The Star Tribune has taken lots of fire for its full-throated, conflict-of-interested Dome-area Vikings stadium advocacy, but how many millions would the the newspaper reap from selling its nearby land?
The latest $975 million plan provides an early clue, designating $25.8 million for acquiring nearby parcels.
The Strib — which owns a block in a plaza/walkway included with the stadium — would share that pot with Vikings owner Zygi Wilf, Hennepin County, parking lot owner Alatus LLC, a Metropolitan Sports Facilities Commission spokesman says.
MSFC chair Ted Mondale says the $25.8 million was based on “estimates of a number of privately owned blocks, not part of any negotiation.”
Although the paper has hyped even implausible twists in the stadium saga, Strib management says the current plan is too squishy to discuss.
“There are many plans and drawings being circulated, but right now there is nothing concrete to react to as far as Star Tribune and its land are concerned,” says spokesman Steve Yaeger. “No further comment at this time.”
Nevertheless, the Dome-area parcels are worth paying attention to. For example, the plan would have taxpayers buying back a ramp they sold just five years ago. The plaza also potentially restricts access to the county morgue and crime lab. And Zygi Wilf — expected to pay into the stadium deal — could have his contribution reduced by multimillions for land he presciently bought in the mid-2000s.
How much is each parcel worth?
Although Mondale spoke to the land deal at a news conference last week, the MSFC has not made someone available to explain how the $25.8 million was derived.
Chuck Lutz, a city of Minneapolis development executive who has been involved in negotiations but not on the land-sale piece, says: “My understanding is that it was arrived at through a variety of means — current tax valuations, appraisals or sales of comparable properties, etc. I don’t have a breakdown of the estimated acquisition cost per block. One way to estimate a breakdown would be to look at the current Hennepin County market values for the blocks and use the same proportions applied to the $25.8 million figure.”
Using that method, the Strib’s block is valued at $3.3 million. One block south, where Alatus LLC owns a parking ramp under a light-rail stop, is valued at $4.5 million. Wilf’s partial blocks, just north of the Dome, come to $2.1 million.
The total: $9.9 million, of which the Strib has an even third.
However, complicating the estimate is a Hennepin County half-block south of Alatus’s land, which is not taxable and therefore has no market value. There’s also no listed value for a three-block stretch of publicly owned right-of-way on 5th Street designated for a linear plaza, or two other parking ramps south and east of the site that may become part of the deal.
If, say, the unvalued parcels were worth half as much as the valued ones, the Strib would be in line for about 22 percent of the pot, or $5.6 million. If the two sets of parcels were of equal value, the Strib’s chunk would come to $4.3 million.
For perspective, keep in mind the Vikings canceled a $45 million deal to buy four Strib blocks in 2007, including the plaza one, which works out to $11.25 million a block. That was before the real estate bust — but before public officials and the team endorsed a Dome-area plan.
Again, this is back-of-the-envelope stuff, dependent not just on estimates but the idea that the latest stadium plan is less ephemeral than all the earlier ones. But it’s at least a clue to the money directly at stake here.
As any real estate mogul knows, land is only worth what someone will sell it for.
At the news conference, Mondale and Minneapolis Mayor R.T. Rybak suggested the Strib was a willing seller. Zygi, obviously, falls into that category, though as a real estate baron, is well-equipped to haggle over such things.
Finance and Commerce reported that Wilf bought his parcels for $5 million in May 2007 — far more than the current $2.1 million valuation.
While Mondale and Rybak indicated “negotiators won’t get hosed,” and the non-Dome blocks were not mission-critical, NFL stadium rules require 2,500 V.I.P. parking spaces with dedicated skyways, tunnels or walkways. Whoever accommodates those may profit more relative to other owners.
Buying back land
One of the more intriguing parcels contains a Hiawatha Light Rail stop and the “Downtown East” underground parking ramp. City of Minneapolis taxpayers owned it as recently as 2007, when it was sold to Alatus LLC, a partnership that includes Block E owner Bob Lux.
The LRT block was part of a five-parking ramp, $65 million transaction. The city had been losing three-quarters of a million annually on the Downtown East ramp alone, and used the sale proceeds to pay down debt and fill its parking fund.
Lutz says the ramps were sold as a package, so the “Downtown East” ramp’s value cannot be broken out. However, much as they did with the Strib’s four blocks, the Vikings had a $14.5 million option to buy the ramp — about triple its current assessed value.
The option expired in 2009, says Alatus vice president Jon Fletcher, adding, “There’s really nothing going on with our side. We have no partnerships or transactions to announce.”
Killing the morgue?
Hennepin County administrator Richard Johnson says the county has not negotiated with the MSFC, and did not know their half-block was part of the plaza until the map was unveiled last week.
Johnson says the plan covers a parking lot attached to the crime lab and morgue, and would cut off access to the building, rendering it “not useful.”
Stadium backers have pointed to discussions about building a multi-county medical examiner facility out of downtown, but Johnson says that does not cover the crime lab function; relocation remains “a ways down the road … could be three to five years.”
That could mean stadium backers would have to take the whole parcel, paying more, or drop the half-block from the plaza.
Does the county have a valuation of its land? “At this point, I don’t have one,” Johnson says.
No way you’d sell? “Anything’s available for the right price,” he says. “I would not say no way.”