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Finance committee backs amended Market House lease, requiring tenant investment and tighter reporting
Summary
The committee gave a favorable recommendation to an amended lease for the Market House that raises base rent and performance-rent terms, requires a $100,000 tenant investment during the initial term and adds an amendment restricting deduction of that investment from performance rent unless tied to city‑agreed capital improvements.
The Annapolis Finance Committee voted to give a favorable recommendation to ordinance O33-25, an amended lease with the Market House operator that raises base rent, refines performance-rent reporting, and includes a new clarification tying required tenant investment to capital improvements that benefit the city.
Assistant City Attorney Ashley Leonard summarized the negotiated changes: security deposit increased to $15,000; basic rent raised to $11,000 per month; performance rent set at 1% of amounts over $2,000,000; basic rent will increase 10% every five-year renewal period and performance rent will increase 5% every five years. The proposal sets an initial five-year term with a first renewal conditioned on the tenant expending $100,000 on agreed improvements; two additional five-year renewal terms require mutual agreement.
Leonard told the committee the agreement also revises reporting requirements: the operator will provide an annual report to the mayor and city manager, which will be shared with city council and become a public document. "It would be an annual report ... and it will become a public document," she said.
Keith Bouchard, representing the Market House team, said the operators were satisfied with the negotiated terms. "We think we're in a good spot," he said, adding the operator prefers to remain locally owned and to continue the current business model.
Committee members focused on the $100,000 investment requirement and how it interacts with provisions that allow performance rent to be used for capital improvements. Members requested—and the committee adopted—an amendment that clarifies the $100,000 lessee obligation cannot be deducted from performance rent unless the deduction is tied to a city‑agreed capital expenditure that benefits the city’s facility (for example, renovation of publicly available Market House restrooms). Assistant City Attorney Leonard said those deductions would require a written amendment and standard approvals by the director, finance and legal staff and the mayor.
Aldermen expressed that the change balances the city’s interest in maintaining its asset with the operator’s need to manage rent obligations and business operations. After discussion, the committee approved the amended lease by voice vote with no recorded opposition.
Committee members asked staff to circulate a concise, bullet-pointed summary of the negotiated changes to council members and to ensure the lease language clearly requires any deduction to be tied to capital work that benefits the city and is approved through the amendment process.
