03/15/2004 10:22 PM ET
Governor proposes ballpark plan
Saint Paul -- Governor Tim Pawlenty today unveiled his solution for building new baseball and football stadiums, relying on an innovative financing approach that combines team, fan and local community contributions.
"No one opportunity is the key to Minnesota 's nation-leading quality of life," said Governor Pawlenty. "It results from a variety of things, including our great schools, our great outdoors, our great cultural opportunities, a diverse economy, our friendly, hard-working and civic-minded citizens, and much more. It also includes the enjoyment and economic benefit many Minnesotans find in amateur and professional sports."
"The economics of professional sports remain a concern. However, it's clear the Twins and Vikings are not going to stay in the Metrodome much longer. As Governor, it's my job to lead efforts to solve problems. We need to make reasonable and responsible efforts to resolve our stadium dilemma. Our plan will achieve that goal while still focusing state general funds on the things that matter most, like education, health care and the environment," the Governor said.
The Governor's proposal:
Requires the teams to make substantial contributions of approximately one-third of the total project cost;
Authorizes the host communities to levy specific local taxes;
Provides a unique tax increment financing plan that will capture the growth in sales and income taxes resulting from the new stadiums and use the proceeds to help pay for the stadiums;
Uses the difference between investment earnings and bond payments to finance part of new stadium;
Requires that the state and host community to share in the gain in the value of the team resulting from the new stadiums if the team is sold;
Includes 16 specific criteria which must be met before construction can begin;
Creates a new Minnesota Stadium Authority (MSA) to negotiate the details of an agreement and to certify to the Commissioner of Finance when the criteria have been met to finance, own and operate the stadiums;
Requires final agreements be approved by the Commissioner of Finance; and
Safeguards against the "blackout" of televised home games.
The Governor's proposal requires substantial contributions from the teams, the present cash value of which will be approximately one-third of total project costs, yet to be finalized. The contributions could be in the form of up-front payments, guaranteed annual payments, the assignment of naming rights, the assignment of permanent seat licenses, or other forms of payment to be negotiated. The final amounts will be negotiated with the new Minnesota Stadium Authority.
A cornerstone of the solution will be a unique form of tax increment financing which captures increased sales and income taxes generated within a baseball stadium or within a limited football stadium district. Living up to his commitment, the Governor's plan does not use current general fund money or general fund money that would exist without the stadium.
Host communities will be given the ability to levy local taxes on items such as memorabilia sold in the stadium, tickets, hospitality and sales taxes through either a vote by the governing body or referendum.
Final negotiations on the stadium location, financing and use plan will be conducted by the MSA, which will also own the stadiums and lease them to the teams, as well as make them available for non-professional sports and other activities.
"The stadium issue has been a public policy and political Rubik's Cube for too long. It's time to lead, solve the problem, and move ahead. While our top priority remains balancing the budget, we also need to make prudent investments in maintaining our quality of life infrastructure," Governor Pawlenty said.
Governor Tim Pawlenty's Stadium Proposal
Team Contributions: The Governor is proposing that the contribution from the teams have a present cash value of approximately one-third of the total project cost. The contribution could be in the form of an up-front payment, guaranteed annual payments, assignment of guaranteed naming rights, permanent seat licenses or payments of another type to be negotiated. The exact amount will be determined by the new Minnesota Stadium Authority (MSA). The captured tax increment (described below) is not a contribution by the team for this purpose.
Local Referenda: The bill will authorize but not require potential host communities to conduct a voter referendum to authorize local taxes. The City Council or County Board may decide if a referendum shall be conducted.
Innovative New Tax Increment Financing Option: The increased collections from within a new baseball stadium or within a limited football stadium district would be captured and transferred to the MSA for the payment of principal or interest on revenue bonds issued for a new stadium(s). The actual amount of the increment will be negotiated and transferred yearly based on a certification by the Department of Revenue of the actual revenue collected from sales and income taxes previously paid in the Metrodome for baseball and football. A guarantee of the transfer in the amount necessary to cover bond payments as agreed to by the parties must be provided by the team(s). The guarantee must be in a form acceptable to the MSA. If there is more tax revenue captured than the amount negotiated, the balance goes to the general fund.
Uses the Difference between Investment Earnings and Bond Payments to Help Finance New Stadiums: Using the team's contribution, the State will use bonds to finance the debt. All or part of the upfront cash contribution from the team(s) and other money that may become available from the sale of permanent parking or seat licenses may be deposited in an interest-bearing stadium finance account created by the MSA. Proceeds from the sale of the Metrodome may be transferred to the account(s) in the future by a specific act of the Legislature. The interest earnings on the investments may be used to reduce the total cost of debt service.
Return on Community Investment Protected. The statewide and host communities will share in the gain in team value resulting from the addition of the new stadium.
Stadium Criteria. The following criteria must be met and certified by the MSA prior to the issuance of bonds or the beginning of construction:
1. A maximum total public investment toward project costs for the respective baseball and football facilities has been set and agreed to by the teams and the host communities. The teams shall assume responsibility for any and all cost overruns.
2. Leases or use agreements between the teams and the MSA have been negotiated. Teams will schedule all regular season and play-off home games at the facilities for 30 years or the term of the longest bonds. Terms for default, termination, or breach of the facility leases must also be in place. The leases or use agreements must require specific performance and may not include escape clauses or buy-out provisions.
3. A guarantee of payment of all the obligations due under the lease shall be in place in a form satisfactory to the MSA. The guarantee could be in the form of a letter of credit, personal guarantees, or other surety.
4. Bond proceeds must be used to site, design, construct, or furnish the facilities.
5. The MSA must have title to all land and air rights needed for construction and operation of the facilities.
6. The MSA must determine that all public and private funding sources for construction and operation of each stadium are committed in writing and enforceable. The committed funds must be adequate to site, design, construct, and service the debt of the respective baseball and football facilities as well as to pay for the ongoing operation and maintenance.
7. The MSA must negotiate an agreement that will prevent strikes that would halt, delay, or impede construction of the respective baseball and football facilities.
8. The MSA must have contracts executed which set construction price and completion date, which should include performance and payment bonds that cover any costs over the certified price for the facility.
9. An environmental impact statement must be approved by all appropriate regulatory entities.
10. All necessary and appropriate public infrastructures shall be financed and constructed at completion of the respective baseball and football facilities.
11. The leases or use agreements shall provide for the public to share proportionally in the increased value of the franchise due to the existence of a new facility upon sale of the team(s).
12. The leases or use agreements should include a provision for a reasonable amount of use by amateur sports and other activities.
13. The leases or use agreements should include a provision that assures affordable access to the respective professional sporting events held in these facilities.
14. The MSA is encouraged to negotiate a provision in the leases or use agreements, which provides incentives for the respective teams to increase attendance at their sporting events.
15. The MSA is authorized to negotiate a provision that avoids the blackout of televised home games.
16. The Commissioner of Finance must approve all of the documents and agreements prior to the issuance of bonds or the beginning of construction.
Creation of the Minnesota Stadium Authority. A Minnesota Stadium Authority (MSA) will be created to conduct stadium negotiations on behalf of the State of Minnesota and be solely authorized to certify to the Commissioner of Finance when criteria have been met to move forward with stadium construction. The MSA will have seven members appointed by the governor.
Wide Range of Financing Options. Professional baseball and football stadiums may be financed through a combination of team contributions, fan contributions, host community revenues, and new form of tax increment financing that would allow the increase in sales and income tax collections within the stadium or football stadium district itself to be captured for financing the stadium.
Recommended Potential Financing Sources:
Site Selection: MSA will be empowered to select final baseball and football sites. Two sites have been found viable for construction of a new professional baseball stadium (Hennepin County/City of Minneapolis and City of St. Paul). Two sites have been found viable for construction of a new professional football stadium (Anoka County/City of Blaine and City of Eden Prairie), although additional sites may emerge.
Stadium Ownership, Operation, and Governance: MSA will own the professional baseball and football stadiums and oversee leases with the teams. The MSA shall be responsible for the overall operations of the facilities and shall contract for their management. After completion of stadium negotiations and construction, the MSA will make a recommendation to the Legislature for future governance to ensure that those entities that provided the most financial support receive adequate representation.
Deadline: MSA should be given ample but not unlimited time to negotiate stadium agreements. The authority to negotiate and enter into agreements with the teams and host communities shall sunset on December 31, 2004 for baseball and on December 31, 2006 for football.
||State of Minnesota
||Ticket taxes (local)
||Hospitality taxes (food/lodging/beverage)
||Use of tax increment financing (TIF)
||Capture of the difference between investment earnings and
bond payments to pay debt
|Payment of operating expenses for the life of the
||Personal seat licenses (PSLs)
||Sale of development rights
|Guarantee of increases in the sales and income taxes paid
within a facility
||Personal parking licenses
||Private placement bonds
||Cable television rights
||Memorabilia tax within the stadium only (local)