Capitol View: March 2, 2012 Archive

Mondale, Rybak defend stadium deal

Posted at 12:00 PM on March 2, 2012 by Tim Nelson
Filed under: Vikings stadium

Two of the key negotiators of this week's deal for a new Vikings stadium in Minneapolis were taking questions again this morning, in what's commonly known as an "ed board call," the informal, wide-ranging discussions that policy makers often offer to newspaper editorial boards.

And while much of it was boiler-plate detail on the stadium deal, the pair rebutted some of the key doubts about the deal, as it's been floating around in negotiations for weeks. (That's a picture of Lucas Oil Stadium in Indianapolis, by the way, and the model planners are using for the new Minnesota version.)

Let's start with the money.

Metropolitan Sports Facility Chairman Ted Mondale said the electronic pull-tab financing mechanism for the state's $400 million share is solid, despite questions about gambling revenue projections and the bonds the state intends to sell. Mondale also seemed to be hinting that he's not worried about charitable gambling operators' complaints about their taxes:

"As it relates to the revenue estimates. We believe that the total pot in the first year will be $72 million. There will be a final negotiation when the bill goes through with the bars and the restaurants, but we think their revenue almost doubles. After their revenue doubles they want a tax break? Which would have been the easiest thing in this term sheet to negotiate. So we're thinking at a minimum the state is going to have $62 million in, and we're starting at the high 30s to be able to finance this over the period of time. So if we have to go higher for coverage, there is that revenue from the pull tabs to be able to do that. But at this point, the route is the appropriation bonds, which again, has been used before. It puts the full faith and credit of the state behind it, but we think its almost 2 to 1 on the revenue coming in, and if you look at once this is established in the out years, it's 3-to-1, 4-to-1."

It may be that Allied Charities of Minnesota has a gut-check ahead on their electronic pull-tab bill.

Mondale also explained how the deal will get around the city's charter amendment. Voters in Minneapolis capped spending on pro sports at $10 million in a 1997 referendum.

Mondale said that the city will be bonding for $548 million dollars in appropriation bonds to pay both the state and local share of a new Vikings stadium.

"The city through the local option sales taxes will pay the state back for the bonds," Mondale said. "Amending the special law, we'll have the state collecting and holding onto those dollars. So there's no need to be able to worry about the charter amendment."

The "special law" is the measure that enacted the sales taxes in Minneapolis in the first place, which, according to the state constitution, requires assent from the city which the law effects. That's likely the "city council approval" that Gov. Mark Dayton made reference to at the announcement of a deal on Thursday.

Which brings up a third point the pair addressed today: How does Minneapolis get to "Yes"?

The language in the state's Constitution is kind of intriguing:

"The Legislature may enact special laws relating to local government units, but a special law, unless otherwise provided by general law, shall become effective only after its approval by the affected unit expressed through the voters or the governing body and by such majority as the Legislature may direct."

Here's how Minneapoils Mayor R.T. Rybak sees that working:

"The Legislature will hopefully pass it, and then it will come to the city council, where as I understand it the only part of it the state requires is the Vikings part of it. Then the city has the ability to use those economic development dollars as it chooses. As I've said from the beginning, I need this all tied together as a package with Target Center, convention center and Vikings."

But he confirmed that the city may not actually wait for the Legislature to ask. He said the city is considering a non-binding resolution from the city council in support of a prospective stadium deal.

"While the city doesn't have to act until after the legislature," Rybak said, "Its clear to me that we have to demonstrate our support. So we're exploring ways to get that done."

So keep an eye on that Minneapolis City Council agenda.

Photo: Metropolitan Sports Facilities Commission.

Can charities say no to Vikings stadium deal?

Posted at 4:07 PM on March 2, 2012 by Tim Nelson (1 Comments)
Filed under: Vikings stadium

The folks that may be footing part of the bill for a Vikings stadium are raising questions about whether they'll show up for kickoff.

Allied Charities of Minnesota is the trade group for Minnesota's $1 billon charitable gambling industry. Executive director King Wilson says they paid about $37 million in taxes on their proceeds last year -- nearly half of the charities' take, in some cases, Wilson says. (That's him at left, with an electronic pull tab machine.)

The trade group originally pitched an expansion of their operations into electronic pull- tabs to put more money on their bottom line, only to find the idea appropriated to fund a Vikings stadium.

Metropolitan Sports Facilities Commission chairman Ted Mondale said today that the state could easily pay debt service on $400 million in stadium bonds with the marginal taxes on new electronic pull tabs. State revenue experts put the proceeds at $72 million a year.

Doubters have questioned that, in part because Minnesota would be the first state in the nation to implement the devices for gambling. There isn't necessarily a lot of history to base projections on. But Mondale said today the debt service would only use a little more than half that figure -- suggesting there's room for error.

But he also questioned why gambling operators should get a tax break when they're making more money.

Wilson responds thusly: He says the extra business could push charities into a higher tax bracket -- nearly 7 percent of their sales. On top of an 85 percent prize payout to keep players coming back, Wilson says there isn't enough left to cover expenses and pay anything to beneficiaries like youth sports.

"We're just not convinced, without some significant tax relief and reform that these are economically viable and that they'll work," he said. "I sent an email alert out last night, and I got several folks that got back to me, basically saying that if we don't get tax relief, we're not going to do the (electronic) pull-tabs."

But he's not backing down, either: "It appears to me to be clear that that the administration isn't open to tax relief. That's their perogative."

And it sounds like chartiable gambling operators may be begging to differ as the stadium endgame approaches at the Capitol.