The U.S. Bank Stadium reserve fund has swelled so much that the state could pay off the bonds for the six-year-old building in the spring — 20 years ahead of schedule.
The reserve fund will hit $368 million by the end of June, according to this week's projections from Minnesota Management and Budget (MMB). The cost to pay off the debt entirely in June is an estimated $377 million, meaning the state could be debt-free on the $1.1 billion building by mid-2023.
"There's no question there's a benefit to refinancing or paying off those bonds, and if we're not going to do it with a surplus of this size, we're never going to do it," incoming DFL Assistant Senate Majority Leader Nick Frentz of North Mankato said Wednesday.
The gigantic stadium reserve — projected to top $1 billion by 2027 if untapped — was part of a healthy economic forecast released Tuesday, which also projected an overall state budget surplus of $17.6 billion.
Frentz said Democrats, who gained control of the Senate in the November election, haven't discussed the stadium issue yet as a caucus, but "there's an opportunity there that most people can see."
Republican veterans in both the House and Senate are even more enthusiastic about an early payoff.
"What a great success story," said Sen. Eric Pratt, R-Prior Lake. A payoff "would save the taxpayers a whole lot of interest. From a financial standpoint, it seems to make a lot of sense."
The stadium reserve fund has swelled despite the pandemic and related economic pressures. The account is funded by taxes on charitable gambling, including electronic pulltabs that were legalized by the Legislature and Gov. Mark Dayton in 2012 to pay for the state's share of the stadium.
When the stadium was built, the state issued almost $500 million in bonds. The Minnesota Vikings, the building's primary tenant, were responsible for the remainder of the $1.1 billion cost.
The state now makes annual debt payments of about $30 million to cover the public portion of the building, including $12 million in debt service that comes from Minneapolis hospitality taxes. Initially, the state covered the annual debt service; Minneapolis payments started last year.
As sales of both paper and electronic pulltabs have grown at a pace exceeding projections, so have state tax collections on them. Electronic pulltab sales were initially shaky, but consumers adapted and sales took flight. Sales of all pulltabs continued to soar even in 2020 when bars were shuttered for part of the year because of the pandemic.
The charitable gambling tax collections bring in more than enough revenue to cover the annual stadium debt payments. After the state's annual obligations are met, the excess remains in the reserve fund, which was created as a backup to cover the bond payments in case of a downturn.
But the state has never tapped the fund.
In the past, the Minnesota Vikings and supportive lawmakers have floated the idea of using the reserve to refinance or pay off the bonds a few years earlier than anticipated, but paying them off entirely in 2023 wasn't an option until now.
Two years ago, Gov. Tim Walz suggested capping the fund at $100 million and using the excess revenue for a slew of other programs. That proposal went nowhere.
Sen. Julie Rosen, R-Fairmont and an architect of the 2012 stadium plan, has long been a supporter of paying off the bonds early and then using some of the ongoing pulltab revenue to set up a maintenance fund for the stadium.
Rosen did not seek re-election and won't be part of the 2023 Legislature, but she calls the payoff a no-brainer. "That's something that absolutely needs to be done," she said. "It's an incredible state asset that needs to be protected financially."
Rep. Jim Nash, R-Waconia, agreed with the idea of paying off the stadium first and setting up a maintenance account for the building. "It's an asset, and assets need to be preserved," he said.
House Speaker Melissa Hortman, DFL-Brooklyn Park, was noncommittal. She said in a written statement that it would be "premature" to say which direction her caucus would go on the issue. "We should let the legislative process take its course so we can hear from the public and their elected representatives," she said.
Through a spokeswoman, Walz issued a statement saying the payoff would be "among the issues" he takes a closer look at in putting together his budget. "In addition to the surplus, the continued growth in the reserve is good news," he said.
Pratt said paying off the stadium should appeal to Walz's desire to use the surplus for one-time purposes, not ongoing expenses. "This is a perfect one-time use with long-term benefits," Pratt said.
Minnesota Vikings vice president Lester Bagley said U.S. Bank Stadium is the NFL's best. "The opportunity to pay off the stadium now would continue that success," he said, adding that the team appreciates "the state continuing to use the e-pulltabs for their intended purpose. Electronic pulltabs were created to fund the state's share of the stadium."
If the building were paid off, the question would be what happens with those charitable gambling tax revenues. The Vikings and members of the Minnesota Sports Facilities Authority (MSFA), which oversees the stadium on behalf of taxpayers, have supported the need for a maintenance fund to keep it updated.
Nash said it was a "little early" to put a number on how much should go into that fund, but that it needs to be done.
Michael Vekich, the chairman of the MSFA, declined an interview request.
