Hodges criticizes financing plan for soccer stadium

A view of a portion of the proposed soccer stadium site from Royalston Avenue. Credit: Photo by Sarah McKenzie

Mayor Betsy Hodges criticized Bill McGuire’s investment group for seeking tax relief for a new soccer stadium on the edge of downtown Minneapolis in a blog post Wednesday.

While McGuire’s group has proposed to privately finance the stadium for a new Major League Soccer expansion team, they are seeking a sales tax exemption for construction materials, a property tax exemption and limits on future local taxes levied on the stadium, according to a proposal outlined on the Minnesota United FC website.

The requests would likely require a combination of approvals from the Legislature and City of Minneapolis. City staff are researching the property tax exemption request as there is no recent precedent in the city for a private developer being granted a blanket exemption from property taxes for a privately owned development. 

The ownership group has until July 1 to finalize a plan for the soccer stadium under terms of an agreement with Major League Soccer. 

McGuire’s team, which also includes Glen Taylor, the Pohlad family and Wendy Carlson Nelson, has committed to paying $100 million to purchase the MLS expansion franchise, $30 million for land acquisition for the stadium and $120 million to build the stadium. The group predicts the development would create 1,900 construction jobs and generate more than $2.5 million in state and local sales taxes each year, according to its proposal posted on the Minnesota United website. 

The group along with several other soccer fans celebrated news at Target Field on March 25 that MLS had decided to award Minnesota a MLS franchise. The group competed against proposals in Sacramento, Calif., San Antonio, Texas, and Las Vegas, N.V. McGuire is the owner of Minnesota United.

While the mayor said she’s a soccer fan and would like to see a privately financed stadium be built in the city, she said there is no need for a public subsidy.

“The subsidy they are requesting will have a direct and negative impact on the taxpayers of Minneapolis,” she wrote, adding “there’s no question” the property slated for the stadium would be redeveloped even if the soccer venue doesn’t materialize. “A truly private development would pay property taxes there; but if a tax-exempt stadium is built there, Minneapolis taxpayers would forego millions of dollars of value on the property-tax rolls.”

McGuire’s group has eyed a site northeast of the Minneapolis Farmers Market for the stadium. Three parcels that make up the site, which are bordered by Border and Royalston avenues, have a combined property tax bill of about $343,000 for 2015, according to Hennepin County property tax records. 

The group has pledged to make improvements to the Farmers Market as part of its proposal and help spur other development and public realm improvements in the area. 

Hodges also criticized the suggestion that the soccer stadium should be exempt from property taxes because other sports facilities have had taxes abated. Those facilities are partially owned by taxpayers, however, she pointed out.

“This stadium is not like other stadiums: rather, this proposal is as if a private developer asked to pay no taxes — ever — on a $150-million mixed-use development in downtown Minneapolis,” she wrote.

Hodges also argued the soccer stadium would be a competitor to Target Center, a city-owned facility that has been approved for a $130 million renovation.

“As a lifelong soccer fan, I am excited that Major League Soccer is choosing to expand in Minneapolis, and I know that my excitement is shared by thousands of fans for whom soccer has great, unique appeal. But as Mayor of Minneapolis, it’s my job to put the public’s interests ahead of private wants,” she wrote. 

The City Council is divided on the issue. Some Council members have expressed an openness to considering the request for tax exemptions, while others have reservations and said they need more information about the proposal. 

Hodges was an opponent of the financing plan for the Vikings stadium when she represented Ward 13 on the City Council. 

The financing plan for the $1 billion Vikings stadium includes a commitment of $529 million from the Vikings and $498 million from taxpayers. The public contribution includes $462 million from the state and $150 million from the City of Minneapolis. 

The construction of Target Field, which opened in 2010, cost about $522 million. The financing plan included a 0.15 percent Hennepin County sales tax to fund about $392 million with the Twins contributing the rest. 

McGuire’s group has met with state lawmakers and Gov. Mark Dayton to discuss the soccer stadium proposal. Minnesota United is also urging fans to rally support for the plan and contact their local legislators.