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Legal challenge could unravel Ryan deal, city warns

Posted by: Eric Roper Updated: December 12, 2013 - 4:09 PM

A Hennepin County judge heard arguments Thursday morning regarding a last-minute legal challenge to the $400 million proposal to reshape land adjacent to the new Vikings stadium.

The lawsuit, seeking an injunction, comes just a day before the City Council is slated to vote on the development -- one of the largest in city history. Plaintiffs claim, in part, that the city is violating spending limits in the Vikings stadium legislation by spending up to $65 million on a new parking ramp and a public park.

It remained unclear Thursday morning when the judge might rule. City attorney Susan Segal said the judge indicated he would wait until the city council had voted, and possibly issue a ruling next week. Segal and her deputy stressed that any delay will sink the project.

Representatives of the city, developer Ryan Cos and the Star Tribune, which owns the land, gathered in a courtroom before judge Mel Dickstein Thursday. They were joined by the three plaintiffs: former city council president Paul Ostrow, software executive Stephanie Woodruff and planning commission member Dan Cohen. Cohen and Woodruff ran for mayor earlier this year, and Ostrow was Woodruff's campaign manager.

A central claim of the lawsuit is that by committing millions to a parking ramp required by the stadium legislation, the city is violating a $150 million stadium spending cap outlined in that bill.

Ostrow, who is also an Anoka county prosecutor, noted that the stadium bill explicitly includes parking in the definition of stadium costs. The bill requires 2,000 stalls of parking near the stadium, most of which is satisfied by the new parking ramp.

"This is critical because the cap on the state and city contributions was a very significant and integral part of this legislation," Ostrow said.

Ryan Cos. has proposed building more than 1.1 million square feet of office space, in addition to apartments and retail on the lots now owned by the Star Tribune.

Deputy City Attorney Peter Ginder argued that the parking ramp and park are necessary for that deal to happen. He said they were unrelated to the stadium legislation, despite satisfying the parking requirement.

"This is not a stadium deal. This is not a stadium parking lot, per se," Ginder said. He added: "I suggest the court does not need to look at the stadium legislation at all."

Ostrow argued that the team should be covering costs beyond what was already allocated from the public for the stadium. "The obligation to build this ramp is clearly and unambiguously the responsibility of the Minnesota Vikings," he said.

The mayor's office has pointed to another section of the stadium legislation legislation, which says the "city may make expenditures or grants for other costs incidental and necessary to further the purposes of this" legislation.

Ostrow and plaintiffs also challenged whether the city has the ability to develop a park under its charter, and whether it was appropriately using port authority powers to execute the deal. The use of port authority powers to issue the bonds reduces the number of votes necessary and bypasses the city's semi-independent board of estimate and taxation.

"There are rights that are lost, procedures that are bypassed by using the port authority," Ostrow said.

Ginder and city attorney Susan Segal stressed that the deal will crumble if there is any delay. Ryan Cos. has a purchase agreement to buy the land from the Star Tribune that expires on Dec. 27. Presumed tenant Wells Fargo has not yet made its final commitment to buy the buildings.

"This is a $400 million project. The ramifications not only to the city, but the parties that have worked for years on this, are huge," Ginder said.

They also argued that the deal was not yet ripe for consideration since the council has not yet voted. That vote is expected at the last council meeting of the year, which will occur this Friday. Seven new council members will be sworn in on Jan. 6.

Segal added, "The whole thing can and may well fall apart because of delay."

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