When big-box stores left, a Minnesota town feared for its future. Downtown investment changed the vibes.

FERGUS FALLS, MINN. – When an anchor store closes in a big metro area, it’s often met with a shrug: Drive another mile or two and you’ll find a similar option. But when the same thing happens in a small town, residents begin to worry.

So when the 2014 shuttering of a Kmart on the west side of Fergus Falls kicked off a years-long spate of big-box stores and grocery stores closing in this west-central Minnesota town, it set off something of an existential crisis. After Kmart, Target closed in 2018 (which the local paper called “devastating”). Sun Mart Foods and Herberger’s closed that same year, followed the next year by a Shopko. Downtown was struggling, with more than 20 empty storefronts even before COVID ravaged retail.

“There was a real panic and fear that set in: Is our town dying?” said Mayor Ben Schierer.

But go to downtown Fergus Falls today, a mile from the big-box stores on the town’s outskirts, and you’ll see a town that’s anything but dying. A downtown pavilion completed in 2022 on the banks of the Otter Tail River has spurred excitement and momentum, hosting twice-weekly farmer’s markets and community events. A nearby splash pad opened in summer to much local fanfare. The town of 14,000 broke ground this year on a $10.8 million aquatic center, funded when voters approved a local option sales tax in 2022 and scheduled to open next year.

The infrastructure investments have sparked private business growth in what had previously been a sleepy downtown. New businesses include Uncle Eddie’s ice cream parlor and its 100-foot-long gumball machine; Töast, an upscale Scandinavian-inspired breakfast and lunch cafe; and the riverside Outstate Brewing Company, which last month opened a coffee shop and this weekend is hosting an Oktoberfest event.

Fergus Falls’ transformation shows how one town can turn a crisis into an opportunity: by drawing up a master plan to revitalize its riverfront, by its City Council making that plan its top priority, and by bringing together various sources of public funds to spur private business investment.

The three riverfront projects — the pavilion, the splash pad and the green space at the old dairy — cost more than $13 million. Schierer said the only way the projects happened was through pulling together various funding sources: state bonding money, federal COVID relief money, Minnesota Department of Employment and Economic Development loans and grants, private grants and contributions, and city funds.

“It’s a story of what a community believing in itself can do,” Schierer said. “And that involves all sectors. It’s not all on the public sector. The public sector plays a role, because they have access to funding. They can be a catalyst. But the public sector has to understand its role, to step back when it should step back.”

Now, downtown storefronts are nearly completely full. Children bus in from around the area to visit Otter Cove Children’s Museum. Even a landmark eyesore vacant for decades, the century-old Red River Flour Mill, is getting a facelift.

On the other edge of the parking lot from Outstate Brewing, Curt Zimmel, a construction manager for the Fargo-based Mutchler Bartram Architects, walked past excavators digging up black dirt and opened a door to a bustling scene of construction workers turning the old flour mill into something wholly different: They’re building a 33-unit boutique hotel (including a two-story penthouse) that will work like an Airbnb — no 24-hour desk service, and online check-in.

The $7.5 million project includes $2 million in tax credits for the building that’s on the National Register of Historic Places. That means the hotel will feature exposed concrete floors, ceilings and masonry, giving it an industrial feel. Grain bins will be used as stairwells. Historic photos will dot the hotel.

“There’s a new vitality downtown, a lot of energy,” said Kevin Bartram, the architecture firm’s president. “The city is starting to take advantage of the river and the old historic buildings. There’s a lot of good roads from all different directions that pour through downtown, so it’s only going to keep getting better.”

A redevelopment project like the hotel always comes with surprises, Zimmel said. Once they got behind the walls, they discovered a solid pillar of old, hard-packed wheat in a bin. It took a week to chisel that away and haul it out.

“Until we cut a hole, we don’t know what’s in there,” Zimmel said. “That’s the fun and the frustrating part. You think you have this figured out. We didn’t find any chests of gold, no dead bodies. But were you expecting 20 feet of wheat?”

A block away, Evan Burkdoll walked through his Scandinavian-inspired cafe, where every table was full with the lunchtime crowd. He has two concepts under one roof; next door is Union Avenue Bar & Eatery, an upscale restaurant with handmade pastas, including the popular braised short rib ravioli, and wood-fired sourdough pizzas. At 26, Burkdoll also runs a third restaurant in town, Mabel Murphy’s, and a catering business serving the region.

He grew up in Fergus Falls, went to culinary school in Moorhead and moved back home. When he was young, he never went downtown. He thought of it as a bunch of offices that closed up at 5. If his family went out to dinner, it was for Applebee’s or takeout pizza.

“There was no heart downtown, no energy there,” Burkdoll said. “Now it seems like there’s always something going on. A bunch more people walking downtown, a lot more bike riding. Just people, man. It’s a small area, so when you see lots of people gathering somewhere, it’s a big deal.”

These sorts of things are good for the tax base, certainly. But more than that, it’s good for the town’s morale. The mayor jokes that people used to visit Fergus Falls and wonder: Where’s the falls? Visitors didn’t even know a river ran through downtown, since the river was bordered by empty parking lots and dilapidated industrial buildings.

“There had been sort of a feeling of things going backwards, going downhill, like the town was going to die,” said Steve Rufer, a longtime local attorney who helped start an organization promoting downtown. “We went from turning our back on the river to being a true riverfront community. Now you can actually watch the river flow by.”

Cities often have ambitious master plans that don’t work. The mayor of Fergus Falls believes this plan worked because public money sparked growth of private investment. And city leaders plan for continued growth. Near the old flour mill is space for more development: 28 acres of green space on what used to be a dairy facility.

“The lesson,” Schierer, “is that it’s on us. We have to be in control of our destiny.”