By Bill Clements
Dolan Media Newswires
Minneapolis — Mainly because of financing difficulties, Mall of America developers say they’re taking a new approach to the long-delayed, $2 billion-plus expansion known as Phase II.
In 2008, the Minnesota Legislature rejected Mall of America Co.’s request for money to help build a $186 million parking structure that was to be included in the mall’s Phase II, part of the facility’s original 1985 development plan.
Instead, the Legislature gave the city of Bloomington authority to raise local taxes that would pay for the parking structure — and suggested that Mall of America Co. officials redesign parts of their Phase II plans.
And that’s what the company has been doing since then, in conjunction with Bloomington officials.
“Working with city leaders, we have been exploring the possibility of moving Phase II from a single-phase construction project, to multiple stages,” according to a statement last week attributed to Dan Jasper, public affairs director for Mall of America Co. “Given this new approach, we have been working with the city to determine the effects on funding, city requirements and our potential tenants in a still-challenging economic environment.”
Jasper refused to give details of the new approach.
Larry Lee, community development director for Bloomington, said Mall of America Co. staffers and Bloomington officials have been meeting weekly.
He said the Bloomington City Council and the Bloomington Port Authority have held two joint meetings since December to discuss Mall of America-related issues.
One of the smaller sticking points has been terms of the tax-incremental financing agreement that the mall developers have with the city.
TIF districts let cities borrow money to support development in an area and use taxes generated by the area’s increased property value to pay off the debt. When the debt is paid off, the district reverts to traditional property tax collections.
The agreement still in place in general establishes that for every $10 Mall of America Co. spends to develop the mall, Bloomington has to spend $1 on public infrastructure improvements, according to Lee.
If the city were to raise local taxes to pay for the parking structure and other infrastructure improvements, that would mean Bloomington would be spending more than $1 for every $10 the Mall of America Co. spends, which would require changing the terms of the TIF agreement, Lee said.
As of 2008, the mall expansion plans called for a 5.6-million-square-foot, four-story “lifestyle center” on the site of the old Metropolitan Stadium that was to include hotels, entertainment centers and a Bass Pro Shop.
But circumstances have changed since then.
“The uncertainty of the whole financing situation and (the Mall of America Co.’s) uncertainty over the tenants they will have, those are holding things back,” Lee said.
The difficult financing climate is “a third player involved here — and that’s the toughest problem right now,” Lee said. “The revised development agreement hasn’t proceeded because there’s a third leg on the stool and we’re trying to figure out how long it is.”