Another Round: The Remiss Management of the St. Roch Market

Last month, I explored St. Roch Market’s failure to provide affordable access to basic groceries. Will Donaldson and Barre Tanguis were identified as the duo behind Bayou Secret LLC, the city-designated master tenant of the historic building. I argued that St. Roch Market’s refusal to accept Supplemental Nutrition Assistance Program (SNAP) cards indicated the inability on the part of the business to serve the residents of the local neighborhood, 40% of whom live in poverty. Additionally,  I called into question the use of $3.1 million in Disaster Community Development Block Grants specifically designated to “help cities, counties, and States recover from Presidentially declared disasters, especially in low-income areas” on the grounds that the spending is emblematic not of recovery, but of systematic restructuring. In this second installment, I investigate the ownership of St. Roch Market to more accurately ascribe responsibility for the operation of the business and its questionable practices.


 

antigravity_vol13_issue7_Page_16_Image_0001 Will Donaldson being given the lease to the St. Roch Market came close on the heels of his failed bid for ownership of a separate city-owned property. As a founding member of Launchpad, an entrepreneurial incubator based out of the Warehouse District, Donaldson and his Launchpad business partners, Barre Tanguis and Chris Schultz, submitted a proposal in late 2013 to the City of New Orleans for the Louisiana Artworks complex. Their proposal was rejected. Less than two months later, Donaldson filed Bayou Secret as an LLC with the State of Louisiana. He is currently listed as the company’s registered agent and manager. Tanguis is listed as one of the company’s members along with two other members: Surin Techarukpong, a Birmingham-based restaurateur, and David Donaldson, Will Donaldson’s  father. In August 2014, five months after the LLC filing, Bayou Secret was declared by the City of New Orleans as the master tenant of St. Roch Market.

In near proximity to the date of that  announcement, four LLCs were formed directly related to St. Roch Market (St. Roch Forage, St. Roch Libations,  Arcadia Court, and Bayou Secret)  listing Donaldson as the registered agent. Besides acting as the managing  member of Bayou Secret, Donaldson appears to be in charge of two of the 13 businesses inside St. Roch Market, St. Roch Forage and St. Roch Libations (via The Mayhaw). Donaldson is the sole member of both companies, indicating his immediate involvement in the two ventures and their profits.

Bayou Secret forbids any of the St. Roch Market food vendors from selling alcohol. All sales of alcohol are made exclusively through The Mayhaw, the St. Roch Market bar (owned by St. Roch Libations). Donaldson uses one of his companies to enforce rules that allows for another of his companies to make money, restricting vendors from selling alcohol while monopolizing a typically large source of revenue for restaurants. To add insult to injury, the alcohol permit obtained by Bayou Secret is contingent upon the same food vendors divorced from St. Roch Libations’ profit.

Additionally, this sale of alcohol appears to be illegal. Bayou Secret’s Class AR (Restaurant) permit stipulates that it is specifically designated for “a restaurant establishment whose purpose and primary function is to take orders for and serve food and food items.” The Mayhaw bar doesn’t serve food or belong to a restaurant. If Bayou Secret were to obtain the appropriate permit for The Mayhaw, a Class AG (Bar) permit, they would be required to adhere to the rule of not permitting any person under the age of 18 years on the premises.

[pullquote]Either St. Roch Market is a farmers market with an illegal liquor license, or St. Roch Market is a restaurant paid for with federal recovery dollars illicitly allocated by the City of New Orleans. [/pullquote]With the more appropriate Bar permit, Bayou Secret could technically apply for a Class AG-Restaurant Conditional Permit, which would allow The Mayhaw bar to operate as a Restaurant permit holder and serve alcohol with persons under the age of 18 years present. However, this Conditional Permit would still require The Mayhaw to meet the requirements of the Class AR permit holder between the hours of 7 a.m. and 11 p.m.—to be a restaurant establishment primarily serving food, a qualification that The Mayhaw doesn’t currently meet.

If Bayou Secret were to posit that St. Roch Market is in fact a restaurant and thus the Class AR permit is appropriate, this would be in direct opposition to the publicized notion that St. Roch Market, paid for in large part with federal dollars, is a functioning market.  This would also call into question the severe misuse of federal funding used to pay for the rehabilitation of St. Roch Market: $3.1 million in Community Development Block Grants (CDBG) spent in renovations. A document from rebuild.la.gov detailing $1.4 million in CDBG expenditures describes the St. Roch Market as “a project to restore the St. Roch Market on St. Claude Avenue to its historic use as a farmers market.”

Either St. Roch Market is a farmers market with an illegal liquor license, or St. Roch Market is a restaurant paid for with federal recovery dollars illicitly allocated by the City of New Orleans.

The city’s vested interest in the success of St. Roch Market is indicative of Mayor Landrieu’s particular vision of neighborhood revitalization. This vision may also explain the special treatment given to Donaldson and his business practices. St. Roch Market is prime real estate, located in an area referred to by the mayor’s office as a “Cultural Products District.” Bayou Secret’s monthly rent for the St. Roch Market is $3,500 (for the first three years, increasing to $6,500 by the end of the ten year lease), a remarkably low figure for an 8,600-square-foot building with over $3.5 million in renovations.

Sources (speaking under the condition of anonymity) revealed that the rental structure determined by Bayou Secret for St. Roch Market vendors is drastically different. Vendors pay a minimum of $150 per day for rent. With all vendors operating seven days per week, this means individual vendors are paying at least $4,500 in a 30-day month. The minimum rent Bayou Secret collects from eleven businesses comes to a total of $49,500. The monthly collective rent of eleven vendors, paying for individual stalls and the use of a collective kitchen, is at least 14 times greater than the rent Bayou Secret pays to the City of New Orleans each month for the entire building.

Regardless of sales, $4,500 is the minimum monthly rent for vendors. This figure can be even higher for vendors doing well, with some rents exceeding $10,000. A centralized point of sale system, powered through the software system Square, allows Bayou Secret to closely monitor all individual vendor sales and garner varying percentages of gross sales. Bayou Secret places higher percentages on lower earning vendors. Higher earning vendors pay smaller percentages, although they still pay more in rent than vendors earning less. The more a vendor makes, the more Bayou Secret collects. No ceiling is placed on this collection.

A single vendor, paying the minimum rent and a single full-time employee at the federal minimum wage ($7.25 per hour), would need to spend $5,600 each month to cover these basic operating expenses. This figure doesn’t factor in the staffing issues related to the market being open from 9 a.m. to 10 p.m. Sunday through Wednesday with an additional hour on Thursday through Saturday, totaling 96 hours per week. The above figure of basic expenses also doesn’t include the cost of product or any other costs associated with the running of individual businesses. Considering the exorbitant overhead,  along with the lengthy business hours, it is uncertain how this could be a tenable arrangement for vendors. Nonetheless, Bayou Secret’s uncapped earnings facilitated through all sales occurring via a centralized system  ensure income for St. Roch Market’s management.

Bayou Secret’s point of sale system also raises serious questions about the legality of the sales tax applied to tax-exempt eligible products at St. Roch Market. Examples of products eligible for exemption within the State of Louisiana include coffee, cookies, and “potato chips and similar snack foods.” Last month, I purchased four unique items from four separate vendors at St. Roch Market, all of which were improperly taxed. These purchases were: a single bag of coffee beans ($14.95 plus a sales tax of $1.35), one chocolate chip cookie ($2.75 plus a sales tax of $0.25), a bag of “Dirty Chips” potato chips ($1.75 plus a sales tax of $0.16), and a bag of plantain chips ($2.25 plus a sales tax of $0.20). By law, these state sales tax-exempt purchases should have been taxed at 4.5% (in accordance with the Orleans Parish sales tax). All of these food items, considered eligible for state sales tax exemption, were sold with a tax of 9%.

As every sale occurs through a centralized system, all the money brought into St. Roch Market through purchases goes first to Bayou Secret, who then disburses funds to vendors. It is unclear as to why state sales tax- exempt food is being taxed or where the extra 4.5% charged to consumers is ending up. The uncertainty regarding this tax, along with an underhanded rental structure and a potentially illegal liquor license, raises questions as to what sort of business is being conducted in this city-owned property. Several requests for comment from St. Roch Market management were either ignored or denied.

Will Donaldson: Not just the president, also a client!
Will Donaldson: Not just the president; also a client.

Those curious as to where Bayou Secret might direct some of their suspiciously generated revenue need not look far beyond St. Roch Market’s front door. The large, blue, two-story building directly across St. Roch Avenue (at 2401 St. Claude) was purchased for $350,000 by Arcadia Court in November 2014. This past April, a letter written by Tore Wallin—the “owner’s architectural representative”—was distributed to residents of the St. Roch neighborhood notifying them “Arcadia Court LLC owns the building at 2401 St. Claude. We are planning to renovate the old historic building and open a restaurant at that  location.” The letter, a required formality  for submitting zoning adjustment applications with the City Planning Commision, extended an invitation to learn about the proposal and present questions or concerns in early May. The meeting location was listed as “Front  Porch, St. Rock [sic] Market.”

[pullquote] Bayou Secret’s control of St. Roch Market might signify the most current brand of cronyism in New Orleans  government[/pullquote]The obfuscation in this notice is intentionally misleading. It fails to disclose that Arcadia Court features the same members spearheading the controversial St. Roch Market. Three people from the community attended the May meeting. The developers—Arcadia Court—are reported as being present in Wallin’s summary. In reference to a suggestion of two respondents, Wallin reported, “The developers were generally  supportive of the idea and mentioned they would reach out to the neighboring St. Roch Market.”

As previously stated, Bayou Secret operates St. Roch Market. Arcadia Court features all four of the Bayou Secret members as well as Kari Ayala, a New Orleans based real-estate broker. The LLC was formed in June 2014 and lists Donaldson as its registered agent. Perhaps if the residents were made aware that 2401 St. Claude was owned by the management of St. Roch Market, public response regarding the variance application would have been stronger. If St. Roch Market were widely embraced among the residents of the neighborhood, there would be no reason for Donaldson and his business partners to not be more transparent.

A month after St. Roch Market’s opening, a May 12 application was filed for a change affecting the zoning of 2401 St. Claude Avenue to “permit the renovation of a vacant building for use as a restaurant.” In the Board of Zoning Adjustments staff report from June 8, the project description states that the area around the property has “seen a recent increase in development” due in part to “the recent restoration of the adjacent St. Roch Market.” Further into the document is a statement echoing public sentiment of those disappointed in the finished product: “The St. Roch Market adjacent to this site was recently restored and is occupied  mostly by small restaurant businesses similar to a food court.”

To summarize the busy time period for Donaldson prior to St. Roch Market’s April opening: the formation of St. Roch Forage and St. Roch Libations (Donaldson’s LLCs) as well as the acquisition of 2401 St. Claude Avenue (purchased by Donaldson’s Arcadia Court)—all occurred within a ten day period in November. It seems safe to suggest that the concentrated business activity documented prior to opening— along with filing for a zoning variance  a month after the opening to permit a two-story restaurant across the street— indicates Donaldson’s anticipated financial reward from the lease handed to him by the City of New Orleans three  months prior.

Why Landrieu’s office or the New Orleans Building Corporation, the city agency overseeing city- owned properties, would allow Donaldson to profit so intensely from a project hailed as part of New Orleans’ revitalization process is unclear. Landrieu’s embrace of New Orleans as “a hub of entrepreneurship” may provide a clue. Bayou Secret’s control of St. Roch Market might signify the most current brand of cronyism in New Orleans  government, where smooth-talking techie-types with abstract credentials are awarded profit-generating toys built with millions of taxpayer dollars.

St. Roch Market is a classic bait-and- switch business model structured by Bayou Secret and personally endorsed by Landrieu, who went as far as to wear a St. Roch Market t-shirt at Jazz Fest and give special recognition to the project in his State of the City address  this past May. If St. Roch Market is, as Landrieu said, a symbol of New Orleans’ “rebirth and resilience,” a sober examination of these terms  is in order. If creating “something authentic” is predicated upon misuse  of federal funds, concentration of wealth, and capitalizing off of the credibility and tireless efforts of service industry workers, this authenticity isn’t something to be celebrated.

Walking into St. Roch Market, the intent of the business is written into the architecture. The building ’s interior design was overseen by Bayou Secret. The kiosk-like stalls lining the building and the lack of adequate space for retail testify to the failure of Bayou Secret to commit to serving the community as a bona fide market. The egregious planning decisions made by Bayou Secret have put vendors in the unfortunate position of being affiliated with insolent development. Bayou Secret’s model for St. Roch Market is supposedly based on incubating small businesses, specifically restaurants. However, the inequitable rental structure gouging the gross sales of vendors indicates business incubation is not Bayou Secret’s top priority.

The remiss management of St. Roch Market has made it evident that Bayou Secret’s regard for the backbone of New Orleans—the service industry—is little  to none. Considering that the livelihood of many New Orleanians is reliant upon this line of work, St. Roch Market being held up as an example of the “new New Orleans’ way” is ominous.

Jules Bentley contributed reporting to this article.

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