Minneapolis' slice of stadium funding could jump

Legislation ties Minneapolis' contribution to unexpected increases in sales tax revenue.

Minneapolis' contribution to a new Vikings stadium could become millions more than city officials have publicly revealed if local sales tax revenue increases faster than expected.

Mayor R.T. Rybak's administration has said the city's contribution of local sales taxes to a new stadium on the Metrodome site will amount to approximately $338 million for capital and operations over 30 years, or $675 million when including interest costs. But a provision in the stadium bill raises that figure if the local economy booms.

The city's contribution could reach $890 million if tax revenue grows by 5 percent each year for 30 years, based on a Star Tribune analysis of figures provided by the city's chief financial officer, Kevin Carpenter. In that scenario, the city would also be left with more money to spend on the convention center and economic development.

Conversely, the city's contribution could fall to $592 million if the taxes stay flat.

The variable contribution is one of many complex financial arrangements in the 86-page stadium bill winding its way through the Capitol.

That plan's future was clouded Tuesday, however, when Republicans announced a dramatically different proposal for an open-air stadium, which Rybak immediately said the city would not help fund.

But even before that development, two opponents of the stadium plan highlighted the complicated nature of the city's contribution.

"What other business or what other building gets more subsidies just because sales tax collections went up?" said City Council Member Gary Schiff.

Stadium negotiators have calculated the city's stadium contribution estimates based on a 2 percent annual growth in the four sales taxes Rybak wants to use for the stadium -- a citywide sales tax, downtown restaurant and liquor taxes and a hotel tax.

If those tax revenues increase faster, the city's contribution to stadium operations and capital reserves would rise at the same pace -- but no more than 5 percent per year. Under a separate section of the bill, growth in the taxes beyond 2 percent would also give the city extra money for economic development and send a smaller pot of funds to the state.

"It's extremely convoluted," Sen. John Marty, DFL-Roseville, said of the language regarding how much city sales tax money would go to the stadium in a given year.

Marty cited those potentially higher costs Monday as a reason to adjourn the session and restart negotiations on the stadium deal, noting it is one of many problems with the legislation.

"Every time they fudge something, it's always with the burden going on the public, not on the team," he said.

Ted Mondale, Gov. Mark Dayton's lead stadium negotiator, said the city's possible increased contribution would be good for the stadium, and would be a backstop to guard against the project's operating cost overruns.

"If the city taxes come in over 2 percent, and I think they're at 6 percent growth this year, the first million goes back to the city," he said. "But the next 2 million above that ... we get half of the next 2 million. And it's split going forward."

"We've thought a lot about this," Mondale said. "We think we're covered both for the non-inflation years and the high-inflation years" as far as having money for stadium operating cost overruns.

The mayor has called the current projections "conservative," meaning it's likely revenue could exceed 2 percent annual growth.

In 2011, the four taxes grew by 7.7 percent over 2010 revenue. The average annual growth in the last 10 years has been 2.6 percent, according to figures supplied by the mayor's office, which include a 9.9 percent drop because of the recession in 2009.

"Our history would suggest that 2 percent is a prudent and conservative projection on the sort of compounded annual basis of what those taxes have done over longer periods of time," Carpenter said.

He noted a larger city contribution to the stadium will occur only when the city itself will have more money to spend on economic development.

Eric Roper • 612-673-1732 Mike Kaszuba • 651-925-5045

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