First Avenue Hy-Vee to close, leaving urban grocery gap in Cedar Rapids

CEDAR RAPIDS — A highly sought Hy-Vee grocery store in a low-income Cedar Rapids neighborhood will close next month, the company confirmed Thursday.

The Hy-Vee at 1556 First Ave. NE, will close on Sunday, June 23. The Cedar Rapids location and another in Waterloo will close because they “have not consistently met our financial expectations and sales goals over the past several years,” a company official said.

The First Avenue Hy-Vee store opened in 2002 after the City of Cedar Rapids dedicated a $915,000 incentive package to replace a small, rundown Hy-Vee store nearby.

The store was deemed important because it served two of the city’s older eastern neighborhoods, the densely populated Wellington Heights and Mound View neighborhoods.

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The area is designated by the U.S. Department of Agriculture as low-income, meaning the poverty rate is 20 percent or higher, or the median family income is less than 80 percent of the median family income for the state or metropolitan area.

“This one hurts,” Cedar Rapids City Council member Dale Todd said Thursday. “It hurts a lot of people.”

Cedar Rapids Mayor Tiffany O’Donnell, in a statement, called the closure “incredibly disappointing.”

“Generations of customers have relied on this store for their basic needs,” O’Donnell said. “It is unfortunate the company is leaving at a time when the nearby neighborhoods are seeing significant improvements and public investment. We anticipate this momentum will continue when combined with efforts like the upcoming First Avenue Micro Area Action Plan community planning process.

“We know that access to fresh, affordable food is crucial for our community’s well-being and we will work with local agencies to meet the needs of those impacted most by this closure.”

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Dale Todd: Closure is ‘abandonment’ of ‘most vulnerable’

Todd said Hy-Vee considered closing the store last year, but city officials worked with the company to keep the store open.

The building that houses the First Avenue Hy-Vee is owned by Agree Limited Partnership, according to county records. Todd said he believed a five-year lease extension had been negotiated to keep the store open, and that he was “completely surprised and shocked” by Thursday’s announcement that the store will close.

Todd also criticized Hy-Vee’s decision to close the First Avenue store as “shortsighted” and “an abandonment of some of our community’s most vulnerable.”

“As a council, we understand the challenges and complexities of running a business in an inner city neighborhood, and we are sensitive to their need to make money,” Todd said. “But instead of working with us to address the inherent challenges, this feels like an abandonment and a complete run for the hills.”

Todd said the city will assemble a working group to discuss options for the site or to explore the development of other sites.

“This is a priority for everybody on the council,” he said.

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Tax incentives helped build store

Iowa Rep. Sami Scheetz, a Democrat from Cedar Rapids, issued a statement expressing his frustration with the pending closure, given the “substantial” tax incentives that the city of Cedar Rapids invested in the store.

When the First Avenue Hy-Vee was being planned, the City of Cedar Rapids and Hy-Vee negotiated an incentive package that required the city to pay 10 percent — up to $915,000 — of the cost to purchase land, demolish the existing, smaller store and build a new store with a more attractive exterior, which was demanded by the city.

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The incentive package called for the city to recoup its investment over 20 years through tax increment financing, or TIF: property tax increases at the store site and in other parts of the urban renewal district of which the store is a part.

“This store was built on the back of taxpayer support, and its closure betrays the community's trust and investment,” Scheetz said. “Our community has supported Hy-Vee with a 20-year tax increment financing deal aimed at keeping a grocery store in this location. It’s disheartening to see that while our local dollars helped Hy-Vee grow, our own citizens are left with diminishing services.”

Hy-Vee ‘continues to be committed’ to the area

Hy-Vee senior vice president of communications Tina Potthoff said customers in the areas where Hy-Vee stores are closing still will have the option of using the chain’s online grocery ordering and delivery system, Hy-Vee Aisles Online. The delivery service charges $9.95 with a minimum purchase of $24.95.

Hy-Vee has six other locations in Cedar Rapids.

“Hy-Vee continues to be committed to the Waterloo and Cedar Rapids area through our involvement and continued investments in the local community, and we look forward to serving our customers at one of our other Hy-Vee locations,” Pothoff said in a statement.

Hy-Vee pharmacy customers’ prescriptions will be automatically transferred to another local Hy-Vee. Pharmacy customers will receive information in the mail.

Potthoff said all employees at the closing Hy-Vee stores will be offered a position at another Hy-Vee store in the area at the same pay rate and with their existing benefits

Comments: (515) 355-1300, erin.murphy@thegazette.com