Mall of America wants tax break extended

  • Article by: MIKE KASZUBA
  • Star Tribune
  • March 22, 2012 - 10:58 AM

The Mall of America would be one of the bigger beneficiaries in the Republican-sponsored House tax bill, which would allow it to divert some of its property taxes for another 10 years as it tries to get a long-planned and long-delayed expansion off the ground.

The proposal has drawn the ire of Rep. Ann Lenczewski, DFL-Bloomington, the ranking House DFLer on taxes. Lenczewski represents the city in which the mall is located, and said the mall may already own the state's most desirable land and needs no further taxpayer subsidies.

"Enough is enough," she said. "This is not like the stockyards in [South] St. Paul -- like some horrible place where you couldn't get a developer."

She said the mall is at the center of an area that ought to attract development on its own, and already includes "the airport, five light-rail stations, all the infrastructure."

But mall officials said they want to extend by 10 years a tax increment financing (TIF) district for the mall's second phase, which includes the property where the former Met Center was located and now features a nearby Ikea store and a large parking lot.

Mall officials said the airport's nearby expansion, the recession and tax reform delayed development on the mall's second phase, whose tax increment district is scheduled to expire in 2018. Tax increment districts capture property taxes generated by a development, and instead uses them for a period of time to pay for project-related costs.

"An extension of the TIF district will allow the project to go forward as planned, creating new employment, tourism and tax base," said William Griffith, an attorney for the mall.

The tax increment district for the mall's first phase -- which includes the $660 million mall itself -- is set to expire in 2016 and would not get an extension.

"Development of the [second phase] is no different than development of the original mall," Griffith said. "If the city wants to expand an international tourist destination that is one of the top draws in the country, they need to invest in infrastructure like roads, parking and transit."

The mall's second phase, according to Griffith, would begin with a 500,000-square-foot project that would include a medical office building, hotel and additional retail space. Construction of the $200 million project is expected to begin in early 2013, he said.

Lenczewski said she met with Gov. Mark Dayton on Monday in an attempt to block the mall's public subsidy extension, and said the mall over the years has gotten a series of tax breaks. "They've got a different argument every year" as to why the mall's second phase has not begun, she said.

Lenczewski said the mall is like a grown son who has never left home, and expects his parents to pay his bills. "Now you're 45, and we're still supposed to put gas in your tank. I mean, Holy Lord," she said.

Mike Kaszuba • 651-222-1673

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