Unable to secure funding from other sources, Akron may seek a $3.8 million federal loan to pay for a long-awaited — and sometimes maligned — new grocery store in the Highland Square neighborhood.


City Council will have public hearings next Monday on whether the city should apply for the loan from the Department of Housing and Urban Development (HUD).


“The Highland Square residents have been waiting for a new grocery store for a long time, and these HUD funds will significantly help to move this project forward,” Akron Mayor Don Plusquellic said in a news release.


The public hearings will be during the Planning Committee meeting at 2:30 p.m. and the regular council meeting at 7 p.m.


City officials have been searching for viable funding options for the grocery store, but haven’t been able to find one with a low enough interest rate to make it feasible.


“Short of milk at $10 a gallon …” said Adele Roth, Akron’s development manager who has been spearheading the project. “That’s opposite of what we want to do.”


Roth said the HUD loan would be at a low interest rate, possibly around 2.6 percent for 20 years. The $3.8 million would cover the cost of design, construction, site prep and utility work. The same type of financing was used for Dave’s Supermarket on East Exchange Street.


Akron has established a nonprofit organization, called Highland Square Economic Development LLC, that will serve as the developer on the project to add a grocery store to the triangular property at West Market Street and North Portage Path. The organization will be staffed by city employees.


The two-story, 2,400-square-foot grocery store will be a Mustard Seed Market operated by Phillip and Margaret Nabors. The couple lives in Highland Square and currently owns stores in the Montrose area of Bath Township and Solon.


Akron owns the triangular property, the building that houses Chipotle and the parking behind it. The Naborses will lease the property and buildings, with the option to buy down the road.


Roth said the leases from the businesses in the Chipotle building would help pay most of the annual debt service of $250,000 for the first three years, though the city might have to subsidize $30,000 to $40,000 a year. She said the hope is that the Naborses would buy out the city after that point and assume the loan repayment.


A new store called Next that sells high-end, hip clothing and sneakers is expected to open next month in the Chipotle building. The city is still trying to find a tenant for a vacant 1,450-square-foot space in the building.


While city officials have been searching for funding, architects have been working on design plans for the grocery store. Roth said those plans, nearly finalized, involve taking down the existing, vacant building on the triangular property, but trying to reuse materials as much as possible in the new store. She said it isn’t possible to keep the existing building because of its elevation.


If the council decides to move forward with the loan application, the city is hoping to find out if it’s accepted within six to nine months. Roth said the city has a good track record with HUD on its federally funded projects. She said, however, that she’s continuing to look for other financing avenues in case the loan doesn’t work out.


As for those who contend that Akron is wasting money by putting a grocery store in a single neighborhood, Roth said the area east and south of where the store would be located is considered a “food desert,” which means the majority of residents don’t have easy access to healthful food. She said there are also other neighborhoods in Akron where the city would like to add grocery stores.


Roth said the grocery store would represent another economic development to a neighborhood that already has seen significant investment, including a new elementary school and library.


“We just need to finish the work we started,” she said. “I think it’s going to be great.”


Stephanie Warsmith can be reached at 330-996-3705 or swarsmith@thebeaconjournal.com.