The Economy of Public Markets: Case study of Pike Place Market, Seattle

Introduction

Sustainability and quality of public spaces depend on the financing model used for their creation, management and maintenance. As public spaces have direct effects on attractiveness of cities and increase of property values, many theories consider local governments as the principal stakeholders investing in public place projects (UCLG, 2016). However, responsibility of management of public spaces should not be vested with the local government alone.

Public space entities rely on one or more revenue sources such as economic development organisations, merchant’s associations, universities, non-profit informal volunteer groups, daily visitors, commuters, etc. (Trudeau, 2017). As public funding for building and maintaining public spaces is inadequate in many communities (Nagel, 2017), cities strive to approach with innovative funding sources to supplement the local budget (UCLG, 2016; Action Canada, 2015). Each public space has its own model for funding and management specific to their needs and vision. This article concentrates on public markets and will discuss the case study of Pike Place Market in Seattle.

Models of funding and management of public spaces

Models of funding can be generally grouped under three categories (Stavel, 2017):

  1. Institution based – where institution(s) and/or city is responsible,
  2. Public Private Partnership – where corporate partners or a group of stakeholders are responsible and
  3. Grassroots Partnership – where volunteer led community groups are responsible.

Figure 1: Categories of models of funding. Source: Greenest City Scholars

The eight models of funding identified by CABE space, London are (CABE Space, 2006):

  1. Traditional local authority funding – by the local authority from its general revenue budget.
  2. Multi-agency public sector funding – by two or more government departments or agencies (health, crime, education, etc.) to meet cross-cutting targets.
  3. Taxation initiatives – from levies on properties or tax credits.
  4. Planning and development opportunities – funding ensured by planning agreements for new commercial and residential developments.
  5. Bonds and commercial finance – from loans repaid by local businesses or residents.
  6. Income generating opportunities – from revenue income such as licensing and franchising, sponsorship, entry fees and fines, etc.
  7. Endowments – long-term funding from the interest gained on investments in assets such as property or the stock market.
  8. Voluntary and community sector involvement – funds raised by non-profit organisations.

In addition to the above, models such as event based, self-governing special assessment districts, etc. are also identified as innovative mechanisms. It is possible for two or more financing models to co-exist in a single project (San Francisco Planning, 2016). Therefore, it is important to understand how the economics of a public space is managed, where multiple sources of funding and multiple financing models generally co-exist.

The Economic Value of a Public Space

A high-quality public space has significant impact on the economic life of urban centres (CABE Space, n.d.). The direct economic benefits of public spaces are (CABE Space, n.d.; Bennete, 2016):

  • Property value adjacent to a park or green space increases,
  • Businesses prefer locations adjacent to public spaces,
  • Footfall in local retail increases

and indirect benefits are:

  • Positive impact on general, physical and mental health reduces the public health care cost
  • Energy saving through natural ventilation, etc.

Public markets as public spaces

Public markets, generally owned and operated by public or non-profit entities, are intentional and diverse combination of shops/ stalls serving a community’s daily shopping needs and showcasing its culture. They typically sell locally grown or produced commodities (Zaretsky, 2017).

Public markets are always relevant to planners seeking a multipurpose tool for social, economic and community development. For example, the Chicago’s Maxwell Street Market is a municipal policy tool established to address unemployment, enhance food security and incorporate new immigrants (Morales, 2009). Similarly, the Portland Public Market House, Maine set in two levels of a mixed use building provides a neighbourhood meeting place, serves local cuisine prepared in a community kitchen and thereby benefitting the local economy (Barron, 2016).

Public markets help in improving the quality of life of a community (Pps.org, 2010). They provide benefits to urban land markets, community health, ecology, environment, expansion of businesses and promote income-earning opportunities (Morales, 2009; IPM, n.d.)

Figure 2: Benefits of public markets. Source: Project for Public Spaces

Dilli Haat, New Delhi is an example of urban transformation of a leftover urban space to an active public space. Managed by Delhi Tourism and Delhi Municipal Corporation, it sells artefacts, local food and serves as space for cultural activities (Raheja, Borgmann and Pillai, 2015).

Generally, the funding and management of public markets is based on multi-agency public sector or non-profit organisation models. The case study explained here is a long term success story of the Pike Place Market in Seattle which has an innovative funding and stewardship model to follow.

Case study of Pike Place Market, Seattle

The Pike Place Market is located in the Belltown neighbourhood of Seattle, Washington, USA opened in 1907. It won the Rudy Bruner Award for Urban Excellence in 1987 (Langdon, 1990). The market (CNT, 2010):

  • acts as small business incubator (occupies over 300 small businesses)
  • improves economic development
  • connects local farmers to consumers (130 stalls for local producers)
  • provides social services like medical clinic, preschool, etc.
  • provides affordable housing
  • improves community cohesion
  • preserves historic buildings
  • acts as tourist spot
Funding and management

The Pike Place Market is run by ‘Pike Place Market Preservation and Development Authority’ (PDA) since 1973 (CNT, 2010). PDA is a non-profit, public corporation chartered by the City of Seattle in 1973 to manage 80% of the properties in the nine-acre Market Historical District. PDA acts as a public steward to the market whose council members are appointed by the Mayor, making it more accountable and transparent (Turnbull, 2016).

Over 60% of revenues for the functioning of the market are derived from the tenants through rent, utilities, and other property management activities (CNT, 2010). The remaining 40% is from investments and bonds. About 75% of budgeted expenses is for the tenant services such as maintenance and security to insurance, utilities, and property management. Another 14% is for PDA management and administration and 10% for marketing and other programmatic expenses (Turnbull, 2016).

Figure 2: Sources of Revenues and Expenses of PDA. Source: What Pike Place teaches us about place governance, 2016

The PDA has now started utilising bonds for the construction of new ‘Market front Expansion’. A part of the Funding is allocated for the affordable housing construction. In 2017, the market generated total revenue of $18,821,615 and a 4% increase in commercial retail sales compared to the previous year (PDA, 2017).

Impacts of a transformative public market

In due course of time, Belltown neighbourhood changed from a low rent, semi-industrial arts district to a place hosting trendy restaurants, boutiques, night clubs, residential towers, warehouses and art galleries (CNT, 2010). The market itself has expanded to more levels and now also occupies antique shops, comic book sellers, etc. The public market district has become a strong neighbourhood community providing homes for nearly 500 low-income seniors. It also provides services like medical clinic mostly serving poor, HIV positive, elderly or differently abled patients. Friends of Market, Historical Commission, Pike Place Merchants’ Association, Market Foundation, etc. are a few of the community partnerships/ collaborations existing in the market (CNT, 2010). It has formed a new public plaza as part of the market front expansion adding up to socially active public spaces in the city.

Image 1: Pike Place Market in 1920s

Image 2: Front view of Pike Place Market in 2017. Source (image 1 & 2): pikeplacemarket.org

Similar example

Ann Arbor Farmers Market in Detroit, a public market for local produce, food and crafts, is owned by the City of Ann Arbor and run by the Parks and Recreation Department. 1/3rd of the market’s operating cost is from City’s General Fund and 2/3rd from vendors’ fees making it a good institution based funding model. Eastern Market in Detroit has 70 % of its funding covered by vendors’ fee and rest by the city. It utilises private funding from companies like W.K. Kellogg Foundation. The market is run by a board of directors from private, public and non-profit sectors (CNT, 2010).

Image 3: View inside Ann Arbor Farmers Market, Detroit. Source: annarborchronicle.com

Image 4: Easter Market, Detroit. Source: detroit.curbed.com

Conclusion

The case study of Pike Place Market shows that public markets benefits in many ways:

  • by connecting local farmers with the consumers directly,
  • creating jobs, and
  • providing active public spaces.

They provide economic development, community cohesion and overall social development. PDA Council utilised the revenue from rental sources for meeting the expenses in operation and maintenance of the market. In addition, using revenue surplus and bonds for new developments, makes it a sustainable model.

Similarly, Ann Arbor Farmers Market and Eastern Market are run by institutions of public-private partnerships and uses vendors’ fee to generate revenue. It is evident from the three cases that non-profit institution based stewardship model can be adopted for the management of urban public markets. If India’s traditional public market culture is augmented with similar management concepts, it can have positive impact on the city’s economy. Such new and innovative funding and stewardship solutions are necessary to sustain any public space in cities around the world.