Why are Minneapolis and Ramsey County playing by different rules in stadium bids?

Mayor R.T. Rybak's stadium plan also envisions a renovated Armory as the centerpiece of Viking fans' "game-day experience."
City of Minneapolis
Mayor R.T. Rybak’s stadium plan also envisions a renovated Armory as the centerpiece of Viking fans’ “game-day experience.”

Minneapolis is playing with a far different, far less costly, set of financial rules than Ramsey County in the big effort to build a new stadium for the Vikings.

In its effort to become the Vikings’ local partner, Ramsey County believed that it would have to come up with $350 million for construction of a $1.2 billion facility in Arden Hills. The total cost of paying back those bonds over 30 years would have amounted to $674 million, or more than $20 million a year. The county had proposed to pay off those bonds with a half-cent county-wide sales tax.

On Thursday, Mayor R.T. Rybak unveiled his financing plan to the Minneapolis CityCcouncil to keep the Vikings with a new stadium on the Metrodome site.

His proposal, which was greeted by considerable skepticism from several council members, would have the city paying an average of $8.5 million annually until 2041, at a total cost of $300 million. That money would be used to pay for a portion of the new stadium’s annual operating costs.

“We don’t quite understand the Minneapolis numbers,” said a well-informed Ramsey County official who asked not to be named because he did not want to appear to be the county’s spokesman on this issue.

Why the difference?
So why this huge disparity?

Ramsey County officials are perplexed. Yet, Minneapolis officials insist they’ve been told by state officials that $8.5 million annually is enough.

A small portion of the difference is that Rybak insists that building on the Metrodome site would be $215 million cheaper than the Arden Hills site.

That, however, doesn’t come close to explaining the vast differences between what Ramsey County believes it has to come up with and what Rybak says Minneapolis needs to win the game.

But Minneapolis City Council members did not exactly treat the mayor’s proposal as a mighty triumph.

He was greeted by skepticism that sometimes bordered on hostility at Thursday’s council session.

“I don’t want to lose my temper” is how Council Member Betsy Hodges opened her remarks to the mayor.

She didn’t. But Hodges made it sharply clear she does not support the funding plan that Rybak and Council President Barb Johnson presented to a joint Senate committee earlier this week.

Council Member Lisa Goodman doesn’t support it either — unless there’s a city vote.

“I call on you to call a referendum,” Goodman said. “I don’t think the public is on your side.”

City council members express doubts
Other council members also expressed doubt. The old “Why give money to millionaires?” was a common refrain.

Rybak’s plan calls for the city to use the hospitality sales taxes it now collects to pay for the Convention Center. Those funds would be used for the local share of the stadium, plus renovation of the Target Center.  Bonds for the convention center are to be paid off in 2020.

The mayor’s main selling point is that once the convention center is paid off, the Legislature will no longer permit the city to collect the special tax. If the city doesn’t have a specified use for the tax, it will simply lose it, he said.

He also said this is “only” an extension of an existing tax, not a tax increase. The Republican-dominated Legislature has made it clear that it will not tolerate tax increases without a public referendum.

That demand has all but killed the initial Ramsey County plan, although county officials are trying to figure out new ways to come up with revenue.

Rybak was selling as hard as he could Thursday.

The mayor said renovation of the Target Center will get that facility back on the property tax roles. The $5 million a year that would mean for the city could be used to offset property taxes.

By extending the current hospitality tax, Rybak says there would be enough funds to have some operating money left over to maintain and improve the Convention Center and to renovate the Target Center.

There are all sorts of “buts” in this, beginning with the reality that in the early years of the mayor’s proposed deal, the city could not afford to pay $8.5 million.

In the early years, the hospitality tax would allow the city to contribute only $3.6 million, rising at a 3 percent annual rate until 2020 when the Convention Center would be paid off. At that point, the city’s due bill would be $9.3 million a year, rising 3 percent a year until 2041.

City Council members seemed skeptical of these numbers and also about becoming partners with the state. Legislatures, council members noted, have changed the rules of funding games in the past.

They also appeared agitated that Thursday’s session with the mayor came after the mayor and Johnson had presented it to the Senate joint committee.

“There is no city of Minneapolis position on a Vikings stadium,” Council Member Elizabeth Glidden pointed out to the mayor and Johnson.

Rybak-Johnson plan problematic
Even assuming that Minneapolis could seal the deal with the hospitality tax extension, the Rybak-Johnson plan is loaded with other issues.

There is, for example, the delicate matter of a city charter. In the midst of the public debate over funding of a baseball park, Minneapolis residents overwhelmingly supported a charter amendment that limits the city to spending no more than $10 million total for sports facilities without a citywide referendum.

Rybak and Johnson suggested to state senators 10 days ago that the Legislature would have to waive that portion of the charter for the city to be a player in the Vikings stadium deal.

Given that current legislators have made it clear that there should be no tax increases without a referendum, it seems unlikely they’d suddenly be willing to waive referendum rights Minneapolis voters so clearly wanted just a few years ago.

There are other weaknesses to the proposal as well.

City council members do share Rybak’s belief that the Metrodome is the best site for a stadium, but they just don’t want to put city money into it.

That site would force the Vikings to play at least two years in the University of Minnesota’s stadium. Such a move, the team has said, would cost the team $12 million a year.

Beyond that, a major reason the Vikings want to make the move to Arden Hills is to “enhance the game-day experience for the fans.” That experience would give fans a chance to return to a time of full-fledged tail-gating. And yes, that experience would also give the Vikings a chance to collect large amounts of money from parking more than 20,000 cars on lots they would control on game days.

Rybak didn’t delve into charter amendment issues during Thursday’s session. That discussion, the mayor and council members agreed, are worthy of a separate meeting.

But he has come up with a plan to offer a “new form of game-day experience.” He says that private interests could turn the nearby Armory into some sort of pre- and post-game hall for Vikings fans.

Presumably, this hall would be filled with music and food vendors. But it’s far from clear how this would benefit the Vikings’ bottom-line experience, which is what this whole stadium issue is about.

Minneapolis situation still unclear
The only thing that’s clear to date is that nothing is clear.

There are at least some Hennepin County commissioners who are watching this unfold — and there’s still a chance, perhaps even a likelihood, that the county will become a player.

But county officials — and many business types in downtown Minneapolis — have indicated they are more interested in developing a stadium near Target Field.

The mayor says no site has been ruled out yet but that the Metrodome is his preferred site — mostly, it seems, because it would be the least costly.

Meantime, Ramsey County officials are scrambling to figure out just what’s expected of the county and what funding sources state legislators would allow them to use for the stadium project.

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.

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Comments (8)

  1. Submitted by David Greene on 12/09/2011 - 10:58 am.

    The purpose of the Armory proposal is to call the Vikings on their B.S. They don’t care about the gameday experience. They care about parking revenue and the ability to leverage public subsidy to develop around the stadium.

    It’s quite astute of the mayor to put out this plan with a specific gameday experience proposal. They’ve just cornered the Vikings into publicly admitting the gameday experience isn’t all that important to them.

  2. Submitted by James Olson on 12/09/2011 - 11:50 am.

    Rybak’s Armory proposal reeks of desperation. Tailgating is what Vikings fans want: open air, outdoor grilling of food they’ve prepared, near their cars and trucks and campers, tossing the football around, and enjoying the company of other tailgaters. Not some homogenized mass-market indoor ‘experience’ in that gloomy barn.

  3. Submitted by Fritz Dahmus on 12/09/2011 - 12:08 pm.

    Doug Grow,

    Do you know why TIF financing for the Arden Hill site is not an option? Or is it?

  4. Submitted by Matt Pogatshnik on 12/09/2011 - 01:40 pm.

    I don’t know: I bet a person could do a pretty cool job of opening up that Armory and doing a re-design/expansion that would combine a modern getting-drunk-before-a-sporting-event experience with references to the building’s history. Anything has to be better than filling that nice Art Deco building with cars.

  5. Submitted by Brian Marshall on 12/09/2011 - 02:22 pm.

    After the expenditure of multiple billions of dollars for mass transit in the Metro Area over the last 10 or 20 years, it is financial misfeasance for any politician in the Twin Cities to support paying any amount of public funds for a new Vikings Stadium in Arden Hills.

  6. Submitted by Brian Simon on 12/09/2011 - 02:57 pm.

    $8.5 million per year to pay off bonds? Why can’t Zygi afford that?

  7. Submitted by Bernice Vetsch on 12/09/2011 - 03:49 pm.

    How about tailgating in the park-and-ride lots that serve fabs riding to games (at the Dome) on light rail?

    This morning I read a StarTribune piece on the Legacy Fund. Out of 80 reader comments, 70 or so were extremely resentful of any arts or cultural/historical group receiving money that should go to the things people actually like, like football (“the people” meaning the commenters).

    Some commenters portrayed the arts as a waste of money and did not contribute to the state the way pro sports team did. So I checked.

    There was no money figure available to indicate the economic impact, but the number of persons employed in Minnesota in pro sports was 404 (in roughly 2007-9).

    A 2006 (or later) report from Minnesota Citizens for the Arts notes that 22,095 persons work in the arts or arts-related businesses. The economic impact was:

    $352,681,956 from audiences
    485,845,715 from organizations
    ____________
    $835,527,689 total

    The government’s return on investment was $11 for every dollar invested.

    Can Zygi match the arts? I don’t think so.

  8. Submitted by William Pappas on 12/09/2011 - 06:17 pm.

    Is the armory really figuring in all this? Is that worth it? Certainly the road infrastructure required on 10, 694, 96 and 35W will be massive. Meanwhile everything is right there in Minneapolis, including LRT and commuter rail. If this is all about keeping the cost down for the public then Minneapolis is the place. Personally, knowing that developers could finance and build this stadium and make money, I don’t feel the public should be providing any financing or construction money. As long as republicans are disinvesting in education and transportation infrastructure while refusing any new revenue options, there should certainly be no investments in sports franchises by the public.

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