Apr 29, 2008 5:23 pm US/Central
MOA Subsidy Backers Showcase Top-Tier Support
ST. PAUL (AP) ―
Minnesota's most powerful legislators united Tuesday behind a major Mall of America expansion based on $370 million in public subsidies and to be built by thousands of construction workers.
All four legislative leaders -- House Speaker Margaret Anderson Kelliher, House Minority Leader Marty Seifert, Senate Majority Leader Larry Pogemiller and Senate Minority Leader David Senjem -- said state clearance for the $2.1 billion project would be an element of any end-of-session deal.
"It's my commitment to you we are going to get the job done this session" Kelliher, DFL-Minneapolis, promised a rally of hard-hatted construction workers who filled the Capitol Rotunda and circled two balconies above.
Beginning this fall, the mall's owners hope to add 5.6 million square feet of new retail, hotel, office and entertainment space. The goal is to put the mall back atop the rankings as the nation's largest, making it a must-see tourist attraction again. Once finished, officials say the number of annual visits will jump from 40 million now to 60 million.
"I don't want to have the 13th largest mall in the world in Minnesota, I want the biggest," said Sen. Tom Bakk, DFL-Cook.
Senjem, R-Rochester, called the mall "Minnesota's Disneyland."
"We've got to keep this Disneyland strong, we've got to keep it vibrant, we've got some opportunities here," he said. "We've got people who are willing to invest $1.8 billion in our state and we can't say no to that."
But the expansion comes at a public price. Mall officials estimate that 17 percent of the project cost would be covered with public subsidies with the rest coming from investors and tenants of the new space.
The city of Bloomington is seeking permission to raise sales, lodging and restaurant taxes and plow the new money back into the project. And the mall wants to help pay for a parking ramp by capturing nearly $5 million a year in property taxes that would otherwise flow into a pool that cities in the region share.
The tax capture is the biggest point of contention -- and the feature most likely to change in the final few weeks of the Legislature's 2008 session.
While supportive of the overall project, the Minneapolis Downtown Council and other entities that represent area businesses are fighting the mall's proposed use of the so-called fiscal disparities pool. The pool has never been used to back a real-estate deal, said council president Sam Grabarski.
"It ends up requiring that all of the mall's competitors to pay for it to become even more competitive against them," Grabarski said. And, he added, "thousands of other companies in the metro area would have to pay for a garage by earnings that came from industries that had nothing to do with retail."
The Legislature approved a mall subsidy package last year, but the tax bill it was part of got vetoed.
Pressure to fashion a workable plan this year is intense. Labor unions have made the mall deal a priority, dispatching laid-off carpenters, electricians and other tradesmen to lobby their local legislators.
David Ybarra of the Minneapolis Building Trades Council said the unemployment rate among union construction workers hovered around 16 percent last month and some of those who aren't idled have had trouble getting 40 hours of work each week. He said the mall project would produce 7,000 jobs over its 40-month construction schedule.
Officials from the mall, which has invested heavily in lobbying since last year, mostly stayed in the background Tuesday. Their lead lobbyist, Bill Griffith, watched the rally from a third-floor balcony.
Seifert told the crowd that he was on board because the Minnesota economy could use a jobs boost.
"Let's get it done, let's get it passed and let's get you guys back to work," the Marshall Republican said.
The Senate approved the mall package in early April, but it isn't in a comparable House tax bill. Kelliher said the Senate's approval puts it in play during an upcoming conference committee.
Still, it's not clear where Republican Gov. Tim Pawlenty stands.
Pawlenty declined an interview request and his Department of Revenue commissioner remained noncommittal before a House committee.
Pawlenty's spokesman Brian McClung issued a written statement saying the administration believes "this year's Mall of America financing proposal is better than last year's but we still have some questions and concerns. In addition, the Governor will be looking at the Mall of America proposal in the broader context of our state's priorities and whether legislators are serious about appropriately solving our budget challenges."
Seifert said he's betting Pawlenty will get on board.
"He's had some thoughtful criticism on the payment mechanism," Seifert said. "I don't think he's slammed the door shut."
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