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Stadium deal will let Minneapolis spend some hospitality tax revenue on infrastructure

After funding the Convention Center and Target Center, Mayor Rybak wants additional tax revenues used for infrastructure and then economic development.

The Minneapolis Convention Center will receive needed renovations as part of the stadium deal.

The first sign that Minneapolis will actually get to spend some of the city’s hospitality tax on streets, roads and other infrastructure came Tuesday during a budget hearing.

The hospitality tax is what will pay the city share of the new Vikings stadium.

Beginning in 2021, the state commissioner of Revenue will begin taking out yearly payments from the tax to cover the city’s $150 million share of stadium costs.

After taking out the payment, the commissioner “must,” according to the Stadium legislation, remit the remaining funds to Minneapolis, which “may expend the excess revenue to fund other capital projects of regional significance.’”

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The Convention Center and Target Center are now partially funded by the hospitality tax and will continue to receive those funds, but now there is a longer list of how that money will be spent.

Minneapolis Mayor R.T. Rybak is proposing that after the Convention Center and Target Center have been funded, “infrastructure” be the next priority on the spending list, followed by “economic development.”

Rybak is also asking for a plan to account for hospitality tax spending in budget planning. He will be asking council members to include that spending plan as part of the official 2013 budget, along with some yet-unannounced fiscal policies.

“I’m excited about it,” said Council Member Sandy Colvin Roy, who pointed out that one reason she and Council Member Kevin Reich backed Rybak’s stadium proposal was because it would give the city a source of revenue for infrastructure.

“We haven’t been able to find another source,” said Colvin Roy.

The hospitality tax is made up of a group of sales taxes that includes a 0.05 percent citywide sales tax, a 3 percent citywide entertainment tax, a 3 percent citywide lodging tax, a 3 percent downtown restaurant tax and a 3 percent downtown liquor tax.

Convention Center budget

This year “has been a challenge” in terms of attracting events and visitors, but managers of the Minneapolis Convention Center say they will end 2012 “close to our goals.”

But 2013 is apparently looking good.

“We see the economy coming back a little. We see people willing to spend money,” said Convention Center Director Jeff Johnson as he presented his 2013 budget to the City Council Ways and Means/Budget Committee.

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The annual budget for the Convention Center (which includes the Target Center budget) is $70 million, with more than half of that amount coming from the hospitality tax.

Its proposed 2013 budget represents a 3.1 percent decrease from 2012 and would require the elimination of 17 full-time-equivalent jobs and the expansion of a part-time workforce. There would be 177 full-time-equivalent workers on the 2013 payroll, compared with 208 in 2010.

“We’re doing a good job of coming in under budget,” said Johnson. “We tried to be as efficient as we possibly could.”

Johnson is predicting that 2013 could rival 2011 in terms of Convention Center events. That year, the center recorded a 60 percent occupancy rate with 433 events and 820 event days.

Despite the 2012 slowdown, the Convention Center expects to finish the year with a $350 million economic impact on Minneapolis and the region.

The new year will bring a need for repairs, including replacement of the original 23-year-old system of movable walls. Also, more than 20 original escalators are candidates for replacement.

This year, the domed copper roof is being repaired, and there are 32 new bathrooms and new landscaping in front of the building.

“We hope to draw more community activity to the Convention Center,” said Johnson, noting that discounts will be offered to community groups next year to bring more functions downtown.

And they have added 30 iPads for staff working events and security.

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“Our staff used to have big books with lots of paper,” said Johnson, adding that this approach was good to build arm strength but slow to solve problems.  “With the iPads, we can help clients immediately.”

A public hearing on the entire city budget is scheduled for Nov. 18, with City Council adoption of the budget set for Dec. 12.