Minnesota United fans as well as many citizens of the City of St. Paul who hope for redevelopment of the Midway area, woke up Monday morning to joyously discover the news. What United team owner Bill McGuire had requested and the City of St. Paul had shepherded, had actually passed. In the end, it was one of only a handful of bills that made it through the train wreck of the 2016 Legislative session.
As was always expected, the bills were lumped into two separate measures. The bill that allowed the city of St. Paul to lease the property from Metro Transit and keep it tax exempt (as it has been for over 50 years) was included in a $259 million omnibus tax relief bill. It was a generally-popular bill state wide that aims to help many outstate areas, and was supported by many lawmakers that will be running for reelection this fall.
The liquor license was placed in an omnibus supplemental spending bill which also included spending for schools and early education. Liquor and schools. Go figure.
Both bills were looked upon as a compromise but the larger bill which included a property tax exemption had mysteriously picked up a $32 million dollar tax break for large tobacco companies and another $6 million for companies that produce some of the best quality tobacco e-liquids and e-cigarettes. It was an aspect of the bill that Minnesota Governor Mark Dayton called “very distressing” at a press conference on Monday. “I don’t know where it came from, I don’t know who was behind it,” Dayton said.
The bills now sit on Dayton’s desk and those who desire a 20,000-seat soccer stadium which McGuire says he wants to start construction on this summer, will have to wait and see. In his 30-minute press conference on Monday, Dayton was generally very negative about the lack of action on a major bonding bill and secrecy in the way many of the bills were constructed. The Minnesota Governor only has authority to line item appropriations bills and mentioned the possibility of a veto as well as a request for a special session. Overall he was pessimistic until his closing statements. “I’m not going to hold the tax cuts for people or the supplemental budget… hostage to the other considerations,” said Dayton.
Dayton said he would take 48 hours to make his decision after he had received all the financial documents that should have accompanied the bills. The Governor said he still had not received all of those as of Monday afternoon. The 48-hour timeline means Dayton will most likely decide today or tomorrow on his course of action.
“I respect the fact that Gov. Dayton needs time to review the bills passed by the Legislature and to determine any next steps with regards to a possible special session,” Coleman said in a statement after the Governors press conference. “I am grateful for his continued support of property tax exemption for the soccer stadium site, which has been tax exempt for many decades.”
In actuality, only two of the three provisions that were requested were approved. A third item, a sales tax exemption on construction materials, never saw the light of day in tax committee after originally being included in the bill. The team claimed that aspect of the bill was very important to them, yet neither Minnesota United nor the City of St. Paul would comment on that exclusion. Even lawmakers like Senator Sandy Pappas (D-St.Paul) seemed confused by the omission. “We’re just trying to figure out right now why that’s missing,” said Pappas at a press conference at the State Senate on May 10th. “I was just talking to Senator [Ann] Rest [Vice Chair Taxes Committee] about that. We just have to have further discussions about that. You know this is a moving process.” Yet no one ever offered an explanation.
Political insiders and those familiar with the teams request never felt that the sales tax exemption was a deal killer. They said it would have only amounted to around $5 million of the $150 million plus they plan on spending on the new stadium. The lack of urgency for the sales tax exemption was made a bit clearer on Monday when St. Paul Mayor Chris Coleman said in his statement that a Minnesota statute already allows sales tax exemptions on construction materials that relate to building capital projects of “regional significance.”
“While the city sought an up-front exemption at the Legislature this session, which is easier from an administrative perspective, the lack of action simply means that contractors can move forward and a refund will be granted on the back end. This refund in lieu of an up-front sales tax exemption is the same model used during the construction of CHS Field,” said Coleman.
Pappas told the Star Tribune that while an upfront tax exemption on construction materials was “cleaner and less bureaucratic,” the refund process also will work. She went on to say that the whole process was much more difficult than it needed to be. “These are three such easy asks compared to our other stadium projects. This is an incredible gift to St. Paul.”
One other thing the Legislature failed to accomplish for the second year in a row, was a major transportation bill. Metro Transit was also attempting to get funds for the Southwest Corridor light-rail project which has run up against many obstacles over the last several years. With no funding for the project Minnesota could lose $900 million in federal funding and could potentially kill the project. Many republicans have opposed the project. The Southwest Corridor light-rail line would have run directly past the original Minneapolis location where McGuire had chosen to build the stadium.
In an exclusive interview for the Byline Press book, The Complete Darkness 2015, the Loons owner spoke of the many reasons for shifting the stadium location from Minneapolis to St.Paul. He explained that light-rail was a major consideration and a primary reason why they ended up in St. Paul. “The light-rail wasn’t confirmed yet and that was a big part,” said McGuire. “The more it’s delayed the bigger that problem becomes.”
With the Southwest Corridor light-rail project in jeopardy and if Governor Dayton signs the bills in the next several days, McGuire will look like a soothsayer.