Time for a Plan B for Vikings stadium financing?

  • Article by: RICHARD MERYHEW , Star Tribune
  • Updated: April 9, 2013 - 6:55 AM

Sluggish sales of electronic pulltabs have legislators concerned.

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Architect HKS Inc. designed preliminary schematics of a new Vikings stadium.

“We’re into this,” said Michele Kelm-Helgen, head of the public authority overseeing the $975 million downtown Minneapolis development. “We’re spending money and the project is underway.”

Kelm-Helgen’s comments came as some lawmakers, critical of the stadium financing deal, are pushing to reopen stadium financing talks and shore up the state’s commitment to the project. Among the ideas surfacing at the State Capitol are adding a tax on professional sports memorabilia and revisiting the concept of a racetrack casino, where slot machines and other electronic games would be installed at the state’s two racetracks.

“If nothing changes and the shortfall continues and they [sell] the bonds, the money will come out of the general fund,” said Sen. Sean Nienow, R-Cambridge, who plans to introduce a bill this week to put stadium construction on hold until the issue is resolved. “And three-fourths of the general fund goes to education and health care.”

Concern over the state’s financial commitment surfaces just weeks before the first schematic design is expected to be unveiled.

Kelm-Helgen said that to date, the first $50 million of project expenses, as required by the legislation, are being paid by the Vikings. But that money will probably run out by the time the team plans to break ground on the stadium, to be located on the current Metrodome site, she said.

At that point, the authority would begin tapping proceeds from the state’s bond sale, tentatively scheduled for August. Kelm-Helgen said the state does not have to start repaying bonds until spring 2014, giving Gov. Mark Dayton, her former boss, and charitable gambling officials more time to tweak and evaluate the e-pulltab and bingo financing strategy.

If revenue still fell short, “they could make a midcourse adjustment next session,” she said.

Finding a solution

The stadium financing legislation approved last spring calls for the Vikings to pay $477 million of the $975 million stadium construction cost. The city of Minneapolis is on the hook for $150 million, with the state responsible for $348 million through revenue generated from electronic pulltabs and bingo.

The state initially projected that the games would generate about $34 million in revenue by the end of 2013, but as the games have struggled, that has been cut to $1.7 million by year’s end. The number of bars installing the games has been less than one-tenth the number projected.

While Dayton has consistently said it will take more time for the games to develop momentum, Rep. Jim Davnie, DFL-Minneapolis, said Monday that he shares Nienow’s concern that a backup financing plan is needed sooner rather than later.

“I think there are an awful lot of members in both parties who are pretty motivated to find a solution this year,” he said.

Dayton staffers met late last week with the chairs of a legislative panel that oversees the stadium authority and representatives of the state’s gambling control board, lottery and revenue department to discuss the two backup funding options already approved in last year’s stadium legislation.

The first is the creation of a sports-themed lottery game that would be expected to generate at least $2.1 million annually. The second is a 10 percent tax on stadium suites, which wouldn’t kick in until after the stadium was built.

Allen Lund, executive director of Allied Charities, which represents charitable gambling groups and who attended the meeting, said Monday that much of the discussion centered on finding ways and resources to market and promote the electronic games once more of them are up and running in the next month.

Lund said the games currently are in less than 5 percent of the possible sites.

“If we can just let this play out, I think we’ll be OK,” he said. “We just believe we need to wait until we have a presence in a larger number of sites before we go and try and create excitement for what we believe is going to be a very exciting product.”

Ed Van Petten, executive director for the lottery, said that he has had several discussions with Dayton’s staff about backup funding options, but has yet to talk about anything seriously. He plans to meet with the governor’s staff again Tuesday.

Van Petten said it’s possible that a combination of games — from scratch-offs, which could raise several million dollars, to electronic poker or Keno — could be part of a solution to help bridge the funding gap.

“But my fear in doing that is we’ll cannibalize charitable gambling and jeopardize those great programs,” he said. “We’ve got to be careful we’re not taking away from other good causes.”

That said, Van Petten said that he believes electronic pulltabs and bingo games will eventually catch on, and in a big way.

“I really do think once they get the bugs worked out of those e-pulltabs, it’ll generate a lot of money,” he said.

Several other ideas, including user fees on tickets, concessions and parking, adding a tax on professional sports memorabilia and installing games at the state’s two race tracks, Running Aces and Canterbury Park in Shakopee, also have surfaced at the Capitol.

While the state’s tribal casinos have historically opposed the racino concept, Rep. Tom Hackbarth, R-Cedar, said that, if approved at both tracks, it could generate more than $100 million per year.

“It’s not taxpayer dollars, it’s voluntary contributions to folks that want to go and play slot machines,” Hackbarth said. “We’re looking for money now. ... So I think this is a good alternative to get money for the state general fund.”

 

Staff writer Jim Ragsdale contributed to this report. Richard Meryhew • 612-673-4425

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