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Cottage Grove Rainbow Foods closing its doors Tuesday

The Cottage Grove Rainbow Foods store is one of 18 that will either be closed or sold by the end of the year as the store's owner, Roundy's, is exiting the Minnesota market altogether. (Bulletin photo by Scott Wente)

Rainbow Foods in Cottage Grove is closing Tuesday, July 22, the company confirmed, giving local grocery shoppers one less retail option.  

The Cottage Grove store is one of 18 in the state either closing or being sold following a mass exit of Rainbow Foods owner Roundy’s from the Minnesota market.

The future of the grocery store was left uncertain after the announcement earlier this spring. It prompted city officials to begin talks between property owner Howard Levy, of EBL&S Development, and potential end users. A deal, however, was never reached. “It’s a sad situation all around,” Mayor Myron Bailey said Monday. 

Bailey said the store was expected to remain open until October if certain monthly revenue quotas were met, but he said sales steadily declined, forcing the much earlier closing date.

About 40 employees staff the Cottage Grove Rainbow Foods, store manager Greg Kennedy said. And despite the two-week notice given earlier this month, Kennedy said the employees continue to look for new work.

“We do have opportunities for our employees to apply at other stores (in the metro) and all have been applying,” he said. The store’s union workers are expected to meet with local representatives later this week to discuss plans for moving forward, Bailey added.

Many of the Rainbow Foods across the Twin Cities will become Cub Foods, including Eagan (Town Centre Drive), Oakdale (10th Street North), Roseville (Larpenteur Avenue) and St. Paul (Arcade Street). Woodbury’s store (Valley Creek Plaza) will be converted to a Byerly’s.

The Rainbow Foods in Maplewood (White Bear Avenue) will remain as is.

Easement contract hindering redevelopment

The Gateway North retail center has been a sore topic for the city of Cottage Grove following the 2008 closure of Home Depot, whose empty building anchors the opposite end of the mall that also includes Rainbow.

Throughout the years, several failed development deals have kept the property without an anchor tenant. Now with the closing of Rainbow Foods imminent, Bailey said redevelopment of Gateway North is high priority.

While the city continues to push for a quick redevelopment strategy, a strict REA (reciprocal easement agreement) remains intact, hindering negotiations between Home Depot and EBL&S. The agreement between the two owners specifically outlines what can and cannot be built adjacent to one another if one of the companies go under.

“This agreement was put together under the premise that these retailers wouldn’t close,” Bailey said. “But now it’s just stopping development.”

In terms of Home Depot, the agreement says a workout facility cannot occupy the building if a grocery store remains on the other end. With L.A. Fitness still interested in the Home Depot property — as well as three other tenants, Bailey said — no deals can go forward.

“This is not good for both parties involved,” he said. “The city is now working with both to look at the options. We have people interested in these properties. But this agreement doesn’t put the city’s best interest in mind.”

Bailey said conversations with the interested end users continue, but he declined to name specific retailers.

“I am now personally very involved in negotiations with these companies to get the redevelopment process going.”