Against additional funding for the Target Center renovation

Council Member Andrew Johnson says:
Why I voted against additional funding for the Target Center renovation.
Last week I was one of two CMs, the other being Lisa Bender, to vote against a requested $24.5 million in additional City funding for the Target Center. It was a big vote and I wanted to share my reasoning why I voted the way I did.
How renovation came up in the first place
In late 2013, the outgoing Council voted to put $49 million (matched by another $50 million in private funding) into renovating the Target Center. The predominant feeling was that the 1990’s now-City-owned facility was “getting old” and that it made more sense to renovate it to make the facility more modern/competitive than to “let it fall apart” until the Timberwolves/Lynx run out their contract to play there until 2025, at which point the City would likely face pressure to tear it down and build a new arena at a much greater cost than a renovation. In this regard, the idea of renovating the Target Center was sold as the “frugal choice.”
Now $99 million to renovate is “not enough”…
Fast-forward to today. Construction prices in Minneapolis are third-highest in the nation (yes, you read that right… we’re only less expensive than Chicago and NYC), in good part due to the stadium construction which requires a massive amount of labor and materials, thus driving demand up, and in turn, prices. Because of these higher construction prices, the original budget for the Target Center renovation will no longer suffice, and thus they “need” another $24.5 million to build what was originally planned for. More specifically, the additional funding is needed mostly for the exterior portion of the building.
Why the referendum was not triggered
The City has a referendum requirement that for more than $10 million in spending on sports facilities, the approval of said spending needs to be put out for the voters to decide via a ballot question during the next regularly-scheduled election. The referendum requirement was actually put in place after public concern over the City taking ownership of the Target Center. However, the referendum requirement was legally-superseded when State Legislators passed a law for the new stadium which specifically said that the City does not need to follow the requirement; a judge agreed, as the City is a “creature of the State” and thus they can pretty much override anything at the City-level.
I still honor the requirement even if I legally don’t have to. I take issue with legislators who don’t represent Minneapolis interfering with the rights of Minneapolis residents to vote on Minneapolis issues. A number of my colleagues feel the same way on this point, however the push-back I heard regarding the referendum requirement and this latest request of $24.5 million for the Target Center is: it doesn’t apply because the facility is City-owned. I disagree with that assessment of the requirement, which doesn’t distinguish between City-owned and privately-owned. In fact, virtually all of these professional sports facilities end up being government-owned, such as the new stadium. However, if my colleagues don’t follow a referendum requirement they not only don’t legally have to follow, but which most don’t believe even spiritually applies, so let’s instead talk about this latest funding request on its own merits.
Cutting through the talking points
Three primary arguments have been used by supporters to justify this additional funding which need to be addressed.
“We need to spend this so we don’t spend even more money later building a new arena.” Per the City’s Chief Financial Officer: staff had approval and were authorized to move forward with at least the original funding package and would have done so even if the Council did not approve the additional $24.5 million. This vote was not about whether a renovation is happening. It was about fulfilling all the wants of the original plan. Had the Council voted no to the additional funding, the exterior of the arena would largely if not entirely been the only part of the project affected.
“We are saving $30 million by voting for this additional funding.” No we are not. This is a misleading claim that comes from the fact that each year we spend around $5 million on maintenance and long-term capital improvements for the facility and under the previously approved package, we were committing to continuing to cover these annual expenses from 2025-2035 to the tune of $50 million, but to make this additional funding package more palatable, we are now only committing to $20 million *even though* staff acknowledged in their report that we’ll still need to pay around $50 million. The CFO calls this “flexibility,” but acknowledges that these expenses will still need to be paid.
“This deal will not affect property taxes.” Yes, the additional $24.5 million is paid for via sales tax revenue, not property tax revenue; that’s a little more than $1.2 million per year over the next 20 years. That $1.2 million a year in sales tax revenue would have gone toward economic development and/or other capital projects across our city if not redirected into even more funding for the Target Center renovation. In the larger sense, it would have offset economic development being paid for by property tax revenue (out of the general fund), thus freeing up $1.2 million per year over the next 20 years to instead be spent on police, firefighters, health, roads, or even lowering the property tax levy.
Why we should not have provided another $24.5 million in funding
Beyond the referendum requirement, there are a multitude of reasons why this additional funding should not have been approved by the Council, from the disproportionately minimal contributions of the Timberwolves/Lynx, to the impact another large government-subsidized construction project will have on further increasing construction prices in Minneapolis, thereby costing us development that would otherwise have occurred if prices were not so high. But perhaps the strongest reason I had for voting against the project is this …
With a $15-20 million annual shortfall in basic road maintenance and some of the worst disparities in the nation, spending $24.5 million to ensure the Target Center renovation comes with a “cool new look” for passersby is the wrong choice.