FAQs regarding proposed waterpark project in South Loop
What is the waterpark project?
At 225,000 square feet, the proposed $150 - $200 million waterpark project in South Loop would be one of the largest indoor waterparks in North America. The West Edmonton Mall (WEM) in Canada (which was a model for MOA and is also owned by Triple Five) has a 215,000-square foot, integrated and attached waterpark that brings in more than 500,000 users annually. The waterpark adds to the vibrancy and resiliency of the WEM. Not only does the WEM waterpark have slides and other rides, its large wave pool hosts evening beach parties and surfing leagues (even in the colder months), allowing for greater use of the venue.
The proposed South Loop waterpark would be open to the public. Much like the Kalahari Resort in the Wisconsin Dells, the waterpark would fill hotel rooms when business travelers and event uses do not. It could be branded by an international brand such as Dreamworks or Nickelodeon.
Why does MOA want a waterpark in South Loop near the mall?
Triple Five (owners of MOA) is a pioneer in building large retail malls, which are also diversified with entertainment and restaurants. As retail continues to change in the age of Amazon, new projects that Triple Five is building have about a 50% non-retail component. MOA has performed much better than most brick and mortar retail developments due in part to its entertainment and tourism focus. Continuing to diversify the MOA project with new traffic generators (e.g., attached hotels and office as well as more entertainment opportunities) is a top priority for Triple Five. MOA is about 70% retail today.
Triple Five has also been interested in having a waterpark as part of the MOA project for years. It’s proven to be an asset to West Edmonton Mall, driving more people to that mall. Triple Five is building a 285,000-square foot waterpark along with the American Dream New Jersey project, which will be the largest indoor waterpark in North America. (The largest indoor waterpark in the world is in Germany in a former zeppelin hangar which is 710,000 square feet.) MOA has been studying private financing models, but the private market interest rates create annual debt service payments that are potentially higher than the projected annual revenues.
Who owns the land where the proposed project would be built?
Triple Five owns the land where the proposed project would be built. In the model currently being analyzed, the City would lease the land from Triple Five at market rates on a long-term lease.
What would be the City’s and Port Authority’s involvement, and why?
Due to legal financing requirements, the model that City staff is currently analyzing is a publicly owned and financed waterpark. Land would be leased from Triple Five and the City would hire Triple Five as the operator/manager (O&M). Both the land lease and O&M costs that the City would pay to Triple Five would be at market rates – Triple Five cannot share in the profits. Profit upside for the project would become either City or Port General Fund dollars, or dedicated to public improvements in South Loop (or a combination). Based on early MOA projections, it is estimated that the project would cash flow; revenue would support debt service and O&M expenses, and have a potential for annual excess revenue.
To mitigate concerns that revenues may not cover debt service and operations, Triple Five would agree to ‘turn on’ the Additional Revenues by Legislation (ARBL) at MOA if needed to cover any shortfalls. ARBLs are the sales and use taxes from 2008 and 2010 legislation that have not been enacted to date. The type of debt sold by the City/Port would not be backed by the general obligation of the City’s taxpayers, eliminating direct financial risk for the project to the City.
In summary, the waterpark could be publicly financed and owned because the City/Port can borrow at much lower interest rates than a private entity and the City/Port have financing sources (ARBLs) that can be used to backstop debt in case the project does not perform as projected. ARBLs and the borrowing authority cannot be used for privately owned recreational facilities such as a waterpark.
What money would be used to finance the waterpark?
The waterpark is projected to support itself with revenues from tickets and admissions. If those revenues do not support operations, maintenance and debt payments, sales and use taxes would be enacted at MOA to pay for any shortfalls. No Bloomington property taxes would be at risk for the project.
Why would the City be interested in owning and financing this waterpark?
The waterpark would help add resiliency to the South Loop and MOA by bringing new visitors to the district. Continued health of MOA is important to the reputation of Bloomington and MOA directly impacts the amount the City needs to levy to operate.
- Mall of America is about 10% of the City’s tax base.
- About 30-40% of the City’s hotel room demand is attributed to MOA and the hotels in Bloomington make up about 7.5% percent of the City’s tax base.
- Without existing lodging and admissions taxes that go to the General Fund and help hold City services constant, the $58.4 million property tax levy in 2018 would be $9 million higher.
Additional lodging and admissions taxes from the waterpark would go to the General Fund, which could reduce the levy or be used for Strategic Plan Initiatives (e.g. Affordable Housing) anywhere in the City. There is a potential profit upside from the waterpark (after debt service, lease, operations, and maintenance payments), which could also be additional funds to the City.
Last, the waterpark would also be another amenity for the community. The City could offer a discount to Bloomington residents; the impact of which would have to be weighed against the revenue projections.
Will this project impact the Bloomington Family Aquatic Center (Valley View)?
While the Bloomington Family Aquatic Center (BFAC) is much more than your average municipal pool, it does not serve the same market as the proposed waterpark project, a true year-round vacation destination. BFAC is limited to the summer months and is designed as a local destination.
When would construction start?
This project is in the conceptual stage. There have been no approvals by the City and no timeline for the project has been set.
What formal action has the City Council and Port Authority taken related to the proposed waterpark project?
On March 6, 2018, the City Council and Port Authority directed staff to continue analyzing the project. The analysis is in early stages and there is no target date for returning to the City Council and Port Authority for an update or further action.