In late 2021, Dana Henson made a panicked, late-night phone call to the CEO of the Housing Authority of Baltimore City, expecting to drop a major bombshell that would almost certainly spell disaster for both women.

Henson, principal and vice president of The Henson Development Company Inc., told CEO Janet Abrahams that their plan to bring a full-service grocery store to East Baltimore to serve as an anchor tenant for an ambitious development project and provide relief to an area long classified as a fresh food desert would not work. The two would have to walk back the promises made to investors, government leaders and, most notably, legacy residents who had been relocated to make way for the 244-acre transformation. And they would have to find a different use for the eight-story marquee building where they had planned to house the grocer.

When the call came, Abrahams allowed Henson to finish speaking before handing down her marching orders. “Janet was like, ‘I need you to relax,’” Henson recalled.

“I’m losing it,” Henson recalled saying.

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“It was a meltdown,” Abrahams confirmed. “But I said, ‘It’s a nonstarter for us. It’s part of the plan. We sold it to the community, and we’re going to deliver.’”

From there, Abrahams committed to lend whatever support Henson needed — financial, emotional and otherwise — to get the job done. And a little more than a year later, Henson would land a deal with Lidl, a discount grocery store chain that has expanded rapidly in Maryland and across the United States since its national headquarters opened in Virginia in 2017.

Lidl officially signed a long-term lease for a 31,000-square-foot space this past January, Henson said in an interview with The Baltimore Banner. She did not specify the exact terms of the deal, saying only that the lease will run “long term” with an option to extend and that the two parties are continuing to negotiate the details, including surface parking lots and signage. She expects construction to break ground in the second quarter of next year, kicking off an 18-month build.

Lidl did not respond to an additional request for comment. But Henson said the company still needs to work with city government to navigate the remaining zoning approvals that need to be finalized.

The German-owned discount grocer has 19 stores in Maryland, including locations in Baltimore and Anne Arundel, Baltimore, Harford and Howard counties.

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But the grocer also has pulled the plug on underperforming stores quickly, including Maryland stores in Brooklyn Park and Oxon Hill as part of 11 stores closed in July. The Brooklyn Park store opened in December 2020. And the Baltimore team negotiating with Lidl said the grocer’s analysis raised questions about whether the new location could be viable.

But the long-awaited announcement comes almost six years after Henson first introduced the Perkins-Somerset-Oldtown concept to Lidl with nothing more than a dream and a few pieces of paper. The store’s investment in Baltimore, she said, proves that the development team can stick to its word — and inspired her to give the public a rare peek behind the curtain into one of the city’s highest-profile projects.

“This is my most personal achievement,” Henson said. “It really brings the community full circle. I want people to understand the significance. We’re bringing access to a full-service, national grocer to East Baltimore.”

A digital rendering of The Blake at Somerset, which will house the full-service Lidl location in East Baltimore. (BCT Design Group)

The vision for the development pledges to revitalize a historically neglected part of Baltimore with new, luxury-style affordable and mixed-income housing, office space, public parks, recreation centers and a new school. So momentous is the project that it has induced four individual developers to split the work: Henson, Beatty Development Group, Mission First Housing Group and McCormack Baron Salazar.

The investment comes with a $1 billion-plus price tag and includes a $30 million grant from the U.S. Department of Housing and Urban Development that must be spent by September 2025. It has earned five individual American Rescue Plan Act commitments from Mayor Brandon Scott’s administration totaling over $26 million, including about $16 million to support affordable housing at the site.

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The project also secured $105 million in tax increment financing from the city in 2020 to fund up to $76 million in infrastructure needs within the footprint, which extends as far north as Monument Street and as far south as Eastern Avenue. The financing mechanism allows the city to float bonds to cover public infrastructure costs now that ideally will be paid back later with future property taxes at the site.

Described by several city insiders as a “hole in the doughnut,” the project site sits between Johns Hopkins Hospital and the Inner Harbor. But unlike its neighboring waterfront communities, the area hasn’t seen significant investment, and has concentrated levels of poverty and an outdated public housing stock first erected during World War II. The last vestiges of the Perkins Homes housing complex came down this past spring at a highly publicized press event that featured a hard-hatted Scott wielding a bulldozer.

Mayor Brandon Scott controls an excavator during the demolition of one of the remaining former Perkins Homes buildings, paving the way to start the construction of Perkins Phase III, Wednesday, April 26, 2023. (Jessica Gallagher/The Baltimore Banner)

The grocery store — a difficult tenant to secure in just about any neighborhood — has long been considered one of the most integral pieces to the Perkins-Somerset-Oldtown project’s success. Without it, the development team’s promise of “transforming” the neighborhood into a mixed-income neighborhood where people choose to live would ring hollow. And to Henson, whose father, Dan Henson, once served as commissioner of the city’s Department of Housing and Community Development, the prospect of breathing new life into a food desert carried extra weight.

“It was important to us to make it something we wanted to live in and shop in,” Henson said. “And from a construction and management company side, we’re also providing retail and employment opportunities as well.”

Henson, who negotiated the deal along with the Segall Group, said the back-and-forth with Lidl started after she and the development team created a 25-store “shortlist” in 2017 that eventually got whittled down to about eight or 10 contenders. Some stores wanted too much square footage; others could only agree to a portion.

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Lidl, Henson said, checked all the boxes from the start and quickly rose to the top of the pack.

After years of productive talks, Lidl ended discussions in September 2021 in a text message to Henson’s colleague at the Segall Group that felt more like a breakup than a business negotiation. The “breakup” resulted from a financing formula used by grocers to determine whether it makes sense for them to open stores in specific locations using an area’s demographics, density and income levels. Lidl said they couldn’t make it work.

Henson said she donned her “marketing hat” and began to explain an inconvenient truth about Baltimore to the Lidl team: that Baltimore shoppers will often travel outside their neighborhoods for groceries, and that few stores offer everything shoppers need under the same roof. Lidl, she told them, would need to think bigger. But eventually, the message from the grocer broke through.

“They said, ‘The deal is dead,’” Henson recalled. That gut-wrenching text sparked the phone call to Abrahams.

After feeling buoyed by Abraham’s promises to close any funding gaps that the grocer couldn’t make work on its own, Henson flew to Las Vegas in spring 2022 for the annual International Council of Shopping Centers conference and began wooing other prospects. She secured a meeting with one that seemed likely to move forward with Baltimore. But as those talks moved forward, the phone began to ring again.

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“We went from zero to four options overnight,” she recalled. “The rumor mill can work in your favor as much as it can work against you.”

Lidl, under new management, called back and asked to reconnect after the conference, Henson said. The old flame burned bright, she said, and the two parties agreed to pick up where they left off.

It’s not clear what brought Lidl back. Henson thinks the project’s momentum over the past few years — which includes two finished multifamily buildings and a third one in the process of opening, plus the grocery store building in the pipeline — helped seal the deal.

But she also thinks the united front of public and private partners, all equally determined to help get the grocery store concept across the finish line, helped push the negotiations through.

“This is as true an example of public-private partnership as I’ve ever seen it,” Henson said.

State Sen. Cory McCray, who helped secure more than $1.3 million in government bonds to plan, design and equip the grocery store and prepare the site, said he feels every cent will be well spent. Henson said his involvement helped legitimize the discussions.

“At first, I was like, what do we get for the dollar? But … no one else has been able to solve this complex problem. I’ve seen more grocers leave than come,” McCray, a Democrat from Baltimore, said. “Our job is to put points on the board.”

In his 2022 bond application, McCray wrote that nearly a third of the City Council district where the project resides lives in a “healthy food priority area.”

“The closest grocery store to Somerset Homes is more than a quarter mile away; the closest grocery store is a Whole Foods, which is unaffordable to many,” according to the bond application. “By developing fresh food retail in the PSO footprint, the neighborhood will be more attractive to a diverse population.”

To be sure, even in spite of the Lidl success story, there are several outstanding variables in the Perkins-Somerset-Oldtown equation left to solve.

Three years after winning City Council approval, the city has yet to release the first money from the tax increment financing bonds. Full financing for the building expected to house the grocer was still being finalized as of last month. Oldtown Mall, described by the housing authority as the project’s “economic engine,” has been slow to move forward, and the city does not yet own all of the properties within that footprint. Construction of the new City Springs Elementary School has not yet begun, even though the class sizes are expected to grow as housing units come online.

Though all the Perkins Homes public housing units will be replaced, the Somerset Homes units — demolished before the era of the transformation plan about a decade ago — will not be replaced as part of the project, resulting in a net loss of public housing units in the area. And the Housing Authority’s waitlist for public housing units ballooned in September to include nearly 30,000 new applicants — meaning the Perkins-Somerset-Oldtown initiative, while impactful, will not make much of the dent in the existing need.

But Abrahams said landing Lidl should help put to rest any remaining skepticism about the project’s direction.

“In the beginning … residents did not trust us. They thought we were selling them a bill of goods, and we’d do to them what everyone else had done in the past,” Abrahams said. “I realize the only thing you can do is show folks you’re strong on the commitment and do as you promised. And everything we have promised, except a few things, we have done, and we are delivering the balance.”

hallie.miller@thebaltimorebanner.com