St. Paul prepared to commit $18 million to infrastructure improvements for soccer stadium

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The City of St. Paul will commit to infrastructure improvements totaling $18.4 million to secure a new Major League Soccer stadium for the Midway area, according to documents and contracts prepared for city council approval next week.

The series of agreements — covering nearly 150 pages — sets the terms for the city’s lease of the bus barn site from the Met Council, the development agreement between the city and team as well as an agreement detailing the terms of use of the stadium itself.

As previously announced, the team would pay all costs of construction and operation of the stadium before giving the facility to the city. It will also purchase or lease some land from the owners of the adjacent shopping center and turn that over to the city as well. It will make annual rent payments to the city that will match the amount the city will pay to the Met Council for its long-term lease of the bus barn — $556,623.96 per year.

What is new in these documents is the scope and cost of the city’s commitment to infrastructure. City officials have said that it intended to build the streets, sidewalks and utilities necessary to redevelop the bus and and RK Midway shopping center property. That intent predates the stadium proposal.

But these agreements identify the projects and price tags:

• Plaza areas: $2 million

• Promenade: $762,269

• Sidewalks: $1.38 million

• Streets: $1 million

• Lighting: $1.16 million

• Landscaping: $921,000

• Sanitary sewers: $1.28 million

• Storm sewers: $3.07 million

• Water: $1.5 million

• Utility relocation: $1.4 million

• Parking: $420,000

• Design and testing: $1.14 million

These projects, along with so-called “soft costs” and the city’s commitment to put up $1.5 million of the Met Council’s estimated environmental remediation budget of $4.5 million, the total reaches $18.4 million.

How to pay? According to a resolution that will be before the council Wednesday after a 5:30 p.m. public hearing, the city hopes for federal, state and county grants for both the remediation and the stormwater costs. Until those grants are received, the work will be paid for via a federal revolving fund and will be administered by the St. Paul Port Authority.

But the bulk would come from the Housing and Redevelopment Authority of St. Paul which will tap into $285,000 in parking fund balances as well as balances in existing tax increment financing districts the touch on the area of the project plus procedes from the sale of the Penfield Apartments which were developed via another tax increment financing district.

Council Member Amy Brendmoen, who is also the chair of the HRA, said the parking balance must for used for parking related investments. And while the Penfield sales hasn’t yet closed, she says it is imminent and will net the TIF district between $6 and $7 million.

She thinks the overall deal is a positive for the city.

“The work that will be required on the site – there are no roads – would have been required for anything else that goes into that site,” she said. “For $16 million, we’re leveraging a private investment of $150 million for the stadium alone. For the whole site we could be looking at $550 million in taxable property.”

The city does set some limits on how much of the infrastructure it will pay for. It will cover costs of “standard” sidewalks and lighting. If the Minnesota United soccer club and the owner of the shopping center want the types of sidewalks and lighting shown this week in renderings including 15-foot-wide sidewalks, they would have to pay the additional costs.

The development agreement between the city and team owners terms the promise to lead a master development plan for all 34 acres at University Avenue between Snelling Avenue and Pascal Street and pay infrastructure costs “a material inducement for the team locate, design and  construct the stadium on the stadium site.”

What about parking?

The agreement also calls on the city to commit to providing additional parking for the project without specifying how much parking. For instance, the agreement with the team includes among city responsibilities the “grading, blacktopping, striping and curbing of any parking areas within the stadium site.” If called on by the master development plan, the city may fund parking facilities — both ramp and surface lots.

The agreements also call for the city to “identify adequate convenient parking for those attending and discounted rates at city or St. Paul Housing and Redevelopment Authority-owned parking facilities shall be negotiated.” An exhibit that would put a number on the stalls adjacent to and in proximity to the stadium is left blank, pending transportation and parking studies.

The agreements also call for joint development of the smaller green spaces to the west and east of the stadium. And it contains an intent by the various parties to cooperate in the development of large green spaces shown in stadium renderings. While the city might eventually be given the land, the areas will be designed, built and maintained by the team and RK Midway. The city would pay for basic sidewalks, bikeways, landscaping and lighting. Any upgrades, however, would be covered by the team or RK Midway.

As with the proposed Downtown East park at the new Vikings Stadium in Minneapolis, the team will have the right to exclusive use around game days and other events. One reason for eventually giving the land to the city is to satisfy recently adopted park dedication laws that require developers to either provide open space or pay fees to the city to develop park land near developments.

The agreement also calls for the city to help the team work with Met Transit to improve the light rail stations on University “to address the additional and peak traffic expected for events in the Stadium, and … identify the transit stop with the Club’s name similar to transit stops near other sports facilities in the metropolitan area.”

All of this is contingent on other agreements such as the formal signing of the franchise agreement with Major League Soccer, approval of the land lease by the Federal Transit Administration and the approval of two key tax breaks sought by the team. The first is an ongoing exemption from paying property taxes on either the land or the improvements, including the stadium. The team also wants exemption from construction sales taxes.

The deal will terminate if those breaks are not approved by the Legislature this session.

Questions for the Legislature

During a session preview Thursday, leaders did not say “no” but they did qualify any support for the tax provisions.

MinnPost photo by Briana Bierschbach

Senate Majority Leader Tom Bakk

Senate Majority Leader Tom Bakk, a Democrat from Cook, said he has told the owners and city that he doesn’t support the sales tax exemption.

“We didn’t do that for the [St. Paul] Saints stadium.” Bakk said. “I’m willing to look at a property tax exemption as long as the local units of government support it. If they are willing to give up the revenue — the city, the county and the school district — I think I’d certainly want to accommodate those local units of government.” (St. Paul finance director Todd Hurley said the Saints stadium did have construction sales taxes rebated under state law already in existence when the Legislature gave the city $25 million in bond funds for the stadium).

Bakk said there is a procedural issue, however, because the tax bill is in conference committee where it was when last year’s session ended. Usually, conference committees negotiate the terms that were in the bills passed by each house, and the soccer breaks were not in either bill. He would prefer to have the bill returned for hearings and debate rather than insert those provisions in conference committee.

“So we will have a hearing on it, but tax bills always amount to some mischief when you get them to the floor, so I think I would have to have a conversation with [Minority Leader] Senator [David] Hann if we want to get a good clean bill.”

House Speaker Kurt Daudt, a Republican from Crown, said his caucus hasn’t talked about the requests in detail.

MinnPost photo by Briana Bierschbach

Speaker Kurt Daudt

“The fact that they’re not asking for specific dollars is helpful to their quest,” Daudt said. “In the past, putting dollar amounts of general fund money into a soccer stadium, or a football stadium, or whatever, is always highly controversial.”

Gov. Mark Dayton’s press secretary Matt Swenson said this: “The Governor looks forward to reviewing the City’s requests. He also looks forward to discussing the City’s proposal with legislative leaders this session to determine whether there is legislative support for these initiatives.”

The tax exemptions would cover only the stadium and perhaps the open space, should it be given to the city. The agreements and leases would require that if some of the bus barn land is sublet to Rick Birdoff and his RK Midway ownership group, it would be subject to payments in lieu of taxes equal to what would be paid if the property was private.

The agreements would set minority and women construction workforce and business utilization goals and calls on vendors, including concession companies, to enter into labor peace agreements.

Other provisions:

• The team would keep revenue from naming agreements of the stadiums, plazas, green spaces and a “projection tower to project light and other projections” that could be part of the stadium.  

• The agreement would run for 50 years but provide an opportunity in 40 years to negotiate with the Met Council to purchase the land or extend the land lease.

• The team cannot allow use of the stadium by gun shops, vendors of adult-only materials, a pawn shop or “any so-called head shop.”

• Home games are to be played at the stadium, but the agreements do allow the team to move games to larger stadiums “for international matches and playoff and championship games.”

• The team will pay for all game-day traffic control, security and crowd control as well as all stadium personnel such as ticket takers and ushers.

• The team will meet affordable ticket goals but details of that plan are left blank in the exhibits.

• The stadium will be smoke free and the team is prohibited from selling tobacco-related advertising.

• The team will “engage in outreach” to youth sports programs.”

• The team will encourage its concessionaire “to include ethnic food from local community vendors.”

Update: This story has been updated with more financial details, to insert city comment on sales tax exemption for Saints stadium and to correct length of the agreement between team and city.

Briana Bierschbach contributed to this story.