The People’s Parking Lot: City Charter Violating Vikings Stadium #wilfare

Governor Dayton likes to use the term “The People’s Stadium” to refer to the more than half a billion dollar gift to Zygi Wilf’s private business. To illustrate just how bad of a deal this is for the public, let’s look at how the treatment of one downtown block under the Vikings stadium bill violates the Minneapolis City Charter. Check out “The People’s Parking Ramp” in the red section of the StarTribune’s stadium plan infographic:

Property Parcels for New Vikings Stadium
See the parking ramp?

As I understand it, that parking ramp would hold 2,500 cars. It costs around $20,000 per car to build a parking ramp these days, so that ramp will cost around $50 million to build. Based on the breakdown of costs between public and private financing of the project, the public would spend around $25 million so Vikings VIPs can park a block closer to the stadium. Based on the city and state’s shares, the City of Minneapolis would be paying $7.9 million to build this parking ramp for Zygi.

By the way, that’s a public subsidy of $33 per parked car per game for 30 years (including pre-season games).

But, it gets worse. Zygi Wilf owns that parcel of land. Currently, Wilf pays taxes on that piece of property: $42,144.04 for 2012. Hennepin County’s property info site shows this:

Property Parcels for New Vikings Stadium

Under the terms of the current bill, that land would shift from taxable to tax-exempt. By removing that land from the tax rolls, the city’s remaining taxpayers would have to make up a $1.7 million property tax shortfall from that one parcel of land over 30 years. And, that’s based on the land NOT being developed. Taxes would clearly be higher if it was developed into to something other than the surface lot it is today (parking ramp, commercial building, residential, mixed-use, etc.).

But, it gets worse. Today, many Vikings fans park in lots or at meters owned by the city. Under the terms of the proposed Vikings stadium bill, Wilf would get to keep the parking revenues generated at the lot we helped build (and let him use tax free). If we even assume an average cost of $15/car being shifted from public parking to The People’s Parking Ramp, that’s up to $37,500 in lost parking revenue to the public per game, $375,000/yr, or $11,250,000 over 30 years (without even taking inflation into consideration).

Again, the City Charter regarding public financing for pro sports stadiums:

Section 13. – Putting Professional Sports Facility Financing Before the Voters.
The City of Minneapolis, Minneapolis Community Development Agency, or any city department, agency, commission, or board, shall use no city resources over $10 million dollars for the financing of professional sports facilities without the approval of a simple majority of the votes cast on the question, in a ballot question put to the public at the next regularly scheduled election. City resources are defined for these purposes as: Tax increment financing, bonds, loans, land purchase or procurement, land or site preparation, including necessary infrastructure such as roads, parking development, sewer and water, or other infrastructure development, general fund expenditures, sales tax or other taxes, deferred payments, interest free or below market interest rate loans, the donation or below market value sale of any city resources or holdings or any other free or below cost city services. The ballot question shall not be put before the public in a special election, in order to prevent the costs associated with special elections. (11-4-97)

$10 million is the cutoff for requiring a referendum. As I’ve shown above, the City of Minneapolis would be contributing:

– $7.9 million toward construction of The People’s Parking Ramp

– $1.7 million in lost property taxes on a parcel of valuable downtown real estate by shifting it from taxable to tax exempt.

– As much as $11.25 million in lost municipal parking revenue by giving Zygi Wilf all of the parking revenue generated at The People’s Parking Ramp (which he operates property tax free).

Even without including Minneapolis’ contribution to the stadium’s operating costs, the city’s contribution to this professional sports stadium plan is more than double the amount triggering a referendum under the City Charter.

If you add up the property tax revenue from all of the land that will become tax exempt, it triggers the City Charter. And, as shown above, how one parcel of downtown land is being treated should trigger the City Charter.

If Kevin Reich, Sandy Colvin Roy, and Don Samuels’ word is good regarding their position on the City Charter, this is a no-brainer. The city is giving away millions in property taxes, millions to build a parking ramp, and millions in municipal parking revenue. Even if you are willing to accept Rybak’s argument regarding who controls the convention center taxes, the City Charter is still violated at least twice under the terms of the current stadium plan.

16 thoughts on “The People’s Parking Lot: City Charter Violating Vikings Stadium #wilfare”

  1. Your napkin math sorta fails here.

    You mention 7.9 million in construction costs and then speculate 1.7 million lost in property and some huge figure lost in revenue.

    But you can’t include those other costs as they are not the actual cost, it’s simply 7.9 million.

    I understand you are anti-anything-viking but don’t let that cloud your logic to the point you are completely biased and unthinking.

  2. @Nate, the 30 year property tax exemption and shift in parking revenue from municipal to Wilf are clearly shifts in Minneapolis revenues to Wilf.

  3. Ed- This post is just a perfect micro of the of the macro problem with this deal. Thanks again for all your number-crunching and research on this issue.

    @Nate – If the city gives up the property taxes it currently collects on that lot AND it gives up the income from that lot, how is that not lost revenue? And, if that revenue is longer collected from the Wilfs but, instead, goes TO the Wilf’s, how is that not revenue that goes from the public to private interest?

    Secondly, Ed clearly lays out how he gets to the 7.9 million number. If anything, that’s a lowball. Somehow, the Wilfs would figure out how to have the citizens of Minneapolis shoulder even more of the costs. What’s your estimate for the construction cost?

    Finally, just because Ed is anti-this-stadium-deal, does not make Ed anti-anything-Viking. Ed’s point all along is that this deal benefits the Wilfs and the NFL at a net cost to the state of MN and Minneapolis. This has never been about the Vikings, this is about the deal. It’s about the money.

  4. @Fygar, thanks. One additional cost that I didn’t factor in was land acquisition costs. Is Wilf planning to donate the land he owns to the project, or is the public planning to buy it from him? If the public, for how much? I haven’t been able to figure that out.

  5. If one reads Ed’s posts literally, you would think that Ed should march down to Rybak’s office and tell the mayor that he is a DAMN FOOL fool for agreeing to this proposal.

    Of course, if you get hung up on a few details of just a few property locations, you also might be missing the point. Yup, we could well be subsidizing the VIP parking in exchange for buying those hugely expensive private suites that make the stadium construction possible.

    Will property tax collections go down over the years because of the stadium construction? I think Rybak expect them to increase.

    Ed, on the other hand, probably has a crystal ball to show that the Minneapolis property tax base will go down into the toilet if we build the stadium– I suppose??.

    I wonder what will happen to Minneapolis property taxes if the team leaves. There is a story on MinnPost today that says the Dome would be abandoned in fairly short order and it is unlikely the NFL would return to the city for some time. This is probably the scenario that Rybak sees.

    Ed, your posts about property taxes on specific parcels of land are a reflection of what I would call “in the box” thinking. Lots of stuff happens when cities do big developments—good and bad—you apparently haven’t thought about it very thoroughly. The reverse scenario is also true when the center of the city loses vitality and the property tax base goes to hell. This decline scenarios actually happened in the 1960’s when businesses pulled out of Minneapolis for the burbs until an outlandish expensive oversized IDS tower was built. The IDS tower lost money for some time on depressed rentals, but it saved the city.

  6. @Rick, we have an example we can look at to see how much development an NFL stadium creates: The Metrodome. 30 years of experience shows us that it doesn’t drive downtown development in that area. In fact, the growth that’s happened around that appears to be in spite of the stadium being there rather than because of it.

  7. @ed Interesting that you bring up this point. What exactly was the state of health of Downtown Minneapols when the Metrodome was finished? Go back in time and take a look at it.

    The answer is that Minneapolis leaders were badly struggling with businesses moving out of the city. The Dome probably helped bring back a city that was being abandoned.

    I think you should be damn thankful to have Rybak in office because he anticipates such issues quite well. You probably would not want to return to his predecessor who signed the doomed bailout of the Timberwolves arena.

    Personally, I believe that if the current Metrodome is abandoned it would be a disaster for Minneapolis and Rybak probably agrees. Expanding government agencies and colleges into the space doesn’t do much for property tax collections.

    My advice; You should be consulting with a civic planner type before writing some of this stuff.

    I suppose you were opposed to the huge amount of federal funds that went into light rail because the main beneficiaries are private businesses and those businesses ought not to be using a public subsidy to bring in workers. There is a legislator in the GOP named Phil Krinkie who once suggested that instead of building light rail, we could use the same money and buy each rider a new BMW and it would actually be cheaper. (Krinkie is a TParty type that you seem to be in alignment with on many of these issues.)

  8. @Ed. So if I understand you correctly, 30 years ago there was no need to raise any taxes to fund the existing Dome, because private interest came up with the whole amount.

    Yeah….I guess we ought to do the same deal all over again. I wish those downtown businesses you are now complaining about were more involved and not less involved.

  9. @Ed. I wonder if the final deal just might include a rescue fund or some corporate contributions just to make the proposal more acceptable to vote on. Instead of sports themed betting boards as a back up source to pull tab revenue, the private companies could buy a performance or surety bond so the legislature need not worry. This would also appease the NFL which opposes all betting on specific games. My guess is that private companies will be asked to chip on here beyond their commitment for executive suites.

  10. @Rick, nope. There was still public money involved, but far less because local businesses chipped in, on a percentage of construction costs, more than $200 million dollars (in 2012 dollars). As in, enough to cover the entire Minneapolis construction cost part of the Wilfare deal.

  11. @Rick, 30 years ago, one form of that happened 30 years ago when General Mills purchased $1.5 million ($3.6 million in 2012 dollars) worth of tickets to avoid blackouts.

  12. @Ed. Understanding Dayton’s style and Mondale’s connections, I doubt that corporate help will be overlooked. But a couple of bucks for tickets won’t make much of a dent. I would not be surprised if Rybak is hitting up the Downtown Council members to fund the fancy soccer fields and public areas that surround the stadium. This won’t do much to reduce Wilfare, but when the whole deal is done, Rybak will look pretty smart. They did the current Dome on the cheap and it too utilitarian.

  13. @Rick, as I said and you ignored, Minneapolis businesses put in the equivalent of more than $200 million in 2012 dollars into financing the Metrodome.

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