April 29, 2014

Friction between Hy-Vee, Leawood officials results in plans to close supermarket

Hy-Vee will close its grocery store at 122nd Street and State Line Road on June 1 after the city of Leawood balked at its redevelopment plans, including a sales tax to pay for improvements inside the store.

Hy-Vee will close its grocery store at 122nd Street and State Line Road on June 1 after the city of Leawood balked at its redevelopment plans, including a sales tax to pay for improvements inside the store.

The company’s action comes on the heels of Leawood’s decision last week to put a 90-day moratorium on development along 135th Street. Hy-Vee also is abandoning its plans to build a store at 135th and Roe Boulevard because of the moratorium.

“It is clear that the current business environment in Leawood is one in which Hy-Vee cannot be successful,” Hy-Vee spokeswoman Chris Friesleben said in a written statement. “Because lack of city support prevents us from providing customers with the best shopping experience we have to offer, we will be closing the Leawood Hy-Vee on June 1.”

The decision to close did not come easily, Friesleben said in a phone interview.

“This is not how our company operates,” she said.

The pharmacy at the State Line Road store will remain open after June 1, to continue serving customers’ needs, Friesleben said.

“We haven’t put up signs in the store,” said store director John Weaver. “The news is spreading by word of mouth to the employees and customers.

“We were shocked.”

Hy-Vee and the Leawood City Council have disagreed since last year on how to pay for improvements to the State Line supermarket, which officials have said was underperforming.

“I was surprised and very disappointed to hear about the store closing,” said Mayor Peggy Dunn. “The City Council had one work session in 2013 with Hy-Vee lawyers. We had a good dialogue. The last comment we heard from them was that they guessed they would go back to work, sharpen their pencils, and come back to us.”

Dunn said the council never heard from Hy-Vee again until now.

Friction started at a May 2013 council work session when the council told Hy-Vee lawyers that their plans to finance updates at the 122nd and State Line store didn’t comply with city ordinances.

Hy-Vee wanted the city to create a Community Improvement District (commonly called a CID) to partially fund improvements at the store. The chain wanted a half-cent sales tax to be created at the store to help pay for a large-scale remodeling inside and out. The chain wanted to offer a larger health food section, more prepared food, more fresh produce and a full-service restaurant that served beer.

The shopping center housing the store, Leawood Plaza, wanted a full cent sales tax levied on the other stores there to be used for outdoor improvements only.

The council said that city ordinances prohibit a separate CID for only one store and that the sales tax money could not be used for improvements inside a store. It would instead consider a full-cent CID at the whole shopping center, Hy-Vee included.

But Hy-Vee lawyers said the corporation’s policy is for half-cent sales taxes at any Community Improvement District it obtains.

Friesleben said Hy-Vee decided to try a different location.

“Since we couldn’t be successful and make the State Line store into the kind of grocery store our customers want, we went to the location at 135th and Roe,” said Friesleben.

So Hy-Vee submitted plans on April 3 to build a 90,000 square-foot grocery store at the southeast corner of 135th and Roe. It would have been similar to the new Hy-Vee on 151st Street in Olathe.

Leawood City Administrator Scott Lambers said he had a meeting with Hy-Vee lawyers near the end of March where he told them the city wasn’t interested in a big-box development on 135th Street “with a sea of parking.”

And then last week the council halted all development along the 135th Street corridor for the next 90 days so the council could more closely study its new master plan for that growing area.

“We feel targeted,” one Hy-Vee lawyer, Curtis Holland, said at the April 21 City Council meeting. “That may not be the intent, but we feel targeted.”

“You are not being targeted,” said Councilwoman Debra Filla. “I hope you use some of that fear energy.”

The temporary freeze includes rezonings, site plans, plats and special-use permits. By late July the city hopes to finish a comprehensive plan that can then be applied to developers’ requests.

Hy-Vee’s decision to leave the grocery store on State Line in Leawood and to abandon the proposed grocery store at 135th and Roe is the chain’s response to the moratorium, but the company hasn’t formally withdrawn its application for the store at 135th and Roe, Friesleben said.

“We value our loyal Leawood customers, and we will bring a Hy-Vee back to their area as soon as we can,” Friesleben predicted.

Customers of the State Line store took to Facebook on Tuesday to urge Hy-Vee to keep the store open, praising the store’s staff and commitment to the community.

“No other grocery store in the area has such a friendly, neighborhood feel,” one shopper wrote. “I have taken my children up for their fantastic holiday open houses where they have decorated pumpkins, searched for Easter eggs & made crafts. The store has supported our neighborhood school by selling yellow trash bags & matching a percentage of sales in turned in receipts. The customer service is beyond compare.”

Hy-Vee told commenters to contact their City Council representative.

All 160 employees at the State Line store will be transferred to other Hy-Vee stores in the Kansas City area, with the same pay and similar hours.

The city’s master plan for the 135th Street corridor imagines town homes and condos sprinkled among the retail stores and offices where emptynesters and members of generations X and Y would like to live, shop and eat — walking among the buildings.

Lambers said he has had two other individuals express interest in the 135th and Roe area: a developer who wants to build apartments, and another who wants to put up single-family homes. Neither idea is anticipated in the city’s master plan for the development at the southeast corner of Roe and 135th.

In 2005, a developer built roads at 135th and Roe for a planned senior citizens living facility. But the recession stopped the improvement in its tracks.

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