Minneapolis officials want the state of Minnesota to pull from cash reserves to cover payments coming due next year on the city’s share of the $1.1 billion U.S. Bank Stadium.
Rep. Mohamud Noor, DFL-Minneapolis, said he will seek relief from the city’s first scheduled debt payment of $17 million — and then push for a longer-term discussion about restructuring the stadium’s debt to give relief to Minneapolis.
“It’s a difficult conversation,” Noor said. But the stadium belongs to all Minnesotans, not just Minneapolis, he argued. Mayor Jacob Frey said he would welcome the support and will “continue discussing details with legislators.”
In 2012, state lawmakers approved the legislation that built U.S. Bank Stadium, following difficult negotiations with the building’s primary tenant, the Vikings, who paid more than half the cost of the building. During that process, the team considered other sites in the Twin Cities — until then-Mayor R.T. Rybak devised a backloaded $150 million contribution from Minneapolis, which enticed the team to stay downtown and build on the site of the former Metrodome.
The state’s $348 million share of stadium costs is covered by electronic pulltab sales. That revenue came in slowly at first, then ignited before falling off again during the COVID-19 pandemic this year.
But pulltab sales overall have been robust enough to produce a healthy cash reserve. In May, the state projected a $66 million reserve next year in the pulltab fund.
On Tuesday, Minnesota Management and Budget will release a new budget forecast that will show how the pulltab fund has weathered the past six months.
Noor said he expects the reserve account will be healthy enough to give Minneapolis a break on its stadium debt. The state’s largest city is desperate for financial relief, coping with fallout from the death of George Floyd in police custody and the widespread civil unrest that followed, along with a big hit in sales tax revenue due to the pandemic.
“Whatever we do, we’ve got to come out of this together,” Noor said.
But the Republican state senator who chairs the Senate Finance Committee was not familiar with Noor’s proposal and did not give it a warm reception.
“I’m just kind of surprised that they’re taking this approach,” said Sen. Julie Rosen, R-Vernon Center, the lead Senate sponsor of the 2012 stadium bill. “It was a very good deal for Minneapolis.”
Of the city’s obligations under the 2012 deal, Noor said, “that was then, this is now. We’ve got a global pandemic.”
The stadium deal was structured so that Minneapolis wouldn’t have to make payments until 2021, when the city was expected to be done paying off the debt on the expansion of the convention center.
But earlier this fall, Minneapolis City Hall decided to refinance the remaining $26 million convention center debt for up to five years.
City Council President Lisa Bender said the refinancing — at a rate of less than 1% — was “a way for us to ensure that we are able to meet all of these obligations.”
City Coordinator Mark Ruff declined multiple interview requests but provided a written statement saying the city had seen an “unprecedented decrease” in sales tax revenues from the pandemic. City staff recommended delaying the convention center debt for greater “flexibility,” he said.
But Ruff warned that if sales tax revenues do not recover quickly, “revenues will need to be diverted from future capital improvements at the Convention Center to debt payments.”
In the legal notice issued with the bond refinancing offering in late September, counsel noted that Minneapolis took a $55 million hit to sales taxes this year, more than half its annual collections.
Minneapolis pays the debt services on the convention center, Target Center and U.S. Bank Stadium with a mix of hospitality sales taxes, including a half-cent sales tax, a 3 % downtown liquor tax, a 2.325 % hotel tax and a 3 % downtown restaurant tax.
The taxes have all been whacked by the pandemic. Hotels saw low occupancy rates; bars and restaurants faced multiweek shutdowns and capacity limits. The city’s daily commuting workforce has been largely absent from downtown since March.
“In the big picture, we will welcome support from the state of Minnesota in any number of areas,” Bender said.
Staff writer Jessie Van Berkel contributed to this report.