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Another day, another stadium subsidy request

Minnesota United
If a soccer stadium isn't built, this land will someday be filled with people who live, work, and play there 365 days per year.

You have footed much of the bill in one way or another for the homes of the four big pro sports teams in town, much to the benefit of their billionaire owners. You’ve also paid (and are paying) for stadiums for the Saints and Gophers. The owners could easily fund the venues that their teams use, but why would they when we will pay?

Patrick Steele

The new kid in town, professional soccer, wants in on some of that action. Rather than paying for a new stadium for his team, Bill McGuire is looking for handouts from the state and the city.

He’s making this request for no reason except that he can. Sadly, there’s precedent to think he might get his way.

Make no mistake: Exemptions are subsidies

Advocates argue there’s no direct subsidy and thus it’s not really a subsidy at all. Make no mistake: Exemptions on sales tax on materials and freedom from property taxes are subsidies. This year the owners of the proposed site — currently an industrial facility — will pay approximately $280,000 in property taxes. Should this property go untaxed, other taxpayers in Minneapolis would immediately need to make up the difference. Additionally, with its proximity to the North Loop and a proposed light rail station, this land is about to get very valuable, very fast.

McGuire didn’t build his fortune by being stupid, and he knows that he’s getting in at the right time, much as the Twins did when they built their new facility (with a significant assist by taxpayers) in an area that was just beginning to spring to life. After a quick look at the tax burden on much smaller properties a few blocks closer to Washington Avenue, it’s not a stretch to suggest that in a few years the proposed soccer stadium’s land will be worth seven figures annually to the tax base.

If we are going to buy another stadium, at the very least taxpayers must demand a sunset provision for this property tax subsidy. Without such a clause, we’re looking at what is effectively a subsidy of infinite dollars. As proposed, taxpayers would be better off paying the entire cost of building the facility than they would offering an indefinite property tax exemption.

Much is touted about the benefits of a stadium to the area, and there’s certainly something to that. Thousands of soccer fans and their wallets would darken the doors of establishments in the area on game day, the stadium would likely draw a few concerts every summer, and it could also host lower-level and youth soccer tournaments. But are these benefits the long-term model for a quality and vibrant downtown? The bread and butter of many downtown establishments consist of the residents and workers who spend five to seven days in the area each week and have a vested interest in seeing the area thrive. If a soccer stadium isn’t built, that land will someday be filled with people who live, work, and play there 365 days per year.

Legal questions, monetary hurdles

There are also legal questions about this subsidy request. Council Member Andrew Johnson pointed out that exempting a private facility from the property tax rolls runs counter to our state Constitution, which forbids such actions. Backers have argued that a public group could be established that will own the facility, but this creates its own hurdles. As we’ve seen with the Target Center (which is owned by the city), ownership of a facility means having a direct financial stake and creates short- and long-term costs and liabilities. Additionally, Minneapolis voters added a clause to the City Charter mandating a direct vote on any stadium subsidies totaling $10M or more. The desired property tax exemption would easily clear that monetary hurdle in the long run, but it wouldn’t at the outset. Would a direct vote be required? Nobody knows.

McGuire and company are hoping that we taxpayers are terrible poker players. They’re hoping that we’ll fear missing out so much that we’ll subsidize his private enterprise.

Taxpayers in Minneapolis should ask themselves if indefinitely supporting a private soccer stadium is how they want to spend their property tax dollars. They would be wise to call McGuire’s bluff and see if he walks away if he doesn’t receive the subsidies he wants. If he wants to foot the bill, great. If he doesn’t, I can assure you that that area and Minneapolis will do just fine.

Patrick Steele is an IT professional from the Twin Cities who currently resides in Madison, Wisconsin.

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Comments (4)

  1. Submitted by James Hamilton on 04/30/2015 - 09:32 am.

    Well said.

    A rose by any other name . . .

    There are times when state and local funds may legitimately be spent to encourage private development. Those funds, however, should be limited to extending infrastructure to serve the development, with those costs to be recovered as are similar public investments.

    Any business which cannot provide its own long-term facilities should re-visit its business plan.

  2. Submitted by Dan Hintz on 04/30/2015 - 10:47 am.

    Fair enough

    This is the first honest opposition piece I have read. I do like the idea of a sunset provision.

    A couple of points:

    There is no guarantee that this land would be otherwise developed, or at least developed any time soon. It certainly is possible the land would otherwise generate more taxes than it is generating now, but its highly speculative to say that Minneapolis would be giving up anything near what the taxable value of the stadium would be.

    And the soccer stadium may actually drive development on nearby taxable land. I was over by Target Field last night and was amazed by the amount of construction right across from the garbage burner. You may see a net property tax gain despite the stadium being off the tax rolls.

    People need to also understand that every single other stadium is off the tax rolls. As are the Guthrie and Walker and many other properties. Property tax exemptions are very common – McGuire is not asking for anything unique. The only difference is that unlike every other billionaire sports owner not paying property taxes, he is not asking taxpayers to pay for the stadium too.

    I do appreciate that you understand what public ownership of stadiums means – there is no benefit to the public – just less tax collected and more costs.

  3. Submitted by Connie Sullivan on 04/30/2015 - 12:08 pm.

    Please! Are we to be thankful to McGuire, that he proposes that his private group pay for its own stadium? As if beggars can’t be chosers?

    This article’s take on the issue is a breath of fresh air. Let’s give them an infrastructure boost (water and sewer connections, street alignments) and let them pay for the rest themselves, with no tax subsidy.

  4. Submitted by frank watson on 05/05/2015 - 03:56 pm.

    How odd is that..

    Funny he can come up with $150 million for the stadium and $100 million for the franchise fee but he can’t afford or doesn’t want to pay a few million of taxes?

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