File this one under the very un-American concept of pay now, buy later.
A Mexican-style market under construction near the Memorial Coliseum is being built using an unusual method of financing especially for a venture that normally would have trouble securing a loan.
Future customers are buying $1 coupons, and when the mercado opens this summer in an old garment building in the USC neighborhood, the coupons can be redeemed at any of the various food and handicraft stalls set up inside.
“So far we’ve sold $60,000 in coupons,” said Melanie Stephens, director of community relations at Esperanza Community Housing Corp., the nonprofit group building the 34,000-square-foot market.
The market is a new kind of venture for Esperanza Community Housing, which has developed affordable housing, child-care and community centers for the working poor in South Central Los Angeles, among other things. A mercado was considered a good way to create a sense of community and jump-start some of the residents’ small-business ventures.
That was three years ago. Since then, Esperanza has been figuring out a way to raise the $6 million it needed to buy the former Mr. Marty’s garment building at 3655 S. Grand Ave. and rehabilitate the 1967 structure. So far, $3 million has been raised in grants, federal funds and donations.
The presale of coupons has been a minor but important part of the financial formula to build what is now being called Mercado la Paloma, or Dove Market.
Washington Mutual Bank bought 20,000 coupons. It plans to distribute 5,000 of them to neighbors in the area and the rest to customers at bank branches located near the market.
Bank of America acquired 10,000 coupons, and Tokai Bank bought 20,000.
Also, local residents are stepping up. Ruben Lizardo, who works at the Community Development Technologies Center, a technical trade school near the market, purchased 20 coupons to show his support.
“I feel it is a good way to engage the various merchants and vendors in this area who are going to be a part of their own development,” he said. “But it took me a while to figure out the concept.”
The concept was originated by Frank Totoriello, a deli owner in Great Barrington, Mass. who lost his lease several years ago and couldn’t get a bank loan to move to another store. Totoriello started selling discount coupons that could be redeemed after he opened his new deli, and was able to fund his move with the proceeds. “The concept stuck with me,” Stephens said.
The market’s second floor will have offices for various nonprofit organizations. The main floor will have a commercial kitchen that can be rented by caterers on a temporary basis. There will be 40 permanent stalls where vendors will sell everything from Yucatan-style pork wrapped in banana leaves to handmade tamales to hand-carved wooden items.
The coupons being sold for Mercado la Paloma can be redeemed starting in July, when the business opens in a two-story building that will be covered with bright murals. Merchants who accept the coupons will be able to use them in lieu of cash when paying monthly rent for their retail space.
