Former Kmart building as it sits in September 2026. (Derek Sidian, KBRF News)
FERGUS FALLS, Minn. (KFGO-KBRF) – 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.
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