Why Is There A Kmart In Minneapolis That Blocks An Entire Street?

Image courtesy of Google Maps

Lots of people and cities made terrible decisions in the ’70s. It was an era of traffic circles and jughandle exits, and a general “just put that building/highway wherever” attitude. Like the Kmart store in Minneapolis that was plopped down in the middle of what had been a main thoroughfare — an error that is only just beginning to (maybe) be remedied.

How did the store get there in the first place? In the late ’70s, the city decided to allow Kmart to build a store across two blocks of Nicollet Avenue, one of the major streets that passes through Minneapolis and its close suburbs.

It made the deal with Kmart out of desperation, MinnPost explained in a 2014 article about the fateful decision.

As urban renewal funds from the federal government began to dry up, the city issued bonds to raise money for projects in troubled areas. The second area chosen for development funded this way was the area at the corner of Nicollet and Lake.

Bondholders would be paid back using the property tax money that would roll in once fresh commercial development replaced urban blight. Only the city issued those bonds, then began acquiring land and clearing the neighborhood before finding a developer with actual plans for the site.

Enter Kmart, which wanted to build a large store and larger parking lot that would require closing down Nicollet Avenue. Over the protests of neighborhood residents, many of whom are still mad about it, the city took the Kmart deal out of desperation.

“No one is objecting to the Kmart,” the owner of a nearby Texaco station told a local newspaper in 1976, as activists fought the Kmart deal. “But we think Kmart could be built without closing Nicollet.”

One proposal would have put the store’s Auto Center across Nicollet, leaving the street open. Kmart rejected that proposal back in 1976, but the Auto Center attached to the store has long since closed.

The Kmart store and the intersection are in the news at the moment because the city has taken another step toward regaining control of the whole ten-acre parcel. A City Council committee voted this week to spend $8 million to become the store’s landlord, buying the land the store sits on. Making the store move is another matter.

The city’s director of economic policy and development is thinking long-term here. He told the Minneapolis Star-Tribune that he hopes the two sides are able to come to an agreement. If not, well, the city can wait.

“Even though there’s another 36 years on the lease, this puts us in a position that we know for sure that the street will reopen and that land will be available for development,” he told the paper. “Unfortunately, we don’t know when.”

Yes, you read that correctly: Kmart has the option to keep renewing its lease for the store site at the corner of Lake Street and Nicollet Avenue for another 36 years, until 2053, no matter who owns the land. The city has already managed to buy an adjoining site, which used to be a supermarket.

While experts question whether Kmart and its parent company Sears Holdings Corporation will still be around in 36 months, let alone 36 years, the store is a relatively busy one.

A 2013 Business Journal article notes that the massive parking lot that takes up most of the site is usually empty, since most shoppers live nearby and walk there.

The store and property are officially rented to a company called Troy Coolidge No. 42, LLC. That name is meaningless unless you know that the headquarters of Kmart before merged with Sears Roebuck was at the corner of Big Beaver Road and Coolidge Highway in Troy, MI.

Even if Kmart were to close all of its stores and Sears Holdings were to go out of business, under the current agreement with the city, Troy Coolidge No. 42 LLC has the right to sublease the site to another business.

Sears Holdings is in a strong negotiating position, something that’s unusual for that company at the moment as it closes hundreds of stores and fights suppliers that want to get out of their contracts in court. So far, Sears Holdings has turned down the city’s offer of a new store on the same site and a $5 million “moving payment,” even though it wouldn’t actually move.

A Sears Holdings spokesman told the Minneapolis Star-Tribune that the city’s proposal was unreasonable, since it didn’t spell out what kind of development would happen around the new Kmart, and increased the store’s rent.

“If the City Council moves forward and becomes our landlord, we hope they would be a champion for our store and support the community members that we serve and the approximately 100 employees who are employed at our store,” a Sears Holdings spokesman said in a statement.

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