The Republican leader of the Minnesota Senate said Friday that “we just have to figure something out” for the Mall of America after the shopping center said it needed public assistance to recover from the pandemic shutdown.
Senate Majority Leader Paul Gazelka, R-East Gull Lake, said Friday that the mall wants to use money from tax subsidy districts — intended for its future expansion — to offset “a huge financial problem” due to unpaid rent. The exact amount is unclear, though city records show about $80 million is available.
The city of Bloomington, which has worked hand-in-hand with the Mall of America on other projects, and its House delegation oppose using that money to prop up the mall. City Manager Jamie Verbrugge wrote a letter to legislators this week urging them not to draw on that money for grants or loans to the mall and its ownership, Triple Five Group.
“[T]he City of Bloomington does not support legislation that would allow loans of tax increment to Triple 5, at this time,” Verbrugge wrote. “We simply have no assurance or confidence that a loan will help the long-term viability of the project. Also, it is unknown whether a loan would or could be repaid, in which case the funds would not be available for future projects.”
The debate centers on tax increment financing (TIF) districts, which cities form to use growing property taxes in certain areas to help pay for land clearance and new infrastructure. The Legislature increased money available for the mall’s expansion in 2013 by withdrawing it from a regional tax-sharing pool and sending that money into the TIF districts.
The city had budgeted using about $26 million from the mall districts this year to help build a parking ramp and skyway adjoining a new water park. But the water park plan is in limbo.
Representatives for Triple Five did not immediately respond to a request for comment Friday.
Triple Five Senior Vice President Kurt Hagen testified in support of an early version of the proposal that was heard in the Senate tax committee on April 23. That bill, which does not mention the Mall of America or Bloomington, would temporarily grant cities broad new powers to use the tax subsidy districts “to provide loans, interest rate subsidies, or assistance in any form to private businesses impacted by the peacetime public health emergency.”
The bill would forgive loan repayments for money used to retain employees, meet payroll, pay a mortgage or make a utility payment. It also hinged on cities passing plans to authorize the loans. The language was not included in the Senate tax bill.
“We didn’t have all the information when we passed our tax bill, but I do think it’s something we should pay attention to,” Gazelka said. “I believe it’s the No. 1 tourist attraction in Minnesota, draws from all over the world, it’s good for Minnesota, and so we just have to figure something out.”
Gazelka said he asked Gov. Tim Walz, a DFLer, and House Speaker Melissa Hortman, DFL-Brooklyn Park, to work with the Senate on addressing the issue before the session ends Monday.
Walz confirmed at a news conference Friday that the issue has come up in conversations with leaders and said he’s open to some sort of action. He said the mall’s finances are “a Bloomington issue but it’s also of statewide importance.”
“In concept, I’m certainly willing to hear them on this,” Walz said. “I do acknowledge the fact that all our businesses we need to figure out, but when you have one that has that big of a draw both nationally and internationally, there is an impact that it has tax-wise not just for the city of Bloomington but for the state. So we are talking about it.”
Hortman said in a statement that the Bloomington House delegation is opposed.
“The Mall of America is an important asset for the state, but I don’t think it’s appropriate for us to be bailing out the wealthy owners of the mall while thousands of Minnesotans and small business owners can’t afford their rent or mortgage,” Rep. Mike Howard, a DFLer whose district includes part of the city, said in an interview.
Gazelka emphasized that the mall’s intent would be to borrow the money.
“They’re trying to cover their short term obligations right now as a result of the governor shutting down basically all the business related to what they do there. There is virtually no money coming in, but they all have all their debt obligations,” Gazelka said. “They’re in a hopefully short-term financial problem as a result of what the state did, but they’re not talking about asking for free money.”
The Mall of America shut down on March 17 as the governor ordered bars, restaurants, attractions and places of entertainment to close.
It paid its employees through the end of March, but furloughed about 90% of its 900 employees in April while keeping some security, maintenance, housekeeping and groundskeeping intact.
“We were one of the first ones closed down by these mandates and we’ll more than likely be the last to reopen or to have some sort of normalcy as we move forward,” Jill Renslow, a senior vice president of the Mall of America, told the Star Tribune last week.
While the mall is planning to reopen for shopping on June 1, it’s not yet clear when it will be able to resume operations at Nickelodeon Universe and in-person dining at its restaurants.
Events, which are also big draws at the mall, have also been postponed.
Renslow said the mall has received “minimal” rent from tenants and has been working with them to defer payments until the mall reopens.
“This is an important asset for Minnesota,” Renslow said. “We have contributed a major economic impact for the state for the 27 years we’ve been open. We hope to work collectively with the city and state and with the support of our customers to be able to reopen and to thrive into the future.”
She said the mall has been looking at local and federal relief efforts, but it was a challenge to find a program that the mall could qualify for. Since it’s not a small business, it didn’t qualify for a Paycheck Protection Program loan.