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Stadium financing: More of the same
by Michael Khoo, Minnesota Public Radio
January 16, 2004

A stadium proposed for downtown Minneapolis would be built just west of the Target Center, which is in the foreground. (MPR Photo/William Wilcoxen)

As policymakers and state officials pore over the details of 26 stadium ideas submitted Thursday, one thread emerges bright and clear -- aside from the plans that call for new gambling revenues, all the major proposals rely heavily on increased tax dollars to build new homes for the Twins and Vikings. And, as in past years, convincing lawmakers, citizens, and businesses to accept new taxes won't be an easy sell.

St. Paul, Minn. — St. Paul's pitch for a $520 million Twins stadium relies, in part, on a 3 percent city-wide tax on bars and restaurants. The argument goes that game-day activity encourages fans to stop for dinner or drinks en route to the ballfield -- and that a new stadium would be a boost for the city's hospitality industry. The only problem is the hospitality industry isn't quite buying it. Tom Day is the vice president for government affairs at Hospitality Minnesota.

"The general baseball crowd isn't going to go a fine-dining establishment for dinner," says Day. "So for them to have to charge a 3 percent sales tax to pay for a stadium that isn't necessarily directly benefiting their customers is not fair."

Day says his organization supports the stadium drive, but he says his members will argue for spreading the tax base as widely as possible.

	Urban ballpark

St. Paul Deputy Mayor Dennis Flaherty recognizes that bar and restaurant owners are divided over the hospitality tax. But he says the recently-opened Xcel Energy Center continues to demonstrate that a pro sports franchise can invigorate a city's nightlife.

"We're not under any misconception that the overwhelming majority of bar owners support this. But we do believe that the hospitality (industry), in general, does support us. Simply because they've had an opportunity to see their business increase with hockey fans," says Flaherty.

Across the river, Hennepin County and Minneapolis are jointly proposing a menu of tax options to finance their $535 million Twins proposal. Possible targets once again include bars and restaurants countywide.

Greg Ortale is the president of the Greater Minneapolis Convention and Visitors Association, which is part of a coalition lobbying for the Minneapolis plan. Even so, Ortale says some of his members share Hospitality Minnesota's anxiety.

"Our restaurants feel that way, too, and our bars feel that way, too," says Ortale. "But they also understand what would happen if we were to lose baseball."

I have real hesitations about going to a Dairy Queen in Eden Prairie, and having a portion of a sales tax or the revenue I spend on an ice cream cone going to pay for stadium. - House Majority Leader Erik Paulsen, R-Eden Prairie

Ortale says he and his members would prefer a wider tax -- covering the entire metropolitan area, or even the state, and extending beyond the hospitality trade. But he acknowledges the wider the tax, the tougher the sell.

Already, many suburban lawmakers are chafing at the idea of taxing the entire county to support a downtown Minneapolis attraction. House Majority Leader Erik Paulsen, R-Eden Prairie, says he's reluctant to cast the tax net so widely.

"I have real hesitations about going to a Dairy Queen in Eden Prairie, and having a portion of a sales tax or the revenue I spend on an ice cream cone going to pay for stadium. Because I don't see a direct correlation or benefit," Paulsen says.

The early sniping, however, shouldn't be a major concern, says Hennepin County commissioner Mark Stenglein.

"All of them are, of course, leery of any kind of a new tax. Some are more open to it than others. It all depends on exactly what the end result is. And that's what we'll be working out in the new legislative session," says Stenglein.

But similar issues played a critical role in sinking a 2002 bid by Hennepin County. And Stenglein acknowledges the proposal hasn't changed substantially since that time. What is different, however, is a batch of new lawmakers and a new governor, who so far has taken a fairly active interest in the process.

But that doesn't make Gov. Tim Pawlenty an automatic friend of the stadium crowd. He has repeatedly said that state revenues from general sources -- the income tax, sales tax, etc. -- are not an option.

"We don't want any general money -- no general fund obligations for state bonds," says Pawlenty. "And we're looking for creative or different financing approaches. And I think we're going to find some."

Even so, Hennepin County is calling for $100 million in state assistance. Anoka County, courting the Minnesota Vikings, is seeking an unspecified amount that is likely to equal or exceed that amount. And St. Paul is asking for an interest-free loan, courtesy of the taxpayers of Minnesota.

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