Wisconsin firm to take over Aug. 1

The Port Authority of Austin will hold a public meeting at 4 p.m. on July 11 in the Council Chambers of City Hall to discuss a request from Slaby and Associates of Verona, Wisconsin, to reconsider the purchase price of the old Hy-Vee building and Farmer’s Market lot.

The original contract, approved in July 2017, set the sale price at $800,000. It also had an inspection and due diligence period that extended to the end of last year, during which time Slaby and Associates would have either successfully marketed the 52,000-square-foot building for tenants – which had to include an anchor store – or it would withdraw from the agreement.

Slaby and Associates proposed a reduction in price of $400,000.

“Part of the reason for the proposed reduction in sales price is (Slaby and Associates) have five spots that they hope to get tenants for, but they only have three,” said City Administrator Craig Clark, who is also the executive director of the Port Authority. “That is, in part, driving the reduction of the purchase, as is rising construction costs, lending requirements and appraisals.”

“We have three signed letters of intent which are non-binding at this time,” said Slaby and Associates Vice President Victor Baeten. “The deals are with Marshall’s, Five Below and Pet Supplies Plus. We are working diligently on finalizing these leases. There are no guarantees until they open the doors.

“The Port Authority has been very understanding,” he added.

The Port Authority granted an extension, which will allow the deal to close on Aug. 1. Under Minnesota statute, the Port Authority is required to publish notice of the sale no more than 20 days and no less than 10 days out.

Once the deal is closed, Slaby and Associates will continue to market the property to attract two more tenants to fill the five spaces, Clark said.

Hy-Vee will be responsible for demolishing the building should ownership go back to the Port Authority.

“If for some reason (Slaby doesn’t) make progress on closing on the leases and starting construction, we can buy back the property,” Clark said. “In the off chance we get the property back, we would still maintain Hy-vee’s responsibility for demolition.“

Slaby and Associates will invest $5 million in constructing a new façade. Baeten said that, under their timeline, they hope to have the façade demolished as soon as possible in order to get it closed in for the winter to begin work inside.

“We hope we can do the interior work and turn it over to the tenants by Aug. 1 next year so they can open by the end of the year before the holiday season,” he said.

As for the other two possible tenants, Baeten said Slaby and Associates have spoken to 180 possible tenants in an effort to find the right tenant mix.

“We knew that if we attracted the right anchor store, in this case Marshall’s, we would attract the others,” he said.

The agreement also says Slaby and Associates need to establish a new building at the Farmer’s Market lot, located between O’Reilly Auto Parts and the Hy-Vee gas station, which will have a “fast casual” or “sit-down” restaurant along with three other tenants.

Clark said using the existing structure is critical to attracting new retailers.

“Maintaining a mid-box retailer is really important in the community,” he said. “Being able to get a ground up construction would be too optimistic at this time for Austin, so repurposing an existing building for Austin is why Slaby’s been able to get attention for redevelopment. The cost of a ground up construction would be too prohibitive. The former Hy-Vee store was paying $125,000 in taxes annually. To be able to have that same building with enhancements made to it is critical for the taxing jurisdictions.”

Baeten shared the same point of view.

“If it hadn’t been for the vacant building, (businesses) would not be looking at Austin, Minnesota,” he said.

Clark is optimistic the plan will bring a new vitality to Austin’s retail scene.

“A lot of other communities are struggling with retail,” he said. “It’s not that we don’t have our challenges as well, but I think it shows some strength in the market place for retail and building upon the great things that are going on in Austin, whether it’s the new Hy-Vee or redevelopment of Oak Park Mall. Those things get people’s attention and the good things that are going on in Austin aren’t missed on those types of people when they’re looking to expand to other parts of the country. To be able to choose Austin, Minnesota, is a great opportunity for us but also the culmination of a lot of hard work of a lot of different projects that have come together.”

Baeten believes that the new development will make other businesses consider Austin.

“We believe Austin is a hidden gem and they will be successful once we get (the tenants) there,” he said. “We’re excited to be a partner with Austin.”