Kmart shopper Barry McReynolds once found it odd that the store and its supersized parking lot on Lake Street blocked off Nicollet Avenue, seen by many as one of Minneapolis' biggest blunders in urban planning.

After shopping there for 20 years, McReynolds doesn't think any more about how the store got there. "I know they had a good reason, but nobody ever told me about it," he said.

Opened in 1978 as part of a city-backed redevelopment, the Kmart has become a Lake Street fixture that customers depend on for its convenience and low prices. Yet neighborhood and city leaders have been stewing for years over how to open Nicollet again to improve its urban atmosphere and better connect the community.

Mayor R.T. Rybak drew thunderous applause last week when, in his State of the City address, he said part of a streetcar line planned for Nicollet would hopefully be "busting right through the back of that Kmart."

So far, Minneapolis has no solid plan to open up the intersection, an expensive and complex proposition that would require the relocation of Kmart and the cooperation of the property owners, a New York-based trust.

While proposals to reopen Nicollet have failed in the past, city officials say there are recent signs of progress.

Developers have been in talks with the landowners about acquiring control of the site since last year, said David Frank, the city's director of transit development.

Studies are underway to examine the possibility of streetcars running down Nicollet from 46th Street, through the Kmart site, downtown and up through Central Avenue, as well through the Midtown Greenway. Another plan under consideration envisions freeway ramps and a bus station to increase access to that area from Interstate 35W a block away.

And a working group of officials organized late last year at the direction of Council Member Robert Lilligren, who represents the area, has been meeting to further define the project, set a timeline and find funding.

"For however long ago the decision was made decades ago to close the street, people have regretted it," Frank said. "It's an important real and symbolic hole in the street grid."

Many in the neighborhood acknowledge that much of the parking lot goes unused because so many people arrive at Kmart on foot or by bus. The expansive lot creates an almost-suburban separation of an otherwise-urban avenue, where "Eat Street" runs north and a string of small businesses -- many immigrant-owned -- bustles to the south.

"There's a big box with an ocean of surface parking in front, which is not what any of us want in our neighborhood and commercial corridor," Frank said.

The matter was controversial from the start.

In the 1970s, the city targeted the Nicollet-Lake area for redevelopment. After an initial plan fell through and left city taxpayers on the hook, the city turned to the Kmart plan to "staunch the tax loss," said Earl Netwal, a council member at the time who voted against the deal.

Netwal recalled last week that his objection was that blocking the intersection would hurt the small shops that depended on passersby for business, pulling traffic from commercial Nicollet to quieter residential streets. And it hurt the pedestrian appeal, he added: "It is offensive, aesthetically."

His predictions came true. Storefronts emptied as business owners moved out. But over the following decades, immigrants started up dozens of restaurants and shops that began to revive Nicollet.

Whatever city officials see as a lack of pedestrian appeal, many people pass through the intersection and cross the parking lot. On one recent afternoon, several young men were observed hollering for people to give them cash for their food stamps.

Police Sgt. William Palmer said Kmart has the highest incidents of shoplifting and theft in the Fifth Precinct, though that is to be expected, given its size.

Isreal Mills, another shopper, said neighbors come to Kmart because it has what they need. Going around the block only takes an extra minute, he added.

But supporters of reopening Nicollet are quick to point out that they do not oppose the store itself, only its location blocking Nicollet. Frank said plans would entail moving Kmart to another part of the intersection, though their lease on the property is not up for "a long time."

Sears Holding, which owns Kmart, did not comment. But the store was not on the list announced last month of Sears and Kmart stores slated for closure.

Mark Hinds, executive director of the Lyndale Neighborhood Association, views the history of the Kmart as a debate about whether Minneapolis should be suburban or urban.

As the Kmart deal happened, he said, Minneapolis faced white flight to the suburbs and there was discussion about whether it should become more suburban to stay competitive.