Minnesota Supreme Court asked to dismiss Vikings stadium bond suit

  • Article by: JANET MOORE , Star Tribune
  • Updated: January 14, 2014 - 6:06 AM

Agency wants three stadium foes to post $50 million bond to cover possible damages from delay.

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The opening of the new Vikings stadium, going up on the site of the Metrodome, is being challenged in a suit over bond sales.

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Public officials guiding work on the new Minnesota Vikings stadium Monday fired back at three Minneapolis residents seeking to derail the $1 billion dollar project.

The Minnesota Sports Facilities Authority — the body in charge of stadium construction — pointedly asked the Minnesota Supreme Court to dismiss the “frivolous” suit, that led the state to abruptly halt this week’s anticipated sale of $468 million in bonds for the stadium.

Contending that even a brief delay in the bond sale could postpone the stadium’s 2016 opening date and imperil associated downtown development plans, the authority also asked the court to require the challengers to post a $49.7 million bond to cover any losses the project suffers if the suit is unsuccessful.

MSFA Chairwoman Michele Kelm-Helgen said Monday that officials had counted on the bond sale to meet $28 million in bills due at the end of this month.

Former Minneapolis mayoral candidate Douglas Mann, his wife, Linda, and one-time city school board member David Tilsen filed the lawsuit challenging the bond sale with the state’s highest court Friday. They argue that supporters muscled through the project without a citywide vote required by the Minneapolis city charter.

When told of the nearly $50 million bond request, Mann, a registered nurse and former candidate for Minneapolis mayor, replied only after a long pause. “I haven’t been served with any papers, so I won’t have any comment until then,” he said. An earlier legal challenge he filed to thwart public funding for the stadium was thrown out by a lower-court judge.

Mann said Monday that the stadium authority’s method of doing business is akin to kiting checks. “The problem is they’re spending money that they don’t have,” he charged.

But Kelm-Helgen argued Monday that the already-tight stadium construction deadline would be disastrously blown if the bonds are not issued “very soon.” Not only would the authority’s ability to pay the general contractor and construction crews with bond proceeds be imperiled, she said so would the stadium’s 2016 opening. And the developer of a $400 million mixed-use development planned for the western flank of the stadium said that project would be put at “significant risk,” as well.

The Ryan Cos. development, which is financially intertwined with the stadium project, includes two office towers for Wells Fargo & Co., up to 400 residential units, retail shops, a public park and a parking ramp on a five-block swath now owned by the Star Tribune. The ramp will be used by up to 5,000 Wells Fargo employees and stadium-goers, and will be owned by the stadium authority — which is on the hook to contribute $7.7 million from state bond proceeds by Jan. 24.

“This is a real threat to the viability of our Downtown East project,” said Rick Collins, Ryan’s vice president of development.

Another key parcel in play is the Downtown East light-rail station, which sits atop a 455-space parking garage. After a separate legal battle last fall, the authority agreed to pay the property owners $17.1 million, also with bond proceeds. That deal is expected to close Jan. 23.

Philip Jaffe, one of the transit property owners, said he’s hopeful the bond sale will go through so the sale of his land will, too. “We have a purchase agreement, and I’m optimistic [Kelm-Helgen’s] team will work it out,” he said.

Both of these parcels are needed for the authority to meet its legislative mandate to provide 2,000 parking spaces within a block of the stadium, connected by skyways or tunnel. “Without that connection, a significantly detrimental effect could arise in the stadium’s ability to attract and host major national and international events,” the authority’s motion contends. The stadium is already in the running to host the 2018 Super Bowl.

The Vikings, who declined to comment Sunday and Monday, have put up $50 million for stadium work, and about $14 million of that amount remains unspent. When asked Monday if the Wilf family that owns the team would provide further bridge funds in light of the legal challenge, Kelm-Helgen said “We haven’t had a conversation with them.”

Despite all the urgency, there’s no word on when the Supreme Court may hear the stadium case, said John Kostouros, spokesman for the State Court Administration.

Before the weekend events, state budget officials had been methodically preparing for the bond sale to ensure the lowest possible interest rates. Now the project costs could creep up, not only with the potential for higher interest rates, but also added administrative and legal costs, officials said.

“Ultimately, the cost of financing the stadium will be more expensive because we are not in the market in a timely manner,” said Minnesota Management & Budget Commissioner Jim Scho­walter. “We are taking on the challenge of creating a lot more legal and administrative time. That is not the message we want to be sending to the market.”

On Friday, Schowalter had been preparing to fly to New York to oversee the bond sale early this week. After numerous consultations with legal counsel, Schowalter canceled the sale Saturday afternoon and stayed in Minnesota.

Schowalter said they do not know how much more legal and administrative time will be necessary if the Supreme Court ultimately allows the bond sale to go forward.

Mann also has filed a petition with the Minnesota Court of Appeals to overturn a Hennepin County District judge’s decision on the issue last November, seeking a citywide vote on the stadium agreement in Minneapolis.

Mann’s Supreme Court challenge uses a new argument. Specifically, he cites Article X, Section 1 of the Minnesota Constitution. That section states: “The power of taxation shall never be surrendered, suspended or contracted away.” The language is relatively common among state constitutions nationally.

He further cites an 1864 Minnesota Supreme Court ruling, saying “that a tax cannot be imposed exclusively on any subdivision of the state, to pay an indebtedness or claim which is not peculiarly the debt of such subdivision or to raise money for any purpose not peculiarly for the benefit of such subdivision.”

In other words, a tax cannot be imposed on Minneapolis to pay for something “not peculiarly for the benefit” of Minneapolis.

 

Staff writers Baird Helgeson and Eric Roper contributed to this report. Janet Moore • 612-673-7752

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