Category: Minnesota United

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.

And we have a number for St. Paul’s infrastructure costs for a new Minnesota United soccer stadium development!

The sweeping vision for the redevelopment of the Midway Shopping Center around a future Major League Soccer stadium will require new sidewalks, plaza areas, a promenade, parking, lighting, landscaping and water, storm and sanitary sewer infrastructure — in short, an $18.4 million public investment, mostly borne by the city.

That’s not nothing, but it’s also not terrible, I suppose, on a $150 million stadium. And St. Paul would have to spend something on infrastructure for any development there, so this shouldn’t necessarily be seen as a special subsidy, at least not until more information comes in.

And speaking of more information, it’d still be good to know whether the city shopped around to find a better deal from another developer for the site, plus how the city and United will split revenues and operating costs, plus whether United is guaranteeing to cover the city’s rent payments to Met Council for the site even if the team or league folds (it’s 52-year lease, stuff happens), and probably a few other items. But at least we now know the infrastructure cost, and it’s not crazy-high, so that’s better than the alternative.

The Twin Cities’ Met Council approved a lease with the city of St. Paul for Minnesota United‘s stadium land as expected yesterday, and as expected this didn’t make it any clearer how much money St. Paul is going to have to put up as part of the deal. But who cares, because we got renderings, baybee, whoooooooo!

This looks a fair bit like Red Bull New York‘s stadium in Harrison, N.J., except for the glowy part, which is supposed to be accomplished by wrapping the outer wall in polytetrafluoroethylene (i.e., Teflon), or probably Teflon-coated fiberglass, which is what’s used for translucent roofs like the one on the Houston Texans‘ Reliant Stadium and the new roof going up on Arthur Ashe Stadium at the U.S. Open in New York. The projected price tag for this has now gone up from $120 million to $150 million; given that the Harrison stadium cost $200 million six years ago without the fancy outer wrapping, this might be overly optimistic, but so long as United is paying for it without putting the city at risk of covering cost overruns … you see why it’s important to see the actual lease between the city and United now, right? Until then: Ooooh, shiny!

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 mnunitedfc.com, 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.

As St. Paul’s plan for a new MLS stadium for Minnesota United has moved forward (new renderings, kinda, here!), there has been a distinct lack of clarity about whether the city will seek to kick back tax revenues from the surrounding development to help pay for infrastructure on the site, a mechanism known as “tax increment financing” that has worked out startlingly badly for many other cities. So St. Paul councilmember Rebecca Noecker has decided to take matters into her own hands:

One St. Paul City Council member says she will introduce resolution taking a possible Tax Increment Finance District (TIF) off the table for a development planned next door to proposed soccer stadium…

“I have support on the council to take the TIF option off the table and it is really important to me that we make sure we are being good financial stewards,” Noecker said. “I have 40,000 people I represent who are counting on me to be making good use of their money.”

It’s not clear whether the anti-TIF bill will pass the council, or whether United is really counting on TIF money to help pay for its project — the financial plan hasn’t been spelled out at all beyond “don’t worry about it.” It’s way too soon to call this a roadblock to a United stadium, but there could still be some fireworks left to this debate, let’s just put it that way.

 

Notwithstanding Minnesota United‘s announced agreement with St. Paul to build a soccer stadium there as soon as everyone figures out exactly how to do that, several officials in Hennepin County are reportedly still trying to lure the team back across the river to Minneapolis with the sweet, sweet smell of public cash:

Multiple sources confirmed that Hennepin County Commissioner Mike Opat, former Hennepin County Commissioner Mark Stenglein, and businessmen Chuck Leer and Mark Oyaas discussed ideas on how to bring the new soccer stadium to downtown Minneapolis near the Farmers Market next to Target Field.

Sources said the four talked about using surplus tax money collected for the Minnesota Twins stadium as a revenue partner with the owners of the Major League Soccer (MLS) franchise.

This is the same plan that Opat and company had back in August to take money that’s currently going to libraries and youth sports and redirect it to an MLS soccer stadium. It would require votes of both the Hennepin County commission (which might happen) and the state legislature (which almost certainly won’t) to happen, so maybe if the St. Paul stadium plan ends up with huge unforeseen infrastructure costs … maybe. Anyway, it ain’t over until it’s over.

UPDATE: Asked if the group was still trying to push a Minneapolis soccer stadium plan, Stenglein replied: “Oh God, no… We lamented the fact that we didn’t get the stadium, and that’s kind of it.” So there’s that.

St. Paul city officials and Minnesota United execs made their stadium announcement on Friday as expected, and here’s what they’ve agreed on:

In front of dozens of soccer fans and business boosters, Coleman and McGuire announced a deal in principle to build a privately funded, $120 million, 19,000-seat stadium on 10 acres of vacant asphalt in St. Paul’s Midway area.

Some hoops remain, including discussions with state lawmakers over a series of proposed tax exemptions. The mayor said he had yet to pin down costs for public infrastructure improvements such as green space, parking and sidewalks.

In other words, pretty much exactly where we were in early September, only this time the two parties have held a press conference announcing where they are in negotiations. The state legislation still needs to sign off on a property tax break for the team, a lease still needs to be written, and while no one mentioned anything on Friday about kicking back property taxes from surrounding development to pay for new infrastructure, there’s been no indication that’s off the table, either.

There’s been lots of media talk about how this is a “coup” for St. Paul; honestly it’s hard to say, without knowing the details of what it’s likely to cost the city or how long United can go before threatening to move and/or demand stadium improvements. Minneapolis may not get to have the team within its city limits, but residents can still go see games across the river, and the land that would have gone to a soccer stadium is still available for another redevelopment that might be open more than a few dozen days a year, and actually pay its property taxes as Mayor Betsy Hodges has insisted. There’s even the possibility — depending on the details of what St. Paul works out with United, whenever that happens — of a win-win here, where the city with the land that’s harder to develop gets a stadium at a price it can afford, while the city where tax breaks for soccer would make no sense at all gets to let United be somebody else’s problem.

That’s assuming a soccer stadium actually helps promote other surrounding development, of course, which is an extremely dubious notion, given that it’s never happened before anywhere ever. But it’s easy to call a glass half-full when you still can’t see inside it.

 

St. Paul Mayor Chris Coleman and the owners of Minnesota United have called a press conference for 1 pm today, and if you don’t know what it’s about, you really haven’t been following:

The city’s monthslong courtship of the MLS and Minnesota United, which was awarded an MLS expansion franchise last spring, is about to be rewarded, according to an e-mail sent Thursday by St. Paul Area Chamber of Commerce President Matt Kramer to board members.

In it, Kramer wrote that Mayor Chris Coleman and United team officials plan to announce at 1 p.m. Friday that the MLS has signed off on putting a new franchise in St. Paul and that a soccer stadium will be built at University and Snelling avenues in the city’s Midway neighborhood.

Does this mean that the mayor and United have already agreed on a lease, just one week after talks began? Or just that they’re agreeing to pursue a stadium deal in St. Paul and relegate Minneapolis to the far back burner? What does this mean for the state legislature signing off on the property tax exemption United owner Bill McGuire says he wants as part of any deal? Stay tuned for 1 pm, I guess, though from past experience I’d expect more snazzy renderings and promises of economic development falling from the sky than actual financial details. There’s a first time for everything, though!

The city of St. Paul is officially opening stadium lease talks with the owners of Minnesota United, and good news, everybody! City officials have agreed not to violate state law by keeping the talks secret:

On Wednesday, the St. Paul Port Authority, the city’s economic development arm voted to strike language from a proposed agreement that had pledged to keep information related to the deal “nonpublic to the fullest extent of the law.”

Negotiators will comply with state law, which makes all government data public unless it’s specifically classified otherwise, said Louis Jambois, the port authority’s president.

“There’s always that tension, that interplay between what’s public, what’s private,” he said. “How do we get something done in the public domain, in the public realm, but protect the privacy of the folks who may want, who may have a right, to have their information stay nonpublic?”

Or as Met Council chair Adam Duininck told the Minneapolis Star Tribune: “Sometimes the lawyers just get in the way.” Somebody want to tell Kevin Johnson?

Major League Soccer officially gave its blessing to the proposed St. Paul site for a Minnesota United stadium yesterday, which of course it did, because why force one of your owners to turn down a potentially more lucrative deal just because you originally said you had eyes only for Minneapolis?

Not that MLS Don Garber put it that way, of course:

The general market is “filled with millennials,” he said. “It’s got great ethnic energy. And these are the things that have been driving MLS.”

(St. Paul, for those wondering, is two-thirds white. The largest non-white ethnicities are African-Americans, Mexicans, and Hmong, all of whom can now be proud of their “ethnic energy,” I guess.)

As United owner Bill McGuire is still insisting on tax breaks and public infrastructure spending for the site, a St. Paul stadium still isn’t necessarily a go, at least not until the state legislature takes up a property tax exemption and construction sales tax exemption in March when the legislative session starts. And while there was little interest in such legislation last year for Minneapolis, opposition seems to be softer now, whether because St. Paul’s mayor is more gung-ho about it than Minneapolis’s or just because they’ve been worn down it’s hard to say.

Also still hard to say is how much all this would cost Minnesotans, since there’s still no official funding plan (another piece could have St. Paul siphoning off local property taxes around the stadium to pay for infrastructure, via a TIF) and no one is sure what else the land could be used for or how much in public upgrades that would require. Basically, all we know now is that MLS is happy to have some sort of bidding war going between the Twin Cities, and really, the only surprise is that it took them this long to hold the press conference.