St. Paul approves spending $93m in public cash and tax breaks toward United’s $150m soccer stadium

The St. Paul city council voted 5-2 yesterday to approve $18.4 million in spending on infrastructure for a new Minnesota United soccer stadium, as was revealed last week would be the city’s price tag. United’s owners are now just awaiting state legislative approval of a full exemption from property taxes and construction sales taxes, and then they say they’ll begin construction.

So what exactly did the St. Paul council agree to? There are a whole lot of documents, but the most interesting one is the “playing and use agreement,” which is effectively the team’s lease. It says, in short:

  • United gets all rights to the stadium and “appurtenant” areas. (Whoever wrote this document really likes the word “appurtenant.” As they should, because it’s an awesome word.)
  • United will pay the city $556,623.96 a year in rent, which is the exact amount that the city will have to pay the regional Met Council in rent for its land.
  • The city can use the stadium for high school sports and stuff, unless United doesn’t want to let it.
  • United will be responsible for all operations, maintenance, and capital improvement costs to the stadium. The city gets to maintain the sewers, because that’s why they’re paid the big bucks.

This answers most of the remaining questions about the deal, and is mostly reassuring — you could argue that the city might have wanted to shop around to see if someone else would pay more for development rights to the land, but at least the public’s costs do seem to genuinely be capped at $18 million. Plus whatever the property tax and construction sales tax break would be worth, of course — previous estimates of the property tax break have put it at around $2.4 million a year, rising over time, which would come to around $54 million in present value, while the construction sales tax break would add about another $3 million.

So the final total public subsidy looks to be $93 million — on a stadium that will cost $150 million to build. Which just goes to show that there’s a big difference between mostly reassuring and all reassuring.

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9 comments on “St. Paul approves spending $93m in public cash and tax breaks toward United’s $150m soccer stadium

  1. The property tax break is also for the associated development?

    If so that seems like a pretty big giveaway… :(

    That development will definitely use a lot of goods and services and so basically the people living there/the developers won’t be contributing to fire/police/schools/sewers while using all these things?

  2. No, the property tax exemption–continuing a a property tax exemption that’s been in place for 50 years–for that 10 acres only applies to an additional 2 acres given how the stadium design worked out. It does not apply to the other 23 acres in the area to be redeveloped.

    Neil’s representation of the deal is slanted and inaccurate. Most of his accounting is mythical. Don’t have time to pick all of it it apart right now, and maybe someone else will point out the numerical sophistry and/or errors and/or outright lies he presents, but one thing to keep in mind about this deal:

    The stadium land itself–12 acres–is tax exempt, but putting the stadium there and investing in these infrastructure improvements–many of them planned regardless of the stadium going there–will make the other 23 acres much more valuable than presently, hence increasing property tax revenue from the entire site, and surely for some of the surrounding land outside of this 35 acre plot. In addition, sales tax revenue generated from the 35 acre site+ will be much higher than it is now.

    If you want to project expenses (including hypothetical lost property tax revenue) into the future, as Neil does with his mistaken attribution of of $150 million in property value for the stadium’s 12 acres–explaining why that’s faulty reasoning and accounting is the hard part I’m not addressing right now, one also needs, if one cares to be intellectually honest and consistent, to project future tax revenue from the development.project. Neil only takes into account the expenses (and some of his numbers are mythical) and ignores the income side.

    By the by, much or most of the $18 million in infrastructure improvements would be made regardless of the stadium going there for any other major development–and was planned already, so that isn’t a public stadium subsidy and shouldn’t be part of his (terribly misguided and inaccurate for other reasons) $93 million figure.

  3. The one simple but essential point I failed to mention is that the stadium is the catalyst the is making the rest of the redevelopment to that site so grand and extensive. There would be some redevelopment of the other 25 acres, and some day of the 10 acre bus barn, but without the stadium going there, it would be far less extensive, valuable, and productive in terms of increasing property values-hence-property-tax-revenue and also in producing increased sales tax revenue. It’s all tied together; you can’t think of the stadium separate from the rest of the (yes, envisioned) redevelopment nor vice-versa.

    Without the stadium, the projected and discussed redevelopment for the (entire) site was going to be far less significant.

    This is a game-changed for this central transit and commercial node and neighborhood. This has the potential to revitalize and improve Midway beyond that specific location, a part of town that’s been in decline for 50 years and has become far less attractive to people and businesses. The light rail line there is a major component for this; without that, there;s no way the stadium would be built there.

  4. The property tax exemption numbers are neither “mythical” nor mine — they’re from an MPR analysis conducted last year, which I clearly linked to above. Yes, the land currently doesn’t pay property taxes since it’s used by Met Council for bus parking, but under normal circumstances it would go back on the property tax rolls if turned over to private use, which is the whole reason United needs to go to the legislature to ask for an exemption.

    As for a soccer stadium in use maybe 30-40 times a year at best being a “catalyst” for surrounding development, I think I’ve covered that urban legend sufficiently here, but in case you need a reminder, start here:

  5. Watched this last night on a stream. One councilmember actually did ask why the city would own a building when they were getting none of the revenue associated with it. Was fun to watch someone try to explain “So we don’t have to pay property tax” without actually saying “So we don’t have to pay property tax.” He basically said (paraphrasing) it was to get in line with the state’s position in making all of the other area arenas and stadia property-tax exempt (which I’m not sure if that’s an official state position as much as something public entities roll over and give as if it’s the starting point of any deal).

    The next best part was a representative of some of the unions (plural I believe). Who said something like: “People question job. We all know this creates jobs.” It was great. Not an appeal to any study or any actual evidence by anyone on the ‘for’ side of the ledger. Don’t think anyone actually said how much the forgone property tax would amount to.

  6. Hey stpaulite, didn’t that area just get reworked for the green line? Why would the city need to spend another $18M a few years later?

  7. Carl,

    The lot itself would need some improvements, and sadly these days no developer is going to put those in themselves when they can easily con the city into footing the bill.

    I do think stpaulite is right that the development there will be slightly better than it would have been with the stadium, and obviously will happen sooner.

    All and all this isn’t a terrible deal, I just strongly wish the city would instead make them own the stadium and just cut them a straight cash check instead. Would make the process a lot more transparent.

  8. Stpaulite,

    I guess your analysis depends on accepting the assumption that a soccer stadium–used maybe 35 days a year–actually makes land around it more valuable. I’m not sure there’s a lot of evidence for this–either via soccer stadiums or any other kind of stadium. Stadiums that are surrounded by valuable land

    There’s a “from the heavens” aspect to all this, that somehow stadiums just make developers lose their minds and say “throw in another 40 units.”

    You yourself say that the planned infrastructure improvements account for the vast majority of land value increases…which begs the question–why not just do the planned infrastructure improvements and sell the land to someone that will openly build and own something useful on the site?

    Despite your incendiary language, I wouldn’t say the piece advocates for or against–just that there is a “public cost” to tax subsidies that do amount to real money.

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