No Hy-Vee for West St. Paul

Thanks to Jameson’s Irish Bar and Clothesline Laundromat for their support.

Plans for a proposed Hy-Vee grocery store in West St. Paul are no more as the company announces plans to sell the land after never developing the site. Hy-Vee is looking to build larger stores—150,000 square feet or larger—and the proposed West St. Paul location was less than 70,000 square feet.

“A lot has changed since we first acquired these locations,” Hy-Vee President and Chief Operating Officer Jeremy Gosch said in a company statement. “As customers’ shopping patterns have changed over the pandemic, we’ve determined that there is a need for larger store formats that these current sites simply are not able to accommodate.”

The move is as part of a strategy shift that impacts four other proposed Hy-Vee locations in the Twin Cities, including Farmington, Chaska, Blaine, and the company’s second site in Maple Grove. The announcement came in a full page ad in the April 16 issue of the Star Tribune.

The Original Plan

Hy-Vee finalized the original West St. Paul deal in late 2018, saying at the time that it was one of the most difficult they had negotiated thanks to multiple moving pieces. Hy-Vee bought the former YMCA in 2019 and demolished the building by 2020. The YMCA relocated to a temporary space across the city line in Inver Grove Heights. AutoZone also relocated to the former Chuck E. Cheese site to make room for Hy-Vee.

As early as summer of 2019, reports indicated that the West St. Paul location was on hold. The notoriously tight lipped company never provided details one way or the other and rumors have flown back and forth until now.

What’s Next?

Now the question becomes what happens next for the former YMCA property?

“While I’m sure some are disappointed that Hy-Vee has made the business decision that they will not be building a store in West St. Paul; they have indicated that they want to work with us to find a developer who wants to develop the site in accordance with priorities and objectives of the community,” said West St. Paul City Manager Nate Burkett.

April 18, 2022 Update: What Did It Cost?

So what did West St. Paul lose with the planned Hy-Vee falling through? In terms of specific costs, the answer is not much.

• The initial development agreement included a subsidy of just over $1.5 million, approximately half in cash and half in tax abatement. Because construction never started, the city never paid any of that subsidy and will not have to pay it.
• The acquisition of AutoZone is a little more complicated because it’s also tied in with the River-to-River Greenway underpass. It involves a land swap and reimbursement, with Dakota County reimbursing the city for the vast majority of the cost.
• City staff put in a lot of time with plans, permits, rezoning, etc. Hy-Vee paid a total of $2,226 for various permits and fees. This amount likely doesn’t cover the full cost of staff time, though that’s fairly typical.
• With the land moving from nonprofit to commercial use, Hy-Vee was required to pay property taxes. For the former YMCA portion, that amounts to over $123,000 for 2021 and over $96,000 for 2022 total (with about $33,000 and $25,000 going to the city respectively).

Considering the additional property taxes, the city didn’t lose money and actually came out ahead.

But in terms of opportunity, time, and amenities, the loss is harder to define but certainly there. Clearly the biggest loss the community feels is the YMCA, which had been there for nearly 50 years. The YMCA sold the land and building to Hy-Vee for $3.8 million. Presumably the YMCA would use that money to build a new location, though nothing has been announced since the 2019 sale, aside from their current temporary location.

Currently the City of West St. Paul is exploring options, including buying the property, an agreement to control the property, and working with Hy-Vee to find a potential buyer.

April 18, 2022 Update: YMCA Statement

Here’s what the YMCA says about a new location: “We continue operating the temporary location and exploring opportunities with community partners and cities.”

April 19, 2022 Update: Pioneer Press Story

The Pioneer Press published their story about Hy-Vee changing plans, which includes this quote from Burkett:

“I think there’s a reasonable number of people in this community that are disappointed that Hy-Vee is not coming in. But they made their business decision, and while we’d still welcome them and like to have them here, they’re in the business of their business and we can’t tell them what to do.”

The story also reiterates that the YMCA “remains committed to finding a permanent home in the service area.”

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