P. 1
Ostrow Comments

Ostrow Comments

|Views: 4,385|Likes:
Published by eric_roper

More info:

Published by: eric_roper on Nov 11, 2013
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

12/10/2013

pdf

text

original

November 7, 2013

To: Ways and Means/Budget Chair and Mayor-Elect Betsy Hodges and Committee Members: From: Paul Ostrow On today’s continued Ways and Means/Budget agenda is the opportunity for public comment on the proposal to give final approval to sign a binding agreement with the Minnesota Timberwolves and AEG Management that will require the issuance of 97 million dollars of city-backed general obligation bonds for the renovation of Target Center. Since I cannot join you in person, I am providing my comments in writing for your consideration. First, as you all know quite well, I do not oppose the use of public funding for stadiums or arenas. I supported the financing of Target Field largely because we honored the City Charter and because it was financed regionally through the Hennepin County sales tax. Second, I believe city staff and the Timberwolves have negotiated in good faith and that the share of the costs borne by the public is reasonable and fair. The Timberwolves ownership and management are first class. In the interest of full disclosure, I love the Timberwolves and now that I am not attending nightly neighborhood meetings, I have purchased season tickets. I will benefit directly from the Target Center renovation. As I am sure you recall, I pushed for the inclusion of the Target Center in our bonding priorities for years. At least while I was on the Council our position was that the Target Center was a statewide resource and any major renovation required financial support from the state. During my last year on the Council we debated the scope of our legal responsibilities and financial capacity to address the needs of the Target Center. We determined at that time that the City’s contribution to Target Center capital needs would be limited to fifty million dollars from 2010-2029. A majority of the Council decided to extend the Common Project Tax Increment District and split the proceeds of that district between neighborhood funding and Target Center capital needs between 2010 and 2019. One of our bedrock financial principles over the past decade was to avoid paying an undue burden for regional facilities and amenities that benefit the whole state. This policy served us well during the Target Field discussion. I am concerned that the city continues to take on massive debt and obligations that more appropriately should be borne by the state or the region. The 2012 stadium legislation does not require the city to use its discretionary sales tax dollars to renovate the Target Center. Neither did the stadium legislation grant the city the authority to use available sales tax dollars for the Target Center. That authority already existed under 2009 amendments granting the city the very broad authority beginning in 2012 to use available sales tax revenues for “capital projects advancing economic development or housing downtown or in the neighborhood.” The only significance of the 2012 legislation as it relates to the Target Center is that

the legislation overrode the City’s charter and removed the charter as a barrier to the funding of new construction or renovation. There are strong arguments for moving ahead with the Target Center renovation. Unlike the outsized investment in the Vikings stadium, there is a reasonable return on the city’s investment. What is missing from this discussion and most glaringly was missing from the Vikings stadium discussion is any consideration of alternative investments available to the city with these funds. What is also missing is any process to set priorities for the city’s allocation of available sales tax revenues. Both neighborhood funding and community development funding have been inadequate to address our most urgent housing and job creation needs. It is critical that these discretionary sales tax dollars be considered as a part of the annual budget process so that the capital needs of the city both downtown and in the neighborhoods can be addressed. At least while I was on the Council, the available city sales tax was consumed almost entirely by the needs of the convention center. The statutory change in 2009, coupled with the final bond payment on the convention center expansion in 2021, frees up over one billion dollars for city housing and economic development needs between now and 2046. The 678 million dollars to be retained by the state for the Vikings stadium as well as the city sales tax being used for the Target Center renovation will consume a large portion of that funding. I would argue, however, that the remaining discretionary city sales tax dollars should be invested in our neighborhoods that face the biggest needs and the biggest disparities in income. It is unclear to me how the city is freeing up funding to pay for the Target Center renovation. It may be that bonds are being refinanced or other mechanisms are being used. If so, it is a fair question to ask if discretionary sales tax dollars for capital needs in neighborhoods can be similarly expedited. I am excited about the new leadership in the Mayor’s office and on the City Council. I can think of no better time to have a long term discussion about funding our most critical community development needs. I only wish that we had engaged neighborhoods in a long range discussion regarding these sales tax revenues before May of 2012. I am confident that if that discussion had taken place, the outsized city contribution to the stadium would not have been approved. OK I will say it because I know you are thinking it. Why don’t I give it a rest? After all of those years I am still thinking about the city’s budget. Get a life, right? Getting this right is important. Being honest about choices and long term consequences is central to governing well. The work we did with the Mayor to put our financial house in order was important not just to balance the books. It was important because we made the tough choices in an honest and transparent way. That makes our civic democracy a healthy one.

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->