make them aware, and maybe they can kind of I don't know, curb their activity.

I don't know.

But it needs to be a discussion about you make a wonderful point there.

Um the sidewalk situation, you know, for pedestrians and bikes along Forest Drive needs improvement.

That is a you know, that's a big challenge, but there are areas where it's an easy opportunity.

The sidewalks are just simply too close to the road and too narrow.

Um, and anapolis middle school is a perfect example of that.

That could easily be moved three, four or five feet away from the road and made wider at currently maybe two and a half, three feet wide.

Um so I believe, you know, working with the county.

I know um our planning department uh really advocates strongly for this, is that there's a lot of um improvements for the pedestrian infrastructure on the Forest Drive corridor that need to happen.

Thank you.

And then one more piece I wanted to add about the safe route to schools when we are going through and inspecting after a snow event, we will be focusing on those routes to schools and commercial areas in the downtown area where pedestrian use is highest and most needed.

Thank you.

So, Mr.

Chair, uh you preferred a motion to postpone.

Is that what where we are?

I don't recall.

No, I I feel perfectly comfortable with uh with passing this today with making a favorable recommendation.

I think we've I feel like you have coordinated with the county, and I think out of all of these, what I'm hearing is that the coordination with the county, it's not even really a big concern here.

It's mostly about private owners of property.

Uh, but to the extent that we do need to coordinate with the county, it's also done.

So I I'd be ready for a favorable recommendation.

Well, uh, I'm comfortable with Ms.

McEwen's um explanation of how she came to this and you know, I I know we don't want this to be, we want this to be a deterrent.

We don't want it to be something accessible for residents, so they'll say, Well, I'm not gonna clean the sidewalks because city's only gonna charge me 200.

Vendor will charge me 400, so I'm gonna let the city fine and they'll clear it.

So I understand that dilemma.

Um, so if this is gonna address that, then I'm I'm so I will make a motion that we give a favorable to R 363.

Thank you.

I will second that.

All those in favorable of a in favor of a favorable recommendation on R 3625, please say aye.

Aye.

All those opposed nobody's opposed.

All right, motion carries.

Thank you guys.

Really again, just big congratulations on this one.

I know it's not the biggest thing in the world, but I love the way we did it.

All right, next up we got R 3925, which is our itinerant merchant sales in the historic district for a flea market.

I'm not seeing the uh person who's applying.

I don't suppose we can get Felicia Nolan to come speak on this.

Um yeah, can we put a pin on in this?

And could you see if Felicia could come over to talk about it?

Uh or maybe Hillary if not if Felicia's not available.

Is this legislation just for one person?

It's just, yeah, because any time there are itinerant merchants in the historic district, they need a uh a resolution.

This is someone who approaches the city about doing a flea market at market space.

It's for one uh I mean it's a flea market, so there are multiple vendors, but it's one organizer and for one day.

Uh so I say let's let's just push it down the agenda until Felicia can come to the ball.

Great.

Okay.

Um then we're just gonna move on to 032 25 and oh are we out of order a little bit.

Oh 3225 and 03625, which are Lisa City property for the spring and fall boat shows from 2031 to 2036.

Um these are not in order.

I know you just said so.

We're gonna do 032 and 036 together.

Yeah, I don't see any reason not to.

Those are I I thought I had asked that they be grouped together, but either I didn't or the agenda just got a little messed up.

But I think it's for the two boat shows, so it makes sense to have I think we heard um discussion at the council.

I think it was the council.

Right.

Um, I'm comfortable with approving both 032 and 036.

Okay, let's let's just I mean, these are big leases.

I'd like to get them walked through by our director of central services and uh without just like jumping right into approval.

But so Mr.

Florida, are you the appropriate person to come speak on this?

So I I mean, I have looked through these leases.

We've heard from Miss Ewanson uh and others about why they need to be uh why they need to come forward now and I've looked at what's in them.

But could you kind of walk us through some of the major pieces in these and any potential decision points for the council?

Absolutely.

Matt Flair, director of central services um on leases.

I tend to defer to my partner in crime in the office of law, Ashley Leonard, who is familiar with the nuances of those lease terms.

Um, but happy to answer any questions that you may have.

You were working on elections.

You must have been up late last night, right?

Uh, they well, they released me to go home at five.

I was just on call from five.

So whenever.

I hope you got a little more sleep than I did.

Yeah, yes, probably.

Um, so Ashley Leonard, Assistant City Attorney.

Um the boat show leases are I would say substantially similar to the past boat show leases um in terms of um how long they are, which is sort of an initial, you know, an initial term and then the ability to extend um totaling, I think between 2031 up to um, I think it can go in theory through 2040.

Yeah.

Um the same sort of rent setup, which is uh a percentage, either a minimum payment that is slowly escalated up every year, um, which we don't have an exact number in here because we're gonna have to keep our finance office is gonna have to keep escalating it every year.

Although we did include language that going forward, we're gonna document each year what that escalation is, so we can all sort of keep track of that.

Um they haven't paid the minimum payment, I don't believe in a while.

They usually pay the percentage of their gross revenue.

Um, they have reporting requirements for you after each show to let you know um what went on.

We have the same sort of um set up inspections and approvals.

We have addressed a little bit more clearly how dates will be shifted related to weather or other issues.

Um but otherwise it's it's about the same.

They're about the same as we've been doing for the past five, six years, how I forget when the initial ones were.

And can you talk a little bit about how we have these adjusted for city doc uh for the city doc renovation?

Um, so we do have language in there that they have to work with us to adjust.

We have rights to adjust the premises, of course, depending on how much we adjust it.

We also have to adjust the rent to be fair.

Um, we also have language in there that says we're gonna work towards post-construction when it's all settled.

We can update um the exhibits for the premises to reflect the new construction.

Um since we're doing these early, we had to put a little bit of place language, placeholder language in there just so that as we get through it, we will adjust um how things will be set up based on what the city decides as its final plan for City Doc.

Um, since we're gonna be the ones driving that design, um, we have to give a little bit of flexibility at the end of the day to allow them to adjust their premises, but I can't see them expanding, although um they they're here and they can speak that I can't see them expanding much beyond what their current footprint is for either of them.

My next question is you want to be in Ms.

Ewenson.

So if you want to come up and uh maybe weigh in on that first yeah, you didn't sorry.

Yeah, uh so I just wanted to kind of get your perspective on what we just heard about from Ms.

Leonard on the uh city doc renovation.

On the city doc renovation.

Yeah, on I mean, you were saying that it might require these guys to to make some changes, and and so I wanted to kind of hear ultimately that is I mean, if the city is driving the underlying need for the changes, what those changes would look like are coming from you guys.

So I was hoping you could speak to what, if anything, that might look like.

Absolutely.

I'm Mary Ewenson, Annapolis Boat Shows.

Our offices are located at 110 Compromise Street.

I'm actually a resident of the county.

Um that's okay, we won't hold it against you.

Um right now, City Doc is sort of in the middle of the project.

Some of the changes that are happening are gonna be terrific for the boat shows.

The flood um mitigation is super important because we have had to make payments to exhibitors and have had insurance claims because of flooding during the shows.

Actually starting with our current lease.

And those will carry through in this new lease.

And the important part there was to allow for a little bit of growth in our premises to account for the changes in elevation in the new city dock design.

If the design goes through, I know there's a ton of ifs right now, and that's why, as Ashley said, there's some, hey, when we get to that point to use very strict legal language.

When we get to that point, we'll figure it out.

But really, we've we've got a 55 year relationship between the boat shows and the cities, city.

And despite the fact that Ashley and I were not involved 55 years ago, we're continuing that really good working relationship.

So what we're looking at is if we do have these changes in elevations with ramps and the elevated park, it changes how the move in and move out work because there will be limited ingress and egress to Susan Campbell Park, which makes the move in and move out time just a little bit longer.

Right.

And so we've worked with Burr, with Matt, with Ashley to make those accommodations and also to give some just some small changes to the X to the perimeter of the space.

That said, any time we have not needed the extra time or have not needed the extra space, we've given it back to the city as quickly as we can.

For example, in this upcoming Power Boat show, we usually use all the mornings at St.

Mary's Cove for a brokerage cove action activity.

And um right now, new boats aren't selling very fast, but brokerage boats are selling so fast that we don't have critical mass to offer that brokerage cove.

So we made the difficult decision two days ago not to use those moorings.

And immediately after doing that, we reached out to Tyler and Jacob at the Harbor Master to let them know they are free to lease those.

So it's been our experience that we have a very good give and take here.

And um Ashley worked with us to kind to just work it into the legal document so that as the city dock construction happens, we can adjust as we go along.

But the the important part to us about the renewal now is that we're investing in new drawings repeatedly.

We are taking it on the chin from our exhibitors about, you know, I don't want to move my booth.

And so you know, we're in it for the long haul.

So are exhibitors, so is the city, and this gives us the opportunity to invest in the relationships and the resources and the infrastructure to adjust as we go through these stages.

Um we're really thankful to the city for putting a brakes on the construction for this couple of weeks so we can do fall shows.

We know that's a big heavy lift for the city and for Whiting Turner.

Um, but it was the only way we could have the shows and provide the economic impact that we do.

Got it.

Um I I do have more questions, but I realized I should have let my colleagues start.

So auto room for the lesson, floor is yours.

Thank you, Mr.

Chair.

Um very basic question for both you and Ms.

Leonard.

Um what obstacles have you experienced in the past as far as um the relationship is concerned?

Um, you know, I'm I'm comfortable as long as there's collaboration between us and boat shows.

And you guys are the experts, whether it's boat show or whether it's legal.

So I rely on your uh expertise to tell me what's lacking uh in the agreement or in Miss Mary, I can't go asleep.

Um you shared with us the reason for the length of the contract, you know, which was um significant because we've gotten a lot of questions about that, but you dispelled any concerns about that.

And Mr.

Leonard, you too spoke to the length of the contract and why it's important.

So my question is back to it.

Were there any particular obstacles from past years that needed to be addressed in this new contract because it's a very lengthy one?

You want me to go?

I mean, you can throw me under the bus if you want to.

Mary's very difficult to deal with.

I've been with the city about 12 years, including changeover in ownership for the boat shows.

And during all of that time, we've never been able to not reach some sort of resolution in a working relationship, even with various different parties.

The parties have all changed out.

Um we did try to to do some overhauls in this agreement.

First, I restructured it um to make it a little bit more, I know it's still very lengthy, but from a legal perspective, more readable.

Um, but we balked up in particular article two, which is change in show dates and times to address when we have to deal with um moving dates around a little bit, adjusting move in and a move out dates.

We um we balked up a little bit of what was it, section one point five, which is revisions to the premises, decide if they need to decrease areas or if we need to um do that.

And then we also in particular balked up article number 11, which is the impossibility of performance, but it also includes things, which is like a force majeure hurricane, but it we also included language about future city construction, changings and parking management.

So I think those were those were the areas when I saw it that we needed to more clearly address.

And the other thing we did is we added more exhibits to more clearly show where each of the multiple lease spaces are.

Um we've always had it in words and we've always had kind of exhibits, but this time we tried to to really make sure we had exhibits for each of the different parcels um that they're looking at so everybody could be on the same page.

And we allowed for those to be updated as needed, so you can just pull out one sheet and put the a new sheet in with and the same thing with the dates without having to redo the whole lease.

You could just ship the exhibits as needed.

So that's my perspective.

Yeah, and when we first started working through this for us, as Ashley said she reordered everything, which made so much more sense.

I mean, uh our attorney was like, oh, thank goodness, because you know, previously reading the lease was flipping back and forth, back and forth.

But Ashley also had maintained um anytime something had gotten a little bit scratchy in, you know, during the move in or the move out, or I mean, we deal with a lot of different departments in the city, and Ashley had a really good list of like potential places where we gotten crosswise.

And by crosswise, I don't mean like screaming and yelling, just like, hey, what are we supposed to do here?

So we we did address most of those things.

What was kind of interesting to me through the process is many of the things that Ashley sorted out in the lease, we didn't even realize weren't in the lease because we had sorted them out, you know, directly with Beth and Tyler at the Harbor Master or directly with Burr and Matt with the DPW or you know, back with David.

So there were a lot of things that were sort of happening kind of automatically because we had worked with each other so much.

Um, you know, and as Vicky knows, we had one of the leases had been rewritten, and we by force of habit, the city and we did it the way the old lease had happened, which is why we're really glad Matt Flinner is here to be like, hey, remember we changed that.

But so I think a lot of this lease um, as Ashley said it's very similar to previously.

You can look at the same economic impact and financial and all of that, but she memorialized a lot of things that had already happening that we had already figured out some sort of the like sticking points.

Okay, well, thank you to all of you, Mr.

Flynn.

I didn't mean to leave you out.

I was just focusing on those two.

Thanks for heavy lifting.

But I I am very comfortable with uh with the lease.

And after the discussion we heard the other night, uh it's been codified.

So uh, Mr.

Chair, I will make a I have a couple more questions.

Yeah, we can still have discussion if I make a motion.

But you go ahead if you want to ask the questions prior to.

So I don't know that I think this is completely founded, but a question that I get asked by the public is why are we doing this now?

Why not let it wait six months?

Anyone want to jump in and answer that?

I can tell you from our perspective.

Yeah, that'd be great, Mary.

We actually started asking for it two years ago.

Um, which I know sounds funny when there's a 10-year lease and why when you're three and a half, four years into a lease, would you then say, we we need to do this again?

And um, the reason is that any time we need to finance something or make a decision about a very large purchase.

We are thinking about, you know, uh a five-year, 10-year, 20-year investment.

And if it's something that requires us to go to the bank, the very first thing they say is we will not finance you beyond the terms of your lease.

And so at this point, we have five years left, you know, about to be four years on this lease.

If I were to go to the bank and say, I need to spend 100,000 on new floating docs, they'd say, Great, we need you to pay that off in less than the four and a half years left on this lease.

So by like I envision hopefully it will not be me in 10 years, but somebody will be back here again saying when we get down to that five-year mark, we're getting too short again because we have to plan in ahead.

Like you wouldn't put a 30-year roof on a house that you're only gonna be in for four more years.

And that's some of our investments are that long.

And I mean, I think we're gonna have a similar conversation when we get to the market house lease, which I don't want to jump into right now.

But um I wonder, Mr.

Flinner, if you think is there a more systematic way we should be going about leases such that uh to address this sort of general problem of you gotta have a lease to be able to get a loan, and yet the council wants to have control.

We don't want to be seeding something too far into the future.

How do we balance those two competing priorities?

Is there a way we can do it more systematically?

Great question.

Thank you.

Um to be honest, without Ashley Leonard's help, uh our real estate would would would be a disarray, in my opinion.

Um, and being new to the city, uh, I've relied on her and the office of all heavily to help get all of these projects across the finish line.

And I know she's been working very, very hard on all of our leases up for renewal right now.

So my observation, what I've been very open about is I really think, and something I'll be asking all of you to consider in December or next budget cycle.

So I think the city would really benefit from a real estate team or a real estate individual, where one point of contact with a background in commercial real estate that can help oversee all of our cities, leases, uh lessors, lessees, rent payments.

I think a lot of things that you'll hear in these different conversations, though, historically, we missed this, or maybe this didn't happen.

And I think having one point of contact, one person or a couple people tracking all of this, advocating for it, working closely with all of our partners in real estate.

I think that'll help us be really, really organized.

Things won't slip through the cracks.

We can have more proactive conversations about all of our real estate more often, and that'll be a huge help to the city, in my opinion.

Uh, also with things like uh surveys, appraisals.

Uh, there's a lot of steps in land acquisition, and we have several new CIP projects right now or requiring new real estate, and that individual or that team could oversee all of that work too.

So that's something I'm gonna be uh advocating for um next budget year.

May I ask a question, Ms.

Leonard?

Um, my impression has been that the law department is organized.

Uh we know who to go to for uh contracts and uh things of the like.

And Miss Leonard, you I'm correct me if I'm wrong.

You are the point of contact in the law department who deals with all of our uh contracts and agreements.

Am I wrong?

No, I I would say I I don't know about all, but I would say I I have a majority.

Um, but I think from my perspective is I have no problem negotiating, drafting, amending, working through problems, but it would be helpful to have a non like you like someone outside the office of law who's handling the day-to-day operations.

Um, I don't think I have the bandwidth to check that every tenant is making rent payments and submitting the reports and you know, so it would be helpful to have sort of the counterpart to handle the day-to-day operations that doesn't need like an attorney's immediate, you know, interference.

Um I think that's sort of the part that has been it has been um sort of divided up among various departments.

So each department might have a different, you know, leased property, but I I could see the advantages of having all of that under one person, one person who's checking to make sure all the tenants paid their rent, making sure they did all their reports.

And then being sort of my point of contact with if there is an issue, a legal issue, then they can sort of tag me in.

Um, I think that that would be helpful because I I don't honestly have the bandwidth necessarily handle um that sort of day-to-day administration for leases.

Well, you know, when we created, recreated the Department of Central Services, I believe that that was one of the considerations.

Um, and Mr.

Flinner, you have the opportunity to design your department, the department as is needed.

So, you know, maybe this is an effort that you would want to pursue.

Um, I can see a collective committee uh on which there is someone from every department, kind of like our um adequate facilities where everybody's gonna maybe not that extensive, but um, something where every department who touches that project has an opportunity to weigh in on and make sure that all the standards are met.

So um, but I think we've gotten a little hard fetch on this legislation.

Um Mr.

Chair, you guys should think yeah, and so back to your original question from the perspective why we do longer leases, and I'm not gonna opine to how long leases should be, but doing annual leases is a heavy lift for staff because for instance, for a boat show, I have to coordinate with OEM, fire marshal, fire department, police department, planning department, harbor master public works.

If I have to coordinate that many departments every year for a lease, it's it's it uses up a lot of time.

So I personally I'm okay with longer leases.

If we do it right, if we do a good negotiation the first time and getting everyone's input in, and then set it for a couple of years and see how it goes and works.

Um the boat show is honestly, I'm okay with a longer lease because we've been doing it for so long.

We sort of know how things figured out, but one year leases, two-year leases require a lot of effort for a very minimal amount of payoff in my mind.

Well, I I do have to speak in support of the longer leases with this council, uh, because this council brings a certain level of experience.

We have a new council coming in in a month or two months.

Um, and they're starting from scratch, at least five out of the nine people.

And so there is great, I think great value in utilizing the experience from those who are sitting here now instead of pushing it off to new people who will may not, I'll say, have a clue.

Yeah, and might have other priorities.

And well, they they'll have all the priorities.

Yeah.

Um, so I think there is a great benefit to utilizing the existing council for our level of experience.

So that's my two cents worth.

Um, I'll make a motion that we give a favorable recommendation to 036.

Mr.

Chair, are we still doing both of them together?

Um that's why I see no reason not to.

And the other one is 032.

Correct.

Okay, so that's my motion.

032 and 036 in favor of.

Second, all those in favor say aye.

Aye.

Thank you very much for being here, folks.

Thank you.

And uh, yeah, you two don't go away.

Well, I mean, you can go back from the table.

We're gonna jump to this.

Uh we're gonna jump backwards to the itinerant merchant sales.

I'm sorry, and you can you can go back to your seats, just don't leave the meeting.

Oh, I thought we were going to market it.

No, we got I want to go back to this itinerant merchant sales that we skipped over.

I'm kind of involved in that anyway.

So I'll just figure out.

Uh yeah, I'm not surprised to hear that.

Uh Ms.

Raftovich, thank you.

Good morning, Hilary Raftovich, mayor's office.

Thank you.

So I know um I I know the background on this, but could you just give us the explanation for the order?

Thank you.

Um there was a this organization, Knaptown Flea, worked with the current um restaurants that currently lease that space and had planned a flea market in that area.

We became aware of this and realized that that was not allowed under the lease for the market space restaurants.

Um, so we discussed it with Ashley and with the um gentleman who was organizing this, and um told him that he would need to come before council for the for permission to you for the peddlers hawkers permission.

Um because it's in the historic district, it needs to get approved by council.

So he canceled the original planned event and rescheduled it for this date um in October, and is going through the process, including coming before you for approval.

So there's kind of as I understand, three impediments, we call them hurdles, three hurdles to clear if they want to do this.

One is the lease terms, one is this, the itinerant merchant sales, and the third is our just general what is it, special events permitting process.

Um so this is only one hurdle, one leg of the stool.

Um, but obviously we want to understand the whole picture.

So, Miss Leonard, can you speak to what's going on with the lease?

Not uh without getting into, you know, there's a lot more with that lease, but this particular under the current five market space leases.

There's five five and one individual ones that all sort of work together, they are allowed to essentially sublease or assign in limited conditions.

One of them includes flea markets.

Um so the hurdles they have to get through is they have to get the intender intinerant, I can't say that merchant approval.

Um they have to submit a special event permit application so we know what's going on, and then the tenants all have to give their support for it.

So that's the the three pieces we would need.

Um so it it is it is allowed under the leases, it just has conditions to be allowed.

And so as I understand this is happening in the space of federal house, but you're telling me all five of those lesser lessees would have to approve it.

Generally speaking, that would be our preference, is because we sort of lease them sort of all even though they got their own leases that we leased it all together, sort of as a working group, you know.

We shut down the whole area sort of as a um together.

So it would be preferred to have support from all of the tenants to do that.

Okay, yeah, one of the things that we're gonna do.

May I ask exactly where we're talking about?

I'm looking for the specific location.

So the location would be in front of um uh the names of the restaurants now, they've changed them, right?

McGarve Rooster and McGarvey's Iron Rooster, Federal House, Fed House, yeah.

And then across is Market House and Middleton's is around the sort of around the corner.

Those are the five.

So that whole area where now there sits tables and chairs, correct?

Yeah, I I don't believe they plan to remove all the tables and chairs.

I believe they they intend to work with them to have some of that space be for vendors and some to continue with tables and chairs, and it's just for the one day, yeah.

So and and my concern with it though is uh I I think I think where I'll just say put my cards on the table where I'm feeling with this is I think we should pass the resolution, but I think there's some things to work through through the permitting process.

Um and one of those is the timing of it if this flea market makes sense to me to have it happening in the morning, maybe the afternoon, but by six o'clock, that's a pretty darn bustling area, and I worry how that will impact some of the other lessees.

So I'd like to know that all of the lessees are going to support it.

Yes, yeah, we have requested, they have submitted their special events permit, and we have requested a letter of support from the businesses.

From all five.

Yeah.

Got it.

Okay.

Um and or any affected business if they're gonna stay just in the in one of the lease spaces, then I think that would be no.

What I'm saying is I think even if they're staying in one of the lessee spaces, I think it will have an impact on the other ones.

Okay.

So I would like to see that support from all five.

I'll make sure that that's in there.

Uh, and I don't think this, yeah, 1 p.m.

to 6 p.m.

Okay.

Well, if the businesses are okay with it, then I'm okay with it, but I would do worry about the timing of that.

Okay.

Um, Mr.

Chair, uh, my question, I guess, has to do with uh the space that the the restaurants are paying for now.

Um again, do they remove all their chairs so they uh the trade folks can come in?

Or I'm just trying to envision how this is gonna set up.

Yes, they I mean they would need to stay within the parameters of the existing lease space.

Um, and they would need to work with those leasees to decide what they uh I know originally they were in support of it.

They um we did hear from Fed House in particular, that's who they were working with originally.

Um, and they did support the idea, but my understanding was that they would leave a row of tables, so they still had some outside seating during the period of the flea market.

Well, my colleague makes an excellent point about the hours that are um being requested one to six.

Yes.

Um, and I know that would be the height of the where there's lots of activity down there.

Um, but most of our flea markets in the past, and when we were over on the Donner lot, uh started in the morning, and we're usually over by mid afternoon, if I remember correctly.

The yeah, the so what's their interests?

I I know what their overall interest is.

Um, but I think there should be some consideration for the uh starting late and then staying later.

It it is on a Sunday, just to point out.

So um, yeah.

So I think that that's probably a quieter time, but and it's after boat shows are completed.

Right.

But it's a football Sunday.

Um season.

Well, but football is gonna be playing during this event.

Right.

Um but anyway, I would want to have that discussion with the merchants as long as they're good with it.

Uh the other flea markets used to be on Sundays too, if I remember.

Yes.

And they counted on church flow.

Yes.

After church, you know.

So uh maybe that's what their target is.

My church is over by 11 30.

I'm just saying.

So anyway, um if the merchants are or the merchants who have businesses there are comfortable with I I'm comfortable with, but I want to make sure they're good with it.

So I I would like to request Ms.

Reuter write us two amendments to this.

One being that all five market space lessees have to sign off, and the other that it be from I'm flexible on this, but let's say from 10 a.m.

to 3 p.m.

instead of from 1 p.m.

to 6 p.m.

Did I hear that you were talking to all five, but no requirement that they c collaborate or um so originally when they came to us, they were just working with um federal house.

They were and they were only gonna be in their space.

So um I think one of the things we will request from them is an actual plan, you know, a physical plan of what their space would be.

Um, and I can add that.

Yeah, I I like this.

I think it's worth trying it out once.

I certainly wouldn't sign off on saying sure you can do it forever, but I think it's worth trying out once.

But this is obviously a very sensitive area.

We've got a lot of stuff going on there.

I want to have I I frankly, I want us to have control over it.

So those are my should be a one-time approval.

Right.

Yeah.

So uh those are my two requested amendments.

Uh obviously coordinating with the permit applicant uh will be needed for that, but uh that's that's where I'm standing on this.

And should we can we make sure I'll move to postpone X okay?

I think that well, let's 39.

Let's just think about it.

Are we gonna be able to pass it by the right time now?

Uh well we're meeting again in what two weeks.

So we would meet on the October 8th.

We meet on October 1st, October 13th.

Okay.

So we can is that adequate time for the vendor to get his vendors lined up at I mean, we're giving him less than a month.

I I mean that would be I think the challenge is that they would need to.

I think they're currently this legislation would be scheduled to come back to the full council at your next meeting.

The 29th.

Right.

If we so if we Which would give them enough time to because they can't offer spots to vendors until they have your approval.

I mean, we could make a favorable recommendation with those amendments, even if the amendments are not drafted.

Well, why don't we um verbally uh approve the amendment?

Could we hear what the amendments are again?

So um you're asking for an amendment to um could we have our legal oh I'm sorry.

I I'm not asking, I don't think we're asking to wordsmith it precisely right now, Miss Reuters, but just repeat back what I said.

Is that what you're asking, Mr.

Yeah, yeah.

Cynthia Reuter uh Office of Law Legislative Analysts and Amendment First part of the amendment, all five market lesie no the restaurants in that are by the five slot uh parking spots which would be used by the vendor, uh the flea market vendor must sign off on the flea market operating in front of their businesses, and then the other part was to limit the flea market to the times 10 a.m.

through 3 p.m.

Right now it's 1 p.m.

to 6 p.m.

So we would change that to be three hours earlier.

Um Ms.

Rafkovich, just to clarify, you did want a letter of support from all five members of the market space lease group.

Is that correct?

Correct.

This is not just the ones whose parking spaces they're using.

Correct.

That should be part of the application for the vendors.

Okay.

Okay.

Well with that, uh, Mr.

Chair, I will move R 39 as with the two amendments from the finance committee.

Okay.

Uh second, all those in favor say aye.

Aye.

Okay.

All right.

Now we're we're getting to the hot button stuff.

Uh 03325 market house lease.

Mr.

Flinner, Miss Leonard, how you doing?

Uh this has been a big one.

Um, I think we've we've heard a lot about it.

We've thought a lot about it.

What I mean, maybe you want to give us a brief overview, but what I'd really like to hear is I I want to I I have some ideas for amendments.

Um I also would like to hear some about sort of well, let's just start with.

Can you give us an overview?

Um so Ashley Leonard, Assistant City Attorney.

Um currently the market house has a lease for the space that has been extended um twice at this point.

So this would be instead of continuing to extend the current lease, this would be to do a brand new lease um starting July 1st, 2033.

Um the current lease is slated to expire June 30th of 203.

Um again, it's we use the prior lease agreement as the basis and um attempted to address any outstanding issues as well as um any feedback from the tenants about they would what they would like to see changed.

Um the term is similar to what is similar to what we're doing with other leases, however, rather than having um continual abilities to extend, this has a more sort of um set amount of renewals, um, which is three successive renewal terms of five years, which was what was requested by the tenant related to their um financing and other operational things.

Um so they might be able to provide more input on the time for that.

Um so they have we'd have an initial term for five years and additional abilities for three successive renewal terms of five years each.

Um the it is sort of um what is the term net where they pay everything.

Yes, thank you.

Sorry.

Um it is a net zero lease in which they um they do exclusive control, their responsibility responsible for rent, utilities, um, various maintenance.

There is some maintenance the city has to provide, mostly to the exterior of the building.

Um, we did go back and forth on that, and Director Flinner can provide some insight onto that.

Um rent um was based on input from both sides.

Um current basic rent was starting at is about started at $8,000 and has escalated up.

Um, given that we're starting this little future out, we bumped it up to 10,000.

It would also still have a 5% escalator for each renewal term.

So that would not be every annual year, but every five years, you would get an escalator for five percent.

It still does have performance rent.

Um the tenant had asked to adjust that um based on again growth and financial um perspectives from theirs.

I think those are the only um really big changes.

Um we did also include some language that um for some flexibility where that if the tenant was under willing to undertake certain bigger projects, certain different repairs that we could have some flexibility with sort of offsetting that to payments they would owe.

If they took on some of our city um responsibilities and funded those, then we could sort of offset or prorate some of the rent they owed rather than us having to organize and coordinate contractors and so that that is slightly new language.

Uh such as the roof, would that be an example of one of those larger projects?

It it could be.

That would be more uh discussion between the tenants and director Flinter as to how they want to maintain it.

But yes, the thought was some of the bigger projects, if the tenant was willing to take them on, find the contractors, do the bids, run the project rather than us doing it, we could do it in a more collaborative approach.

Let me ask uh about the tenants.

And you haven't lived through quite as many of these leases with the market health, but uh I remember clearly uh some of the issues I'll say in the past of market house leases, and I remember lawsuits and city having to pay significant amounts of money to get out of uh agreements with certain tenants uh over the years.

And so this organization appears to be functioning well in the market.

Now, I don't come downtown other than City Hall, and I miss the market.

But on the opportunities when I have been near there, it seems to be a bustling uh place to go.

So tell me what issues there are.

And keep it in mind, I don't want us to go backwards.

I don't want us to go to site realty and those other companies that we have major issues with over the years.

So tell me why we shouldn't move forward with this agreement.

Other than the fact that you created it, Miss Lennon.

Well, I mean, I only created it from a legal perspective.

So I'm I don't know if I have final say on that.

Um I will say that this lease was a completely different approach.

So I was not here for the earliest lease in like the early 2000s, but I did come in um right after the 2012 leases were signed.

And my understanding, I the 2012 leases for short, and I believe the earlier ones were set up differently, in which we leased, we sort of carved up the market house and did individual leases to individual tenants in the space.

And then we um hired or otherwise brought in sort of an uh a third party to sort of manage for us.

Um and that was the setup in both cases.

That's not what we did with the current lease or in this new proposed lease.

This is we're giving the whole market space to one person, to one entity, and we're giving them control over how they want to carve up the inside.

We if they need a property manager, they hire that.

Um we did add in some flexibility so that they they can sub-lease a little bit here and there so that they can try um, you know, if they want to bring in a few like approved sublease sub tenants to to do that.

So we gave them a little bit of flexibility in that, but it's a completely different approach.

Um, versus us having to try to I would say micromanage five or six tenants versus giving it all to one tenant and saying it's on you, you figure out what works for you operationally and from a business perspective and from uh you know consumer perspective.

And so I think that's why we have seen different results.

Um from my perspective, it's an easier lease to manage.

Um trying to manage six different tenants who are all in the same space together is very challenging because you end up having to mediate disputes, you have to you know weigh different priorities from different tenants.

Legally having to only deal with one tenant is a a much simpler and easier format, I think from from my perspective.

And that's good to hear.

Um we did have one tenant some years ago who had his own subcontractors, and that created another another challenge for us.

And I guess that was oh, two contracts previous or two uh owners or I don't know what to even call them.

But um, we've gone that route before.

This one seems to be more successful.

Well, we've limited how how much they can subcontract.

So I think the the earliest ones, the two ones before, they literally carved up the whole thing.

This one, it's still the primary tenant is still running a majority or you know, a substantial amount of the footprint.

So you're not getting as many subcontractors in there to sort of piecemeal the place.

So it's a slight difference, but it it is a different person.

Okay, well, I am good with your comfort level with working with the tenant.

Um, if they are living up to the expectation we set out in the the lease agreement, um, and we have had, and maybe this is a question.

Have there been any major infractions of any sort that would make us pause on this lease.

I have not had to write any default letters, if that's what you're asking.

I mean, we did go through COVID, um, the pandemic with this lease.

So there were some adjustments based on that, but we pretty much those adjustments were for a limited time and have sort of settled out.

Um, but I haven't I have not personally had to been be involved in any sort of substantial issues.

Okay.

Good to know.

Mr.

Flinner, have you inherited anything that you'd like to share with us?

I I fully agree with everything Ashley shared.

I would say um I I feel like what we're trying to do with this lease, uh, that space and and even that part of the city is kind of continuing to evolve, especially in this post-COVID climate we're working in right now.

Um, and so we're trying to modernize the lease to help both the city and the tenants operate more effectively in this climate we now find ourselves.

I think the only two challenges I would flag um that is uh an aging facility, it's a historical uh uh property.

Um, and so uh, you know, we're trying to work with the tenants to modernize it.

Uh air conditioning is always a challenge there, and we're working through those types of things, which is why we change some of the terminology in the lease to help the tenants more quickly um uh go out and get funding and and make those improvements themselves.

The only other thing is I'm working with the Department of Finance just to uh do a high level overview of all the financials.

We're working on some different things there, nothing egregious, but we're looking at you know, tax revenue, rent payments, uh you know, uh just everything involved on the financial side and uh director Moran and I, now that we both got here, we're just trying to make sure all of that is uh aligned to lease terminology as well.

Well, let me ask them Moran.

Are there any issues, financial issues?

We're working on a few things right now, but I will say that they are up to date on their rent and their performance rent for the year, and they do report annually like they're supposed to in the terms of the lease.

So, what kind of issues are you working through?

That was my question.

We're not working through any issues per se.

We're just uh director Flinter and I have been really looking at the lease and the terms of the lease and figuring out like are we following exactly as the lease is written.

But there's nothing outstanding that the tenant knows is collectible and they aren't collecting if that's what you're getting at.

I'm not understanding.

Yeah, if they are financially sound, meaning they have no outstanding indebtedness to us.

What issues are you having to work out?

Financial issues.

That's true.

Yeah, so I um and I'll I'll ask you guys to clarify, but having sat through a number of the um public hearings, I know that part of the questions that have come up in those contexts that I'm guessing you guys are are also just getting from from residents is around um are they in fact caught up on their rent and performance rent?

Are they in fact applying that correctly to sub tenants to um sub tenants um and and things like that and um through the lease and um making sure that we have a really solid grasp of here's all here's all the provisions, here's how you calculate those things, how does that apply to the subtenants?

So I think it's more of some of that kind of stuff, but the core the the um from our perspective, and uh correct me if this is wrong, but um certainly what I've heard from from Jody since those questions came up, and I haven't heard anything different from these guys.

I'm sorry, when you said Jody.

I'm sorry, um Judy Dickinson, the former finance director.

I I just wasn't sure if you meant tickets.

Oh, yeah, yeah, yeah.

No, I'm sorry.

Um, is that um the leaseholder has been responsive to our requests.

Um, you know, there had been, I know questions, just part of the reason this came up.

Questions about how those payments were done during COVID, making sure we're fully beyond that, right?

So I think the because there had been some questions.

Um, you know, I think it's really a matter of going through that and just making sure we really have looked at everything.

We've really satisfied that because we know that people are asking questions that it comes up in the public hearings.

I know you guys are getting questions off.

So I think it's really just making sure we've done our due diligence.

You know, I'm happy to give a more specific example.

It's one that actually the tenant raised for us, where um, I guess the reporting requirements that we placed on them in the past uh were challenging for them to to adhere to.

And so they asked if we would reconsider kind of how they report their numbers to us because they would have to go out and contract um accountant to basically audit all their financials and get us that information.

So that's one thing they raised for us that we're reviewing right now, just to give you more specific example.

Well, is that something that is doable, solvable, accomplished uh support?

Um, but something that you can read an understanding on in order to get this passed.

I I view that more as an operational thing than uh then really a lease uh you know uh term, but like director Moran and I were talking, and you know, what kind of financial reporting would they require on their end um to justify what they're doing, and then the same for me.

So it it's just that's something we're just trying to figure out and try to help out the tenant to the best of our ability.

Well, let me ask Miss Linner, she's looking through for the language, I guess.

Um so we did so it I I would preface this as we're they still have to provide us with numbers and reports.

It's just we're going to give them a little bit more flexibility.

Again, it's still in our reasonable discretion about what is sufficient, but instead of the old lease required one specific type of audit.

Instead of requiring that one specific type of audit, we're giving them a little bit of a more flexible approach where they could submit different types of financial numbers that we can review and see are sufficient.

Again, we still have the right to say that's not sufficient, we're going to need more from you, but it gives a little bit more flexibility where we can still get sufficient information for our purposes without them necessarily having to contract with the specific type of accountant to do a specific type of audit.

So if we approve this, what's your leverage?

The leverages, there's still language in there that they have to submit sufficient documentation in our discretion to demonstrate their numbers.

So if it's not sufficient, then it we would say it's not sufficient, we need something more.

Otherwise, it would be a default.

But once they have the lease, what's your leverage?

No, that that is that that'll be an ongoing requirement.

So every year they will have to submit submit sufficient documentation.

It's not it's not a beginning of the lease, it's a regular ongoing thing.

And all like I said, all we're saying instead of a specific type of auditing document, you must submit this type of auditing document.

It says you must submit sufficient documentation, financial documentation to support your numbers.

So it's not saying they can get away with not reporting annually or not providing us with documentation.

We're just saying it doesn't necessarily have to be that one particular type of audit.

And again, I'm not a financial person, so I don't know the differences between different types of audits, but um my question remains what's your leverage if they don't provide the type of audit that you're asking.

Then it's a default because it's it's it's a it's a re it's a requirement that they have to submit annual reporting numbers.

And I think that should be clear.

Yes, it it is the default, it includes having to provide all this stuff, and there is language in here, and I can't find it right this second.

Um, but there is language specifically about how they have to report and what they have to provide.

And if they don't, then it is considered um it is considered a default.

So it's written in there.

Thank you.

So am I correct that if this lease is passed, it by itself extends us.

So let me ask this in a different way.

The current lease goes for another three years to 2028 with the option to then renew for five more years.

They have already exercised the option.

So they have exercised the um the original lease did not put a cap on the number of extensions they could request.

Um, so the lease has passed allows for an unspecified number of extensions.

So they have requested through two different extensions to get them all the way through June 30th of 2033 that have been approved.

And has the city exercised our option too, or is it at their soldier?

The way the original lease was written is it was at the provided that there are no defaults, it's at the tenant's option to extend.

Really?

Yes.

So under what circumstances would the city wow, that's kind of crazy.

Well, it's similar, it's the same setup as we do it for a lot of things, is we have to balance, and I'm not one to not have termination for convenience language in there, but the problem is if you put termination for what convenience, which means you can just terminate it for any reason.

When you do it like that, banks consider it as a one-year or short lease.

Um if they so you can't, as a tenant, my understanding is you cannot get financing if there's a terminate uh unlimited termination for convenience because it essentially makes the lease at most, you know, um a one-year lease.

So we have to balance that against city rights.

We do have always a right for termination for default.

Um if there are any issues, they're not holding up to any of their um their requirements and their obligations.

Um and in theory, technically, um city council is a governing body.

So you could always, and I'm not recommending this because it could end up in other legal issues, but in theory, you guys can act in your own capacity as a governing um body.

Um, but yeah, so that's the from my perspective.

Um I thought it was time we needed a new lease.

Um, I think continuing to extend the current lease.

Um, I don't think I I want to do un can continue from a legal perspective, I don't want to continue a lease that has unlimited extensions.

So I would like to start a new lease.

This one does not have unlimited extensions, so that at some point it will definitively get back to council.

So then with this new lease, can you walk me through the it's a you know city council passes this?

It's coming up on 2038, and is it the same situation that the tenant has is uh has the sole discretion to exercise the option?

Well, that that wouldn't be an option.

So if we pass this lease, a new five-year term would automatically kick in July 1st, 2033 through June 30th, 2038.

Right.

Then July 1st of 2038 would kick in the first renewal for another five years.

But they only have unlike the current lease, which sort of doesn't have a cap on it, it does have a cap of three of those five year renewals.

And then this lease would terminate with no ability to renew or extend and it would come back.

Right.

But my question is when that uh potential June 30th, 2038 date is coming up, who makes that determination?

Solely the tenant?

It would it would by approving this lease, both parties would automatically approve it at this point.

There wouldn't be any further action on July 1st, 2038.

The action when you approve this ordinance, the new term, the new this new lease would take effect unless we undo it.

So it wouldn't, it's not a renewal.

It's we're not he's asking about when you get to the first renewal under that.

Oh, the first so in so the so the first one would be yeah, so yeah.

Then it yes, it's written as tenant.

If they're not in default, they have the right to renew.

So it's it is a unilateral right on their side unless there's a default.

Apologies.

And Sarah I understand what you're saying about a termination for convenience, but and I I am not an attorney, but when I look at, for instance, our parking contract, there's a difference between the termination for convenience, which could happen at any time, and termination at the end of the five-year period.

Um, I'm just using our parking contract as an example.

We could you could amend the the way that it was requested is that the tenants were hoping to get essentially 20 years at their discretion.

Um renewals don't always operate like that.

Sometimes renewals are mutual, sometimes they're on the part of the city.

Um but that the request was for the tenant to essentially have sort of a 20-year term at their discretion without the city having to approve.

That would that would definitely give me a little more uh uh certainty, I guess.

Give them less certainty, give us more certainty.

Um, okay, I got some other questions here.

The let's talk about the performance rent.

The performance rent is changing from 2% to 1%.

Am I remember that correctly?

Correct.

Above still above one million dollars in gross receipts.

Um it's so it would be 1% over 1.5 million dollars.

Well, okay, and is it currently one?

Uh let me see.

Hold on.

I printed it all out, but it's been I know it was two percent.

I'm trying to remember if it was I mean, is it currently over one million?

Yeah, that's what I was hold on.

I'm just trying to it's currently 2% over 1.5 million.

So the only thing that changed was the percentage.

Okay.

So why are we decreasing the percentage?

It was a request by the tenant that as they've gotten um more successful, they believe the and then again, they should really respond to this, but my understanding is that the one percent, the two percent was needed when they were start starting up and were struggling and wouldn't be making necessarily as much money.

But my understanding is that the one percent, the two percent was needed when they were start starting up and were struggling and wouldn't be making necessarily as much money.

Um, but now they feel like um an adjustment in the performance rent is warranted based on how their operations have shifted over the last few years.

Yeah, I mean it it makes a lot of sense to me to say as you the tenant have more certainty of performance, you want a lower performance rent, but a higher base rent.

But I'm seeing the base rent only go up by a relatively small amount while the I mean with the base rent is going up 25% and the performance rent is decreasing by half.

So those two things don't seem totally congruent to me.

I again I I negate I I would say I the numbers were what were proposed and agreed upon.

I did not get into the um from my from my role, I don't tend to get into the economic not your role.

Yeah would the finance director like to opine on this.

I share the same questions you have.

Um this was a proposed from the tenant.

I think it's very far out to give a quantified impact of those changes.

I can give for context.

Um in the current year, it would be a uh that change that percentage change would be 20,000 lost to the city in performance rent.

So 20,000 for the current year, so losing 20,000, but gaining that 8,000 is per month.

So uh to losing 20,000 but gaining 24,000, but only for that this current year.

We would expect that gap to grow uh over time.

We would expect we would expect the amount that we're losing to grow and the amount we're gaining to not grow.

Correct.

Yeah.

Okay.

That's that's very helpful.

I understand we can't quit fully project out, but that's good.

And that kind of takes me to my second question.

We're talking about this very long-term lease without inflation adjustments.

We have the escalator, but it's limited to just five percent any uh every five years.

That's a what.8 percent increase per year.

That strikes me as too low.

Um it's lower than what we can reasonably assume inflation.

So I would like to see, and maybe what I'm doing here is just proposing an amendment and waiting to hear if anyone objects, that those escalators be at the very least higher to match what we would expect inflation to be.

And if not directly written as related to the consumer price index.

I don't know if that's something we've done in other leases.

We have done that with Bocho.

Pocho is tied to the So I think that makes sense for both the escalator on the base rent and for the umor, I guess, for the performance rent that that uh 1.5 million dollar figure.

And it seems to me like we ought to adjust at the very beginning of this new lease that floor of the performance rent based on inflation over the last since the lease was written.

So what I just throw out a bunch of suggested changes.

I wonder if any of you have any response to those.

And then as a broader question, as the council has potential changes, how do we we're not in a position, the three of us, including Alder Roman O'Neill, to sit across the table from the tenant, but we do clearly, at least I have some concerns here.

How do we go about amending and negotiating in such a way that we don't drive these folks off?

Because I do think we have a really good situation going on there.

I just want to make sure we have the value for it.

So couple of questions there.

First, in the more particular, can anybody respond to those amendments I just threw out?

Yeah, I I would just jump in and say that that's the prerogative of the council.

I we're happy to change or amend any terms of the lease that you all recommend and run those by the tenant.

So I I would welcome all that.

I don't have any any hardship if you you change the cost of living increase.

I I agree that's very standard in most real estate leases.

Yeah, that um makes a lot of sense.

So maybe I need to and so then as a process question, if we have these concerns, we have these things that we think need to change.

I can go to Ms.

Ryder, I can write an amendment to an ordinance just like any time, but we also have to recognize this a negotiation, which the tenant could walk away.

So can we get some guidance?

Uh this is maybe even a question for auto-women finleas, and how have we dealt with that in under previous lease agreements?

I don't think we have um I hate to use the word interfered, but I'm gonna use it, interfered with the legal um standing for the city.

Um we have entrusted our law department to bring their very um best knowledge to help us make these decisions going to the bargaining table.

I think that ship, I don't want to say it's sale, but you know, we should have had and for everything, we should weigh in on legislation on what the council wants before there's a contract, yeah.

Um, because that's what bargaining is all about.

So um, I don't know, and I'll ask Ms.

Leonard.

I mean, how would you feel adding something to the bargaining table at this state?

Well, market house has always been a little different because you guys regulate it in your city code.

Um the original one went out through um a procurement process.

Um so if if you have concerns, uh there's two ways you could do it.

One, you could propose exactly what you want the escalator to be and the amounts to be.

The other is you could just make a remote recommendation that you think they're too low and ask for the tenant to come up with some alternatives that they would be comfortable with.

Um thank you, Miss Beckham.

Yeah, so I mean the market this le the original lease was not interfered with, but was highly overseen by the city council, unlike some of the other leases where we do sort of more of a what the market can hold, or we um what we're willing to get, the market house has always been a different scenario, and the city council has always been more involved.

Um I did not finish the original lease because I went out on maternity leave, but I remember there were a lot of meetings with the full city council um and the departments and the proposed tenants to negotiate this lease originally.

So in that respect, I think with this lease in particular, not that you couldn't do it with any lease, but in this lease particular, you guys have always played a more active role.

If I may, I'll add that uh I remember my first meeting on market house was my second week with the city.

So uh since mid-April, we've been here having these conversations with each other and with the tenants.

So it is a long process, and you know, based on our lease terms, we're trying to finish things by a certain date.

So um I mean I mean, we're happy to reapproach, renegotiate, do take whatever action we need to.

Um, it just takes some time, a lot of times to go back and forth and uh have council review everything.

It so it it the process itself can be long and challenging.

What's your timeline?

Do we have a drop dead date when this has got to be completed?

Um before the election, which in the November election.

Well, yes, because well, I mean, I mean, technically we could hold this and reintroduce it after the election as a new ordinance, but if this council wants to be the one to approve it, then it would need to be done within the next month-ish.

So, in other words, we have a little bit of time, not a lot.

Correct.

But um, we could give you an opportunity to address those potential uh negotiations items.

And to the finance and see if they have any um right.

Yeah, let them know what we're thinking.

They have no clue, probably, unless they're watching.

They might oh so it's um yeah, so we can definitely do that.

And then I mean, the I think the goal was to get this approved before the election, but um from a time perspective, in theory, they do have a current lease through you know, June 2033.

So um we have a little bit of time.

Yeah, I mean, that's in your discretion.

I would the tenants would argue that they would like that approved now from their perspective and financing reasons, I'm sure.

Um, but in theory, the lease is not expiring this year.

But Mr.

Chair, I would move that we postpone on 03325.

That's where I'm going to uh I've got a couple more questions still going.

Okay, we're in discussion.

That's yeah, second.

Um so under the current lease.

Take take this out of the equation.

We don't pass anything.

The tenants can just keep renewing, right?

They can just keep going and going and going.

So if we do not pass this, the market house potentially is just for the current tenant as long as they want.

No, so I should clarify.

So the current lease has unlimited extensions, but they still require city approval.

Okay.

So unlike, but you just told me they don't need city approval.

No, no, no.

So the new lease has three renewals that can be exercised by the tenant unilaterally.

But then once those are up, it's done.

The current lease has had a renewal, plus they have this thing called an extension.

The renewal was unilateral, but the extension could be done as long as both parties agree.

Creed.

So the extension had to be approved by the city council or not the city council by the city administration.

So the extensions didn't bring us back up to city council for approval, but they do still require um city administration approval.

So it couldn't, yes, in theory, if the administration kept approving them, yes, it could go on for a while.

Right.

Okay.

Okay, got it.

Thank you.

Yeah, sorry, it's slight renewal versus extension.

That might have gotten mixed up in my head.

Is there a reason we couldn't have under this lease have it be?

Tell me if I get this wrong.

Extensions rather than renewals.

No, it's just how it was negotiated.

So in theory, I mean, and you the renewals at the request of the tenants, my understanding was that they wanted 20 years.

The only way to get 20 years and to have a little bit of checks and balances is you break it up into renewals that are essentially unilateral, but you add in the caveat about no defaults.

Right.

Um, versus doing like a, you know, like so that then you don't keep rolling it if there are issues.

Um, but you could rework that so that the renewals require a different type of approval that are not unilateral.

Um that would require, or you could do some that are unilateral and some, you know, you could you could reduce it down to they get maybe one or two instead of three unilateral renewals, and then any further extent they get maybe one extension that requires approval on both sides for an X amount of time.

Right.

But I would personally, from a legal standpoint, is I don't want anything to be unlimited anymore, because that from a legal perspective is not the best scenario.

So you could shift how the unilaterals renewals work, or you can get rid of them, keep them, reduce them, and then if you're going to do an extension that requires both parties to agree, keep that to a set amount of time.

Okay.

If this passes, are we uh does that could if if this passes, can the next administration say that they do not want the 2028 to 2033 lease extension to have could they renege on the extension?

Um from a legal perspective, because we already approved it and agreed to it, it would be tougher to undo.

Okay.

And but that's nothing to do with this lease that's because the administration has already approved that.

Okay.

All right.

Um, I think that's good.

Uh just on the accounting part.

To what extent is that public information?

What extent is all of this like how much they have paid the city, how much they're supposed to pay the city, when they paid it, any fees they paid.

To what extent is that public information?

So that's all would be sort of governed by the Maryland Public Information Act.

Under that, we are allowed to release some things like how much rent was paid and things, but we do have a legal requirement to withhold and keep internal anything that they consider confidential financial information.

Right.

Um we are not, and that's state law.

So state law, we are not, it's not a discretionary, it's not the city, may or may not.

It's the city cannot release anything that they deem as confidential financial information that could impact them in a financial way with you know things.

So um, I can send you that section, but it it's state laws that sort of governs what can go out and what has to stay internal.

Okay.

Then the last thing I want to talk about here is sub-leasing.

And it sounded like maybe you guys were talking about that when I stepped out briefly.

Uh so apologies if I cover something we already did.

But the option for the tenants to sublease.

Can you describe any limitations on that?

Yeah.

Um and particularly just to give you context.

My concern is we if we give this lease and then the tenants say, well, you know, we want to kind of get out of this.

We're just gonna have basically somebody else totally take it.

That's what I want to make sure we're doing.

So could you describe what limitations, if any there are?

Sure.

That's in um paragraph 18.

If you want to read it in full.

Um, but essentially they have to get our approval.

Um, they have to provide us with a copy of the sublease so that we're aware of it, and any sublease has to comply with the lease as a whole and any and all applicable laws, which could include you know, permitting requirements, things of those nature.

Um let's drill down on that first one.

You said they have to get city approval for sub leasing.

So they're allowed to sublease one or more portions of the premises for a term of not longer than you know, this lease after first obtaining in each instance prior written approval from the city, which would be the city administration or their designate.

Um any subleafs has to be consistent with um this lease, including the tenant's business summary as well as city code.

They have to provide the cop the city with copies of all sublisas as part of the approval.

Um, and the tenant is the one who has to the tenant, the subtenant has to comply with the laws, but the tenant is also taking it on themselves to make sure that their subtenants are complying with all applicable laws.

No, that that satisfies me.

I had missed that requirement by the for them to get approval from the city.

That totally satisfies my concern.

Thank you.

All right.

So essentially what I think uh Aldero and Philas and I are thinking here is that we want to send you folks back to the bargaining table with the tenant.

And what I'm hearing here is that there are a couple different areas to talk about on that.

Can I grab a pen real quick?

Or do you want my notes?

Maybe I shouldn't throw pens while we're uh on camera, but just just so I just remember if I'm talking on point number, I've lost track of what I am talking today.

Okay, so continue.

Okay.

So the couple of places that I think should be uh areas for negotiation are whether those renewals could be by mutual agreement rather than unilateral.

Uh there's a sublet.

But no, not not the sublet.

The sublet we have to approve.

I'm saying the renewal on the agreement.

The as a whole.

Okay.

Um whether the either the performance rent percentage or the base rent should be increased.

If we're decreasing the performance rent, then it seems to me that we the base rent should be going up by a higher amount.

Uh this is, you know, we're giving you sort of parameters to negotiate.

I'm not saying I'm the expert.

Understood.

And then both the escalator clause, uh, that five percent for each renewal term, and that I'm calling it the performance baseline, 1.5 million dollars being tagged to and that's those are my three kind of parameters.

Did you have any others auto and filling that you wanted to?

Uh no, I think you've uh covered them.

Um I'm sorry we didn't have those amendments came in this morning.

No, that's okay.

So okay, Mr.

Chair.

So we're gonna postpone action on 033 pending uh the three amendments.

Were there only three, Ms.

uh Rooter?

I mean that might end up having to be more than three, but uh actual amendments, but it's sort of three areas of it's those are amendments that'll have to be drafted by Ashley.

Yeah, okay.

Uh so I'll second the motion.

All those in favor of postponing 03325 to the next meeting of the finance committee say aye.

Aye.

Excellent.

Thank you.

Uh and then is this go bowling military bowl parade?

Is that time sensitive, or can we just push that off?

Because we're already over time and we still have to talk about market space.

Mr.

Chair, do you think there's issues with the military bowl?

Well, no, we I think we could probably I'm I'm comfortable with it.

They've been a long-standing partner in the city.

Um if I may, I I actually do and have um one uh thing that I I want to make sure you guys are aware of.

Um we've been going back to look at how much we've spent the way that that this is framed, it talks about both the parade and the game.

But looking into the past, it looks like traditionally those two things have actually been separated, and primarily what has been waived has been costs related to the parade portion, and the game sort of is sort of a different animal in some sense.

Um, but as you can imagine, for the last number of years, that amount that's been waived has been 15,000.

But of course, the city's costs continue to rise.

And based on um the information that um finance gathered and and Felicia gathered, it does look like the FY25 total that the city spent, because it's framed as up to 15k.

Um total amount that we spent was closer to about 20K, and I just want you to know that going in case that influences how you feel about it.

So for FY25, will the city be seeking payment of that remaining five thousand dollars?

Yeah, we need to go back and um like I said, the the question of the um the game amount is is kind of a different animal.

Um, but yeah, we'll be um we've had an initial reach out, and there's some some other discussions for us to have, but um I just wanted you to know that's what that looks like.

Um in case that makes a difference.

May I ask why the uh fiscal impact note doesn't reflect that?

Uh because that is the getting all of gathering all of that information and putting it in one place is relatively that getting updated numbers.

We had some estimates prior, we have harder numbers now.

That's newer.

Yeah.

Also the fiscal impact note is just based on the way the legislation is written, which is waiving up to 15,000, which is no change from last year's waiving.

So there is no this the wedge legislation, the way it's written, there is no financial impact in the fact that the council is waiving 15,000.

Well, that is I don't understand.

That is a fiscal impact.

But it it's an impact.

So in terms of uh in terms of the city, it it's less of an impact on the city than it is on the organizer.

Right.

Okay.

Our intent with the fiscal impact note and the staffing impact is to give us a true picture of what this is gonna cost, not you know what we've seen in the past, but we can't calculate future budget if we don't know actuals.

So this is not an actual depiction of the cost for the military bowl.

Sorry, as written, it is an act at as written, this would be $15,000 worth of expenses that the city is not recouping.

That is the cost to the city.

Um who picks up the other $5,000?

Exactly.

That the the any excess then goes to the organizer.

That's where the difference gets felt.

It's not on the city side, it's on the organizer side, which is why I want I just want you to know that's what that looks like.

And so has this information been relayed to the organizer.

Yes, that that was um we have some further some further discussions to go with them, but they're they are certainly aware that um that that number is um that that has grown over time or is growing over time.

Okay, thank you.

The other question, it sounds like there's really two questions here.

One is the how do we get the rest of the money, uh, or change it so that it's more, and then the other is should we break this out by game versus parade?

Because I see a real public benefit to parade, I'm not sure how much of a benefit there is to the game.

Yeah, the the I the reason I bring it up only is because the title explicitly mentions the game.

Right.

But that's not how the calculation is done.

Oh, oh, okay.

And I I again just want for clarity so you know exactly right because the title mentions the game, but that's not that's not how the calculation's done.

So we should have it at the very least, we should have an amendment on this that takes out the words football, right?

Yeah.

And only if you want to, obviously.

Uh, but I I think that would um bring those two things into align.

Yeah.

Well, that means there's another discussion with the sponsors.

Yeah.

Um, because this has traditionally been the way it's been handled.

So now we're gonna separate it out and look at two different numbers as if they're two different events.

Um, and I just think everybody needs to be on the same page.

I just wanted to add that we in theory bill two different parties for the different events, so the same person that would pay the difference or would reimburse the city for the services that we supply or we provide for the game is not the same as the foundation that is paying for the the parade.

So you're saying traditionally it's been broken out into two different bills for two different programs, even though they're back to back contiguous.

Well, yes, back to 2019 pre-COVID, there was a separate billing of the games at a set amount, the parade was handled separately and billed to the foundation net of the $15,000.

And the other amount the other amount of the game.

Who who gets the $15,000?

The foundation.

Towards the parade.

And so who gets the football bill?

The Naval Academy uh athletic association.

Okay.

So that should be interesting.

Uh negotiations.

Um, so if it's been separated out, then there's no reason why this shouldn't be separated out, also.

And especially if by virtue of the fact that it's five thousand dollars less than what it needs to be.

Yeah.

Yeah, if we were actually going to waive the fees for the game, too, that's another chunk of money.

So yeah, I mean, I I say we give an unfavorable recommendation to that's just where I'm leading.

We went real 180 on that real quick.

Well, yeah, that that was just to provide some context of we had asked the same questions and we saw it, although it's no change from the prior year's waiv, just looking at as a whole of like, are we waiving 50%?

Are we waived are is the city paying all of it?

Just kind of context um for you all too.

You know, we've had this discussion before, but I don't recall us having a discussion about two different entities, and I think uh colleagues need to be aware of that.

Um so we I would suggest we take no action on this there.

Um and it it needs to come before the full council when preferably on the 29th, Ms.

Ruder.

Um, I just want to point out that the language of the military bowl and parade, that is as the foundation requested it to be presented in the resolution.

Is that similar to what their request was in previous years?

It's exactly what it was last year, and we approved it as it was without finance weighing in on the two separate uh entities, right?

So I think that if you were to separate them, it would be uh a major rewrite of the resolution.

Well, I'm thinking we don't have a lot of choice, especially by virtue of the fact that there's two different organizations.

We got the foundation and we have the alumni associate, right?

We pay both of them a num an amount.

We thought we were paying one amount to the foundation, and now I learn we learn that they're two organizations.

So I'm not sure how we would do that in one legislation without specifically stating that, Mr.

Chair.

Yeah, I uh I think that we need to do two significant rewrites.

I I don't see a reason for us to be waiving fees for a football.

Uh I mean, maybe there is, but I don't see it.

Uh so my suggestion is that we this isn't too terribly urgent.

Come back to five.

What I'd like to see is that we have two amendments written.

One to strike any mention of the game from them.

So it's really about the parade.

And the other being to at least get us the information on what the expected costs will be and determine whether we should raise that from $15,000 up to say 20, 25, whatever it actually is, or not.

So those are my two requested amendments, and that we have it back to let me ask, would it be easier, simpler if we simply added the alumni association, athletic association, athletic association, and change the amount to 20,000 as opposed to two separate entities.

Um the 20,000 that Vicky was speaking on was the cost of just the parade.

The police and fire services that we provide, that's the cost to the city is roughly 20,000.

Of just the parade, just for just the parade.

Yeah.

Yeah, we need to postpone.

Yeah, yeah.

I'm sorry, the game's a whole nother animal.

So we need to postpone it, and we need two amendments.

One getting rid of everything related to the game, and the second that brings the cost in line with what the cost actually incurred by the city.

So I'm gonna call what you just said uh motion.

Mr.

Care, I'm not I'm not clear on taking everything out about the parade.

No, no, about the game.

About the game, because we still cover the game, we still have police and fire.

We do right, but we're not waiving those fees.

They pay us fee currently, right?

They pay us fees for doing that.

That's a yes or a no.

They have not been billed for the game 2019, but and there is no working with office of law, there is no formal agreement of the city bills you X amount for X amount.

There's no formal agreement.

All right.

Well, then I think we should take out the game part because if they want to do that, it needs its own separate resolution, it needs to be one for the game specifically and for the athletic association specifically.

So that should be we should take it out of this either way, and then if they want to bring forward a second resolution, my thing.

What do you think?

Generally, I don't like putting two waivers for two different entities in the same document because it just makes it legally messier.

So if we're talking about two different entities, I think they should be getting their own separate resolutions, and unless they're willing to work together.

If the foundation is willing to take over ownership for all of it, but it doesn't as far as I know my working relationship with them, they are two very distinct separate entities and they do their own thing.

If they want to come together as a united front and put one of them for it as like that's the person who's doing it, and they are willing to offer that, that's fine.

But as it stands now, it seems like they are two separate um entities, and I would prefer to have two separate decisions on it.

So Mr.

Chair, I'm uh comfortable delaying taking no action until either there's two separate pieces of legislation or there are amendments to this legislation that will delineate the two organizations and the cost.

So, but on this one, if we take no action, it'll come up on the council.

But I think we should really postpone it quite it won't come up if we don't take automatically go okay, then we will postpone action until the next finance committee meeting.

Yeah, okay.

Second, all those in favor of postponing uh R 4125 to the next finance committee meeting.

Say aye, I all right.

Miss Moran seemed to have something funny.

No, I just wanted to ask for clarification.

So is the intention of the resolution for the parade to cover the full cost to where we would not be billing them for any difference?

the next finance committee meeting yeah okay second all those in favor of postponing uh our 4125 to the next finance committee meeting second aye aye all right miss moran have something funny no i just wanted to ask for clarification so is the intention of the resolution for the parade to cover the full cost to where we would not be billing them for any difference that's how we do our other parade okay that's and I agree when I saw the legislation I had a question of well why is this one done at a max what is the difference I'm just trying to get some clarity on what we're so we need to have a true cost of what that is okay okay you've been waiting so patiently back as very so we're on to our 3425 which really we need to combine with the ID 13025 um do you want to come up to the table or okay uh and we probably need Hillary too maybe Matt you want to you want to pull up a fourth chair um hey Caitlin I hope we don't need five people I think we only need four right on my list of somebody okay yeah yes this is market the area yeah him and the other are both they both represent McGarveys yeah they're kind of the they're on the periphery they don't no they do yeah market uh McGarvey's as basic right but minimal compared to the other I don't know exactly yeah you know I guess it is kind of minimal compared but but they're they're very much like I would say the tip of the spear like you're welcome to consider on that actually okay I think they would be either way just because you sit in front of a mic doesn't mean you have to speak right we'll do this should we do this before or do we have to say that we'll use howdy everybody this is a fun one uh so let's just uh whoever is most appropriate I'm gonna guess it's Hillary start with where are we with market space what is the current status and why would a resolution for interest charges be needed uh some of you were out of the room when I said this we're combining the uh general discussion with the discussion on R 3425 so the question is what is the status of market space and why would an interest charge waiver be needed um I can speak to the market space lease status um if I can't speak to the waiver the fee waiver part sure feel free to break it out okay um so the we met again with the concession the concessionaire as well as medco um and I believe at the last meeting everyone is in agreement that we would like to see a way for market space lease to go forward um we have submitted um a proposal for how we can change the concession agreement to bring it into compliance um with that lease going forward and we are awaiting word from them on whether they would like to take that route or a different route but I would say that all parties agree that we would like to see market space leases continue.

Well that's that's reassuring in the generalist terms uh but uh ashley can you uh maybe take over give us some more of the legal background and then talk about the charge waiver um so clarification the concessionaire is medco so I'm sorry yeah so just just to clarify so med care medco is the is the person is the entity the city has the direct concessionaire agreement with and then they have subcontractors which we know as air slash amrp as well as premium um is can I ask you someone is premium a subcontractor to AMRP or are they a subcontractor to Medco?

Medco I believe okay going sorry not really related um so we under the concession agreement as it's currently written um the market space area is supposed to be under medco's is is under medco purview so we're working with them to see how they would what they're comfortable with using it as instead of just straight parking spaces and what the rate would need to be um if that was done um so that might require some adjustments to lease as part of that we have to go through a process under the concession agreement where we put in essentially a city request which is a written request which is what we have done that says here's our request this is what we would like to change these are our proposed amendments to the concession agreement and then we have to wait um so that's that's what we're doing they are actively reviewing it along with a number of other ongoing um items under the concession agreement but it is under active review and as Hillary indicated it it

As part of that, we have to go through a process under the concession agreement where we put in essentially a city request, which is a written request, which is what we have done that says here's our request.

This is what we would like to change, these are our proposed amendments to the concession agreement, and then we have to wait.

Um, so that's that's what we're doing.

They are actively reviewing it along with a number of other ongoing um items under the concession agreement, but it is under active review, and as Hillary indicated, it it I did not get the impression that they per se care from uh their operational standpoint, one way or the other, how the space is used, as long as um it's documented formally and it doesn't negatively impact um revenue and other operational concerns.

Um there's not much more we can do other than that, and then we put in our requests and we will wait and see, and hopefully we will be able to come to some sort of compromise.

Um it will probably be a compromise all the way around.

Um, as I know one of the sticking points will be what will be the the rent rate.

Um the current leases have it at I believe 2 or 20.

Yeah.

So that there would there might need to be plausibly some increase from that amount to get sort of a sign off from MedCo.

Um so that's the statuses.

We put in our requests, we have had conversations with them, but they have a lot of people they have to vet it through.

Um they have bondholders, they have you know financial um involved institutions that all have to sign off on changes to this agreement.

As for the interest charge waiver, um we had um the current leases do have um an interest provision in them for um late or unpaid monthly rent.

Um it it the city did not um bill as far as I believe in Director Morgan can um correct me if I'm wrong, but I believe we we have had some late and some late rent payments and some unpaid rent amounts, um, but the city never billed or invoiced for the interest related to those amounts.

Um when we got a change in leadership and some people were doing some digging, well, not digging, but you know, doing some due diligence, I would say it came to the surface that we never built them for interest and um as sort of a I want to say an act of good faith, because I feel like you know, on the one hand, yes, they they might have submitted late payments, so and that's not all.

This is just a generalization.

Some of the tenants might have submitted late payments, but on the other hand, we did not bill for it or proactively seek it.

So if we wanted to continue the relationship, it's one of those things we need to clear up.

Um either um they need to come up to date and pay the interest, um, or we need to waive it, if um, or they could not pay it, and then we could end the leases in theory.

So uh based on sort of um mutual discussions across the board, there was a decision that we would like a continuing working relationship, that we don't think there was a bad faith intent for the late payments, or for us to not charge them, and in this one instance, we're willing to wave some of the interest as we proceed forward.

And I just spoke for a lot of people.

So if anybody wants to chime in.

That's about I was exactly what I was gonna say before we jump into questions.

Um Chris, what's your last name?

My name's Chris Hannon, H A N N A N, and I'm one of the owners of Magarvey's.

I have you saved in my phone, it's Chris McGarvey's.

Um Mr.

Hannon.

Uh could you is there anything you'd like to add without getting too far down the rabbit hole before we start asking questions?

Uh I I guess in terms of the infrastructure, I must I'm assuming we're being um polite with there's five individual leases.

I don't believe that McGarvey's is behind on interest, or I'm not really sure if we're being specific on this where we would owe interest.

I know that some of the other people of the consortium maybe at times had under their and previous discussions said they had problems with proper payments, it wasn't applied, right?

So on so forth.

But um I don't believe we are.

I I would be surprised, and we're usually the ones on the front.

So I think the important part of that would be it would be nice if we knew exactly is it all five, because they are five individual leases.

But I would say that also goes to the larger issue that we can go on later, which is not all five businesses are on equal footing in that consortium and is a very, very unique uh lightning in a bottle that market space was able to happen.

That five businesses were able to account for any number of differences.

So I think the interest part are payments if it's applied to one versus all five, which I believe probably goes more to the fact that this is a unique case.

It's not an individual restaurant looking for individual parklet in front where they can make the financial decision on two.

We're all beholden to each other, essentially, to be able to keep this alive because of the street and McGarvey's and Middleton's has no parking spaces in front of it to even open a parklet.

So we're somewhat dependent upon the financial viability of the people that are involved in that consortium.

So we can obviously work out with finance department if there's something that we owe, but I would be highly surprised.

Yeah, real quick and then let's start out.

Who owes the money?

Like who didn't have to do that?

I do not have the lease.

It is not all five, as far as no.

I think it was two.

Two of the five have were late or missed no payment.

Is that what you're saying?

Let's let's let's get to this later.

Well, if you don't want to do that.

Yeah, I mean, yeah, I it is not all five.

It's not all five.

I believe it is and the ones who I believe have have had issues have been notified directly by our finance department.

Sure.

Yeah, I I wanted to give everybody the opportunity to set the stage on this big awesome thing we've got going here at market space.

We'll drill down on some questions.

Um Philly, so the floor is yours.

I'm gonna ask you to go back a bit.

Yeah, good.

Okay.

Um, when COVID hit, we tried to find a way to allow the businesses to stay in business.

And uh outdoor dining became a very popular uh avenue for those businesses, considering that we had reduced the capacity on the inside of their of your restaurant.

Um, sometime after COVID, and it's not gone, but we saw fit to keep that proposal, that program to allow seating and market space.

So my first question, and you kind of just touched on it.

How many spaces does each of those five restaurants hold?

And what is it that they are paying to have those spaces um available for their rest their tables and chairs?

So yes, ma'am.

Um in 2019, the the estimate was made that there's 39 total spots in market space in that particular corridor.

The five restaurants took 19 of the 39 spots.

So using revenue numbers that were estimate, and and Hillary and I just had a little bit of a conversation, but you just using the published data from the consultant for the parking uh agreement.

It was about 88,000 is what those spots earned.

We doubled that.

So we, as a five businesses, agreed to pay 160,000 based on 2019 numbers rates.

May I stop you here?

Sure.

88,000 is what those 19 spots were estimated to have earned in 2019.

The initial agreement for what we went into in 2021 was based on 2019 numbers, but the five businesses doubled that number.

So our initial rate was about 160,000 between the five businesses per year for 19 spots.

It's now about 190,000 is what we pay for 19 spots or about 2850 per spot.

Right.

And so is everyone paying one fifth of it's proportionate based on so there's a diagram attached to leases that breaks up um the proportionate amount that each tenant is using.

So McGarvey and Middleton really have no parking.

We have zero parking spots in front of us, but we have taken the five businesses again.

This is why this is a little bit of a gene in the pump.

Five businesses collectively out of the limelight, agreed to split up the whole area in proportion to what we thought we could service, what's logically in front of you, and then do a proportional rate.

The city graciously then agreed to take that 19 spots and build in different proportions to each restaurant.

But they're all relatively close.

Ironically, market house has the fewest because they have outside dining on the side of their building.

So they ironically had the fewest.

I believe if you want to exact I do have an exact number, so that's not even around that.

It is Middletons has 1,578 square feet.

I'm gonna do it even more quicker because I know we're not worried about the subdivision.

How does it compute to space?

They wind up taking if there's a collective, if the collective payment is a root currently in was 190,000, Middleton's paid 32,000, so a little less than one sixth because they have their own outside dining underneath the canopy.

McGarveys was at 40,000, Iron Rooster was at 40,000, Market House was at 35,000.

It's all about it, it's essentially equitable.

We took the 19 spots, took the effective rate, and then split it up almost five ways, but there's a little bit of waiting to account for people that where do the spots fall?

Who's doing that?

And in particular, even small things like market uh McGarveys and Middletons have to break down their entire area every night, move it out of the way so that there's a fire lane that's available up Pickney Street as well for the residents.

So we internally try to make adjustments on okay, you're gonna get a little bit more of your of the overall rent of 190,000 because a little bit more of the space is directly in front of you.

Obviously, Iron Rooster has the most space in front of it because it goes lengthwise.

But that's uh again, hopefully I'm explaining well that subtly we all work together to accommodate who can serve us where can it go, street closures as well as financial um fortitude, I would say.

But there are two of you here representing one entity, one restaurant.

So the other four, and I guess the market house, then we would be responsible for the market house.

So we would be at the table.

But why is it that it's your solely on you and the others have not even given us the pleasure of a discussion with them?

We we did that out of courtesy to make it a little bit clearer.

We meet regularly with the other tenants, and it slowly but surely kind of fell on Kevin and my shoulders, and then I went started going through all the agreements, trying to look at try to do analysis that it was probably easier.

We're all tried to speak as one voice, because if there were five voices speaking, it would be really, really hard to understand where someone such as Middletons might be saying, but I don't even have a parking spot in front of me.

So how could I even get a parking spot unless I go in with federal house collectively?

We're just here to say we would very much like to continue where we are.

We think there's any number of reasons that it's financially viable for everyone who's involved, and more importantly, we were just for the overall goal of the city and most worldwide cities is to make more pedestrian zones as to parking zones.

Um that's why we have one representing the five.

It would have been a little bit hectic, we believe, but it they are in full agreement.

We met just last week to keep going over what are your thoughts?

Where do we stand?

How is this applied to your business?

What do we do in uh in the absence of us coming to a concrete lease moving forward?

So, in short, Chris and Kevin have kind of stepped up to be representatives of all five of the businesses.

That's correct.

They're all represented here by us.

Yeah.

Um, yes, and another question about the amount that you're in arrears.

Um how has that been determined?

And and I think that's already been uh outlined, but has that been a global perspective to all of the organization?

Do they know that there is such a thing as them being in a rear?

And that they can't be, you know.

This is the first I've heard.

Yes.

Um because there are five individual leases, the the tenants that had specific financial issues were approached directly.

We did not approach it as the whole group at this time.

Their financial situation is in fact they're in arrear.

So it's gonna impact all of you.

And and so I get the sense here that we don't want to um disclose with maybe it's confidential business information.

I I don't know.

We don't necessarily, it doesn't really matter who it is, frankly.

Um we know it's not begun.

But uh my question is, Miss Leonard, can you explain some more of the circumstances around these late or payments?

Was it was it just a plain old they didn't pay their bill?

Was there some confusion?

How did this come to happen?

Uh Director Moran would have more detail, but I think well, we we can turn it to her then.

Um, yes, just to add some clarity.

So the way that the lease is written is not the way that the finance department has been billing in the past couple of years.

There is interest based on the um the lease agreement at five percent.

Interest meaning on something not paid, late payment, yeah, rent monthly rent payment.

Each individual business gets a monthly bill, and they're supposed to pay it within 30 days, they get a an interest charge that's accrued.

The way that finance department prior was billing it was adding 1.5% interest for some reason.

Um, but it should have been five.

There's confusion on how there are two businesses that have interests that are sitting on their account right now that are in question.

One of them, there's a situation where for an entire year they made no rent payments.

They were billed just an entire year they didn't pay.

Um, eventually they came in, made one one payment for the the principal due, the rent due, cleared their balance off.

However, they were still incurring interest in those years.

They said they weren't gonna pay that.

They're still that's still sitting on their account.

That's a small amount of this potential interest weighting.

It's about $1,500.

There's another business that routinely didn't pay their bills on time.

They still actively make payments.

Well, up until June 30th, everyone was making payments.

They were still making payment, they were late on a lot, they weren't paying the correct amount, they were um paying to our lockbox instead of paying to the city the way their payments were applied.

There was some confusion.

They know how much rent they owe.

They owe rent and interest.

They owe about $10,000 in rent, and then about 11,000 in interest over the span of a couple of years.

And is that at the 1.5 rate or at the 5%?

That's at 5%.

Okay.

So they were aware that they were late, they were aware that there were interest charges, they weren't in agreement that they should pay the interest, but there was some confusion on what was being billed as identified in the lease or how they were making their payments.

There was confusion.

So is it the case that anyone paid their bills late but paid their bills and then paid their interest at the 1.5% rate and is totally cut up at that 1.5% rate, but is not caught up at the 5%.

Is there anyone in that?

Yes, if you went back a couple years, there were instances where some businesses paid 1.5 because that was what was on their bill, and they may have missed a payment by 10 days, and then they paid an interest charge.

Those are not the ones that we've calculated.

That's you know, it's these two specific instances that um are in question.

Yeah.

If it was solely a question of we were billing them at 1.5 and we should have been billing them at five, that seems like that's on us, and we should absolutely be waiting for that.

Correct.

Uh, but what you're describing to me is waiving a bunch of interest on it's the the problem is not whether it's 1.5 or five.

The problem is there is interest and the interest is not getting paid.

How you're describing.

Does that sound correct?

Correct.

And if I may, I I feel I'm kind of the genesis of all of this.

We had a a meeting with all the tenants in late June.

Uh, that was kind of the first introductory meeting I had with them to kind of introduce myself as their main point of contact on the real estate side with the city.

Uh, one of the talking points that I presented to all of our tenants was hey, we're getting ready to do a renewal.

Um, you know, we we need to make sure no one's in financial uh arrears, you know, everyone has to be current on all of their payments.

And I remember they all kind of came back and um shared feedback with me that they weren't even really sure they weren't really clear on who owed what they owed.

So I went back, worked very closely with Director Moran and the finance team to kind of take stock of all of that, and that's when they discovered the the things that she just mentioned.

So I was a big proponent of asking to waive that interest since we had both only been with the city two or three months.

We were starting a new business relationship really with all of our tenants.

Um and uh we didn't really know, and we really couldn't speak to how our predecessors did this in the past.

So we were just hoping to start everyone off with a clean slate, sign a new agreement, and then move forward into the future.

And that's why we're here today.

Yeah, um, I like the thinking, the direction in which we go.

You know, we have tried very hard to help our businesses stay in business.

And I'm hearing that some aren't even aware of any arrears.

But but they're not in a reason.

They're not inrears, but they're representing the other.

Um, whether that's a formal or an informal arrangement, um, I would like for us to make an effort to sit down.

First of all, we have a new chief in town, a new finance director in town.

And her way of doing things seemed to be very different from the previous finance director.

Good, bad, or indifferent, it's a different approach.

And the businesses that do business with us have to learn the procedures and know that Ms.

Moran is gonna hold them to whatever agreements they've signed with us.

But in the interim, I think we should make every effort, and Ms.

Leonard, this falls to you as well as Ms.

Raftovich to help them understand their responsibility.

And if we have to waive them, I'm good with waiv uh their back fees, especially when they didn't know that they were supposed to be waiving them, and maybe it was in there in their agreement, and they didn't get it, and that's their fault, but it's partially ours also.

So I would hope that we would help that we would help our businesses stay in business, and you know, give them one pass.

And after that, they get held to the same standard as everybody else.

But I hope that we make an effort to help, not to hinder um the businesses that are there.

We rely on them, and I know they rely on the space that they have, uh, whether it's you know, a few tables or a lot of tables, uh, they rely on that agreement that they have with us.

And we as a city made every effort to help them stay in business through COVID to this new whatever it is now that we're living from.

Um, so I would propose that I don't want to I would propose that we support.

Um, but I may be the the loan spokesperson.

I'm done.

Yeah, I'm I'm torn.

Um let's let's pivot back to the sort of general questions about the lease uh going forward.

And maybe it was a mistake to combine these two discussions in hindsight.

Uh but um yeah, to talk about the main lease that we're dealing with here.

So we have this agreement in principle with premium parking.

What happens?

Uh first of all, how do we come at that dollar figure that we're going forward with we the city are supposedly going forward with premium on and what happens if for whatever reason these tenants try and walk away, right?

I mean, this is a uh this has been a lease with the city.

It is it is still governed under a lease of the city, and they have the opportunity to back out of that.

So how do we how do we come up with that number and how do we make sure that it's viable?

So the um the proposal that we submitted recently was to bring the parking spaces in line with the current fee or rental of parking spaces, which is $35 per day.

Um we await a response as to whether that's the the way that the change will be made in the concession agreement.

Once we know what the process will be, what the change will be that will allow these leases to go forward, we could um review the actual amount per space.

But it's a little hard to get ahead of that when we don't know if they're going to accept the uh proposed change that we made, they implied that they may have a different way to address it.

So once we know what how we're gonna address it, we'll be in a better position to talk about the final number.

All right, let's let's say status quo.

Nothing happens with premium parking.

What are they going to bring a bulldozer out there and push away all the tables?

Like what it wouldn't be with premium because keep in mind.

Sorry, with med cap.

You're right.

Contractor.

Um so in effect, there is a provision in the concession agreement that says that if the city directs use of spaces that is under Medco's control, then there's a bag meter fee that either the tenant and or the city has to cover, which is above the rental amount.

So the city will have to pay the it's it's an additional charge per space.

Yes.

And in effect, that would come out of the city's waterfall payment.

Correct.

Assuming the waterfall continues.

If not, it would come directly from the general.

Well, from parking funds from the general fund, yes.

Would it be the general fund or the parking fund?

That was better.

My water.

I was like, I don't want to opined as to which fund it would come out of.

But if there is a if there is a sufficient waterfall, then yes, it would come out of the waterfall.

If the waterfall the waterfall is a fluid, but no pun intended, but it's you know it's a fluid amount.

So if there's not enough in the in the waterfall to cover it, then they would come back to the city directly.

We would have to decide what buttons to use.

Okay.

Um, I just found out auto infinite needs to run.

So we need to take a vote uh on this resolution, and then can I continue, Ms.

Jackson?

Can I continue the discussion?

No, we don't have a quorum.

We can't even have a discussion.

Sorry, but that's okay.

Before the next finance committee meeting?

No, the next meeting with the with um AMRP.

AMRP.

Who is the representative?

Consider them the management company for MedCo.

And when is that?

Uh I do not have my phone on me.

It should be in the middle of well, before and we did when we submitted our proposed change.

We did say that um that the leases as they stand now would end in October 15th.

So we need a response before then.

And they seemed on board with that.

So we expect to hear from them in the next few weeks.

So that means the next um meeting of the finance after 15.

Is that when your next meeting?

Uh the next meeting of the finance committee is October 1st.

Oh, because you pay every time that probably won't be.

I'm happy to report back at that time if we've heard anything.

Okay.

I want to make sure we uh we'll we'll take no action on R 3425, which is not required.

Okay, so that's good.

Um I want to take just one more minute here, and then I understand you have to go, but just one more minute and turn the floor over to uh Mr.

Hannon to talk about what uh you see as a steps forward here for to allow what I think is one of the most wonderful amenities in our city to keep going forward.

Uh I just spent about an hour with Ms.

Ratkovich, so my opinion might have changed slightly.

Um due deference, we recognize that um it's a complex issue a little bit from the way the Hillman parking agreement was written uh and might not have been written exactly the way um the the lower end parties may have won it.

So recognizing that we know that um Miss Leonard and Ms.

Rakovich they're trying to work to see the best way to make it clean and and rectify the situation so that it can continue.

The the point that I think hopefully that um Hiller and I were able to get over is that as complex that side is our side is almost as equally challenging is that we just touched on that briefly.

You have five businesses that have five competing interests that have five different ideas that have five different levels of already outside dining available, so a consideration or recognition that this might not be able to be fit into a larger citywide thing due to the United circumstances of market space is probably the best way to leave it today.

Is that it's it's kind of a unique situation.

It's not kind of, it's a really unique situation with two businesses having no parklet to do, but also recognizing that we also apparently have members of the team that are in arrears, which makes it uh a situation where parking rate is of utmost importance.

Yeah, okay.

Thank you.

That's great.

I'm gonna say um I think this is clearly not a settled issue, and that I think we ought to explore the council putting together a resolution expressing our intent.

And with that, I will adjourn the finance committee meeting at 1.23 p.m.

Thank you all for being here.

Thank you.

And thank you for being patient through everything else.