Conclusions

In view of the fact that the estimated potential revenue from the market proposed for the downtown section of Cleveland falls short of the approximately $100,000 per year that would be required to liquidate the investment within 25 years and to pay annual operating expenses of about $49,000, it is necessary to find some way to reduce the annual income needed from the market if the new facility is to be self-supporting. In seeking a way to reduce the annual income required, attention naturally falls first on the difference between the estimated day-to-day operating costs of the proposed market, amounting to about $49,000, and the operating costs in the old Central Market in 1946, which amounted to only about $15,000. The latter, however, did not include some costs of day-to-day operations, such as policing of the market, garbage removal, street cleaning, electricity, and water. If all these costs had been added to the reported expenditures for Central Market in 1946, the total probably would have been almost twice the reported expenditures. Since a new market would have to be self-supporting, all these expenses would have to be paid from market revenue. If the estimated. expenses on the new market could be reduced to the 1946 figure, the annual income needed would drop to about $81,000. In view of the fact that prices of most goods and services have greatly increased since 1946, and since more electricity and water would be required in the proposed new market than were used in the old, it would not appear possible to operate the new market at the 1946 level of expenditures. But if in some way the total expenses of the market for all purposes could be held to $81,000 and if the $70,000 annual income estimated from rental of stands and restaurant could be obtained from those sources, it would be necessary to receive for the lease of parking facilities in and around the market only about $1,000 per month. In view of the fact that the size of the day-to-day operating expenses would largely determine whether a new market building would be self­-liquidating, attention should be given to the composition of the estimated expenses, with a view of making a careful determination of their accuracy and of the possibility and willingness of the interested people to reduce them below the estimates.

A second approach to reducing the amount of annual revenue needed would be to seek ways of reducing the approximately $52,000 payments per year for amortization of investment in land and buildings. This amount is necessary to amortize the investment only if the total cost of land and buildings is amortized within a 25-year period at 3 percent interest. About one-fourth of the cost of the proposed market represents the value of the land, which will undoubtedly increase over the years. If the cost of the land were not liquidated in 25 years, but only interest were paid on the money invested in it, the annual requirements for debt service would be reduced. Likewise, if the money could be borrowed for a lower interest rate than 3 percent, the annual requirements for debt service would be lowered. There remains the question as to the desirability of amortizing the cost of the building within a 25-year period. The 25-year period was used because of a statement made in conference with city officials that the lav required the bonds to be repaid within a period not in excess of 25 years. The use of this period for determining the annual payments required to liquidate the cost of the building was not meant to imply that the building would have no value at the end of the 25-years. In view of the fact that a large number of the public retail markets in the country have ceased to operate within 25 years after being built, there is some question as to whether a public retail market of this type would still be needed at the end of that time. Therefore, in determining the proper amortization period for the building, consideration should be given to its probable value for use other than a public market. The possibility of reducing by one or more of these means the $52,000 estimate of the amount needed annually to amortize the investment should be carefully explored by those interested in building a market.

A third way to reduce the annual income that would be required to make a new market self-supporting would be to find cheaper land or to build a less expensive building. The only apparent way of finding cheaper land would be to seek a location outside the downtown area. This, of course, would open up the question as to whether the present customers of the market would transfer their patronage to a market in some of her area. Before deciding to move the market to another area, careful attention would have to be given to the possible loss of these customers. In view of the fact that the building proposed is not an elaborate structure, it is difficult to see how it would be possible to reduce its cost and still maintain an enclosed selling space that would be satisfactory.

When these possibilities of reducing tee annual operating expenses have been exhausted and found impracticable, the only remaining consideration for solving this problem would be with respect to the possibility of charging higher rentals than have been used in estimating the income that could be received from the operators of stands in the market and from the lease of the restaurant. In view of the fact that the rental estimates already represent an increase of 30 percent over the amount paid for the use of stands in the old market, it would appear to be dangerous to base the conclusion that a new market would be financially sound on the assumption that higher rents than these could be collected.

The final determination of whether a new public retail market should be built in downtown Cleveland to replace the Central Market will, of course, be made by city officials in Cleveland. It is hoped that the data contained in this report will help them in reaching the proper decision. In the meantime, many of the retailers who were doing business in the old Central Market building at the time it burned in December 1949 have relocated in a nearby private warehouse while this warehouse is old, it is a substantially better building than the old market building, it is large enough to meet the needs of the persons operating in it, and presumably the dealers can continue to operate their indefinitely, certainly pending a decision by the city as to the desirability of building a new public market.