Dawson’s Market, the resurrected Rockville Town Center grocer, is eligible for up to $400,000 in taxpayer-funded city grants this year under a deal completed late last month.
If it meets performance benchmarks, the store could receive the lion’s share of a new city-backed economic development fund designed to help struggling businesses, according to Rockville Economic Development Inc., which is administering the Rockville Small Business Impact Fund program.
The program was approved last fall after several retailers in Rockville Town Center, including Dawson’s, abruptly closed.
Rockville’s mayor and City Council authorized $430,000 in grants for 2019, the first year of a pilot program, and earmarked an additional $2 million over five years, beginning in 2020.
Grants for Dawson’s, which struggled with declining sales before it closed in October, could be worth up to $2 million over five years, based on a preliminary approval to extend the program for the grocer beyond 2019, said Cindy Stewart, executive director of REDI, a nonprofit advisory group set up by the city to boost economic development.
“REDI is pleased that the first recipient of the Small Business Impact Fund is Dawson’s, and that they, in partnership with REDI and other supporters, are able to reopen the store under new ownership,” Stewart said in an email. “The grant is a five-year grant, so they are eligible for additional years provided they are performing per the grant agreement terms.”
In addition, Dawson’s is receiving a five-year, $350,000 loan from Montgomery County’s Economic Development Fund that carries a below-market 5 percent interest rate for six years, according to county spokesman Neil Greenberger.
After a six-month deferment period, a $6,769 monthly repayment fee will kick in for Dawson’s new owner, Bart Yablonsky.
None of the government dollars being used by Yablonsky are contingent on private financing. Greenberger said the county was aware Yablonsky was trying to secure private financing, but they knew there was a chance it might not happen.
Yablonsky is the former chief of operations for the store, which specialized in organic products.
In December, Yablonsky said he had secured private financing and a county loan as part of his efforts to reopen the store. However, last week Yablonsky said those plans did not pan out.
Greenberger said a decision to approve the small business loan “came with the knowledge that Rockville Economic Development would also be helping Yablonsky with his finances.”
Former County Executive Isiah Leggett and the County Council approved Yablonsky’s economic development loan before a new county executive and several council members were sworn in Dec. 3, Greenberger said.
The loan is restricted to working capital-related expenses.
“The fund is available to try and help businesses succeed,” Greenberger said. “It’s quick and easy, but it’s a loan. This is not a handout, it’s a helping hand. The county wants to see businesses succeed.”
Under the Rockville program, the grocer is eligible for $100,000 each quarter in 2019. The city’s lawmakers must approve program funding each year and a REDI review panel will approve grants and loans. No elected officials will serve on the panel.
The city benchmarks for Dawson’s, which do not include meeting minimum sales targets or net-income expectations, include hiring workers with special needs and others in prison work-release programs, buying products from local farms and helping nonprofit and community organizations.
“Dawson’s is an anchor in the community that supports local product sales, employs hard-to-place employees, and serves as a community gathering place for meetings and events,” REDI’s Stewart said.
If Dawson’s doesn’t meet the benchmarks in the performance agreement, the store could lose its funding, Stewart said. Yablonsky is required to submit regular updates to REDI.
“If he doesn’t follow the agreement, we wouldn’t keep funding,” Stewart said. “He also has to be in compliance with the lease.”
Potential allowable uses for grant dollars include business analysis and counseling, leasehold improvements, equipment and machinery acquisition and working capital for inventory, rent, job training and marketing, according to information presented at a City Council work session.
Neither Rockville City or REDI would provide a copy of the contract that specifies requirements and uses of the funds by Dawson’s.
Rockville has denied a Public Information Act request for the contract and REDI officials said they do not consider the contract public information.
Rockville will allocate $556,770 for REDI’s operations expenses in fiscal 2019, according to Stewart. The funding does not include the Small Business Impact Fund.
Yablonsky said he signed a 10-year lease with Federal Realty, the developer that owns all the first-floor retail space at Rockville Town Square, though he offered no further details on the transaction.
A representative from Federal Realty would not provide additional details about the lease, citing company policy.
“They have been supportive in the process and they really wanted the store to reopen as well,” Yablonsky said of the landlord.
While none of his benchmarks in Yablonsky’s agreement are based on revenues, he said he hopes to increase sales by introducing a variety of national brands requested by customers, while he continues to use local vendors and stress community involvement.
“The old model didn’t work,” Yablonsky said. “The store was owned by someone in Richmond –125 miles away. It was very focused on Richmond … and it just didn’t have the attention [it needed]. It had a remote owner.”
Dawson’s reopened Dec. 15. Yablonsky estimates 5 percent of the store’s new offerings will be national brands.
“We anticipate the sales to return to levels prior to closing, and we plan to build from there with the addition of the national brands,” Yablonsky said.
Some of the new items include Arm & Hammer baking soda, Bounce laundry sheets, Bounty paper towels, Cheerios, Diet, Mexican and regular Coke, Clorox Wipes, Hellman’s Mayonnaise, Jif peanut butter, Kraft Singles cheese slices, Kraft Macaroni and Cheese, Land O’ Lakes butter, Prego pasta sauce and Windex glass cleaner.
The grocer has also added Applegate deli meats and a television in a bar area where the grocer serves alcohol.
While Yablonsky said the store has been profitable at times, it is unclear what factors precipitated the store’s closure last fall after six years in business.
Yablonsky would not disclose revenues or sales goals. He said staffing would largely remain the same and there had been no change to parking in front of the store, which allows one free hour to Dawson’s shoppers.
When asked about the fairness to other grocery stores that won’t receive the annual grants, Yablonsky said Dawson’s is a unique, independently-owned grocery.
“We’re very focused on the community versus any other store in the area,” Yablonsky said. “It’s not only the residents of Rockville, it’s also the vendors we sell throughout the county.”
The Rockville Small Business Impact Fund targets two of Rockville’s business districts: Rockville Town Center and the Twinbrook Metro District. In its first year, the program will only consider grants for Rockville Town Center businesses.
Stewart said REDI has received dozens of inquiries after the city announced the program, but only one other business in the Town Center is in the process of applying. She would not name the business.
“The remaining grant fund balance is available for other qualified businesses,” Stewart said.
