Businesses hoping for tax relief

02/27/2007

BRIAN BAKST
Associated Press


Publishing giant Thomson West made a public pitch Monday for a $9 million state tax break for a campus expansion in Eagan, a sweetener that could seem like pocket change compared with a Mall of America request reportedly in the works.

Operators of the Bloomington megamall are privately preparing for a run at a state subsidy that would feed a massive expansion, heads of the Legislature's tax committees said.

MOA offiicials previously announced a 5.6 million-square-foot expansion, including a hotel, performing arts center, waterfalls, a skating rink, a Bass Pro Shop sporting goods store, a museum and other amenities. In all, the project's price tag exceeds $1.4 billion.

The mall's exact appeal for public dollars isn't clear. Bill Griffith, the mall's attorney, couldn't be reached for comment. Peter Coyle, a mall lobbyist, didn't return a phone message Monday. The mall's lobbying team includes Roger Moe, a former Senate majority leader with deep political connections.

A letter of support under consideration Monday night by the Bloomington City Council speaks to a $181 million parking structure the state would be asked to pay for, said city manager Mark Bernhardson. The city's burden would be up to $200 million in local tax breaks and infrastructure upgrades, he said.

"How the state chooses politically to make this happen, how they choose to fund it, how they choose to finance that funding is truly up to them," Bernhardson said. He said the mall generates $43 million a year in taxes for the state. Without the parking ramp, he said, the development would have to be scaled back.

Senate Taxes Chairman Tom Bakk, DFL-Cook, said he plans to sponsor the mall legislation, which is expected to be introduced in a few weeks. It likely will include permission for an extended tax-increment-financing zone allowing property taxes that would normally go into local government coffers to flow back into the site.

Bakk said the project would mean 10 million to 15 million hours of construction work; by comparison, the Thomson proposal would require 350,000 hours.

Bakk wouldn't handicap the mall's chances but said any business breaks would be in competition for state dollars with property tax relief, school funding requests and other budget priorities.

His House counterpart, DFL Rep. Ann Lenczewski of Bloomington, was more dismissive of the mall's prospects at the Capitol.

"I don't think it's on the top of anyone's to-do list," she said. "As a Bloomington legislator, I'm emphatically opposed to Bloomington residents putting another nickel into this."

The Thomson proposal has gotten a friendlier reception. It was included in Gov. Tim Pawlenty's budget proposal, and local legislators are rallying behind it.

The bill would free Thomson from paying sales tax on construction materials as part of its proposed $100 million expansion. Thomson, in turn, said it would add 2,000 high-paying jobs at its Eagan site, where law books and legal software are produced.

"These are exactly the kind of jobs every state would love to have to compete economically," Thomson executive Richard King told a Senate panel. "These are brainpower jobs with an average annual salary of $70,000."

Sen. Jim Carlson, DFL-Eagan, said income taxes from the added Thomson payroll would provide a swift return on the state tax break.