In a move that will doubtless spark controversy, last week local Minnesota officials approved $40.3 million in tax-free bonds to help fund a 12-story luxury hotel at the Mall of America, according to the Minneapolis Star-Tribune. The bonds come from part of the county’s stimulus package funds.
This type of funding is normally used to finance projects such as roads or subsidized housing, and some county officials questioned awarding the bonds to the hotel project. However, the county stands to lose the bonds if they aren’t doled out by the end of 2010. Moreover, the hotel only recently became eligible for the stimulus funding when the area around it was designated a “recovery zone,” meaning the area has a poverty rate of at least 20 percent or the median income is at or below 80 percent of the state’s median income. Revenue from the hotel will be used to repay the bonds.
The Mall has been trying to build the hotel for three years but stalled for lack of financing. The total cost for the hotel will be $130 million. Construction is expected to start by the end of 2010 and take two years. Potential partners include Starwood, Radisson, and Marriott.
Tell us what you think: should stimulus funds be used for projects like hotels?
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