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July 26: Proposed improvements to Kandi Mall could bring big retail names to Willmar

Editor's Note: This story was published July 26, 2016. WILLMAR -- A $6.5 million construction project proposed at the Kandi Mall could result in more national retail chains setting up shop in Willmar, according to mall ownership. Tommy Stewart, w...

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The southside of Kandi Mall is nearly deserted on Sunday. Mall ownership group Rockstep Capital is hoping to change this picture with a $6.5 million renovation project, which includes splitting the empty Kmart location into at least three different retail spaces. The project also includes the construction of a separate retail building between Tires Plus and the closed Pizza Hut building. Rockstep Capital is hoping for a tax abatement to help fund the project. (Shelby Lindrud / Tribune)

Editor's Note: This story was published July 26, 2016.

WILLMAR -- A $6.5 million construction project proposed at the Kandi Mall could result in more national retail chains setting up shop in Willmar, according to mall ownership.

Tommy Stewart, who works in property management and leasing for Kandi Mall’s owner RockStep Capital, presented plans Thursday to the Kandiyohi County and City of Willmar Economic Development Commission for a project to remodel the old Kmart space and construct new retail space along First Street.

Stewart also outlined a request for a 10-year, $1.5 million tax abatement from Kandiyohi County, the city of Willmar and Willmar Public Schools.

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“That is why we are here today, to ask for your consideration,” Stewart said.

The EDC’s operations board made a motion Thursday to recommend the city, county and school district consider participating in the abatement at whatever level each entity decides.

“I think that is a reasonable request,” said Economic Development Commission Director Aaron Backman.

RockStep Capital’s request is a 100 percent tax abatement for years 1-8 and a 80 percent abatement for years 9 and 10 from all three entities. The abatement would cover any additional taxes from the value added by the construction project, along with abating the taxes coming from the increased value of the property after the mall’s sale to RockStep.

RockStep, in partnership with RockStep Willmar LLC, bought the 44-acre mall property in October 2015 for $14.1 million.

The mall originally had a market value of $9.2 million but has now been re-evaluated to reflect the purchase price, raising the market value of Kandi Mall to $11.4 million.

RockStep had approached the city and county for a reduction in the market value of the property, but was denied by both.

The full abatement, if approved, would mean the city, county, and school district would continue to collect all taxes on the $9.2 million value, but not any additional value for the 10 years of the abatement.

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The proposed mall project focuses on remodeling the old Kmart space, along with constructing a brand new retail space along First Street, between Tires Plus and the empty Pizza Hut building. The $6.5 million project would be funded by private funding, owner equity and the potential tax abatement. Bremer Bank has agreed to be part of the project.

“They are committed fully to this project,” Stewart said.

The project would take the 91,181-square-foot space on the south side of the mall, which has stood empty since Kmart closed in 2012, and divide it into three or four different retail spaces.

“It’s a huge investment to redo that Kmart building,” Stewart said.

The new retail building would be 6,500 square feet and would be split into at least three different spaces.  

The project also includes new signs and some improvement to the mall’s parking lots, but not the entire thing.

“To do all of it is wildly expensive,” Stewart said.

While specific retailers interested in coming to Willmar were not named, they are said to be nationally recognized brands.

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“The retailers we’re discussing are what people are asking for,” said Kandi Mall manager John Vornholt.

The mall had been in discussions with Hobby Lobby at one time, but the craft store decided to build its own store by Home Depot and Runnings.

“It really took us by surprise,” Stewart said, adding that building a freestanding store is a big risk.

However, with the potential stores coming in, Stewart and Vornholt are not concerned.

“Missing out on Hobby Lobby is OK,” Vornholt said, adding the potential new mall tenants will fit better and not directly compete with current stores.

“I think that is a good thing,” Vornholt said.

Stewart said major mall projects like the one planned for Kandi Mall can take three to five years to be completed, when you include the time needed to enter into lease agreements with the retailers.

“These deals are very tough with these national guys,” Stewart said.

Stewart said the plan is to have a portion of the project completed by the end of 2017, with the full project wrapping up after that.

New jobs being created by the project could reach 60, adding over $1 million to the mall’s payroll, Stewart said.

How much those jobs pay could be an issue for the city, Willmar Planning and Development Director Bruce Peterson said.

To approve a business subsidy, which this tax abatement would be, all new jobs must pay at least $12 an hour.

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