Posted: 3/16/04

Gov. Pawlenty's stadium plans provides several financing mechanisms

by T.W. Budig
ECM capitol reporter

Gov. Pawlentyís stadium proposal allows host communities to raise local taxes without a referendum ó sales tax, hospitality taxes ó while providing several financing mechanisms for building stadiums.

The governorís no-referendum-required stance extends to counties.

Pawlenty released his proposal on Monday (March 15), explaining though the stateís quality of life is dependent on many things, professional sports is one of them.

He remains troubled by the economics of sports, explained Pawlenty, yet as governor must do what he can to solve the longstanding stadium issue.

It has been a vexing problem and the odor has lingered for years, he said.

ìBottom line, I donít want to lose the Vikings and the Twins on my watch,î said Pawlenty.

Pawlentyís proposal calls for the Twins and Vikings to contribute one-third of the total stadium construction cost ó it can be an upfront payment or take other forms.

Naming rights

ìWe suggested those could be credits toward the teamsí total contribution ó the assignment of naming rights, the assignment of personal seat licenses,í said Pawlenty Chief of Staff Dan McElroy.

The exact amount of the contribution needed would be determined by the Minnesota Stadium Authority (MSA), a new seven-member body appointed by the governor.

The MSA, under Pawlentyís proposal, will own the sports stadiums and oversee leases with the teams.

Elements of Pawlentyís proposal include a tax increment finance (TIF) option which would have increased tax revenue from within new football or baseball stadium districts transferred to the MSA for payments on bonds.

McElroy said a TIF option for a Twins stadium could yield $7 million a year ó enough to finance about $110 million in bonds.

ìSo itís a significant portion of the financing. It helps fill what has been described as ëthe community hole,íî said McElroy.

The administration proposes as a benchmark tax revenue gathered at the Metrodome in calculating the TIF.

Extra dollars captured would go into the stateís general fund.

Another proposed funding method would place Twinsí and Vikingsí revenue in a stadium finance account created by the MSA.

Interest from this account could be used to retire bond debt service.

Pawlentyís proposal specifies that host communities and the state will share in the increased team values generated by a new stadium.

It also includes some 16 stadium criterias ó teams shall assume responsibility for cost overruns, for example ó the MSA must certify before the issuance of bonds.

The commissioner of finance must also approve any stadium agreements.

Novak troubled by sunset date

One feature of the proposal Anoka Countyís Steve Novak, governmental services director, found troubling was the sunset date on the MSAís authority to achieve a stadium deal.

While a baseball stadium plan has until the end of the year, Pawlenty gives the Vikings until the end of 2006.

ìWe donít find that helpful,î said Novak.

ìTime is not to our advantage. Our site is a private site that has other development opportunities,î he said.

ìDelay will not help get this done,î said Novak, otherwise reserving comment on the proposal, saying a more careful analysis is necessary before making a definite statement.

While Sen. Steve Kelley, DFL-Hopkins, who will be carrying stadium legislation in the Senate, called Pawlentyís stadium proposal ìa reasonable and responsible beginning,î the Senate proposes to await action in the House.

ìWeíll wait and perhaps hold an informational hearing,î said Senate Majority Leader Dean Johnson, DFL-Willmar.

Longtime stadium opponent Rep. Phil Krinkie, R-Shorewood, characterized much of Pawlentyís proposal as ìregurgitatedî piece of earlier proposals.

How successful the stadiums will move through the Republican House depends on whether Pawlenty throws his full force behind them, Krinkie explained.

Pawlenty plans to do some shoving, he explained.

ìIím going to use a lot of political capital to get this done,î he said.

The administration still remains open to helping the University of Minnesota with its stadium, said Pawlenty.

Pawlenty credits Anoka County proposal

While Pawlenty did not discuss specific stadium proposals in detail, he credited Anoka County for having a sound one.

ì(There) seems to be a great deal of energy and vision behind the proposal,î he said.

But Pawlenty added the dynamics for the Twinsí stadium deal are probably ìmore ripe.î

ìThe Vikings deal is a little less developed and perhaps not as ready. So we wanted to give them more time,î said Pawlenty.

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