Bloomington mulls ‘complex’ plan to fund $432 million Mall of America water park

A long-planned water park at the Mall of America could be one step closer to reality if Bloomington officials on Tuesday approve a key part of the plan to pay for the $432 million project.

But turning renderings of the Mystery Cove water park into a real-life destination could involve what one former city development leader called “the most complex financing that I’ve been involved in.”

Officials hope that millions of dollars in private loans, a pool of money generated from mall property taxes and a personal guarantee from the Canadian family who built the Mall of America over three decades ago are enough to ensure the water park’s success. And, despite skepticism from some residents, they’re confident the costly investment will pay off by generating tourism and tax revenue.

“I can see the light at the end of the tunnel,” said Kurt Hagen, the senior vice president of development for mall owner Triple Five Group, at a recent meeting.

The plan to bankroll the water park, a project that’s been in the works since 2017, reflects the intense effort of city officials and mall executives to get it done. Leaders’ outreach has extended to the Minnesota Legislature, which in June passed a bill making it possible for mall property taxes to partially subsidize the project. Bloomington officials will decide Tuesday whether to move ahead with that financing tool.

Some observers have questioned whether funneling public money toward a water park is appropriate and balked at the project’s price tag. The city’s sustainability commission, meanwhile, last year took issue with the amenity’s intense water and energy use.

“The mall, I feel like they have way too much power in the city,” Bloomington resident Pamela Pommer said. “I just don’t think [the water park] is necessary. There’s too much risk.”

“We do not want to see Mall of America’s performance decline,” Bloomington Port Authority Administrator Holly Masek said. “They are a significant economic generator for the city and the region, and they believe a water park is the next step to helping them grow and thrive.”

Renderings of the water park show coiling slides, a meandering lazy river and a whitecapped wave pool clustered under a retractable roof.

Mall property taxes would fund a portion of the project. That $160 million slice, raised through a method known as tax increment financing (TIF), would finance the water park’s construction. Another bucket of TIF money would fund ongoing improvements.

Then there’s the contribution from Triple Five. Two loans totaling $253 million that the company secured would cover much of the rest of construction. The St. Paul Port Authority would administer one of those loans. The other has an estimated 14% interest rate, a fact that seemed to concern City Council Member Chao Moua at a recent meeting.

“That’s the only number that scares me a little bit,” he said.

The financing agreement includes several backstops if Triple Five can’t repay the loans, including a $20 million lender-controlled securities account that can be converted into cash if the project doesn’t perform. And the Ghermezian family, the developers behind megamalls in Minnesota, Canada and New Jersey, have agreed to personally guarantee the project for an unspecified amount.

Hagen said those terms protect taxpayers should the water park go into foreclosure, allowing a new ownership group to swoop in. Even if the water park were to face that undesirable outcome, it would still generate jobs, tax revenue and tourism for the time the attraction remains open, he said.

“The regional public investment carries much less risk now than it did a year and a half ago” because of the guarantees, Hagen said.

City leaders have framed the Mystery Cove water park as a boon to Bloomington.

In addition to attracting an estimated 700,000 annual visitors and generating millions in tax revenue, the amenity will produce profits that executives hope to invest in other mall projects, they said. Ideas include an athletic facility, exhibit hall and sports medicine space.

A portion of the water park’s profits could also boost affordable housing and climate resiliency projects in the city. Triple Five has pledged to spend at least $5 million on sustainable design improvements for the water park.

At the recent meeting, few city officials seemed to express serious concerns with the proposed financing approach. Few residents were present to hear directly about the potential new attraction in their city.

“It is a very complex project,” said Schane Rudlang, the city’s former port authority administrator who now works for the municipal advisory firm, Ehlers. “There’s a lot to it.”

Hagen credited the Legislature for extending the deadline cities have to finance certain projects through TIF, effectively making the water park possible.

“The state really wants us to get this project done, and they’ve given us everything we need, I believe, to accomplish just that,” he said.