After moving into closed session to discuss a purchase agreement for 8101 Highway 65 NE, Central Park Liquor, the Spring Lake Park City Council voted to authorize city staff to execute the agreement with Hy-Vee Inc.
The agreement allows Hy-Vee Inc. to purchase the property for $1.15 million with a closing date of Sept. 27. That date can be extended.
With the sale of Central Park Liquor, the city will exit municipal liquor.
Hy-Vee is working through processes with the city, county and watershed district to bring a grocery store and convenience store to the Central Park Liquor site and adjacent land at the 81st Avenue Northeast and Central Avenue intersection along Highway 65.
“There’s been a lot of comments on social media regarding this,” City Administrator Dan Buchholtz said.
Other comments were received at the Planning Commission public hearing July 24. Primary concerns centered around potential loss of municipal liquor, traffic and transparency.
In a statement, Buchholtz said “Hy-Vee has been adamant throughout the negotiation process that the city retaining the municipal liquor business was a deal breaker for locating in Spring Lake Park. The city pushed hard to retain municipal liquor in the community, even offering a significant reduction in the purchase price over assessed value. There was no interest.”
Hy-Vee has leased space to municipal liquor operations at other Twin Cities locations. A co-located store in Savage opened earlier this year.
Hy-Vee Inc. did not respond to requests for comment.
If Hy-Vee had been willing to keep municipal liquor on the table, the city would still encounter a number of risks, including paying out full-time salary costs during construction, Buchholtz said.
Additionally, Buchholtz noted that a lease between Hy-Vee and another municipal liquor operation charged more than $25 per square foot, which would require an increase in sales by 90 percent to maintain the level of profit anticipated for 2017.
“A 90 percent increase in sales would represent $4 million annually,” Buchholtz said. “That is a big ask.”
Central Park Liquor is on track to see $2.1 million in sales this year with approximately $100,000 in net profits, according to Buchholtz.
The store has been performing better financially recently with liquor store manager Brian Hachey coming on board one year ago.
“Our liquor store manager is doing a great job increasing the profitability of the store by implementing a purposeful pricing strategy and reducing expenses,” Buchholtz said.
But if Hy-Vee comes to Spring Lake Park, taxes collected from the business will bring in approximately $90,000, and investment of the $1.15 million collected through the sale of Central Park Liquor will generate between $40,000 and $50,000 in interest, Buchholtz said. “There’s no risk in those revenues.”
At press time, it had not been determined when Central Park Liquor would close.
In an interview Aug. 8, Hachey said he was unaware what transpired at the council meeting the previous evening. He is one of two full-time employees at the store. Twelve part-time employees are on the payroll.
Buchholtz concluded his comments on the matter by addressing complaints about a lack of transparency.
“Whenever the city works on an economic development deal, there is a balancing act between the public’s right to know and the privacy expectations of businesses exploring development opportunities,” Buchholtz said. “A false start could have been detrimental to the city’s municipal liquor operation. We wanted to make sure things were done right out of respect to our residents and our employees at the liquor store.”
Spring Lake Park has run a municipal liquor store since the mid-1980s.
Items on the council agenda Aug. 7 pertaining to Hy-Vee’s planned unit development and preliminary plat approval were removed because the traffic study had not yet been completed.
Those are expected to come before the council in the coming weeks.