Minneapolis may have to kick in another $24.5 million to a renovation of the city-owned Target Center in order to make the project a reality.
A City Council committee will weigh Tuesday whether to increase the city's contribution from $49.5 million to about $74 million. The Minnesota Timberwolves would contribute another $5 million for a team total of $49 million.
The change would simultaneously decrease the city's 20-year commitment for building improvements — once $50 million — by $30 million. But staffers said the actual costs for repairs and maintenance over that time would probably be significantly higher than the city's pledge.
The renovation would include a dramatic overhaul of the building's fortress-like exterior, as well as better technology, more VIP clubs, more accessible loading areas, extra seating capacity and improved gathering spaces.
A dramatic increase in local construction costs made the original $99 million budget impractical for achieving their goals, said Timberwolves senior vice president Ted Johnson. The new renovation budget for the 25-year-old arena would be about $129 million.
"As much as we were able to drive down and reduce costs, we still got to a point where we decided we couldn't meet the objective without new resources," Johnson said.
Council Member Lisa Goodman, a vocal critic of stadium subsidies, said the changes are worth it. The exterior renovation was among the improvements that were on the chopping block, she said.
"I don't take lightly the fact that more has to be spent. But it's not worth doing unless we do it right," said Goodman, chairwoman of the committee that will hear the proposal. "And this isn't the Cadillac plan. But to do the Yugo plan makes no sense to me. … We get one chance at a refresh. And that means you have to do all of the pieces."
In a report on the plan, city staff said the changes would mean the city is issuing less general-obligation debt since the private entities will now be responsible for their own financing. Staff also argued that putting in some of capital improvements now rather than later is more cost-effective.
As part of the agreement, the team and operator AEG — which runs nongame events like concerts — are agreeing to lease the arena for another three years, until at least 2035. That leaves more time to pay the debt, staff argued, reducing the city's annual costs.
AEG's commitment grew from $5.4 million to $5.9 million.
The city's portion of the project will be funded through a package of sales taxes that are currently paying down debt on the Minneapolis Convention Center and are committed to the Vikings stadium. They are a 0.5 percent citywide sales tax, a 2.625 percent hotel tax and 3 percent downtown liquor and restaurant taxes.
The Convention Center debt is slated to be paid off in 2020, but the taxes have been extended until 2046.
The Target Center's current loading dock is insufficient for major concerts, which are among the most profitable events at the arena. Seats are often stored outside because there is insufficient space inside.
The proposed changes are subject to approval from the City Council, which must also sign off on a maximum project budget this summer. If all goes to plan, the project would begin construction in late 2015 and finish in late 2016.