Photo by Deb Gau Troy Eichmann, chief operating officer of The Furniture Mart USA, spoke to members of the Marshall City Council about plans to redevelop the old Kmart property in Marshall.

MARSHALL — Planned redevelopment of the former Kmart building in Marshall took another step forward Tuesday night. Members of the Marshall City Council approved an agreement for the city to improve a privately-owned street running past the property, which is in poor condition. The council also voted to grant a utility easement for the property.

The news that the former Kmart building had been bought by The Furniture Mart USA came out earlier this month. Representatives of the company, including COO Troy Eichmann, were at Tuesday’s council meeting to talk about the project.

The Furniture Mart USA is based out of Sioux Falls, S.D., but it has 40 stores in a five-state region, Eichmann said. The company plans to bring an Ashley Furniture HomeStore to part of the former Kmart property in Marshall, and Eichmann said they are “in active negotiations” for other potential tenants.

Marshall city staff said part of the plans for redeveloping the old Kmart building was to rehabilitate the parking lot, divide the interior into four smaller commercial spaces, and to construct an additional retail commercial building on the property. The new building would have about 20,000 square feet of space, city staff said.

“We are moving pretty fast” on redesigning and redeveloping the old Kmart building, Eichmann said. He said the company hoped to move forward on the project this year.

But the aspect of the development that the city council was looking at had to do with the deteriorating service road that runs along the edge of the old Kmart parking lot. The road is privately owned as part of the Kmart property, but under a 1989 development agreement, it can be used as a public street. The Furniture Mart USA was asking the city to consider improving the roadway.

Under a development agreement presented to the council Tuesday, the road would remain privately owned, but the city would reconstruct the road and maintain it like a city street. The street construction would be done at the city’s expense. In the new development agreement, the total cost of reconstructing the road was estimated at about $360,000.

Council member Glenn Bayerkohler said he had some concerns about the development agreement, and an agreement granting a utility easement on the property.

“We want fair treatment of all companies” in Marshall, Bayerkohler said. He said the development agreement gave the appearance of the city subsidizing a business.

Council member Craig Schafer said the situation with the old Kmart service road was similar in some ways to Service Drive, a frontage road along East College Drive that the city reconstructed in 2015. Instead of assessing local businesses for the whole cost of the street improvements, the city took on part of the cost.

“That does kind of set a precedent or an example,” Schafer said.

Council member James Lozinski also asked if it was possible the street improvements would affect the value, and the property taxes, of the former Kmart property.

In separate votes, council members approved the development agreement for the street improvements, and the agreement granting a utility easement on the property. Both votes passed 5-1, with Bayerkohler casting the dissenting vote each time.