A unanimous Minneapolis City Council vote Tuesday approving a $97 million renovation of Target Center reignited a lingering debate about whether the deal would have been possible without the polarizing Vikings stadium legislation.
Mayor R.T. Rybak has repeatedly argued that the Vikings deal improved city finances by allowing restricted sales taxes to be spent on a renovation of the city-owned Target Center, thereby alleviating a burden on property taxpayers. Several prominent politicians have said this is false, because the city already had the power to use the largest of those taxes for Target Center improvements.
This flared up at Tuesday’s council meeting, when outgoing Council Member Diane Hofstede said it was important to relate the Target Center deal, in which the city will pay $50 million in sales taxes for the renovation, to the Vikings agreement. “Without that decision this decision would not be possible,” Hofstede said.
Council Member Lisa Goodman, who opposed the Vikings stadium deal, spoke up to make a “correction,” pointing to a letter from former council budget chair Paul Ostrow, who said the law already allowed the taxes to be used for Target Center.
“Unless you think that Council Member Ostrow is essentially a liar and everything that he said is incorrect, we had the ability to do this before,” said Goodman, who otherwise supports the Target Center deal. She said the deal was possible “due to the leadership of council President [Barbara] Johnson and the mayor that tied it together and made it more politically feasible, not as a result of the Wilfs and the Vikings deal.”
The Target Center deal, which passed the council 10-0 on Tuesday, completes a process that began with an unveiling in February 2011. The funding will improve the building’s public spaces, upgrade technology and overhaul the facade. The city, which purchased the building in the mid-1990s, is also on the hook for $50 million in ongoing capital costs.
The Timberwolves will pay $43 million for the renovation, with another $5 million coming from operator AEG.
Rybak cites the Target Center property tax savings nearly every time someone asks him about the wisdom of the Vikings stadium legislation, as well as in budget speeches. His chief negotiator on the Target Center deal, Jeremy Hanson Willis, said Tuesday that they felt the Vikings legislation was necessary for the renovation.
“It was our understanding that we did not have that authority,” Hanson Willis said. “And one of the reasons that we pursued the legislation was to clarify that exact point.”
Several taxes that currently pay for debt and operations on the convention center were committed to the Vikings stadium and Target Center. They are a 0.5 percent citywide sales tax, a 2.625 percent hotel tax and a 3 percent downtown liquor and restaurant taxes. The convention debt is slated to be paid off in 2020, but the Vikings deal locked the taxes in until 2046 to help pay for the two sports facilities.
Existing statute said that the citywide sales tax, which accounts for more than half of the revenue, could be used for city capital projects if there were excess funds. The Vikings stadium bill did extend that capability to the other taxes.
Hanson Willis said the legislation was not needed to sidestep a clause in the city’s charter requiring a referendum on major sports facility investments, based on advice from the city attorney. That is because the city owns the building.
Others have raised the tax question in the past, including state Rep. Diane Loeffler, who authored the 2009 language that supposedly gave the city that power. Rybak responded to Loeffler’s comments in 2012 that the Vikings legislation gave the city access to the excess funds earlier so that renovations could begin immediately.
“What this did allow was it allowed this mayor and this City Council to spend money that they otherwise would have to wait a few years for,” Loeffler, DFL-Minneapolis, said Tuesday.
Rybak had also claimed that the taxes, which had no expiration date, would be eliminated by the Legislature after the debt was paid. “The Legislature has never taken away a local option sales tax,” Loeffler countered. “So I don’t believe that was a real threat.”
Asked about the comments on Tuesday after a meeting with Mayor-elect Betsy Hodges, Rybak said he agreed with Hanson Willis. “We needed to do this to have access to the sales tax funds,” Rybak said. “But the last thing that this community needs is to dredge up an old argument.”