The Star Tribune buildings on Portland Avenue and surrounding blocks, in front of the Metrodome.
Glen Stubbe, Star Tribune
$35M tax subsidy could go to Vikings stadium plaza
- Article by: ERIC ROPER
- Star Tribune
- January 11, 2013 - 11:55 AM
Minneapolis and a local developer are discussing a potential $35 million tax subsidy to build a plaza as part of a proposal to bring apartments, retail and office space next to the new Minnesota Vikings stadium, officials confirmed Thursday.
The prospect of forgoing property taxes to aid Ryan Companies' development, which the company has not yet formally requested, is one of several details that emerged about plans for four blocks of Star Tribune land on the eastern edge of downtown. Ryan hasn't purchased the land but is in exclusive negotiations with the newspaper.
In the first glimpse of proposed development near the $975 million publicly supported stadium, city e-mails obtained through an open records request show that Ryan is considering a development that includes 460 apartments and 1 million square feet of office and retail space.
City staffers projected, at Ryan's request, that local governments could potentially defer $35 million in taxes generated by the new development over 25 years -- a subsidy subject to extensive government approvals -- to help build a large plaza or green space for public use.
One of the blocks houses the Star Tribune's headquarters, while the other three are largely surface parking lots. The potential Ryan development represents the largest project to emerge surrounding the future stadium on the Metrodome site. Stadium groundbreaking is expected in October.
It remains unclear whether the potential subsidy has the support of top leaders at City Hall. It would represent one of the largest uses of the financial tool, known as tax increment financing (TIF), in Minneapolis in the past 10 years.
John Stiles, spokesman for Mayor R.T. Rybak, said the mayor knows about the $35 million analysis and is open to considering all funding options. "He's really excited about the possibility of the project. ... He's hopeful that something will come together. And if it makes sense for TIF to be part of the solution, then he'll support that," Stiles said.
Talks with Wells Fargo
The e-mails also confirm that Wells Fargo & Co., which was rumored to be eyeing the office space, is talking with Ryan about the development.
Ryan Vice President Rick Collins wrote in an e-mail to the city in early December that an upcoming meeting would include an update "on discussions with Wells Fargo." Collins also wrote "city-owned parking as 'overflow' for Wells Fargo?"
Collins declined to elaborate Thursday on Wells Fargo or the potential high-rise buildings outlined in the e-mails, calling the latter "one development scenario." He stressed that the tax savings would support a public space, rather than their "vertical development." He said it was too early to say whether their project hinges on the TIF dollars.
"What we have said is that in order to make this area attractive, it needs to have better space available for enjoyment by citizens and for prospective tenants than it has today," Collins said. Ryan asked for the analysis of what TIF might be available.
"Essentially we said if we bring private development to the area ... roughly what might that generate to help support public amenity space?" Collins said.
The city's development chief, Chuck Lutz, said the city or another public entity would end up owning the public space created by the project. He stressed that the development could be done many different ways and that the $35 million is merely a calculation based on Ryan's assumptions.
The City Council would need to approve a preliminary analysis of a TIF deal before it could be fully developed. The school board, Hennepin County and the City Council would then need to give it their stamp of approval.
Star Tribune spokesman Steve Yaeger declined to comment for this article. A Wells Fargo spokeswoman, Peggy Gunn, said in a statement that "we continually evaluate our space needs to provide the best facilities for team members and customers." She declined to elaborate further.
The city calculated the $35 million tax figure based on value estimates about the Ryan project. They estimated that the commercial and residential developments on the land could boost its value from $18 million to about $144 million.
Tax increment financing is used much more sparingly at City Hall these days than it was during the boom times of the 1980s and '90s. In recent years it has supported the development of medical supply manufacturer Coloplast's headquarters in north Minneapolis and a rehab of the former Sears building on Lake Street. Lutz said Thursday that apart from Coloplast and the Sears building, TIF has largely been used recently for housing projects.
Some of the bigger projects came during the administration of former Mayor Sharon Sayles Belton, who presided over a $62 million TIF subsidy for Ryan to build the Target store on Nicollet Mall. Rybak said during his first campaign against Sayles Belton that the city committed too much to the project.
Eric Roper • 612-673-1732 Twitter: @StribRoper
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