See more of the story

For the last year, chatter in Columbia Heights has swirled around the possibility of a business moving into vacant commercial spaces at the busy corner of Central Avenue and 43rd Street.

The biggest buzz? That it would be a grocery store.

In September, the city’s Planning and Zoning Commission approved plans for a Hy-Vee to set up shop in the Central Valu Center shopping complex, several miles from downtown Minneapolis.

City leaders and residents say landing a new grocery store has offered a big boon to community morale after the inner-ring suburb lost Rainbow Foods three years ago. But development plans have hit a snag: A recent environmental analysis found pollutants at the site, and now the city must decide how to fund the cleanup.

Hy-Vee plans to renovate and expand the spaces that once housed a Rainbow Foods and Slumberland Clearance Center for its 94,000-square-foot store, which will include a full-service restaurant and coffee shop — but not a convenience store or liquor products, because of site constraints.

The Iowa-based grocery store chain also plans to buy the entire shopping complex from its owner, New York-based Blackstone Group, and spruce up existing storefronts, according to a Hy-Vee spokeswoman.

The property’s other tenants — Frattallone’s Ace Hardware, Dollar Tree and Meineke Car Care Center — will remain open, with the grocery store debuting as soon as next year, said Joe Hogeboom, Columbia Heights development director.

In recent weeks, dry cleaning chemicals and asbestos were found on the site, which need to be scrubbed before development moves forward, city officials said.

“With us, the sooner the better because we don’t have another store in town besides the Aldi,” said Mayor Gary Peterson.

City leaders say they plan to apply for a grant from the Metropolitan Council to help pay for the $2 million site cleanup.

The City Council is also meeting Oct. 24 to discuss the use of tax increment financing to pay for it.

‘It was devastating’

Since losing Rainbow Foods, city leaders have hoped to entice a grocery store back to town. Many residents say they now drive to neighboring cities, including St. Anthony and Fridley, to pack their pantries.

With the shopping complex on a bus line, losing the grocery store was a particular blow to residents who walk or take public transit, said Rob Oleary, who has lived in Columbia Heights for 30 years.

“It was devastating,” Oleary said.

On a recent afternoon trip to Dollar Tree, Oleary chatted with other shoppers about the possibility of a new grocer moving in just a few doors down.

“They’ve got a great butcher,” he told one woman in an aisle next to the plastic hangers and lint rollers.

Hardly a day goes by without customers asking about Hy-Vee, said Kimberly Eastman, assistant manager of Dollar Tree.

“There’s been so many theories about it, and we’re just finally happy to know what’s going in there,” Eastman said.

Hy-Vee first broke into the Twin Cities’ market last fall, with stores in New Hope and Oakdale.

Five Hy-Vees are now in the metro area, and new stores will be open next year in Savage, Cottage Grove and Shakopee. The grocer also has stores planned in Farmington, Maple Grove and Stillwater.

The supermarket chain hopes to open four to five stores a year in the area over the next several years, said Tara Deering-Hansen, a Hy-Vee spokeswoman.

Hannah Covington 612-673-4751