Stadium opponents on the Minneapolis City Council joined stadium supporters Tuesday in giving unanimous committee approval to the adjacent Downtown East project.
“I’m not going to be the person who vehemently opposed this Vikings deal and then tried to make everything else there happen poorly,” said Council Member Lisa Goodman, a stadium opponent. She chairs the Community Development Committee, the first to vote on the latest plan.
“Our job is to take the situation … to the next level and know when to stop saying ‘no’ and start embracing the kind of change we need in this part of downtown,” she said after the committee’s public hearing on the $400 million project.
The Downtown East five-block area will include 1.1 million square feet of office space in two buildings, expected to house 5,000 Wells Fargo employees. The plan also includes a park, residential and commercial space, and a city-built parking ramp that will be owned by the Minnesota Sports Facilities Authority.
The project involves land owned by the Star Tribune, which is expected to sign a purchase agreement with the Ryan Cos. on Dec. 27. Ryan and Wells Fargo also are expected to reach greement this month.
By voting to move ahead, council members agreed to establish a development district adjacent to the stadium site, sell $65 million in bonds, accept a term sheet from the Ryan Cos. outlining the project and direct city staff to negotiate an agreement with the developer.
The city will use its Port Authority powers to create an industrial development district and sell bonds. This option gives the city flexibility in the purchase of private property and allows the acceptance of money from the private sector.
This option has been used before in Minneapolis for the construction of the Riverfront Ramp in 2005 and the Hawthorne Transportation Center in 1998.
Ryan Cos. will contribute $350 million to the project. The city portion is $57 million for a park and a parking ramp, with the Minnesota Sports Facilities Authority contributing $29 million. Of that, $20 million will be spent on the city-built parking ramp, with the remainder going for skyways. The Minnesota Vikings have contributed $1 million, earmarked for the park.
“Our objective throughout this, from a financial standpoint, has been to come up with a revenue stream that will pay the debt service to finance it,” said Kevin Carpenter, the city’s chief financial officer. He told committee members the agreement allows the city to increase the tax base and establish a park without directly funding either of those options.
Under the agreement with Ryan, all of the proceeds in the ramp’s first 10 years of use will go to Ryan, which will then pay the city a fixed yearly fee that will be larger than the city’s obligation to pay off the bonds.
“City projections currently show sufficient cash flow from the ramp to cover the estimated debt service, Carpenter said. “We believe an important part of this is the property tax growth that comes to the city.”
He estimates additional property tax revenue in the first year of $1.1 million,with a total of $42 million during the 30 years of the bonds. During that time, the project also will pay an estimated $50 million in taxes to Hennepin County and $35 million to Minneapolis Public Schools.
“The ratings agencies view this as a plus for the city’s ratings, not a minus,” said Carpenter, who estimates yearly revenue of $250,000 for the city after the bonds are paid off in 2043.
“What we are doing here is leveraging 5,000 [Wells Fargo] employees coming to this area, to acquire a park and get development without doing a tax increment finance district,” said Carpenter. “A big parking ramp by a stadium that’s full four hours a day, 10 days a year, doesn’t accomplish anything.”
“This is a pretty good project, and I think in the long run I will be proud to have my name on it as someone who supported it,” Goodman said.
The city has the option to sell the air rights above the parking ramp and is expected to actively pursue developers for that part of the project after it has been approved by the full City Council.
The project is before the Ways and Means/Budget Committee on Wednesday and is scheduled for a full council vote on Friday.