2022-00956 - 2022 Metropolitan Council Livable Communities Account (LCA) Pre-development grants

2023-00397 - Former Kmart and New Nicollet Project Update

This report recommends approval of appropriation for activities related to the City-owned properties at 10 and 30 W Lake St. They are:

1. an amount not to exceed $850,000 to demolish the vacant structure at 10 W Lake St (the former Kmart building) and
2. $25,000 for property management.

In addition, $65,000 of funds already appropriated from the Development Account (01SDA-8900320) will be used for additional property management and community engagement activities.

The City of Minneapolis owns approximately ten acres of land on 10 and 30 W Lake St. These two properties are often referred to as the “Former Kmart Site.” With the pending demolition of the former Kmart building in March 2024, project staff from CPED and Public Works are now referring to the project as “New Nicollet Redevelopment.”

Demolition – Not to exceed $850,000

The former grocery store building that was on 30 W Lake St was demolished at the end of 2022 and is now a flat foundation. The building on 10 W Lake St is the former Kmart building and was actively being used and leased by the United States Postal Service (USPS) until May 28, 2023. Since then, the building has been vacant and boarded. The Public Works project to reconnect Nicollet Ave between Lake St and Cecil Newman Ln requires the demolition of the former Kmart building.

With the exit of the USPS, the City is now ready to begin the process of demolishing the Former Kmart building on 10 W Lake St to make way for a new Nicollet Ave. The public request for bids will be ready for issuance in early September 2023. This appropriation request is required, prior to issuing the request for bids. The project will demolish the former Kmart building and foundation, remove the remaining foundation at 30 W Lake St, and restore the foundation areas with grass seed.

Property Management - $50,000

The City appropriates $75,000 for property management of 10 and 30 W Lake St through the City budget process each year. The anticipated costs for 2023 are higher than the budgeted $75,000. This recommendation requests an additional appropriation of $25,000 to help cover the additional expenses with another $25,000 coming from other funds already appropriated.

Phase II Community Engagement - $40,000

City staff began Phase I of Community Engagement for the New Nicollet Ave Redevelopment project in May 2022 and wrapped up in January 2023. Staff presented the Phase I Engagement Summary and Desired Outcomes document to the City Council in May 2023. The Phase I Engagement Summary describes how feedback was gathered and outlines the themes from the engagement activities. The Desired Outcomes consolidates the feedback from the Phase I engagement into a list of what the engagement team heard as the community's main priorities for what the project should accomplish.

Phase II of engagement began in June 2023, which focuses on the design of the (a) new Nicollet Ave and (b) future public space on the site. There are three parts to Phase II engagement: (1) Uses and Priorities, (2) Concept Design Options and (3) Concept Recommendations. Phase II will culminate with a staff recommendation for the Nicollet Ave Street Layout to the Public Works and Infrastructure Committee and a Public Space Framework to the Business, Inspections, Housing, and Zoning Committee in early 2024.

There are three funding sources that will pay for the services and activities for Phase II of engagement. They are a $150,000 Metropolitan Council LCDA-TOD Pre-development Grant, project funds from Public Works, and the $40,000 in funds already appropriated to CPED.