Vikings bond sales halted at last minute under lawsuit threat

Perennial Former Minneapolis mayoral candidate Douglas Mann’s lawsuit against the Minnesota Vikings stadium project, which charges that the state’s end run around a Minneapolis law requiring voter approval of stadium spending was illegal, has been burbling along for a while now without attracting too much attention. That all changed yesterday, however, as state officials announced that today’s planned sale of bonds for the stadium would be delayed until a court can rule on Mann’s request on Friday for a “petition for a writ of prohibition.”

This wouldn’t seem like a big deal, given that demolition of the Vikings’ old stadium is already underway, presumably using either money from the team or cash raised by the state’s cigarette tax windfall, neither of which requires bonds. But the state’s head of the stadium project was still in full panic mode yesterday:

“Major problems will result from any significant delay,” Michele Kelm-Helgen, chairwoman of the Minnesota Sports Facilities Authority, said Sunday in a conference call that also included state Management and Budget Commissioner Jim Schowalter. The authority will own and operate the $1 billion stadium slated to open in July 2016 on the Metrodome site.

“We will be short $28 million if we are not able to pay our bills [without bond proceeds] … by the end of the month. Architects and Minnesota companies have done work in the past month and submitted bills due at the end of January,” said Kelm-Helgen. She said bond funds need to be available by Jan. 23 to avoid delays that could postpone the stadium opening for a year.

That sounds to me a bit like an attempt to arm-twist the courts into a quick decision — give us our money by January 23 or Vikings fans will have to spend another season watching football outdoors. If it’s legit, though, it’s just another indication of how Minnesota officials really haven’t thought through having enough money to pay off their bills at the time that they’re due. You’d think that a bill hastily cobbled together over a weekend after the NFL commissioner made vague threats about moving the team wouuld be better thought out than this.


11 comments on “Vikings bond sales halted at last minute under lawsuit threat

  1. I have a question for Neil and others on this forum. Is there a good reason why politicians end up negotiating with businessmen on business matters? By that I mean, just as an example, the Vikings ( a business) negotiating terms of a new stadium with Minnesota’s Governor and City Council members (politicians). Or another one: Chris Hansen (a businessman) negotiating with City Council and the Mayor and his staff (all politicians).
    Is there anything that would prevent the following scenario: When Chris Hansen approaches the city with a large business proposal, (in the hundreds of millions), the City Council, aware that it may not have the business acumen to negotiate a fair deal on behalf of taxpayers, hires somebody like Goldman Sachs to represent the city. That way, you have a business negotiating with another business…just like in the corporate world. And since the investment bankers at GS will be hired by the city, they will obviously need to look out for the best interest of taxpayers if they expect to win any future business.
    I am very uncomfortable with the Seattle City council, in which most of the members don’t understand the first thing about finance, sitting across the negotiating table with a hedge fund manager, who lives finance. What am I missing? Is there a precedent of a city council reaching out to private business to figure out the best deal?

  2. griffin,
    many of these cities also pay 6 figures for special consultants. Carl Hirsh was who McGinn hired for Seattle. Unfortunately, those consultants are typically charged with getting to a “yes” and usually shoot for “less crappy than other crappy deals” as their goal.

    One could argue that a better “negotiation team” like the one US Bank used (C-III) might be more in the city’s interest, but they drag things out long enough to make real public spectacles of how much money is involved.

    http://www.sacbee.com/2014/01/07/6054839/sacramento-council-votes-to-file.html
    George Speir, an attorney representing C-III, the firm negotiating on behalf of U.S. Bank, wrote in a letter to the city that the company objects to the eminent domain plan.

  3. It’s both: part low expectations by politicians, and part incompetence. Though in some cases you have to think even a half-dead corporate lawyer could do better than the guys the city sends up to the bargaining table:

    http://www.fieldofschemes.com/2010/07/26/2726/tales-of-city-mismanagement-how-the-st-louis-rams-won-their-sweetheart-lease/

  4. I would imagine that at some point someone like Wilf or Hansen might be going to the capital markets in search of financing for something. And if you’re Goldman or any of the other i-banks, you don’t want to cut yourself off from doing business with billionaires because you helped saved Minneapolis or Sacramento $50M. So whatever a city might pay would be less than the money they’d lose for getting involved.

  5. Doug Mann has been a long time candidate for Mpls school board and this was his first time as a candidate for Mayor. The overarching message of his mayoral campaign was to stop the Vikings stadium. His involvement with the schools has been about the need for a quality education for all children in Minneapolis. He has been pointing out the racism in the school system for years. He is now a hero to many for pointing out, with this second court challenge, the illegal process used to get this stadium built. The first pro se challenge resulted in a judgment by the Honorable Phillip Bush that the city had received bad legal advice from City Attorney Susan Segal regarding the stadium. At least, if the stadium gets built, there will be forever on the record the illegal procedure by officials on all levels of government to help a crooked billionaire.

  6. If the courts decide funding must go to a public vote it will be interesting to see how it turns out. On one hand the start of the demolition of the existing facility creates a situation where the team has no home should funding for the new stadium not be approved by voters. That’s a big advantage to the yes vote. On the other hand, voters might be mad and want to send a message to those who tried so hard to deny them their right to vote.

    I’ve heard low level rumblings of something similar planned for the bond hearing for the Atlanta Falcons stadium. It would be somewhat different than Minnesota in that there is no requirement for a vote but something along the lines of issuing bonds for the benefit of an individual is illegal. Whether or not that happens, the mayor who pushed through the new stadium like it was the most important project in the history of the city is now pushing for a large tax increase for city infrastructure. That will require a vote and it appears many are going to use that vote as a proxy for the stadium vote that never was. Denying the public the ability to vote on stadium funding because the political and ownership classes are worried that the public might vote no can result in a negative reaction in other unintended places.

  7. I really love this development. It gives me hope that the same thing can happen in Sacramento.

    They plan to use parking meter revenue to pay off the bond debt, but we have a law in Sacramento (and I think California) that you must use parking meter revenue only for parking and traffic expenses.

    I’d love to see a lawyer sue on those grounds.

  8. Janet: My bad on the “perennial” — I quickly read an article that described all of Mann’s runs for school board, city council, and mayor, and didn’t realize that he only ran once for council and once for mayor.

  9. Isn’t that special. It is quite possible that demolition of the Metrodome might be halted to a degree that the Ciggie tax might end up financing the rebuilding of the lot as well as new equipment for the Metrodome. Plus, the Minnesota House is going to want to start impeachment proceedings against governor Mark Dayton. This is clearly counting chickens before they are hatched.

  10. Sorry, but the local rubes already gave in to my extortion and handed me my publicly funded palace. No givin’ it back, plebes! As you well know, I have an army of shark-toothed lawyers and we grind our enemies into the dirt. This aggression will not stand, as Walter Sobchak would say.

    My stadium (you know, the one they call the “Peoples” stadium, lol) shall be built!

  11. Griffin:

    What you’ve described is exactly what they should do. No voter expects a councillor they elect to instantly master every possible skill a councillor might need (including becoming a master plumber in case city hall has a plumbing issue, for example).

    They can and should be hiring top flight professional negotiators to do their negotiating. I believe the reasons they effectively don’t do that are many, but chefjoe has captured the most important one: the city and team owner are never on equal footing.

    The city pols are generally terrified of “what might happen” if the team leaves on their watch. So their instructions to the negotiators are often “get us the best deal you can, but we have to have a deal no matter what”. A rough equivalent would be a contract buyer being sent to an auction with the instruction that their client MUST have a certain item, and the client announcing that fact publicly before the auction. He is bidding against himself from that moment forward.

    The teams (and their representatives) know only too well that the mere mention of a new arena backs the pols into a corner (albeit one they have created themselves through their inability to do what is right rather than what is popular) and that they can then negotiate ever more aggressively from a position of strength – something the city tends see the reverse of… once they have said “hey, that’d be nice”, they end up negotiating away every point under discussion. They are feckless and afraid. And the negotiators working for the teams know it.

    Unless both parties to a deal are ready to walk away on a point of negotiation, there is no prospect of a fair deal being made. It doesn’t matter whether you are buying a car, building a shopping mall, or negotiating pay and benefits for your next job… if you aren’t willing to walk away, you will never get a fair deal.

    The really irritating thing about this is that in most cases it should be the team that gets a crap deal as they have much less leverage than the cities that host them (which small midwestern town would the Yankees, Giants, Islanders, or Rangers move to if they didn’t get their way? None. Even if they leave NY proper – something the Giants did in 1976 – they aren’t dropping NY from their name…)

    The real answer to this problem is for cities to hire professional negotiators and let them run the negotiation. They are really good at it, after all.