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Kmart execs respond to Nicollet-Lake plan

Posted by: Eric Roper Updated: April 14, 2014 - 3:47 PM

The owners of Kmart are pushing back against the city's characterizations of their store ahead of a vote Tuesday to redevelop the Lake Street and Nicollet Avenue area.

In a letter submitted to the City Council last week (below), Kmart executives criticized a proposed redevelopment plan for referring to the area as "blighted" and said city officials' statements about plans for the area are hurting their business. The company nonetheless supports the vision for the area and would like to keep a store there over the long term.

The council's community development committee is slated to vote Tuesday on the redevelopment plan, which specifies properties the city may try to acquire in order to reopen Nicollet Avenue. Closing Nicollet Avenue at Lake Street to make way for the Kmart in the 1978 is frequently cited as one of the poorest planning decisions in recent city history.

The plan would give the city authority to purchase parcels of land in and around the Kmart site from willing sellers (there are five separate landholders). Transit-oriented development director David Frank said the city must outline blight in order to justify that authority under state statute.

Kmart vice president James Terrell and director of real estate Max Bulbin asked that all references to blight be removed from the document.

"This leaves the public with a negative impression of Kmart when, in reality, Kmart has buoyed the local economy and community for years while the city has failed to invest in the Nicollet corridor's development for decades," they wrote.

They added that uncertainty about the project, including "the specter of condemnation proceedings," has hurt their business and confused customers and vendors. They attributed this partly to statements city officials have made in the media before having a concrete funding plan for the redevelopment.

"The uncertainties created by mischaracterizations in the media surrounding Kmart coupled with the lack of specificity in the current plan -- both in timing and scope -- are manifold and create significant confusion for Kmart, its customers, and the public in general," the letter said. "The city's statements in the press regarding gaining control of the Kmart property has created a cloud of condemnation over Kmart's business and operations, hurting its profitability."

Frank said the redevelopment plan does not give the city authority to take the properties by force, which would require an entirely separate analysis and approval. He said he has tried to emphasize that Kmart is a partner when speaking to the media, but that nuance is not always reflected publicly.

"It's pretty hard to write about this project without describing it as, 'Hey, there's a store in the way of the city's street. And that sets up a looming conflict when ... it gets written about that way," Frank said. "So I understand where they're coming from when they say 'Hey, we're not clear what you're doing here. What are you doing here?'"

Terrell and Bulbin wrote that Kmart supports the vision for revitalizing the area, and that the retailer is interested in remaining at the intersection. They said that the store is one of the company's most successful in the country.

But, they added, "The city has not yet offered Kmart any viable economic proposal or other specified assurances to which we can refer in addressing the concerns of our customers, employees and business partners. We ask that it do so."  

The land beneath the site is owned by New York investor Lawrence Kadish. In their letter, the Kmart executives said they have a long-term lease on the property that is renewable through 2053.

“They have a below-market lease for their store," Frank said. "So it is in their best interest that that lease be allowed to run to the end.”

Frank added that they are in "early conversations" with Kadish and "we'll try to see if there's a business deal that can be struck."

City officials altered portions of the redevelopment plan in response to Kmart's concerns. They acknowledged Kmart's interest in remaining as a stakeholder and eliminated one reference to the store's contribution to "blighting" at Lake Street and Nicollet Avenue. Kmart executives are expected to attend tomorrow's council hearing.

Kmart Response

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