The party known for fighting slavery and then communism, the party of Teddy Roosevelt and Dwight Eisenhower and Ronald Reagan, is now the party of Orange Julius and Bath & Body Works.
That’d be the Republican Party, whose legislative leaders in Minnesota have made a priority of saving the Mall of America and its dodgy finances.
Make no mistake: The Mall and its current ownership structure are in trouble. During the recent shutdown due to the pandemic, its tenants took in no revenue, so they struggled to pay rent.
(The Mall of America did not return calls or emails.)
The Mall has not paid its property taxes for the first half of 2020, totaling more than $16 million.
But the Mall’s financial problems are much deeper than all that.
As Bloomberg reported recently, mall owner Triple Five — owned by the Canadian Ghermezian family — borrowed billions to complete a mall project in New Jersey, using the West Edmonton Mall and Mall of America as collateral on $1.7 billion in construction loans.
“Mired in debt” are never words you want in a headline.
That New Jersey mall, called American Dream, is set to reopen.* But all is not well, according to NJ.com:
Despite missed mortgage payments on its Mall of America and dozens of liens from contractors that hint at financial trouble for Triple Five, the developer says it is dedicated to American Dream.
By “dedicated to American Dream,” apparently the developer means this: Let’s see if we can get some cash from the suckers in Minnesota.
Specifically, the Mall wants the city of Bloomington, with whom it has a long and, eh, friendly relationship, to extend a loan.
In an act of pleasantly surprising civic defiance, Bloomington’s reply: Hard pass.
In a recent letter to Gov. Tim Walz and legislative leaders, city officials wrote, “It is not the City’s place to backstop losses when the city already has provided hundreds of millions of dollars in subsidy which facilitated the private profits Triple Five has taken.”
Unlike you or I, however, the Mall has high priced lobbyists. And Republican legislative leaders including Senate Majority Leader Paul Gazelka and House Minority Leader Kurt Daudt are on their side. (Walz told reporters in May, “In concept, I’m certainly willing to hear them on this.” House Democrats are opposed.)
Daudt, whose district is more 50 miles or so from the mall, has taken a curiously passionate interest in the mall loan, which would require lawmaker approval because it would come from a special tax account intended for roads, parking garages and other mall infrastructure and redevelopment. Instead of using the money for those purposes, Daudt and Triple Five want Bloomington to use the money to give the Mall a loan so it can pay their mortgage, taxes and payroll.
In a recent email to his House colleagues, Daudt wrote: “I really wish the city of Bloomington’s support for the MOA was more apparent in their actions. MOA contributes about $130M annually in tax revenue to the state, county, city and school district, and accounts for 17% of the cities (sic) revenue.”
Finally, the long suffering Ghermezian family has a champion in Minnesota.
(Daudt declined an interview request.)
Daudt charges in his email to colleagues that Bloomington is hostile to the mall because the city is eager to take tax money intended for mall redevelopment purposes and use it for other projects.
Bloomington City Manager Jamie Verbrugge told me using the money for anything other than what it was intended for would be against existing tax law.
He said the city — backed by south metro lawmakers — believes the problems with the loan are twofold: First, Verbrugge said, they’re concerned Triple Five has borrowed too much money against the Mall. Adding more debt in the form of a loan from the city will only worsen the situation.
Second, “We just don’t think it’s good public policy,” he told me.
Just for starters: Why should this mall get a sweet deal from the Legislature? It’s not like without a loan the Mall of America would turn into a ghost mall. It’s a unique asset, and someone is going to own and manage it.
And what about other malls? Where’s their loan? And remember when Republicans were screaming about “reopening” during the pandemic, and how the shutdown was helping big guys like Target at the expense of small businesses? Oh, nevermind.
Art Rolnick, a Humphrey School economist who was formerly director of research at the Minneapolis Federal Reserve, is usually a favorite of Republicans.
He sounded appalled when I told him the deal.
“Republicans don’t like welfare going to the poor, but to the rich it’s OK,” he said. “You want a loan? Go to a bank. I’m a big time capitalist. I believe in markets. This is corporate welfare.”
Your modern Republican Party: Welfare for me, but not for thee.
*Corrected to reflect that American Dream has not yet reopened.