Kroger seeks $82.2M to fund 36 Michigan store upgrades

Posted on Mon, Nov 15, 2010 : 5:55 p.m.

Kroger seeks $82.2M to fund 36 Michigan store upgrades

By Paula Gardner

Kroger Co. is seeking $82.2 million in bond financing to fund new gas station construction, store expansion or renovations at 36 of its Michigan stores.

The local impact of the plan totals $3.325 million, with plans for a $2.5 million store upgrade on Plymouth Road in Ann Arbor and a new fuel center on East Michigan Avenue in Ypsilanti Township.

The request — made under the federal Recovery Act — was possible after legislation took effect Sept. 1 allowing financing request to be pooled across jurisdictions, state officials said.

The Michigan Strategic Fund board will hold a public hearing on the request Dec. 1 in Lansing.

The proposal is unusual, said Amy Banninga, director of federal initiatives for the Michigan Economic Development Corp.

Part of that is the size, she said.

“And it’s unusual because it’s retail,” Banninga said. “In this case it was allowed because it does create jobs and it does create tax base.”

If the new financing is approved by the state, improvements will include:

9 new fueling centers, including locations in Ypsilanti Township, Hamburg Township and South Lyon.
4 store additions in Plymouth, Chesterfield Township, Lambertville and Imlay City.
23 store renovations; in addition to the Ann Arbor store, locations include sites in Wayne, Oakland and Macomb counties; Okemos; Bay City and Frankenmuth.

Details on the planned investment were not available from Kroger.

However, the grocery chain — which employs 16,000 people in Michigan — has invested about $480 million in store acquisitions and upgrades since 2005, said Dale Hollandsworth, spokesman for the Ohio-based chain’s stores in Michigan.

In Ann Arbor, the Plymouth Road store anchors the Traver Village shopping center at Nixon Road.

The store has been in the center since it opened 20 years ago, said Chris Grant, vice president at First Martin Corp. He said he had no information on specifics of the remodel, though store officials have been in touch with First Martin.

“It would be great to see the store remodeled,” he said. “It’s a great indication that the store is doing well.”

The Ypsilanti Township store, located at 1771 E. Michigan Ave., is owned by Ypsi Associates LLC, according to state records. It’s registered to Michael Sisskind of Farmington Hills.

Kroger operates seven stores in Washtenaw County.

File photo

The store is set back from the northeast corner of Michigan Avenue and Lamay, where Kroger wants to build the fuel center on the corner.

Since 2005, Kroger has added 25 fuel stations to Michigan stores, Hollandsworth said.

Among the new fuel center locations: The store on Carpenter Road in Pittsfield Township, where construction is concluding on a fuel center that will open before the end of the year.

Kroger operated 2,470 stores as of the end of the second quarter. During that period, net earnings were $262 million, up 2.7 percent from a year earlier.

Meanwhile, if the bonds are approved by the MSF, the amount will not exceed $82,240,000, and they’ll be limited obligation bonds of the MSF. Kroger will have to find its own bond source.

The bond market now is opening to these types of requests from private borrowers, Banninga said.

However, the program will end Dec. 31 unless federal legislation extends it. So far, $300 million in recovery zone bonds have been issued in Michigan in 2010, compared to a $1.2 billion cap.

Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.

Comments

Frains

Thu, Nov 18, 2010 : 5:05 a.m.

Imagine if Hiller's or Zingerman's tried to open a dozen stores in Ohio - Kroger would pull out all stops to lobby against them to prevent market intrusion. Laughable that Kr-Ohio-ger is trying to pull this off, yet with so much money at stake, legislators pockets can be lined to shift votes and perspective.

AlphaAlpha

Wed, Nov 17, 2010 : 10:06 p.m.

One of the commenters onsite has been encouraging the Meijer produce, meat, and dairy buyers to go head to head with the other whole food store in town, by offering an improved selection of natural and organic foods, at very competitive prices. So far, so good...

Ann English

Tue, Nov 16, 2010 : 8:17 p.m.

MI-expatriate, ALDI on the west side of town and Sav-A-Lot in Ypsilanti do keep their carts joined together until shoppers loosen one at a time with a quarter. I can just imagine nearby apartment dwellers walking off with Sav-A-Lot carts if it weren't for the chains holding them to each other. From what other commenters are writing, it sounds like I may soon stop buying all my kale at Kroger. It was very wet and on sale for 89 cents per pound when I first went to the Carpenter Road location to buy it. I've begun noticing that now Meijer is selling kale for a dollar per bunch. I'd never paid attention to their regular kale before, just their purple Oriental kale. And just today I noticed that Meijer offers two sizes of leek, for the same price per pound. THEY'RE UPGRADING THEIR PRODUCE SECTION WITHOUT CALLING IN JOURNALISTS TO PROCLAIM IT! They're people of action, not mostly words and publicity seekers.

beaumont_slave

Tue, Nov 16, 2010 : 8:11 p.m.

@mike... i believe those were people grandfathered in when kroger tried to bust the union up about 10 years ago. they let many go.. and those that started before a certain time continued at their salary..hence the high pay. Personally management at the ypsi krogers sucks. has for years. they treat their employes bad. and micro manage the deptartments. so stock doent get done because of lack of workers.

mike

Tue, Nov 16, 2010 : 4:25 p.m.

i know a few people that work at Krogers and top pay is $ 17.65 and hour! you start off at 7.50 an hour and work up from there! i still think krogers should use there profits to do all the upgrades

a2trader

Tue, Nov 16, 2010 : 4:20 p.m.

While much of what ERM's Ghost says is true, it omits the most important fact that these are CHEAP dollars going to a Retailer. Why we would advantage the development of an out-of-state, publically traded company that could issue stock (debt) at market price? Plus, what quality of jobs are we talking about? This is a temporary flow of dollars to the construction industry to support the profit motive of a retailer whose average wage probably hovers around a bare living wage. Did we all forget how Kroger pulled out of serving Detroit years ago, along with everyone else? I would much rather see these cheap loans go to advantage a Michigan-based company that will provide high quality jobs, that doesn't already have access to the capital market (like a start-up). If the dollars get spent on construction, great! I have no beef with that. IMO if the MSF can't find a better qualified Michigan-based candidate, the opportunity should just expire. I don't want to disadvantage our Michigan-based companies. Would Annarbor.com please tell common folk like me how we can make our comment public at Michigan Strategic Fund hearing on December 1.

krc

Tue, Nov 16, 2010 : 4:10 p.m.

Carpenter road is pathetic except for maybe the deli area and health food. With all the ethnic folks living in the area, I would think they would expand, maybe devoting a whole aisle to food from their various countries, not just Ramen noodles and salsa. And I agree with whoever commented about their bottle return area. The floor in there is always sticky, it smells like stale beer mixed with coke besides being trashed.

Cash

Tue, Nov 16, 2010 : 9:41 a.m.

Dear Mr Ghost, Please stop confusing us with facts. LOL Good post.

Soothslayer

Tue, Nov 16, 2010 : 8:38 a.m.

There are several good reasons to approve this: 1) Kroger will incentivize customer loyalty by offering points rewards/discounts for fuel & grocery purchases (both of which consumers need so it makes sense), 2) the upgrading of the stores should produce a better and healthier selection experience (fresher/more local AG) for the grocery shoppers, 3) Kroger is investing in Michigan using local workforce and staff, 4) they support more convinient locations for shoppers that are transit limited that other chains do not Maybe as part of the condition of this we ask that Kroger also restructure and incorporate in Michigan for its Michigan stores (and giving them incentives to do so) so that more of the growth revenue stays in Michigan. No offense Buckeye's! Bottom line is if Kroger sees a benefit to upgrading the quality & selection of its meats & produce it will and shoppers will win with more efficient purchasing power on fuel & groceries. Win-win if played correctly.

A2comments

Tue, Nov 16, 2010 : 8:09 a.m.

talker said "I'd rather help Borders---remember, it is an Ann Arbor founded and based business being undermined by local people who shop on-line and then deprive us of sales taxes to help the state of Michigan." Borders may have been Ann Arbor founded and is based here, but it's now controlled by a tobacco magnate. I for one wouldn't want to support a company run by tobacco money. Further, saying that is's being undermined by those shopping online and depriving the state of sales taxes implies that all your fellow citizens are making false statements by not stating on their Michigan tax returns that they made purchases on the internet that they now owe taxes on. I check the box that says I did make purchases, and pay the tax on my return as I am legally required to. Borders failure has everything to do with being a poorly run company that was way to slow to respond to challenges from innovative competitors, and might have likely failed even if they had responded well. When you go into a Borders and find a book for DOUBLE the price of Amazon, then how can you defend that? I buy my son's college books online at Amazon and pay my tax on my tax return, and save $200 per semester. As far as the grocery carts at Kroger's on Plymouth Road, in addition to the token system previously mentioned, there is technology that locks the cart wheels when someone tries to remove the cart from the lot. http://www.gatekeepersystems.com/ We shop at Kroger's on Plymouth (and sometimes Carpenter), Meijer on Carpenter, and Busch's on Plymouth. Kroger produce is vastly inferior to Meijer and Busch's. Kroger stores are much less clean, on Saturday I had to ask the Customer Service desk on Carpenter Road to clean the bottle return area it was so filthy and piled with trash. Kroger seemed to build the Carpenter Road gas station without taxpayer help, I would be opposed to them getting this assistance - and find that they asked for it to be unacceptable.

AlphaAlpha

Tue, Nov 16, 2010 : 6:42 a.m.

Aldi, Arbor Farms, Busch's, Coleman's, Hiller's, Knight's, Meijer, Plum, Whole Foods, not to mention many fine ethnic markets. Vote with your money.

God Loves Us All

Tue, Nov 16, 2010 : 6:30 a.m.

Ya we need another gas station in Hamburg the ones that are here now are going out of business fast enough. God bless america

Cash

Tue, Nov 16, 2010 : 5:56 a.m.

Well The East Michigan Ave store should be condemned by the Health Dept...forget the gas station. There's nothing like seeing someone cook samples at the end of an aisle, drop one on the dirty floor, and pick it up and put it back on the sample plate....to stimulate the appetite.

Frains

Tue, Nov 16, 2010 : 2:52 a.m.

More Michigan dollars vacuumed to support the Kroger's state of Ohio instead of favoring a Michigan company that would keep more Michigan dollars circulating locally - the millions of lost capital to our state economy is staggering. Hiller's? Busch's? There are plenty of independent, Michigan grocery enterprises to support and nurture if Michigan's economy is to awaken from careless, sleepwalking decisions.

Frains

Tue, Nov 16, 2010 : 2:52 a.m.

Frains

Tue, Nov 16, 2010 : 2:51 a.m.

Frains

Tue, Nov 16, 2010 : 2:46 a.m.

MI-expatriate

Tue, Nov 16, 2010 : 1:25 a.m.

The cart problem many have commented on is very easy to solve. In most of Europe, you pay to get a cart but are reimbursed at checkout with a token. If you return the cart to the corral and insert your token, you get your money back. When we first moved here I didn't understand all the carts strewn across grocery store parking lots but soon learned. (I was also shocked by the amount of litter everywhere though that won't be so easily fixed.) Yes, carts might still wander away but inventive souls could return them for cash, much like searching for recyclable cans and bottles that pay money upon return.

Randy

Tue, Nov 16, 2010 : 12:29 a.m.

It is a total shame they want to add gas to the E. Michigan Store when we have plenty of gas stations on this side of town. What the store needs is a total renovation. I live on this side and find myself either going to Huron or Plymouth if I want a good selection, great produce area, sushi, soup and many other benefits the other stores have that we dont. Plus dont even get me started on the cleanliness of the other stores and Im sorry to say the workers are just much friendlier. If I only have to pick up a few things I might go to Michigan or drive past it and go into Canton. Kroger Management please work on your core offerings and improving there before you consider offering something new that you probably could not handle. And trust me when I say Im not the only one that feels this way. Many of my neighbors make the same comments and also make the drive to the other Krogers. We need and want a good quality grocery store on this side of town we can depend on.

Chris

Mon, Nov 15, 2010 : 11:20 p.m.

The Kroger on S. Industrial was upgraded in the last 18 months or so. I remember the work going on when we lived in that area. The interior is much brighter/better organized now. I believe the store on Maple went through upgrades earlier this year.

nan

Mon, Nov 15, 2010 : 11:12 p.m.

The south industrial store is a smelly PIT. I cannot believe it will not be upgraded. You walk into the store and it smells like rotting food. What's up, Kroger??

breadman

Mon, Nov 15, 2010 : 10:40 p.m.

Leah! I agree someone should put a stop on the carts that just roll off the parking. Krogers on plymouth road is in bad shape and all the students on the north campus just walk off with carts same with Park Way Meadows residents. Then Krogers raise the price on the ones that leave the cart in the lot.

Greggy_D

Mon, Nov 15, 2010 : 10:35 p.m.

Most of you voted for this charade.

stunhsif

Mon, Nov 15, 2010 : 9:03 p.m.

I shop at the Milan Kroger a couple times a month when doing light shopping and buying their special's from their flyer in the newspaper. They have improved their produce selection recently at the Milan store and they have added a gas station. I will agree that Meijer has better produce and prices as does Wal Mart so I do most of my heavy shopping at those stores. Kroger just cannot seem to compete with Meijer in the state of Michigan. When it comes to quality, no one compares to Busch's but their prices are out of my league.

Marvin Face

Mon, Nov 15, 2010 : 8:55 p.m.

Three of the many reasons I don't shop at Kroger: 1. The employees are in a union 2. They make you use that stupid card to get regular prices. If you don't have the card, you pay extra. 3. It is the bottom of the grocery barrel in terms of cost, selection, quality, service. The whole experience is just an awful, dirty mess. In my mind, there isn't enough money in the world you could put into those stores to make me shop there.

Audion Man

Mon, Nov 15, 2010 : 8:42 p.m.

But... screw Kroger for the whole bond thing. I'd like nicer stores, but gads... to expect public money for it. That is beyond the pale. I'd sooner give public money to *another* chain and force them to compete.

Macabre Sunset

Mon, Nov 15, 2010 : 8:40 p.m.

This is true. A refunding of all unspent "stimulus" dollars and an even playing field for all businesses is far more important than upgrading a fading grocery store.

Dante Marcos

Mon, Nov 15, 2010 : 8:27 p.m.

I can't believe what I'm reading. A grocery store megachain wants government money so it can... make even more profits? This is a joke, and I hope the MEDC says no. Supermarket chains are to health and human happiness as robots are to massage.

MyOpinion

Mon, Nov 15, 2010 : 8:26 p.m.

You just missed the application for alternatives to golf at Huron Hills. You could have opened a small store on the front 9 and added a small selection of golf balls, shirts, etc.

Audion Man

Mon, Nov 15, 2010 : 8 p.m.

Huzzah! After traveling through Ohio and seeing the Krogers there, it is clear that the Michigan market is rather short-changed. They have much posher stores- and Kroger Marketplaces- which seem to be designed to compete more with Meijer. The Krogers here seem like they are stuck in the 70's. design-wise. Kroger is the major chain here and they have, to date, treated it like a backwater. Meijer is variable and Busch's while nice, tend to be expensive and their selection is not always so great. In lieu, of some other chain moving in like Safeway and Giant Eagle, I welcome the upgrades from Kroger.

talker

Mon, Nov 15, 2010 : 7:51 p.m.

I don't think public money should favor a retailer. This is not a must have, sole retailer in its field. In fact, though the Plymouth Road Kroger would be a reasonable choice for me, I never go there. I agree with the poster who prefers Meijers. Though I drive and can shop anywhere from Trader Joe's to Meijers, Hillers, etc., there is bus route 22 which goes from the northeast side of town to the Carpenter Road Meijers. Where would be stop? If Kroger's gets public money to remodel, why not give public money to Trader Joe's or to Fleetwood Diner, or any other business? Kroger is a publicly traded company. Kroger isn't a Michigan owned company as Busch's, Hiller's, and Meijer's are. Why should we in Michigan support the use of public funds to remodel a non-Michigan owned business when we have grass roots businesses. I'd rather help Borders---remember, it is an Ann Arbor founded and based business being undermined by local people who shop on-line and then deprive us of sales taxes to help the state of Michigan.

mike

Mon, Nov 15, 2010 : 7:48 p.m.

Krogers make's a billion dollars a year! Why should my tax dollar's be used for this!! And if the City of Ann Arbor was smart maybe they would fine the people that steal carts!

MyOpinion

Mon, Nov 15, 2010 : 7:45 p.m.

You just missed the application for alternatives to golf at Huron Hills. You could have opened a small store on the front 9 and added a small selection of golf balls, shirts, etc.

InsideTheHall

Mon, Nov 15, 2010 : 7:43 p.m.

Why give Kroger a competitive advantage over Meijer and Wal-Mart? This will be a waste of taxpayer money to support the least efficient producer. This is why Obama will be a one term POTUS.

trs80

Mon, Nov 15, 2010 : 7:42 p.m.

So they want public tax dollars to perform this upgrade? Unless they are planning to sell gas under $2 a gallon I see no reason why public money should fund a private company. Jobs or no jobs we will never get any of money back.

BernieP

Mon, Nov 15, 2010 : 7:33 p.m.

Dear Kroger Mgmt - Prior to commencement of the refurbishment of your sites, file the paperwork for a Brownfield tax credit. There is recent evidence that this credit will cover nearly 10% of the proposed bond sale. PS - no charge on the consulting fee.

Leah

Mon, Nov 15, 2010 : 7:23 p.m.

I am glad to hear about the Plymouth Rd remodel. I have given up on it due to disgusting produce, lack of available carts, and a poor layout. I'd also like to see some incvetmemt in cotnrolling the "cart thieves" who think walking 2 miles away with a Kroger cart is okay. I'd love to know how much this costs the store in retrieval and damaged carts. The Busch's on this side of town is pricey but well worth it in comparison.

mike

Mon, Nov 15, 2010 : 7:20 p.m.

Maybe Kroger's should start paying there worker's more then $ 7.50 a hour then remodeling stores! Kroger's only care's about how there stores look then the customer's!

Macabre Sunset

Mon, Nov 15, 2010 : 6:55 p.m.

They're definitely in decline. I've actually gone back to Meijer's for the most part. So the upgrades are welcome. Part of the problem is that there are always lines for the automated checkout and finding fresh perishables is sometimes difficult (I need to become more attuned to the delivery schedule if I want to go back). The Kroger card can save money, but it kills you when something is not "on sale" - just one non-sale can make the extra trip to Meijer's worth while.

Cash

Mon, Nov 15, 2010 : 6:50 p.m.

Hope they fumigate the East Michigan Krogers....that is the filthiest store in Michigan.

Urban Sombrero

Mon, Nov 15, 2010 : 6:31 p.m.

Forget the stores, they need to upgrade the quality of their produce! The store near me (Carpenter Rd) always has wilted, nasty looking stuff. Overpriced, too. I haven't bought anything fresh from them in ages.

Marshall Applewhite

Mon, Nov 15, 2010 : 6:16 p.m.

I'm kind of surprised they're planning to remodel the Plymouth Rd location and not S. Industrial. The one on Plymouth is already a lot nicer, and I'm not really sure what upgrades are necessary/advantageous.