Could Minneapolis afford to pay for a Vikings stadium?
The debate over where the Minnesota Vikings should build a new football stadium is narrowing down to just a pair of likely sites, one in Arden Hills, and the other at the site of the existing Metrodome in Minneapolis.
The Vikings are reportedly close to a deal with Ramsey County, but Minneapolis may yet make a bid. The question is whether the city can afford it.
The Vikings had a losing season last year, going 6-10. But by some measures, they rank near the top of the National Football League -- in taxes collected by their home city.
Minneapolis collects a hospitality tax, a liquor tax, an entertainment tax and a half-cent sales tax to support the city's convention center. And a Hennepin County tax to help pay for Target Field is also in the mix.
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"We know we're in the top tier," said Barb Johnson, president of the Minneapolis City Council.
Research by MPR and the Virginia-based Global Business Travel Association -- or GBTA -- shows that Minneapolis has some of the highest sales, hotel, food and car rental taxes of any city that hosts an NFL team.
Minneapolis ranks No. 5 in terms of the total highest tax burden on travelers, according to the group's research.
The taxes don't just apply to travelers, though. Anyone who eats in a restaurant, buys a drink, rents a car or stays in a hotel pays as well, even if they live in the city. And these aren't just nickels and dimes. Liquor taxes can total nearly one-sixth of a drink tab. Food taxes can be nearly one-seventh of a restaurant bill.
Those extra costs can make a difference in how much business a city can attract, according to Joe Bates, director of research for the GBTA's foundation.
"It's important for travel managers, as well as meeting planners, to understand what the cost is of doing business in different locations," said Bates. "And it does actually factor into their decision to locate their event in one place versus another."
The Vikings stadium bill that has been introduced at the Capitol includes sales and hospitality taxes as principal sources of revenue for a host city. Gov. Mark Dayton has also mentioned a car rental tax.
That means a new stadium could put Minneapolis in a tax league with Chicago and New York City. That cost could drive away some of the very people who might visit Minneapolis, and spend money in the city, because of the presence of an NFL team.
Still, Minneapolis Downtown Council president Sam Grabarski says area hotels support a higher guest tax to pay for a Vikings stadium. That may be key to a deal for the Metrodome site.
"They say they have room, and could still be competitive nationally," said Grabarski.
Grabarski says the details are negotiable, but said that any more tax would have to be reasonable. The room tax is 13.4 percent now, compared to the highest tax -- more than 18 percent -- in New York City.
But Hospitality Minnesota, the trade association for the state's hotels, restaurants and resorts, worries about how new taxes might be charged.
Any tax imposed in just one city could make the hotels in that city uncompetitive locally. But a tax spread out more widely would be harder to sell politically for restaurants and hotels a long way from the stadium.
That tax load matters, according to Dan McElroy, president of the trade group.
"I don't think anybody even at the Legislature considered a tax of more than 2 or 3 percent, and even that we have a great heartburn with," said McElroy.
Hospitality taxes aren't the only revenue Minneapolis could tap. The half-cent sales tax for the Minneapolis convention center will pay off the building's debt in a few years.
Minneapolis voters put a $10 million cap on stadium spending in 1997 referendum. And City Council President Barb Johnson says the city will still need the money to keep up facilities it already has.
"We know our convention center has needs, and our Target Center has needs. We own those facilities. So that's our first interest, is protecting those facilities," said Johnson.
In the meantime, Hennepin County Board Chairman Mike Opat has officially taken a pass on the stadium. He sent a letter to the governor this week saying his county isn't interested in making a deal.
Hennepin County's decision not to pursue a stadium doesn't necessarily damage the city of Minneapolis' chances of reaching an agreement with the Vikings -- if city and business leaders are willing to put up the money. The answer to that question is not yet clear.
