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Rite Aid seeks $600K to release restriction on Howard Park market

City is balking at the price, after mishandling the land sale that got the supermarket project into a legal quagmire.

sign announcing howard park grocery

Coming not so soon: This sign has been posted for more than a year at the site of the much-delayed Howard Park supermarket.

Photo by: Century Greene

What’s the latest glitch holding up Howard Park’s 14-year-long quest for a supermarket in a Northwest Baltimore “food desert”?

The demand by Rite Aid Pharmacy for $600,000 from Baltimore City to release a restrictive covenant that’s blocking the financing of a proposed ShopRite grocery store and pharmacy.

Rite Aid no longer owns the parcel at 4629 Liberty Heights Avenue, but it retains restrictive legal language that prohibits locating a pharmacy on the supermarket site.

Top city officials had known about the restriction since at least 2009. But the matter was never resolved, leading to the current delay.

The problem was publicly revealed several months ago when the Klein family – designated by the city as the developer of the new grocery store – discovered it could not obtain private financing because the land title wasn’t clear.

Far Apart on Price

The city solicitor’s office recently began negotiations with Rite Aid to extinguish the covenant. According to multiple sources, the city offered $15,000 for removal of the language, and Rite Aid countered with a demand for $600,000.

“We’re really disappointed,” said Preston Greene, president of the Howard Park Civic Association, who has been briefed on the negotiations.

“We always considered Rite Aid good neighbors. They have many drug stores in the area, but this kind of action makes it seem like they are more interested in money than [in] the people they serve.”

Greene said he has tried to open up a dialogue with Rite Aid officials at their corporate headquarters in Camp Hill, Pa., but has gotten no response.

Lisa Winnick, associate general counsel for Rite Aid, did not respond to a request for comment yesterday from The Brew. Allan Hillman, a Connecticut-based lawyer who is representing the pharmacy chain, said he was not authorized to speak for Rite Aid and referred all questions to Winnick.

UPDATE: The Brew received this emailed response from Ashley Flowers, senior manager for public relations at Rite Aid: “We are in negotiations with the city concerning this matter and hope to reach a solution that will be fair to all parties.”

Ordinance to Condemn Covenant

In response to Rite Aid’s demands, the Rawlings-Blake administration is trying to force the pharmacy – which has 44 outlets in the city – back to the bargaining table through the threat of condemnation.

Community leader Preston Greene is "really disappointed" with Rite Aid. (Photo by Century Greene)

Community leader Preston Greene is “really disappointed” with Rite Aid. (Photo by Century Greene)

A bill “to acquire by purchase or condemnation” the restrictive covenant has been introduced in the City Council.

City Solicitor George Nilson would not discuss the details of the city’s negotiation strategy, but indicated that he hoped the bill would encourage Rite Aid to reach a settlement.

City Has Spent Millions

Greene said his group is extremely frustrated by the city’s failure to resolve the legal issue.

“The people at City Hall have known about this covenant for years, but they didn’t do anything about it,” Greene said.

Greene said his community group had raised the matter many times with the city solicitor’s office and representatives of the BDC.

The Brew has reviewed property and related records of the former Rite Aid store. Here is a time-line of a project that has so far cost taxpayers millions of dollars in land acquisition and demolition costs, but so far hasn’t gotten a supermarket built:

July 1994: Rite Aid of Maryland purchases the 18,000-square-foot property, with 12,000 square feet of enclosed space, for $220,000.

1999: Super Pride Supermarket – located next to the Rite Aid – closes, leaving Howard Park without a full-service grocery store.

May 2000: Rite Aid sells the property to Vicken Baklayan for $530,000. Baklayan opens up a tennis shoe store.

February 2009: The city offers $1.1 million for the property – double what Baklayan paid – based on an appraisal by Gilbert Advising and Appraising LLC hired by the BDC.

Mayor Stephanie Rawlings-Blake, then City Council President, approves the purchase, along with Mayor Sheila Dixon, during a Board of Estimates meeting.

May 2009: The BDC acquires title to the property as part of the 6.6 acres it is assembling for the new supermarket.

August 2011: The BDC is allotted $1,030,286 by the Board of Estimates to clear the land of all structures, including the former Rite Aid building.

The BDC had already spent at least $3 million in acquiring the 6.6 acres (encompassing the old Super Pride and Rite Aid stores) and relocating tenants and other displaced businesses.

August 24, 2011: Mayor Rawlings-Blake announces with fanfare the sale of the land to the Klein family for a ShopRite supermarket and pharmacy. The Kleins agree to buy the 6.6 acres for $2 million, but the city lets the Kleins defer payment on the property until the eighth-year anniversary of the settlement date.

December 6, 2012: The Brew reports that the Kleins cannot obtain private financing because of the Rite Aid covenant. Settlement is postponed until the matter is resolved.

January 23, 2013: Bill 13-0184 is introduced to the City Council “for the purpose of authorizing the Mayor and City Council of Baltimore to acquire, by purchase or condemnation, the fee simple or other interests in certain property known as 4629 Liberty Heights Avenue, and needed for extinguishment of a restrictive covenant.”

February 4, 2013: The bill passes the first reader, or preliminary Council approval.

February 6, 2013: City Solicitior Nilson tells The Brew he hopes Rite Aid will return to the negotiating table. He declines to say how much the city might be willing to pay to extinguish the covenant.

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  • Rob Carlson

    Your timeline doesn’t indicate when the covenant was added. Was it the May 2000 sale?

    • baltimorebrew

      That would be my guess, but the exact date of the covenant is not recorded in land records or in the bill going through the Council. -MR

  • http://profile.yahoo.com/EKMWHINIGSIZGS3QAIXGTUQKJA treje

    Why doesn’t the grocery store simply not have a pharmacy, like the Giant on 41st St?  Plenty of grocery stores have to deal with things like this, like Giant and Superfresh before them, as there’s a restriction there too, as well as at the Rotunda when Giant was there.  Seems silly to hold the whole project up because of that!

  • http://twitter.com/bosconet p johnson

    Anyone know if the 25th Street Station development is going to add any covenants to the deed that could complicate future uses of the site once Wal-Mart tires of that store…..

    What about the Westside Superblock? Any other ‘big’ developments? 

  • RealEstateLawyer

    Looks like the restrictive covenant was in the Deed that transferred property from Rite Aid to Baklayan. The Deed is dated 2/2/2000 and is available at Liber 330, Folio 164.

    Language:

    “Subject nevertheless to the restriction that the premises, either alone or in connection with another property, shall not be used for the sale of prescription drugs or health or beauty aids, or as a pharmacy or drug store, or for selling or dispensing items requiring the presence of a licensed pharmacist.  This covenant shall run with the land and shall be binding upon the Grantees, their successors and/or assigns forever.”

    • pinkderby

      Well, that may cover the preexisting space that Rite-Aid held. But, the space/lot has been expanded. So, if the community wanted to place a drug store that sells health and beauty aids on a section of the expanded lot –wouldn’t that be legal?

  • Barnadine_the_Pirate

    I don’t know which is more depressing — the ongoing, wasteful, abject incompetence of city government, or the fact that at this point I expect nothing other than abject incompetence from city government.

    It should be pointed out that for all the many millions being pissed away on this project, there are at least three large supermarkets within 3 miles of this location — one at Mondawmin, one at Reisterstown Road Plaza, and one in Hamden. I know the USDA defines a “food desert” as a low-income urban census track more than a mile from a large supermarket, but seriously, spending in excess of $3 million just so people don’t have to go an extra few blocks to buy groceries seems idiotic even by Baltimore City standards.

    • pinkderby

      You have no idea the hurdles and delays our community has endured. At the start of this project good faith agreements were made between the city and residents. The three supermarkets you mention are not within walking distance for our aging citizens. This was one of the agreements made between the aging population of the community and the city at a time when a school building was being revitalized for seniors and at the same time, a new senior apartment was being built on a nearby lot. Many seniors were on their way out of the community, but the city and developers asked (in a meeting) them to reconsider. The seniors agreed to finish their golden years in the community if viable businesses remained in the neighborhood. A big reason they agreed—because they were promised a new supermarket, within walking distance. They were told – it would replace the closed supermarket that sat on the Liberty Heights and Hillsdale corner. Please know, the seniors, who love their neighborhood, lived and worked in the community, 20, 30, and 40 years as educators, businessmen and women, clergy and other professions. They held up their end of the agreement. Now, it’s time for the city to do the same.

      • Gerald Neily

        PinkDerby and Bernadine, you are on the exact same page. Your key common point is City incompetence, both in too many promises and too little delivery.

        • pinkderby

          True indeed! But it expands to the State’s failure to the city. Fourteen years covers others who were in adminstration. If the Governor wanted this to be settled he could have handled it when he was the Mayor. Governor Ehrlich had the power and connections to make this happen too. Let’s remember…the money and power flows from the state to the city.

      • Barnadine_the_Pirate

        I love my city neighborhood, too.  But I don’t have a large supermarket within walking distance, either. Maybe the city should spend $3,000,000 to build one in my neighborhood? Or maybe if there was a market for a decent supermarket within walking distance, the owners would build it without a giant taxpayer handout? Or maybe if I grew tired of taking the Light Rail or a bus to the supermarket, I would move somewhere else?

        A good supermarket within walking distance is a very good thing. I think that all neighborhoods should have that. It would really make the city a better place.

        It would also make the city a better place if we all got free icecream cones, and money just rained magically from the ceiling at City Hall so we wouldn’t have to pay more and more in taxes to get fewer and fewer services.  My city income taxes went up, and yet the potholes get worse. The schools tread water. The fire departments shut down, as do the rec centers. And the city wants to slash worker pensions to balance the books.

        And yet we have $3,000,000 to waste so people in Howard Park don’t have to travel 2 miles to go grocery shopping. Priorities, people.

    • http://profile.yahoo.com/NP3N43274NXJK5VQH7SMOUEFBE Pegasus111

      Thank you for your lack of concern for others. The fact is – neither Mondawmin nor Reisterstown Plaza is the issue. The money has already been SPENT. The homeowners in Howard Park have taxes as high as everywhere else in the city. Most of the homes are single family on nice size lots. There are many older citizens who would be forced to catch 1,2, or 3 buses to GET to the store(like my mom). They then have to pay to get their groceries home. Since WE ALL PAY TAXES, all of Baltimore should be represented equally. But it is not – look at the difference in Northwest Baltimore and Charles Street or Roland Park. Since the millions have been pissed away(your words), spending a little more to settle (with funds already allocated) makes fiscal sense. And if you read the article, the owners cannot get financing with the covenant in place. The other point, there are places in Baltimore, Carroll, Harford and Anne Arundel county where you will be most welcomed. 
      One more point, Howard Park has NEVER been considered LOW INCOME. 

      • pinkderby

        Some people will never understand nor except the fact that 14 years ago the city made this project a priority. Now, some wonder if monies that were set aside for the project have not been co-mingled with other project funds. Stall they might—but the truth will come out. Now, that the site for the supermarket has doubled, we need to watch carefully to see if politicians try to place apartments or some other large development on the lot instead of what has been intended. Not sure if you remember the quick and slick move that almost happened with the property when some city official tried to slip in a BP gas station on the lot. The tricks never end. The priorities of the city of Baltimore should be all the people and that includes the Howard Park community too!

      • Barnadine_the_Pirate

        Pegasus, so since we’ve already wasted $3 million doing something that isn’t really the city’s business, we might as well waste $3.6 milllion? And I have no idea whether HUD classifies Howard Park’s census track as low-income or not, but if it doesn’t, then it doesn’t even fit the definition of “food desert,” undercutting even that tepid rationale for the project.

        Reread my earlier post. I am not saying that it wouldn’t be good to have a decent supermarket there. I’m saying that given very finite resources and much more pressing demands, this is a misuse of city money.  This is something that the private market can and should be able to fix. There are a lot of things which we leave to “free markets” to fix which should be handled by governments — the power grid, for example, delivery of healthcare, the operation of prisons, the enforcement of traffic laws.  But the development and placement of grocery stores? Not properly the task of government, as this debacle demonstrates.

  • pinkderby

    In response to the following comment “spending in excess of $3 million just so people don’t have to go an extra few blocks to buy groceries seems idiotic even by Baltimore City standards,” you must know the history of the agreements made between residents and the city in this area concerning the placement of this supermarket. A senior home and apartments was built so that seniors who had spent some 20, 30, or 40 years in the community, raised families, taught at community schools would continue to live in the area. The seniors said they would agree if viable businesses along with a supermarket to replace the closed market would be located in walking distance. The city and neighborhood worked hard to make the senior home and apartment a reality. Now, we expect them to make good on their agreement. This is just one glitch in our supermarket being built. For me, an aging citizen of this community, the three supermarkets mentioned in another comment are the answer. They service the communities in which they reside. I have been to two of them to shop and and look forward to one within walking distance, as I give up driving for my safety and yours. Please be sensitive to our area with it’s rapidly aging community.

  • 13thClockStriker

    My question, are people getting drugs, health and beauty aids there now, I am quite sure they are not…build the store without no health and beauty aids. The people in that area need a store. Just don’t sell those products, and save the taxpayer, and the city a lot of money

  • Michele Brewington

    I think that the point should be made that provisions like this are destructive to free enterprise. If my business model includes a pharmacy, as the land owner I shouldn’t be restricted by the demands made by the former landowner.  This provision is now affecting land use of the former Super Pride, the small strip of mom and pop stores as well as homes that were also acquired to build the new market based on that little corner formerly known as  Rite Aid.  How common is this kind of language in commercial property sales? 

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