US Bank Stadium’s reserve fund has swelled so much that the state could pay off the building’s six-year bonds in the spring – 20 years ahead of schedule.
The reserve fund will reach $368 million by the end of June, according to this week’s projections from Minnesota Management and Budget (MMB). The cost to fully pay off the debt in June is estimated at $377 million, meaning the state could be debt-free on the $1.1 billion building by mid-2023.
“There’s no doubt there’s an advantage to refinancing or paying off these bonds, and if we’re not going to do it with a surplus of this size, we’re never going to do it,” Nick Frentz said. , the DFL’s new Deputy Senate Majority Leader. of North Mankato said on Wednesday.
The stadium’s mammoth reserve — which is expected to top $1 billion by 2027 if not tapped — was part of a sound economic forecast released on Tuesday, which also projected an overall state budget surplus of 17,000. $6 billion.
Frentz said the Democrats, who took control of the Senate in the November election, have yet to discuss the stadium issue as a caucus, but “there’s an opportunity there that most people can see”.
Republican veterans in the House and Senate are even more enthusiastic about a quick win.
“What a great achievement,” said Sen. Eric Pratt, R-Prior Lake. A gain “would save taxpayers a lot of interest. From a financial point of view, this seems to make a lot of sense.
The stadium’s reserve fund has swelled despite the pandemic and related economic pressures. The account is funded by taxes on charitable gambling, including electronic drawbars that were legalized by the Legislature and Governor Mark Dayton in 2012 to pay for the state’s share of the stadium.
During construction of the stadium, the state issued nearly $500 million in bonds. The Minnesota Vikings, the building’s major tenant, were responsible for the remainder of the $1.1 billion cost.
The state now makes annual repayments of about $30 million to cover the public portion of the building, including $12 million in debt service from Minneapolis hospitality taxes. Initially, the state covered the annual debt service; Minneapolis payments began last year.
As sales of paper and electronic pull tabs have grown at a rate exceeding forecasts, state tax collections have also increased. E-tab sales were initially shaky, but consumers adapted and sales soared. Sales of all pulltabs continued to soar even in 2020, when bars were closed for part of the year due to the pandemic.
Charitable gambling tax collections bring in more than enough revenue to cover the stadium’s annual debt payments. After annual government obligations are met, the excess remains in the reserve fund, which was created as a backup to cover bond payments in the event of a downturn.
But the state never dipped into the fund.
In the past, the Minnesota Vikings and supportive lawmakers have floated the idea of using the reserve to refinance or pay off the bonds a few years ahead of schedule, but paying them off in full in 2023 wasn’t an option until here.
Two years ago, Governor Tim Walz suggested capping the fund at $100 million and using excess revenue for a host of other programs. This proposal was going nowhere.
Senator Julie Rosen, R-Fairmont and architect of the 2012 stadium plan, has long been a proponent of paying off bonds early and then using a portion of ongoing revenue to create a maintenance fund for the stadium.
Rosen did not seek re-election and will not serve in the 2023 legislature, but she considers the win a no-brainer. “It’s something that absolutely needs to be done,” she said. “It’s an incredible state asset that needs to be financially protected.”
Representative Jim Nash, R-Waconia, was on board with the idea of paying off the stadium first and creating a maintenance account for the building. “It’s an asset, and assets should be preserved,” he said.
House Speaker Melissa Hortman, DFL-Brooklyn Park, was evasive. She said in a written statement that it would be “premature” to say which direction her caucus would take on the issue. “We should let the legislative process take its course so that we can hear from the public and their elected representatives,” she said.
Through a spokeswoman, Walz released a statement saying the gain would be “among the issues” he is looking more closely at when developing his budget. “In addition to the surplus, the continued growth of the reserve is good news,” he said.
Pratt said the stadium refund should appeal to Walz’s desire to use the surplus for one-time purposes, not ongoing expenses. “It’s a perfect one-time use with long-term benefits,” Pratt said.
Minnesota Vikings vice president Lester Bagley said US Bank Stadium was the best in the NFL. “The ability to reimburse the stadium now would extend that success,” he said, adding that the team appreciates “that the state continues to use e-pulltabs for their intended purpose. Electronic pulltabs have been created to finance the state’s share of the stadium.
If the building were reimbursed, the question would be what would happen to these gambling tax revenues. The Vikings and members of the Minnesota Sports Facilities Authority (MSFA), which oversees the stadium on behalf of taxpayers, supported the need for a maintenance fund to keep it up to date.
Nash said it was “a little early” to put a figure on how much to put into that fund, but it needed to be done.
Michael Vekich, the president of the MSFA, refused a request for an interview.
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