Betsy Hodges: Soccer stadium subsidy would open can of worms

Like most Minnesotans, I was excited to learn that Major League Soccer chose Minneapolis for its franchise expansion. It's a popular, fast-growing sport. It's no surprise that owners of other local major-league sports franchises are investing in the major-league sport of the future.

As a result, I was disappointed when I learned through the press last week that despite characterizing the proposal as "privately financed," the high-powered investment group led by former UnitedHealth Group CEO Bill McGuire is seeking a public subsidy from regional and state taxpayers for its new soccer stadium.

Simply put, not paying property taxes on a private development is a direct public subsidy. And there is no need for a subsidy for this facility, or for this ownership group.

And the subsidy is not small.

Reasonable estimates of the value of a new soccer stadium are between $80 million and $100 million. At these values, the total property-tax abatement on the facility would be between $3.4 million and $4.2 million each year. The cumulative cost of the subsidy would be more than $100 million over the 30-year life span of the stadium.

But this request for a subsidy isn't just for 30 years. It's for forever.

Compare these numbers to McGuire's own estimates of sales- and hospitality-tax revenues that would be generated from the proposed soccer stadium, which he puts at an average of $2.5 million a year.

It's unlikely that these taxes would be generated only with the addition of the soccer stadium; rather, we should assume that a significant portion of this revenue is already being generated by entertainment spending that is happening elsewhere.

But even if we assume that soccer-stadium tax revenue is all new revenue, the gap between a reasonable assumption of property-tax dollars lost and McGuire's estimates of tax revenues gained is a total loss of more than $20 million over 30 years.

In addition, this property will be redeveloped — stadium or no stadium.

The land's location is on the growing edge of our booming downtown, located next to the upcoming $1.6 billion public investment in Southwest light rail. This public investment will benefit the proposed soccer stadium with a station at the stadium's front door. Moreover, the proposed Bottineau light-rail line will have connecting service just one station away.

We as a region invested in light rail in part because it will spur development. A Star Tribune article on April 18 pointed out that "growth will inevitably spread" to this area once the Southwest light rail is serving that area four years from now. So no subsidy is needed to spur development there.

The Star Tribune argued in an editorial ("Soccer stadium is a gift for Minneapolis," April 18) that the McGuire group's proposal is "relatively modest." I don't see anything modest about asking taxpayers to give away tens of millions of dollars' worth of value on the property-tax rolls for decades and generations to come. This loss would not just be to the city of Minneapolis, but to Hennepin County, the Minneapolis Public Schools, Minneapolis parks, the state of Minnesota and other public jurisdictions.

There is absolutely no precedent in Minnesota for a private development being exempted from paying its fair share of property taxes forever. If this subsidy were granted, other Minneapolis homeowners and business owners would simply pick up the property-tax tab for this private development.

Let me be clear: I would be pleased to see a new soccer stadium at this site.

I would love to see a privately financed stadium that pays property taxes just like every other privately financed development, regardless of the size. However, the McGuire group's proposal fails the fairness test to other Minneapolis taxpayers.

I am excited that Major League Soccer is choosing to expand in Minneapolis. I know that my excitement is shared by thousands of fans for whom soccer has great, unique and growing appeal. But as mayor of Minneapolis, it's my job to put the public's interests ahead of private wants.

Betsy Hodges is mayor of Minneapolis.