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Minneapolis’ decision to buy and demolish Minnesota’s last Kmart, explained

MinnPost file photo by Tony Nelson
Since 1977, the Kmart, a grocery store and parking lots have spanned the 10 acres between Lake and West 29th Street.

It’s a land-use dream in Minneapolis, decades in the making: to demolish the Kmart straddling Nicollet Avenue just north of Lake Street and build a new streetway connecting the busy north-south thoroughfare.

Now, city planners say that vision is closer than ever to becoming reality. On Thursday, they announced an agreement with Kmart to terminate its lease and vacate the building a milestone in a years-long debate over what should come of the 10-acre site that interrupts the city’s street grid system.

From Kmart shoppers’ reactions to the city’s redevelopment plans, here’s what you should know about the agreement and why it’s happening now:

Wait, back up: Why did Minneapolis allow Kmart to build a store in such a weird spot, anyway? 

Planning for the store was part of what was known as the Nicollet Lake Development District, an area of the city where officials wanted to generate revenue from private investors by first demolishing distressed properties and then issuing city-backed bonds. In the early ’70s, some planners envisioned a mini-Southdale Mall at Nicollet-Lake with shopping, housing, office space and a movie theater.

But the city’s plans for development did not go as planned. Only a minimal amount of new construction took place. Taxpayers citywide paid higher bills as a result. So considering that financial position, the city in 1977 welcomed Kmart a leading discount retailer at the time to open a big box store on Lake to try to revive the area’s economy. Kmart agreed — on the condition that the city would close Nicollet Avenue so the retailer could build a massive, sprawling store.

Since then, the Kmart, a grocery store and parking lots have spanned the 10 acres between Lake and West 29th Street. Residents and businesses for decades have protested the street layout. To this day, the closure of Nicollet has been called “the worst planning mistake in Minneapolis history,” said David Frank, the city’s director of Community Planning and Economic Development

So why is the company agreeing to vacate the space now?

The city of Minneapolis for years has tried to get Kmart’s parent company, Transform Operating Stores LLC (formally Sears Holding Corp.), to enter an agreement that would allow the city to rebuild the street.

In 2015, the city purchased the western third of the property for $5.25 million, which contained a now-closed Supervalu grocery store and a parking lot. Then, two years later, the city acquired the land beneath the Kmart for $8 million. That latest financial deal maintained a lease agreement between Transform and the city with the expiration date of 2053.

But after Transform declared bankruptcy in October 2018, executives seemed more open to the idea of terminating the lease for the Minneapolis Kmart in exchange for payment from the city, Frank said. The two parties settled on a price tag of $9.1 million for the agreement.

Pending final approval by the Minneapolis City Council, the lease termination would require Kmart to shut its doors and move out of the building by June 30.

The city has $9.1 million sitting around?

Sort of. About six years ago, the council successfully lobbied the state Legislature to establish a special tax district to raise money for a 3.7-mile streetcar on Nicollet and Central avenues. The district allows the council to levy property taxes from five parcels along the proposed streetcar route. 

So far, the fund has raised about $19 million, according to Mark Ruff, the city’s chief financial officer and interim city coordinator. And while there’s no formal streetcar plan in the works, city officials said they can dip into the revenue pool to acquire property. The city used money from the fund to buy the land under the Kmart in 2017 and now, again, to pay the retailer to end its lease. 

After the Kmart closes this summer, then what?

Soon after the store closes, Minneapolis officials said they will launch environmental reviews of the site’s conditions. After that, they will take a major step in the city’s long-time land-use dream of reopening Nicollet: They’ll hire a contractor to demolish the place.

The teardown job will include the former grocery store adjacent to the Kmart. The city would cover its costs, though it’s unclear at this point what that price tag would be.

Meanwhile, the city would begin soliciting proposals for new development along the street, an area totaling roughly 9 acres excluding the public’s right-of-way on Nicollet. That process could span months or even years. Frank said city planners will prioritize pitches that meet objectives in the city’s already-established policies for long-term redevelopment, such as Minneapolis 2040.

“There’s been a fair amount of community engagement right in this area about what would happen when this time ever came,” he said. “Don’t know exactly but something a lot like what’s already in the adopted city policy for here.”

So when is Nicollet Avenue going to reopen?

The city’s public works director Robin Hutcheson on Thursday praised the city’s deal with the retailer as a long-awaited step to establish the city’s historic grid system for streets. That land-use pattern is often considered the most efficient layout for people to get around cities.

“Opening this up gives us the opportunity to make better connections to the Orange Line, the city’s transit access project, to the Midtown Greenway,” she said. “A grid helps distribute nicely the way people travel.”

At this point, she said city planners are open to any and all ideas for what happens in the area, including a new thoroughfare exclusively for foot or bicycle traffic without vehicles. “We rarely get to build a piece of infrastructure like this from scratch,” she said. “Other than it’s an incredibly important transit corridor for the city, we don’t have any preconceived notions on exactly what goes where within that right of way.”

But she said she’s hesitant to estimate when the new construction will finish. The city is committed to hearing from neighboring residents and businesses about what they envision for the area, and that takes time. “Typically, if we’re doing a good job, we’re going to have a long period of time for community engagement really good design takes about a year to do,” she said. “If we’re doing it right, it’s not fast.”

The city has yet to design a plan for how and where it will solicit that public feedback.

Whatever happened to the Nicollet streetcar idea?

Initial planning for a Nicollet streetcar began in 2007, under former Mayor R.T. Rybak. Using the Hennepin Avenue Bridge to cross the river, city planners mapped the streetcar to run from Central Avenue and Southeast Eighth Street in Minneapolis’ Marcy-Holmes neighborhood to the intersection with the Kmart.

Early studies showed the line would cost upwards of $200 million in construction and another $10.6 million to operate each year, while providing 9,000 trips daily and a new north-south connection between light rail lines. In 2010, the Minneapolis City Council agreed that it wanted to explore not just a Nicollet-Central line but a multi-line network across the city. The Federal Transit Administration (FTA) answered local leaders’ funding requests to study the transit option with a $900,000 grant.

Hutcheson said Thursday a streetcar is still an option. But a proposal to further study the idea is competing for federal funding against numerous other transportation projects in the region. “The streetcar is, indeed, not dead,” she said. “We had to, I’ll say, pause a little bit on the environmental document … Absolutely having this connection is a linchpin in that.”

What are the odds that council members reject the Kmart proposal?

Slim. City Council members and mayors for decades have tried to reach this deal with the Kmart, and several current council members have supported less-dramatic proposals to try and reopen Nicollet in the past.

For example, in 2017, Council Member Lisa Goodman said the store straddling Nicollet is a symbol of past mistakes. “It has been a longstanding development goal of the city to rectify the destruction of the street grid and open Nicollet where Kmart now sits as a reminder of past poor planning decisions.”

Council President Lisa Bender, who has long fought to reopen the street (even before her election to the council) and represents the area, is celebrating Thursday’s news as a win. “This is the final piece of the puzzle to make it a reality,” she said in a statement. 

The council’s Economic Development & Regulatory Services Committee will consider the proposal at its regularly-scheduled meeting Monday afternoon. With its approval, the full council will take a vote next Friday.

What about people who work at Kmart or rely on it for shopping?

The Minneapolis store has long been an affordable shopping destination for people who use the nearby bus stops or live in the area, even as the retailer’s parent company shutters dozens of locations nationwide. The Nicollet Avenue location is the last Kmart in Minnesota and might be one of the few profitable locations left in the chain. 

After news of the proposal spread Thursday, some shoppers took to Twitter to express their frustration with the city’s plans. “Sadly it is one of the few places my neighbors and I could walk to for household needs. Now what?” one person tweeted. “POC have been using that Kmart for decades and now more rich white gentrifiers got their way,” another person said.

Brad Bourn, a commissioner on the city’s park board, said the store was the closest, most affordable place for his dad to fill prescriptions and buy food when Bourn was growing up. “He was almost always pretty poor,” Bourn said. “Kmart made the area livable for so many people.”

Resident Summra Shariff, who lives just a handful of blocks from the Kmart, said she also visits the store about twice a month to buy everything from laundry detergent to batteries to milk. “They have such a wide selection,” she said. “The prices and location were also very helpful.”

Shariff said the store serves a big purpose for many immigrant, black or indigenous families who live in the area. Yet, considering the circumstances, she thinks the city’s plans make sense so long as it considers shoppers like her as it decides how to rebuild the area.

“I still don’t understand why Nicollet was blocked by the store in the first place,” she said. “We don’t need more fancy restaurants, yoga studios and breweries,” she said. “We need places where low-income and middle-income people can get the things they need without having to drive to the suburbs.”

Frank said the city is committed to making sure all residents, including those in the Whittier and Lyndale neighborhoods, like Shariff, have access to affordable stores in future development. 

As for the store’s employees, they were notified of the city’s plans Thursday morning, Frank said. 

He said the city is connecting them with information via the Minnesota Department of Employment and Economic Development (DEED) about state programs for dislocated workers. 

“We acknowledge that Kmart has been an asset to the community for the people who work there, the workers who found out some distressing news today, and for the public who shops there,” he said. “This will be a change and, that said, it’s a change that we think has good long-term benefits for the immediate neighborhood and the city.”

Comments (30)

  1. Submitted by Adam Miller on 03/06/2020 - 11:18 am.

    Reconnect the grid, but only open the street to transit vehicles. Cars have been getting around here for decades without Nicolett. If our transportation priority policy and climate policies mean anything, we should be adding capacity for sustainable transportation modes only.

    • Submitted by Carol Becker on 03/08/2020 - 09:27 am.

      That would mean that we spend about $9 to benefit 3% of travelers.

      • Submitted by Christopher Wlaschin on 03/08/2020 - 01:15 pm.

        It’s is also an investment in the health of the community and the environment. We need to quickly act responsibly towards global warming. This does not mean everyone needs to bike or use mass transit but we create a more options for transportation that use less fossil fuels. The longer we wait to make these change the more it will cost us.

      • Submitted by Carin Peterson on 03/08/2020 - 02:47 pm.

        Sound a about as wise as oh I dunno… closing the street in the first place?
        How much more money are gonna throw at this?
        And after paying for everything ~ there’s No money left for the street car (that will never get built) so… another BRT route.

        I bet we see…
        One lane of traffic, minimal parking and, incredibly~ bike lanes. Because rather than slower, quieter streets… bike lanes simply MUST be on our busiest streets. Dunno why. Just know that for some reason…they sure are.

      • Submitted by Adam Miller on 03/09/2020 - 10:28 am.

        You left out transit. Again.

  2. Submitted by Dave Carlson on 03/06/2020 - 12:08 pm.

    I read elsewhere that the city offered to re-build or help subsidize a new K-Mart building adjacent to a re-opened Nicollet Avenue, but K-Mart refused. So I think the K-Mart investors were mostly hanging on to get the best buy-out deal from the city; even if the store is profitable, the longterm viability of the company is in doubt.

    I am excited to see the reconnection of Nicollet as I think it will make that street even more viable. Certainly allow transit and a bikable/walkable design… but I suspect the Eat Street businesses will want car traffic as well.

  3. Submitted by Gary Morgan on 03/06/2020 - 12:32 pm.

    It’s interesting (in an absurd Kmart way) that if you go to the Kmart website they indicate that the St Paul store is still open.

  4. Submitted by Brian Simon on 03/06/2020 - 12:36 pm.

    I’m all for the streetcar idea. Run it all the way to bloomington from downtown.

    The closing points about shopping are important too. We put some focus on affordable housing in our urban planning, but need to include planning for affordable & reasonable access to necessities too.

  5. Submitted by Paul Udstrand on 03/06/2020 - 01:02 pm.

    No need to explain. Let’s just bring this embarrassing episode civic stupidity (planting a K-Mart in the middle of the street) to a close and move on. Long over due.

  6. Submitted by Elsa Mack on 03/06/2020 - 02:17 pm.

    While I am sympathetic to the need for affordable places to shop—there is a Cub Foods (Lagoon & Dupont) and an Aldi (26th & Lyndale) within a mile. It’s an easy bus ride downtown to another Target, or a longer one down Lake Street to another Aldi, another Cub, and another Target, as well as Midtown Global Market with its very well-priced Produce Exchange. There is no shortage of options.

    This Kmart is an obvious blight, and the neighborhood around it (south of the Greenway) could use some new life and investment. I’m glad to see the city will finally get a chance to improve things.

    • Submitted by lisa miller on 03/06/2020 - 02:39 pm.

      I agree that KMart should never have happened. But to all you eater streeters or what ever the latest hipster lingo is– a moment of silence is due. Let’s hear it for all stood in line never complaining at how slow things moved to buy their affordable products. Yes there are other stores; however for many elders who live in the near by subsidized buildings, hopping the bus or pushing their walkers is a big deal. So here’s to the Martha Stewart towels on sale, phone cards, the big tin popcorn and Jaclyn Smith pants made to wear. It may not fit into your 2040 plans but it has helped many make it through.

      • Submitted by Orville H. Larson on 03/06/2020 - 05:23 pm.

        I associate myself with your comment. For 43 years, Kmart provided countless customers with a variety of reasonably-priced products. That’s on the plus side of the ledger.

        What does the future holds for this piece of land and the (re-opened) street? Will it be family-oriented houses or duplexes, and a smattering of stores? Or will it be “chic,” artsy-fartsy shops, boutiques, and the like? High-rise luxury apartment buildings?

        You may be sure that developers (in collusion with their bought-and-paid-for hacks on the Minneapolis City Council) have their own ideas on the subject. . . .

      • Submitted by Peggy Reinhardt on 03/07/2020 - 10:06 am.

        So many dreams for 10 acres soon to be divided by Nicollet Avenue. Some of us would like to bring sledge hammers to help with wrecking! City needs to host a few good-bye parties and solicit neighbors for ideas for developers. Then hold developers to neighborhood wants!

        A win for MetroTransit with fewer transfer stops along Lake and Nicollet.
        How will the new 35W ramp to Lake street impact development? Perhaps a distribution center to get semi-trucks off of city streets. That would also create needed jobs in that area.
        I agree that it is difficult for handicapped, low- and fixed-income residents to get to other low cost stores – even along bus 21 route. A great need!
        Where will those food trucks park? Plan for space for them.
        What about senior housing? Wait lists in Mpls are as long as 4 – 7 years.
        Consider non-profit day center with art and music therapy for mentally-ill street people.
        Put pedestrians and bicyclists first.
        Most of all, don’t forget the power of trees and green space for clean air and health benefits!

  7. Submitted by David Markle on 03/06/2020 - 02:22 pm.

    For decades I boycotted K-Mart because of the city having bowed to their demands. Of course the city’s present underlying motive for any new development on that site is identical to the original motive: get more tax revenue.

    The city appears ready to make another serious, obvious mistake with its plan to redevelop Lot ‘A’ on the West Bank. The sole responder to the city’s effectively exclusionary RFP is, as predicted, Sherman Associates, who will harvest revenue and let its new property deteriorate, just as Sherman has done with Riverside Plaza. And the city will get miore tax revenue while increasing the area housing density beyond any reasonable limit while reducing parking needed by nearby businesses and neighborhood attractions and denying residents’ wishes for green space and expanded recreational facilities.

  8. Submitted by Paul Udstrand on 03/07/2020 - 08:23 am.

    Ya know, we have and have had K-Marts all over the place ( I worked in one in St. Louis Park). You don’t have to plant a K-Mart in the middle of a main artery street in order to have a K-Mart. There’s a perfectly good Target not far away, and that hasn’t been blocking any streets ever. Consumers will not be left without any low cost or nearby options. Re-connecting one side of MPLS with the other isn’t gentrifying anything, it’s just returning to the original street grid.

  9. Submitted by Dennis Wagner on 03/07/2020 - 10:33 am.

    Some interesting comments, to develop not to develop, to develop and keep the neighborhood low income or try and diversity and add income to the neighborhood. Seems some folks disparage other folks that make a couple of bucks beyond self-sufficiency/poverty level, curious where do folks think the tax $ come from for those health and human services budgets? . ,

  10. Submitted by Daniel Pinkerton on 03/08/2020 - 09:30 am.

    There’s a closed grocery store right there. Lobby Target or even Aldi to move into it (give them some money?) ASAP to make sure people’s short term needs are met. This vital. A four year wait for a replacement is too long.

    • Submitted by David Markle on 03/09/2020 - 05:55 pm.

      Target? Ironically, Target backed out of the redevelopment in the first place, leaving a situation where K-Mart could force the City to obey their wishes and close the street.

  11. Submitted by Carol Becker on 03/08/2020 - 09:33 am.

    The idea that we would open up the street only to bikes and buses is as bad as closing the whole street. 3% of people bike. Local transit ridership has dropped 25% over the last five years. It would be an equally bad decision to limit travel today as it was when the street was originally closed.

    • Submitted by Carin Peterson on 03/08/2020 - 02:52 pm.

      Amen Carol Becker!

    • Submitted by Michael Yoder on 03/08/2020 - 07:56 pm.

      It’s nice to see you’re more concerned about traffic and you don’t seem to care about the jobs that are being lost, Kmart more than likely has dozens of employees who have worked there for many many years and all you can talk about is your disappointment about only bikes or buses using the new connection that will replace this store and these jobs? Okay then.

    • Submitted by Pat Terry on 03/09/2020 - 11:22 am.

      If you build transit and bike friendly infrastructure, people will use it.

  12. Submitted by Carin Peterson on 03/08/2020 - 03:09 pm.

    I didn’t read any remarks I took as disparaging of anyone who “makes a couple bucks above self sufficiency/poverty level” ~
    (And thanks for those tax $$ contributing to health care coverage -btw!)
    What I have read are voices of concern for a Kmart that many many have grown accustomed to and counted on for years.
    When I lived 4 blocks away I sure counted on Kmart ~ even tho ~ I was paying those taxes not reaping the benefits….

    I guess my point…
    This is a already a very diverse neighborhood and they are struggling to keep it that way and NOT have it overrun – gentrified- with luxury/market rate Apts and restaurants and stores they can’t afford to enjoy and don’t need .

    They need an affordable grocery store (and a good one. Not like that awful Supervalue that last gasped on site . And a Kmart would be great BUT one lone Kmart cant survive- even if it was the top money maker in the company!
    If there is no longer a company to support it… pretty hard to go it alone .
    THAT is what I am getting from this thread.

    The only thing remotely disparaging… may have been the comment about … others being disparaging?

    • Submitted by Dennis Wagner on 03/09/2020 - 09:25 am.

      “This is a already a very diverse neighborhood and they are struggling to keep it that way and NOT have it overrun – gentrified- with luxury/market rate Apts and restaurants and stores they can’t afford to enjoy and don’t need”.

      Not sure what you are saying other than, don’t improve things, don’t change things, and any folks with a few extra $ go someplace else, we don’t want you here. Of course, business etc that might come into a neighborhood never bring new jobs or opportunity!

  13. Submitted by Michael Yoder on 03/08/2020 - 07:53 pm.

    So basically, the city is terminating jobs just so they can have a convenient access to a road that’s been cut off? Nice to know the city of Minneapolis is willingly terminating 70+ jobs so the citizens can have convenience when it comes to navigating the streets.

    • Submitted by Adam Miller on 03/09/2020 - 10:31 am.

      The store isn’t long for this world regardless and hopefully any redevelopment will include a mixes of uses, including new retail jobs.

  14. Submitted by Thom Roethke on 03/11/2020 - 11:27 am.

    How about instead of entertaining development proposals, the city just build the basic infrastructure, subdivide the property into lots, and auction the lots off to people/businesses/developers/whoever to build what is wanted and needed with the current zoning? That’s probably the best way to get an actual, organic, urban environment. You’ll probably even get a grocery store back.

    Instead they’ll probably hand it over to some mega-developer who will build some faux-urban, ‘mixed use’ monstrosity. And it will take years and years instead of a year or two.

  15. Submitted by joe olson on 03/14/2020 - 08:39 pm.

    If K mart has to be out June 30 and it is close to the Hennepin County Medical Center on Nicollet

    could it and the former Sullivans Grocery be used for coronavirus treatments?

  16. Submitted by Steve Barrett on 03/19/2020 - 07:44 am.

    If Kmart was the worst planning mistake, the suburban styled interchange of Lake Street and Hwy 55 might be the second.

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