The city of Austin is starting the process to turn Oak Park Mall into a new shopping district featuring a new Hy-Vee grocery store.

The Austin City Council approved a $750,000 request during its work session Monday toward demolition expenses for the mall.

The demolition, expected to cost about $3 million, will also be paid for through the Austin Port Authority, Hy-Vee, and state and local grants, according to Finance Director Tom Dankert. The port authority will give $500,000, Hy-Vee will contribute $1 million, another $500,000 will come from state grant opportunities, and another $325,000 will be raised through local grants.

The council also voted to accept a $3.2 million grant from The Hormel Foundation as part of the deal to purchase the Oak Park Mall property.

“Without this grant, there would be no deal,” Dankert told the council.

About $250,000 from the sale proceeds will go into escrow to ensure Oak Park Mall’s owners can take care of final expenses to vendors, utilities and back taxes to Mower County, among other things.

The deal may be settled by Dec. 8, as the city must determine whether operating agreements in place with some tenants would prevent the project from moving forward. Yet the city won’t begin the demolition process until early 2015, according to Dankert.

The move will affect several other tenants at the mall. Younkers, Anytime Fitness, the Cinemagic 7 movie theater and the Wells Fargo ATM leases will be honored as part of the deal, but all other tenant leases will be terminated, according to city officials.

Most mall tenants have a month-to-month lease, but one tenant is set to stay at the mall through January 2015.

The city will likely have five to six open spots for businesses who wish to stay on mall property.

Once demolition is complete, the mall site will go to Hy-Vee, which announced plans earlier this month for a 60,000 to 90,000-square-foot grocery story.

 

In other news, the council:

—Heard more details about a proposed downtown master plan. Brian Ross of CR Planning presented a shortened version of the plan to the council during its work session. The master plan includes more emphasis on Main Street North and Fourth Avenue, as well as potential redevelopment sites along Oakland Avenue, the old Austin Utilities downtown plant and the Paradise Island building on Second Avenue Northeast, among others.

One of the most controversial parts of the plan is a proposed three-story, 120-spot parking ramp, which consultants estimate could cost $3 million. Though the city has enough surface parking for the near future, further development in the downtown area could require city officials to look ahead.

“It’s a long-term strategy,” Ross told the council. “The benefits are not next year but probably five, 10 maybe even 15 years out.”

The city already planned for a parking ramp in its 2005 master plan.

—Formally approved $1,500 for a new bike repair station at the old Eagles site at Lions Park.

—Approved a pay increase for city clerk Ann Kasel. Kasel’s pay was raised to the top step, at $26.52 per hour, for 2014. City officials say Kasel has gone above and beyond her duties in recent months, which includes more administrative and social media work.