Traverse City News and Events

Updated Plans Proposed For Acme Kmart Site

By Beth Milligan | Jan. 6, 2021

Developers looking to revitalize the vacant former Kmart site in Acme have submitted updated plans to township officials, seeking to use the sprawling retail building for climate-controlled indoor storage and constructing nearby workforce housing in partnership with HomeStretch – with park space and trails, parking lot upgrades, and additional commercial buildings also included in the plans.

Development group Lormax Stern appeared before township planning commissioners in December to discuss the updated plans, which have gone through several iterations since 2019 after the company purchased the 87,000 square-foot Kmart building for $1.4 million. Indoor self-storage and residential townhomes were part of the originally proposed redevelopment plans, though only a portion of the Kmart building was targeted for self-storage. Restaurants, cafes, office space, retail, and other uses were envisioned for other areas of the property.

Lormax Stern is seeking approval of a planned development (PD), or a zoning plan tailored to a specific property. In a revised PD application submitted in December, the company indicated it now plans to pursue three phases of construction at the Kmart site. Phase one proposes using the entire Kmart building for indoor self-storage – rather than splitting the building between self-storage and other retail tenants, as originally proposed – with upgrades planned to improve the deteriorating building. The company also plans to partner with local nonprofit housing group HomeStretch to build five townhome buildings containing six dwelling units each on the property, for a total of 30 units.

HomeStretch Executive Director Jon Stimson said the region is in “crisis mode” when it comes to housing, and that his organization is receiving five to six qualified applicants for every one unit HomeStretch builds locally. Stimson said he envisions the Acme units to be similar to those HomeStretch is building near the corner of Eighth Street and Garfield in Traverse City: two-bedroom, one-and-a-half-bathroom townhouse-style apartments averaging 968 square feet that accommodate 2-4 person households. “The type of people we cater to is the workforce housing group,” he said, adding he believes the Acme project will draw from employees at The Grand Traverse Resort & Spa and Meijer.

Phase one also includes a planned park on-site, a non-motorized trail easement to allow for the extension of the TART Trail, a conservation easement on the west property line to provide a buffer to neighboring residences, and cross-access easements on the north and south sides of the property. Phase two calls for the construction of a new 6,000 square-foot commercial building on the property near the highway and associated parking lot improvements, while phase three calls for building a third 5,500 square-foot commercial building to the west of the phase two building. Phase three would also include more parking lot upgrades and a designated transit stop for the entire development. The commercial buildings could host a range of potential tenants based on market interest, according to Lormax Stern, including restaurants, cafes, offices, daycares, banks, or other uses.

While planning commissioners expressed support for bringing more housing to Acme Township and revitalizing the eyesore Kmart site, they voiced concerns about the funding and phasing plans of the developer’s application. One primary challenge: indoor self-storage is not a use normally allowed on the commercially-zoned Kmart property. Under a PD, the township could grant an exception and allow Lormax Stern to develop an otherwise-prohibited use – but such exceptions are typically granted in exchange for also building other allowed uses the township finds more desirable. Housing could be one of those uses – as could the park space, trail, and retail buildings planned for the property – but most of those components do not have defined construction timelines attached in Lormax Stern’s application.

Furthermore, because plans call for building workforce housing, HomeStretch will need to apply for – and receive – state funding to make the project financially viable. Approval delays or outright rejection of funding could jeopardize the housing component, with commissioners expressing wariness about approving a PD that could ultimately result in only indoor self-storage occurring at the site with no other redevelopment. “I think it’s a challenge logistically just because of the way the phasing can’t be (guaranteed),” said Planning Commission Chair Karly Wentzloff. “Shame on us if we do a PD and the only thing you do is move that (self-storage) in there and nothing else happens.”

Lormax Stern Partner & Principal Daniel Stern told planning commissioners he has over 30 years of experience redeveloping commercial malls and properties, including former big-box sites like abandoned Kmart buildings. “I think our track record has to speak for something, that we haven’t left anything and not finished what we started,” he said. Stern noted he was taking financial losses on some of the Acme property acreage by agreeing to workforce housing, parks, trails, and conservation easements in order to make the PD more attractive, adding that indoor self-storage was one of the most practical uses for a warehouse building that is otherwise functionally obsolete. “I do believe all the things that we are proposing now, and then talking about possibilities in the future with the additional outparcels, is the highest and best use that we’re ever going to see with the property,” he said. “And most importantly, it’s so much better than what exists today.”

Stimson also said he believed odds were strong of funding being approved for housing, and that he could prepare multiple options for moving forward in case one path didn’t work out. If HomeStretch could secure funding in the fall application cycle this year, he said, a 12-16 month buildout could begin shortly thereafter, with units potentially ready for occupancy as soon as spring 2023. “We need the housing,” he said. “Give Daniel the approval, and I’ll do whatever it takes to get them built…we need these people taken care of.”

Planning commissioners ultimately decided to have Lormax Stern flesh out application documents with more details – including providing updated site drawings and more concrete phasing plans – and return for further review before setting a public hearing on the PD. The application appears likely to return as a discussion item at the planning commission’s February 8 meeting, with a public hearing to follow in March, provided the board is comfortable with the updated materials. Planning Commission Secretary Beth Balentine said she thought the project was risky, but that “given all the circumstances, it sounds like a good risk.” President Nancy Sands of Tom's Food Market, who is trying to sell the former grocery store building located near the Kmart site, also wrote to planning commissioners expressing support for the project.

“We are actively marketing the former Tom's Food Market site,” she said, “and are in support of the efforts being made to develop economically viable solutions that will benefit the township and the community at large.”

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