Minnesota United’s “privately financed” stadium could cost public almost $50m in tax subsidies

Minnesota United issued a press release about their new soccer stadium plans yesterday afternoon, and check it out:

In the proposal, the ownership group has committed to privately finance the construction of an outdoor stadium – with natural grass – that is accessible to all people and communities. The Minnesota United Major League Soccer franchise will be the first professional team in Minnesota to construct their stadium without a direct public subsidy.

Well, that is big news. It’s previously been assumed that United owner Bill McGuire would demand public money for his project, mostly because he kept being coy about it. But if he’s really going to fund it all himself, then — sorry, what’s that you say, St. Paul Pioneer Press?

The club asked lawmakers for a sales-tax exemption related to construction costs for materials and supplies, a property-tax exemption or relief, and limits on future taxes levied on the stadium and its operations.

Oh, so that’s what McGuire meant by no “direct” public subsidy. Tricky things, those press releases.

So how much are United’s owners actually asking for from the public? The sales-tax break, which is a common subsidy given to big construction projects, is estimated to be worth about $3 million. The value of the Vikings‘ full property tax exemption has been estimated at $25 million a year, so given that the United stadium would cost about 12% as much to build, let’s guesstimate $3 million a year, or $45 million in present value.

That leaves us with limits on future stadium taxes — or as United’s own stadium memo actually puts it, “limits on future local taxes levied on the facility and operations that do not currently exist.” That could mean a couple of things: either a promise not to add new taxes (ticket taxes, say) that would hit the MLS team in the pocketbook; or a TIF to kick back an increased taxes resulting from stadium “operations that do not currently exist.” (Damn you, misplaced modifiers.) The former wouldn’t be an additional public cost, though it would mean giving up possible future revenue; the latter could mean just about anything, depending on what local taxes they mean — property taxes would already be waived, but “limits” on sales taxes could amount to a significant chunk of change.

So, we’re looking at $48 million in tax breaks that McGuire and company are asking for, at minimum, for a $120 million stadium. The United owners have certainly identified the low-hanging fruit of the subsidy world — construction sales tax breaks and property tax exemptions are indeed very common, and tough for either legislators or the public to fully understand — but that doesn’t make them any less of a taxpayer cost than if the $48 million were delivered via suitcases full of twenties. So far top public officials’ responses have been cautiously positive about the team not asking for direct cash, but cautiously pessimistic about getting any tax breaks through the legislature in the month and change left in this session, and McGuire said he wants. Expect this to get very heated very quickly, with high odds of the can eventually being kicked down the road to 2016.