The Annapolis Economic Matters Committee on Oct. 15 gave a favorable recommendation to O33-25, the city lease for Market House and the adjoining Market Plaza, while members and local business owners pressed city staff about unresolved pricing and contract issues tied to the Hillman Parking Garage concession agreement.

Committee members said the lease recommendation preserves current market operations while the city seeks Medco/AMRP approval of an “alternative rate” under appendix 10/10B of the garage concession agreement. The chair and business owners warned that failure to reach a workable rate could force Market Plaza’s five tenants to stop operating and return the area to vehicle parking.

The tenants’ representatives — Chris Hannon of McGarvey’s, Kevin Havens of McGarvey’s and Kenny Pembleton of Iron Rooster — told the committee the plaza depends on an exemption to a bag-meter formula in the concession agreement. Hannon said the five tenants currently pay an “effective rate of $28.50” per space per day and that the original Hillman projection assumed about $15.50 per space; if the prevailing-meter rate were multiplied by the 17.5 factor in the concession agreement, the daily effective cost would rise toward about $61.50 per space and “that’s wholly untenable,” he said. Hannon cautioned, “If it doesn’t work out for all of you, the whole house of cards sort of collapses.”

Assistant City Attorney Ashley Leonard told the committee the five Market Plaza leases technically auto‑renewed on July 1, 2025, subject to default status. "Three technically auto renewed. Two renewed with sort of the caveat that we had to resolve those issues," Leonard said, explaining that two tenants have outstanding questions about interest and rent that the city must resolve under the leases. She said the city has requested an alternative rate from Medco and AMRP and is waiting on their financial review.

City staff described the administrative steps in play: clear outstanding lease defaults or have the council pass an interest-forgiveness resolution, maintain the tenants’ renewals for the present term while the appendix 10/10B alternative-rate request is under review, and, if necessary, pursue a longer-term amendment to the concession agreement. Staff emphasized that approval from Medco/AMRP is required because the concessionaire controls Hillman Garage and most Ward 1 street parking under its contract with the city.

Alderman Savage and other committee members said they support keeping the plaza operating and urged quicker resolution with the concessionaire. Chair Terry said the city has been paying the 17.5 multiplier to Medco since June 2023 in administrative reconciliation and that the city would prefer a simpler approach. Terry warned that, if the concessionaire does not cooperate, he is prepared to pursue more drastic options: “I want to rip the dang contract up and do the divorce papers,” he said, noting the city’s frustration with delays.

The committee approved a motion for a favorable recommendation on O33-25 by voice vote (motion and second not specified on the record). Committee members also asked staff to consider language in an upcoming interest-forgiveness resolution to give tenants certainty through the end of the fiscal year if the concessionaire issue is not resolved quickly.

The Market Plaza tenants asked the council to pursue an exemption under appendix 10B that would allow the city to collect the lease rates currently in place without the 17.5 multiplier and avoid destabilizing the five-tenant arrangement. Staff said the city has already submitted the appendix 10B request and is awaiting Medco/AMRP’s financial analysis.

The committee and business representatives said Market Plaza generates foot traffic and downtown vitality that exceeds the revenue that would be produced by turning the area into 19 annualized parking spaces. Tenants said the plaza employs roughly 25 people and produced roughly $80,000–$85,000 in revenue in 2019 from the 19 spaces used as a baseline in earlier agreements; tenants also noted a 3% annual escalation clause in the lease. Staff and tenants agreed that resolving the alternative-rate request and the outstanding interest questions quickly is the priority to provide business certainty.

The committee’s favorable recommendation advances the lease to the full city council for final action. The staff action items remaining are (1) resolve outstanding lease defaults or include forgiveness language in a forthcoming resolution, and (2) obtain written Medco/AMRP approval of an alternative rate under appendix 10/10B or pursue a concession-agreement amendment.

The committee adjourned the Market Plaza portion of the meeting after the tenants thanked members for their time and support.