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Continued: Ramsey County revises Vikings stadium financing plan

Ramsey County's third stab at a financing plan for a Minnesota Vikings stadium in Arden Hills relies on revenue from parking lot naming rights, parking fees, an admissions surcharge, stadium sales taxes and taxes collected on ancillary developments.

The proposal, projected to raise $20.6 million per year from the assortment of user fees, comes as stadium supporters rush to cobble together a workable plan for the legislative session and as funding concepts proposed by Minneapolis and state officials appear to be faltering.

Ramsey County Board Chairman Rafael Ortega's name appears on an unsigned "final draft" of a letter that is expected to be submitted to Gov. Mark Dayton and legislative sponsors Friday. Unlike previous county proposals, the new one doesn't rely on countywide sales, liquor or food tax increases.

The new Ramsey County ideas add to a stadium financing puzzle that seems to get more complicated by the day.

Only last week, the news that electronic pulltabs could generate $72 million annually to help pay the state's share of a new stadium was hailed as major progress. Officials now question whether that is enough to satisfy bond houses wary of gambling revenues.

Early Thursday, Minneapolis officials confirmed that the city's stadium funding plan may fall $55 million short.

With the state and a local funding partner expected to raise at least $650 million for a stadium, finding a way to pay for the project is proving as vexing as selecting a site.

Although the Vikings have repeatedly said they prefer the Arden Hills site, user-fee proposals such as Ramsey County's haven't been well-received elsewhere by team owners seeking to reap new revenue for their operations. Vikings Vice President Lester Bagley didn't respond to inquiries late Thursday.

The Ramsey County letter proposes capturing seven streams of revenue. In addition to the parking lot naming rights, parking fees and an admissions surcharge, the county envisions capturing sales tax growth at the stadium, business property taxes from ancillary development on the site, "stadium district user fees comparable to those collected in Minneapolis" and debt service for land acquisition and remediation of the former munitions site.

Ortega's letter didn't provide detail to the revenue ideas, but said together they would raise $618 million over the 30 years needed to pay off the $1.1 billion project.

Pulltab snag

Allowing electronic pulltabs in Minnesota isn't proving to be as easy as it once seemed. Although state revenue analysts are confident in their $72 million annual estimate, the figure does not include tax relief for the charitable gambling industry -- the group's main reason for proposing electronic pulltabs, and a reason the industry now views the plan as "problematic." Tax relief would cut into the $72 million, perhaps by as much as $12.5 million a year.

"If there were no tax reform and relief, my guess is our people would not be particularly happy," said King Wilson, executive director of Allied Charities of Minnesota, which represents charitable gambling interests.

What's more, issuing state bonds for a project that would be financed by gambling money -- generally seen as a shakier form of financing -- might require the pulltabs to generate twice as much money as what is needed.

So while Ted Mondale, Dayton's chief stadium negotiator, said that only $40 million a year may be needed initially for the state's share, there are questions about whether even $72 million would be enough -- especially if tax relief would be deducted from the proceeds. Bond houses want "up to two, or over two times the amount of revenue" needed if gambling money is used, said Myron Frans, the state revenue commissioner.

Tom Hanson, former Gov. Tim Pawlenty's chief budget official, agreed and added that "the more unreliable or unsure the payment source, the more you're going to pay in an interest rate."

Furthermore, depending on the type of bond, if the pulltabs didn't raise enough money, the state could be stuck covering a shortfall.

State officials said they are wary of estimates of electronic pulltab revenue and have already scaled back expectations. The practice of selling paper pulltabs -- allowing Minnesotans to peel off paper tabs to see their winnings in a game of chance -- has seen revenue fall sharply, with gross receipts down $400 million in the past five years.

Rep. Morrie Lanning, R-Moorhead, the chief House stadium legislation author, said providing tax relief for the charitable gambling industry is necessary but does pose a problem. Lanning said Wilson's group should be careful not to be too insistent on getting everything it wants. "Their best hope for success [is] having it tied to the stadium," he said.

The perils of financing a state project with gambling are hardly new.

In 1997, when the Legislature was considering financing a new Twins ballpark, then-state Finance Commissioner Wayne Simoneau warned in writing that gambling revenues from slot machines at Canterbury Park or lottery money "cannot be considered a dependable source of revenue for the up to thirty years that debt service may have to be paid on stadium bonds."

Shortfall in Minneapolis

In Minneapolis, the city's stadium funding plan hit an obstacle , when officials conceded that revenues fall $55 million short of goals.

Mayor R.T. Rybak's spokesman John Stiles said it's an "open question" whether the city, state or team fills the gap.

The city's multi-pronged plan would help pay for a stadium, renovate and pay down debt at the city-owned Target Center and keep the city's Convention Center afloat.

City Council Member Gary Schiff said the total gap will eventually climb to $100 million. The primary sources of revenue in the mayor's plan involve redirecting existing sales taxes that prop up the Convention Center. But the plan also includes revenues from 1,000 parking meters, which City Council President Barbara Johnson said would cost $25 during games.

Another new source of revenue would be an entertainment tax on Vikings tickets. Johnson said similar tax revenues emerged when the Twins left the Metrodome for Target Field.

Staff writer Eric Roper contributed to this report. raolson@startribune.com • 651-925-5035 mkaszuba@startribune.com • 651-925-5045

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