Struggling businesses in Rockville Town Center and the neighboring Twinbrook Metro district may soon be able to apply for financial relief through an economic development program established by the city earlier this month.
The Rockville Small Business Impact Fund, which will begin operating as a pilot program in 2019, would provide loans and grants to qualified small businesses that lack the capital to sustain growth in two of Rockville’s business districts: Rockville Town Center and the Twinbrook Metro District.
City officials said they would focus on helping Town Center businesses in the first year of the pilot program in response to recent business closures in Town Center’s Rockville Town Square. Mellow Mushroom, a national pizza chain located in the heart of the Town Square, closed in September. Anchor store Dawson’s Market announced its closure in early October and Pandora’s Seafood House and Bar, slated to be evicted, closed in mid-October.
Also, Apollo Restaurant, a diner that had operated in Town Center for 30 years, closed in late October.
All of the businesses that closed, leased space from Rockville Town Square developer Federal Realty Investment Trust.
Federal Realty owns and controls the retail portions of Town Square and some retail space in Town Center. The city of Rockville owns three parking garages in Town Square, but leases the space from Federal Realty and pays them to manage the garages.
“It’s common knowledge small and local businesses struggle to pay the rent that Federal Realty is requiring,” Rockville Mayor Bridget Donnell Newton said Monday. “This program represents an overall response of what can we do to support the central business districts. We need these businesses to be there for the residents—in the Town Center, too.”
Rockville officials approved $430,000 in funding for the pilot program at a work session Nov. 13 during which city staff also introduced an 11-step revitalization plan for the Town Center. The total includes $300,000 in new funding and a reallocation of $130,000 already included in the city’s annual budget, officials said.
An additional $2 million to be distributed over a five-year period beginning in fiscal 2020 has also been earmarked, which would provide a minimum of $400,000 annually for the program.
The creation of the pilot program is the first concrete step city officials have taken since meeting with more than 400 residents and business owners in October to address concerns over the business closures in Town Center.
The city’s economic advisory partner, Rockville Economic Development Inc. (REDI), developed the funding program, which it will also manage. REDI has recommended the pilot program should offer grants initially and focus primarily on Town Center businesses during its first year.
According to the program’s draft guidelines, a small business must have fewer than 100 employees and annual receipts of less than $10 million and be located in the Town Center Performance District in order to qualify for funding. Other criteria, including an evaluation of the business and the public benefit it provides, will be part of the approval process.
“Both existing and new businesses would be eligible” for funding, Rockville Deputy City Manager Jenny Kimball said.
Potential allowable uses for an approved grant or loan include business analysis and counseling, leasehold improvements, equipment and machinery acquisition and working capital for sales growth to support accounts receivable, inventory, rent, job training and marketing.
REDI will establish an Impact Fund Selection Committee that will have sole discretion to award the grants and loans. The mayor and council members will not sit on the committee, but will have some oversight of the program, REDI Chairman Paul Newman said.
“As we go forward, we would like to see it become a revolving fund,” Newman said. “Eventually, businesses who are successful will be expected to pay back some portion or all of the loan.”
Newman also said the group would look for other donors to eventually generate some of the capital.
Rockville officials are expected to reconvene in January to host a series of hearings that will address the Town Center revitalization plan. Next steps for the pilot program have not been announced by city officials.