St. Paul announces details of United stadium deal, except for the details part

The Met Council, the regional governing body that covers the Twin Cities region, is set to vote today on authorizing a ground lease with Minnesota United on a St. Paul stadium site* with the city of St. Paul on a Minnesota United stadium site, which means it needs to actually say what will be in the lease. So: The Met Council will spend up to $4.5 million on pollution cleanup of the site! But: The Met Council will get $556,620 a year in rent payments for 52 years, which totals $29 million but in present value is closer to $10 million! And: “The stadium itself will be built by team owners and given to the city,” according to mayoral spokesperson Tonya Tennessen!

Okay, so deeding the stadium (but not control of its revenues) is actually a benefit to the team, since it would get out of paying property taxes. But we knew that was in the works — what we didn’t know was what the lease would look like. And a tradeoff of $4.5 million in cleanup costs for $10 million in rent doesn’t sound bad, though one should probably account for the opportunity cost of whatever you could get to rent it out to someone else instead as well. So if that’s all there is to the lease, then—

Council Member Jane Prince said she remains concerned that the city would be left footing the bill for millions of dollars of stadium-related infrastructure costs, such as streets and sidewalks.

Oh, right, the infrastructure, and the possible tax kickbacks from surrounding development that could be used to pay for it. That still isn’t spelled out in the lease? What’s the holdup?

Council Member Amy Brendmoen, who chairs the city’s Housing and Redevelopment Authority, said the city is working on a memorandum of understanding with the team but isn’t yet locked into anything.

“Until we get the property-tax exemption, we probably can’t execute a lease,” Brendmoen said.

So the Met Council will vote to authorize a lease, but then the state legislature has to authorize a property-tax exemption, at which point Met Council can write a lease and the city council will decide on whether to spend on infrastructure — if this all seems backwards to you, you’re not the only one.

I’d also want to know who’d be on the hook for both rent payments and actually paying off the stadium bonds if the team ceased to exist or ended up demoted to a lower-level league, which given the way MLS is handing out franchises like candy isn’t an impossible scenario, especially over a span of 52 years. So there’s a fair bit to work out yet. But hey, renderings to be unveiled today at, that’s always shiny!

*Gaaaaaah, sorry, you guys, when I read this in the early morning I completely failed to notice that the lease is between Met Council and the city, not the team. So everything above only applies to Met Council’s costs and revenues — in other words, the regional body is pretty much assured of being made whole here, but the city would have a load of unknown costs (including that $10 million worth of future rent payments) and unknown future revenue (because there’s still no lease or MOU between the city and United).

Thanks to commenter Scola for pointing this out, and I will try to get more sleep before reading lease terms in the future.

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11 comments on “St. Paul announces details of United stadium deal, except for the details part

  1. I could be misreading some of this but I think you just confounded two different government bodies.

    From what I am reading the Met Council is leasing the land to St Paul which will then be on the hook for the stadium and improvements. So, yes, when you said that’s all there is to the lease, that indeed would be all there is to the lease, as far as the Met Council is concerned.

    Then you switch to St Paul politicians discussing possible downsides to the City of St Paul. As St Paul is leasing from the Met Council, not the Met Council’s problem.

    If I’m a taxpayer in Minneapolis or Edina or Brooklyn Center or wherever, I’m probably pretty happy with the deal. It seems St Paul is owning all the downside, doing all the handouts and I just got a bunch of funding earmarked for regional transit projects. Unless I am misreading.

  2. So if Met Council works out a lease with United, what’s to stop St. Paul from saying, “Hey, great work, guys. What? Infrastructure money? Gotta run, we got a thing.”

    If St. Paul’s infrastructure spending is going to be a prerequisite of any deal, then it seems they’d need to be a party to either the lease or an MOU. If the city council just sits on the sidelines until it’s handed an infrastructure bill and told to pay it, then yeah, it’d be pretty much as you describe it.

  3. The first sentence of the Star Tribune article begins:

    “The Metropolitan Council will vote Wednesday on leasing its Midway-area bus barn site to St. Paul for redevelopment associated with the planned professional soccer stadium.”

    My reading of that is what it says. The Met Council is not working out a lease with United. They are working out a lease with St Paul.

    Further it says “The city would lease the space from the Met Council, but the team would pay the Met Council $556,620 annually for use of the site, said Todd Hurley, St. Paul’s financial services director.”

    I assume this means if for some reason St Paul “Hey, great work, guys. What? Infrastructure money? Gotta run, we got a thing.” they would then be on the hook to pay the Met Council as they are technically the lessee.

    At least that’s my reading but all those carefully worded sentences read to me as “St Paul could get screwed but that’s not Met Council’s problem.”

  4. By 2020, MLS will have added 18 teams in 15 years. Not exactly Halloween-level largesse.

    Also, I would love to see the other examples of “MLS ripping off taxpayers” that must be so much worse or more prevalent than, say, anything the NFL has done recently.

  5. There are some pretty bad ones — Chicago (Bridgeview) and Philadelphia (Chester) stand out. But I agree MLS ripping off taxpayers is nowhere near as prevalent as in other sports, if only because owners don’t have nearly the leverage since “you’ll never get a soccer team otherwise!” isn’t as big of a threat (yet, anyway).

  6. In Chicago the team had a 50/50 deal with city of Bridge view. City then wanted 100% of any profits and insisted on current deal. I agree that if the league ever got to a level of the big 3 then yes they would also be as greedy. However there are plenty of examples of unpopular NHL teams getting Hugh subsidies. Also minor league baseball teams with minor fan support also getting much more in public money . But so much hate for MLS when there’s speculation the an expansion team might get public money.

  7. On the other hand St Paul went out of their way to steal this development from their sister city so I am sure its going to cost them. However we are talking about a place where even minor league hockey teams get huge public subsidies.

  8. One other thing here, specifically around St Paul “stealing this development” and the use of TIF.

    The Twin Cities is unique in a lot of ways. The Met Council is one with only Portland having anything similar. However, the other regional structure is what’s known as the fiscal disparities system. It basically says 40% of the property tax revenues for all commercial / industrial / utilities development that has happened since 1971 goes to a common pool for the region.

    I admit I’m not an expert on the system (my total understanding comes from reading Myron Orfield’s books) but it seems TIF doesn’t exempt the properties from the fiscal disparity system. Therefore TIF would only impact the local share of the taxes after the region already took their cut.

    The whole thing is funny as one of the purposes of the fiscal disparities act was to discourage cities from competing against one another for commercial/industrial development. So just like St Paul is on the hook but Met Council gets paid, St Paul gives up its incremental property taxes, but Minneapolis and all the suburbs get paid 40% of them. St Paul pays substantially all the money (except perhaps a subsidy for the stadium itself being tax-exempt) and Minneapolis gets incremental transit funds, incremental property taxes, etc. That makes the idea that St Paul “stole” this from Minneapolis more than a little humorous.

  9. As a resident of South Mpls I’m glad it’s over in St. Paul. I’ll be paying off the Vikings’ stadium for however long I live in MN. I can’t afford to pay for another rich bastard’s bragging rights. I do realize state taxes will go to this, but better than adding city on top of it.

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