Minnesota Vikings home to be paid off before 2023 season
The 7-year-old, $1.1 billion US Bank Stadium will be paid off long before the Minnesota Vikings play their first preseason home game in August, under the tax bill signed by Governor Tim Walz this week.
By the end of June, the state will have retired $377 million in outstanding bonds on the building, saving taxpayers $226 million in interest. The bonds, which have an interest rate of 4.25%, were due to be repaid in 2046.
“I don’t like having that debt there,” Walz said.
The governor proposed the reward in his budget in January and in a session full of big changes, the stadium reward passed without much attention or friction. The governor didn’t even mention it during his bill signing celebration on the Capitol lawn on Wednesday.
While the stadium-building effort took years of tense talks and media lobbying by the Vikings, the first win was rolled into a giant bill that included $3 billion in tax cuts and $1 billion dollars in new tax revenue. The bill passed the House last weekend and the Senate on Monday.
Vikings vice president Lester Bagley said in a statement that the decision is “great news and the latest chapter in a success story that has benefited Vikings fans, the city of Minneapolis and the community. State of Minnesota. It’s a significant achievement that the Vikings have advocated for for many years.”
The Legislature and Walz also agreed to pay $15.7 million for the first phase of a new secure perimeter at the stadium. Designs for that perimeter are expected to be released next month, and the Minnesota Sports Facilities Authority (MSFA) will discuss the project at its monthly meeting on Friday.
Most of the money for building bond payments, $366 million, is already in the stadium’s reserve fund. In 2012, as part of the stadium construction legislation, the state legalized electronic drawbars. Tax revenue from the tabs was used to make annual debt payments on the building of about $30 million, a number that included the first years of payments for Minneapolis.
Excess electronic drawbar revenue above the annual payout went into the stadium reserve. As consumers embrace electronic pull tabs, revenue has skyrocketed and the reserve has swelled beyond expectations in recent years. Now, the reserve fund will be dissolved, sending about $150 million a year in electronic tax revenue to the state’s general fund.
The stadium, which opened in August 2016, was a public-private partnership. The state issued bonds to cover $489 million. Of that amount, $349 million was the state’s contribution and $150 million was Minneapolis’ construction share. The Viking owners paid the rest.
Minneapolis got a break on interest on its $150 million tax bill. As of next year, interest on the City’s debt will drop from 4.25% to zero. The change saves the city $6.2 million per year through 2046.
Including interest and a separate loan, the deal Walz signed on Monday relieved Minneapolis of $205 million in stadium debt. The tax bill canceled principal and interest on a $39.5 million state loan that covered the first five years of operation and city capital reserve payments on the building.
The new tax law also capped the portion of the city’s hospitality taxes that will go to the stadium at 3% and will require the money to be used exclusively for capital expenditures. Combined with the debt relief, the city will save an estimated total of $350 million through 2046, according to Angie Skildum, Minneapolis’ director of development finance.
Sports Facilities Authority Chairman Michael Vekich could not say Thursday what the impact of that Minneapolis sales tax cap would be for the stadium, but is expected to have numbers Friday.
What the Legislature failed to do was create a permanent maintenance fund for the state-owned stadium with a dedicated revenue stream, which the Vikings have long called for. Vikings, the building’s primary tenant, has repeatedly noted that the building’s use agreement requires the state to maintain it in first-class condition.
Bagley’s statement said, “We look forward to continuing to work in partnership with the Governor and state legislative leaders to meet the long-term capital needs of U.S. Bank Stadium. It is imperative that we protect this incredible community asset in the future.”
The building will require work. A report by a consultant to the Sports Facilities Authority earlier this year said the stadium will need $280 million in maintenance and upgrades over the next decade, of which around $48 million next year for the second phase of the perimeter.
“Going forward, this will be a more in-depth discussion with the governor and legislative leaders for ongoing needs,” Vekich said. “Is it from bail? Is it from general fund dollars? It’s still an open discussion.”
startribune Gt Itly