Final chapter of the Vikings stadium debate: How to save on debt
Like the good old days, a stadium debate is brewing at the Minnesota Capitol.
Except this time it’s not a new sports site. The discussion is about how to save money on the one that is already built – US Bank Stadium, where the Minnesota Vikings play.
This stadium bill was a huge political boost when in 2012 – after many years of trying – the Vikings managed to get the legislature to approve a plan to build a stadium worth around 1 billion dollars. The final cost was higher, although the team was responsible for anything over the original budget.
under the law, about half of the stadium was to be funded by the state – $348 million from the state and $150 million from the city of Minneapolis. The state sold bonds to help build the stadium. These 30-year bonds will reach a point next year where the state could try to prepay the debt without penalty.
There is an appetite and the money to do it.
Various sources of revenue were used to support the state’s share, the main one being electronic drawbars. They were slow to get started, but are now bringing in far more than they need to pay the annual debt. In fact, a stadium reserve account is inflated.
There is more of 200 million dollars on the account now. The balance should approach 600 million within a few years. And that’s what key lawmakers want to use for advance payments.
Senate Finance Committee Chairwoman Julie Rosen, chief architect of the 2012 stadium bill, is sponsor an invoice to pay the debt sooner.
“We have to make sure that money doesn’t come out of the stadium reserve fund. It’s not for anything other than the stadium — to pay for it,” Rosen, R-Vernon Center, said. we paid for it, everyone can breathe. Then we can look at all sorts of other issues, what to do with the excess money.
Bills pushed by Rosen and House state government finance chairman Mike Nelson would pay off the bonds by 2027, about 16 years ahead of schedule. And that translates into savings through avoided interest charges.
Nelson, DFL-Brooklyn Park, compares it to a home refinance to reduce years on a mortgage.
“It would save us money for the rest of our daily use in our household by not having that monthly mortgage payment that we would have to pay,” he said.
Finance officials say that would free up tens of millions of dollars a year or hundreds of millions over the life of the initial bond structure.
The Minnesota Department of Management and Budget is working with lawmakers but has not taken an official position. He might have the power to do so without legislation, but Rosen said passing a bill would make the intent clearer, set out a process and give buy-in to the legislature.
The Twins stadium received similar treatment. The baseball team’s public funding partner, Hennepin County, accelerate debt repayment in the hope of realizing considerable savings on interest charges.
But that doesn’t necessarily mean smooth sailing for the Vikings’ stadium debt plan.
The electronic pull tabs generate charitable tax revenue which is paid into the stadium fund. Some organizations say the state should consider lowering these tax rates if the games bring in more money than necessary. They have backers on Capitol Hill who could push for that instead of or in combination with an early win.
“I wonder if there is in this proposal the ability to provide more immediate relief to gaming charities rather than waiting five years for it to be fully earned,” said Rep. Kristin Bahner, DFL-Maple. Grove, during a hearing. on the bill last week. “I know it has been difficult over the past few years for many of these organizations with increasing operating expenses to meet their obligations and still have money for the mission to do the good work they do for our communities.”
Like Rosen, Nelson said he would prefer debt to be satisfied before competition or changes to the e-pull tab revenue stream begin.
When the Stadiums Bill was passed, lawmakers put in place a “flashing” insurance policy if proceeds from the game did not cover the necessary costs. They authorized a sports-themed lottery game and sequel tax to fill in any gaps. These would be repealed once the stadium’s debt disappeared.
There is another House hearing on the bill scheduled for Tuesday. Rosen said discussions were also taking place behind the scenes. She is retiring after this year. This gives him extra incentive to tie that loose end on one of his bills. The state’s sizable budget surplus — more than $9 billion — also means lawmakers aren’t prowling special accounts to find money to cover other expenses.
“We have a window of opportunity here,” Rosen said in an interview last week. “And we have to be responsible for that.”
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