St. Paul and Saints team agree on plan to plug funding gap, revenue sharing

St. Paul cleared two major hurdles Thursday to building its $63 million downtown ballpark, laying out a plan to close a $8.8 million funding gap and shaking hands with the St. Paul Saints on operation costs and sharing revenues.

"This is a wonderful day. ... To have a new playground and a ballpark on St. Paul's front porch is so gratifying," Saints president and co-owner Mike Veeck said.

The tentative agreements come just as demolition has begun on the former Gillette/Diamond Products factory in the Lowertown district to make way for the ballpark.

The project is scheduled to be finished in time for opening day of the Saints' 2015 season.

On Wednesday, the City Council will be asked to approve $2 million in city funding and a $6 million loan that it hopes to repay with environmental grants from state and regional sources.

The plan has the backing of City Council President Kathy Lantry and City Council Member Dave Thune, who represents downtown.

And next month, officials said they expect to finalize a preliminary development and use agreement under which the Saints assume responsibility for operations and everyday maintenance at the ballpark.

Veeck couldn't say how much that will cost, but it's believed that annual expenses will run into the millions.

The Saints have agreed to boost its $1.5 million contribution by $1 million and also will deposit nearly $100,000 annually in a capital maintenance account to cover future improvements or needs.

The agreement also includes a revenue sharing arrangement that will give St. Paul a share in the Saints' net ballpark proceeds and what the team would make should it be sold within seven years. Mike Hahm, the city's parks and recreation director, said that specific percentages were still being ironed out.

"I believe and am suggesting that this marks the first time in Minnesota sports history that a team has agreed to share with a government partner both annual revenues and a percentage of a sale. This is a hallmark aspect of the deal," Hahm said.

"When we finalize the details and put it in legal form next month, it will be a win-win-win — good for the city, good for our partners the Saints and good for our community."

Last month, St. Paul leaders announced that the ballpark was nearly $9 million over budget.

Soil at the ballpark site needed more stabilization and cleaning than previously thought, adding $6.2 million to the cost of that job.

About $2.6 million more also was needed to make it a first-class minor league ballpark and, in Hahm's words, "a facility we're proud of."

In heralding various taxpayer protections in the deal, city officials added that they are negotiating with Ryan Companies — which is overseeing the design and construction of the ballpark — on a guaranteed maximum price for the project. That means Ryan would cover cost overruns.

The additional $2 million that St. Paul is kicking into the project would come from the annual $2.7 million that the state awarded the city last year for sports facilities, as part of the tax bill that included financing for the Minnesota Vikings stadium in Minneapolis. That state funding continues for a 20-year period.

Hahm said he was confident the city would find the remediation grants necessary to pay off its own $6 million loan, and declined to speculate on where the money would come from if the money wasn't forthcoming.

"All previous loans have been repaid. That's our track record and that's why we're structuring it this way," he said.

The city's contribution would be on top of $17 million in bonding, half of which will be paid by the Saints with rent. The balance of public funding for the ballpark comes from a $25 million state grant and assorted other funds.

The plan to cover the funding gap will go before the City Council next week. After a public hearing, the council is expected to vote on the measure as a budget amendment.

In a statement, Mayor Chris Coleman said that despite the fact that contamination at the site had boosted the city's contribution, he was "pleased that there are important safeguards in place that protect St. Paul and Minnesota taxpayers."

But Tim Holden, an independent candidate for mayor who has been hammering Coleman for engineering "a sweetheart deal" with the Saints, said that St. Paul has its priorities upside down.

"How can we neglect our city parks and rec centers and close them down when we're talking about doing something like this? It doesn't make any sense," he said.

"We're still talking about a $60 million-plus project here. There should have been a lot more private money coming from the Saints."

Kevin Duchschere • 651-222-2732.