Mall of America owner wants city to finance water park.
Edmonton, Alberta-based Triple Five Worldwide wants the city of Bloomington to publicly finance and own a $150 million to $200 million water park on land just east of the developers Mall of America. Under that proposal, Triple Five would manage and operate the 225,000-square-foot water park, which would be one of the biggest indoor attractions of its kind in North America, according to city documents. The city would lease the land from Triple Five, which owns the property. The water park would rise on part of the 30-acre adjoining lands area, which is bounded by 24th Avenue South, East Old Shakopee Road, 26th Avenue South and East 2nd Street. The site is currently used for surface parking. Schane Rudlang, administrator of the Bloomington Port Authority, said in an interview Tuesday that the proposal is in the very early stages. The Bloomington City Council and Port Authority were scheduled to review the proposal Tuesday night. The city staff is recommending that the council and Port Authority "continue to analyze and perform due diligence" on the proposal and "search for other alternatives" that would protect the city and the Port Authority. Triple Five and Mall of America officials couldnt be reached for comment Tuesday. Under the proposal, Triple Five would not invest in the project or share in the ownership. If its publicly financed, it would need to be truly owned by the city and the mall would not be allowed to be an equity partner, Rudlang said. The Mall of America site is less than a mile from the Great Wolf Lodge and water park at 1700 American Blvd. E. in Bloomington. The 75,000-square-foot Great Wolf water park is limited to people staying in the hotel, but the city-owned water park would be open to the public, the staff report said. As brick-and-mortar malls compete with Amazon and other online retailers for customers, they are turning to entertainment, hotels and other ancillary attractions to generate traffic, the staff report said. That at least partially explains Triple Fives affinity for big water parks. Triple Fives West Edmonton Mall in Alberta has a 215,000-square-foot water park that attracts 500,000 users per year, according to the staff report. The attraction features slides, rides, and a large wave pool. Triple Five is also building a 25,000-square-foot water park in New Jersey as part of its American Dream project. It will be the largest indoor water park in North America, the city said. In the staff report, the city said Triple Five wants to partner with Bloomington because the city can borrow at much lower interest rates than a private entity, and that would make the project less risky for the mall. The staff report said the Mall of America has been studying private financing models, but the private market interest rates create annual debt service payments that are potentially higher than the projected revenues. An upside to the project is that it would bring more people to Bloomington with cross-travel trips to the Mall of America, which represents about percent of the citys tax base, Rudlang said. Profits could go to the citys general fund, or to public improvements at the mall or in the citys South Loop area, the staff report said. The risks are obviously financial, Rudlang said, but if the city moves ahead with the project it would have to be structured to protect the citys taxpayers and bond rating. Based on early projections from the Mall of America, the water park could cash flow with revenue to support debt service and operating expenses, and generate annual excess revenue of $1 million to $2 million per year, the staff report said. If revenue isnt sufficient to cover debt and operating costs, the city could turn to sales and use taxes generated by the Mall of America, Rudlang said, adding that the city would not go to Bloomington taxpayers to foot the bill. When it comes to public ownership of recreational facilities, the city of Vadnais Heights experience with the Vadnais Sports Center is a cautionary tale. The $26 million center was built with city-backed bonds, but revenue from the facility wasnt enough to cover debt payments. In 2014, the city sold the sports center to Ramsey County for $9. million, and the citys long-term bond rating took a big hit. We want to make sure, if we move forward, that we dont have a situation like that, Rudlang said. Steve Sherf, president of Excelsior-based Hospitality Consulting Group, said water parks are wonderful amenities that draw a lot of visitors, but they are also expensive to run from a utility, staffing and insurance standpoint. Another issue: When casinos started building water parks as amenities, they discovered that the adults didnt have as much time to gamble because they had to be with their kids at the water park, Sherf said. Sherf said hes not sure if that would translate to shopping at the Mall of America. Even so, a water park of that size would be a major, major attraction that would almost rival the Valleyfair amusement park in Shakopee, he said. It would extend peoples stay. When people come up for shopping vacations, they may very well add another day to attend a water park. From that standpoint, I think it would be very successful, he said. Rudlang said the adjoining lands property has long been pegged as a Mall of America expansion site. Besides the water park, potential uses there include one or more hotels, performance space, meeting space and sports areas. Future development on the north side of the mall known as the Phase 2B project -- may bring a luxury hotel, luxury retail expansion and a second office tower. That phase is contingent on ongoing financing and leasing activities, the staff report said. [divider] Related: South Loop water park Feasibility report New JW Marriott opens at Mall of America Megamall: Four projects in one expansion
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|Publication:||Finance and Commerce|
|Date:||Mar 6, 2018|
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