What else does a gigantic mall need but a gigantic water park right next to it? That's the idea for the Mall of America.
Plans are in the works for a 335,000-square-foot dreamscape. The renderings show glass ceilings, wading ponds, waterfalls, and tropical plants to give it an oasis-like feel. A consultant hired by Bloomington projected last fall that it would bring in 1.1 million visitors by 2022.
The Mall of America couldn’t be more thrilled. Retail is struggling all over the country thanks to online shopping, and the park could be the attraction to get more shoppers through the doors. Mall ownership is eyeing a site currently occupied by a parking lot. The only problem: It’s going to cost $250 million, which the mall says is too much for it to privately finance.
But Bloomington has concocted a way around all that. It’s complicated, but the upshot is this: Set up a nonprofit to borrow the money for the build, with the charitable mission of “lessening the burdens of government.” The nonprofit would own the park and would therefore be eligible for exemption from property taxes. But the mall’s parent company would run it and own the land. Voila! Tax-exempt financing.
City officials say property taxes won’t be used. But taxpayers aren’t completely off the hook. In order to qualify for this kind of exemption, the mall has to have limited skin in the game.
Which brings us to mid-April, when Bloomington officials voted to pay $7.5 million of the park’s $10 million design fee using funds from liquor and hotel taxes. The mall’s parent company will be paying the remainder. They assure the money will be repaid with revenue from the park. And if the park flops, sales taxes at the Mall of America will cover the tab.
But that’s just the tip of the iceberg. Taxpayers could also be responsible for the $50 million required for a new parking ramp and a skyway, and as much as $8 million to prepare the site.
None of this means the park is a sure thing. But approving the design costs brings it one step closer to becoming a reality. (The city of Bloomington didn’t respond to interview requests.)
So, presuming this complicated taxing scheme works, what does the city get out of this? According to a presentation at an April 17 City Council meeting, the idea is that what’s good for the mall is good for the city.
The park could bring in more visitors, and the mall happens to be 10 percent of the city’s tax base. Hotels are 7.5 percent. The new property taxes alone could be worth between $150,000 and $200,000 annually, to say nothing of admissions and lodging taxes. The mall itself wouldn’t profit from the water park, except by getting more chances to lure in visitors. They make it sound like a win-win.
But that may be because this kind of financing is pretty much untested in these parts. As attorney Kim Lowe told the Star Tribune in February, the complications might be a “red flag.”
“Why do we have to go through all these hoops to get this financed if it’s going to be a good deal?” she asked. (She helped make Minnesota’s nonprofit laws in the first place.)
Her fear is that this may end up benefitting the mall far more than it benefits Bloomington.