Mall goes shopping for public funds

Marketplace Staff Apr 19, 2007

Mall goes shopping for public funds

Marketplace Staff Apr 19, 2007

BOB MOON: Here’s a question you don’t hear every day: How about giving public subsidies to shopping malls? And not just any mall, we’re talking the country’s biggest, by number of stores: the Mall of America. It’s already a retail and entertainment powerhouse just outside Minneapolis. Now it’s asking the state’s legislature to help fund an expansion.

As Minnesota Public Radio’s Annie Baxter reports, the argument is the plan would benefit everyone by boosting tax revenues and creating more jobs.

ANNIE BAXTER: It’s a typical day at the Mall of America. The place is dense with teens wearing shiny lip gloss. Families are scampering through the amusement park at the center of the facility. And as kids whiz around on roller coasters, their screams echo throughout the space.

[SOUND: Kids screaming]

They might look like they’re having fun. But the Mall’s PR director, Dan Jasper, says these people want something more.

DAN JASPER: As hard as it is to believe, there’s not quite enough to do at Mall of America.

To keep visitors adequately amused, the mall wants to add more stores, a skating rink, hotel and auditorium. The expansion project would more than double the Mall of America’s current size, adding more than 5.5 million square feet. That’s almost a hundred football fields.

The price tag for the expansion is $1.8 billion. And the mall wants some of that to come from public sources.

Mall officials are seeking sales tax exemptions from the city of Bloomington, where the mall’s located. And the mall would very much like the state of Minnesota to chip in, with about $180 million for a parking structure.

Dan Jasper says the state would get a lot in return.

JASPER: Well, the bottom line is it’s good for everybody. It generates a bunch of revenue for the state, the region, the city. It adds jobs. Currently, Mall of America provides between 11 and 13,000 jobs. That will jump to about 20,000 with phase two.

And, Jasper says, the new-and-improved Mall of America would draw scores more outstate and international visitors — who drop several hundred dollars into the local economy through car rentals, restaurant visits and the like.

But some key legislators in Minnesota aren’t buying the pitch.

ANN LENCZEWSKI: I don’t think mayors and city councils should be willing to tax their people and give huge subsidies to corporations, and I don’t think the state should be willing to use state resources.

That’s Ann Lenczewski, a Democrat from the Minnesota House. She represents the mall’s district and is a vocal opponent of the expansion.

Lenczewski heads the House tax committee, which recently said it would consider a mall bill for possible inclusion in some bigger tax legislation.

In the meantime, Lenczewski is hoping her committee members will decide that mall subsidies are imprudent. At a recent hearing, she trotted out the director of research at the Federal Reserve Bank of Minneapolis, Art Rolnick, to help drive home the point that the Mall of America does not need the state’s help.

ART ROLNICK: If they wouldn’t do this expansion on their own, my guess is the markets . . . that’s a market signal. Let the market figure out how big they should be.

But some Minnesota legislators say it’s possible to fund the Mall of America expansion without tapping state coffers. A bill in the state senate would have visitors pay higher sales tax at the mall.

Mall visitor and area resident Kelly Laurie says she’d be OK pitching in with “user fees” or anything else to help the mall expand. She says the mall’s been a great thing for the state.

KELLY LAURIE: Mall of America’s been a great thing for Minnesota as far as being . . . kind of putting us on the map. Getting us . . . getting people here.

FRIEND: Some people think of it as like our Eiffel Tower.

LAURIE: Right, right. Sadly enough.

Mall of America officials say they won’t be able to undertake the expansion without adequate public support. But it’s unclear they’ll get what they want this legislative session.

I’m Annie Baxter for Marketplace

The amusement park at the Mall of America in Bloomington, Minn.. (Karen Bleier, AFP/Getty Images)

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