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Vikings Stadium: It’s a question of priorities

The Governor Arne Carlson Blog
newminnesotastadium.com
To this day, we still do not know the full details of how the funding of bonds, costs, etc. for the new Vikings Stadium will be handled.

A longtime friend and a retired legislator has an expression that forms the basis of this blog: “Minnesota does not have a money problem, it has a priorities problem”. How true.

For instance, tonight some 2,000 young people in the metro area will search for shelter. Statewide that figure is nearly double. Some will find bed space with friends and acquaintances. Most will sleep in their lean-tos, tents, or cardboard boxes. Those with minimum wage jobs will use the bus system, walk, or bike to work. Their hot meal will come at night when various shelters provide food, Internet service, a hot bath and some donated clothes.

Janet Entzel, another former legislative colleague, recently gave me a tour of Hope 4 Youth in Anoka. This homeless shelter is just off of downtown Anoka near transportation lines. Various churches in the area provide funding and an endless stream of volunteers who represent the finest of our religious tradition of service to others. The staff is professional, dedicated and truly know how to work with children and young adults.

The building owner is State Representative Jim Abeler who is also a candidate for the Republican nomination for the Unites State Senate. He is described in glowing terms with words like generous, always helpful, caring, etc.

The overall visit left me with a sense of gratitude that so many committed and competent people are serving homeless children. On the other hand, there is a deep sense of sadness that these alert and resourceful children will still sleep the night in a tent, lean-to or whatever.

As a state, we are blessed with the presence of many facilities comparable to Hope 4 Youth and served by countless volunteers who give so much of themselves. Further, I know that state and local governments are helping both in terms of leadership and funding.

In spite of all of this human goodness, the fact remains that next February when it is 10 degrees below zero these children will still be sleeping outside and then be expected to attend school and keep up with their studies.

I remember bivouac in the Army during the winter and I can attest to the total discomfort of sleeping in a tent, compelled to dry shave and eat cold rations. And we were far better prepared to handle the cold in terms of clothing and transportation.

Clearly progress from a governmental viewpoint is being made. However, I would term it a modest priority.

But then what constitutes a major priority? Certainly, it is the usual: education, transportation, social services, public safety, etc. As part of our overall quality of life we also enjoy sports and entertainment and our symphony, theater, and sports teams are essential to a vital and successful community. In recent years, one of our major priorities has been what is generally referred to as the “stadium issue”. However, the relationship between private enterprise and taxpayer financial participation has always been tenuous and properly so. In the case of building a new Vikings stadium, it was always understood to be roughly 50-50 with the Vikings owners and taxpayers sharing the financial load. Currently, it appears to be closer to a ratio of 90 percent taxpayer and 10 percent owner.

I think it is fair to say that at every turn, Vikings owner Zygi Wilf, and his team of attorneys, accountants and lobbyists have run circles around the negotiators representing the state and city of Minneapolis. The tragic result is that today, we, the taxpayers do not know the full extent of our financial exposure because embarrassed public officials are keeping their distance from any meaningful stadium discussion and, all too often, are delaying legitimate requests for information. It should be noted that no public official has taken responsibility for the financial package.

Let’s consider the following:

1 ) Top state leaders publicly expressed surprise when notified of a 20-year old lawsuit that was in the New Jersey courts. Mr. Wilf was ultimately found liable for civil “organized-crime activities” with fines and legal fees exceeding $100 million.

2) Top state leaders again expressed surprise when Mr. Wilf decided to impose a seat tax on season ticket holders. Overall, this was expected to bring in over $100 million on the Wilf side of the ledger.

3) To this day, we do not know the full details of how the funding of bonds, costs, etc. will be handled. We have been promised that no general fund monies would be used but that may not be true. Consider the observations of Doug Grow, a former Star Tribune reporter and current columnist for MinnPost: by sessions end, that plan (the Governor’s Plan) turned out to be using one-time funds from a special cigarette tax and ongoing funds created by closing a corporate income tax loophole. Clearly, this backup plan is dedicating general fund monies to the stadium in contradiction to the promises made. Overall, the estimate is a draw of some $20 million per year.

Any fair analysis would conclude:

1) The state’s “due diligence” on the finances of Mr. Wilf was virtually nonexistent. The reality is that people of average incomes are subject to more financial scrutiny when they borrow for a car purchase than Wilf was in a transaction involving hundreds of millions of dollars;

2) When top leaders expressed surprise at Wilf’s imposition of a seat tax that is further acknowledgement of their ignorance about the very financial package that they were selling to the public.

3) We have not seen any accounting that makes certain that the state’s financial contribution to the stadium and related infrastructure is being monitored to ensure that the cap of $348 million of state spending is being honored. For instance, we know that additional skyways are being built and that the Minnesota Sports Facility Commission is purchasing the Downtown East parking ramp. However, lacking full financial disclosure we do not know the full extent of the state’s contribution.

As if this series of state blunders were not sufficient, we now have Minneapolis leaders rushing to pour more monies into a deal already overloaded with taxpayer funds. I have written a previous blog (December 10, 2013) detailing the rush by the Mayor and City Council to pass a financial package that they knew all too little about. Secrecy and a lack of deliberation are the enemies of competent public policy and that adage holds true here.

State law limits Minneapolis’ contribution to the stadium project to $150 million. Since the city has pledged $150 million to the stadium itself, how can they issue another $65 million in General Obligation bonds without going over the legal spending limit?

A second and more potentially harmful element is the question of anticipated revenue versus costs when it comes to financing and operating parking ramps and the park. First of all, by now it should be abundantly clear to anyone with an IQ approaching room temperature that if there were profit to be made in operating a parking ramp or park, Mr. Wilf would have seized that opportunity. He has successfully cornered the market on profit and is leaving the risk to the taxpayer.

For instance, the ramp will be built at an anticipated capital cost of $30,000 per stall. Interest payments and operating costs are in addition. Further, the agreement calls for 1,418 spaces to be “ provided for Vikings patrons and MLS (soccer) patrons at no charge to the MSFA or the Vikings.” How do you make money when you give away your revenue?

In addition, the General Obligation bonds are spread out over 30 years with the developer providing a subsidy starting at $2.75 million and rising to $4 million per year for the first 10 years. After that, bond payments are dependent on that limited revenue stream. Then the taxpayer is on the hook and that explains the city’s stonewalling of requests for detailed spreadsheets.

And then we have the “Park” or “Yard” as it is often described. This is land that was purchased by the city from the Star Tribune Company with the intention of serving as a stadium plaza and public park. It was also thought that the Vikings would have exclusive use for game days expected to be 10 a year. Now, after analyzing the agreement, it turns out that if the Vikings bring in a professional soccer team (which they will), the number of days for professional sports usage will go up to 100. Considering that we have at least a five month winter, the Vikings will control the usage of the park for nearly one-half of its usable time. In addition, they have a liquor license and free use of the park. That leaves all costs including maintenance to be borne by Minneapolis taxpayers. According to theStar Tribune (August 2, 2014), Park Board officials “expect the cost of operations and maintenance to approach $3 million a year.” That would be some $90 million from the city over the life of the lease.”

Even former Mayor Rybak who rushed the agreement through the City Council last December is now “shocked” and suggested that this “should deeply concern the public.” Well it does.

In spite of all these missteps and the raising of legitimate financial concerns, the State Auditor has refused a request to get involved. Few people like controversy but we expect our political leaders to always have the courage to do right.

Certainly, it is unsettling to challenge large interests who have gained so much from this deal. Likewise, no one wants to call one’s political allies to accountability. However, the State Auditor is the people’s financial watchdog and that expectation cannot and must not be compromised. After all, if the State Auditor will not protect us, who will?

During the course of preparing this blog, I have been working with Paul Ostrow, former President of the City Council of Minneapolis and currently a County Attorney in Anoka. He has been a truly outstanding and courageous leader. His summary on the stadium issue is that “the real legacy is a betrayal of the public trust by public officials wanting to fund the Vikings stadium while keeping the real costs and choices hidden from the people they are sworn to represent.”

The goal here is not election politics but rather confronting a problem that will harm us over the long-term unless we act decisively now.

One reality that must govern any future actions is the realization that the demands for more public money will not end. The demands will be with us through the life of the lease. Witness just in the past week the articles on the glass and its impact on birds and the Minneapolis Park Board’s refusal to take over the “Park” project. Further, notice that all discussions on costs revolve around the taxpayer and not the owners of the Vikings.

With this in mind, I would submit the following proposals:

1) That the Governor declare a “hold” on all pending taxpayer expenditures involving the stadium project. This includes Minneapolis as well as all state agencies and commissions. It is imperative that the bleeding stop.

2) That the Governor work with the State Auditor and Legislative Audit Commission (it is bi-partisan) to create a joint audit team for the purpose of reviewing and enforcing the stadium spending limits imposed by the Legislature on state and local governments. This team should also be empowered to make recommendations relative to cost savings including shifting more of the burden to the beneficiaries (the Vikings owners).

The Governor, State Auditor and the Legislative Audit Commission should assume oversight responsibility. It may sound improbable for a Governor, State Auditor and Legislative leaders on a bi-partisan basis to work together during a highly competitive political campaign. However, I am persuaded that voter pressure will keep everyone in line.

3) That candidates for Governor, State Auditor, and the Legislature discuss during their campaigns the role of pubic financing in public-private partnerships. Perhaps they can agree to appoint people to vital posts based on merit and not political friendship. This means selecting people with a demonstrated competence in business and administration commensurate with the talents of those representing the private sector.

It is equally imperative that all fully abide by not only the open meeting law but also the intent behind it. Openness is an enormous asset when making public policy.

We have the opportunity to correct some of the mistakes of the past and start building agreements toward restoring our traditional priorities which always reflected a balanced commitment to our quality of life. Central to that should always be our concern for our children — all our children.

This post was written by Gov. Arne Carlson and originally published on the Governor Arne Carlson Blog.

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Comments (11)

Confusion or curruption

It's clear that for some reason, legislator of both parties, Rybak, and Dayton, all decided that an out of state billionaire was their primary constituent. I never could figure out who was the constituency for this stadium when the clear majority of actual MN and MPLS citizens kept saying they didn't want this thing built with public money of any kind. It was, and such deals are, betrayals of public trust. When a stadium supporter like Arne Carlson complains, you know you have a problem.

Clear warning were issued regarding the costs, economic impact, and financing of this deal, and they were all ignored, literally ignored by elected officials. This kind of corruption is institutional, it's not about under the table payments or favors, it's about billionaires and the wealthy having access that's denied to actual citizens, it's about privatizing profits and socializing risks or costs. This is the largest public subsidy in the history of MN, and it's going to a company that promises not a single new permanent job, nor any real economic growth for the community.

Worse than the economics may be the undermining of our democracy. When elected officials deliver these kinds of welfare programs to the wealthy, they demonstrate contempt for the democratic process and the people they're elected to represent. They call this the "people's" stadium but in fact despite all the public spending, absolutely no truly public space is being created here. Even the light rail station is privately owned, but publicly maintained. People aren't stupid, they see what's happening and this only deepens our disgust and cynicism for elected officials. We keep passing laws that are supposed to require a democratic process (i.e. referendums) and our elected officials just make new laws that set democracy aside so they can create these welfare programs for the wealthy... and it's the only thing they can accomplish on bi-partisan level!

Corruption or Incompetence?

The Vikings stadium project exists because of a perceived political liability had it not been passed. As we know, public pressure, even from a small group of noisy people, is very powerful. This is true whenever professional sports issues come before political bodies. Arguing that it was a mistake to give in to such pressure is a nonstarter. Politicians will always yield to certain types of noisy pressure. And though this constitutes ONE failure of the Vikings stadium process, it is not the most devastating one.

The devastating error here is the complete failure to negotiate an even marginally equitable deal -- both with the team owners and with the legislative advocates. There was either corruption or incompetence at fault, and I'm inclined to go with the latter.

On the one hand, the mechanism proposed and accepted for the public funding (electronic gambling) was highly speculative and regarded in advance with extreme skepticism from all directions. That it has utterly failed and must now be replaced (likely with money from the general fund) was entirely predictable, and even widely predicted.

On the other hand, those who negotiated with the team on behalf of the public (both state and city) clearly gave away the store, ostensibly responding to trumped up threats of a relocation which was widely regarded, by anyone with even a basic understanding of stadium financing, as extremely unlikely.

The remedy now is also clear: Stop the construction until a new permanent funding mechanism can be secured. Doing so would allow cooler heads to work on the problem while also returning leverage to the public, and forcing the owners back to the table under much more favorable conditions for the new public negotiators (no one involved with the earlier process should be allowed anywhere near a new round of discussions).

Some might think this a breaking of promises. It is not. Conditions have changed, and there are very real new problems which must be addressed. Without secure, long-term public financing available, all options must be reexamined, and this should most definitely include reconsidering the team's financial participation. Without such a reopening of the plan, the money to cover the bonds will (or at least should) run out. Now is the time to bring the Vikings into that process and correct the errors so deeply embedded in this project (and so clearly stated above by Gov. Carlson).

That's just it...

There was no noisy group demanding a stadium, there was no outcry large or small on behalf of the Vikings. Sure people showed up for the hearing once they decided to have them, but they had the hearings because Dayton demanded them, not because there was an outcry. I think at some point you have to ask if these elected officials can really be THAT incompetent... accidentally. At some point you have to wonder if negligence on this magnitute is kind of accidentally on purpose?

Outcry

Actually, there was. A good friend of mine, although we disagreed on this, spearheaded the "Save The Vikes" campaign. He did anything and everything he could to get the Viking Stadium bill passed, and created a very large, vocal community to do it.

Thank you, Mr. Carlson for writing with clarity...

...although in your reserve, you hesitate to call the issue by its real name: public corruption.

This is one of the gifts of professional sports here in Minnesota - the integrity of our public officeholders has been seriously compromised. You name a few of the names above, but I fear you're a little too kind to them.

This has harmed us all, and there is no cure a but bright light on all the dark dealings. For example, when the vote-by-vote management through all motions in the legislature, whether in committee or full session, time-outs were frequently called to intervene with people who had fallen off the wagon and were straying from the stadium line in their votes. The Vikings had their personal representatives involved in these legislative meetings, as well as the unions and tribes. What were these legislators promised, and with what were they threatened ??

I agree with Paul Udstrand above - it's not just the money.

It's about the integrity of the political system that now, perversely, turns and attacks the interests of the very public it is sworn to serve.

The larger question...

So Arne, what social problems must be completely solved before we can build a stadium, or install a bike trail, or subsidize a concert hall? I get sooo tired of this false set of choices...that we have to choose between a stadium or homelessness. It's actually possible we could do both.

Sooo tired of uninformed comments

Did you read the article?

Governor Carlson takes a much more subtle approach than I would in pointing out that our priorities are backasswards in funding a stadium while there are those in Minnesota homeless, without access to healthcare, and without adequate food. Those would be my main 3 before Zygi gets a dime, much less billions of dimes.

But, Governor Carlson clearly made the point that he's NOT saying we must fund all "good" things before we fund entertainment/quality of life initiatives. He advocates a balanced, thoughtful approach.

From the article:

"But then what constitutes a major priority? Certainly, it is the usual: education, transportation, social services, public safety, etc. As part of our overall quality of life we also enjoy sports and entertainment and our symphony, theater, and sports teams are essential to a vital and successful community."

"We have the opportunity to correct some of the mistakes of the past and start building agreements toward restoring our traditional priorities which always reflected a balanced commitment to our quality of life."

Now the Monday morning QBs come out

Where were all of you when your legislators and Governor were overwhelmingly voting for the new stadium (which hadn't even been designed or had a location picked) at great urgency demanded by the Governor? It's over. You lost. Get over it.

One freedom everyone has is to completely miss the point,...

...as Mr. Anderson does here.

Read our ex-Governor's column again, and while you're at it, read the comments again - for meaning.

Calling BS Mr. Anderson! The

Calling BS Mr. Anderson! The legislators, Mayor and Governor all knew that the public did NOT want to finance a pro sport team playground. You are being disingenuous stating that. The City residents passed a Charter amendment right after the Pohlad handout stating as much, by a 70-30% margin. This was subverted by a non-elected attorney at the behest of Rybak. This will tho down as the biggest ripoff in State history, and the residents of Minneapolis are the ones taking the biggest tax hit.

Vikings and Birds

Well said, Governor Carlson!
While you still have their ear, could you please bring up again (and again) the lies the Vikings management (and the MSFA) are spewing about bird-safe glass? At first, it was a cost issue as you mentioned in your piece. Then it turned into an issue of aesthetics. How dumb do they think we are?
This is absolutely shameful on their part. Gov. Dayton and the Wilf family need their feet held to the proverbial fire.