A bad business deal; City quits negotiations on mall site after agreement deadlock
Published 11:58 pm Monday, May 4, 2015
The city of Austin is throwing in the towel on the Oak Park Mall.
Seven months after they first announced a $3.2 million development deal to buy the Oak Park Mall, city officials announced Monday afternoon it would cease negotiations on the property after the businesses involved couldn’t come to terms on the proposal.
“We as a municipality can’t continue to spend the dollars on attorneys, surveys, all those things and have it drag on,” Finance Director Tom Dankert said.
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According to city officials, negotiations have continued after Oak Park Ltd. Partnership, the company behind the mall, and the city agreed to allow the city’s purchase agreement to expire.
Yet ongoing negotiations proved difficult. The city not only had to work with the Oak Park Mall owners, but attorneys from Younkers, Shopko, and Cinemagic 7 to get a demolition project off the ground so the property could be handed over to Hy-Vee. Hy-Vee hoped to build a new 60,000- to 90,000-square-foot grocery story on the Oak Park Mall site.
Attorneys with The Bon-Ton Stores, the parent company of Younkers, approved and sent out a final draft of an agreement for the city to last month to allow the project to move forward. That agreement included a $250,000 incentive for Younkers to remodel, as well as 18 months of free rent.
The company withdrew its own draft a week later after their attorneys drew up an additional 22 stipulations.
That deadlock effectively killed the deal, according to city officials. Oak Park Mall leadership advised the city it was out of time once again, and Hy-Vee needed answers on whether to build a new store or renovate its old one.
Austin Port Authority Attorney Craig Byram said the decision was difficult to make but the city remained committed to economic development projects such as the Oak Park Mall site.
“The mall has been perceived as being an ongoing concern for economic development in Austin for many years now,” he said.
Austin Hy-Vee General Manager Todd Hepler said earlier this year Hy-Vee would commit to a project in Austin regardless of how Oak Park Mall negotiations turned out.
For now, the mall remains the property of Oak Park Mall Ltd. Partnership — or Chicago-based Martin Graff of M H Graff & Associates Inc. and Martin Goldman of M J Goldman & Co. Ltd., the companies behind the mall.
The property is left largely empty after most tenants’ leases were terminated as part of the purchase agreement.
A $3.2 million grant by the Hormel Foundation to buy the mall will be returned, according to city officials.
Representatives from The Bon-Ton Stores could not be reached for comment.