MOA owners say financing plan is a dud

The Mall of America issued a line-in-the-sand response Tuesday to a revised subsidy package for the complex's $2 billion expansion, saying the project "has no chance of being built" unless changes are made.

In a letter to Gov. Tim Pawlenty, Raphael Ghermezian of Triple Five Corp., the mall's owner, increased the uncertainty for a project that promises to create 14,000 jobs and has been the subject of high-stakes negotiations as state legislators face a scheduled adjournment in just five days. Ghermezian's pointed statement came one day after legislators seemed cautiously optimistic that they had forged a subsidy plan that would pass the Legislature.

Though critics said the mall was likely bluffing in an attempt to get more public money, Ghermezian said the proposal to build 5.6 million square feet of hotels, office, stores and a water park would not occur unless a "final workable solution" was found.

Pawlenty spokesman Brian McClung acknowledged that Ghermezian's comments indicated that "from the mall's perspective, [it] seems to spell an end" to the latest attempt to satisfy both the mall and those opposed to large-scale public subsidies for the project.

"While others may claim that [the new plan] provides the resources and bonding authority to build the project, I must respectfully disagree," Ghermezian said.

"The bonding authority is so fraught with conditions and obstacles that I wouldn't ask my team to spend any time trying to place either public or private financing based on it," said Ghermezian, whose flamboyant family had the original vision for the Mall of America, which opened in 1992 as the largest indoor mall in the country.

Sen. Dan Larson, DFL-Bloomington, and others were skeptical. "You don't know what to believe when you're dealing with these folks," said Larson, who said he would vote against a 279-page omnibus tax bill because it included subsidies for the mall. "They've sort of perfected the art of the 'over ask.'"

"They wanted a really easy outcome, and that was a big public subsidy without a lot of strings attached," Larson said.

$370 million in subsidies

Over the weekend, legislators had made significant changes to a proposal to provide $370 million in public subsidies for the mall's expansion. The changes, according to legislators, were an attempt to ease objections over a previous plan that would affect many cities across Minnesota by diverting state aid from them to help build the project.

The new plan instead would raise public money for the project by allowing the city of Bloomington, where the mall is located, to implement a series of admissions, entertainment, food and beverage taxes in the city. Bloomington officials, along with the mall, have long argued that the mall's economic benefits stretch across the region and state and that the city should not have to finance the project alone.

Benefits for state, region

Ghermezian, alluding to that argument, told the governor that "I cannot imagine the political obstacles to approving millions in new taxes in Bloomington when nearly all of the benefits of the project run to the state and to the region."

The latest proposal also would require the mall to open its financial records to the state finance commissioner, who would determine whether the project could be built without a public subsidy.

Sam Grabarski, president of the Minneapolis Downtown Council, which had objected to the previous financing plan as being overly generous, said Ghermezian's objections were predictable. "They have a well-earned reputation for being hard bargainers," he said.

Next step is unclear

Rep. Mike Nelson, DFL-Brooklyn Park, the chief House author of the mall's initial proposal this year, said that what happens next is uncertain and that other options might include having the state extend the tax-increment financing districts on the site to help provide more public subsidies for the second-phase expansion planned for land east of the mall.

"Their bankers are saying it's not feasible, it's not 'bankable,'" he said. "It could be, as some people say, another negotiating ploy -- [but] it may not be."

Mike Kaszuba • 612-673-4388