UPDATE: Mayor Betsy Hodges says proposal “may very well have merit” but wants details from team.
Hennepin County Commissioner Peter McLaughlin used a meeting of a North Loop community/business group Tuesday to say the county is deeply involved in getting a soccer stadium built near the Minneapolis Farmers Market.
McLaughlin, who was invited to speak to the group, 2020 Partners, about light rail transit projects that use the Target Field Station, decided to address soccer after a representative of the group awarded Minnesota’s Major League Soccer franchise had spoken about the status of stadium politics. In his presentation, Ralph Strangis, an attorney with Kaplan Strangis Kaplan, had mentioned that the county is involved in a work group formed by Minneapolis to look at the soccer stadium proposal.
Since the county’s involvement “had been bandied about,” McLaughlin made a pitch for political leaders to make the stadium deal happen. He also suggested ideas — some that had been made in private talks with state and local elected officials — to get around the political inaction regarding a request by the MLS franchise ownership group, led by former UnitedHealth Group CEO Bill McGuire, for some government involvement.
“This is a better deal for a stadium than any I’ve seen,” McLaughlin told members of 2020 Partners. Of the Hennepin County board, McLaughlin said: “We were enthusiastically supportive of the soccer proposal” and made suggestions to legislative leaders as to how it could come together. Those ideas, however, were rejected by the Legislature. But he said they could form the core of a new plan to get Major League Soccer to end its threats to pull the franchise.
The new plan
First, McLaughlin said the land under the stadium and the soccer-specific stadium itself would be transferred by the team owners to the Minnesota Ballpark Authority. That would mimic the ownership of all other professional sports stadiums in the region that are technically publicly owned, and would lead the way to exempting the soccer stadium from property taxes. It would also reproduce the circumstances of those stadium projects that did not pay sales taxes on construction costs.
Those two tax breaks were requested by McGuire if his owners paid the full cost of land and construction for the 18,500-seat stadium. And while McGuire initially said the stadium would be privately owned, he has said since that he is open to having it under a stadium authority.
“It’s an appropriate and understood vehicle for ownership and operation of a sports facility,” said McLaughlin, who was at the center of county efforts to get Target Field funded and built.
McLaughlin also proposed something that has been considered politically unpalatable from the start: using excess capacity from the taxes used to build Target Field for soccer. Those taxes have produced far more revenue that needed and will pay off construction bonds years early. Under Minnesota law, however, the taxes expire once the bonds are paid off.
The so-called Twins tax is a 0.15 percent sales tax collected in Hennepin County. Even after the $5 million a year that goes to county libraries, youth and sports programs and a long-term maintenance fund for the ballpark, the tax is collecting more than is needed for its debt service. So far, the county has used the excess to retire some of the $350 million in stadium bonds early. County finance staff now thinks the final bonds would be retired in 20 years or so rather than 30 — by 2027 rather than 2037.
McLaughlin said that once the team owners said they would pay all stadium construction costs privately, it meant that the Twins tax would not be looked at to pay some of those costs. But McLaughlin said a small part of that revenue could be used to pay for the infrastructure improvements around the stadium.
“There are things that need to be done over there,” he said in reference to the area west of Target Field and the county’s garbage incinerator. “There’s a lot of infrastructure that’s needed to make it a hospitable place to go to a soccer game or invest in real estate.”
He said some of the excess revenue from the Twins tax would add to money currently going to libraries and youth sports. But he said the tax would still end earlier than the 30 years in the stadium legislation.
“Instead of reducing the payments by eight years, we’d reduce them by six and a half years or seven years. And we’d have the resources — instead of using the property tax — to make some infrastructure investments in an area that hasn’t seen them in I don’t know how long.”
Any change to the tax, however, requires approval of the Minnesota Legislature. The legislation for Target Field states that once the bonds are paid off “the taxes shall terminate and shall not be re-imposed.”
Taking issue with Mayor Hodges’ position
McLaughlin acknowledged the political opposition to any deal, and said the stadium plan “hasn’t been sold properly” at the statehouse but added, “I think we can do it. We have to do it.”
McLaughlin, who’s been on the Hennepin County Board since 1991, also said he did not understand the opposition to the plan by Minneapolis Mayor Betsy Hodges. The mayor has agreed to serve on the city work group of elected officials and senior staff. But she came out opposed to any public resources going to the soccer stadium. And while she said she was not opposed if all costs were covered by the owners, she has said she thinks the team should play in other stadiums and has expressed concern that a new stadium would compete with city-owned Target Center for concerts and other events.
McLaughlin, however, said he thinks the math works for the city. The city would not receive sales tax from the new stadium but the region would benefit from what he termed the donation of the stadium to the ballpark authority. Under a proposal by City Council Member Jacob Frey, the area where the city alcohol tax would be collected would be expanded to the area around the new stadium, adding to revenue from the tax for the city.
“It’s not a giveaway, and here’s where I take great exception to the mayor’s characterization,” McLaughlin said. “I don’t get the position she’s taking in terms of the city and the long-term interests of the city.”
Hodges issued this statement on the latest stadium twist Wednesday afternoon: “The soccer stadium proposal the commissioner brought up last night has been previously presented to my office and it may very well have merit. When the team provides more detailed information, incuding operating costs and development pro formas, the city’s soccer stadium working group will be able to fully evaluate how any plan will affect Minneapolis taxpayers.”
Hodges also said she wants to “have a full conversation about a strong community benefits package.” Community benefits agreements are a relatively new concept and involve bringing members of a community where a public-private project such as a stadium has been proposed to talk about issues such as local hiring, minority contracting, environmental concerns and public access. The agreements are legally binding.
McLaughlin’s impromptu pitch for getting the soccer stadium built came after Strangis gave the group an update on the latest efforts to get the stadium built, including the recent announcement by St. Paul Mayor Chris Coleman to compete for the stadium. Coleman has met privately with McGuire about putting the stadium at a sight along I-94 near University and Snelling. MLS Deputy Commissioner Mark Abbott has said he would like to meet with St. Paul and tour the site. A visit is expected after the league finishes its All-Star festivities this week.
“The MLS liked the ownership group, like the opportunity here but is not interested in having this thing go on forever,” Strangis said. “The reality is you have to have a public-private partnership and you have to have MLS satisfied.”
With the work group meeting in Minneapolis and Coleman’s interest, “both communities are more dedicated and recognizing the imperative that something needs to get done.” But he added that, “it’s beyond the control of the ownership group as to what happens on the public side.”
Strangis said the league has not set a new deadline for stadium action. “They haven’t said July 1 is now August 1 or August 31, but they have to make a decision about Minnesota soon.”
2020 Partners was formed to advocate for development around Target Field and the Target Field Station. Its members are both representatives of businesses in the area as well as neighborhood organizations. It has been in support of the soccer project.
The group’s chair, Nick Koch, who is an associate vice president of the architecture and engineering firm HGA, asked Strangis what the group could do. Strangis suggested calling the mayor and the council. The group decided to send a resolution supporting the stadium.
“I’m enough of a regionalist that I don’t want it to go to St. Paul, but I certainly don’t want it to go to Sacramento,” Koch said.
Joan Campbell, a former Minneapolis City Council member and a current ballpark authority board member, explained the politics of the region this way: “The mayor in St. Paul has considerably more power and he can be out there in front. What we need in Minneapolis is nine votes. We need seven to get it passed and nine to override a veto.”