Analyst: Ramsey County can afford a stadium for the Vikings

  • Article by: ROCHELLE OLSON , Star Tribune
  • Updated: May 31, 2011 - 10:16 PM

Ramsey County's AAA bond rating wouldn't be affected by $350 million in bonds for a Vikings stadium in Arden Hills.

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The proposed Vikings stadium site at Arden Hills.

Ramsey County's proposed sales tax increase would provide enough economic gusto to support $350 million in bonds for a $1 billion Vikings stadium in Arden Hills, according to a consultant's report released Tuesday.

The seven-page report from St. Paul-based Springsted Inc. allays concerns the county's finances couldn't shoulder the burden of the bonds, which would be financed by a proposed half-cent sales tax increase.

"It raises the money we thought. It does what we thought it would do," said County Commissioner Tony Bennett, one of the creators of a deal to build a Vikings stadium at the former munitions site in Arden Hills.

The proposed increase would bring in more than the necessary $22.5 million for annual debt payments. Also, the new debt wouldn't dent the county's impeccable AAA bond rating from two New York agencies, according to the report.

That revelation, however, isn't likely to change the minds of those who want a statewide tax or user fees to cover the public share of the costs.

Commission Chairwoman Victoria Reinhardt is one who remains opposed to the countywide tax. "There is a way we can do it that would be much less of a burden to Ramsey County only, especially at this time of great need," she said.

The sales tax, a dedicated means to pay back the bonds, would need to be approved by the Legislature and the county before the bonds could be sold, the report said.

The assumption behind the report's calculations is a Jan. 1, 2012, issuance date for the bonds, which now seems unlikely. The Legislature adjourned last week without voting on a stadium bill. A special session is needed to approve a state budget.

Vikings Vice President Lester Bagley said the Springsted report shows Ramsey County to be a "strong local partner."

"We've got two-thirds of the equation. We're working on the other third," he said.

In addition to Ramsey County's contribution, the team would pay $407 million and the state would pay $300 million. It hasn't been determined, however, who would pay for $131 million in nearby road upgrades that would be needed to support traffic for a stadium in Arden Hills.

Rep. Morrie Lanning, R-Moorhead, the chief House author of stadium legislation, said he and others had not yet agreed on the state's role in the proposed Ramsey County stadium. "We're not there yet," he said.

The Springsted report, requested by the County Board, estimated countywide revenue from the tax increase at $28.4 million in state fiscal year 2010 to $34.8 million in 2015.

Mayor Chris Coleman was out of the office, but his staff issued a statement calling the proposal a "bad deal" for St. Paul. He proposed last week a two-cent-per-drink tax on alcohol statewide to finance not just a Vikings stadium but facilities for other teams.

Springsted's report said that if any of the county sales tax increase were to be used for something other than stadium debt service, there is a designated hierarchy, including replenishing reserves and covering operating costs at the stadium. Hennepin County, for example, uses money from the 0.15 percent sales tax increase for Target Field bonds to help with libraries and youth activities.

The Hennepin County tax amounts to 3 cents on $20 and raises roughly $28 million a year. The Ramsey County tax would amount to 10 cents on $20.

Two New York ratings agencies, Moody's Investors Service and Standard & Poor's, recently affirmed the county's top AAA rating and said the stadium wouldn't dent that.

According to the Standard & Poor's review, dated May 20, "Although the construction of a $1 billion sports stadium in the county is uncertain, we believe that if the county followed the current proposal and issue(d) sales tax revenue bonds to fund the project, the credit quality would remain strong."

Analysts, however, made several technical assumptions in the report and warned of one in particular: Current interest rates are at "very attractive" levels for municipal borrowers with strong credit, but that can change quickly. For example, if interest rates rose 0.25 percentage points, an additional $875,000 would be needed to pay the bonds each year.

In Springsted's schedule, the bonds would be paid off Jan. 1, 2042. Adding interest and issuance costs, the county's taxpayers would pay $675 million toward the Vikings stadium.

Staff Writer Mike Kaszuba contributed to this report. Rochelle Olson • 651-735-9749 Twitter: @rochelleolson

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