Hailed by city officials as a major achievement in ending a “food desert” in an underserved area of ​​Baltimore, the ShopRite supermarket on Liberty Heights Avenue is in financial difficulty.

Today, the Board of Estimates excused $ 500,000 from a $ 2 million promissory note issued to the Howard Park store, which suffered from lower than expected revenues, according to two sources.

The action means that the primary owners, Klein’s ShopRite of Maryland, will only have to pay $ 600,000 on the first loan payment due next month.

The board of directors also today agreed to wipe out the remaining $ 900,000 (currently owed in annual installments of $ 100,000) if the store employs “no less than 100 residents of the city of Baltimore with a gross salary of d ‘at least $ 2,000,000 “.

Translated, this means Klein’s ShopRite must maintain an urban workforce whose individual gross salary would average $ 20,000 per year over the next nine years.

According to BOE’s agenda, the retailer had requested the reduction of $ 500,000 to “help continue operations at the site.” Klein’s is now looking for “bigger refinancing” to keep the store afloat.

The initial funding came from a $ 14.65 million new business tax credit underwritten by The Reinvestment Fund and City First Bank.

Deferred purchase

The Klein family never paid the $ 2 million purchase price for the six-acre lot on which the ShopRite store sits.

Instead, they received an eight-year deferral of the purchase price, which in itself was a big reduction from the $ 4 million the city spent to buy an abandoned SuperPride store and clean up the site of the avenues. Liberty Heights and Gwynn Oak.

Colin Tarbert, President of Baltimore Development Corp. who arranged the deal, did not return a message asking for comments on the loan reduction.

Neither Henry Raymond, the city’s chief financial officer, nor Howard Klein, vice president and legal counsel for Klein’s Family Markets.

KEY CONTEXT:

Slow progress at ShopRite frustrates Howard Park (12/6/12)

Rite Aid asks for $ 600,000 to lift restriction on Howard Park market (2/8/13)

Doors open today at Howard Park ShopRite (07/31/14)

Today’s loan reduction was approved without comment by Mayor Bernard C. “Jack” Young and City Council President Brandon Scott.

Comptroller Joan Pratt alluded to the reduced payment (which she called a ‘modification’), saying, “This is an example of socially responsible investing in a historically underserved community, and that’s why I am. proud to support this article today.

Mayor Stephanie Rawlings-Blake with the Klein family and others at the 2014 opening of the Howard Park ShopRite. (Klein’s Family Markets)

Hindered and greeted

Since the closure of the SuperPride store in 1999, the city had tried to set up a supermarket on the site.

Campaigning for mayor in 2011, Stephanie Rawlings-Blake brought local residents to their feet at New All Saints Church by declaring that the Klein family would build a state-of-the-art supermarket.

Under city leadership, the Klein’s built Baltimore’s largest grocery store, with 67,000 square feet of space, as well as community meeting rooms and other amenities. (By comparison, the new Whole Foods store opened in June in Harbor East and is 47,000 square feet in size.)

Still under city leadership, a source said The drink, the retailer was pressured to hire Commercial Construction, the politically connected vehicle Kevin Johnson and silent partner JP Grant, to manage stormwater management and other work.

The collaboration cost both time and money due to Commercial’s allegedly sloppy work. “I felt very sorry for the Kleins,” the source said.

When it opened in July 2014, the store was hailed by then BDC President Brenda McKenzie as an “important signal that there is money to be made” in Baltimore communities. ShopRite would serve as an “anchor point” to activate new business activity in Howard Park, she said.

But the store never hit the expected revenues, even after Target closed a competing grocery store at the Mondawmin Mall in February 2018.

As the Covid-19 pandemic took shape this spring, the Kleins were faced with payment for the long-delayed purchase, with the first installment falling due on September 30.

Today’s agenda item, prepared by BDC, alludes to the reduction of $ 500,000 as being justified by “the lack of perceived financial incentives from the state or city to hiring and training employees ”.

When they received the $ 2 million price deferral in 2011, the Klein family accepted a “$ 500,000 commitment to pre-open employee training,” according to BOE records.

UPDATE 8/27: The Klein family released a May 21, 2016 letter from then-housing commissioner Paul Graziano saying the city will credit Klein’s ShopRite $ 500,000 because the retailer only received a portion of the training funds. of labor added as a sweetener with the purchase of the Liberty Heights land.

Klein’s told the city it had only received $ 241,437.91 in aid from Maryland Social Services for hiring and training employees. Those funds – used to train 49 people, 12 of whom were still employed at the store – fell short of the $ 1 million pledged as part of the $ 2 million purchase of the land.

“Any shortfall [in taxpayer aid] up to $ 500,000 can be applied to the purchase ticket. . . and will ultimately be passed on to the tenant, ”Graziano wrote.

It is still unclear why city officials cited in yesterday’s BOE diary the need for “greater refinancing” of the store to maintain operations.
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