Former Kmart building as it sits in September 2026. (Derek Sidian, KBRF News)
Fergus Falls, MN – After years of vacancy, plans to redevelop the former Kmart building are moving forward.
At its meeting on Monday, the Fergus Falls Port Authority authorized a letter of intent to purchase part of the former Kmart property for future redevelopment for $1.75 million. Community Development Director Klara Beck says that under the redevelopment structure, WeissmanCorp will acquire and reposition the former Kmart building for retail use, while the Fergus Falls Port Authority will invest the approximately $1.75 million to acquire adjacent property intended for additional retail development.
The project is designed to do more than reuse the existing building. The Port Authority property is expected to create opportunities for several additional retail development pads, with the hope of bringing more developers into the area.
“This has been one of the most visible redevelopment opportunities in Fergus Falls for a long time,” Mayor Anthony Hicks said. “What makes this project important is that we are not simply talking about filling one vacant building. We are creating an opportunity to put the existing property back into productive use while also positioning additional land for new investment.”
The existing former Kmart building contains approximately 83,776 square feet. The principal Kmart parcel, which contains most of the building and parking lot, is currently valued at approximately $1.46 million. According to the Letter of Intent submitted in the Port Authority Packet, WeissmanCorp is set to pay $2.5 million for its portion of the property, making the total potential purchase for the Kmart property $4.25 million.
Highlighted are the planned pieces of the Kmart property the Port Authority is looking to acquire. (Maps provided by the City of Fergus Falls, edited into one map by Derek Sidian)
When asked why the Port Authority is paying more than the main parcel is valued at, Mayor Hicks said that there has been a trend in recent commercial land sales of land being sold at significantly more than the taxable value.
“This is fundamentally about restoring productive activity to an existing commercial corridor,” Mayor Hicks said. “We have existing infrastructure, an established retail location and a developer with experience doing this type of work around the country. Our goal is to use that opportunity to generate more private investment, more jobs and a stronger tax base.”
James Leiman, the City’s economic development consultant, says the Port Authority is getting involved because the property has remained substantially underused and has proven difficult to redevelop through the private market alone. The Port Authority’s participation helps support the broader transaction while also acquiring property that can be positioned for additional private development.
The Port Authority says preliminary project analysis anticipates approximately $4 million to $5 million in private renovation investment to reposition the property. Preliminary redevelopment scenarios evaluate stabilized property values between approximately $6 million and $7.5 million, depending on final investment and assessment. At those values, preliminary analysis estimates the redevelopment could generate approximately $125,00 to $166,000 more in annual property tax than the property does today, subject to final assessment, tax rates and any approved tax increment financing structure.
The redevelopment is also expected to create meaningful employment and economic activity. Current planning estimates project approximately 85 to 120 direct permanent retail jobs and approximately $3.2 million to $4.5 million in annual direct payroll once the project is stabilized. Those figures are planning estimates and will depend on final tenants and operating plans.
Port Authority Chair Laura Job said the investment should be viewed in the context of the community’s long-term development. “As a Port Authority, our role is to look beyond a single transaction and consider what an investment can mean for the community over the long term,” Job said. “This approach allows us to invest in a tangible asset while helping unlock significant private redevelopment of a property that has been underused for years. Just as importantly, it creates additional opportunities for future development, jobs and a stronger tax base along the West Lincoln Avenue corridor.”
Specific businesses associated with the redevelopment are not being announced at this time. Individual business location decisions remain subject to private negotiations, corporate approvals, construction planning and final agreements.
The city and Port Authority will release additional information as agreements, development plans and timelines are finalized.
Below are is a set of frequently asked questions provided by Leiman.
Q: What is happening at the former Kmart?
A: WeissmanCorp is moving forward with plans to acquire and redevelop the existing former Kmart building for
retail use. At the same time, the Fergus Falls Port Authority is acquiring additional property associated with the
site for future retail development.
Q: Is the Port Authority buying the Kmart building?
A: No. WeissmanCorp will acquire the existing Kmart building. The Port Authority is acquiring separate property
intended for future retail development.
Q: How much is the Port Authority investing?
A: Approximately $1.75 million.
Q: Is the city giving WeissmanCorp $1.75 million?
A: No. The Port Authority investment is associated with the acquisition of real estate. The Port Authority will own
the property it acquires.
Q: Why is the Port Authority involved?
A:The property has remained substantially underused and has proven difficult to redevelop through the private
market alone. The Port Authority’s participation helps support the broader transaction while also acquiring
property that can be positioned for additional private development.
Q: What will happen on the Port Authority property?
A:The current plan is to position the property for several additional retail development pads. Individual projects
will depend on tenant interest, site planning and future development agreements.
Q: Why is this better than simply giving the developer an incentive?
A: The Port Authority is acquiring an asset. That gives the public future development options and the possibility of
recovering value through future property transactions.
Q:Who is WeissmanCorp?
A:WeissmanCorp is an experienced commercial real estate firm that has completed development, redevelopment
and investment projects in markets across the country.
Q: Why was WeissmanCorp selected?
A:The company has experience acquiring and repositioning commercial real estate and has a track record of
working with retail and commercial properties in multiple states.
Q: How large is the former Kmart building?
A: Approximately 83,776 square feet.
Q: How much private investment is expected?
A: Preliminary planning estimates anticipate approximately $4 million to $5 million in private renovation
investment associated with the existing building, in addition to acquisition and potential future investment on
surrounding development sites.
Q: How many jobs will be created?
A: Current planning estimates anticipate approximately 85 to 120 direct permanent retail jobs when the
redevelopment is stabilized. Actual employment will depend on final tenants and operating plans.
Q: What kind of payroll could those jobs generate?
A: Preliminary planning estimates indicate approximately $3.2 million to $4.5 million in annual direct payroll.
Q:What retailers are coming?
A: The city is not identifying specific businesses at this time. Individual companies will make announcements
when their agreements and internal approval processes are complete.
Q: Why won’t the city identify them?
A: Premature disclosure can interfere with private lease negotiations, financing, construction planning and
corporate approvals. The city will disclose its own public actions while respecting legitimate private business
negotiations.
Q: Are leases signed?
A: The city will not characterize individual tenant agreements. Businesses and the developer will announce final
commitments when appropriate.
Q: What happens if one of the businesses changes its plans?
A: The redevelopment strategy is not dependent on one specific business. The existing building is being
repositioned for retail use, and the Port Authority property creates additional development opportunities over
time.
Q: Why should taxpayers support retail development?
A: The public purpose is broader than any individual retailer. The project is intended to restore productive use to a
major underused commercial property, generate private investment, create jobs, increase taxable value and
strengthen an existing commercial corridor.
Q: Isn’t retail already struggling nationally?
A: Retail has changed substantially, which is one reason redevelopment of large former big-box properties can be
difficult. The strategy here is to adapt an existing property to current retail formats rather than simply
attempting to recreate the old Kmart model.
Q: Will this hurt existing Fergus Falls businesses?
A: New competition is possible whenever new businesses enter a market. However, additional retail offerings can
also reduce spending leakage, draw additional regional customers to Fergus Falls and increase overall activity
in the commercial corridor.
Q: What is the current value of the property?
A: The principal Kmart parcel is currently valued at approximately $1.463 million.
Q: What could it be worth after redevelopment?
A: Preliminary planning scenarios evaluate stabilized values of approximately $6 million to $7.5 million.
Q: How much additional property tax could that generate?
A: Preliminary analysis estimates approximately $125,000 to $166,000 in additional annual property tax
compared with the current property, subject to assessment, tax rates and the final TIF structure.
Q: Is TIF involved?
A: Redevelopment TIF has been evaluated as a potential tool. If used, the preferred structure is
performance-based or pay-as-you-go, meaning the developer first makes eligible improvements and
reimbursement occurs only as the project actually creates new taxable value and tax increment.
Q: Does TIF mean the developer doesn’t pay property taxes?
A: No. The existing tax base continues to generate taxes. Eligible incremental taxes created by the redevelopment
may temporarily be used to reimburse qualifying redevelopment costs.
Q: Is the project guaranteed?
A: No development project is guaranteed until all transactions, financing, agreements, approvals and construction
obligations are completed. The city should not characterize prospective businesses or projected economic
outcomes as guaranteed.
Q: What happens if development of the Port Authority property takes longer than expected?
A: The Port Authority will own the property and can evaluate future development opportunities as market
conditions evolve. The intent is to retain flexibility rather than depend on a single buyer or use.
Q: Why weren’t these negotiations public from the beginning?
A: Real estate and business recruitment negotiations often involve confidential property terms, financing and
private business decisions. Public bodies will take formal actions through the appropriate public process as
required.
Q: How can residents follow the project?
Future Port Authority and City Council actions will be reflected in public agendas, meeting materials and city
communications as required
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