The proposed $432 million Mystery Cove water park at the Mall of America has moved closer to construction. The Bloomington City Council recently approved a critical tax subsidy, a key step in securing the project's financing. This development marks a significant achievement for the Mall of America, which has pursued this large-scale entertainment addition for several years.
Executives at the Mall of America believe this water park will significantly boost tourism and increase tax revenue for Bloomington. They hope it will usher in a new phase for the retail destination, shifting its focus more towards diverse entertainment options alongside traditional shopping.
Key Takeaways
- Bloomington City Council approved a $160 million tax subsidy for the Mystery Cove water park.
- The $432 million project aims to open in 2029 at the Mall of America.
- Financing includes the tax subsidy and two private loans totaling $253 million.
- Mall ownership group, Triple Five, will personally guarantee the project for an unspecified amount.
- The water park is expected to attract 700,000 annual visitors and generate substantial tax revenue.
Financing Structure and City Approval
The financing plan for the Mystery Cove water park involves a combination of private loans and a substantial tax subsidy. The Bloomington City Council's approval of the tax subsidy was a crucial moment for the project's progression.
This subsidy will direct $160 million in property taxes generated by the Mall of America directly into the water park's development. This funding mechanism, known as tax increment financing (TIF), can only be used for projects within the mall's designated district.
"This is really money that’s been made available to Bloomington for working on the Mall of America development, and it was done because of the unique nature of the project," Port Authority President Bob Erickson stated during the council meeting.
The Minnesota Legislature played a role in enabling this financing. In June, lawmakers extended pandemic-era rules that had eased restrictions on how cities could use TIF funds. This legislative change allowed the Mall of America to pursue this specific financing method for the water park. Bloomington officials then approved this extension.
Projected Impact
- Annual Visitors: 700,000
- Tax Revenue: Millions for Bloomington
- Job Creation: Indirectly through increased tourism
City officials clarified that the recent approval does not fully commit Bloomington to funneling the TIF money to the water park yet. A separate redevelopment agreement will require approval at a future meeting. This additional step is widely expected to occur, paving the way for construction.
Bloomington Mayor Tim Busse noted, "We’re not obligating any specific project here. What we’re doing is simply restating this spending plan and having that money available for an extended period of time."
There was no public commentary during the hearing that preceded the council's vote, indicating a lack of immediate public opposition at that specific session.
Private Loan Components
Beyond the tax subsidy, two private loans secured by Mall of America owner Triple Five Group will cover a significant portion of the remaining construction costs. However, these loans have not yet been fully finalized.
One loan, projected to be $133 million, would be managed by the St. Paul Port Authority over a 30-year period. Bloomington city documents suggest this loan would carry an interest rate of approximately 7%. A spokesperson for the St. Paul Port Authority confirmed that a formal application, including precise loan amounts and terms, has not yet been received.
"Those and other details such as interest rate and annual payment would be negotiated between the private parties entering into the loan financing," the spokeswoman explained in an email.
The second private loan, for $120 million, is expected from a real estate company. This loan is anticipated to have a higher interest rate, around 14%, and would span at least two years. The relatively high interest rate for this second loan has caused some discussion among mall executives and city leaders in recent meetings.
What is Tax Increment Financing (TIF)?
TIF is a public financing method that diverts future property tax increases from a designated area to fund improvements within that same area. It allows local governments to invest in infrastructure, redevelopment, and other projects without raising taxes on existing residents or businesses outside the TIF district. The idea is that the improvements will increase property values, generating more tax revenue, which then pays back the initial investment.
A Mall of America spokeswoman did not provide specific details on Triple Five’s anticipated annual loan payments when asked by the Minnesota Star Tribune.
Project Safeguards and Future Vision
The water park's financing agreement includes several protections in case Triple Five faces difficulties in repaying the loans. One such safeguard is a $20 million lender-controlled securities account. This account can be converted into cash if the project does not meet performance expectations.
Furthermore, the Ghermezian family, the developers behind major mall projects in Minnesota, Canada, and New Jersey, has agreed to personally guarantee the water park project for an unspecified amount. This personal guarantee adds another layer of financial security.
Key Financial Figures
- Total Project Cost: $432 million
- Tax Subsidy (TIF): $160 million
- St. Paul Port Authority Loan: $133 million (approx. 7% interest over 30 years)
- Real Estate Company Loan: $120 million (approx. 14% interest over 2+ years)
Kurt Hagen, Senior Vice President of Development for Triple Five Group, previously stated that these terms are designed to protect taxpayers. Should the water park face foreclosure, these measures would allow a new ownership group to take over. Hagen also pointed out that even in such an unlikely scenario, the project would still contribute jobs, tax revenue, and tourism during its operational period.
City leaders have consistently highlighted the potential economic benefits of the Mystery Cove water park for Bloomington. They project 700,000 annual visitors and millions in new tax revenue. Mall leaders are optimistic that the water park will generate profits, which can then be reinvested into other proposed projects.
These future project ideas include an athletic facility, an exhibit hall, and a sports medicine space. Hagen noted in a September meeting that these concepts have been discussed for as long as the water park itself, but a funding source has been lacking until now.
A portion of the water park's future profits could also be directed towards supporting affordable housing initiatives and climate resiliency projects within Bloomington. This potential allocation could provide additional community benefits beyond the direct economic impact of the attraction.
Construction on the water park could begin as early as this spring. The Mystery Cove water park is currently slated to open its doors to the public in 2029.
