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Bloomington leaders were hoping to sign off a month ago on a deal to build one of the nation's largest water parks beside the Mall of America.

But the vote has been delayed in large part because the city and mall owners haven't agreed how much mall owner Triple Five Group should be paid for its land and managing the water park. The mall proposed the water park, but its only investment — money for design costs — would be repaid if it moves forward.

The payments to the mall are one element of an unusual financing deal with little precedent in the state. Under the arrangement, a Louisiana-based nonprofit organization will borrow money from a public agency in Arizona to build the glassy, $260 million theme park. That borrowing hinges on a city pledge to raise sales taxes at the mall if the water park doesn't earn enough to pay its debts.

The park would be built on a parking lot owned by the mall and managed by an affiliate of Triple Five. The city says the mall can't donate or discount the land or its services, however, because of rules limiting private ownership in this type of tax-free borrowing deal.

The city, the nonprofit and Triple Five must therefore determine the market value of both the ground rent for the land and management fee — which would be funded by water park revenue. Bloomington Mayor Tim Busse, a supporter of the water park deal, said in an interview that those are the two largest unresolved issues in the negotiation.

An early feasibility study estimated the rent could amount to more than $2 million a year, and a management fee of about 4% of revenue.

"They're very important. … They affect the whole cash flow," said David Sangree, a water park expert currently developing the park's final feasibility study, which will be shown to prospective investors. Sangree said the land and management costs are the two primary figures he is missing to complete his work.

Schane Rudlang, administrator of Bloomington's port authority who is coordinating the water park project, said the ground rent and management fee are among a number of incomplete terms — including insurance provisions and the cost of various services. He emphasized that negotiations of this magnitude typically take longer than anticipated.

"I think if you surveyed other real estate projects around the metro, you would find that the fact that closing the deal takes more time than anticipated is extremely common," Rudlang said.

Rudlang declined to elaborate on the details of the rent and management fee negotiation.

The City Council and Port Authority had originally expected to vote on the final elements of the plan on Dec. 17. The city's website now says it will be in the first quarter of 2020. Rudlang said there could be a progress update at a public meeting in February.

"This has been a cooperative process and all parties are working thoroughly on the due diligence effort to ensure the success of a project of this magnitude," Triple Five Senior Vice President Kurt Hagen said in a statement. "This process takes time and that is not at all unusual. We are as excited and as confident as ever that we are on the right track."

The future of the mall

Busse, who took office in January, supported the project as a council member and remains bullish on the plan, partly because it shields Bloomington property taxpayers from risk.

He said the park will help keep the Mall of America a prime destination, which is important considering it makes up about 10% of the city's tax base.

"We are significantly invested in, and a part of, the hospitality industry in the city of Bloomington," Busse said. "And I think it's entirely appropriate that the city is working to ensure the strength of that hospitality industry."

He acknowledged that the deal is very complex. The nonprofit entity that will borrow for and own the water park, Provident Resources Group, is acting under its charitable mission of "lessening the burdens of government."

"We're not making this up as we go," Busse said. "This is part of federal tax code. It's been used very successfully across the country on a variety of projects — everything from student housing to convention centers and so on."

Triple Five proposed the facility, but found that it did not earn enough to cover private borrowing interest rates. The current deal is structured to lower borrowing costs while shielding the city's credit rating. The city has more at stake than just the sales taxes, however. It plans to spend up to $55 million to build an attached parking ramp and skyway.

'Unique and special'

Sangree, with Ohio-based Hotel & Leisure Advisors, said in general his study has positive findings about the water park.

"We think there will be a strong attendance and a strong usage for the project," Sangree said. "But it is potentially one of the most expensive water park developments in the country. … It's also one of the most elaborate ones."

Sangree said the park will be unique even for Minnesotans, who already have plenty of water parks to choose from.

"You have the highest concentration of indoor water parks in the nation, between Minnesota and Wisconsin," Sangree said.

"But … the quality level, the theming, the food and beverage options, just the overall feel to [the Bloomington park] is going to be at a higher quality level than really any existing facility in the region. That's what's going to make it so unique and special."

Visitors will encounter a spacious tropical adventure park with palm trees, wave pools, a mock steamer ship and a slide complex climbing 70 feet into the air, according to a presentation last November. Rafts will zoom down 10-foot-wide slides with translucent, multicolored walls.

There is another important difference: Sangree said Midwesterners are used to staying in a hotel and getting free admission to a water park. In this case, the water park entrance will be separate.

Eric Roper • 612-673-1732 Twitter: @StribRoper