Nginx - Only apply basic auth if htaccess file exists

conditional-basic-auth.conf

server {
        listen 80;
        server_name ~^(?<instance>.+?)\.foo.example.com$;

        set $instance_root      /instances/$instance.foo.example.com;
        set $htaccess_user_file /htaccess/$instance.foo.example.com.htaccess;

        root $instance_root;

        # Abusing unused error codes to perform an internal redirect
        # to a named location. This was the advice from nginx gurus.
        error_page 599 = @noauth;

        if (!-f $htaccess_user_file) {
                return 599;
        }

        location / {
                auth_basic "Restricted";
                auth_basic_user_file $htaccess_user_file;
                try_files $uri /index.html =404;
        }

        location @noauth {
                try_files $uri /index.html =404;
        }
}