Authority fires back in dispute over land near Vikings stadium site

A nasty dispute over land near the new Vikings stadium site escalated Friday when the public board overseeing construction charged the property owner with "grossly" overstating its value to squeeze millions of dollars from the deal as groundbreaking nears.

"From the public's perspective, there's no way we could ever agree to that," said Michele Kelm-Helgen, chairwoman of the Minnesota Sports Facilities Authority.

Responding to a lawsuit filed last week, the authority alleged that Minneapolis Venture LLC is trying to gain leverage in the valuation dispute by threatening to walk away from a 2003 agreement with the Metropolitan Sports Facilities Commission, the authority's predecessor, over using a portion of the land just west of the Metrodome as a public plaza during sporting events.

The authority contends that the current agreement, which expires Oct. 31, should endure as long as the current Metrodome "continues to be operated as a sports arena." The Vikings play four home games after that date and could have more if they qualify for the playoffs.

Kelm-Helgen on Friday called the threat to the plaza "a negotiating tactic."

The authority's response comes as it races to complete an extensive financial and legal review of team owners Mark and Zygi Wilf in time to meet a tentative Nov. 7 groundbreaking on the nearly $1 billion stadium.

That review was prompted by a New Jersey judge's ruling earlier this month that the owners had defrauded partners in a real estate deal in that state. The judge, who was highly critical of the Wilfs' business practices, is expected to rule on damages, which could cost the owners tens of millions of dollars or more, in coming weeks.

There were strong indications Friday, however, the authority will complete its "due-diligence" work and rule on the Wilfs' ability to finance their portion of stadium construction before the judge's final order on damages.

The dispute between the authority and Minneapolis Venture, a partnership led by developer Robert Lux, isn't expected to affect the stadium's construction timeline since early work will be limited to the east side of the site while the Vikings play their final season at the Metrodome.

The block in question is just west of the new stadium's glassy main entrance and is viewed as an important piece of the development, serving as the light-rail stop for thousands and the gateway to the stadium and downtown.

Its 455 underground parking stalls also could help the authority meet a legislative mandate to provide 2,500 parking spots close to the new stadium.

"They clearly know it's important," Kelm-Helgen said of Minneapolis Venture.

In its suit, filed in Hennepin County, Minneapolis Venture has asked a judge to rule on whether the above-ground plaza and underground garage should be included as part of the stadium's broader development plan. It also expressed frustration with the authority, saying it was unclear whether the board wanted to purchase the land even though "it was communicating to the public" that it was within its control.

Jon Austin, a spokesman for Minneapolis Venture, said Friday the property owners have asked the authority for weeks to submit a proposal for a new plaza agreement. He said the land owners are "disappointed" with the board's "cake-and-eat-it-too" approach, adding that the authority believes "we have some unwritten obligation to agree to any terms they think appropriate."

It's unclear whether the authority would acquire the land in a traditional real estate deal or by eminent domain.

In an April letter to the authority, Minneapolis Venture said "with the economy rebounding and development activity accelerating all over town," the time was "ideal" for development. But it also said that with its block targeted as part of the extended stadium project, "the opportunity to develop is probably gone."

It also said that the land and parking ramp are worth double the authority's appraised value of $12.9 million. As part of its letter, it shared architectural renderings for a mixed-use project that could be built around the light-rail tracks that bisect the block.

Kelm-Helgen said a mixed-use project so close to a busy public plaza and light-rail stop is "highly unlikely." She reiterated that the authority has proposed purchasing the land "for a fair and reasonable price."

Minneapolis Mayor R.T. Rybak, a longtime supporter of the stadium development, said the board can't "succumb to outrageous demands for property. If we have to go to a Plan B because somebody is trying to make more money, then so be it."

The state of Minnesota and city of Minneapolis are responsible for $498 million of the $975 million stadium construction cost, with the Vikings picking up the rest through an NFL loan, seat license fees and other equity sources. The stadium is scheduled to open in July 2016.

Staff writer Mike Kaszuba contributed to this report. Richard Meryhew • 612-673-4425