St. Paul wins forgiveness of Xcel arena loan

St. Paul may not have received state bonding for projects this session, but it did claim a legislative victory it's been chasing for years: the state will forgive most of the remaining $32.7 million it loaned the city to build Xcel Energy Center.

That doesn't mean that the Minnesota Wild will stop paying rent to St. Paul for use of the arena, money the city used to pay down the loan to the state.

What it does means is that the money now will go toward renovating the arena, a project Wild and Xcel Center spokeswoman Kathy O'Connor said is overdue. "It's the right time for an update," she said.

In 1998, the state made a $65 million interest-free loan toward construction of the $130 million arena, $17 million of which was forgiven when the team agreed to allow amateur and public events. That left a loan of $48 million.

Under the terms of the forgiveness deal in this year's omnibus jobs, housing and commerce bill, St. Paul's annual loan payment will be reduced by $500,000 in 2014 and again in 2015. The balance of the loan will be forgiven in 2016. The city still owes $56.8 million in bonds on the arena, of the $72.7 million it borrowed in 1998.

The Wild and the city will jointly decide how to use the loan windfall for arena improvements, O'Connor said. High on the team's list: seat replacements, widening of concourses, expanding entrances and upgrading scoreboards for the digital era, she said, "All things we feel are important to keeping the arena relevant."

She added that there are no plans to use the money for a nearby practice facility that the team has long desired.

As a tit-for-tat of sorts, the state gave Minneapolis about $33 million over several years to help pay off debt on the downtown library, a last-minute addition to the tax bill intended to right the balance with St. Paul.

"The state stepped up and helped out the Xcel Center this year because that's a statewide asset. It just happens to be located in the city of St. Paul," said Rep. Jim Davnie, DFL-Minneapolis. "The downtown library is a statewide asset that just happens to be located in the city of Minneapolis."

No local projects were included in the bonding bill, including $14 million that St. Paul had sought for a planned $28 million expansion of the Minnesota Children's Museum. Dianne Krizan, the museum's president, said they will continue with private fund­raising and return to the Legislature next year.

But Joe Campbell, a spokesman for Mayor Chris Coleman, said that St. Paul got a $10.1 million hike in state aid, over and above the $50.3 million it received this year. "This will help us close what could be a gap in city services … and go a long way toward stabilizing property taxes," he said.

Maplewood won approval in the tax bill for a tax-increment financing (TIF) district for a 412,000-square-foot research and development lab building planned by 3M Co.

City Manager Jim Antonen said the TIF district was "essential for the retention of 3M jobs, not only in Maplewood, but in Minnesota." The $150 million project will replace two older buildings. "I think it's a recognition of the importance of 3M's investment," said Jacqueline Berry, a company spokeswoman.

The lab building, to be built on the corporate campus near McKnight Road and Conway Avenue, will house 700 current 3M employees. The TIF district would cover just the lab site, Antonen said, and remain for 25 years.

TIF districts are a financing mechanism to spread out the increased cost of property taxes created by the higher value of new construction over a longer period of time.

The city will have only a modest direct cost as a result of creating the TIF district, he added, while ensuring that 3M doesn't look elsewhere.

The company's property in Maplewood is assessed at $210 million and accounts for 12 percent of the city's tax base.

The fate of two multi-district integration schools, Harambee Elementary in Maplewood and Crosswinds Arts and Science School in Woodbury, was tossed into question after lawmakers failed to back plans turning over the buildings to the Roseville Area Schools and Perpich Center for Arts Education, respectively.

But initial fears that both buildings could be mothballed for a year by the East Metro Integration District (EMID) began to ease a bit Tuesday, at least for Harambee.

EMID Superintendent Janet Mohr said that she had been in discussions with the Roseville district and that the two sides were "confident that we can come up with some kind of solution" to keep Harambee running in 2013-14.

Keeping Crosswinds alive, however, is a tougher proposition, given the South Washington County School District also covets the building.

Staff writers Jim Anderson, Anthony Lonetree and Eric Roper contributed to this story.

Kevin Duchschere • 651-925-5035