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Madden’s Letter to Community Advisory Committee

Wednesday, April 20, 2016

Dear Co-Chairs Eric Molho and Julie Padilla,

At the last CAC meeting, I was encouraged to hear committee members question when the proposed development on the Snelling/University super-block might begin to provide a return on government investment. My concern extends beyond recouping the $18.4 million infrastructure cost, as I recognize that property and sales taxes also fund schools, parks, transit, and other public services that I value.

Because the development that the soccer stadium is expected to catalyze is a distant prospect, and because it will likely differ from what is anticipated (if it occurs at all), this question has no definitive answer and would likely be a black hole should the committee decide to pursue it. However, it can already be said that since the soccer stadium would occupy roughly one third of the super-block, and since it will be exempt from property tax, sales tax on construction materials, and right-of-way assessments, the City is off to a poor start indeed with respect to return on taxpayer investment. That is why, at your meeting, I requested a more thorough examination of the stadium deal along with solicitation of public opinion on the deal itself.

May I suggest that the committee start with the analysis provided to the Senate Tax Committee on March 31st by the Minnesota Department of Revenue (Analysis of S.F. 3241). It concludes that $3.5 million will be lost in sales tax revenue. As for lost property tax revenue, it does not provide a dollar figure, but does note; If the stadium were built without the exemption, property taxes would shift onto the stadium and away from neighboring property, including homesteads. The additional property tax burden on homesteads caused by the exemption of the completed facility will increase state-paid homeowner refunds by about $110,000 beginning in fiscal year 2020.

The September 8, 2015 edition of TwinCities.Com is one source that did put a dollar figure on the exemption. Estimating the land value at $8.6 million, and the cost of the structure at $120 million, it calculated the lost revenue at $5.48 million annually using Ramsey County’s commercial tax calculator tool. Since the City has a higher valuation of the land ($1-1.25 million per acre according to the 2014 Smart Site Study) and Minnesota United has now committed to a $150 million stadium, the lost revenue may be even higher. I think it would be appropriate for the CAC to come up with its best estimate.

I would also request an estimate for annual right-of-way assessments that the City will forgo.

When the stadium is completed and has been deeded to the City, I believe that yet more revenue will be lost to the government. It is likely that the cost of the stadium will be written off by the franchise as a loss against its other tax liabilities. It would be appreciated if the committee could look further into this.

While I find that a soccer stadium hosting less than twenty games a year to be a less-intensive use of this land than was anticipated in the Snelling Station Area Plan, I am not opposed to it. I also believe that the development anticipated surrounding the stadium is overly optimistic, but still I don’t oppose the stadium. What I oppose is the stadium deal. It is a give-away of prime real estate and is grossly unfair to taxpayers. The gap between rich and poor in this country is immense and it’s growing. We reached a point some time ago, where the wealthy pay less in taxes as a percentage of their income than the working class. This stadium deal could be presented as ‘Exhibit A’ as to why such disparity exists.

Finally, at the Senate Tax Committee meeting mentioned above, I heard William McGuire testify that without the requested tax breaks, the stadium deal would likely fall through. In Minnesota, we have something of an aversion to asking people about their finances. In this case, I think it would be entirely appropriate to ask Dr. McGuire and his investment group to open their books to examination. If allowed to view the business and personal wealth of these investors, taxpayers might draw a different conclusion as to the necessity of these tax exemptions.


Mike Madden