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Good news from Home ... Depot

Posted: Thursday, June 19, 2003

Good news came in orange Tuesday for the city of Kenai, when Home Depot U.S.A. finalized a deal with Kmart Corp. to take over the lease of the building that once housed Big Kmart.

The bright orange Home Depot sign and the orange aprons worn by the company's employees will be a welcome sight to a city sorely lacking in greenbacks after state budget cuts trimmed an already lean municipal balance sheet.

"I think this bodes very well for the community," said Kenai Mayor John Williams. "It will lend itself toward developing a new kind of economy. It will definitely be a help for the city."

Following a brief public courtship with Kenai, in which Home Depot officials reviewed all the possible factors surrounding a move, Home Depot representatives took the final step that would bring one of its home improvement retail warehouses to the Kenai Peninsula.

"We've been able to finalize an agreement on the site," said Home Depot spokesperson John Simley. "We never had any doubts that we wanted to be there. Now, at some point (the building) has to stop looking like a Kmart and start looking like a Home Depot."

When that will happen is uncertain, he said. Following Big Kmart's closing in March, the building was placed under the jurisdiction of the federal bankruptcy court in Chicago. In April, the court granted Home Depot permission to assume the lease, and the company took a 30-day lease on May 5, followed by a subsequent extension, to inspect the location and determine what changes would be in order.

"We will have to do a building permit," Simley said. "There will be substantial work on the building. If all goes well, we can get the bulk of it done during fair-weather months."

Anticipated architectural and engineering reworks include raising the roof to accommodate the warehouse store's "high-stack" method of holding and displaying products, and putting in a heavier floor to support heavier merchandise than what the building was designed to hold.

Jack La Shot, Kenai public works manager, said getting the building permits from the city would take less than two weeks, but he said those applications have yet to be requested.

"They're probably still working on getting their engineering work done," he said. "But I understand that they've rekeyed the locks."

City water and sewer services also have been activated in Home Depot's name. From the time permits are requested and granted and remodeling begins, Simley said it would take several months to get the store refitted, filled with inventory and to train the staff.

Once open, the new store should bring an economic boost to both the city of Kenai, which lost annual sales tax revenue of about $800,000 when Big Kmart closed, and to the Kenai Peninsula Borough, which received approximately $400,000 from the store's sales taxes.

In particular, this could help Kenai, still reeling from a loss of more than $226,000 of state dollars after Gov. Frank Murkowski vetoed funding for the Revenue Sharing and Safe Communities programs. But Kenai City Manager Linda Snow said the city was not budgeting for any Home Depot revenue in the 2004 fiscal year.

"I'm not counting on revenue increases in the fiscal year beginning July 1 and ending June 30 of next year," she said. "We may see additional revenue (if they open in that fiscal year), but we have no idea what that store will produce in terms of revenue."

Beyond tax dollars, the store will create as many as 120 jobs including skilled positions requiring such expertise as carpentry, masonry or plumbing, for example with between a $4 million and $4.5 million annual payroll.

"That will help offset some of the job losses the city has suffered," Williams said, referring to unemployment created by Big Kmart's closing and layoffs from Agrium, Unocal and the Kenai Peninsula Borough School District. "And because of some of the people that will go to work, it will fill up some of the vacancies in apartments around the city."

La Shot said he expects the new store will draw more commerce into the area and suggested that buzz about the store already may have spurred interest in the area.

"Hopefully, this will spark growth in the area," he said. "There are already other projects in the works."

Snow said the city stands ready to assist Home Depot in getting the building ready.

"I look forward to receiving their building permit," she said. "That will allow us to contribute and help them move the project along."



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