The move appears to eliminate the final impediment to the long-awaited grocery store.
A groundbreaking has been scheduled for May 7 and construction should be complete within 10 months, said Howard S. Klein, general counsel of Klein's ShopRite of Maryland.
"We have been working on this project since I was a member of the City Council representing this district," Mayor Stephanie Rawlings-Blake said. "Longtime residents of Howard Park have been supportive and patient throughout the process."
Rite Aid of Maryland Inc. held a legal restriction on a portion of the six-acre tract at the corner of Liberty Heights Avenue and Hillsdale Road where Klein's ShopRite intends to build a full-service grocery store.
When Rite Aid sold the Liberty Heights Avenue land in 2000, the company put a covenant in the deed that barred the site from being used as a pharmacy. The city purchased the land in 2009, anticipating that a grocery store would be built on the site, and was bound by the restriction.
Klein's ShopRite, which intends to include a pharmacy in its Howard Park store, was prevented from getting construction financing for several months because of the Rite Aid covenant.
Although the grocery chain had its building permits for the site in August, construction would not have been possible until after federal New Markets Tax Credits were made available in January, Klein said.
On Thursday, Klein said the company was getting ready to close on its financing. The store is going to cost $18 million, he said. Klein's ShopRite is paying the city $2 million for the land.
Thursday's agreement waives the pharmacy restriction for ShopRite at no cost to the city, according to Preston Greene, president of the Howard Park Civic Association. The restriction would still apply if another owner were to take over the land, he said.
"We are relieved that Rite Aid has finally decided to become a good neighbor and allowing the community to have the supermarket we so desperately need," he said.
Rawlings-Blake and the City Council passed legislation last month that would have allowed the city to extinguish the restriction.
"Rite Aid sincerely appreciates the Howard Park community's desire for a supermarket," the company said in a statement. "Rite Aid's sole interest in this matter has been to protect and support its core business — pharmacy — as the company's closest store is located less than a mile from the property on which Rite Aid holds a restrictive covenant."
The Howard Park Civic Association planned to boycott Rite Aid. A rally outside a store on Liberty Heights Avenue was scheduled for Saturday.
Howard Park residents have been seeking a new grocery since a Super Pride at the site of the proposed ShopRite closed in 1999.