Updated at 1:26 p.m.
Mayor R.T. Rybak's biggest selling point for last year's Vikings stadium deal came under fire Tuesday as the City Council approved a $100 million renovation of Target Center.
Rybak has repeatedly argued that the Vikings deal improved city finances by allowing restricted sales taxes to be spent on a renovation of the city-owned Target Center, thereby alleviating a burden on property taxpayers. Several prominent politicians have said this is false, because city already had the power to use the largest of those taxes for Target Center improvements.
This flared up at Tuesday's council meeting, when outgoing council member Diane Hofstede said it was important to relate the Target Center deal, in which the city will pay $50 million in sales taxes for the renovation, to the Vikings agreement. "Without that decision this decision would not be possible," Hofstede said.
Council Member Lisa Goodman, who opposed the Vikings stadium deal, spoke up to make a "correction," pointing to a letter from former council budget chair Paul Ostrow. Ostrow said the law already allowed the taxes to be used for Target Center.
“Unless you think that council member Ostrow is essentially a liar and everything that he said is incorrect, we had the ability to do this before," said Goodman, who otherwise supports the Target Center deal. She said the deal was possible "due to the leadership of council president Johnson and the mayor that tied it together and made it more politically feasible, not as a result of the … Vikings deal.”
Rybak cites the Target Center savings nearly every time someone asks him about the wisdom of the Vikings stadium legislation, not to mention budget speeches. His chief negotiator on the Target Center deal, Jeremy Hanson Willis, said Tuesday that they felt the Vikings legislation was necessary for the renovation.
“It was our understanding that we did not have that authority," Hanson Willis said. "And one of the reasons that we pursued the legislation was to clarify that exact point.”
Several taxes which currently pay for debt and operations on the convention center were committed to the Vikings stadium and Target Center. They are a .5 percent citywide sales tax, a 2.625 percent hotel tax and 3 percent downtown liquor and restaurant taxes. The convention debt is slated to be paid off in 2020, but the taxes are now locked in until 2046 to help pay for the two sports facilities.
Existing statute said that the citywide sales tax, which accounts for more than half of the revenue, could be used for city capital projects. The Vikings stadium bill did extend that capability to the other taxes.
Hanson Willis said the legislation was not needed, however, to sidestep a clause in the city's charter requiring a referendum on major sports facility investments, based on advice from the city attorney. That is because the city owns the building.
Others have raised the tax question in the past, including State Rep. Diane Loeffler, who authored the 2009 language that supposedly gave the city that power. Rybak responded at the time that the Vikings legislation gave the city access to the excess funds earlier so renovations could begin immediately.
“What this did allow was it allowed this mayor and this city council to spend money that they otherwise would have to wait a few years for," Loeffler said Tuesday. "So it is kind of ironic that leaders, who have been bragging about having had to clean up and lower debt and obligations from previous leaders when they inherited office, are now doing the same thing only I think to maybe even a larger degree.”
Rybak had also claimed that the taxes, which had no expiration date, would be eliminated by the Legislature after the debt was paid. “The Legislature has never taken away a local option sales tax," Loeffler countered. "So I don’t believe that was a real threat.”
Loeffler's language, which was state law during the Vikings debate, said of the citywide sales tax: "the city may use the excess revenue in any year to fund capital projects to further residential, cultural, commercial, and economic development in both downtown Minneapolis and the Minneapolis neighborhoods." A summary (below) was presented to the City Council in 2009.
It was changed in 2012 to include the other taxes and read (underlined is new langugage): "the city may use the excess revenue in any year to fund capital projects to further residential, cultural, commercial, and economic development in both downtown Minneapolis and the Minneapolis neighborhoods, to fund other city expenditures in support of the basketball arena, other capital projects, or for other economic development, provided the city may direct excess revenue first to convention center debt, operations, capital improvements, and marketing. The city may issue bonds to fund any such projects or improvements using these taxes or any other available city resources to finance or secure the bonds."