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Struggling City Market loses subsidy

December 22, 2008
A decade ago during his first stretch as executive director of Indianapolis' City Market, Jim Reilly learned a few things about advertising on a tight budget. He once closed Market Street for a pig race. Another time, he had a man shot from a cannon.

Reilly, who returned to the helm in October, will face even tougher challenges this time around. That's because Mayor Greg Ballard has notified the market that the financially strapped city is phasing out its subsidies, which account for one-quarter of its nearly $1 million budget.

"We've got to become self-sufficient," said Reilly, 61, who left behind his own retail consulting firm to retake his old job. "There's no ifs, ands or buts about it."

Reilly replaced Joe Dayan, who lasted only 16 months. The obstacles Dayan couldn't overcome remain for the 123-year-old historic landmark. It has long struggled to draw vendors and patrons. When City Market's $2.7 million renovation dragged on longer than anyone expected, even the most loyal members of its lunch crowd moved elsewhere. Repairs wrapped up last spring. But flocks of diners haven't returned.

Today, 40 percent of the market's 24,711 square feet lacks vendors. And Reilly isn't completely satisfied with some of the 27 merchants who are there. Some, like Jumbo's, are local institutions. But too many, like a small travel agency, don't fit the culinary destination theme. And temporary tables fill empty spots where fresh meat and vegetable stands once stood.

Marketing push

With the help of MZD Advertising, Reilly has developed a plan to make City Market a vibrant downtown hub for foodies once more. It relies heavily on themed events, corporate activity and word-of-mouth marketing.

The market's 2009 advertising and marketing budget is just $42,300. So Reilly must lean on volunteer performers and good will from other downtown leaders.

To boost revenue, he's considering allowing advertisers to hang signs inside the place. MZD is even kicking around the idea of selling City Market's naming rights, a la Lucas Oil Stadium.

Despite the challenge of a tight budget in a recession, hopes are high for Reilly. The market's board believes he's the right man to woo patrons back. But some vendors are skeptical. They were told the same thing about his predecessors. City Market has had three leaders in the last three years.

One year ago, for example, Kimberly Ba opened Dianbaar, which sells fair-trade and recycled gifts from Africa, such as handmade baskets, handbags and jewelry. Ba believed promises that crowds would rush back after the renovations, and she liked what had been done to spruce up the building.

But she's decided not to renew her lease, which expires at the end of this month. City Market is nearly empty, she said, except during weekdays from 11 a.m. to 1 p.m. There's not enough to lure people there. Ba said she was promised a busy oasis for dedicated small businesses. What she got instead has a "flea market" air about it, Ba said, with too many vendors hawking T-shirts from folding tables.

After taking a few months off, Ba hopes to reopen Dianbaar in Broad Ripple.

"If you go to any major city, there's a market like this, and it's bustling. That's why I wanted to come here and start my small business," she said.

"But customers don't want to come downtown on Saturdays, when only half the vendors are open. That kills business for everybody here who wanted to make Saturdays work."

"You can't lure people back who come and get a bad impression."

City steps back

The city of Indianapolis, which owns City Market, had spent $250,000 annually for the cost of its electricity and steam heat. City Controller David Reynolds said Ballard is cutting the subsidy. Ballard wanted to trim the expense this year, but instead had to pick up $38,000 in utility cost overruns.

For 2009, Ballard has set the utility support at $156,000. In 2010, he plans to eliminate it outright.

"Our goal is, they're a separate operation of the city that should be self-sustaining," Reynolds said. "It shouldn't be on taxpayers of Marion County to keep them up and running. That's why we're phasing them out."

That's not City Market's only financial challenge. On Dec. 11, former chief Dayan filed suit in Marion Circuit Court-alleging he was fired without cause and seeking tens of thousands of dollars in damages.

Dayan said City Market's board allowed him just two hours to pack up his office, and gave no reason for his termination. Dayan, who'd earned $72,000 a year, says the market must provide him the salary and benefits he would have received had it kept him aboard until his contract expired in June 2009.

"I hate to comment on [politics], but there was no other reason," said Dayan, adding that his and Reilly's goals were essentially the same. He noted that Ballard appointed a new slate of Republicans to the market's board after he succeeded Democratic Mayor Bart Peterson last January.

City Market Board President Bob Whitt could not be reached at deadline. When Dayan was replaced this fall, Whitt told IBJ it was simply "time for a change."

Scrounging for funds

As part of this year's renovation, workers upgraded the electrical system, installed new floors in the central building, and refurbished a mezzanine that's suitable for planned events. But there's still plenty to be done. Reilly pointed out that the market's 35-year-old heating system will have to keep running indefinitely.

Meanwhile, architect Mike Halstead, who leads City Market Foundation's board, is focusing on exterior issues. The foundation has no endowment, so it raises money project by project. This year, he plans to push for a fund-raising campaign rewarding donors with engraved stones in the market's courtyard. That should pay for restoration of City Market's historic wooden doors.

There's a long maintenance list after that. Halstead said the building needs window and roof repairs. And many of its copper downspouts have been stolen.

He said both the market's and foundation's boards are committed to keeping all vendors local, but other seemingly drastic steps are on the table.

Given the market's historic significance, Halstead is concerned about selling advertising signage, or even City Market's naming rights, to corporate sponsors, but sees few alternatives.

"I wish we didn't have to do it," Halstead said. "But unfortunately, we don't have a lot of options, if our budget's being cut so dramatically."

Themed events

With the help of MZD, Reilly has planned events every month at City Market. The idea is to piggyback on existing downtown gatherings, such as Colts, Indians and Pacers games, the 500 Festival and the annual Christmas Tree lighting on Monument Circle.

City Market also will orchestrate its own events. Discussions are under way about expanding the popular Wednesday farmer's market to Saturdays. MZD also wants to draw crowds around annual events, such as Valentine's Day and Thanksgiving.

And Reilly hopes to establish food storage, pickup and delivery services for downtown workers who want to buy fresh meat, fish and produce at City Market, but can't fit them into their overflowing office refrigerators.

Other ideas on the table include staging cooking classes or housing a full-service restaurant in the catacombs below City Market. Reilly hopes to entice corporations and wedding planners to consider City Market for their night and weekend events. MZD even aims to create a City Market mascot named "Indy."

MZD's plan, which Reilly was scheduled to share with vendors Dec. 18, boils down to creating buzz for the market.

"We have to have things at the City Market that perhaps you can't get someplace else. Which is a tough chore, because the city has changed," said MZD CEO Allan Zukerman. "We're going to have to be very clever, mobile and agile to come up with ways to get the word out."

Reilly and MZD have already begun recruiting other downtown leaders for help. IndyFringe Executive Director Pauline Moffat, for example, said her musicians, mimes and jugglers would be thrilled for the chance to perform for tips at City Market.

It's the kind of thing you see in the world's biggest cities, she said, like London, Paris and Rome. And it could pay off for both the performers and City Market vendors.

"Anywhere where there's vibrant activity and a little more happening is really quite seductive" Moffat said. "The more [crowds] stay there, the more likely they are to spend money."

City Market will need all their help, and then some. City Controller Reynolds said Ballard won't shut off the subsidy spigot entirely if the recession slows Reilly down. But it intends to turn off the tap as soon as possible.

"It's a jewel of the city that we want to keep operating. We don't have a desire to have it close or go away," Reynolds said. "We'd certainly work with them so they could keep their books in the black."
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