Federal stimulus help is on the way for the Mall of America's new luxury hotel.
The Hennepin County Board of Commissioners on Tuesday voted to give the Bloomington Port Authority the right to issue $40.3 million in tax-free bonds to help finance the $130 million hotel. Revenue from the hotel will be used to repay the bonds, a temporary financing tool created by the 2009 economic stimulus bill.
"It just ends up being a good use of what this bonding authority was intended to do -- to help the economic recovery," said Bloomington Mayor Gene Winstead. "If this development gets rolling maybe we can get some momentum for the whole Phase II of the mall."
News last week that the county was poised to approve the tax-free bonds for the hotel prompted a flurry of concern. Hennepin County Commissioner Jan Callison, who represents the county's western suburbs, publicly questioned use of stimulus aid to build an upscale hotel. On Tuesday, Callison said she was reluctantly supporting the move because the county needs the jobs and will lose the bonding authority altogether if it doesn't give the money away by the end of the year.
But she said she's still struggling to understand why "in this county, there is only one project that comes before us."
A kick-start
The Mall of America and Mortenson Development have been trying to get the hotel project going for nearly three years. The 12-story building will feature a spa and meeting rooms on the south side of the mall between Macy's and Bloomingdale's. Construction is to start by the end of the year and take two years. It's expected to create 250 full-time construction jobs and 240 hotel jobs.
Patrick Connoy, the county's head of economic development, said he spent 1 1/2 years trying to find a suitable project that met all the requirements for the stimulus bonds. Among other things, projects had to start by the end of the year and be in a designated "Recovery Zone." Generally that's an economically distressed area.
The hotel qualified because in June Bloomington and its Port Authority designated the area south of the airport and around the mall a recovery zone -- by virtue of having a poverty rate of 20 percent or more, or having a median income at or below 80 percent of the state or metro area median income.
Because of the bonds' tax-free status, buyers will generally accept a lower interest rate in exchange for not having to pay taxes on their income, making the financing cheaper for a developer.
Picking projects
The so-called "Recovery Zone Facility Bonds" are part of a total of $330 million in temporary bonding authority the federal government gave Minnesota as part of the stimulus bill. The bonding authority, which also includes a different flavor of bond called the Recovery Zone Economic Development Bonds, went to 55 counties and to Minneapolis and St. Paul.
But because of a lack of applicants, counties have returned about $50 million to Minnesota Management & Budget, which has been doling it back out.
Ramsey County, which got $11.7 million in facility bonds, had just one applicant: the City of Vadnais Heights, which is using the bonds to build the Vadnais Heights Sports Complex, to open Nov. 1.
The city of Minneapolis, which got $19.5 million in facility bonds, is still picking projects, said Bob Lind manager of business finance for the city's Community Planning & Economic Development. Next month the City Council will consider giving the St. Paul-based American Academy of Neurology $15 million to build its new headquarters near the Guthrie Theater.
The remaining $4.5 million could go to a couple of projects, Lind said, including parking and commercial space in the Lyn-Lake area.
Jennifer Bjorhus • 612-673-4683
