Target Field's opener in April 2010.
Carlos Gonzalez, Dml - Star Tribune
Dec. 29: Hennepin County taxpayers on track to pay Target Field off early
- Article by: ROCHELLE OLSON
- Star Tribune
- December 29, 2012 - 1:25 AM
Unlike the home team, Hennepin County's financing plan for Target Field is exceeding expectations.
Taking advantage of a stable revenue stream and low interest rates, the county has prepaid $31.3 million of variable-rate debt on the downtown ballpark, including an $11.4 million payment made earlier this month.
"The bottom line is promises made, promises kept," Minnesota Ballpark Authority executive director Dan Kenney said Friday. "We said this deal would work, and it has."
The excess payments made so far will save the county $53.7 million in interest expenses.
Twins President Dave St. Peter called it "a bit of good news as it relates to these types of projects, which are very controversial."
The county's progress has emerged even as questions arose about financing for the planned Vikings stadium, which will tap electronic pulltabs and bingo to cover the state's share of the $975 million venue.
Early pulltab revenues didn't meet expectations, raising speculation that other funds would be needed to cover public costs. But Minnesota Sports Facilities Authority Chairwoman Michele Kelm-Helgen said "everybody is pretty comfortable" with revenue from the gambling.
For Target Field, Hennepin County's initial plan was to make the final debt payment in 2037, but the payoff now could come five or 10 years sooner, according to county Budget and Finance Director Dave Lawless. The county issued bonds to cover the $350 million public share of the $555 million ballpark, which opened in 2010, and levied a 0.15 percent sales tax to cover its payments.
For taxpayers, an early payoff would mean an early end to the sales tax.
"We're not in love with having a tax on for as long as we can have it," said Hennepin County Board Chairman Mike Opat. "When there's the money, we pay down the debt."
County and Twins officials say several factors made it possible to accelerate the debt payments -- even though the economy unexpectedly cratered after the Legislature approved the deal in 2006. The low but broad-based sales tax is the key, they say. The 0.15 percent rate amounts to 3 cents on a $20 purchase countywide.
Even though collections fell with the economy, the fluctuation was manageable. For example, in 2006 the state projected $30.8 million in revenue from the ballpark sales tax. Actual revenue that year was $27.6million.
Conservative revenue projections also cushioned the economic fall. Yet the downturn had an upside: low interest rates. Carrying a stellar AAA bond rating, the county was able to borrow low for $75 million in variable rate bonds, currently at 0.2 percent.
Other communities haven't been so lucky. When sales tax revenues came up short, Hamilton County, Ohio, rolled back a promised property tax rebate to cover a shortfall in the fund for the Cincinnati Bengals' and Cincinnati Reds' stadiums.
Here's where the Hennepin County money goes: First, required bond payments are made, then it contributes to youth sports and library hours, as agreed in the 2006 deal. The final obligation is a $1 million annual contribution to the ballpark's capital improvement fund. Money left after those payments goes to pay down the debt early, Opat said.
Contrary to concerns voiced by opponents at the Legislature, none of that 0.15 percent sales tax revenue gets dumped into the county's general fund for other programs. "This is a specific tax for a specific use," Opat said.
Moreover, the Twins' annual rent of about $1 million goes into the capital improvements fund, which now totals about $6 million, Kenney said.
While the Twins cover routine operating and maintenance costs at Target Field, significant improvements can come from the capital fund. So far, the team has made about $8million in improvements to the ballpark but has not requested any money from the county fund. "We would like to continue to accumulate those dollars for more significant projects," St. Peter said.
The latest project is the conversion of obstructed-view right field bleacher seats into a patio. St. Peter said the transformation should be finished within a week, but already the team has sold 70 percent of the seats for the coming season. Single-game tickets will be available on Feb. 16.
After the 2013 season, St. Peter said, the team might seek help with upgrades for the 2014 All-Star Game. Under consideration is a remaking of the concessions areas, a stronger connection to a renovated Target Center, and new video boards.
Rochelle Olson • 651-925-5035 Twitter: @rochelleolson
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