Festival Foods coming to former Kmart site

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Neil Johnson
April 2, 2015

JANESVILLE—Onalaska-based Festival Foods is poised to make a new home out of the former Kmart site at 2233 Humes Road.

City Economic Development Director Gale Price confirmed Thursday the project is on a fast track to break ground this spring. It would include demolition of the former Kmart store and construction of a 77,000-square-foot Festival Foods grocery store that would employ about 250.

Price said the store, like Festival's 20 other sites statewide, would be open 24 hours. He said the store would include a separated liquor department with separate, limited hours.

According to a Janesville Alcohol License Advisory Committee agenda released Thursday, the committee will review a liquor license application for Festival Foods on Tuesday.

A media release from the company late Thursday said the store would buy the Kmart building before tearing it down.

Like the former Kmart, the storefront at Festival would be oriented toward Humes Road, Price said.

Price said a third-party developer for the project, Appleton-based Commercial Horizons, plans to develop the store as a build-to-suit project. He said it's his understanding Festival could buy the property after it is built, Price said.

It's not clear whether Festival would lease or own. Nick Arlt, public relations director for Festival, said the company runs its stores as franchises and generally leases property from developers or owners.

Arlt said the full cost of the project isn't known because the project hasn't had designs worked out or approved.

The city has not received permit requests for demolition of the 107,000-square-foot Kmart building, Price said, and it has not received construction permit requests from the developer.

Under city rules, a large-scale redevelopment of the site requires a conditional-use permit to be reviewed by the plan commission along with city council review and approval of the permit and a certified survey request.

Festival's liquor license request says the store's liquor section would sell a selection of 600 to 700 craft beers and 200 to 300 imported beers, along with thousands of types of wine and spirits.

The request would require the city to grant a liquor license beyond the city's quota.

None are available, although the city has a process for businesses to request exceptions if projects would contribute to local redevelopment or economic improvement.

Arlt said Festival's preference is to have a liquor section at the store.

“If not, that would change the project, and we'd have to discuss a plan B,” Arlt said. “With this project, we'd be investing millions and creating employment. I would think it would meet the city's (economic development) guidelines” for an exception to the liquor license quota, Arlt said.

Price said the city's planning department is working with Festival on site plans. He said a conditional-use permit for the project is poised to be introduced to the plan commission Monday, and a public hearing on the conditional-use permit request is slated Monday, April 20.

The city council could review a committee recommendation on the liquor license by Monday, April 13, and the council could review the project for final approval as early as Monday, April 27, Price said.

He said the project could break ground by the end of April or early May, and the liquor license request indicates the store could be open by October.

“This is a very fast-track project. It's probably one of the fastest-moving ones I've seen in my time at the city,” Price said.

Tom Lasse, who is part of a group of investors who has owned the former Kmart building, said last month that redevelopment of the site was in the works. Lasse also suggested that the lot could be redeveloped with outlot stores that would be built once tenants were secured.

The former Kmart site is considered by many local stakeholders as the hot corner for retail on the city's north end. The intersection of Highway 26 and Highway 14, where the site is located, has one of the highest traffic counts in the city.

Kmart closed late last year. The company had leased the space since 1968.

The closure came amid attempts by Kmart and parent company Sears to staunch record financial losses by the two companies that had amounted to more than $6 billion between 2011 and 2014.

Festival Foods, a family-owned company founded in 1946 in Onalaska, has 20 stores throughout Wisconsin, and it plans to open a new store in Madison in 2015, according to the corporate website.

The company's store closest to Janesville is in Fort Atkinson, at a former Sentry Foods store.

Festival sells a blend of name-brand products and discount house brands for certain items.

The company says the Janesville store would offer natural and organic foods, fresh sushi, a healthy-choices salad and hot food bar, an “extensive” deli, a meat selection and catering services.

The store also would have a raised seating area above the deli, a community conference room and a “Tot Spot,” a supervised in-store child care service for customers.

The Festival Foods development would add to an already packed stable of grocery stores in and around Janesville, including Sentry Foods, which has two locations; Pick 'n Save; Schnucks; Aldi; and Janesville-based Woodman's Foods, a 230,000-square-foot megamarket on North Lexington Drive less than one-third of a mile from the planned Festival store.

That list doesn't include big-box stores such as Wal-Mart, Sam's Club and Target, which also sell groceries, along with dozens of convenience stores and the Piggly Wiggly store on Milton's south end.

As a 24-hour supermarket, Festival would compete with Woodman's and Wal-Mart, which also are open 24 hours.

Price had asked the city council last month to consider changes that would include eliminating the city's retail liquor separation ordinance, the rule that requires grocery stores and gas stations to have permanent walls that separate liquor sale areas from other sale areas.

The council rebuffed the idea of changing the separation rule.

Price said Festival indicated that it was willing to develop a store that complies with the separation rules.

Another large-scale grocery retailer, Michigan-based Meijer, has expressed interest in developing in Janesville. However, city officials have said the company is still working to find land parcels of a suitable size and location.

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