Malling America

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Mall subsidies have been making headlines across the country recently. Increasingly, developers ask for massive pubic subsidies when they build mega-retail outlets and, unfortunately, officials often concede.

MINNESOTA: Mall of America (MOA) is at it again. Last year, Minnesota Gov. Tim Pawlenty vetoed a $180 million subsidy package for a $1.7 billion expansion of the mall. Now MOA owners, the Triple Five Group, are asking for about $350 million to finance a parking ramp and infrastructure improvements as part of the expansion, which would more than double the mall’s size.

Rep. Michael Nelson will introduce legislation exempting MOA from the seven-county region’s fiscal disparities program, which requires all communities to share 40 percent of their commercial and industrial tax base growth. MOA’s contribution would have to be made up by other pool contributors. Downtown retailers, which have to compete with MOA, are strongly opposed to the use of tax dollars for the mall expansion.

DISTRICT OF COLUMBIA: DC USA, an urban mall in the rapidly gentrifying Columbia Heights neighborhood, opened with much fanfare by district officials and the media. The Washington Post hailed it as a “rapid renaissance” for a blighted neighborhood, but many local residents and long-term business owners questioned the fairness of the $42 million subsidy DC government awarded the project.

In a March 16th editorial, small business owners Andy Shallal and Kim Weeks of Think Local First (a DC area local business alliance) complained that local businesses were left out of neighborhood redevelopment negotiations. Only 3 percent of 500,000 square foot mall was allocated for locally owned enterprises and existing businesses will receive only $2 million in additional public assistance – pennies for independent businesses that will now have to compete with mall anchors Target, Best Buy and Bed Bath & Beyond.

ARIZONA: George Will has joined the growing chorus critiquing subsidies for malls and retail. In his bi-weekly column, the conservative editorialist blasted a $94.7 million subsidy the City of Phoenix provided to a 144-acre retail, residential and office development called CityNorth, labeling it “booster socialism” and “corporate welfare.” Last summer, on the heels of the CityNorth giveaway, Arizona Governor Janet Napolitano signed a new law banning Phoenix-area cities from providing new retail subsidies.

Now, with the assistance of Arizona’s conservative Goldwater Institute, six Phoenix-area small business owners are suing the city. Arguing that the CityNorth deal violates provisions of the State Constitution, they are seeking to block future payments to the developer.

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