- Public-Private Financing Comes Together for Radisson Blu Hotel at Mall of America
- July 1, 2011 | Author: William C. Griffith
- Law Firm: Larkin Hoffman Daly & Lindgren Ltd. - Minneapolis Office
Radisson Blu Hotel broke ground in May at Mall of America on what is the first hotel to be directly connected to the 4.2 million square foot retail and entertainment complex in Bloomington, Minnesota. Plans for a full service hotel at Mall of America date back to the original 1985 proposal by Triple Five, yet it took a unique combination of public and private financing to underwrite construction in today’s tough economic climate.
The 500-room upscale hotel was first proposed by Minneapolis-based Mortenson Development prior to the 2008 credit freeze that stopped financing on all major development projects, including the proposed hotel. In 2010, Mall of America, led by Larkin Hoffman attorneys, joined with members of the building trades to seek passage of the 2010 Jobs bill. When Governor Tim Pawlenty signed the measure on April 1, 2010, a number of stalled projects were given new life, including the Mall hotel.
Financing at a Glance - Radisson Blu MOA
$40,280,000 Recovery Zone Facility Bonds
$39,668,193 Secured Notes
$14,550,000 Tax Increment Bonds
$137,498,193 Total Project Financing
Last August, Hennepin County granted a request by the Bloomington Port Authority to designate $40 million in recovery zone facility bonds for the hotel project. The bonds were made available to the County as a new type of tax-exempt private activity bond created by the American Recovery and Reinvestment Act, passed by Congress in February 2009. Since the project qualified for the program and no other qualified projects made application for use of the special funding opportunity, the County redirected its allocation to Bloomington.Still, conventional financing for hotel development was scarce, even with TIF bonds and recovery bonds approved by public bodies. To help put building trades people back to work, a number of the pension funds that invest the retirement contributions of laborers purchased over $20 million in debt as investment in the project. Since the investment benefited members, the pension funds hired third party analysts who recommended the vehicle as a sound investment independent of any other consideration.
The final piece of the financing puzzle was provided by equity owners, affiliates of Carlson Companies and M.A. Mortenson Construction Company. The direct investment of the owners of these two locally-based companies gave great comfort to the other investors and helped close the deal under strict timelines and difficult economic circumstances.
As a result, Mall of America will boast one of only two Radisson Blu hotels now under construction in the U.S., providing hundreds of construction jobs and hundreds of permanent jobs. Tourists and business people visiting Mall of America will stay at one of the top hotels in the region, and the City of Bloomington will enhance not only its tax base, but its reputation as one of the top destinations in the state.