Even before the Mall of America opened to great fanfare in 1992, retail experts stressed that the center's long-term success would depend on its owners' ability to keep things fresh. Like the sharks in its aquarium, the mall will begin to sink if it stops moving forward.
With that context, Minnesotans should welcome news that Canadian-based Triple Five Group is continuing to pursue a $2 billion expansion that would more than double the mall's size. There's a lot to like about the proposal, which would generate thousands of jobs and significant tax revenue while kicking off a promising new era for one of the state's most valuable commercial assets and tourist attractions.
There's also one big problem: The mall is expected to seek legislative help to finance a $200 million parking ramp. Critics point out that a facility whose attractions now include SpongeBob SquarePants could end up sponging off of other property owners in the seven-county metro area. Why should the owners of Southdale potentially be on the hook for a parking ramp at the Mall of America?
Specifically, the mall's owners ask to be relieved for 20 years of their $4.5 million annual payment to the metrowide fiscal disparities pool. The pool was created in 1971 to allow slower-growing cities to share some of the proceeds from their neighbors' commercial-industrial tax growth. The $4.5 million exemption would represent about 1.2 percent of the total pool -- an amount megamall representatives say would be more than covered by the pool's annual growth rate.
The Minnesota chapter of the National Association of Industrial and Office Properties has a less favorable opinion of the plan. The rub is that taxpayers throughout the metro area could end up carrying a greater tax burden if the mall got a 20-year pass. That could create a costly precedent for the state the next time a business seeks an exemption.
There's no question the mall's expansion would be a boost for Minnesota's weakened economy. The project, which would largely be privately financed, would create more than 7,000 construction jobs and a like number of permanent positions. Megamall officials say the mall would pay about $130 million in annual state taxes by 2015, up from $50 million today.
Unlike many projects seeking public financing, the mall can make a solid case that it brings new money to Minnesota. Just walk through its parking lots on any weekend and check the license plates, or wander the stores and listen to all the languages. Visitors bring their wallets and purses from around the world, not to mention from Wisconsin, Iowa and the Dakotas.
The expansion would add new retail, hotel and entertainment options and give the 16-year-old tourist attraction new energy and drawing power. But that's just what retail experts predicted the mall would need back in 1992. The expansion project is not some unforeseen contingency, but rather the sort of thing the mall must do to keep its place on retail tourism's cutting edge.
The expansion is a project worthy of support, but not at the expense of sound tax policy.