Each weekend, dozens of families descend on the Mercado Central on Lake Street in Minneapolis to enjoy a hot bowl of menudo -- a traditional Mexican soup -- or buy candies and sweet bread that they cannot find at the supermarket.

More than just a hub of Latino food, crafts and culture, the Mercado was intended by its nonprofit founders to encourage entrepreneurship, in part by offering its merchants the chance to own the building. But that goal remains elusive because of bitter disagreements among the merchants that have landed them in court and cost their cooperative thousands in legal fees.

"It's a shame that this isn't working the way it should have," said Ernesto Payan, who owns El Cafe coffee shop at the Mercado. "If this continues, we will not be able to continue as a cooperative, and I fear that the Mercado may no longer be around."

The Mercado opened at 1515 E. Lake St. in 1999 after a group of recent Latino immigrants came up with the idea of establishing a Latino-themed public market, much like those found in Mexico. The city of Minneapolis, Whittier Community Development Corp., the Neighborhood Development Center (NDC) and the Project for Pride in Living (PPL) assisted the merchants with business training and funding to start the Mercado. Within a few years, about 30 businesses occupied the three floors of the building -- taquerias, bakeries, a smoothie shop, clothing stores and others that catered to Latino customers. As members of the co-op, merchants have a voice in the operation of the Mercado.

"As a model for other projects, it has been a huge success," said NDC vice president Mike LaFave. "The Global Market, which we also founded, was inspired by the Mercado as a small-business incubator."

While PPL is the majority owner of the building, the organizations established a goal for the Mercado's co-op, made up of its merchants, to one day own and manage it. The requirements included having a positive cash flow for two consecutive years and that the Cooperative Mercado Central, Inc. "have a strong management team capable of managing the operations of the company."

The 30 member co-op is split over how the building should be managed and administered. One group of merchants believe that the co-op's board of directors lets certain members get away with late payments, among other favorable treatment. The others support the current board of directors and believe that the board needs to move forward and open the co-op membership to other merchants on Lake Street.

The dispute has landed the two groups in court. Payan, who is suing the current board along with 13 other merchants, said the board was not elected in accordance to the co-op's bylaws. Payan said they want a new election, so that there is fair representation of all members.

"We all have the same rights as members of the co-op," Payan said.

Rodrigo Cardozo, the cooperative president, said the dispute has cost the co-op thousands in legal fees and is not moving the Mercado toward its goals, including owning the building.

"There is no winner here. There are only losers," Cardozo said. "Whether the suit is won or lost by either side, the co-op has lost the trust of its members and leadership. We need to fix that and bring people together."

Last month, to deflect the claims of favoritism, the board hired an outside firm to oversee the management of the Mercado, Cardozo said.

"There is some discord there. There is no need to whitewash that," said Project for Pride and Living Executive Director Steve Cramer. "It is something that the two groups have to find a resolution among themselves."

Cramer and LaFave said disputes like these are not unusual within cooperatives. LaFave said the discord is not productive for moving the Mercado toward its greater goals of autonomy. Several merchants said they want to see NDC and PPL take a greater role in mediating between the two groups, but LaFave said "it wouldn't be an appropriate role to mediate a dispute between members."

Despite the discord, the Mercado is fully occupied and on Saturday, customers lined up for steaming soup and tostadas at TortillerĂ­a La Perla. Cramer said the Mercado is not going away.

"What may not be around is the cooperative structure, and that would be unfortunate," Cramer said. "It may not be able to take advantage of the model of self-governing and ownership."

Alejandra Matos • 612-673-4028