Firm planning overhaul of Cross Street Market in Federal Hill walks away

The firm planning to overhaul Cross Street Market in Federal Hill has backed out.

The firm that signed an agreement with the city to renovate and manage Cross Street Market in Federal Hill said Wednesday it would walk away from the deal, a decision made after mounting opposition from merchants and neighbors.

The decision by Caves Valley Partners to unwind the November agreement dashed hopes for any near-term upgrade to the neighborhood institution and drew mixed reactions Wednesday.

Some said they were disappointed, but others breathed a sigh of relief that merchants facing higher rents and a 10-month disruption during construction would remain in business.

"We're very happy," said Anna Epsilantis, the owner of Big Jim's Deli, who helped organize a rally to draw attention to the merchants' plight last week that drew hundreds.

But Henry Reisinger, owner of Fenwick Choice Meats, who has worked in the market for more than 40 years, called it a "sad day," since it's not clear what — if anything — will happen now.

"I wasn't 100 percent in favor of [the plan] but … nobody was oblivious to what has to change," he said. "What's Plan B? What are you going to do now?"

The neighborhood has long called for improvements to Cross Street Market, which is dark, has maintenance needs and is increasingly troubled by vacancies. But some worried Towson-based Caves Valley would bring national chains and vendors focused on alcohol, an unwelcome presence in a neighborhood weary of bars.

Arsh Mirmiran, a Caves Valley partner, said the developer wasn't going to "force it."

"When the goal is to do something … that creates an amenity in an area and there's an outcry saying we don't want that type of amenity, then why beat your head against the wall?" he said. "Sometimes you take a loss and you move on."

Caves Valley's exit from the agreement comes after more than two years of negotiations. It is effective March 1, said Baltimore Public Markets Corp., the nonprofit that runs the city's markets.

The organization is regrouping to come up with a plan that has "the best interests of both the community and merchants in mind," said Stacey L. Pack, the nonprofit's spokeswoman.

"This came as a little bit of a surprise to us," she said. "We're definitely working on the action plan now."

Under the administration of former Mayor Stephanie Rawlings-Blake, the city wanted the private sector to take a greater role at public markets in some neighborhoods, as a way to inject more money and life into the institutions.

In 2015, the city invited bids from developers to renovate and run Cross Street in Federal Hill, home to a public market since 1846.

The decision came after years of complaints from neighbors, as well as inquiries from Caves Valley, a big player in South Baltimore, with apartments at 1111 Light Street and a $275 million-plus mixed-use development called Stadium Square underway in nearby Sharp-Leadenhall.

A spokesman for Mayor Catherine Pugh, who inherited the agreement from her predecessor, declined to make her available for an interview. Pugh said in a statement the markets "play a critical role in Baltimore's future."

"Public-private collaborations will be key, and I want to see Cross Street Market become what the community wants and certainly deserves," she said.

City Councilman Eric Costello, who represents the area and previously led one of its neighborhood associations, said he was "profoundly disappointed and really sad."

He said he's not sure what happens next.

"This was a very complex deal," he said "The likelihood of putting a similar deal … together — there's a very low probability of that. This was our opportunity."

Caves Valley, working with Scott Plank's War Horse LLC at the time, was the only firm that responded to the city's 2015 request for proposals. Its plan called for adding windows and changing tenants to house a family-oriented mix of eateries, vendors offering a mix of fresh meat, produce and coffee, and seasonal pop-ups, akin to markets in other cities, such as Seattle and San Francisco.

Negotiations dragged on, as War Horse withdrew and the city and the developer struggled to come up with terms that would make the market financially viable.

The final deal, which the Board of Estimates approved in November, would have led to a $6.5 million renovation, including $2 million in public funding, starting this spring.

Caves Valley, through an affiliate, had agreed to make $10,000 monthly payments to the markets corporation and split profits 50-50 after repaying its bank loan and receiving an 8 percent return on its initial investment. The lease was good for 15 years and could have been extended for up to 50.

But the firm still needed a liquor license from the General Assembly for the market.

A draft bill circulated by members of the General Assembly late last week was too restrictive, Mirmiran said.

The legislation would have limited liquor sales at the market to beer and wine for at least two years after it reopened and forbidden alcohol sales after 11 p.m. It also would have imposed a $50,000 annual fee for the liquor license.

In contrast, the Horseshoe Casino pays $15,000 a year for its unique round-the-clock liquor license.

Del. Luke Clippinger, one of the people who worked on the draft, said the legislation tried to balance neighborhood concerns and allow Caves Valley to operate.

Clippinger said the bill could have been amended. There was already a provision to reduce the fee to $10,000 if the market purchased and extinguished two other liquor licenses in the area.

"It is without question deeply disappointing," he said. "I think that everybody is going to need to take some time and determine what comes next, but I think there's no question that the market is in need of renovation."

Neighbors said there is widespread agreement that the market building, which dates to the 1950s, needs an upgrade. Vacancies have mounted, with stalls allowed to sit empty in anticipation of redevelopment. About 17 businesses have stalls there, employing about 70 people. At least one vendor left within the last few weeks.

Tia Boyd, who works nearby and comes to Cross Street Market every day, was there Wednesday to go to The Sweet Shoppe with her son, Kamron Batson, 9.

"I am so happy that they're not closing because it's very important for people to have jobs," she said. "All the people when it closed here were going to be out of a job."

Elizabeth Homer, 75, who has lived in Federal Hill for more than 30 years, said she is hopeful Caves Valley's exit presents a do-over opportunity.

Homer said there wasn't enough input from merchants and neighbors before the deal was signed. A market regular, Homer was worried Caves Valley would turn it into a food hall focused on drinking, with prices that would drive out some of its current clientele.

"It's a great gathering spot for an urban community," she said. "If you gentrify it beyond belief, that doesn't happen anymore and you really lose something."

Bob Merbler was more pessimistic.

He's a longtime Federal Hill resident who is treasurer of the Federal Hill Neighborhood Association and sat on an advisory committee focused on the market.

Neighbors wanted merchants to be treated fairly, but he said some of the opposition was short-sighted and didn't take into account the realities of development.

He said he was disappointed, but sympathetic especially given the "nastiness" of recent discussions.

"Federal Hill and the city as a whole is a loser as a result of this," he said. "There should have been a way to make this work."

nsherman@baltsun.com

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