Middletown ARPA task force reviews $2.5M rehab award after residents question shift from proposed grocery to cannabis retailer

The American Rescue Plan Act Task Force met virtually at 11 a.m. on April 30 to review a subrecipient agreement that awarded $2,536,300 to DFC of Middletown for rehabilitation of several downtown commercial properties, and to hear residents’ concerns that the project’s tenant plans shifted away from a proposed market toward a cannabis retail tenant.

Claire Collins of UHY told the task force the fully executed subrecipient agreement — the binding ARPA document — covered capital rehabilitation of four buildings at 418, 420, 428 and 584 Main Street and did not specify which businesses must occupy the commercial space. "The agreement supersedes all prior documentation regarding the award," Collins said, and ARPA funds are limited to building rehabilitation costs such as roofing, windows, HVAC and other capital work tied to COVID-era economic impacts.

The procedural and substantive dispute began in public comment when resident Bridal Thompson said the application had emphasized a grocery to address a local food desert and later materials indicated a different retail use. "My community's needs would be exploited in this way and then to turn around and have the audacity to say that a dispensary would be nearly the same benefit to this community," Thompson said, and she asked the task force to ensure ARPA dollars directly benefit the community.

Jesse Langer, representing DFC of Middletown (Updike Kelly & Stellus), told the task force, "DFC is in full compliance with the subrecipient agreement," and introduced applicant Dominic DeMartino to explain how tenant recruitment evolved. DeMartino, the owner and applicant for 428 Main Street, said the ARPA award was spread across four buildings, three of which are complete and occupied. He listed six specific grocery/market prospects he approached who declined and said the project never intended a full-line supermarket: "It was never gonna have the all the essentials you'd get at a Stop & Shop... This was a glorified sub shop." DeMartino added that a planned Big Y moving into the area made recruiting certain tenants more difficult.

Several task force members said they were troubled by the apparent mismatch between what applicants presented during the application process and the narrower language the council approved in the subrecipient agreement. Vice Chair Steele and other members said the committee's historical practice required review when a project's scope or budget changed and questioned whether the process had been followed here. Collins replied that, in her review, the scope and budget attached to the executed agreement matched what the council approved and that she was not aware of any alteration to the agreement originating from DFC.

Members spent most of the meeting assessing whether the task force had authority to require a reapproval or amendment. Several members said the council — which executed the subrecipient agreement — would be the proper legislative body to pursue any change. One member recommended the task force re-review its prior materials and report back to the council only if new evidence justified a change of opinion.

The planning and zoning approval process for the tenant fit-out remains pending; Langer and DeMartino told the task force there is a planning and zoning meeting in May related to tenant approvals. The task force made no motions regarding the subrecipient agreement; in the absence of further business it approved prior meeting minutes from Dec. 11, 2024 and adjourned at 11:49 a.m.

The issue is expected to remain active at the common council level, where any change to the city’s executed subrecipient agreement or further legislative action would be decided.