The 90th biennial session of the Minnesota State Legislature got underway on Tuesday of this past week. One of many holdovers from last year is the soccer stadium tax exemption. But unlike last year when the omnibus bill rolled into the following year’s session, the legislature will be starting from scratch and so will the stadium measure. Bills can only be rolled into the following year in an odd year of a biennial.
In early 2016, Minnesota United entered the legislative session with high hopes of having a tax exemption bill passed for their soccer-specific stadium. Previously, United owner Bill McGuire had said the tax break was necessary for the team to move forward and build a stadium in St. Paul’s Midway, which he hoped to have completed by the spring of 2018.
The tax exemption measure slowly made its way through tax committees, the House, and the Senate with bipartisan support and the approval of the governor. Things looked optimistic as the measure was added to an omnibus tax bill that was carried over from the 2015 session. On the last day and in the final minutes of the 2016 session, the bill was passed by an overwhelming majority. Soccer supporters cheered and team officials stated measured optimism. All that was needed was a signature from Governor Mark Dayton. That’s when things got complicated.
A mistake was found in the fine print of one of the provisions. A small wording error that would cost the state a whopping $102.4 million extra dollars. Making it worse was a few niggling issues Dayton had wanted to be resolved that hadn’t because of the 11th-hour rush. The rest is history.
The governor used his pocket veto and the bill was never passed. Special sessions were hinted at, debated behind closed door meetings and squabbled about in the press. It all ended badly in late December when it looked as if a special session could still occur before the end of the year. Instead, Dayton and Republican House Speaker Kurt Daudt sparred publicly in a press conference causing the governor to storm out in front of the cameras with the house majority leader muttering under his breath. It wasn’t a good precursor for the 2017 session which would start in only two weeks.
The proposed arrangement for building the stadium on the ‘bus barn’ site in St. Paul’s Midway area has the City of St. Paul leasing the property from Metro Transit, who owns the 9.5-acre site. Because that property had been used for transit purposes, the Federal Transit Authority (FTA) had granted a tax exemption over 50 years ago.
Metro Transit tore down the structures 20 years ago. The property has stood empty since that time, collecting no taxes and generating no revenue for the city, county, or state.
The stadium deal has team ownership making payments to Metro Transit for the property. Minnesota United would build the stadium and then hand the keys over to the City of St. Paul, making them owners. The stadium lease agreement would give United the exclusive use of the facility and the team has agreed to pay for all future repairs and improvements.
When McGuire and the city announced their plans to build on the lot, they called in the St. Paul Port Authority to help make the arrangements and get the approval from FTA to continue the tax exemption as long as the property was being used for a purpose that would encourage public transportation. McGuire has said that he has no plans to build large parking lots or ramps around the facility. During a meeting regarding the stadium, he said the way of the future isn’t driving to events in cars but taking public transportation. Also, a transit-oriented redevelopment is planned for the rest of the 24.5-acre site.
This year will be a dramatic shift after last fall’s election. Both the House and Senate will now be controlled by the Republicans. One would expect to see more fiscally conservative decisions. However, the state has been deadlocked for two years on bonding and tax bills. Lawmakers seem keenly aware that there are pressing issues that can no longer wait. Also, the state has projected a $1.4 billion budget surplus which will likely influence lawmakers.
With this year’s session, there are a number of ways that the stadium tax exemption bill can get back on track. In a normal session, a bill would originate and be proposed in the House and then the Senate. It would work its way through to a compromise between the two chambers and the governor. Both chambers would adopt it and send it to the governor for a final signature.
The governor can also propose a tax bill, which Dayton did on Wednesday of this past week. As promised at the Minnesota United MLS announcement at CHS Field last fall, Governor Dayton included a provision for the soccer stadium tax break. Tax measures are almost never voted on as a single issue but instead added to a larger bill where more representatives have a stake in the game and are more likely to vote in a positive way for the bill.
The house could look at what was accomplished last year and decide to split a large section off from less controversial parts that were perhaps already agreed upon last year. They would then create another tax bill with more controversial and newer items that would be more likely to bog down. They could also adopt the governor’s bill with changes. Otherwise, they could just have one large omnibus bill like the two years previous; neither of them passed.
The issues aren’t so much about the Minnesota United tax exemption provision but more in how the bill will be passed down. The real concern is that it could quite possibly get stretched out once again to the final hours as often happens, and a stalemate between the Democratic governor and Republican House and Senate could derail the bill.
On the bright side, influential tax committee chair Greg Davids (R-Preston) told the Pioneer Press that the governor’s proposal was “…lean on relief, but it is probably the best proposal I’ve seen from the governor.”
One more issue the bill will need to deal with is finding a new sponsor and champion. Last year the bill was sponsored by a bipartisan group of legislators, but the primaries were Rena Moran (D-St. Paul), and Tim Sanders (R-Blaine). Sanders, a soccer lover who also strongly backed measures for the National Sports Center, was widely respected for his years of work at the capitol. He chose not to run for office last fall and was replaced by a more controversial figure in Republican Nolan West, who narrowly edged out his Democratic opponent Susan Witt. However, a source with knowledge of the Minnesota United bill said there were many people supporting the measure and they were not concerned with finding a new champion for the piece of legislation.
Unfortunately, it could be another long four months of waiting before we know the fate of Minnesota United’s request for tax leniency.