Capital City out more than $400,000 in bringing former market - WFSB 3 Connecticut

I-Team Investigates

Capital City out more than $400,000 in bringing Market to Hartford 21

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HARTFORD, CT (WFSB) -

March 16, 2011 was a triumphant day in Hartford when a grocery store was opening downtown for the first time. But the joy didn't last long and the market went belly-up, leaving behind more than half a million in debt, dozens of angry vendors and an already cash-strapped city holding the bag for a bad investment.

Small businesses don't come much smaller than the Stonewall Apiary.

In the Hanover section of Sprague, Stuart Woronecki and his wife sell honey and honey products. Two years ago they were excited to get into the brand new Market at Hartford 21.

"We gave them honey and honey butter, and maybe even some honey soap," Woronecki said.

The market opened to much fanfare.

The mayor was there, the aisles were packed and the customers were eager to shop.

Stonewall's first batch of products sold out in a couple of days. When the market called looking for more, he asked to be paid first.

"Presumably they marked it up and they made a profit on it," he said. "And I should have been paid with part of that money."

But the market said no, insisting they had 30 days to pay his $129 invoice.

There never was a second delivery. While Stonewall waited, the market closed, never to reopen.

Woronecki tried reaching owners Ryan and Kellyann Jones. He said he called, he emailed and he couldn't get an answer until he showed up unannounced at the restaurant they own in Simsbury.

He walked past a nearly identical banner to the one at the market, and asked Ryan Jones for his money.

"He was very blunt and he told me he was sorry, but there wasn't going to be any payment forthcoming," Woronecki said.

Owners at the Hartford Baking Company got that same message through the courts. This fast-growing niche bakery in West Hartford stocked the shelves with bread.

"They seemed to be selling out every single day," said Scott Kluger, of the Hartford Baking Company. "I mean, the bread was clearly paying for itself. We were in there probably about three months before things started to go a little sideways"

Kluger stopped making deliveries when the money owed approached $2,000. When the market closed, he sued and won a judgment, but he knows it's likely all he'll get from one of his first wholesale customers is an expensive lesson.

"I think there was a lot of hype, everybody was really pumped up, the city was pumped up," he said. "Everybody thought it was going to be a huge hit, but you know, that's how it goes sometimes"

Hype is an understatement.

The only thing missing on opening day was a parade -- and that happened at the registers.

People packed inside and the shelves emptied quickly. It was such a relief to finally have the long-awaited grocery store downtown that the city was a big partner in the deal. In fact, the Channel 3 Eyewitness News I-Team found that they're the market's biggest creditor.

They gave the Jones' $200,000 in initial financing to help build out and equip the space, and another $225,000 in loans along the way. It's all gone, and the city told the I-Team at this point they don't expect to be repaid.

"We're working with the accountants to see where things stand and certainly there's no funds available to pay folks," said Rich Rochlin, attorney for the Market at Hartford 21 owners.

Rochlin is the attorney for Ryan and Kellyann Jones. He insists they have taken the closing of the market harder than any of the people they owe.

"My clients thought it was a good business plan, the city thought it was a good business plan, and we held on as long as we could and we tried everything we could to make it work, but in the end the numbers just weren't there," Rochlin said.

The market was run as an LLC, a limited liability company, and most vendors did business with that company, not with the Jones' personally.

Since the LLC is broke, the vendors, like Stonewall and the Hartford Baking Company, are essentially out of luck. Unless there's some sort of fraud, the law won't let them chase the Jones' personally.

The LLC protects them from the company's debts.

"Unfortunately," Rochlin said. "We can't roll back time and make the business a successful business that has the money to pay them"

The already cash-strapped city is a different story.

The I-Team spoke by phone to Wayne Benjamin, the city's Director of Economic Development.

The I-Team asked multiple times for Benjamin or someone from the city to speak on camera, but the city refused.

Benjamin told the I-Team that the city money was transferred to the community loan fund, and that group did the due diligence work, like reviewing the business plan and checking the Jones' financial background.

Benjamin said it all checked out and that the business plan appeared to be a good one.

Benjamin admits that the city, too, was very excited at the chance for a grocery store, and may have taken on a bit more risk because this project was a major goal, but he said even in hindsight, the warning signs just aren't there.

The city has admitted they haven't been repaid one cent on their investment, and at this point they don't expect to be. But, the city is in a better position than the individual vendors. They weren't just partners with the LLC, they were also partners with Ryan and Kellyann Jones.

Rochlin said the Jones' guaranteed the city loans personally.

"My clients aren't walking away from this scot free," Rochlin said. "They obviously have a huge financial burden to meet. They're devastated both financially and personally. It took a toll on them. They believed in Hartford, they wanted to contribute to Hartford and so they risked their money, their time and their reputation to try to build something there, and unfortunately it didn't work out"

But the city's hopes of being repaid are slim -- so much so that they haven't filed suit, said they don't expect to start legal action anytime soon and think their best chance for repayment would be if another grocery store someday opens in the space and uses some of the equipment bought on the taxpayers dime -- which would at least provide some return on their investment.

But that's no consolation for the little guys. The I-Team has confirmed more than $150,000 is still owed to small businesses, and more than one of these vendors wondered why the Jones' can't use some of the profits from their restaurant to pay the market's bills.

After all, the restaurant prides itself on offering local, farm fresh items.

"I had hoped that just as a good faith as a chef who's buying from local farms, I had hoped he'd make good on it, but he didn't and that's OK, it's over for me now," Woronecki said.

"That's, I think, a bit presumptuous. A restaurant can be busy, but they don't know about the financials of the restaurant, they don't know about their investors, they don't know about their overhead," Rochlin said. "Something can be busy, but a lot of things are busy. So, certainly my clients, if there was anything available to make payment that they weren't obligated to pay, they would do it, because they're those kinds of people. They're wonderful, good people who are devastated by this."

In recent months there's been rumors of new store heading downtown, perhaps using that Hartford 21 location and some of the equipment purchased with taxpayer money.

But Benjamin said there's nothing confirmed yet.

The I-Team asked Rochlin if he and the Jones' have an opinion of what went wrong. He said they believe the space was just too big, and their business plan was overwhelmed by utility bills and salaries that a smaller location might have avoided.

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